All Conveyor Products Pty Ltd v Mitrevski

[2021] VCC 696

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-20-04630

ALL CONVEYOR PRODUCTS PTY LTD (IN LIQUIDATION)
(ACN 106 890 831)

Plaintiff

v

NATALIE MITREVSKI

AND

KRYSTAL LEE TOSEVSKI

First Defendant

Second Defendant

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	24,25 and 26 May 2021
DATE OF JUDGMENT:	3 June 2021
CASE MAY BE CITED AS:	All Conveyor Products Pty Ltd v Mitrevski & Anor
MEDIUM NEUTRAL CITATION:	[2021] VCC 696

REASONS FOR JUDGMENT
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Subject:DEBT- UNJUST ENRICHMENT

Catchwords:       Debt – Unjust enrichment- Monies had and received

Legislation cited:              Corporations Act 2001 (Cth)

Cases cited:Benedetti v Sawiris [2014] AC 938; Black v S.Freedman & Co (1910) 12 CLR 105; Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Shaw Building Group Pty Ltd v Narayan (No 2) [2015] FCA 585

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	A V M Carruthers	Frenkel Partners
For the First Defendant	Self-represented

HIS HONOUR:

Issue

1The principal issue in this case is whether the plaintiff (“ACP”) is entitled to recover from the first defendant (“Mitrevski”) monies which Mitrevski took from ACP and initially paid into her own bank account, before transferring it to the second defendant (“Tosevski”) and ultimately spending it.

Background

2ACP was incorporated on 31 October 2003.

3Northern Belting Services Pty Ltd (in Liquidation) (“NBS”) was incorporated on 17 January 2000.

4NBS and ACP were related companies.  The shareholders and directors of both companies were Luigi Ambrosini and Dennis Gruevski. I infer from the evidence at trial that the work performed by ACP comprised, or at least included, the installation of conveyor belts.

5Mitrevski commenced her employment with NBS in February 2005.  There was some dispute about the detail of her employment.  Mitrevski said that she worked at first in a sales role at NBS and then assumed an administrative role in the company.  She said that she worked on tenders, wrote up job books for invoicing, answered phones, opened mail, paid and received bills, and attended to the payroll.  While Mitrevski worked for NBS, her colleague, Helen Gruevski, worked for ACP.  The administrative work for both companies was performed in the same building.

6Mitrevski prepared the payroll for both ACP and NBS.  Mitrevski worked on the time sheets, entered the details in the Quicken accounting system which both companies used, and printed off the pay slips for the employees.

7Mitrevski acknowledged that she was never employed by ACP. However, she said that on two or three occasions, if Helen were overseas, Mitrevski had to enter an invoice or pay a bill for ACP.  Other than these exceptional circumstances and the payroll work, Mitrevski said that she had nothing to do with ACP. Thus, much of Mitrevski’s work involved processing payments for NBS and ensuring that creditors and employees received the correct payments. Mitrevski said that the directors trusted her to produce accurate figures and to approach them when she had a query. She said that the directors generally did not check the payroll transactions because they were too busy with work.

8On 17 December 2014, Mitrevski transferred $80,000 from ACP’s bank account to her personal bank account.

9On 19 December 2014, Mitrevski transferred an additional $80,000 from ACP’s bank account to her personal bank account.

10Mitrevski made these transfers without the express consent or knowledge of ACP or its directors.

11Mitrevski subsequently transferred the monies taken from ACP into the bank account of Tosevski, her daughter.  Mitrevski said that the purpose of the transfer to her daughter was to hold onto the money as security, but “pushed away”[1] from her own bank accounts.

[1]     See Court Book, page 305-6.

12On 23 December 2014, the directors called Mitrevski into a meeting at work.  They asked her about the ACP money which was missing.  Mitrevski said that she made clear to the directors that she was only holding the money, in effect, as security.  She said that she would willingly transfer it back to ACP when the directors met their personal obligations to her and paid her what they owed as a result of borrowing money from her.  Mitrevski became upset at the meeting, and at one point, gathered her belongings and left the building.  She did not return to work.  NBS paid Mitrevski her final salary and entitlements on 7 January 2015.

13Ambrosini and Gruevski put ACP and NBS into voluntary administration on 7 July 2015. Con Kokkinos and Ivan Glavas of Worrells Solvency & Forensic Accountants were appointed joint and several liquidators.  Glavas subsequently resigned in May 2018.  Kokkinos is now the sole liquidator.

14In 2019, the liquidator conducted public examinations under section 596B of the Corporations Act 2001 (Cth) (“the Act”). Mitrevski was one of the persons examined. She signed a written record of her public examination. Pursuant to section 597(14) of the Act, the liquidator relied upon that signed, written record of the Mitrevski examination as evidence in the current proceeding.

15Kokkinos commenced this proceeding in June 2020. The liquidator alleged that Mitrevski was liable to repay to him the monies taken from ACP on the basis of:

(a)   monies had and received;

(b)   unjust enrichment;

(c)   there being a debt due and immediately payable.

16The liquidator has settled his claim against Tosevski. The liquidator has reduced his claim against Mitrevski by the sum of $5,000.

Admissions

17As part of his case, the liquidator drew attention to various admissions which Mitrevski had made.  These were located in the Amended Defence filed 30 October 2020 and in Mitrevski’s response to the plaintiff’s Notice to Admit Facts dated 19 November 2020.

18In her Amended Defence, Mitrevski admitted that:

(a)   Mitrevski made the two transfers of $80,000 from ACP’s bank account to a bank account in her own name;

(b)   the liquidator and his lawyers made demands upon Mitrevski to repay the funds which she had transferred from the ACP account;

(c)   Mitrevski and Tosevski, notwithstanding the demands made upon them, failed, neglected and refused to repay ACP the sum of $160,000 or any part thereof; and

(d)   Tosevski provided no consideration for the transfer of $180,000 into a bank account in her name.  ACP received no benefit from that transfer.

19Mitrevski admitted the following facts in the Notice to Admit:

(a)   Mitrevski transferred the sum of $80,000 from the plaintiff’s bank account into Mitrevski’s bank account on 17 December 2014.

(b)   Mitrevski made that transfer using the token owned by, or registered to, a director of ACP.

(c)   Mitrevski described the transfer of the initial $80,000 in the bank transfer as “loan payback to Nat for NBS”;

(d)   Mitrevski transferred the second amount of $80,000 from ACP’s bank account into her own bank account on 19 December 2014;

(e)   Mitrevski made the second transfer of funds using a token owned by, or registered to, a director of ACP;

(f)    Mitrevski described the second transfer of funds in the bank transfer as “loan payback to Nat Comm Bank”;

(g)   Mitrevski transferred the sum of $180,000 from her bank account to Tosevski’s bank account on 24 December 2014;

(h)   At the time of the transfer of each of the $80,000 amounts, Mitrevski was not an employee of ACP;

(i)    Mitrevski has not repaid the initial amount of $80,000 to ACP or the liquidator;

(j)    Mitrevski has not repaid the second amount of $80,000 to ACP or the liquidator; and

(k)   Mitrevski has not made any payment to ACP or its liquidator in relation to either of the two transfers of $80,000 made from ACP’s bank account.

Loans to directors and/or ACP

20In her examination by the liquidator in 2019, and again in court before me, Mitrevski said that she had lent funds to the directors and that they were indebted to her. During the trial, Mitrevski sought to argue that she had paid about $48,000 to Victorian Customs Services Pty Ltd on behalf of ACP in relation to imported goods which were subject to duty.

21I reject this claim for a couple of reasons.

22First, it was not pleaded and no notice of such claim was given to the liquidator. Although she was in contact with the self-represented litigant’s coordinator in the County Court and the proceeding was commenced in June 2020, Mitrevski had not raised the matter earlier. It was only in May that Mitrevski asked ACP to consent to her filing a counterclaim. Given the proximity of the trial, the likely delay and the wasted costs which would result, ACP did not consent. Mitrevski made no application to the Court to amend or to file a counterclaim. As a result, there was no counterclaim or any set-off which Mitrevski could employ to reduce her liability.

23Secondly, it was inconsistent with other evidence given my Mitrevski. In the liquidator’s examination, Mitrevski said that she provided money to Victorian Customs for the directors of NBS. Given the circumstances of the examination, I prefer Mitrevski’s earlier evidence that any payment was either for NBS or a loan to its directors rather than a payment for or on behalf of ACP.

Credit

24Only three witnesses gave evidence at trial. Luigi Ambrosini was a director and shareholder in ACP and NBS. He has been a conveyor belt installer for approximately 50 years, working both as an employee and company director. He ran NBS for about 19 years and ACP for about 4-5 years. Mr Ambrosini did not recall many events in detail. He intimated that life had been hell as a result of the liquidation of the two companies and said that he had wiped a lot of material from his memory.

25The gist of Ambrosini’s evidence, which I accept, was that:

·he and the other director, Gruevski, spent most of their time on the road working at conveyor belt installations;

·he and Gruevski left relevant banking details, including passwords and tokens, with Mitrevski and Helen Gruevski so that they could attend to the payment of creditors and other banking matters on behalf of NBS and ACP;

·Mitrevski had no authority or permission to remove $160,000 from ACP. Other than wages, no staff member was authorised to pay money to themselves; and

·Mitrevski did not lend him any money and he did not recall her lending money to NBS or ACP.

26The liquidator, Con Kokkinos, gave evidence about some formal matters regarding the liquidation. He said that the directors had told him about a misappropriation of funds from ACP which had not assisted the company’s financial situation. He confirmed that Mitrevski was an employee of NBS and said that the books of account which he had examined indicated that she was not owed any money for outstanding employee entitlements. He noted that the police had investigated the taking of the funds but were not pursuing criminal charges against Mitrevski. I find Kokkinos to be a credible witness and accept his evidence.

27Generally, Mitrevski was not a credible or reliable witness. Parts of her evidence were inconsistent with the testimony she gave at the liquidator’s examination. Other answers were vague, evasive or reflected a questionable attitude to truth when she resiled from a confident or assertive answer to a rather more equivocal one. Mitrevski was the kind of witness who did not inspire confidence. I would be reluctant to accept her evidence on contentious matters without corroboration by another witness or supporting documentation.

Consideration

28In my opinion, ACP is entitled to recover the $160,000 which Mitrevski took from its bank account. I am satisfied that Mitrevski took the money without the knowledge or consent of ACP or its directors. At the time Mitrevski appropriated the funds, she was neither an employee nor a creditor of ACP. She had no relevant relationship with ACP which might justify the taking of ACP’s funds. There was no evidence to suggest that ACP derived any benefit from Mitrevski’s actions. On the contrary, the evidence indicated that Mitrevski took the money from ACP’s account without any lawful justification and without giving any consideration. Even assuming for the sake of argument that the directors of ACP and NBS owed Mitrevski a substantial sum, the existence of a debt owing by the directors did not entitle Mitrevski to exercise self-help in respect of funds belonging to another legal person, namely ACP.

29I consider it clear that a party in the position of ACP can sue Mitrevski for money had and received in relation to the monies unlawfully taken. As put by Foster J in Shaw Building Group Pty Ltd v Narayan (No 2)[2] where the defendant in effect stole nearly $1 million from the applicant employer over a period of several years:

“[36]  An action for money had and received is a common law in personam restitutionary remedy. It is not a proprietary remedy. In order to succeed in an action for money had and received, the plaintiff must establish that the money which the defendant obtained as a result of the commission of the relevant wrong was “subtracted“ from the plaintiff.

[2] [2015] FCA 585 at [36-37].

[37] Money that has been stolen may be recovered from the thief in an action for money had and received. The claim against the thief is an independent restitutionary claim based upon unjust enrichment by subtraction because the defendant’s receipt of an obviously unjust enrichment has resulted from the defendant’s deception of the plaintiff or commission of a wrong against the plaintiff. In Lipkin Gorman (A Firm) v Karpnale Ltd[1991] 2 AC 548 (Lipkin Gorman) at 559E–G, Lord Templeman said:

Conversion does not lie for money, taken and received as currency: see Orton v Butler(1822) 5 B. & Aid. 652 and Foster v Green (1862) 7 H. & N. 881. But the law imposes an obligation on the recipient of stolen money to pay an equivalent sum to the victim if the recipient has been “unjustly enriched“ at the expense of the true owner. In Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd[1943] A.C. 32, 61, Lord Wright said:

It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep.

The conduct of the defendant imposes a primary restitutionary obligation upon him or her to repay the money which he or she has stolen”

30An alternative analysis which was referred to in final submissions was that adopted by the High Court in Black v S.Freedman & Co.[3] There, a husband stole money from his employer and transferred much of it into a bank account in the name of his wife. The Court accepted that the stolen money was impressed with a trust for so long as it was held by the thief. If the thief paid the money to another person, it could be followed into the hands of the other person unless the recipient of the money established that he or she received the money bona fide for valuable for consideration without notice.

[3] (1910) 12 CLR 105.

31ACP referred to a number of authorities dealing with matters of quasi-contract, monies had and received and restitution. Halsbury’s Laws of Australia in its discussion of the topic said that:

“Until very recently it was thought that the common law governing civil liability comprised tort and contract, with quasi-contract as an appendage to the latter. Quasi-contract has now been displaced by restitution. Unjust enrichment provides the principal theoretical basis for restitution awards under the modern law.”[4]

[4]        Paragraph [370-1].

32Unjust enrichment is not a definitive legal principle according to its own terms but a unifying legal concept which explains why the law recognises in a variety of cases an obligation upon a defendant to make just restitution for a benefit derived at the expense of the plaintiff. Unjust enrichment is not an abstract moral principle which allows courts to give effect to idiosyncratic notions of what might be fair according to an unregulated judicial discretion. Nor is it a legal principle or specific cause of action which has sufficient legal standing to provide a proper basis for directly applying to particular cases. In Pavey & Matthews Pty Ltd v Paul,[5] Deane J noted that the recognition of the unifying concept of unjust enrichment assists in “the determination by the ordinary processes of legal reasoning of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case”.[6]

[5] (1987) 162 CLR 221.

[6] Ibid at 257.

33To the extent that the concept of unjust enrichment is utilised in the present context, the relevant issues to consider include:[7]

[7]See the judgment of Lord Clarke SCJ (with whom Lord Kerr and Lord Wilson agreed) in Benedetti v Sawiris [2014] AC 938 at [10]. But also see the discussion in Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560 at [208-215].

(a)has the defendant been enriched?

(b)was the enrichment at the plaintiff’s expense?

(c)wad the enrichment unjust?

(d)are there any defences available to the defendant?

34In this case, Mitrevski has been enriched at the expense of ACP. The enrichment was unjust insofar as there was no basis upon which Mitrevski could justify taking ACP’s money where she provided no consideration and was not owed any money by ACP. Mitrevski has no defence available to her – as she implicitly acknowledged by saying that she was happy to return the money once the directors discharged their debt to her.

Conclusion

35Accordingly, whether one relies upon the doctrine of money had and received, the imposition of a trust or unjust enrichment, the result is the same and ACP is entitled to recover the money which Mitrevski appropriated, being $160,000 less $5,000 already received.

36I direct the parties to confer about the form of final order and costs in an effort to agree upon orders giving effect to this judgment. If they cannot agree, then by 4:00pm on 9 June 2021, each party is to file with my chambers and serve a written submission setting out the orders sought and the reasons therefor. The submissions are not to exceed five A4 pages, a minimum 12 point typeface, and 40mm margins on either side of the page. By 4:00pm on 11 June 2021, each party may file a reply submission limited to no more than three A4 pages.