JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION : CARATTI -v- MAMMOTH INVESTMENTS PTY LTD [2016] WASCA 84
CORAM : BUSS JA
HEARD : 21-23 SEPTEMBER 2015
DELIVERED : 27 MAY 2016
FILE NO/S : CACV 21 of 2014
BETWEEN : ALLEN BRUCE CARATTI
Appellant
AND
MAMMOTH INVESTMENTS PTY LTD
First Respondent
NAVARAC PTY LTD
Second Respondent
ESPERANCE CATTLE CO PTY LTD
Third Respondent
GRANITE HILL PTY LTD
Fourth Respondent
FILE NO/S : CACV 112 of 2014
BETWEEN : MAMMOTH INVESTMENTS PTY LTD
Appellant
AND
GRANITE HILL PTY LTD
First Respondent
ALLEN BRUCE CARATTI
Second Respondent
ESPERANCE CATTLE CO PTY LTD
Third Respondent
FILE NO/S : CACV 120 of 2014
BETWEEN : GRANITE HILL PTY LTD
Appellant
AND
ESPERANCE CATTLE CO PTY LTD
First Respondent
NAVARAC PTY LTD
Second Respondent
MAMMOTH INVESTMENTS PTY LTD
Third Respondent
ALLEN BRUCE CARATTI
Fourth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MARTIN CJ
Citation : ESPERANCE CATTLE COMPANY PTY LTD -v- GRANITE HILL PTY LTD [2014] WASC 279
File No : CIV 1594 of 2013
Catchwords:
Corporations - Management and administration - Directors - Liability for acts - Indoor management rule - Interaction between the common law and the provisions of s 128 and s 129 of the Corporations Act 2001 (Cth) - Person 'having dealings with a company' within s 128 of the Corporations Act - Assumptions in s 129 of the Corporations Act - Company precluded by the indoor management rule at common law, as amended and supplemented by s 128 and s 129, from asserting that a sublease of real property was not duly executed by the company - Whether the sublessee had a proprietary interest in the real property - Whether the sublessee's proprietary interest had priority over a later leasehold interest created by the head lessor
Legislation:
Acts Interpretation Act 1901 (Cth), s 15AA
Companies (New South Wales) Code 1981 (NSW), s 68A
Corporations Act 2001 (Cth), s 127, s 128, s 129, s 130
Corporations Law, s 164
Result:
CACV 21 of 2014
Allen Caratti granted limited leave to amend his grounds of appeal
Allen Caratti's appeal dismissed
Granite Hill's cross-appeal allowed
CACV 112 of 2014
Mammoth's appeal dismissed
Allen Caratti's notice of contention dismissed
CACV 120 of 2014
Granite Hill's appeal allowed
Category: A
Representation:
CACV 21 of 2014
Counsel:
Appellant : Dr J T Schoombee & Mr M F Holler
First Respondent : Mr D E Ryan SC & Ms P M Tantiprasut
Second Respondent : Mr D E Ryan SC & Ms P M Tantiprasut
Third Respondent : Mr D O'Callaghan QC & Ms H Tiplady
Fourth Respondent : Mr J A Thomson SC & Mr J C Yeldon
Solicitors:
Appellant : Metaxas & Hager
First Respondent : Lemonis & Tantiprasut Lawyers
Second Respondent : Lemonis & Tantiprasut Lawyers
Third Respondent : Lavan Legal
Fourth Respondent : Pacer Legal Pty Ltd
CACV 112 of 2014
Counsel:
Appellant : Mr D E Ryan SC & Ms P M Tantiprasut
First Respondent : Mr J A Thomson SC & Mr J C Yeldon
Second Respondent : Dr J T Schoombee & Mr M F Holler
Third Respondent : Mr D O'Callaghan QC & Ms H Tiplady
Solicitors:
Appellant : Lemonis & Tantiprasut Lawyers
First Respondent : Pacer Legal Pty Ltd
Second Respondent : Metaxas & Hager
Third Respondent : Lavan Legal
CACV 120 of 2014
Counsel:
Appellant : Mr J A Thomson SC & Mr J C Yeldon
First Respondent : Mr D O'Callaghan QC & Ms H Tiplady
Second Respondent : Mr D E Ryan SC & Ms P M Tantiprasut
Third Respondent : Mr D E Ryan SC & Ms P M Tantiprasut
Fourth Respondent : Dr J T Schoombee & Mr M F Holler
Solicitors:
Appellant : Pacer Legal Pty Ltd
First Respondent : Lavan Legal
Second Respondent : Lemonis & Tantiprasut Lawyers
Third Respondent : Lemonis & Tantiprasut Lawyers
Fourth Respondent : Metaxas & Hager
Case(s) referred to in judgment(s):
Albert Gardens (Manly) Pty Ltd v Mercantile Credits Ltd (1973) 131 CLR 60
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; (2009) 239 CLR 27
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568
Andrews v Colonial Mutual Life Assurance Society Ltd [1982] 2 NZLR 556
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Australia and New Zealand Banking Group Ltd v Frenmast Pty Ltd [2013] NSWCA 459; (2013) 282 FLR 351
Australian Capital Television Pty Ltd v Minister for Transport and Communications (1989) 86 ALR 119
Australian Coal and Shale Employees' Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621
Australian Securities and Investments Commission v Hallmark Gold NL [1999] FCA 360; (1999) 30 ACSR 688
Bank of New Zealand v Fiberi Pty Ltd (1993) 14 ACSR 736
Banque Commerciale SA, en liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Banque-Belge v Hambrouck (1921) 1 KB 321
Biggerstaff v Rowatt's Wharf Ltd [1896] 2 Ch 93
Black & Decker Inc v GMCA Pty Ltd (No 2) [2008] FCA 504; (2008) 76 IPR 99
Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279
Browne v Dunn (1893) 6 R 67 HL
Burke v Corruption and Crime Commission [2012] WASCA 49; (2012) 289 ALR 150
Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378
CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384
Correa v Whittingham [2013] NSWCA 263; (2013) 278 FLR 310
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
County of Gloucester Bank v Rudry Merthyr Steam and House Coal Colliery Co [1895] 1 Ch 629
Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] HCA 49; (1975) 133 CLR 72
Deanplan Ltd v Mahmoud [1993] Ch 151
Duck v Tower Galvanizing Co Ltd [1901] 2 KB 314
Errichetti Holdings Pty Ltd v Western Plaza Hotel Corporation Pty Ltd [2006] WASC 113; (2006) 201 FLR 192
Esperance Cattle Co Pty Ltd v Granite Hill Pty Ltd [2014] WASC 279; (2014) 47 WAR 318
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503
Findlay v The State of Victoria [2009] VSCA 294
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Grant v John Grant & Sons Pty Ltd [1950] HCA 54; (1950) 82 CLR 1
Haxton v Equuscorp Pty Ltd [2010] VSCA 1; (2010) 28 VR 499
Heaton v AXA Equity and Law Life Assurance Society Plc [2002] 2 AC 329
Heid v Reliance Finance Corporation Pty Ltd [1983] HCA 30; (1983) 154 CLR 326
Houghton & Co v Nothard Lowe & Wills Ltd [1927] 1 KB 246
Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653
Irvine v Union Bank of Australia (1877) 2 App Cas 366
Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216
Kreditbank Cassel GmbH v Schenkers Ltd [1927] 1 KB 826
Lyford v Media Portfolio Ltd (1989) 7 ACLC 271
Mahony v The Liquidator of the East Holyford Mining Co (1875) LR 7 HL 869
McLennan v McCallum [2010] WASCA 45
MDN Mortgages Pty Ltd v Caradonna [2010] NSWSC 1298; (2010) 15 BPR 29,145
Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214
Minister for Employment and Workplace Relations (Cth) v Gribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194
Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359
Moondancer Holdings Pty Ltd v Navarac Pty Ltd [2011] WASC 250
Morris v Kanssen [1946] AC 459
Morris v Wentworth-Stanley [1999] QB 1004
NM Superannuation Pty Ltd v Hughes (1992) 27 NSWLR 26
Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; (2006) 228 CLR 529
Northern Territory v Collins [2008] HCA 49; (2008) 235 CLR 619
Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146
Pico Holdings Inc v Wave Vistas Pty Ltd [2005] HCA 13; (2005) 79 ALJR 825
Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266
Rama Corporation Ltd v Proved Tin & General Investments Ltd [1952] 2 QB 147
Re EWA [1901] 2 KB 642
Re Hapytoz (in liq) [1937] VLR 40
Re Motasea Pty Ltd [2014] NSWSC 69; (2014) 97 ACSR 589
Re Scottish Loan & Finance Company Ltd [1944] 44 SR (NSW) 461
Registrar-General v Northside Developments Pty Ltd (1988) 14 NSWLR 571
Robinson v Montgomeryshire Brewery Co [1896] 2 Ch 841
Royal British Bank v Turquand (1856) 6 El & Bl 327; 119 ER 886
Ruben v Great Fingall Consolidated [1906] AC 439
S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637
Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252
Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159; (2011) 42 WAR 59
Sheahan v Londish [2010] NSWCA 270; (2010) 244 FLR 64
Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466
Singh v Singh [2008] NSWSC 386
Sixty-Fourth Throne Pty Ltd v Macquarie Bank (1996) 130 FLR 411
South London Greyhound Racecourses Ltd v Wake [1931] 1 Ch 496
Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068
Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722
Sunburst Properties Pty Ltd (in liq) v Agwater Pty Ltd [2005] SASC 335
Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133
Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531
TCB Ltd v Gray [1986] Ch 621
TCB Ltd v Gray [1987] Ch 458
The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [2016] WASCA 36
Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664
Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; (1996) 186 CLR 574
Travelex Ltd v Federal Commissioner of Taxation [2010] HCA 33; (2010) 241 CLR 510
University of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491
Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598
Whistler v Forster (1863) 14 CB(NS) 248
Williams v The Minister, Aboriginal Land Rights Act 1983 [2000] NSWCA 255
Table of Contents
BUSS JA: 12
The parties to the primary proceedings 13
The Caratti family companies 13
Directorships and shareholdings in relevant Caratti companies according to Australian Securities and Investments Commission records 14
The central question in the primary proceedings and its determination by Martin CJ 14
Other conclusions by the trial judge 15
The appeals to this court 15
Overview of the events culminating in the sublease allegedly granted to Granite Hill and the lease purportedly granted to Esperance Cattle 16
A more extensive account of the facts and circumstances found by the trial judge 17
The issues for determination at the trial 39
Issue (1)(a): the trial judge's determination 41
Issue (1)(b): the trial judge's determination 41
Issue (1)(c): the trial judge's determination 42
Issue (1)(d): the trial judge's determination 42
Issue (2): the trial judge's determination 43
Issue (3): the trial judge's determination 43
Issue (4): the trial judge's determination 43
Issue (5): the trial judge's determination 43
Issue (6): the trial judge's determination 43
Issue (7): the trial judge's determination 44
Issue (8): the trial judge's determination 52
Issue (9): the trial judge's determination 53
Issue (10): the trial judge's determination 53
Issue (11): the trial judge's determination 53
Issue (12): the trial judge's determination 54
Issue (13) the trial judge's determination 54
Issue (14): the trial judge's determination 54
Issue (15): the trial judge's determination 54
Issue (16): the trial judge's determination 55
Issue (17): the trial judge's determination 55
The organisation of the balance of these reasons 55
Allen Caratti's appeal (CACV 21 of 2014): the grounds of appeal 55
Allen Caratti's appeal (CACV 21 of 2014): Allen Caratti's submissions on ground 1 57
Allen Caratti's appeal (CACV 21 of 2014): matters raised by Allen Caratti in relation to ground 1 that were not pleaded or run at trial 58
Allen Caratti's appeal (CACV 21 of 2014): Allen Caratti's challenges to the trial judge's findings of fact in the context of ground 1 64
Allen Caratti's appeal (CACV 21 of 2014): the merits of ground 1 65
Allen Caratti's appeal (CACV 21 of 2014): Allen Caratti's submissions on ground 2 75
Allen Caratti's appeal (CACV 21 of 2014): the merits of ground 2 75
Allen Caratti's appeal (CACV 21 of 2014): ground 3 84
Allen Caratti's appeal (CACV 21 of 2014): Allen Caratti's submissions on ground 4 85
Allen Caratti's appeal (CACV 21 of 2014): the merits of ground 4 86
Allen Caratti's appeal (CACV 21 of 2014): the proposed ground 5 92
Allen Caratti's appeal (CACV 21 of 2014): conclusion 93
Mammoth's appeal (CACV 112 of 2014): the ground of appeal 93
Granite Hill's cross appeal (CACV 21 of 2014) and Granite Hill's appeal (CACV 120 of 2014): the ground of appeal 94
Allen Caratti's notice of contention (CACV 112 of 2014): the ground of contention 95
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): the critical issues 95
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): the critical issues: the power of directors at common law to bind the company 96
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): the critical issues: the text of s 127, s 128, s 129 and s 130 of the Corporations Act 103
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): the critical issues: the proper construction of relevant provisions of s 127, s 128, s 129 and s 130 of the Corporations Act 106
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 1: Mammoth's submissions 117
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 1: my opinion on the issue 120
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 1: conclusion 126
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 2: Allen Caratti's submissions 126
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 2: my opinion on the issue 127
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 2: conclusion 130
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 3: Esperance Cattle's, Navarac's and Mammoth's submissions 130
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross-appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 3: my opinion on the issue 131
Mammoth's appeal (CACV 112 of 2014), Granite Hill's cross appeal (CACV 21 of 2014), Granite Hill's appeal (CACV 120 of 2014) and Allen Caratti's notice of contention (CACV 112 of 2014): Issue 3: conclusion 154
The outcome of the appeals to this court 154
NEWNES & MURPHY JJA: 155
Overview 155
Turquand's case 157
1983 amendments to Companies Act 1981 (Cth) 164
The Corporations Law 171
The Corporations Act 2001 (Cth): s 127 - s 130 173
The question of construction raised by the first key issue: s 128 and s 129 178
Determination of the first key issue - whether Granite Hill had an equitable lease 180
Second key issue - s 129(5) of the Corporations Act 1989 (Cth) 180
The execution of the Granite Hill Lease Document and the primary judge's findings 180
Section 129(5), s 129(6) and s 127 181
Section 68A(3)(e) of the Companies Act 1981 182
Corporations Act 1989 s 164(3) 184
The proper construction of s 129(5) 185
The second key issue - conclusion 186
Conclusion 186
SCHEDULE 187
1 BUSS JA: These appeals concern a farming property known as Young River Station. The property is about 90 km west of Esperance. Its combined area exceeds 7,000 ha. The property is well suited to farming by cropping and grazing.
2 Since 1995 Navarac Pty Ltd (Navarac) has been the registered proprietor of Young River Station.
3 Navarac and Mammoth Investments Pty Ltd (Mammoth) are controlled by members of the Caratti family. The members of the family who are relevant to these appeals are Maria Panizza, Maddeleine Caratti, Allen Caratti, John Caratti and Aaron Caratti. Maria is Maddeleine's mother. Maddeleine is the mother of Allen and John and the widow of the late Sergio Caratti. Aaron Caratti is John Caratti's son. At all material times, there has been a dispute between Allen Caratti and John Caratti as to which members of the Caratti family are entitled to control Navarac and Mammoth.
4 Navarac granted a lease of Young River Station to Mammoth for a term of 10 years as from 28 March 2002. In 2008 the original term was extended by a further 10 years until 28 March 2022 with an option to renew for an additional five years. Shortly after the original term was extended, Mammoth granted a sublease to Ronald Cummings for a term of five years as from 1 March 2008. Towards the end of his sublease, Mr Cummings informed Mammoth that he did not wish to renew the term. Consequently, Mammoth required a new sublessee.
5 Each of Granite Hill Pty Ltd (Granite Hill) and Esperance Cattle Co Pty Ltd (Esperance Cattle) is controlled by people who are unrelated to members of the Caratti family.
6 Granite Hill claims to be entitled to possession of Young River Station pursuant to a sublease allegedly granted to it by Mammoth in October or November 2012.
7 Esperance Cattle also claims to be entitled to possession of Young River Station pursuant to a lease purportedly granted to it by Navarac in December 2012.
8 On 1 March 2013, there was a contest between representatives of Granite Hill and representatives of Esperance Cattle for physical occupation of Young River Station. The outcome was that Granite Hill obtained physical occupation and Esperance Cattle commenced the primary proceedings in the General Division of the Supreme Court.
The parties to the primary proceedings
9 The parties to the primary proceedings were Esperance Cattle, Granite Hill, Navarac, Mammoth, Bott Livestock Pty Ltd (Bott Livestock), Bott Cropping Pty Ltd (Bott Cropping), Allen Caratti and Maddeleine Caratti.
10 Andrew Bott was a director and secretary of Granite Hill. His wife, Elizabeth, was also a director of the company. Mr and Ms Bott controlled Granite Hill. At all material times, Granite Hill has conducted farming operations on properties in and around Munglinup, which is about 100 km west of Esperance. Since 1 June 2013, Bott Livestock, as trustee of the Bott Livestock Trust, has acted as Granite Hill's agent in carrying out cropping and livestock operations on Young River Station. Bott Cropping, as trustee of the Bott Cropping Trust, has carried out some of the cropping operations.
11 The primary proceedings involved an original action, a counterclaim, a third party claim, and a counterclaim by some of the defendants by counterclaim.
12 The parties to the original action were Esperance Cattle, as plaintiff, and Granite Hill, Navarac, Mammoth, Bott Livestock and Bott Cropping, as defendants.
13 The parties to the counterclaim were Granite Hill, as plaintiff, and Esperance Cattle, Navarac, Mammoth, Allen Caratti and Maddeleine Caratti, as defendants.
14 The parties to the first defendant's third party claim were Granite Hill, as plaintiff, and Navarac, Mammoth, Allen Caratti and Maddeleine Caratti, as third parties.
15 The parties to the second, third and fifth defendants by counterclaim's counterclaim were Navarac, Mammoth and Maddeleine Caratti, as plaintiffs, and Granite Hill, Esperance Cattle and Allen Caratti, as defendants.
The Caratti family companies
16 The members of the Caratti family control numerous companies (the Caratti group). The companies which are relevant to these appeals are Navarac, Mammoth, Zel Nominees Pty Ltd (Zel), Harvard Nominees Pty Ltd (Harvard), Tosman Pty Ltd (Tosman) and Venetian Nominees Pty Ltd (Venetian).
Directorships and shareholdings in relevant Caratti companies according to Australian Securities and Investments Commission records
17 The directorships and shareholdings in Navarac, Mammoth, Zel, Harvard, Tosman and Venetian, according to the records of the Australian Securities and Investments Commission (ASIC), in 2002 and at all material times before 2002 are set out in the Schedule to these reasons.
The central question in the primary proceedings and its determination by Martin CJ
18 The central question in the primary proceedings was whether the sublease allegedly granted by Mammoth to Granite Hill in October or November 2012, by a person or persons who purported to be a director or directors of Mammoth, was binding upon Mammoth. Granite Hill relied on the assumptions provided for under s 128 and s 129(5) of the Corporations Act 2001 (Cth).
19 The primary proceedings were tried before Martin CJ. His Honour held, in effect, that Granite Hill was entitled to make assumptions under s 128 and s 129(5), but the making of those assumptions did not preclude Esperance Cattle from establishing as against Granite Hill that there was no valid sublease. His Honour concluded that Granite Hill did not have a valid sublease and that Esperance Cattle was entitled to possession of Young River Station pursuant to the lease purportedly granted by Navarac in December 2012.
20 The trial began on 17 February 2014 and ended on 27 February 2014. On 7 March 2014, the trial judge announced to the parties his conclusion that Esperance Cattle was entitled to possession of Young River Station, and orders were made to give effect to that conclusion. His Honour published his reasons for judgment on 5 August 2014. See Esperance Cattle Co Pty Ltd v Granite Hill Pty Ltd [2014] WASC 279; (2014) 47 WAR 318.
21 On 4 September 2014, the trial judge made declarations as follows:
1. The lease document executed by Esperance Cattle … and Navarac … on 10 December 2012 is valid and enforceable; and
2. Granite Hill … is entitled to assume under section 128 of the Corporations Act (Cth) that Mammoth … duly executed a sublease in respect of [Young River Station] in or about November 2012 in its favour … and Mammoth … is prevented from denying that assumption, but Granite Hill has no proprietary interest in [the Young River Station land].
Other conclusions by the trial judge
22 The trial judge also concluded that:
(a) Esperance Cattle was entitled to damages from Granite Hill for trespass, but not to an account of profits;
(b) Granite Hill was entitled to damages from Mammoth for breach of the sublease, and to damages from Allen Caratti for misleading and deceptive conduct;
(c) Granite Hill was not entitled to damages for misleading and deceptive conduct from Mammoth or Maddeleine Caratti; and
(d) Mammoth was entitled to damages from Allen Caratti for misleading and deceptive conduct [8].
The appeals to this court
23 There are three appeals before this court, namely CACV 21 of 2014 (Allen Caratti's appeal), CACV 112 of 2014 (Mammoth's appeal) and CACV 120 of 2014 (Granite Hill's appeal).
24 The parties to Allen Caratti's appeal are Allen Caratti, as appellant, and Mammoth, Navarac, Esperance Cattle and Granite Hill, as respondents.
25 In Allen Caratti's appeal, Granite Hill has filed a cross-appeal. However, the grounds of the cross-appeal are identical to the grounds of Granite Hill's appeal. In its written submissions in the cross-appeal, Granite Hill merely states that it relies on its written submissions in its appeal.
26 The parties to Mammoth's appeal are Mammoth, as appellant, and Granite Hill, Allen Caratti and Esperance Cattle, as respondents.
27 In Mammoth's appeal, Allen Caratti has filed a notice of contention.
28 The parties to Granite Hill's appeal are Granite Hill, as appellant, and Esperance Cattle, Navarac, Mammoth and Allen Caratti, as respondents.
29 I would dismiss Allen Caratti's appeal (CACV 21 of 2014); allow Granite Hill's cross-appeal (CACV 21 of 2014); dismiss Mammoth's appeal (CACV 112 of 2014); dismiss Allen Caratti's notice of contention (CACV 112 of 2014); and allow Granite Hill's appeal (CACV 120 of 2014). My reasons are as follows.
Overview of the events culminating in the sublease allegedly granted to Granite Hill and the lease purportedly granted to Esperance Cattle
30 An overview of the events culminating in the sublease allegedly granted to Granite Hill and the lease purportedly granted to Esperance Cattle, as recounted by the trial judge in his reasons, is as follows.
31 At all material times up to about mid-October 2012, Allen Caratti negotiated with Stephen Blair, who was acting on behalf of Esperance Cattle, for the possible lease of Young River Station to Esperance Cattle upon the expiry of Mr Cummings' sublease. The negotiations ended acrimoniously [102] - [109].
32 In about the second week of October 2012, Allen Caratti commenced negotiating with Mr Bott for Mammoth to sublease Young River Station to Granite Hill upon the expiry of Mr Cummings' sublease [111] - [112].
33 On or about 18 October 2012, Mr and Ms Bott signed an agreement for the sublease by Mammoth to Granite Hill of Young River Station for a term of five years commencing on 28 February 2013. The agreement, as signed by Mr and Ms Bott, was returned to the solicitors who had prepared it on instructions from Allen Caratti [114] - [115].
34 The trial judge found that, between 23 October 2012 and 16 November 2012, Allen Caratti signed the agreement which had been executed on behalf of Granite Hill and returned to his solicitors [115] - [120]. His Honour and the parties at the trial referred to this agreement as the 'GH' or 'Granite Hill' version [121]. His Honour found that, although Allen Caratti purported to sign the agreement as a director of Mammoth, he was not, at that time, a director of the company. Allen Caratti accepted at the trial that, in addition to signing the agreement in his own name, he had 'simulated' the signature of his mother, Maddeleine Caratti, on the agreement. At the material time, Maddeleine Caratti was a director of Mammoth. His Honour held that Allen Caratti did not have Maddeleine Caratti's authority to simulate her signature or to sign the agreement on her behalf, and that she did not know, at any material time, that Allen Caratti had simulated her signature on the agreement [201], [240] - [241].
35 At the trial another version of an agreement, apparently between Mammoth and Granite Hill, for the sublease of Young River Station was tendered in evidence. The execution page of this other version was different from the execution page of the GH or Granite Hill version. The trial judge and the parties at the trial referred to this other version as the 'ABC' or 'Allen Bruce Caratti' version. Allen Caratti gave evidence that on 2 November 2012, after he had executed the GH or Granite Hill version, he saw his mother and requested her to sign the ABC or Allen Bruce Caratti version. His Honour held that this interaction between Allen Caratti and his mother did not, in fact, occur. His Honour concluded that the ABC or Allen Bruce Caratti version was most likely produced by Allen Caratti after 22 February 2013 [256], [276] - [277]. The ABC or Allen Bruce Caratti version was not given to Granite Hill or its solicitors before 1 March 2013 [200].
36 After the negotiations between Allen Caratti and Mr Blair broke down, Mr Blair arranged for Esperance Cattle to lodge a caveat against the titles to Young River Station. In December 2012, notice of the caveat was received by John Caratti who was, in effect, conducting the affairs of Navarac, although he was not, at that time, a director of the company. John Caratti contacted Esperance Cattle's solicitors and, as a result, a meeting occurred on 10 December 2012 between John Caratti and Mr Blair. At the meeting, the directors of Navarac (namely, Maddeleine Caratti and Aaron Caratti), who attended parts of the meeting, executed a lease agreement between Navarac and Esperance Cattle in relation to Young River Station. This was effected by Maddeleine Caratti and Aaron Caratti re-executing a version of a lease agreement between Navarac and Esperance Cattle, which Allen Caratti had previously executed on behalf of Navarac but without its authority. It was not asserted at the trial that the earlier version of the lease agreement between Navarac and Esperance Cattle had any legal effect [106]. The trial judge accepted that John Caratti was unaware of the dealings between Allen Caratti and Mr and Ms Bott on behalf of Granite Hill, in October and November 2012, when John Caratti met with Mr Blair on 10 December 2012 to discuss a lease agreement between Navarac and Esperance Cattle [148].
A more extensive account of the facts and circumstances found by the trial judge
37 A more extensive account of the facts and circumstances found by the trial judge, as set out in his Honour's reasons, is as follows.
38 Sergio Caratti died in May 1992. Maddeleine Caratti was born in April 1929 and was aged 84 when she gave evidence. Allen Caratti was born in February 1956 and John Caratti in January 1950.
39 In 1991, Allen Caratti was involved in contested proceedings in the Family Court of Western Australia against his former wife, Marcia Spargo. Ms Spargo had applied for a property settlement and was endeavouring to establish the nature and extent of Allen Caratti's interest in the Caratti group of companies. According to John Caratti, in early 1991 Allen Caratti informed him that he wanted 'to move everything out of his name' in order to immunise himself and the Caratti group from Ms Spargo's claim. In February 1991, Allen Caratti resigned as a director of various companies in the Caratti group, including Mammoth, Harvard, Tosman and Venetian [11], [13].
40 In 1973, Zel was incorporated. It had two issued shares. In 1991, one of the two issued shares in Zel was transferred to each of Allen Caratti and John Caratti. At all material times, they have been the only shareholders in the company. However, according to records filed with ASIC, the composition of Zel's board of directors was altered during 1992 so that the only directors were Maddeleine Caratti and Maria Panizza [14].
41 By a deed undated, but stamped in December 1991, the Maddeleine Caratti Trust was created. The parties to the deed were Maria Panizza and Zel. Zel was named in the deed as trustee. At all material times, Maddeleine Caratti has been the appointor of the trust. The appointor has power under the deed to remove the trustee and appoint another or others in its place. The Maddeleine Caratti Trust is a discretionary trust. The trustee has the discretionary power to distribute income and capital among the beneficiaries. At all material times, Allen Caratti and John Caratti have been the capital beneficiaries of the trust.
42 According to John Caratti, Allen Caratti informed him during 1991, in the context of the pending Family Court proceedings, that he wanted 'to move any shares in companies within the Caratti family group out of his name' [16]. However, Allen was concerned that John might later disavow Allen's interest in the companies. According to John Caratti, he (John) suggested to Allen Caratti that shares in companies within the Caratti group held by either of them should be transferred to the S Caratti Family Trust and the Maddeleine Caratti Trust. The S Caratti Family Trust was a unit trust. The unitholders were Venetian as trustee of the JM Caratti Family Trust and Kelena Nominees Pty Ltd as trustee of the M Caratti Trust. Allen Caratti and John Caratti were beneficiaries of each of those trusts.
43 Allen Caratti did not deny John Caratti's evidence in relation to their conversation concerning the pending Family Court proceedings or endeavour to explain his resignations as a director in 1991. Rather, Allen Caratti alleged that 'the share which he owned in Zel was owned by him beneficially and had never been transferred into the Maddeleine Caratti Trust' [18]. The trial judge noted that Allen Caratti's allegation did not respond directly to John Caratti's evidence with respect to their discussions.
44 The trial judge accepted John Caratti's evidence as to his conversations with Allen Caratti, and rejected Allen Caratti's evidence on that subject.
45 John Caratti gave evidence to the effect that, some time after his discussions with Allen Caratti, instruments were prepared and executed pursuant to which shares in the Caratti group of companies that were held in John Caratti's name or Allen Caratti's name were transferred either to Zel as trustee of the Maddeleine Caratti Trust or to Harvard as trustee of the S Caratti Family Trust. The trial judge said that John Caratti's evidence on this issue was 'corroborated by the annual returns for each of Mammoth, Venetian and Tosman filed from 1993 onwards, in which Harvard and Zel are reported as the only shareholders of those companies' [23]. His Honour found that Allen Caratti 'acquiesced in the transfer of the shares' [24]. Further and in any event, as Allen Caratti 'expressly [pleaded] that the shareholdings in each of Mammoth, Venetian, Tosman and Harvard were as depicted in the annual returns of those companies, he [could not] be heard to deny that the transfers took place' [24].
46 The annual returns filed on behalf of Mammoth, Tosman and Venetian with ASIC were not consistent with John Caratti's evidence to the effect that the shares were transferred to Harvard and Zel in their capacities as trustees. In each relevant annual return, in answer to the question 'Are shares beneficially owned? (Y/N)', the letter 'Y' was placed on the relevant form. John Caratti signed many of the annual returns. He gave evidence to the effect that he did not notice, when he signed them, that the returns incorrectly asserted that the shares were beneficially owned by the relevant shareholder. John Caratti said that the returns were prepared by Isaac Ellison, an accountant employed by the Caratti group.
47 Mr Ellison gave evidence. He confirmed that he had been responsible for preparing the annual returns in question. His unchallenged evidence was to the effect that in October 1993 he gave the annual returns for that year to John Caratti. According to Mr Ellison, John Caratti instructed him that Harvard and Zel were to own the shares beneficially.
48 Although Mr Ellison's evidence was not challenged, the trial judge nevertheless entertained a doubt as to his capacity to recall conversations with John Caratti which occurred more than 20 years before the trial in the degree of detail contained in his witness statement. In any event, his Honour said 'it does not seem … to matter whether or not Mr John Caratti told Mr Ellison to report Harvard and Zel as the beneficial owners of the shares in the relevant companies given that there is no doubt that he signed many annual returns which contain that assertion' [27]. His Honour added:
That is because I have concluded, for the reasons which follow, that the assertions contained in the annual returns with respect to the beneficial ownership of the shares held by Harvard and Zel in the relevant Caratti group companies, and any direction given by Mr John Caratti to Mr Ellison to prepare the annual returns in that form were a mistake, and did not reflect the true intentions of the parties to the transactions for the transfer of the shares to Harvard and Zel. Those parties were relevantly Mr John Caratti and Mr Allen Caratti in their personal capacities and as agents for the relevant corporate entities (Mammoth, Tosman and Venetian) [27].
49 The trial judge found that there was 'no doubt' that the purpose of Allen Caratti's resignation as a director of various companies in the Caratti group, and the purpose of the various transactions which resulted in the alterations to the shareholdings in relevant companies within the group, was 'to attempt to shield Mr Allen Caratti, and the companies within the group, from the claims being made by Ms Spargo in the Family Court proceedings involving Mr Allen Caratti' [28].
50 During the 1990s Allen Caratti 'used Zel' to trade shares [36]. He borrowed $638,000 from Leveraged Equities to finance the share trading he undertook through Zel. Leveraged Equities took security over the shares acquired with the funds it advanced. During cross-examination, Allen Caratti asserted that the funds borrowed from Leveraged Equities and the share trading should never have been recorded in the accounts of the Maddeleine Caratti Trust because those activities had been undertaken by Zel in its own right. The trial judge rejected his assertions. His Honour concluded that Allen Caratti conducted share trading in 1993 'using Zel as trustee of the Maddeleine Caratti Trust' with a view to concealing from Ms Spargo his interest in the shares being traded [40]. His Honour also concluded that the only reason those arrangements were altered during the financial year ending 30 June 1994 was because Leveraged Equities had discovered that the shares acquired with the funds it had advanced were held for the Maddeleine Caratti Trust, and Leveraged Equities insisted that the arrangements be changed in order that Zel in its own right could provide good security over the shares in question [36] - [41].
51 In 1995, Navarac purchased Young River Station. At all material times, Navarac has had two issued shares, one held by Tosman and the other by Venetian.
52 The trial judge found that, in early 2000, Allen Caratti was involved in a corrupt and dishonest scheme for the acquisition of a farming property known as 'Torradup Farm', which adjoined Young River Station. Allen Caratti denied, in cross-examination and in his responsive witness statement, that the scheme was corrupt and dishonest or that he had been involved in any fraud. Allen Caratti sought to implicate Maddeleine Caratti in the scheme. There was no evidence to support his attempted implication of his mother. His Honour found that Allen Caratti's involvement in the scheme, and his denial under oath of its fraudulent character, were, amongst other reasons, why his Honour approached all of Allen Caratti's evidence with 'extreme caution' [48].
53 The trial judge also referred to another scheme in which Allen Caratti sought to deceive the National Australia Bank in connection with the provision by the bank of finance. His Honour said Allen Caratti's participation in this scheme was further evidence of Allen Caratti's dishonesty and provided another reason why his Honour approached all of Allen Caratti's evidence with 'great caution' [50].
54 The National Australia Bank was the Caratti group's principal banker. By letter dated 1 May 2002, the bank offered to provide credit facilities to companies in the Caratti group. However, it was a specific condition of the bank's offers that 'Allen Caratti is to step down as a director of all group companies, apart from Tosman Pty Ltd as trustee for the AB Caratti Family Trust No 1' and that 'Allen Caratti must not have any signatory capacity in relation to any [Caratti group] accounts' [53]. After receiving the bank's offers, Maddeleine Caratti and John Caratti asked Allen Caratti to resign as a director of each company in the Caratti group. He refused. Despite repeated requests that he resign, Allen Caratti remained intransigent and suggested that finance be obtained from another lender. Maddeleine Caratti and John Caratti then took steps to effect Allen Caratti's removal as a director of various companies in the Caratti group. The validity of those steps was in issue at the trial [54] - [55].
55 As I have mentioned, at all material times Maddeleine Caratti has been the appointor of the Maddeleine Caratti Trust. The appointor has power under the trust deed to remove the trustee and appoint another or others in its place. By a deed dated 13 May 2002 and executed by Maddeleine Caratti and John Caratti, Maddeleine Caratti removed Zel as trustee of the Maddeleine Caratti Trust and appointed John Caratti as trustee. The deed also purported to convey from Zel to John Caratti the legal interests in all the property and assets of the Maddeleine Caratti Trust. Also, on 13 May 2002, instruments were executed pursuant to which one share in each of Mammoth, Harvard, Tosman and Venetian was transferred from Zel as trustee of the Maddeleine Caratti Trust to John Caratti as trustee of the Maddeleine Caratti Trust. As at 13 May 2002, Maddeleine Caratti and Allen Caratti were the directors of Zel. The consideration stated in each instrument for the transfer of the share was 'Deed made 13 May 2002'.
56 The trial judge noted that John Caratti attached to his first witness statement documents which he described as true copies of the register of members, as at 13 May 2002, for each of Harvard, Mammoth, Venetian, Tosman and Navarac. He gave evidence to the effect that he had caused those documents to be prepared.
57 As to Harvard, the document described as 'register of members' recorded that Zel as trustee of the Maddeleine Caratti Trust ceased to be the holder of one ordinary share on 13 May 2002 and that John Caratti as trustee of the Maddeleine Caratti Trust became the holder of that share on that date. The document also recorded that Maddeleine Caratti remained the holder of the other issued share.
58 As to each of Mammoth, Venetian and Tosman, the document described as 'register of members' recorded that Zel as trustee of the Maddeleine Caratti Trust ceased to be the holder of one ordinary share on 13 May 2002 and that John Caratti as trustee of the Maddeleine Caratti Trust became the holder of that share on that date. In each case, Harvard was recorded as the holder of the other issued share.
59 The trial judge concluded:
As I have found that the shares held by Zel in each of Harvard, Mammoth, Venetian and Tosman were held in its capacity as trustee of the Maddeleine Caratti Trust, and that the appointor of that trust removed Zel as trustee appointing Mr John Caratti as trustee in its place, and that instruments recording the transfer of the shares from Zel to Mr John Caratti were executed, there is no reason to doubt the accuracy of the documents entitled 'register of members' produced by Mr John Caratti [63].
60 As to Navarac, the document described as 'register of members' recorded that, as at 13 May 2002, Tosman and Venetian each held one of the two issued ordinary shares in Navarac. The trial judge held that there was 'no reason to doubt the accuracy of this document', which corresponded with Allen Caratti's pleaded case [64].
61 Documents dated 14 May 2002, each described as 'Memorandum of Circulating Resolution signed pursuant to CORPORATIONS ACT 2001 SECT 249A', were executed in respect of each of Harvard, Mammoth, Tosman, Venetian and Navarac. Each document was executed by Maddeleine Caratti and John Caratti, except in the case of Navarac where the document was executed solely by Maddeleine Caratti.
62 As to Harvard, the document recorded that the sole shareholders of Harvard were John Caratti as trustee of the Maddeleine Caratti Trust and Maddeleine Caratti. The document also recorded resolutions to the effect that Aaron Caratti be appointed as a director of the company, that Allen Caratti be removed as a director of the company, and that Maddeleine Caratti be appointed as the corporate representative of the company, to exercise all or any of its powers at meetings, or relating to resolutions to be passed without meetings, pursuant to s 250D of the Corporations Act.
63 As to each of Mammoth, Tosman and Venetian, the document recorded that the sole shareholders of the company were John Caratti as trustee of the Maddeleine Caratti Trust and Harvard (who was represented by Maddeleine Caratti as its corporate representative). Each document also recorded resolutions to the effect that Aaron Caratti be appointed as a director of the company, that Allen Caratti be removed as a director of the company, and that Maddeleine Caratti be appointed as the corporate representative of the company, to exercise all or any of its powers at meetings, or relating to resolutions to be passed without meetings, pursuant to s 250D of the Corporations Act.
64 As to Navarac, the document recorded that the shareholders of Navarac were Tosman and Venetian. The document also recorded that Maddeleine Caratti, as the authorised representative of Tosman and Venetian, had resolved that Aaron Caratti be appointed as a director of the company, that Allen Caratti be removed as a director of the company, and that Maddeleine Caratti be appointed as the corporate representative of the company, to exercise all or any of its powers at meetings, or relating to resolutions to be passed without meetings, pursuant to s 250D of the Corporations Act.
65 On 17 June 2002, documents, signed by Maddeleine Caratti, were lodged with ASIC in respect of each relevant company. The documents reported that Aaron Caratti had commenced as a director and that Allen Caratti had ceased to be a director, in each case with effect from 14 May 2002.
66 Allen Caratti did not accept that he had been validly removed as a director. On 26 July 2002, he lodged with ASIC a document signed by him which purported to record his appointment as a director of Mammoth with effect from 14 May 2002. There was no suggestion that he had the authority of either the board of directors or the shareholders of Mammoth to lodge the document. Also, there was no suggestion that he had been appointed a director of Mammoth as he had asserted.
67 On 5 August 2002, Allen Caratti lodged with ASIC a similar document signed by him in relation to Navarac. The document purported to record his appointment as a director of Navarac with effect from 14 May 2002. Again, there was no suggestion that he had the authority of either the board of directors or the shareholders of Navarac to lodge the document. Further, there was no suggestion that he had been appointed a director of Navarac as he had asserted.
68 The trial judge found that Allen Caratti's actions in lodging the documents at ASIC, which falsely asserted that he had been appointed as a director of the companies in question, reflected adversely on his honesty and credibility [75].
69 On 22 August 2002, Allen Caratti commenced proceedings in the Supreme Court (CIV 2188 of 2002) against Maddeleine Caratti, Aaron Caratti and various companies in the Caratti group, including Navarac, Mammoth, Harvard, Tosman and Venetian. John Caratti was not a party to the proceedings. The relief Allen Caratti claimed included a declaration to the effect that he continued to be a director of relevant companies in the Caratti group. Those companies were named as defendants to the proceedings.
70 On 26 September 2002, the proceedings were settled by the execution of a deed between Allen Caratti, Maddeleine Caratti and John Caratti (the Deed of Compromise). Aaron Caratti was not a party to the deed.
71 The Deed of Compromise recited that the parties, either jointly or severally, controlled various entities including Navarac, Mammoth, Harvard, Tosman and Venetian. Each of the various entities was given a number between one and 17. The deed contained a covenant by Maddeleine Caratti to appoint Allen Caratti and John Caratti jointly to be the appointors of any trust of which she was appointor, with effect from her death. The deed contained other covenants by Maddeleine Caratti:
(a) to make a will bequeathing any assets, other than personal effects, to Allen Caratti and John Caratti in equal shares; and
(b) to exercise any powers she had as a director or shareholder of any of the companies named in the deed for the purpose of furthering the terms of the deed as a whole.
72 Other relevant provisions of the Deed of Compromise included:
4. The shareholdings in all corporations 1-13 above will be adjusted so that Allen Caratti and John Caratti will hold equal beneficial interests.
5. Allen Caratti will be entitled to nominate a person to act as a director of each of:
5.1 Caratti Holdings
5.2 Jamesway
5.3 Navarac
5.4 Mammoth
5.5 Harvard
5.6 Venetian
…
7. Maddeleine Caratti's interests in the corporations 1-13 shall by her will pass to John Caratti and Allen Caratti jointly.
8. In corporations 1-9 above there shall be 2 directors only, 1 appointed by Allen Caratti and 1 by the other shareholders. There will be no other directors to those corporations without the unanimous approval of John Caratti and Allen Caratti. In corporations 10, 11 and 12 Allen Caratti presently acts as sole director and he shall continue as sole director. No chairman of directors or members meetings shall have a casting vote. There will be no coram without 2 directors.
…
10. On John Caratti attaining the age of 60 years all beneficial interests of John Caratti and Allen Caratti will be divided equally between them in specie with cash adjustment as necessary.
…
12. All powers of corporations named above and parties as trustees or appointors of any trusts will be used so that beneficial entitlements are equalised [as] between Allen Caratti and John Caratti or the children of Allen Caratti and the children of John Caratti as the case may be.
13. All powers to acts [sic] as trustees or appointors will if exercisable by Allen Caratti or John Caratti alone be amended so as to be exercisable by them or their nominees jointly.
14. No new entities shall be incorporated by the parties without them incorporating equality of beneficial interests.
15. [Elders Rural Bank] will be advised that Allen Caratti is chief executive of:
15.1 Mammoth
15.2 Navarac
16. Allen Caratti will be the only authorised account signatory with [Elders Rural Bank]. Maddeleine Caratti and John Caratti will each be authorised signatories to National Australia Bank accounts of the corporations.
17. This agreement is binding notwithstanding that parties contemplate there may be further documents to implement its terms.
18. Supreme Court action CIV 2188 of 2002 will be discontinued with no order as to costs.
73 In November 2002, the 2002 annual returns for each of Mammoth, Harvard, Tosman and Venetian were lodged with ASIC. The trial judge made the following findings:
(a) the returns did not reflect the transfer of the share in each company from Zel to John Caratti but, instead, reported Zel as a shareholder in each company;
(b) the returns erroneously reported that Harvard and Zel were the beneficial owners of the shares they held in Mammoth, Tosman and Venetian;
(c) the returns appeared to reflect the state of the records maintained at ASIC with respect to the directors of each company, and reported that Allen Caratti, Maddeleine Caratti and Aaron Caratti were directors of each of Mammoth, Tosman and Venetian, and Maddeleine Caratti and Aaron Caratti were directors of Harvard;
(d) there was no evidence to suggest that any action had been taken to appoint Allen Caratti as a director of Mammoth, Tosman or Venetian following his removal on 14 May 2002; and
(e) the members of the Caratti family were 'less than punctilious' in ensuring the accuracy of the information set out in the annual returns of many companies in the Caratti group [81].
74 The trial judge found that 'nothing occurred' with respect to the implementation of the Deed of Compromise. Further, his Honour found that the evidence at the trial did not provide any reason for the apparent failure to take immediate action to implement the Deed of Compromise [82].
75 In March and April 2004, Allen Caratti and solicitors acting for him wrote to Maddeleine Caratti and John Caratti. The correspondence alleged that Maddeleine Caratti and John Caratti had failed to perform various obligations imposed on them under the Deed of Compromise.
76 On 22 April 2004, Allen Caratti commenced proceedings in the Supreme Court against Maddeleine Caratti, John Caratti, Aaron Caratti and various entities within the Caratti group. The relief claimed included specific performance of the Deed of Compromise and a number of mandatory injunctions requiring the parties to take various steps allegedly necessary to implement the deed.
77 In May 2004, Allen Caratti filed a chamber summons in the proceedings seeking interlocutory injunctive relief, including an order restraining John Caratti from acting as a director of any of the companies in the Caratti group.
78 The evidence at the trial did not establish what, if anything, occurred in the proceedings commenced by Allen Caratti in April 2004 or how they were resolved.
79 By letter dated 6 September 2005, Maddeleine Caratti wrote to ASIC, on Mammoth's letterhead, asserting:
Allen Bruce Caratti, a family member who is not but often pretends to be a director of the company Mammoth Investments Pty Ltd has apparently lodged false forms with respect to the appointment of his daughter Nicole to the board of both companies.
This has been done without any consultation with the directors and without any proper meetings being held or resolutions to either make or ratify any such appointment being passed.
…
We have only just become aware of this and have reported it promptly.
…
The documents have been falsely lodged and we believe that this constitutes an offence under the regulations.
80 The evidence at the trial did not establish what, if anything, occurred in consequence of the sending of that letter.
81 At the trial, Allen Caratti produced and tendered in evidence 57 documents bearing dates between 14 June 2002 and 19 March 2010. Those documents appeared to have been executed by him and Maddeleine Caratti, purportedly in their capacities as directors of one or more of Navarac, Mammoth, Zel, Harvard, Tosman and Venetian [92].
82 The trial judge found that it was 'clear' that, from time to time, Allen Caratti simulated his mother's signature on documents purportedly executed by companies in the Caratti group [93]. His Honour elaborated:
For present purposes it is sufficient to note that without detailed inquiry and investigation, it is impossible to know which of the 57 documents produced by Mr Allen Caratti were in fact signed by him and his mother, and which were signed only by him, by applying his signature and simulating his mother's signature at the appropriate point in the document.
It is, however, clear that a significant number of these documents were in fact signed by Ms Maddeleine Caratti and Mr Allen Caratti purporting to act in their capacities as directors of the various groups within the Caratti group, including the companies relevant to these proceedings. By at least 2004, issues had arisen with respect to the authenticity of Ms Maddeleine Caratti's signature on company documents. I infer that those issues had arisen as a result of Mr Allen Caratti's practice of simulating his mother's signature on company documents from time to time. These issues had become known to those dealing with the Caratti group, including the financiers to that group. As a consequence, some of the parties dealing with the Caratti group required documents that were to be executed by Ms Maddeleine Caratti on behalf of a company within the group to be signed by her in the presence of a solicitor who would then attest to her execution of the document [93] - [94].
83 The trial judge noted that Maddeleine Caratti asserted in her pleaded case, and in her evidence, that Allen Caratti had not been a director of any of the relevant companies in the Caratti group since May 2002. His Honour said that Maddeleine Caratti must have been aware of Allen Caratti's contentions to the contrary, given that:
(a) she was a defendant in the Supreme Court proceedings commenced by Allen Caratti in August 2002;
(b) she signed the Deed of Compromise in September 2002;
(c) she was a defendant in the proceedings which Allen Caratti commenced in April 2004 to enforce the Deed of Compromise; and
(d) she wrote to ASIC in September 2005 asserting that Allen Caratti was falsely purporting to be a director of Mammoth.
84 The trial judge concluded:
In that context, her actions in executing company documents with her son, Allen, in circumstances in which it must have been clear to her that he was holding himself out as a director of companies within the group is inexplicable. As no meaningful explanation for her conduct has been proffered in either evidence or submissions, any attempt by me to derive an explanation by inference would be speculative [96].
85 After Navarac purchased Young River Station in 1995, it was farmed under Allen Caratti's supervision until at least 2001 [97].
86 As I have mentioned, the execution pages of the 'GH' or 'Granite Hill' version of the sublease purportedly granted by Mammoth to Granite Hill were different from the execution pages of the 'ABC' or 'Allen Bruce Caratti' version of that purported sublease.
87 At the trial, two versions of the original lease made between Navarac and Mammoth in 2002 were tendered in evidence. The execution pages of each version were different. Each execution page appeared to have been signed by Maddeleine Caratti and Allen Caratti on behalf of Navarac and Mammoth. However, the signatures purporting to be those of Maddeleine Caratti were different as between the two versions. Allen Caratti admitted, and the trial judge found, that he had simulated Maddeleine Caratti's signature on one of the versions. His Honour found that Maddeleine Caratti had signed the other version [98].
88 At the trial, two versions of the deed of extension of lease made between Navarac and Mammoth in 2008 were tendered in evidence. As with the original lease, the execution pages of each version of the deed of extension were different. Each execution page appeared to have been signed by Maddeleine Caratti and Allen Caratti on behalf of Navarac and Mammoth. However, the signatures purporting to be those of Maddeleine Caratti were different as between the two versions. Allen Caratti admitted, and the trial judge found, that he had simulated Maddeleine Caratti's signature on one of the versions. His Honour found that Maddeleine Caratti had signed the other version [100].
89 As I have mentioned, shorty after the original term of the lease between Navarac and Mammoth was extended, Mammoth granted a sublease to Mr Cummings for a term of five years as from 1 March 2008. Towards the end of his sublease, Mr Cummings informed Mammoth that he did not wish to renew the term. The trial judge found that Allen Caratti then commenced 'looking for other prospective lessees of Young River Station' [101].
90 At all material times, Mr Blair was the company secretary of Esperance Cattle. The trial judge found that Mr Blair was responsible for 'the actions taken by Esperance Cattle which are relevant to these proceedings' [102].
91 In about May 2012, Mr Blair and Allen Caratti discussed the possibility of Mr Blair or a company associated with him leasing land owned by the Caratti group in the Esperance area. Subsequently, there were extensive negotiations between Mr Blair and Allen Caratti concerning a possible lease of Young River Station and other properties in the Esperance area. The negotiations culminated in Mr Blair instructing a solicitor to prepare a draft lease of Young River Station to Esperance Cattle. The solicitor prepared a draft lease on the basis of title searches he conducted which showed Navarac to be the registered proprietor. The draft lease was therefore a lease from Navarac to Esperance Cattle rather than a sublease from Mammoth to Esperance Cattle. A number of drafts of the lease were prepared and exchanged between the solicitor acting for Esperance Cattle and a solicitor, Darryl Kipping, who had been instructed by Allen Caratti to act for the lessor [105].
92 On 3 October 2012, Mr Blair and Mr Kipping attended Allen Caratti's office in East Perth to sign a lease agreement between Navarac and Esperance Cattle. Allen Caratti signed the lease agreement purportedly as a director of Navarac. Mr Blair signed the lease agreement on behalf of Esperance Cattle. Mr Blair took both copies of the lease agreement with him when he left Allen Caratti's office so that they could be countersigned by his son, Angus, on behalf of Esperance Cattle. On 12 October 2012, Mr Caratti told Mr Blair, during a telephone conversation, that Elders Rural Bank (the mortgagee of the property) would not approve the lease agreement because 'they hate your guts' and 'so the deal was off'. At the trial, Esperance Cattle did not assert that the lease agreement signed on 3 October 2012 conferred any right to possession of Young River Station [106] - [109].
93 On 25 October 2012, Mr Blair sent both copies of the lease agreement to his solicitor, together with a bank cheque for $50,000 (being the deposit payable under the lease agreement), and instructed his solicitor to send one copy of the lease agreement and the bank cheque to Allen Caratti. The solicitor complied with that instruction. However, Mr Kipping returned the lease agreement and the bank cheque. Mr Blair then instructed his solicitor to lodge a caveat against the titles to Young River Station to protect Esperance Cattle's interest under the lease agreement. However, at that time, no-one other than Allen Caratti had signed or purported to sign the lease agreement on behalf of Navarac [110].
94 In early October 2012, Mr Bott on behalf of Granite Hill expressed interest in leasing Young River Station to an agent who had been retained by Allen Caratti. In about the second week of October 2012, Allen Caratti and Mr Bott spoke by telephone. They discussed the possible lease of Young River Station to Granite Hill. They agreed upon the basic terms of a lease. Allen Caratti told Mr Bott that he would instruct Brian McCormack of WA Property Lawyers to prepare a draft lease agreement [111] - [112].
95 Mr McCormack prepared an agreement for a lease by Mammoth to Granite Hill for a term of five years commencing on 28 February 2013. Although the agreement was not described as a sublease, special condition 9(c) acknowledged that Navarac was the registered proprietor of the land and that there was a head lease between Navarac and Mammoth [113].
96 On 15 October 2012, Allen Caratti sent to Mr and Ms Bott by email a copy of the lease agreement prepared by Mr McCormack. On 17 October 2012, WA Property Lawyers sent another copy of the lease agreement to Mr and Ms Bott. On 18 October 2012, Allen Caratti sent an email to Mr Bott enquiring whether he had received the lease agreement and asking when the agreement would be signed. On the same day Mr Bott sent an email to Allen Caratti informing him that the lease agreement would be signed that night and returned by post the following day. Ms Bott sent to WA Property Lawyers two copies of the lease agreement which she and Mr Bott had signed. On 23 October 2012, Allen Caratti collected the two signed copies of the lease agreement from WA Property Lawyers. That afternoon, Allen Caratti sent an email to Mr Bott which read:
Hi Andrew, the lease is signed. I have given a copy to Brian McCormack to send to you [114].
97 Mr McCormack was not called as a witness at the trial. However, an email of 6 November 2013 from Mr McCormack to Mr and Ms Bott was tendered in evidence. The email reads, relevantly:
I confirm the following information regarding the above lease:
1. Instructions were given to me by Allen Caratti on 9 October 2012.
2. Draft sent to Allen Caratti on 16 October 2012.
3. Final lease sent to Bott for signing on 17 October 2012.
4. The lease, signed by Bott, was collected by Allen Caratti on 23 October 2012.
5. The fully signed lease was provided to us by Allen Caratti and sent to Bott on 16 November 2012. It was presumably signed by Mammoth Investments Pty Ltd between 23 October 2012 and 16 November 2012 [115].
98 The trial judge found that the first sentence of the paragraph numbered 5 in Mr McCormack's email was ambiguous in that 'it is not clear whether the date of 16 November 2012 refers only to the date upon which the lease was provided to Bott, or refers also to the date upon which it was provided to WA Property Lawyers by Mr Allen Caratti' [116]. His Honour decided that, in the absence of evidence from Mr McCormack, it was unsafe to make any finding as to the precise date upon which the document, sent by WA Property Lawyers to Mr and Ms Bott on 16 November 2012, was provided by Allen Caratti to WA Property Lawyers, other than a finding that 'it was provided some time between 23 October and 16 November 2012' [116].
99 The trial judge noted that no version of the GH or Granite Hill sublease was attached to Allen Caratti's first witness statement and that was a matter of 'some significance to the assessment of his veracity with respect to its execution' [120].
100 On 9 October 2012, Maddeleine Caratti, John Caratti and Aaron Caratti took steps to alter the ASIC records with respect to Allen Caratti's directorship of Navarac and Mammoth. Minutes recording a meeting of the directors of Navarac and Mammoth, namely Maddeleine Caratti and Aaron Caratti, were tendered in evidence at the trial. Each of the minutes recited that Allen Caratti had been removed as a director of the company on 14 May 2002 and asserted that Allen Caratti had filed forms at ASIC which falsely showed his name as a director of the company, as and from 14 May 2002, without any permission or authority. Each of the minutes also asserted that Allen Caratti had from time to time held himself out as a director of the company and that an undertaking had been given to the Australian Taxation Office to the effect that the ASIC records would be altered to show that Allen Caratti was not a director [122].
101 The minutes recorded resolutions to the effect that such forms as were necessary to correct the ASIC records to show that Allen Caratti had ceased to be a director on 14 May 2002 were to be lodged and that John Caratti was to be appointed as an alternate director, with the same powers and duties as the directors, during any period when a director was overseas [123].
102 Forms dated 9 October 2012 were lodged at ASIC. They gave notice of changes in the details relating to Navarac and Mammoth. The forms did not correspond with the minutes in two respects. First, the forms stated that Allen Caratti had ceased to be a director on 9 October 2012, not 14 May 2002. Secondly, the forms stated that John Caratti was a director of the company and not an alternate director [124].
103 The trial judge found that the discrepancies were not material, but their existence reinforced his Honour's conclusion that 'the members of the Caratti family could not be described as assiduous in ensuring the accuracy of the records maintained by ASIC with respect to companies within the family group' [125].
104 On the morning of 1 November 2012, Maddeleine Caratti and Allen Caratti spoke by telephone. Maddeleine Caratti referred to a threat by Allen Caratti to appoint a receiver to Navarac. Allen Caratti called his mother a liar on at least three occasions and, on one of those occasions, described her as a 'fucking liar' [130]. The trial judge found that the terms of the conversation strongly suggested that Allen Caratti and his mother were not then on 'good terms' [131].
105 On 31 October 2012, Mr Kipping wrote to Esperance Cattle's solicitors and asserted that it had been agreed between Mr Blair and Allen Caratti that any lease between Navarac and Esperance Cattle would be subject to approval of the lease and its terms by all directors of Navarac and by Elders Rural Bank, the mortgagee of the property. Mr Kipping stated that neither condition had been satisfied and, accordingly, the proposed lease would not proceed. He returned the lease agreement and the bank cheque [132].
106 On 2 November 2012, Allen Caratti sent an email, conveying similar information, to Mr Blair. The email stated that 'the other directors of Navarac will not agree to the lease with you as they don't believe you have the financial capacity to perform' and that 'the bank will not give consent to you as a tenant' [133].
107 The trial judge found that it was 'clear' from the evidence that no other member of the Caratti family had any knowledge of Allen Caratti's dealings with Mr Blair or of the proposed lease to Esperance Cattle. His Honour observed that Allen Caratti's false attribution of views to 'the other directors of Navarac' provided 'another example of the liberties which he takes with the truth' [133].
108 By letter dated 9 November 2012, Esperance Cattle's solicitors responded to Mr Kipping's letter of 31 October 2012. Esperance Cattle's solicitors stated that, on their instructions, the lease was not subject to any preconditions, and Allen Caratti had represented to Mr Blair that he had authority to bind Navarac 'to any deal which he negotiated' [134].
109 On 3 December 2012, Mr Kipping lodged an application at Landgate, pursuant to s 138B of the Transfer of Land Act 1893 (WA), for the removal of the caveat previously lodged by Esperance Cattle. The application was made in Navarac's name and signed by Allen Caratti, purportedly as a director of Navarac. The application also appeared to have been signed by Maddeleine Caratti in the same capacity [136].
110 In her witness statement, served in December 2013, Maddeleine Caratti denied having signed the application, and asserted that her signature on the document had been forged. She also denied having given authority to anyone to sign her name on the document [137].
111 In his responsive witness statement, Allen Caratti stated in relation to his mother's assertions:
I agree that I wrote my mother's name on the document. At about the end of November or early December 2012 I telephoned my mother and said to her: I need to get you to sign another document. She said: What is it? I said: It's an application to remove a caveat from Young River Station. Why don't you call past and sign it. She said: No way with Tina there. You sign it for me. (emphasis added)
112 The trial judge found that Allen Caratti's evidence on this topic was 'utterly implausible' [139]. His Honour rejected it [139]. His Honour accepted Maddeleine Caratti's evidence that her signature on the application was a forgery perpetrated by Allen Caratti without her authority [140].
113 The trial judge found that, by 5 December 2012, Mr Blair was aware that Navarac was denying that Esperance Cattle had any lease over the property, and that steps had apparently been taken to lease the property to others [142].
114 On 10 December 2012, John Caratti was given a letter from Landgate to Navarac. The letter had been addressed to Navarac at the Caratti group offices in Great Eastern Highway, Redcliffe. The letter notified Navarac of the existence of the caveat lodged by Esperance Cattle. John Caratti ascertained that the caveat had been lodged by a solicitor, Richard Payne, on behalf of Esperance Cattle. John Caratti then telephoned Mr Payne and asked 'what was going on', because, on his evidence, neither he nor the directors of Navarac knew anything about the matters asserted in the caveat [143]. By coincidence, when John Caratti telephoned Mr Payne, Mr Blair was in Mr Payne's office. Mr Blair spoke to John Caratti on the telephone and briefly outlined Esperance Cattle's claim. John Caratti suggested that Mr Blair attend the Redcliffe office of the Caratti group to discuss the matter further [144].
115 About an hour later, Mr Blair arrived at the Redcliffe office and spoke with John Caratti. Mr Blair produced the lease document which had been signed by Allen Caratti on 3 October 2012. Mr Blair told John Caratti that if the lease did not proceed he would have to sue Navarac [145].
116 Maddeleine Caratti and Aaron Caratti then came to John Caratti's office. Mr Blair repeated to them, in essence, what he had told John Caratti [146].
117 John Caratti, Maddeleine Caratti and Aaron Caratti considered, in the absence of Mr Blair, what should be done. After examining the lease document they concluded that the lease appeared to be 'a good deal' from Navarac's viewpoint. John Caratti scored through Allen Caratti's signature on the lease document and Maddeleine Caratti and Aaron Caratti executed the document as directors of Navarac. A copy of the lease document, as executed by them, was then given to Mr Blair who, in turn, handed over a bank cheque for $50,000, payable to Navarac, being the deposit required under the lease document. The cheque was deposited in Navarac's bank account on the following day [147].
118 The trial judge accepted John Caratti's evidence to the effect that:
(a) he had been unaware of the dealings between Allen Caratti and Mr and Ms Bott; and
(b) when Maddeleine Caratti and Aaron Caratti agreed to execute the lease document in favour of Esperance Cattle, they thought they were 'simply regularising what Mr Allen Caratti had previously done, but failed to complete' [148].
119 The trial judge found that Allen Caratti had the authority of Navarac and Mammoth to negotiate the terms of leases in respect of properties owned by those companies, 'at least those mortgaged to [Elders] Rural Bank, which includes Young River Station' [148].
120 On 12 December 2012, Esperance Cattle lodged another caveat over the titles to Young River Station to protect its interest under the lease document that was executed on 10 December 2012. This was the lease document which Esperance Cattle relied on in support of its claim to possession of Young River Station [148].
121 On 22 February 2013, Maddeleine Caratti and Aaron Caratti executed a deed of surrender of the head lease from Navarac to Mammoth of Young River Station in their capacities as directors of each company. The surrender was expressed to take effect at midnight on 28 February 2013 [164].
122 A significant issue of fact at the trial was the identity of the person who endorsed Maddeleine Caratti's signature on the ABC or Allen Bruce Caratti version of the sublease, and when her signature was endorsed on that document. Evidence on the issue was given by Maddeleine Caratti and Allen Caratti. Also, expert evidence was adduced from document analysts.
123 Maddeleine Caratti was almost 85 years of age when she gave evidence. The trial judge found that she had difficulty understanding at least some of the questions put to her and in remembering the events in question, many of which had occurred long ago [216]. His Honour also noted that, on a number of occasions, Maddeleine Caratti's evidence on critical topics was given with great emphasis and in terms favourable to Navarac and Mammoth. His Honour 'gained the distinct impression that she had been made aware of the significant issues in the case, and of the position that would best suit the interests of Navarac and Mammoth in the litigation' [226]. Accordingly, his Honour did not attach significant weight to any evidence given by Maddeleine Caratti, including her emphatic assertion that she had never signed the ABC or Allen Bruce Caratti version of the sublease. However, his Honour added:
Of course, that is not to say that I would use my general reservations about her credibility to bolster a conclusion that she did in fact sign the ABC [or Allen Bruce Caratti] version of the … sublease, but merely that any conclusion that she did not sign that document is more safely derived from evidence other than her testimony [227].
124 The trial judge said that Allen Caratti's evidence to the effect that he had his mother's 'general authority' to sign documents on her behalf was dishonest and given without regard to the truth [237]. His Honour noted Allen Caratti's assertion at another point in his evidence that when he simulated his mother's signature on the sublease he had her authority to do so [240]. His Honour said that this assertion was inconsistent with Allen Caratti's description of events in his responsive witness statement [240].
125 The trial judge observed that Allen Caratti's evidence to the effect that the ABC or Allen Bruce Caratti version of the sublease came into existence in early November 2012 was 'highly improbable'. It was inconsistent with the obvious tension at that time in his relationship with his mother and, also, with his simulation of his mother's signature on both copies of the sublease. Allen Caratti's evidence as to the manner in which the document was presented to his mother for signature was 'highly improbable', and his Honour rejected it [255].
126 The trial judge found that:
(a) the ABC or Allen Bruce Caratti version of the sublease was not created until 'some time after 13 February 2013';
(b) Allen Caratti created the ABC or Allen Bruce Caratti version 'relatively close in time to the date upon which possession was to be taken, most likely after becoming aware of the assertions made on behalf of Esperance Cattle in the email which was sent to Mr and Ms Bott on 27 February 2013'; and
(c) the ABC or Allen Bruce Caratti version came into existence 'a few days prior to 1 March 2013 and, more likely than not, after 22 February 2013' [256].
127 The trial judge found that although Allen Caratti asserted in cross-examination that he had Maddeleine Caratti's authority to simulate her signature, 'that evidence appears to be most unlikely' [257].
128 The trial judge said, for extensive reasons which he gave, that he had 'no doubt' that Allen Caratti's evidence at the trial was 'given dishonestly, and that he was prepared to state, and in fact did state, anything that he considered was likely to advance his cause without regard for the truth' [261]. Accordingly, his Honour gave no weight to Allen Caratti's evidence in relation to Maddeleine Caratti's execution of the ABC or Allen Bruce Caratti version of the sublease [261].
129 The trial judge found, for detailed reasons which he gave and principally on the basis of expert evidence from document analysts, that:
(a) the ABC or Allen Bruce Caratti version of the sublease was produced by Allen Caratti in the last few days of February 2013, and most likely after 22 February 2013;
(b) the execution page of the ABC or Allen Bruce Caratti version was not bound with or presented with the other pages of the document when the signature purporting to be that of Maddeleine Caratti was applied to that page; and
(c) Allen Caratti either simulated his mother's signature on that page or procured her signature on that page by a trick, and, of those alternatives, the former was a little more likely than the latter [276].
130 The trial judge rejected 'entirely' Allen Caratti's evidence to the effect that the ABC or Allen Bruce Caratti version of the sublease was signed by Maddeleine Caratti, in his presence, during the afternoon of 2 November 2012. His Honour found that evidence to be 'a complete fabrication, dishonestly concocted in an endeavour to advance [Allen Caratti's] cause in these proceedings' [277].
The issues for determination at the trial
131 After analysing the pleadings, the trial judge said the following issues required determination [346]:
Issue (1) Was Allen Caratti a director of Mammoth and Navarac between October 2012 and February 2013?
The answer to that issue turned upon the resolution of the following sub-issues:
(1)(a) Were the shares which Zel held in Mammoth, Harvard, Venetian and Tosman held by it as beneficial owner, or in its capacity as trustee of the Maddeleine Caratti Trust?
(1)(b) Was the appointment of John Caratti as trustee of the Maddeleine Caratti Trust and the transfer of Zel's share in each of Mammoth, Harvard, Venetian and Tosman effective to make him one of the two members of each of those companies?
(1)(c) Even if Zel did not hold its share in Mammoth, Harvard, Venetian and Tosman in its capacity as trustee of the Maddeleine Caratti Trust, and held each share as beneficial owner, were the transfers of shares from Zel to John Caratti in his capacity as trustee of the Maddeleine Caratti Trust effective?
(1)(d) Were the memoranda of circulating resolutions in respect of each of Harvard, Venetian and Tosman effective, with the consequence that the memoranda of circulating resolutions executed in respect of Mammoth and Navarac were effective to result in the removal of Allen Caratti and the appointment of Aaron Caratti as a director of each company?
Issue (2) Does the Deed of Compromise executed on 26 September 2002 preclude Allen Caratti from disputing the efficacy of his removal from the office of director of the various companies relevant to the proceedings in May 2002?
Issue (3) Was the lease to Esperance Cattle validly executed by Navarac on 10 December 2012?
Issue (4) Was the deed of surrender of lease validly executed by Navarac and Mammoth on 22 February 2013?
Issue (5) Did Allen Caratti have either the general or specific authority of his mother to endorse her name, in her capacity as a director of Mammoth, on the GH or Granite Hill version of the sublease at the time he simulated her signature on that document?
Issue (6) How did the signature purporting to be that of Maddeleine Caratti come to be on the ABC or Allen Bruce Caratti version of the sublease and when was that signature applied to that version of the sublease?
Issue (7) Is Granite Hill entitled to make any, and if so which, of the assumptions to which reference is made in s 128 and s 129 of the Corporations Act in relation to Mammoth's execution of the GH or Granite Hill version of the sublease and, if so, what is the effect of that entitlement:
Issue (8) Is Esperance Cattle entitled to an order for possession of Young River Station?
Issue (9) Did Esperance Cattle take possession of Young River Station in the early hours of 1 March 2013?
Issue (10) Is Esperance Cattle entitled to:
(10)(a) mesne profits; or
(10)(b) damages; or
(10)(c) an account of profits,
as against Granite Hill and, if so, what is the appropriate measure of each?
Issue (11) Is Esperance Cattle entitled to declaratory relief against Bott Cropping and Bott Livestock?
Issue (12) Are Mammoth and Navarac estopped from denying the efficacy of the GH or Granite Hill version of the sublease?
Issue (13) Is Granite Hill entitled to damages from Mammoth for breach of the GH or Granite Hill version of the sublease?
Issue (14) Is Granite Hill entitled to damages from Mammoth for misleading and deceptive conduct and, if so, what is the appropriate measure of those damages?
Issue (15) Is Granite Hill entitled to damages from Allen Caratti for misleading and deceptive conduct and, if so, what is the appropriate measure of such damages?
Issue (16) Is Granite Hill entitled to damages for misleading and deceptive conduct from Maddeleine Caratti and, if so, what is the appropriate measure of such damages?
Issue (17) Is Mammoth entitled to damages for misleading and deceptive conduct from Allen Caratti and, if so, what is the appropriate measure of such damages?
Issue (1)(a): the trial judge's determination
132 The trial judge decided that the shares held by Zel in each of Mammoth, Harvard, Venetian and Tosman were held by Zel as trustee of the Maddeleine Caratti Trust [347].
Issue (1)(b): the trial judge's determination
133 The trial judge decided that John Caratti's appointment as trustee of the Maddeleine Caratti Trust had the effect of transferring to him legal title to the shares held by Zel in each of Mammoth, Harvard, Venetian and Tosman and, consequently, each of those companies was empowered to register John Caratti as the holder of the shares pursuant to s 1071B(5) of the Corporations Act [348].
134 By reason of the events which occurred on 13 May 2002, John Caratti became a member of each of Mammoth, Harvard, Venetian and Tosman in his capacity as trustee of the Maddeleine Caratti Trust [349].
Issue (1)(c): the trial judge's determination
135 The trial judge decided that the events which occurred on 13 May 2002 were effective to render John Caratti a member of each of Mammoth, Harvard, Venetian and Tosman and, consequently, his execution of the memoranda of circulating resolutions on the following day was effective, even if the shares held by Zel in each of Mammoth, Harvard, Venetian and Tosman were held by Zel as beneficial owner in its own right and not in its capacity as trustee of the Maddeleine Caratti Trust [350].
136 His Honour gave substantial reasons for his decision on this point. He then said:
So, in summary, Zel was a member of each of Mammoth, Harvard, Venetian and Tosman on 13 May 2002. It executed a proper instrument of transfer in respect of each share, transferring it to Mr John Caratti. Neither Zel nor Mr John Caratti has taken any step to set aside the transfer. Each transfer was delivered to the relevant company and entries were made in the register of members pertaining to that company in accordance with the transfer. The efficacy of that process, and in particular, the question of whether Mr John Caratti became a member of each company, is not affected by the determination of the question of whether Zel held only legal or both legal and beneficial title to each share [361].
Issue (1)(d): the trial judge's determination
137 The trial judge decided that the memoranda of circulating resolutions executed on 14 May 2002 in respect of Harvard, Mammoth, Tosman, Venetian and Navarac were valid and effective resolutions of those companies in accordance with s 249A of the Corporations Act [363].
138 His Honour elaborated that, by reason of the efficacy of the resolutions, it followed that on 14 May 2002 Allen Caratti was removed, and Aaron Caratti was appointed, as a director of each of Navarac and Mammoth. Further, Allen Caratti did not have the authority of either company to resume office as a director when he lodged notices to that effect with ASIC in July and August 2002. Accordingly, Allen Caratti was not a director of Navarac or Mammoth between October 2012 and February 2013, and Aaron Caratti remained a director of each company during that period [369].
Issue (2): the trial judge's determination
139 The trial judge decided that Allen Caratti, by his execution of the Deed of Compromise, agreed to discharge the causes of action asserted by him in the legal proceedings then pending, and 'to forego the rights asserted in those proceedings', which included his right to assert that he had been unlawfully removed as a director of the relevant companies in the Caratti group earlier that year, and 'to accept the rights conferred by [the Deed of Compromise] in place of those rights' [381].
Issue (3): the trial judge's determination
140 The trial judge decided that it followed, from his conclusion that Aaron Caratti was a director of Navarac on 10 December 2012, that the execution by Maddeleine Caratti and Aaron Caratti on that date of the lease in favour of Esperance Cattle was effective to confer a leasehold interest in Young River Station on Esperance Cattle [382].
Issue (4): the trial judge's determination
141 The trial judge decided that it followed, from his conclusion that Aaron Caratti was a director of Navarac and Mammoth on 22 February 2013, that the deed of surrender of Mammoth's sublease, executed by Maddeleine Caratti and Aaron Caratti on that date, was effective to surrender Mammoth's interest as sublessee in Young River Station [383].
Issue (5): the trial judge's determination
142 The trial judge decided that when Allen Caratti simulated Maddeleine Caratti's signature on the GH or Granite Hill version of the sublease, he had neither her specific nor her general authority to do so [384].
Issue (6): the trial judge's determination
143 The trial judge decided that Allen Caratti produced the ABC or Allen Bruce Caratti version of the sublease in the last few days of February 2013 (most likely after 22 February 2013) and that Allen Caratti either simulated Maddeleine Caratti's signature on the execution page of the ABC or Allen Bruce Caratti version or procured her signature on that page by a trick, and, of those alternatives, the former was a little more likely than the latter [276].
Issue (7): the trial judge's determination
144 The trial judge examined s 128 and s 129 of the Corporations Act, the legislative history of those provisions, the common law as modified or superseded by statute, and a number of cases which have considered the proper construction of some provisions of s 128 and s 129 or their statutory predecessors.
145 His Honour said that, because of s 128(3), his finding that Allen Caratti forged Maddeleine Caratti's signature on both versions of the sublease did not, of itself, prevent Granite Hill from making the assumption that Maddeleine Caratti signed those documents or prevent Mammoth from being bound by the obligation imposed by s 128(1), which prevents Mammoth from asserting in proceedings relating to the relevant 'dealings' that any of the assumptions referred to in s 129 is incorrect [388].
146 The trial judge said that the only assumption referred to in s 129 that was relevant in the present case was that specified in s 129(5), relating to the due execution of a document which appears to have been signed by two directors of the company in accordance with s 127 [389].
147 His Honour held that Granite Hill could rely on the assumption referred to in s 129(5), whether or not it actually made the assumption at the time of the relevant 'dealings', and whether or not it made any enquiry, subject to s 128(4), which precludes Granite Hill from relying on that assumption if, at the time of the relevant 'dealings', its officers knew or suspected that the assumption was incorrect [390].
148 The trial judge held that, in the present case, the relevant 'dealings' were the dealings between Allen Caratti, as representative of Mammoth, and Mr and Ms Bott, as representatives of Granite Hill, in relation to the sublease of Young River Station. There was no doubt that Allen Caratti had Mammoth's authority to conduct those dealings as its representative pursuant to 'the long-standing arrangement with his mother and other members of the family whereby he assumed responsibility for the management of farming properties mortgaged to [Elders] Rural Bank, including responsibility for negotiating the terms of leases or subleases with respect to those properties' [392]. However, his actual authority did not extend to executing agreements he had negotiated [392].
149 His Honour said it was 'now relatively well established' that 'dealings' include 'purported dealings', for which the relevant agent of the company had no actual authority [393]. It followed that, in the present case, the relevant 'dealings' extended to and included the dealings between Allen Caratti and Granite Hill in which Allen Caratti purported to proffer each version of the sublease as a sublease duly executed by Mammoth [393].
150 Accordingly, as the only statutory assumption relevant in the present case related to the execution of the two versions of the sublease, it followed that the relevant 'dealings' were those in which Allen Caratti proffered those documents to Granite Hill as documents which had been duly executed by Mammoth [394].
151 The trial judge held that, in all the circumstances, it was reasonable to infer, and his Honour found, that 'by the time Granite Hill's solicitors received the ABC [or Allen Bruce Caratti] version of the sublease from Mammoth, the officers of Granite Hill, relevantly Mr and Ms Bott, suspected that the document may not have been signed in accordance with s 127(1) of the Corporations Act because by then they must have suspected that Mr Allen Caratti may not have been a director of Mammoth' [396]. His Honour added that this finding was sufficient to prevent Granite Hill from relying on an assumption that the ABC or Allen Bruce Caratti version of the sublease was properly executed in relation to its dealings with Allen Caratti in respect of that sublease, whether or not Mr and Ms Bott by then suspected that Maddeleine Caratti had not signed the document (as they may well have) [396].
152 His Honour then directed his attention to what he described as the 'first critical question' which had to be addressed in relation to this aspect of the case. The question was 'whether Granite Hill is entitled to rely upon a statutory assumption to the effect that Mammoth had duly executed the GH [or Granite Hill] version of the … sublease in that it had been signed by two directors of Mammoth, notwithstanding that a search of the records held at ASIC and made available to the public with respect to Mammoth would have shown that Mr Allen Caratti was not then a director, as in fact he was not' [397]. His Honour elaborated:
In other words, is the presumption of due execution to which reference is made in s 129(5) only applicable if the document appears to have been signed by two persons who are in fact directors of the company, or who can be assumed to be directors of the company pursuant to s 129(2) because they appear as such from information provided by the company which is available to the public from ASIC (as the Navarac parties submit), or is it sufficient that the document appears to be signed by two persons who purport to have signed in their capacities as directors of the company (as Granite Hill submits). Alternatively, there may be an intermediate position in which the statutory assumption applies if the document appears to have been duly executed because the names of the persons purporting to have signed are indecipherable, and therefore may correspond to the persons who are directors of the company or who appear from information provided by the company available to the public from ASIC to be a director of the company, but the statutory assumption does not apply if it is clear from the face of the document that it has been signed by a person who is not a director of the company nor a person who appears from the information provided by the company available to the public from ASIC to be a director of the company [397].
153 The trial judge said he had not found this 'first critical question' to be 'an easy issue to resolve' [398].
154 His Honour referred to numerous cases including the decision of Hodgson CJ in Eq in Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068. Hodgson CJ in Eq concluded in that case '[w]ith some hesitation' that the affixation of signatures apparently as office holders of the company was, of itself, sufficient to create the appearance that the document had been executed in accordance with s 127 of the Corporations Act, with the result that the assumption in s 129(6) would apply unless the person dealing with the company knew or suspected that the assumption was incorrect [78]. Hodgson CJ in Eq referred to the public policy issues arising from this conclusion as follows:
It might be said that all this makes it too easy for persons dealing with companies to establish the liability of the company under a sealed document. However, if such a person is dealing with persons associated with a company who execute documents honestly but mistakenly on behalf of the company, I do not see that the company should benefit from discrepancies with its published documents; while if, as in this case, the person is dealing with persons associated with the company who are apparently prepared to be fraudulent and to forge signatures, it gives little more protection to a company to require that a forger state a name on the document which is the correct name of a director or secretary shown in information given through ASIC.
In fact, some protection to the company is given by the requirement that the person must be engaged in dealings with the company in the first place; which in my opinion means that there must be dealings (in the sense of negotiations or other steps in relation to a contemplated transaction) with someone on behalf of the company which are dealings authorised by the company, and the document in respect of which the assumptions may be made must be a document which is 'in relation to' those authorised dealings (and I take this to extend to a document arising out of authorised negotiations or other steps). I note that in Story at 733, Gleeson CJ suggested that the concept of having dealings with a company must embrace purported dealings, because if the provisions only applied where the person representing the company had actual authority, they would be largely unnecessary. I take this as meaning that it is not necessary that the person representing the company have authority from the company to commit the company to the relevant transactions or execute the relevant documents; but in my opinion, it is necessary that the person have authority to undertake some negotiation or other steps, so that the dealings, in relation to which the document is executed, are properly considered to be dealings with the company [81] - [82].
155 The trial judge commented that there was 'force' in Hodgson CJ in Eq's observation to the effect that a construction of the statutory provisions which would not bind the company to a document in which a name other than one of its office holders is written would not appear to provide any greater protection to the company, in practical terms, than the clear words of the provision which bind the company to a document in which the name of one of its office holders is forged, unless the other party knew or suspected the forgery [431].
156 His Honour concluded 'with some of the same hesitation expressed by Hodgson [CJ in Eq]', that he should follow Hodgson CJ in Eq's decision in Soyfer. His Honour explained:
[I]n a scheme of national corporate regulation the decision of Hodgson [CJ in Eq] in Soyfer v Earlmaze Pty Ltd has stood without disapproval for more than a decade. It has been followed in at least one other decision. Because of my view that the countervailing arguments derived from the language of the statutory provisions are finely balanced, I do not consider that Hodgson [CJ in Eq] was plainly wrong and have noted that there is force in the reasoning which he applied. Further, my review of the legislative history of the provisions tends to support his conclusion [435].
157 The trial judge said the consequence of his decision on this issue was that Granite Hill could rely on the assumption that the GH or Granite Hill version of the sublease was duly executed by Mammoth, notwithstanding it was evident that it had been signed by Allen Caratti, who was neither a director of Mammoth nor a person who appeared to be a director of Mammoth from information available to the public from ASIC [436]. His Honour added:
(a) when Granite Hill dealt with Mammoth 'through the agency of Mr Allen Caratti' in October and November 2012 it could not be suggested, and was not in fact suggested, that any person acting on Granite Hill's behalf (namely, Mr and Ms Bott) either knew or suspected that Allen Caratti was not a director of Mammoth;
(b) further, at that time, it could not be suggested, and was not in fact suggested, that Granite Hill or any person acting on its behalf either knew or suspected that Maddeleine Caratti's signature had been forged on the GH or Granite Hill version of the sublease; and
(c) it followed that Granite Hill was entitled to assume that the GH or Granite Hill version of the sublease had been duly executed by Mammoth and, in these proceedings, Mammoth was not entitled to assert, in relation to its dealings with Granite Hill, that the assumption of due execution of that document by Mammoth was incorrect [436].
158 His Honour then directed his attention to the 'next question' which had to be addressed, namely whether any party to the proceedings, other than Mammoth, was prevented from denying Granite Hill's entitlement to make the assumption of due execution [437]. His Honour said this question was 'much easier to resolve' [437]. His Honour had 'no hesitation' in concluding that, in these proceedings, 'the statutory assumption of due execution of the Granite Hill sublease only applies to regulate the legal rights and obligations as between Granite Hill and Mammoth, and has no application to the rights and obligations of other parties to these proceedings' [437].
159 The trial judge gave these reasons for that conclusion:
The first reason for that conclusion is that it follows from the natural and ordinary meaning of the language used in the statutory provisions. It is clear from the terminology used that it has been carefully crafted so as to ensure that, with one exception, the assumption only applies to the legal relationships between the parties to the relevant dealings. Section 128(1) expressly limits the entitlement to make the assumption to the person who dealt with the company. The section does not suggest that any other person is entitled to make the same assumption. Similarly, the prohibition upon the company expressed in s 128(1) is limited to assertions made 'in proceedings in relation to the dealings'. Further, it is clear from s 128(2) that the assumption, and the corresponding prohibition upon denying the assumption, only extend to parties not included within the dealings in the circumstance for which provision is made by that subsection - namely, in dealings with a person who has, or purports to have directly or indirectly acquired title to property from the relevant company. That is not this case.
This approach to the operation and effect of the statutory assumptions relating to the 'indoor management' of companies is supported by authority. In Australian [Capital] Television Pty Ltd v Minister for Transport and Communications ((1989) 86 ALR 119) Gummow J held that the assumptions for which provision was made by s 68A of the Companies (New South Wales) Code did not prevent a third party from making assertions which the company was precluded from making. So, in this case, neither Esperance Cattle, nor Navarac are precluded from contesting the assertions which Mammoth is precluded from making in relation to its dealings with Granite Hill.
Similarly, in Story v Advance Bank Australia Ltd [741], Mahoney JA observed, in the context of proceedings between the company and the person entitled to rely upon the assumption:
'The section, in terms, restricts the right of a company to assert to the contrary the assumption there referred to. The assumptions do not, as such, validate an instrument to which they are directed but, in a practical sense, they prevent the invalidity of it being successfully asserted.'
Further, in ASIC v Hallmark Gold NL ([1999] FCA 360; (1999) 30 ACSR 688), Lee J observed:
'Sections 128 and 129 are provisions to assist persons who deal at arm's length with a company on the assumption that the company has complied with the Law and with the constitution of the company. The provisions do not apply in rem by making valid acts of a company that are invalid.'
This observation provides the answer to Granite Hill's submission that the effect of the assumption was to confer upon it a proprietary right good as against third parties such as Esperance Cattle and Navarac. Contrary to that submission, it is clear from the terminology of the provisions that the assumptions only apply to regulate the legal relations between the parties to the dealings and do not create rights and obligations enforceable against third parties. Section 128(2) is only explicable because otherwise a company could deny the assumptions and assert its title as against anybody who had acquired title from a person entitled to make the statutory assumptions. If, as Granite Hill contends, the entitlement to make the assumptions has the effect of conferring an interest in rem, good as against the world, s 128(2) would be otiose [438] - [442]. (footnotes omitted)
160 As I have mentioned, on 1 March 2013 there was a contest between representatives of Granite Hill and representatives of Esperance Cattle for physical occupation of Young River Station. Granite Hill succeeded in obtaining physical occupation. Esperance Cattle then commenced the proceedings that were tried before the trial judge.
161 Esperance Cattle pleaded the lease agreement executed by Navarac as lessor and Esperance Cattle as lessee in relation to Young River Station. Esperance Cattle also pleaded that Granite Hill's occupation and use of Young River Station was wrongful. In particular, Esperance Cattle denied that Mammoth had executed the GH or Granite Hill version of the sublease and, further, denied that Mammoth had granted a sublease of Young River Station to Granite Hill, as pleaded by Granite Hill or at all.
162 Granite Hill pleaded the head lease from Navarac to Mammoth in relation to Young River Station that was executed in 2002, the deed of extension of the head lease that was executed in February 2008 and the deed of surrender of the head lease, as extended, that was executed on 22 February 2013. Granite Hill also pleaded that the deed of surrender did not deprive its sublease of force and effect. That proposition was not contested by any party at the trial [287].
163 Granite Hill sought declaratory relief to the effect that either Esperance Cattle did not have a leasehold estate in Young River Station or, alternatively, to the effect that any estate or interest which Esperance Cattle had in the property was subject to Granite Hill's estate or interest as sublessee. In addition, Granite Hill claimed damages from Mammoth, either for breach of the sublease or for misleading and deceptive conduct or both. Granite Hill also claimed damages for misleading and deceptive conduct from each of Allen Caratti and Maddeleine Caratti.
164 Navarac, Mammoth and Maddeleine Caratti denied that Mammoth had entered into the sublease alleged by Granite Hill, and asserted that each of the GH or Granite Hill version and the ABC or Allen Bruce Caratti version of the sublease was invalid because Allen Caratti was not a director of Mammoth, Maddeleine Caratti's signature on each document was a forgery and not made by any person with her authority or, alternatively, in the case of the ABC or Allen Bruce Caratti version, if it was signed by her, her signature was obtained by a trick or, in the further alternative, was signed by her in late February 2013. Navarac, Mammoth and Maddeleine Caratti also pleaded the grant of the leasehold interest to Esperance Cattle on 10 December 2012, and denied that Granite Hill was entitled to the declaratory relief which it sought.
165 His Honour noted that the trial was conducted on the basis that 'if Granite Hill succeeded in establishing that Mammoth granted it a sublease prior to 22 February 2013, the sublease remained in force and effect notwithstanding Mammoth's surrender of its leasehold interest on 22 February 2013' [287]. His Honour added that the common cause on that point 'did not apply if the only basis upon which Granite Hill established the grant of the sublease was by operation of assumptions which it was entitled to make pursuant to the Corporations Act' [287]. In that circumstance, the parties differed as to the effect of the statutory assumptions upon parties other than Granite Hill and Mammoth [287].
166 The trial judge addressed the issue of priority as between the competing proprietary claims of Granite Hill and Esperance Cattle, if both succeeded in establishing their claimed interests, as follows:
Of course different legal principles govern the priorities given to the competing proprietary claims of Granite Hill and Esperance Cattle if both succeed in establishing their claimed interests. In the application of those principles, the relevant date is 10 December 2012, rather than 22 February 2013, because that is the date upon which Esperance Cattle acquired any proprietary interest in the property. However, in the result, nothing turns on the difference between these dates for two reasons. First, neither Granite Hill nor Mr Allen Caratti assert that the Granite Hill sublease was created at some time between 10 December 2012 And 22 February 2013. To the contrary, each asserts that the Granite Hill sublease was created no later than early November 2012. Second, there is no doubt that the GH [or Granite Hill] version of the Granite Hill sublease was created not later than 16 November 2012, and I have found that the ABC [or Allen Bruce Caratti] version of the Granite Hill sublease was created after 22 February 2013.
In its pleading and in the course of submissions Granite Hill places emphasis upon the fact that its sublease commences as and from 28 February 2013, whereas Esperance Cattle's lease does not commence until 1 March 2013. However, as all parties accept the principle enunciated in PW & Co v Milton Gate Investments Ltd [[2004] Ch 142], nothing turns on this distinction. That is because all parties accepted that if Granite Hill succeeds in establishing that it acquired an interest in the land as sublessee by a sublease executed in early November 2012, its interest as sublessee remains valid and enforceable notwithstanding the later grant of a leasehold interest to Esperance Cattle on 10 December 2012, or the surrender of Mammoth's head lease on 22 February 2012. It was also common ground that subject to whether Mr Aaron Caratti was a director, which I have found, if in fact Mammoth granted a sublease to Granite Hill after 22 February 2013 (and I have found that the ABC [or Allen Bruce Caratti] version of the Granite Hill sublease was created after that date), it does not confer a proprietary interest upon Granite Hill because by that time, Mammoth had no leasehold interest to convey, although Mammoth would be liable to Granite Hill for breach of the contractual obligation to convey an interest as sublessee. It follows that the fact that the term of Granite Hill's sublease commences one day earlier than Esperance Cattle's lease is irrelevant to the competing priorities of the two interests [288] - [289]. (emphasis added)
167 His Honour summarised his conclusion in relation to issue (7) as follows:
[M]y conclusion that Granite Hill is entitled to assume that Mammoth duly executed the sublease in its favour entitles Granite Hill to rely upon the contractual rights and obligations created by the sublease in its claim against Mammoth in these proceedings, and Mammoth is prevented from denying the execution of the sublease in its opposition to those claims. However, Granite Hill's entitlement to rely upon the statutory assumption as against Mammoth has no effect upon Esperance Cattle's claim to a leasehold interest arising from its dealings with Navarac. Esperance Cattle is entitled to assert that Mammoth never executed a sublease in favour of Granite Hill in [Esperance Cattle's] claim against Granite Hill, and Navarac and Ms Maddeleine Caratti are entitled to make the same assertion in defence of Granite Hill's claims against them. Further, Mammoth is not prevented from asserting the due execution of the Granite Hill sublease in its claims against Mr Allen Caratti [sic] [443]. (emphasis added)