Amendola & Amendola v Olma No. DCCIV-01-730

Domenico Amendola and Nicolina Amendola v Ida Olma
[2003] SADC 171
Judge Clayton
Civil
Background

The plaintiffs are a husband and wife. The defendant is a woman over 81 years of age. The parties’ relationship was such that the plaintiffs called the defendant “Zia”, which is Italian for “Aunty”. The plaintiffs say that they adopted that term as a consequence of their respect for the defendant.
The plaintiffs had worked in labouring positions. They do not have the benefit of an extensive education. Neither of the plaintiffs has worked since the early 1980’s.
In late 1993 Mr Domenico Amendola settled a claim for worker’s compensation. He had claimed in respect of injury to his lumbar spine consequent conversion neurosis and sympathetic dystrophy of the legs. He received an award of $150,000. In some way which was never explained, Mrs Amendola assumed an interest in the settlement monies. The defendant assisted the plaintiffs with the investment of the settlement monies. This action is concerned with the recovery of the sum of $75,000 which the plaintiffs had given to the defendant to look after on their behalf. The obligation to repay the money was accepted by the defendant. The case raised questions of :
§ Whether the defendant had an obligation to pay interest on the sum of $75,000;
§ What amounts, if any, should be credited in favour of the defendant against her obligation to repay the sum of $75,000;
§ Whether there was an accord and satisfaction in about 1995;
§ Whether the plaintiffs’ claim is barred by section 32 of the Limitation of Actions Act 1936;
§ Whether the defendant is entitled to the benefit of the defence of laches.
The plaintiffs allege that the defendant conducted herself as if, and told the plaintiffs that she was, a knowledgeable, well-travelled person with experience in business matters. It was the plaintiffs’ case that the defendant had made representations to the plaintiffs for the purpose of gaining their confidence. The allegation was that the defendant had represented that her business involved a lot of travelling, that she had a lot of business experience and a lot of knowledge about money, that she had friends who were bank managers, that she knew lawyers, judges and bank managers, that she had met Mussolini, and had married a Polish Colonel in Italy. Their case was that she sounded like a very important and knowledgeable person. It was for that reason that they placed their trust in the defendant. They treated her as part of their family.
Whether the alleged representations were made or not is inconsequential. The reality is that the parties became close friends, stayed at each others’ homes and got to know each other well. They were very familiar with each other and it is unlikely that any reliance was placed upon the alleged representations.
The Pleadings - The Statement of Claim
It is alleged that in 1983 and early 1984 the defendant said she could manage investments on the plaintiffs’ behalf and achieve a return of 10 to 11 percent. In early 1984, at the defendant’s suggestion, the plaintiffs gave to the defendant the sum of $75,000 to hold on trust and to invest on their behalf for a period of 10 years. It is alleged the defendant told the plaintiffs that such investment would earn interest at 10 to 11 percent per annum.
A side issue relates to a separate unsecured advance of $70,000 which the plaintiffs made out of the worker’s compensation settlement to the defendant’s son, Thomas Olma. That advance has been re-paid but it is relevant to the present claim insofar as it forms part of the background and it is said by the plaintiffs that some of the amounts in respect of which the defendant now claims a credit, were withdrawn from the plaintiff’s money in a bank account established to hold the monthly repayments made to the plaintiffs by Thomas Olma.
The plaintiffs allege that the defendant has refused and failed to provide details of the investment of the sum of $75,000 despite requests. They have requested the defendant to return the sum of $75,000 together with interest. On 13 November 1995 and 12 April 1996, the defendant made separate payments to the plaintiffs of $30,000. Those payments are said to give rise to an accord and satisfaction.
The plaintiffs allege that the defendant’s conduct was fraudulent within the meaning and intent of section 32 of the Limitation of Actions Act. There was no application by the plaintiffs for an extension of time.
The Defence and Counterclaim
The defence is extensive. In addition, there is a counterclaim.
The defendant denies that she conducted herself or described herself as having experience or expertise in investment or money management. She says that in about August 1985 the plaintiffs gave her a cheque for $75,000 which they asked her to deposit in an at call account with a view to sending money to Italy at the plaintiffs’ request and for other expenditure to be incurred by the defendant at the plaintiffs’ request. That plea gives rise to several fundamental disputes. First, the plaintiffs assert that they gave the defendant the sum of $75,000 in early 1984, not August 1985. Secondly, the plaintiffs’ dispute that the $75,000 was to be sent to Italy. Thirdly, they do not agree that the money was to be placed in an at call account.
The defendant alleges that the cheque for $75,000 was deposited into her pass book account with the State Bank of New South Wales. The defendant says that the parties agreed that the plaintiffs would not receive interest on the sum of $75,000. That plea gives rise to another fundamental dispute.
The defence alleges that the plaintiffs, for their own reasons, wished to hide money. That theme was pursued at the trial. There was a vague suggestion that the worker’s compensation award may have affected the plaintiffs’ entitlement to a pension, but that suggestion never came to anything.
The defendant alleges that the plaintiffs requested her to use the monies to make payments by bank draft to a relative, Michele Beatrice, in Italy. She says that the plaintiffs made no request for details of the $75,000 until 1995.
The defendant says that in about 1995 the plaintiffs and the defendant orally agreed in Adelaide that all claims of the plaintiffs in respect of the $75,000 would be satisfied by the defendant causing two cheques, each of $30,000, to be paid to the plaintiffs and that the plaintiffs would thereafter account to the defendant to the extent that the sum of $60,000 was more than the defendant owed to the plaintiffs. Two cheques for $30,000 each were paid to the plaintiffs on 13 November 1995 and 12 April 1996.
The defendant asserts that the plaintiffs did not make any request for the return of the sum of $75,000 until she received a letter dated 9 April 2000.
The defendant denies that she conducted herself fraudulently within the meaning of section 32 of the Limitation of Actions Act 1936 and claims credits totalling $73,383. The credits comprise a total of $39,737 which was said to be the cost of purchasing nine bank drafts of Italian currency which the defendant sent to Italy on the plaintiffs’ behalf, seven payments made to the plaintiffs between 12 December 1985 and 6 October 1989, totalling $30,100, and an amount of $3,546 which the defendant said comprised of two separate payments of $2,000 and $1,546 which the defendant incorrectly deposited into the plaintiffs’ bank account. The defendant alleged that the payments to the plaintiffs, totalling $30,100, came from her own monies and not from the account into which her son made repayments in respect of his $70,000 loan.
The defence raises an accord and satisfaction, the Limitation of Actions Act, laches and a set-off.
There is a counterclaim. The defendant said that she had paid a total of $133,383 to the plaintiffs which was $58,383 more than the $75,000 which she received.
Reply and Defence to Counterclaim
In their Reply and Defence to the Amended Counterclaim, the plaintiffs repeat the allegation that they gave the defendant the cheque for $75,000 either in January or February 1984. They allege that Mr Amendola and the defendant went to a branch of the National Australia Bank in Wright Street, Adelaide, and requested a bank cheque in the sum of $75,000 made payable to Ida Olma, which was handed to the defendant. The plaintiffs allege that they never saw that cheque again.
The plaintiffs allege that in 1991 they saw, for the first time, a National Australia Bank term deposit record dated 6 February 1984 in the sum of $75,000 in the name of the plaintiffs. They plead that they did not make that investment themselves and did not know how the defendant was able to make such a deposit in their name, apart from the fact that the defendant told them that she had “friends that were bank managers”.
The plaintiffs deny that they wished to hide monies and plead that monies were repaid by the defendant into a bank account opened by her in the State Bank of New South Wales in the names of the plaintiffs, being account number 110850-81 (later account number 110850-82) (“the plaintiffs’ State Bank Account”). I mention in passing that in the main it was not the defendant who made payments into that account, but her son.
The plaintiffs allege that the bank drafts sent to Michele Beatrice in Italy came from other monies totalling about $23,000 which were given by the plaintiffs to the defendant. They allege those monies originated from the plaintiffs’ savings in a Commonwealth Bank account and from cash they kept at home. The plaintiffs allege $23,000 was given to the defendant because the defendant insisted that she would look after the transfers of money they wished to make to Italy. They plead that the sum of $23,000 was additional to and had nothing to do with the $75,000 which is the subject of these proceedings.
The plaintiffs assert that in 1989 they had many heated discussions with the defendant about the plaintiffs’ State Bank Account, 110850-81/82 and insisted on being given records and particulars of the investments of the sum of $75,000. They claim that when the defendant came to Adelaide in 1989, she brought a sheet of paper with handwritten numbers and calculations which they could not understand. They did notice a reference to $25,000 of the $75,000, but there was no reference to the remaining $50,000. There was a heated discussion as a result of which the defendant wrote the number of a bank account in which she told the plaintiffs the $50,000 had been invested. The plaintiffs requested bank statements but the defendant never produced any, saying they had to wait for the 10 year period to run its course.
The plaintiffs pleaded that in January 1995 the defendant visited them in Adelaide. The 10 year period for the investment of the $75,000 had expired and the plaintiffs enquired about the repayment to them of the $75,000 plus interest. They allege that the defendant replied that she had invested $50,000 at 12 per cent separately from the remaining $25,000. The defendant made a calculation and told the plaintiffs that they should expect from her a total of about $135,000 for the $50,000 (inclusive of interest) and a further total of $70,000 for the $25,000 (inclusive of interest). It is alleged the defendant told the plaintiffs not to worry as the monies were safely invested with banks, but she would not say which banks.
The plaintiffs allege that the defendant proposed four payments of $30,000 (not two as the defendant claims) and that the defendant said that after she had paid $120,000, she would discuss the balance with the plaintiffs. At that time the defendant told the plaintiffs that as far as the $25,000 investment was concerned, the defendant wanted to keep that for a further five years in case there was a liability to pay tax.
The Evidence
Both plaintiffs gave evidence. The defendant also gave evidence, as did her son, Mr Thomas Olma.
The parties all commenced giving evidence in the Italian language with the aid of an interpreter but eventually reverted to the English language. The oral evidence on both sides was vague. The evidence of the parties differed on almost every significant issue. None of them was a satisfactory witness. Preparing a catalogue of all the differences would be a formidable task.
The plaintiffs tendered correspondence that had passed between them and the defendant and them and the defendant’s son. The documents were written by Mr Amendola in the Italian language. The documents show that in some instances Mr Amendola misapprehended the true nature of transactions that had occurred and in other instances he was confused.
In general, the entire body of evidence was confused and riddled with inconsistencies. One thing which is clear is that the evidence before the court does not clearly explain any of the relevant transactions.
The Defendant’s Change of Name
The defendant changed her surname from Olma to Isola. She opened bank accounts in the name of Zusanna Isola. The plaintiffs inferred that she had changed her name to hide their money. Mr Amendola said he only discovered that Mrs Olma had used the other name about two years ago when he went to his lawyer. That was not true. There is evidence that he knew that Mrs Olma had used a different name many years earlier. I do not regard the defendant’s change of name as a matter of any consequence. However, some of the monies which the defendant held on the plaintiffs’ behalf, were invested in an account with the Bankstown City Credit Union Ltd in accounts in the name of Zusanna Isola and the change of name is relevant for the purpose of tracing the monies.
The Loan of $70,000 to Mr Thomas Olma
The plaintiffs claimed that Mrs Olma represented that her son, Tom, was a medical specialist who lived in Sydney. The defendant’s son was not a medical practitioner, he was a microbiologist. However, the plaintiffs may have believed that the son was a medical practitioner, because they did address correspondence to “Dott. Olma”: “Dott.” being the Italian abbreviation for “Doctor”.
The plaintiffs loaned $70,000 to Mr Thomas Olma. There is a dispute about how the loan came about. The loan was made in March 1984. The plaintiffs’ case is that the defendant suggested that the plaintiffs should invest $70,000 by lending it to her son.
Mr Olma, whose evidence on this topic I accept, says that the loan of $70,000 was totally unsolicited. His mother handed him a cheque for $70,000. He was concerned and telephoned Mr Amendola. Mr Olma said the cheque came “totally out of the blue”. He was told that he could have the money for 10 years and just had to give the money back. He felt that he could not accept the offer and that it was too good to be true, but his mother tried to persuade him to take the cheque. He spoke on the phone with Mr Amendola who said that “he wanted to get rid of the money and that he couldn’t trust anybody down in Adelaide to have the money”. Mr Olma said that Mr Amendola pleaded with him to help him because Mr Amendola did not want people in Adelaide to know his business and that he had got money from a compensation payout. Mr Olma said there was no question of interest, Mr Amendola just wanted the money back. Mr Olma was uneasy about the matter and had an agreement prepared by a solicitor, his brother-in-law. It was a formal written agreement which provided for an advance of $70,000 to be repaid by monthly instalments of $750 over a period of 10 years, but restricted the repayments to $90,000. There was, therefore, a fixed interest component of $20,000. An unsigned copy of the agreement was produced in opening by counsel for the plaintiffs who said that the document was contemporaneous evidence of the agreement and there was no dispute about it.
Later in the trial, the defendant produced a signed copy of the agreement. The defendant’s copy of the document purported to have been signed by each of Mr Amendola, Mr T.R. Olma and his wife, Mrs S.L. Olma. The witness to each of the three signatures was Mrs Olma. She gave evidence that the agreement had been signed by Mr Amendola in her presence. Ironically, Mr Amendola disputed that he had ever signed the agreement. This basic factual dispute is typical of almost every dealing between the parties. In the agreement, the plaintiff’s name is spelt “Amandola” and the signature written on the document is spelt the same way. In fact, Mr Amendola spells his name with an “e” not an “a”. Nothing of consequence turned on the difference.
The plaintiffs accept that Mr T.R. Olma and his wife have satisfied their obligations by paying all of the required monthly payments of $750. The loan of $70,000 to them forms no part of the plaintiffs’ claim. However, the loan of $70,000 is relevant to the case against Mrs Olma because it forms part of the background against which the sum of $75,000 was entrusted to the defendant. Also, it is suggested that some of the payments for which Mrs Olma claims a credit against the $75,000 which was paid to her, were taken from the plaintiffs’ State Bank Account. That account was opened in the name of “Mr and Mrs D. Amendola c/-Post Office Box 83, Punchbowl, New South Wales, 2196”. Many, but not all, of the bank statements relating to the account were tendered in evidence. The statements show regular monthly payments of $750 into the account. The statements also record withdrawals from the account and two other payments of $2,000 and $1,546 respectively into the account for which the defendant claims a credit. The credit claimed for the other two payments was the subject of a dispute which is discussed below.
The plaintiffs did not have direct access to the plaintiffs’ State Bank Account. When they needed money, the defendant would withdraw money from the plaintiffs’ State Bank Account in Sydney and bring it to Adelaide. In later years, Mrs Amendola travelled to Sydney and attended at the bank with Mrs Olma to withdraw money from the account. While the named account holders were Mr and Mrs D. Amendola, the address shown was the defendant’s address. The evidence was that the account was opened and controlled by the defendant.
In October 1989 the balance of State Bank Super Rate Account or Flexible Deposit Account number 110850-81, with the State Bank of New South Wales, was transferred to what was called a State Maximiser Account, number 110850-82. The plaintiffs say they have no knowledge of the circumstances in which that change was made. They were given no explanation by the defendant. Again, the address for the account was that of the defendant. The statements from the account were sent to Mrs Olma who passed them on to the plaintiffs. Mrs Olma was able to take money from the account. It can be inferred that she was a signatory.
One of the disputes which arises for determination is whether payments in respect of which the defendant claims a credit, had been made with money taken by the defendant from the plaintiffs’ State Bank Account. The payments are considered separately below.
The Arrangement with Respect to $75,000
The defendant admits that the plaintiffs gave her a cheque for $75,000 and accepts that she was under an obligation to account to the plaintiffs for the sum of $75,000.
The plaintiffs say that they gave the defendant the cheque in early 1984. The defendant says that the plaintiffs gave her the cheque in August 1985. Two National Australia Bank documents throw light on the date of payment. A term deposit record of the National Australia Bank showed that on the 6 February 1984, an amount of $75,000 was deposited at the Southern Branch of the National Australia Bank in South Australia by Domenico Amendola and Nicolina Amendola for a term of 12 months bearing interest from the 6 February 1984, at 11 per cent per annum. A later document addressed to Mr and Mrs D. Amendola advised that the term deposit would mature on 6 February 1985 and the bank sought instructions to renew the deposit for a further term.

On the basis of those documents, I find that an amount of $75,000 was invested in the names of Mr and Mrs Amendola with the National Australia Bank from 6 February 1984, until 6 February 1985. At 11 per cent, the interest on the deposit for one year would have been $8,250. There is no evidence that Mr and Mrs Amendola had any other investment of $75,000. The probabilities are, and I find, that the monies which were deposited with the National Australia Bank were the $75,000, which is the subject of the claim.
What is unclear is whether Mr and Mrs Amendola had made the deposit with the National Australia Bank themselves or whether Mrs Olma had made the deposit in their names. There was no evidence to indicate whether the bank, in 1984, would permit a person to open a deposit account in the name of others.
Mr and Mrs Amendola gave evidence that they first saw the documents relating to the deposit with the National Australia Bank in 1991 when they were placing pressure upon the defendant to account for their monies. If that is correct, the inference is that they did not previously know about the deposit with the National Australia Bank or what happened to the interest on the $75,000.
The defendant’s case is that she did not receive the sum of $75,000 from the plaintiffs until August 1985. If that is correct, the defendant did not receive the money until after the Term Deposit with the National Australia Bank had matured and it is likely that Mr and Mrs Amendola would have received the interest on the $75,000 for the first year.
The evidence does not permit me to make any finding as to who did receive the interest on the deposit with the National Bank for the period from 6 February 1984 until 6 February 1985.
Mr and Mrs Amendola both gave evidence that they gave a cheque for $75,000 to Mrs Olma in early 1984. Mr Amendola said that he prepared a note relating to the loan of $75,000. The note, which became exhibit “P2” is handwritten in the Italian language. When translated it reads :
“I Ida. Z. Olma of NSW 39 Kensington Street Punchbowl have received from Mister and Mrs Domenico Amendola and Nicolina $75,000 on 6-2-84 in cheque from National Bank of Adelaide to invest in Sydney $50,000 from 10 per cent to 12 x 100 for 10 years while int. upon $25,000 the same at 10 x 10 …”
The document purports to be signed by Mr Amendola and it has endorsed on it in Mr Amendola’s writing words which, when translated mean, “Ida Z. Olma I do not sign I will get a statement from the lawyer. Does not cost”. Mr Amendola said he prepared the document, showed it to Mrs Olma, gave it to her, but she refused to sign it and took the original. He said he wrote the words “I do not sign” etc, on a copy when Mrs Olma said she would not sign. That was a reminder for himself so that he had some record.
Mrs Olma was cross examined about exhibit “P2”. She denied that Mr Amendola gave her the document. She also denied that she told him that she would go to Sydney to get a solicitor to prepare a proper document.
The defendant’s case was that Mr Amendola had prepared exhibit “P2” in 1991 at the time he first perused the documents from the National Australia Bank. The date of the transaction evidenced by exhibit “P2”, 6 February 1984, is the date which appears on the National Australia Bank record of the deposit.
If the advances of $75,000 to the defendant and $70,000 to her son were contemporaneous, it is strange that the solicitor who prepared the formal agreement with Mr Thomas Olma was not also requested to prepare an agreement between the plaintiffs and Mrs Olma. On the other hand, it is strange that Mr Amendola felt compelled to prepare a document for signature by Mrs Olma himself, but did not prepare a similar note of the transaction for $70,000 with Mr Thomas Olma. It is difficult to rationalise exhibit “P2” which purports to be a receipt from Mrs Olma for $75,000 received on 6 February 1984 to invest in Sydney with the other evidence. The documentation from the National Bank shows that $75,000 was first invested on 6 February 1984 for 12 months in South Australia. Also, the $75,000 had, on 6 February 1984, not been divided into tranches of $50,000 and $25,000 as stated in exhibit “P2”. The division of the $75,000 into the two tranches did not take place until after the term deposit of $75,000 with the National Australia Bank had matured on 6 February 1985. Exhibit “P2” just does not make any sense. The probabilities are, and I find, that exhibit “P2” was prepared by Mr Amendola some time after 1985 when the division of the $75,000 into tranches of $50,000 and $25,000 had occurred. That causes me to doubt the reliability of the evidence of Mr Amendola generally.
If the plaintiffs had given a cheque for $75,000 to Mrs Olma on 6 February 1984, by obtaining the cheque from a branch of the National Australia Bank in Wright Street, Adelaide, to invest in Sydney, why would Mrs Olma have paid that cheque into another branch of the National Australia branch in South Australia (the Southern branch) in the names of Mr and Mrs Amendola? It is not clear to whom the cheque for $75,000, to which the plaintiffs have referred, was made out. The plaintiffs plead in their Reply that the cheque was made payable to Ida Olma. If the payee was Mrs Olma, why was the Term Deposit made in the names of Mr and Mrs Amendola? If the payees named in the cheque were Mr and Mrs Amendola, why did they have their own bank make out a cheque to themselves and why did they place the money in a Term Deposit with another branch of the same bank? The evidence just does not make sense. The evidence does not explain the circumstances in which the investment of the $75,000 was made in the names of Mr and Mrs Amendola with the National Australia Bank in February 1984.
So far as the interest on the fixed term investment with the National Australia Bank from February 1984 to February 1985 is concerned, the evidence does not permit me to make any finding as to whether that interest was received by the plaintiffs or defendant. Accordingly, I am not able to make any finding as to that part of the plaintiffs’ claim for interest on $75,000 for the first part of the period, namely, from February 1984 until February 1985.
Mrs Olma gave evidence that she first saw a cheque for $75,000 at a time which was before the plaintiffs went overseas in 1985. She said that the plaintiffs showed her the cheque and told her to put it in her bank or in her son’s bank. At first she did not agree. She said she did not accept the cheque at that time. When Mrs Olma saw the cheque again on the plaintiffs’ return from Italy in July or August 1985, she agreed to take the cheque. Mr Olma gave evidence that the plaintiffs wanted to hide the money because they were afraid for their daughter. Mrs Olma believed that and took the cheque. When she agreed to accept the cheque, nothing was said about interest. Mrs Olma gave evidence that Mr Amendola told her that she could take money out (of the Bank) and send it to Italy.
Mrs Olma said she took the cheque back to Sydney but did not put it in a bank straight away. She could not remember which bank she did eventually put the cheque in because she had two bank books, one with the State Bank and another with the ANZ Bank. Her account was with the Riverwood branch of the State Bank. She said it was a passbook account called “High Performance” or something. She did not open a special account. She already had money in the account. She later made other deposits into that account on her own behalf. She no longer has the passbook because it was more than 20 years ago. Documents tendered during the course of the trial show that Mrs Olma also had accounts with Bankstown City Credit Union Limited, although they were in the name of Zusanna Isola.
Mrs Olma’s evidence was a completely unsatisfactory attempt to explain what she had done with the funds which had been entrusted to her.
I am unable to make a finding as to the date on which the plaintiffs gave the cheque for $75,000 to the defendant. If the cheque was payable to Ida Olma, it was likely to have been after the Term Deposit in the names of the plaintiffs matured in February 1985. The plaintiffs’ evidence that they gave the cheque to the defendant in February 1984, is contrary to the National Australia Bank documents. I propose to act upon the defendant’s admission that she received the cheque for $75,000 in about August 1985.
Mrs Olma accepts that she has an obligation to account for the $75,000. She disputes that she has any obligation to account for interest on the money. Any obligation to account for interest could not have commenced after until Mrs Olma had received the money.
The plaintiffs’ case was that the defendant had an obligation to repay the monies at the end of 10 years. Mr Amendola gave evidence that when he gave Mrs Olma the cheque for $75,000 Mrs Olma said she could invest it in the bank earning 10 to 15 per cent interest instead of just letting it sit in a bank. He said Mrs Olma said she was going to invest $50,000 for 10 years and the remaining $25,000 at call. The $25,000 was to be at call so that Mr Amendola could have access to some of the money in case of necessity.
The defendant pleads that the plaintiffs gave her “a cheque for $75,000 which they asked her to deposit in an at call account with a view to sending money to Italy at the plaintiffs’ request and for other expenditure to be incurred by the defendant at the plaintiffs’ request”. I find that plea does not accurately describe the arrangement. The defendant has acknowledged that the $75,000 was to be divided into tranches of $50,000 and $25,000 by providing the plaintiffs with the numbers of the two bank accounts into which the separate tranches had been paid.
I find that the arrangement was that the $75,000 would be divided into a tranche of $50,000 which would be invested for 10 years and a tranche of $25,000 which would be invested at call.
The Claim for Interest
The plaintiffs’ claim for interest is imprecise. The claim was based upon the plaintiffs’ evidence of representations that the defendant would invest the money at “10-12 per cent”, “10-11 per cent”, “from 10-15 per cent”, “10, 12, 15 per cent”, “12, 13 or 15 up to 15 per cent” and “10, 11, up to 15 per cent”. Mr Amendola also gave evidence that Mrs Olma said she could invest the $75,000 in a bank, a different type of investment, whereby the plaintiffs would get from 10 to 15 per cent interest, instead of the money just sitting in a bank. He said she pushed him and said that she could get interest at between 10 and 15 per cent.
Mrs Olma said that Mr Amendola told her that he did not want interest, that he wanted to hide the money for 10 years and that just wanted to get the money back in 10 years time.
The evidence does not enable me to make any finding as to whether there was an express arrangement as to interest. The defendant denies that there was an arrangement. The plaintiffs’ evidence was confused and internally inconsistent as to the percentage rate. It fell short of establishing an express agreement. There was no reason why the defendant should have guaranteed a minimum rate of return. There was nothing in the transaction for her.
I do not accept the defendant’s evidence that Mr Amendola said that he did not want interest on the money and that all he wanted to do was to hide the money. He may have wanted to hide the money but that does not mean that he was prepared to forego the right to interest. The agreement with respect to the loan of $70,000 to Mr Tom Olma does provide for interest. As I have mentioned, the interest for the period 6 February 1984 to 6 February 1985 was more than $8,000. It defies commonsense that the plaintiffs would have gratuitously abandoned an annual entitlement to interest of that magnitude.
Bank records from the Bankstown Building Society Ltd which form part of exhibit “D25” show that the defendant was in fact receiving 17 per cent on her investment during 1986. The probabilities are that the funds which she had invested at that rate were the plaintiffs’ funds.
While I am not able to make any finding that there was an express agreement between the parties that the defendant would invest at a particular rate of interest that is not the end of the matter.
In my opinion, the circumstances in which the money was given to the defendant for the purpose of investment, constituted the defendant a trustee. If there was no express trust, then an implied trust would arise in circumstances where the settlor transferred money to the trustee without disposing of the beneficial interest in the property. There is no suggestion that the plaintiffs did not retain the beneficial interest in the property. Jacob’s Law of Trust in Australia, 6^th Edition, paragraph 1,201. Ford and Lee, Principles of the Law of Torts, 1360. Henry v Harvard (1913) 2 QB 515, 521. Cohen v Cohen (1929) 42 CLR 91, 101. Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567.
Where one person pays money to another a question arises as to whether a trust has been created or a debt incurred. Whether a debt or trust was created depends upon the intention of the parties. If the parties intended that the one receiving the money should hold it for the benefit of the other, there will be a trust. Jacob’s Law of Trust in Australia, 6^th Edition, paragraph 213. The categories of debt and trust are not mutually exclusive. Barclays Bank v Quistclose Investments Ltd, supra.
I find that the parties intended that the defendant should hold the sum of $75,000 for the benefit of the plaintiffs and that the defendant held the sum of $75,000 on trust for the plaintiffs.
The defendant has had the benefit of $75,000 less the amounts that she must be credited with, since at least August 1985 and the defendant has received interest which has compounded over the years. I find that as a trustee she is obliged to account for the interest that she has received.
The obligations of a defaulting trustee were described by Street J (as he then was) in Re Dawson (deceased) (1966) 2 NSWR 211 at 214, where His Honour said :
“The obligation of a defaulting trustee is essentially one of effecting a restitution to the estate. The obligation is of a personal character and its extent is not to be limited by common law principles governing remoteness of damage.”
At 218, Street J said :
“The general principle is that where a trustee has through his breach of trust occasioned loss to the trust estate then he is liable to make good that loss, together with interest.”
Where a breach of trust is a consequence of a breach of duty rather than mere negligence the rate of interest is to be the ‘mercantile rate’.” Ford and Lee, paragraph 17,140. If a beneficiary can show that a trustee has received a higher rate the beneficiary can recover the actual rate received as an account for profits. Ford and Lee, paragraph 17,141. If the beneficiaries cannot show how much benefit the trustee has received, it can be presumed that the trustee has placed the trust fund commercially and a mercantile rate is applied. Ford and Lee, paragraph 17,140.
As to what the mercantile rate is Ford and Lee, refers to Wallersteiner v Moir (No. 2) [1975] QB 373, 388, 389 and 406, where the Court of Appeal said interest should be paid at 1 per cent above the official bank rate or minimum lending rate in operation from time to time, the interest being compounded with yearly rests. The South Australian Supreme Court adopted the formula used in Wallersteiner v Moir in Southern Cross Pty Ltd v Ewing (1987) 91 FLR 271, per Legoe J at 293 and at 298; but ordered compound interest calculated at 6 monthly rests. Compound interest is appropriate where the trustee ought to have obtained compound interest. Ford and Lee, ibid. Mrs Olma has actually received compound interest on the plaintiffs’ monies and compound interest is required to make restitution to the plaintiffs.
I find that the defendant is liable to pay compound interest calculated at half yearly rests.
In Hagen v Waterhouse (1991) 34 NSWLR 308 at 391 ff Kearney J adopted the rate in the Practice Notes of the New South Wales Court as to interest before judgment in proceedings for the recover of money. In such cases, the policy is to adopt rates reflecting commercial rates of interest.
I find that where there is evidence of the actual rate that the defendant received, that rate should apply. For periods where there is no evidence of the rate of interest which the defendant received I propose to follow the approach in Hagen v Waterhouse and use the rate of interest in the Third Schedule in the Supreme Court Rules.
The evidence does not enable me to make a finding on the balance of probabilities as to when the plaintiffs gave the defendant the cheque for $75,000. The plaintiffs’ case is that it was on 6 February 1984. The defendant says the plaintiffs gave her the cheque in about August 1985. As the plaintiffs have not established when the defendant received the sum of $75,000, I can only act on the defendant’s admission that she received the money in about August 1985.
In the circumstances I find that the defendant’s obligation to account for interest on the $75,000 should commence from the end of August 1985. Somebody did receive interest on the fixed term deposit with the National Australia Bank between 6 February 1984 and 6 February 1985. Also, interest may have been derived from 6 February 1985, until August 1985, but there is no evidence to indicate who received that interest.
Accounting for the $75,000
The transcript of the defendant’s evidence extends over many pages, but she never explained what happened to the $75,000.
Mrs Olma said that she saw a cheque in August 1995. She said that she took the cheque back to Sydney, put it in a bank but could not remember which one. She said she had accounts with both the State Bank and the ANZ Bank, and it was one of the two. That evidence was not correct. At least $25,000 of the $75,000 was deposited in an account with the Bankstown City Credit Union Limited.
In essence, the defence was that the $75,000 which the defendant had banked in an account in Sydney had been repaid. The defendant said she paid for the drafts of currency that were sent to Italy and that she paid other monies to the plaintiffs. I discuss those claims below. The defendant also paid the two separate cheques for $30,000 which are said to support the defence of accord and satisfaction.
The defendant told the plaintiffs that $50,000 of the $75,000 was invested in account 048-211-296, although the name of the bank was never revealed. There is no documentation relating to that account. The defendant has never disclosed what happened to the $50,000 after it was deposited with the bank.
The defendant told the plaintiffs that $25,000 of the $75,000 was invested in an account number 16393-5-1626. The number of the account indicates an account of Zusanna Isola with the Bankstown City Credit Union Ltd. References to an account number 16393-5-1626 appear in a number of documents, in particular, some of the handwritten photocopies of correspondence which form part of exhibits “P8” and “P9”. The records which have been produced also refer to other accounts of Zusanna Olma with Bankstown City Credit Union.
The records of the Bankstown City Credit Union Ltd show that a cheque deposit #1626 of $25,700 was made into the defendant’s account 16393.I13 on 13 February 1986. Deposit #1626 is the deposit number which the defendant provided to the plaintiffs. I find that the references in the records of Bankstown City Credit Union Ltd to deposit #1626 are a reference to the tranche of $25,000. The term deposit matured on 13 July 1986 and attracted interest at 17 per cent per annum. If that is the rate which the defendant received on the plaintiff’s monies at that time, that is the rate of interest at which the defendant should be required to account to the plaintiff.

There are no records which show what happened to the deposit of $25,000 between August 1985 and 13 February 1986. After February 1986, the deposit #1626 can be traced in the records of Bankstown City Credit Union Ltd for a number of years.
On the maturity of deposit #1626 on 13 July 1986, interest of $1,795.48 was transferred to account 16393.S8, the defendants’ Access Savings Account and the principal of $27,500 was reinvested at 15.2 per cent until 13 December 1986.
On 12 December 1986, amounts of $1,725.97 and $4,600 were taken from the Term Deposit Account 16393.I13 and transferred to account 16393.S8 (the Access Savings Account). The sum of $4,600 was in part redemption of deposit #1626 of $27,000. $1,725 was interest on the deposit #1626 in Term Savings Account 16393.I13 to 13 December 1986. The balance of $22,400 in Term Savings Account 16393.I13 was reinvested at 15 per cent until 13 May 1987.
On 12 December 1986, a cheque for $6,000 was drawn on the defendant’s Access Savings Account 16393.S8 in favour of Ms A.C. Amendola. That is a cheque in respect of which the defendant seeks a credit. The records show that the funds out of which the $6,000 was paid to Ms Amendola were derived from account 16393.I13. That is, the monies were derived from the $25,000 invested in Term Savings Account 16393.I12.
With the exception of a gap between 24 February 1988 and March 1990, the records of the accounts of Zusanna Isola with the Bankstown City Credit Union Ltd establish that deposit #1626 remained in an account operated by the defendant until 13 February 1991. The records show the rate of interest received by the defendant on the investment. From time to time interest was transferred from the Term Deposit Account to the defendant’s Access Savings Account 16393.S8 or to the defendant directly by way of a cheque.
On 13 February 1991, a cheque for $28,900 was drawn from the Term Savings Account 16393.I1 in favour of Z. Isola. The balance of the account of $259.57 was paid into the defendant’s Access Savings Account 16393.S8 leaving the Term Savings Account 16393.I1 with a nil balance.
I find that the defendant told the plaintiffs that $25,000 of their money was in account number 16393-5-1626. That appears from various exhibits. I find that the Term Deposit Account 16393.I13 was the repository for the tranche of $25,000 from at least 13 February 1986. I find that the plaintiffs were the beneficial owners of the money deposited into account 16393.I13 on 13 February 1986. I find that the deposit #1626 was transferred to account 16393.I1 on 1 March 1990, where it remained until 13 February 1991, when a cheque for $28,900 was paid to the defendant.
What happened to the deposit #1626 after 13 February 1991 is not known, other than that the money was in the control of the defendant.
The defendant has transferred income from the Term Savings Accounts which at different times held the $25,000 deposit #1626 to her Access Savings Account 16393.S8. What she did with the money is not clear, but she has not accounted to the plaintiffs as I find that she was obliged to do. The records of Bankstown City Credit Union Ltd show that the defendant mixed trust monies with her own.
Exhibit “P5” is a letter dated 20 August 1997 from Mr Amendola to the defendant. The letter shows that by August 1997, the plaintiffs were starting to ask questions about their money. The letter indicates that the plaintiffs did not understand what had happened to their money. The plaintiffs wanted to know where the money had been invested and at what interest. The plaintiff wrote, “130 thousand dollars would be of the 50 thousand dollars and 48 would be of the 25 thousand dollars …”. The plaintiffs asked to be shown all the documents relating to the $75,000.
While the manner of expression in exhibit “P5” left a lot to be desired, the message was clear. By August 1997, Mr Amendola wanted to be told what had happened to his money. The plaintiffs’ assertions in the letter are consistent with their claim. Mr Amendola had an expectation that the defendant had to account to him for the sum of $75,000.
Exhibits “P8” and “P9” are later letters prepared by Mr Amendola, which are also generally consistent with his claim. They refer to an arrangement whereby a tranche of $50,000 was to be “put away for 10 years at 12% at a fixed deposit account where if we wanted to withdraw in advance we would lose the interest for a year”, and a tranche of $25,000 was in account 16393-5-1626 “with high interest but could be withdrawn if needed without problems”.
Exhibit “P9” recorded that Mrs Olma had spoken to Mrs Amendola on the telephone on 29 June 1998, and that Mrs Olma said that of the $75,000 there was only $2,000 left. Mrs Olma did not explain where the money had gone.
I find that the defendant has not properly accounted for the sum of $75,000 as she was required to.
The Credits Claimed by the Defendant
The Bank Drafts - Defence Paragraph 11.1
The defendant assisted the plaintiffs to send drafts of currency to Italy. There is a dispute as to who provided the funds. The defendant claims a credit against the $75,000 in respect of nine separate drafts which she says she sent. The plaintiffs claim that the drafts to Italy are unrelated to the $75,000. Mr Amendola said he gave $24,000 in cash to the defendant to send to Italy. The Defence to the Amended Counterclaim refers to “an additional total sum of about $23,000”. The defendant denied receiving any cash.
Mr Amendola first said that he gave the defendant a cash amount in 1983. He later corrected his evidence to say that it was in 1984 “at the end of the year”. He said the amount was $13,000. He said it was monies he had withdrawn and saved bit by bit and kept at home. He said at the beginning of 1985 he provided two further cash amounts of $6,000 and $5,000. He said the money was given to the defendant at his home, that there was $13,000 on one occasion and then $11,000. Earlier he had said that there were two payments of $6,000 and $5,000 which made the further $11,000. Ultimately, he said there was $13,000 in December 1984, $5,000 in January 1985, and $6,000 in March 1985. If that evidence is correct, the total of the cash was $24,000, not $23,000 as the plaintiffs state in their pleading.
Mrs Amendola said money was given on three occasions. She said amounts of $13,000, $1,000 and $9,000 were given and the sum was $23,000. It was cash, not a cheque. Like her husband, she was confused as to the precise amount and in cross examination said that the amount was “23 to 24. It was $24,000”, and, “it could be a few dollars short but about 24”. Mrs Amendola saw her husband give money to Mrs Olma to send to Italy. She said she saw him count the money and give it to her.
Exhibits “D14” to “D19” inclusive evidence six bank drafts arranged between 18 December 1984 and 4 November 1987 at a total cost of $24,923.94. The cost of three further drafts not evidenced by documentation which were said to have been made in June 1984, October 1987 and December 1987 was $3,000 (approx.), $5,900 (approx.) and $5,900 (approx.), respectively. The three bank drafts, which are not supported by documentation, are contested by the plaintiffs. The defendant claims a credit against the $75,000 in respect of all nine drafts.
As to the initial draft, which is contested, the defendant said that in June 1984 she travelled to Italy. She went to a bank, took out the money, took it to Italy and gave it to Mrs Amendola’s brother. She said it was her money and the plaintiffs said they would repay her when they could get their money from the bank. The defendant claims a credit of $3,000 in respect of that payment. In reality, what Mrs Olma described was not a bank draft at all; she simply took money to Italy with her. That may explain why there is no documentation for a bank draft in June 1984. In view of the plaintiffs’ denial of the “draft” and the absence of documentary evidence, I find the evidence does not establish that there was a transfer of funds in June 1984. However, the findings which follow have the result that if a transfer of funds was made in June 1984 in the way described by the defendant, the cost of that transfer was covered by cash which the plaintiffs gave to Mrs Olma, and Mrs Olma would not be entitled to a credit in respect of the June 1984 “draft” against the $75,000 any way. June 1984 was 14 months before the time when the defendant says that she received the $75,000 from the plaintiffs.
As to the second draft, which is not contested, the defendant said that in December 1984 Mr and Mrs Amendola asked her to send a draft to Sydney. She did send 5 million lira and arranged the draft with the Blacktown branch of Westpac Banking Corporation in the name of Mrs F. Ruotolo, the name of her mother. The documentation for the draft is exhibit “D14”. She said her money was used to purchase the draft.
Exhibit “D15” evidences the third transaction being a draft of 5 million lira made through Australia and New Zealand Banking Group, Blacktown branch, on 7 March 1985. The applicant was Z. Isola. The cost was $3,480.74. The defendant said that she paid for the draft with her own money. On the defendant’s case, she had not received any money from the plaintiffs at that time.
Exhibit “D16” evidences the fourth transaction being a draft arranged on 18 December 1985, at a cost of $3,883. The applicant was Mrs F. Ruotolo and the draft was arranged through the Blacktown branch of Westpac Banking Corporation. The defendant said that the money used to purchase the draft came from her money, but it was to be taken out of the $75,000.
Exhibit “D17” was a draft arranged by Mr Thomas Olma on 31 October 1985, from the Australia and New Zealand Banking Group Ltd, Blacktown branch. He arranged the draft because his mother was in hospital. The cost was $4,084. Mr Olma gave evidence that the money came from his mother’s passbook account with the ANZ Bank.
Exhibit “D18” was a draft requested by Mrs I. Olma on 3 December 1985, through the State Bank of New South Wales, Riverwood branch. The cost was $4,333. Mrs Olma said she sent the draft at the request of the plaintiffs, but otherwise gave no evidence about the source of the funds.
Exhibit “D19” evidences a draft arranged on 4 November 1987, by I. Olma with the Blacktown branch of the Australia and New Zealand Banking Group Ltd. The cost was $5,986. The evidence which the defendant gave about “D19” related to a sum of 15 million lira. She said she did “three of the 5 million lira”. Exhibit “D19” only evidences one draft of 5 million lira on 4 November 1987. There is no documentation to support the other two drafts. Mrs Olma said, “I made one in October, one in November and one in December because they needed urgently”. Mrs Olma asked why they wanted her to arrange the drafts and the plaintiffs told her that she wanted to know too much and that it was not her business. She was not able to find the copy documentation for the October 1987 and December 1987 drafts. She said the originals always went to Italy and that she posted the carbon copies to Mr and Mrs Amendola.
Mrs Olma said that a statement from the Bankstown City Credit Union dated 12 October 1987, (exhibit “D26”) related to a cheque for $2,456.62 which was used to send a draft to Italy. I do not accept that evidence. Other records produced by the Bankstown City Credit Union Ltd indicate that the cheque 70806 for $2,456.62, which was payable to I.Z. Olma, was the clearing balance of the account 16393.I12 on its closure.
There is no dispute that the defendant did purchase the bank drafts which are supported by exhibits “D14” to “D19”. I do not accept the defendant’s evidence that she purchased three further drafts which are not supported by documentation, although the first transaction may not have been a transfer of funds by bank draft at all. The onus is on the defendant to show that she has repaid the monies entrusted to her.
The defendant said that the draft which is exhibit “D14” was sent in her mother’s name because Mr and Mrs Amendola requested that the drafts go under a different names. The draft which is evidenced by exhibit “D16” was also arranged in the name of Mrs Ruotolo. The drafts evidenced by “D14” to “D19” were arranged in the names of a variety of applicants with a variety of banks, but the variation is of no consequence in these proceedings.
On the defendant’s case, in August 1985, when the defendant accepted the cheque for $75,000, she had already purchased three drafts of Italian currency at a total cost of about $9,651. She had financed those drafts herself. The defendant said that when she accepted the cheque for $75,000, nothing was said about payment for the drafts, but she understood that the plaintiffs had given her the cheque to send the drafts to Italy to help them. Mrs Olma said the plaintiffs did not pay her anything for the first three drafts.
If, as the defendant asserted, the drafts came from the $75,000, the probabilities are that the money would have been taken from the tranche of $25,000 rather than the tranche of $50,000. I note the plaintiffs’ assertion in exhibit “P9” that the $50,000 was invested in such a way that there would be a penalty if the deposit was withdrawn early. It is unlikely that the tranche of $50,000 would have been used to finance the drafts to Italy. There is no evidence that any draft was paid for out of the tranche of $50,000.
The tranche of $25,000 was to have been invested in a way which made it more accessible. The accounts with the Bankstown City Credit Union Ltd do not reveal any withdrawals consistent with the purchase of any bank draft, although the record does not cover the period from June 1984 until 3 December 1985, during which the first six drafts were purchased. The opening balance of Term Deposit Account 16393.I13 on 13 February 1986, was $27,500. By 13 February 1986, the cost of the drafts which had been purchased was $21,951. I find that the drafts arranged up until 13 February 1986, were not paid for by the tranche of $25,000 in account 16393.I13.
Apart from the evidence of Mr T. Olma, that he paid for “D17” out of the defendant’s account with the ANZ, there is no evidence as to the source of the funds from which the other drafts were made. If the plaintiffs had given $24,000 in cash to the defendant, the immediate source of the funds was immaterial. The plaintiffs’ cash was likely to have been placed in the defendant’s bank account.
If, as the defendant says, the plaintiffs did not give her the cheque for $75,000 until August 1985, the defendant had, on her evidence, financed three drafts totalling $9,651 by 7 March 1985, and there was no arrangement in place for the reimbursement of those monies. As to the drafts purchased after August 1985, the defendant was holding $75,000 of the plaintiffs’ money out of which payment could have been made, but as I have mentioned, the records of the accounts with the Bankstown City Building Society Ltd indicate that the drafts were not paid out of the tranche of $25,000 and it would have been inconsistent with the 10 year investment plan for the tranche of $50,000 for that money to have been used. The defendant has not explained where the money used to pay for the drafts in respect of which she claims a credit, came from.
A difficulty with the plaintiffs’ case is that their evidence as to the payment of $24,000 cash was inconsistent. Also, the three payments to which they refer, namely, $13,000 in December 1984, $5,000 in January 1985 and $6,000 in March 1985, do not coincide with to the purchase of the drafts. On the plaintiffs’ evidence, they had, in March 1985, given to the defendant a total of $24,000 in cash. At that time, the defendant had, on her case, only purchased drafts totalling $9,651. On the plaintiffs’ own case the defendant had, at that time, only purchased drafts totalling $6,651. It was not until six months later in September or October 1985 that the $13,000 cash which was provided to the defendant in December 1984 would have been fully utilised.
Why did the plaintiffs make the further cash payments of $5,000 in January 1985 and $6,000 in March 1985 if Mrs Olma was still holding a surplus from the December payment?
The plaintiffs pleaded that the sum of $1,546, which was paid into the plaintiffs’ State Bank Account on 20 December 1984, “was the balance left over of monies given by the plaintiffs to the defendant in about December 1984, for the purpose of sending such monies to the plaintiffs’ brother, one Mr Michele Beatrice”. (Defence to Amended Counterclaim, paragraph 1.12) That plea is not consistent with their case. On the plaintiffs’ case, in December 1984 the plaintiffs gave the defendant $12,000 cash. On their case, the only draft purchased to the end of December 1984 had cost $3,171. On that basis, the surplus would have been $8,829 not $1,546. Even if the defendant had transferred the other funds in June 1984, as she claims, the surplus would still have been $5,829. The payment by the plaintiffs of further sums of $5,000 in January 1985 and $6,000 in March 1985 is hard to understand if the defendant had repaid a surplus in December 1984. The plaintiffs’ plea in paragraph 1.12 just adds to the confusion in the plaintiffs’ case and casts doubt on their reliability.
The plaintiffs carry the onus of establishing that they made the payments of cash. The objective circumstances do not establish a situation in which any of the three individual payments which made up the $24,000 was either relevant or appropriate. The claimed payments do not correlate with the funds required to finance the individual drafts. There is no reason why the plaintiffs should have made any of the three payments of cash at the times they said they did. There is no objective evidence which corroborates the evidence of the plaintiffs that they made the payments of cash.
On the other hand, it is unlikely that the defendant would have purchased drafts out of her own money.
Exhibits “P8” and “P9” are letters which Mr Amendola wrote first to Mrs Olma and then to her son in 1999. The translation includes the statement that the plaintiffs had given $23,000 cash “because the 75 thousand were already set aside”. One of the attachments to the letter, which is said to have been written by the defendant, contains the following :
“Cheque to Italy                   5,000,000
Australia Dollars  5,986,96
Cheque  4,600
Cash  2,000
________
Total  6,600
5,986.96
________
0-613-06
500-
________
0-113.06
________”
The draft dated 4 November 1987, which is evidenced by “D19” cost $5,986.96. The defendant’s document obviously referred to that draft. The source of the funds was said to be a cheque for $4,600 and cash of $2,000. The document indicates that “D19” was not funded from the cash payments to the defendant of $23,000 or $24,000. The draft evidenced by “D19” was arranged almost 22 months after the previous draft. The cost of the first six drafts, including the disputed draft of June 1984, was $21,951. That is consistent with the drafts having been paid from a sum of $24,000 and there being a small balance left over. The balance would not have been enough to purchase a further draft of 5 million lira.
With some hesitation, I find on the balance of probabilities that Mr Amendola did give cash totalling $24,000 to the defendant. While there are problems with the plaintiffs’ evidence, I am satisfied that the cash was paid because I think it is unlikely that the defendant would have spent so much of her own money to purchase the drafts. If she did not receive the cheque for $75,000 until August 1985, she had, on her evidence, spent almost $10,000 of her own money to transfer funds to Italy for the benefit of the plaintiffs before she received any money from the defendants. Also, while the plaintiffs’ evidence is riddled with inconsistencies, those inconsistencies may be explained by the passage of time and the plaintiffs lack of business acumen. I think it is unlikely that the plaintiffs would have invented the suggestion that they had paid cash of $23,000 at the time they made the assertion in exhibits “D8” and “D9”. At that time they were seeking an explanation as to what happened to their money. Also, there is some corroboration in the fact that the cost of the first six drafts, including the disputed transfer in June 1984, roughly approximates $23,000 or $24,000.

Generally, the dialogue between the parties over the years had proceeded on the basis that the $75,000 was to be divided into two tranches and invested. That regime was inconsistent with any part of the $75,000 being used to transfer money to Italy. The probabilities are that the money, which was transferred to Italy, came from some other source. Cash provided by the plaintiffs was the only other source.
I find that while the defendant did arrange the bank drafts, “D14” to “D19” on the plaintiffs’ behalf, the cost of the drafts “D14” to “D18” was financed by the sum of $24,000 in cash which the plaintiffs gave to the defendant. Accordingly, the defendant is not entitled to set off the cost of those drafts against her obligation to account for the $75,000.
As to exhibit “D19”, the draft dated 4 November 1987, I find that the defendant met the cost of that draft. The source of the funds ($5,986.96) may have been a cheque for $4,600 and cash of $2,000, as indicated in the defendant’s document. The evidence does not enable me to determine the source of the $2,000 cash. The evidence does establish that the defendant paid for the draft and she is entitled to a credit for that amount.
Defence - Paragraph 11.2 - Other Payments
$6,000- 12 December 1986
The defendant claims credit in respect of a cheque for $6,000 dated 12 December 1986.
Exhibit “D27” establishes that Ms Z. Isola withdrew the amount of $6,000 from her account number 16393.S8 with Bankstown City Credit Union Limited on 12 December 1986. Exhibit “P1”, page 21, shows that a cheque for $6,000 was deposited in the account of Mrs Nicolina Amendola and Ms Anna Carmela Amendola on 30 December 1986.
The plaintiffs’ claim that the cheque for $6,000 had been taken by the defendant from their own money in the plaintiffs’ State Bank Account 110850-81. Mr Amendola relied upon a list of the drawings made on that account (page 20 of exhibit “P1”) to support his assertion, but that exhibit does not support his assertion. The amounts and dates do not line up. The exhibit shows withdrawals of $2,000 on 21 May, 2 October, 12 October and 6 November 1987, 24 March, 5 May, 24 June and 18 October 1988. There is no evidence to suggest that the withdrawals of $2,000 had any connection with the sum of $6,000. However, the matter is more fundamental than that. It is clear that the cheque for $6,000 was withdrawn from the defendant’s Access Savings Account 16393.S8 with the Bankstown City Credit Union.
I mention in passing that the plaintiff, Mr Amendola, has for some time been obsessed with what he refers to as the “$6,000 mistake”. On my analysis, his complaints have no basis. The plaintiffs have received the benefit of the sum of $6,000 from the defendant’s account 16393.S8 and the defendant must be given a credit for that amount.
Cash (Rates) $500
The defendant’s evidence was (page 284) that she had a discussion with Mr Amendola about the topic of council rates. She said :
“About Moonta. They said that they receive a notice, rates notice, and they asked for some accounts, you know, for the daughter. And I stepped in and I said ‘Okay, keep it quiet as a friend’, and I offered to pay direct bank cheque they giving me back. And that’s what - I not remember the amount, somewhere like $500. Moonta rates.”
The payment was denied by the plaintiffs. The sum of $500 was not consistent with the amount of the council rates in other years. The defendant said “they asked me for the $500. That’s all what I know”. There is no documentary evidence which corroborates the payment. The defendant’s evidence was vague and unconvincing.
I find that the defendant has not proved that she gave $500 cash to the plaintiffs to pay council rates in 1986.
Payment on 13 August 1987 of $4,600 by Cheque
The defendant said that she obtained a cheque for $4,600 from her ANZ bank account and gave it to Mr and Mrs Amendola. She could not recall what the cheque was for. The plaintiffs did give her a reason but it was too long ago for her to remember. The defendant was not able to specify the date when the cheque was paid.
The records of the defendant’s account with the ANZ Bank were not produced. There are references in the exhibits to a cheque for $4,600 dated 13 August 1987, which went towards payment of the draft, exhibit “D19” on 4 November 1987. Exhibit “P19” was arranged through the ANZ Bank. The date of 13 August does coincide with the defendant’s assertion. Specifically, in exhibits “D8” and “D9”, Mr Amendola referred to a cheque for $4,600 dated 13 August 1987. Because of his acknowledgment of a cheque for $4,600 on 13 August 1987, I find that the defendant did draw such a cheque. However, the cheque was applied to the cost of the draft which is exhibit “D19”. If the defendant is given credit for the draft which is exhibit “D19”, she cannot also be given a separate credit for the cheque for $4,600, because that would amount to double counting.
Because I have allowed the defendant a full credit for the cost of exhibit “D19” ($5,986.96), I find that the defendant is not entitled to a separate credit of $4,600 in respect of the cheque paid on about 13 August 1987.
18 February 1988 - Cash - $4,000; 5 November 1988 - Cash - $4,000; 27 June 1989 - Cash; $7,000 and 6 October 1989 - Cash - $4,000
The plaintiffs admit that they received cash payments of $4,000, $4,000, $7,000 and $4,000 respectively but claim that the monies were not monies of the defendant but were their monies taken by the defendant from the plaintiffs’ State Bank Account 110850-82. Some, but not all, of the bank statements for the plaintiffs’ State Bank Account, 110850-81 (-82), are contained in exhibit “P1”. There is a gap in the bank statements from 2 December 1988 until 31 August 1989. The bank statements do not establish that any of the four cash payments which the plaintiff admits having received are from the plaintiffs’ State Bank Account 110850-81..
18 February 1988 - Cash $4,000
Page 11 of the bank statements (exhibit “P1”, page 18) covers the period from 14 December 1987 to 3 June 1988. There is no record of a payment of $4,000 on 18 February 1988. The statements do record payments of $2,000 on each of 24 March 1987 and 5 May 1987. Those two payments do not establish a cash payment of $4,000 on 18 February 1988.
I find that the cash payment of $4,000 on 18 February 1988, which the plaintiffs admit, was not taken from the plaintiffs’ State Bank Account number 110850-81.
I find the defendant is entitled to a credit for the admitted payment.
5 November 1988 - Cash $4,000
Page 12 of the bank statements (exhibit “P1”, page 19) covers the period from 3 June 1988 to 2 December 1988. There is no record of a cash payment of $4,000 on 5 November 1988. Separate withdrawals of $2,000 had been made on 24 June and 18 October 1988. Those two withdrawals were unexplained but they do not prove a cash payment of $4,000 on 5 November 1988.
I find that the cash payment of $4,000 on 5 November 1988, which the plaintiff admits having received, was not made from the plaintiffs’ State Bank Account 11085-81.
I find that the defendant is entitled to a credit in respect of the admitted payment.
27 June 1989 - Cash $7,000
The bank statement for the plaintiffs’ State Bank Account does not show any cash withdrawal of $7,000 on 27 June 1989. The statement does record withdrawals of $4,000 on 20 April 1989, $3,000 on 9 June 1989 and $4,000 on 31 August 1989. I could speculate that the payment of $7,000 admitted to have been made on 27 June 1989, comprised a combination of the withdrawals shown on the statement, but there is no justification for that. There is no evidence that the admitted payment of $7,000 was made from the plaintiffs’ State Bank Account as the plaintiffs assert.
The defendant should be credited with the payment of $7,000 admitted to have been made on 27 June 1989.
6 October 1989 - Cash $4,000
There is no evidence of a payment of $4,000 from the plaintiffs’ State Bank Account on 6 October 1989.
I could speculate that the $4,000 withdrawn on 31 August 1999, resulted in the cash payment of $4,000 admitted to have been made on the 6 October 1989, but apart from the coincidence of the amounts, there is no reason why I should do that.
The defendant should be credited with the amount of $4,000 admitted to have been made on 6 October 1989.
Conclusion as to Cash Payments
The plaintiffs’ pleading is quite specific. The plaintiffs say :
“- as for the other separate amounts of cash of $4,000, $4,000, $7,000 and $4,000 are concerned as referred to under the heading : ‘Other Payments’ in paragraph 11.2 of the defence, the plaintiffs admit to have received the same but say that such sums of money were not monies of the defendant, rather it was money taken out by the defendant from the said bank account number 110850-82 …”
The evidence does not establish that any of the four payments came from money from the bank account number 110850-82. In the circumstances, I reject the plaintiffs’ assertion in respect of the four admitted payments. I find the payments were not made from the plaintiffs’ State Bank Account 110850-82. The evidence does not support the plaintiffs’ assertion that the defendant made the four payments out of their money. The plaintiffs may have been mistaken about the source of the four payments in the same way that they were mistaken about the source of the cheque for $6,000 which was paid on 12 December 1986.
I find that the defendant is entitled to be credited with the sum of $19,000 being the total of the four admitted payments.
Defence - Paragraph 11.3 - Monies Incorrectly Deposited into Plaintiffs’ Account
9 August 1984 - $2,000
The defendant claims a credit for $2,000 in respect of a deposit made into the plaintiffs’ State Bank Account (-81), on 9 August 1984.
The defendant said that the payment into the account of $2,000 was made by mistake. She said the mistake was that when she went to the bank to make a deposit, she took the plaintiffs’ deposit book instead of her own. Both books were the same - green. It was the same bank. She said that when she realised she had made the mistake she rang the plaintiffs, talked to them about what she had done and apologised to them. They said not to worry, “We got the money there, we give you back”.
Mr Amendola wrote the words “May. Many.”, alongside the entry for $2,000 on the bank statement, which evidences the deposit. He said that writing meant, “My money”, that is, that the money was his. He said that he gave the defendant $2,000 as a loan while she was staying with the plaintiffs because she needed to pay for something. He said he gave Mrs Olma $2,000 to buy a few things to take to Sydney for her grandchildren.
In cross examination it was put to the defendant that she had previously borrowed $2,000 from the plaintiffs and that when she made the payment into their account she was repaying that loan. She denied that.
The parties are now disputing an amount of $2,000 paid almost 20 years ago. The mistake was made about 12 months prior to August 1985 when the defendant says she received the cheque for $75,000. The payment of $2,000 is unrelated to the $75,000.
I do not accept the evidence of the defendant. I think it most unlikely that she would have allowed $2,000 belonging to her to remain in the plaintiffs’ bank account for so many years without making an earlier claim to the money. If a mistake of the kind suggested by the defendant had been made it could have easily been rectified by Mrs Olma withdrawing the money.
I find that the defendant is not entitled to a credit of $2,000 for monies said to have been incorrectly deposited into the plaintiffs’ account on 9 August 1984.
20 December 1984 - $1,546
The defendant claims a credit of $1,546 for monies said to have been incorrectly deposited into the plaintiffs’ account on 20 December 1984.
Mr Amendola said that the sum of $1,546 was the remainder of the money he had given to the defendant after the defendant had sent the bank drafts to Mr Beatrice in Italy.
The defendant said that the $1,546 paid into the State Bank of New South Wales account on 20 December 1984, was her money. It was a cheque “can it be taxation, it can be anything, or can it be the rent”. She said the cheque was payable to her and it came to be paid into the plaintiffs’ account because she made a mistake. Again, she had taken the plaintiffs’ pay-in book instead of her own. She said when she discovered the mistake she rang the plaintiffs and they said “it is no problem, Zia”. She never asked Mr and Mrs Amendola to repay the sum of $1,546 to her from their account.
The defendant was cross examined to the effect that when she made the deposit of $1,546 she put the money into Mr and Mrs Amendola’s account because she owed them that money. She denied that and repeated that she made a mistake. It was a similar mistake to the one which she claims to have made with the sum of $2,000 in August 1984.
The evidence does not permit me to make any finding one way or the other as to the circumstances in which the sum of $1,546 was paid into the bank account. There is no evidence which establishes that the cheque came from the defendant. There is no evidence which establishes that the defendant owed the sum of $1,546 to the plaintiffs. For reasons discussed above, the $1,546 was unlikely to be the residue of the cash provided for the bank drafts to Italy. Most importantly, the payment was made about eight months before the time when the defendant says she received the $75,000. There is no obvious connection between the payment of $1,546 and the $75,000.
I find that the defendant has not proved that she is entitled to a credit in the amount of $1,546 as alleged in paragraph 11.3 of the Defence.
Accord and Satisfaction
The defendant alleges that in 1995 the parties orally agreed in Adelaide that all claims of the plaintiff in respect of the $75,000 would be satisfied by the defendant causing two cheques, each of $30,000, to be paid to the plaintiffs.
The nature of an accord and satisfaction was described by Scrutton CJ in British Russian Gazette and Trade Outlook Ltd v Associated Newspapers Ltd (1933) 2 KB 616 at 643, in the following terms :
“Accord and satisfaction is the purchase of a release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative.”
Whether there has been an accord and satisfaction is a question of fact. Day v McLea (1889) 22 QBD 610 per Bowen LJ at 613. In the case of an ascertained debt, the payment of a lesser sum is no satisfaction of a larger sum then due without some additional consideration. D & C Builders Ltd v Rees (1966) 2 QB 617.
The effect of the defendant’s evidence was that the plaintiffs asked her for $60,000. She said she thought that she had overpaid them. She said she agreed to pay $60,000, that she “repaid it”, and that “I was not happy, but to get rid of these people, finish”.
That evidence is disputed by the evidence of the plaintiffs whose case was that the defendant agreed to make four payments of $30,000 and then work out with the plaintiffs the exact balance due to be repaid. Even on the defendant’s own case, there was no accord, because the payment of $60,000 was provisional. The actual debt had still to be ascertained. More fundamentally, the defendant was a trustee of the sum of $75,000 and liable to account. The correspondence passing between the parties is inconsistent with there having been any accord reached between the parties.
I find that the defence of accord and satisfaction has not been made out.
Laches
Ford and Lee, Principles of the Law of Trusts states at paragraph 18140 that laches will constitute a bar to an action if the plaintiff’s delay places an unfair burden on the defendant or if the delay causes the change in the defendant’s position in relation to the plaintiff, for instance, by the loss of previously available evidence (Fysh v Page (1956) 96 CLR 233; Re Jarvis (1958) 1 WLR 815).
The defendant has not identified any specific facts which are now unable to be proved because of the unavailability of evidence in a way which prejudices the defence, although I do accept that the defendant may have been deprived of access to bank and other records.
If the plaintiffs’ money had been invested for 10 years, it would have been repayable either in 1994 or 1995. The plaintiffs commenced making requests for the return of their money shortly after that time.
Laches may be a defence where a plaintiff has not been reasonably diligent in pursuing a claim. Erlanger v New Sombrero Phosphate Company (1878) 3 App.Cas. 1218, per Lord Blackburn at 1279, citing Lord Selborne in Lindsay Petroleum Company v Hurd (1874) L.R. 5 P.C. 221, at 239; Agbeyegbe v Ikomi [1953] 36 Ch.D. 145. Laches may be established by evidence of acquiescence or where it is inequitable that the plaintiffs should be allowed to pursue the claim. The defence of laches operates as a bar to the claim. The defence may also be available if the delay causes a change in the defendant’s position if documents or other evidence is lost during the period of the delay. Fysh v Page (1956) 96 CLR 233. The length of the delay necessary to give rise to the defence depends on the circumstances of the case. Haas Timber and Trading Co Pty Ltd v Wade (1954) 94 CLR 593, 602.
Ford and Lee, Principles of the Law of Trusts states that where all that remains to be done by a trustee is to transfer the legal title of trust property to the person beneficially entitled to it in equity, delay in so doing will not allow the trustee to plead laches against the beneficiary. The authors refer to Crofton v Ormsby (1806) 2 Sch. and Lef. 583 at 603 and Joyce v Joyce (1979) 1 All ER 175 per Megarry VC at 179.
The defendant says that the plaintiffs delayed unreasonably in issuing proceedings and that the defendant has been prejudiced by the passage of time in that bank records are now no longer in the parties’ possession.
Mr Roder, counsel for the defendant, referred to Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 where McHugh J referred to the importance of time limitations. Mr Roder submitted that his client had been prejudiced because she does not know what other documents may have been uncovered if the proceedings had been brought in a more timely fashion. He submitted that memories have diminished and documents were unavailable, but he has not identified any particular fact which the defendant can no longer establish.
I do not consider that the delay in issuing proceedings has been sufficient to make out the defence of laches. If $75,000 had been invested for 10 years it would, on the defendant’s case that she received the $75,000 in August 1985, not have been due for repayment until 1995. The plaintiffs could not have sued until that time. That is when time started to run for the purpose of estimating the period of any delay. If the defendant was not already aware of the fact, exhibit “P5” would have put the defendant on notice that she was required to account for the $75,000. That was only two years after the money became repayable. The defendant has not established that she has been prejudiced by any delay which has occurred after August 1995.
I find that the defence of laches has not been made out.
Limitation of Actions Act
The defendant says that the claim for damages is barred by section 32 of the Limitation of Actions Act 1936.
The plaintiffs have not sought an extension of time; but in an amendment to the Statement of Claim the plaintiffs allege that the defendant has denied receiving the monies referred to in the Statement of Claim and plead “in the circumstances, the defendant’s conduct is fraudulent within the meaning and intent of section 32 of the Limitation of Actions Act 1936”. The plaintiff says that the defendant’s conduct was fraudulent because the defendant has, in these proceedings, denied receiving the monies referred to in paragraph 6 of the Statement of Claim, in the manner and circumstances therein set forth.

The defendant does not rely upon the bar created by section 35 of the Limitation of Actions Act 1936 which applies to actions on simple contract. Section 32 of the Limitation of Actions Act 1936 applies to trusts. The plea in paragraph 14 of the defence, which raises section 32, contains an admission that the defendant was a trustee; otherwise, section 32 would have no application.
Section 31 of the Limitation of Actions Act 1936 provides :
“31.   Subject to the next following section -
(a)    …;
(b)    no claim of a beneficiary against his trustee, in respect of any property held on an express trust, or in respect of an express trust, shall, subject to the next following subsection, be barred by any statute of limitations;
(c)    no action or other proceeding shall be brought to recover any sum of money or legacy charged upon or payable out of any land or rent and secured by an express trust, or to recover any arrears of rent or of interest in respect of any sum of money or legacy so charged or payable and so secured, or any damages in respect of such arrears, except within the time within which the money, legacy, or arrears would be recoverable if there were not any such trust.”
Section 32 provides :
“32. (1) In any action or other proceeding against a trustee or any person claiming through him except where the claim is founded on any fraud or fraudulent breach of trust to which the trustee was a party or privy, or is to recover trust property, or the proceeds thereof still retained by the trustee, or previously received by the trustee and converted to his use, the following provisions shall apply .” (my emphasis)
Ford and Lee, Principles of the Law of Trusts, comment at paragraph 18190 that section 32(1) of the South Australian Act reproduces section 8 of the English Trustee Act 1888 and makes a distinction between fraudulent breaches of trust and cases of retention and conversion of trust property on the one hand, for which an extended or no limitation period is prescribed, and innocent breaches of trust for which the same limitation period is prescribed as for the case of an action for money had and received, namely six years.
The present action is an action to recover trust property or the proceeds thereof retained by a trustee or previously received by a trustee and converted to her use. Accordingly, the action falls within the exception in subsection 32(1). It is therefore unnecessary to consider whether the claim is founded on a fraud or fraudulent breach of trust. The effect of section 31 is that there is no limitation period in respect of property held by a trustee on an express trust or for breach of an express trust.
I find that section 32 does not apply to the action because the action is one which falls within the exception to that section being an action to recover trust property or the proceeds thereof still retained by the trustee or previously received by the trustee and converted to her own use.
I find that the action is not barred by the Limitation of Actions Act as alleged by the defendant.
Counterclaim
The defendant seeks an account and enquiry into the amount owing by the plaintiffs to the defendant and an order for payment of such amount as may be found to be due. It is alleged that the defendant had caused $133,383 to be paid to or for the plaintiffs (the total of the amounts itemised in paragraphs 11.1, 11.2 and 11.3, together with two payments of $60,000) which amounts to $58,383 more than the $75,000 she received from the plaintiffs.
On my findings, there is no balance in favour of the defendant. There is no reason for an account and enquiry.
I dismiss the counterclaim.
Conclusions
For the reasons set out above, I have come to the following conclusions :
1.The defendant is a trustee of the sum of $75,000 paid to her by the plaintiffs.
2.The payment of $75,000 to the defendant should be treated as having been made at the end of August 1985.
3.The defendant is obliged to account for interest on the sum of $75,000. Where the rate at which the defendant had the monies invested can be identified, the defendant should pay interest at that rate. Otherwise, the defendant should pay interest at the mercantile rate assessed by reference to the Third Schedule to the Supreme Court Rules. The interest is to be compound interest calculated at half yearly rests.
4.The plaintiffs paid amounts totalling $24,000 in cash to the defendant out of which the defendant paid the costs of the bank drafts evidenced by exhibits “D14” to “D18” inclusive, namely :
(a)“D14” - 18 December 1984, $3,171;
(b)“D15” - 7 March 1985, $3,480;
(c)“D16” - 18 September 1985, $3,883;
(d)“D17” - 31 October 1985, $4,085; and
(e)“D18” - 31 December 1985, $4,033.
The defendant is not entitled to a credit in respect of those drafts.
5.The defendant is entitled to a credit in respect of the bank draft evidenced by “D19” in the sum of $5,986.
6.The evidence does not establish that the defendant arranged bank drafts in June 1984, for $3,000 approximately, October 1987, for $5,900 approximately, and December 1987, for $5,900 approximately.
7.The defendant is to be credited with the following payments referred to in paragraph 11.2 of the Defence :
(a)12 December 1985 - cheque, $6,000;
(b)18 February 1988 - cash, $4,000;
(c)5 November 1988 - cash, $4,000;
(d)27 June 1989 - cash, $7,000; and
(e)6 October 1989 - cash, $4,000.
8.I dismiss the remaining claims in paragraph 11.2 of the Defence.
9.I dismiss the claims in paragraph 11.3 of the Defence.
10.I find that defences of accord and satisfaction, laches and the Limitation of Actions Act have no application.
11.The Counterclaim is dismissed.
I will hear counsel as to the calculation of the judgment which must follow these findings.
There will be liberty to apply.

[2003] SADC 171

28 November 2003