Arcaba v K & K Real Estate Pty Limited - [2016] NSWSC 1793

Supreme Court

New South Wales

Medium Neutral Citation: Arcaba v K & K Real Estate Pty Limited [2016] NSWSC 1793
Hearing dates: 14-18 March 2016 and 6 April 2016
Date of orders: 13 December 2016
Decision date: 13 December 2016
Before: Hall J
Decision:
Judgment for the defendant against the plaintiff. The plaintiff is to pay the defendant’s costs of the proceedings. In the event that either party wishes to be heard further on the question of costs, I grant leave to apply in that respect.

Catchwords: CONTRACT – plaintiff sued defendant for damages for breach of contract in respect of an oral agreement allegedly made between the parties whereby the plaintiff alleged that in return for not seeking immediate repayment of certain loan monies the defendant would pay him the sum of $1.6 million upon finalisation of a property development or the interest of the defendant in the project was sold or finalised – in addition to the repayment of the loan monies – principles as to proof of a cause of action based on contract where spoken words are relied upon as a foundation for such cause of action – requirement to prove the relevant conversation to the reasonable satisfaction of the court – the court should feel an actual persuasion of its occurrence – absence of any contemporaneous records corroborating the alleged oral agreement – credibility of the plaintiff and defendant’s directors
Cases Cited: Allen v Carbone (1975) 132 CLR 528; [1975] HCA 14
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 3
Brooker v Friend & Brooker & Anor [2006] NSWCA 385
Campbell v Campbell [2015] NSWSC 784
Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302
Polon v Dorian and Ors (2014) 102 ACSR 1; [2014] NSWSC 571
Watson v Foxman (1995) 49 NSWLR 315
Category: Principal judgment
Parties: Milorad Arcaba (Plaintiff)
K & K Real Estate Pty Ltd (Defendant)
Representation:
Counsel:
G McGrath (Plaintiff)
L Gor (Defendant)
Solicitors:
Stojanovic Solicitors (Plaintiff)
Colin Biggers and Paisley (Defendant)

File Number(s): 2013/345560

Judgment

1. INTRODUCTION

In these proceedings the plaintiff sues the defendant for damages for breach of contract in respect of an agreement allegedly made between him and the defendant in about late November 2010 or early December 2010 whereby the plaintiff alleges that he agreed that in return for him not seeking immediate repayment of certain loan monies, the defendant would pay him the sum of $1,600,000 from the sale of properties by the defendant from its interest in a consortium that was established to develop land at a location known as Gledswood Hills (formerly known as Gregory Hills) in addition to repaying the loan monies (the Deferral Agreement).
At all material times, the defendant had an issued capital of two shares, one held by Michael Kordek Senior and one held by his wife, Maria Kordek.
The plaintiff’s case is that on the abovementioned date the Deferral Agreement was entered into in discussions between Mr Michael Kordek Snr, a director and shareholder of the defendant company and himself.
The defendant denies that the Deferral Agreement was made as alleged, or at all, but admits the making of loan agreements which involved loan funds being provided by the plaintiff via one of his corporate entities totalling $195,000 to the defendant.

The Pleadings

(i) Four loans

The plaintiff instituted these proceedings by way of Statement of Claim filed on 15 November 2013. An Amended Statement of Claim was filed, by leave, during the hearing on 18 March 2016. In paragraphs [4]-[11] of the Statement of Claim the plaintiff pleads and particularises the making of four loan advances by him through a corporate entity controlled by him to the defendant company. The four advances amounted to the abovementioned sum of $195,000 (consisting of four loans of $100,000, $50,000, $25,000 and $20,000).
The loan agreements were express oral agreements and they were all entered into at the plaintiff’s business premises in Liverpool.
The loan agreements were negotiated by the plaintiff personally with Mr Kordek Snr acting on behalf of the defendant.
The plaintiff alleges that that the loan funds were to be applied by the defendant towards meeting legal fees and disbursements of the defendant incurred in instructing its legal representatives, Colin Biggers and Paisley (CBP), in relation to an agreement for the sale and purchase of land at Oran Park.
The plaintiff alleges that it was a term of the agreements that the defendant would repay the moneys when the legal proceedings were completed.
In relation to the Deferral Agreement, upon which the plaintiff sues, the plaintiff pleaded his claim in paragraphs [12],[13] and [14] as follows:

“12.   In or about late November 2010 or early December 2010 the defendant by Michael Kordek informed the plaintiff that the defendant had lost its Court case concerning the Oran Park land and that the defendant was unable to repay the money due to the plaintiff.
13.   At the same time that the defendant informed the plaintiff of the matters in paragraph 12 above, the defendant by Michael Kordek and the plaintiff agreed that in return for the plaintiff not seeking immediate repayment of the First Loan, Second Loan, Third Loan or Fourth Loan, the defendant would pay the plaintiff the sum of $1,600,000 from the sale of properties by the defendant from its interest in a consortium formed to develop land at Gledswood Hills in addition to the sum of $195,000 borrowed (“Deferral Agreement”) (emphasis added).
Particulars
(a)   The Deferral Agreement was express and oral and entered into at the plaintiff’s business premises at Moore Street Liverpool.
(b)   The Deferral Agreement was entered into by the plaintiff personally and by the defendant acting by Michael Kordek.

14. It was a term of the Deferral Agreement that the defendant would repay the First Loan, the Second Loan, and the Third Loan and the Fourth Loan as soon as it could and would pay to the plaintiff the sum of $1,600,000 when the project at Gledswood Hills was finalised and/or sold by the defendant.”

The plaintiff in paragraph [23] of the Statement of Claim pleaded that the defendant had denied that it has any obligation to pay the plaintiff the amount of $1,600,000 or any additional sum pursuant to the Deferral Agreement and denied the existence of such an agreement. In that respect, reference was made to a letter from the solicitors for the defendant, CBP, to the solicitors for the plaintiff, Stojanovic Solicitors, dated 2 and 4 September 2013 in which any such agreement was disputed.
In paragraph [24] of the Statement of Claim the plaintiff alleged that the defendant was in breach of the agreements in respect of each of the four loans and he also pleaded in paragraph [25] that the defendant had repudiated the Deferral Agreement which repudiation had been accepted by the plaintiff. Accordingly, the plaintiff seeks damages in respect of the alleged breach of the Deferral Agreement: at [27].
The defendant at hearing relied upon an Amended Defence filed pursuant to orders made by Registrar Bradford on 6 May 2014.

(ii) Repayment of loans

It is not necessary to discuss at this point the full details of the Amended Defence other than to say that the defendant admitted the four loan advances and stated paragraph [12] that the defendant had offered to repay the total amount of $195,000 together with interest of $4,400 on 13 November 2010. The offer was said to have been made by Mr Kordek Snr. The defendant alleged that the plaintiff declined the offer: at [12].
The defendant company alleged in its Amended Defence that Mr Kordek Snr offered to pay the sum of $125,000 verbally in early October 2010 but the plaintiff declined to accept payment in that amount: at [17].
As at the date of these proceedings were instituted, an amount of $95,000 of the loan monies had been repaid by the defendant: (Statement of Claim [15]-[19]). Upon commencement of these proceedings, the plaintiff sought repayment of the remaining $100,000. This sum was repaid by the defendant on 24 January 2014.
The defendant pleaded that it had tendered monies in repayment of the First Loan: at [18]. Details as to the repayment of $95,000 of the total $195,000 monies owed by the defendant were set out at [15]-[19] of the Statement of Claim in the following terms:

On or about 25 January 2011 the defendant paid to the plaintiff the sum of $20,000 in partial repayment of the First Loan, the Second Loan, the Third Loan and the Fourth Loan.

On or about 27 January 2011 the defendant paid to the plaintiff the sum of $25,000 in partial repayment of the First Loan, the Second Loan, the Third Loan and the Fourth Loan.

On or about 10 October 2011 the defendant paid to the plaintiff the sum of $25,000 in partial repayment of the First Loan, the Second Loan and the Third Loan.

On or about 17 April 2012 the defendant paid to the plaintiff the sum of $11,000 in partial repayment of the First Loan, the Second Loan, the Third Loan and the Fourth Loan.

On or about 20 April 2012 the defendant paid to the plaintiff the sum of $14,000 in partial repayment of the First Loan, the Second Loan, the Third Loan and the Fourth Loan.

On 24 January 2014 the defendant repaid the remaining $100,000 to the plaintiff via electronic transfer from the National Australia Bank (Affidavit of Mr Kordek Snr [64] and p 144 of Exhibit MK-1).

Affidavit Evidence

The affidavit evidence for the plaintiff in the proceedings concerning the Deferral Agreement was given by the plaintiff in his primary affidavit sworn 5 May 2014 and two reply affidavits sworn by him on 13 February 2015 and 15 February 2016.
The defendant relied upon affidavit evidence being the affidavits of Mr Kordek Snr sworn on 30 September 2014 and 30 November 2015. The defendant also relied upon the affidavit of Mr Michael John Kordek Jnr, sworn 12 November 2015.
The plaintiff relied upon the affidavit evidence of the following witnesses: Mr Dennis Locke sworn 11 February 2015 and Mr Sasha Cubrilo sworn 13 February 2015.

The Contractual Issue

Given the nature of the Deferral Agreement relied upon by the plaintiff and the multiplicity of disputed issues of fact raised in these proceedings, it is appropriate at this point to outline the nature of the plaintiff’s case and the nature of the defence to it.
As noted above, the plaintiff’s case is that in or about late November or early December 2010 he and Michael Kordek Snr, on behalf of the defendant, entered into an oral contract for deferral of repayment of loans made by the plaintiff to the defendant. The alleged consideration of the Deferral Agreement alleged by the plaintiff was said to include a payment to be made by the defendant to the plaintiff in the amount of $1,600,000 upon finalisation of the Gledswood Hills Project or the sale or other finalisation of the defendant’s interest in that project.
In the plaintiff’s case it was stated that the alleged genesis of the Deferral Agreement was the defendant’s loss in relation to the Oran Park litigation. As a result of that loss the plaintiff alleged that the defendant could not repay the $195,000 loan funds advanced in the period 4 August to 18 November 2010. In that context the plaintiff alleged that it was the defendant’s inability to repay the $195,000 that led to the parties agreeing to the Deferral Agreement.
The defendant argued that the plaintiff’s case altered from that alleged in the original Statement of Claim. In the Outline of the Defendant’s Closing Submissions it was noted that the plaintiff alleged that the defendant, through Mr Kordek Snr, agreed:

“…In return for the plaintiff not seeking immediate repayment of the First Loan, Second Loan, Third Loan or Fourth Loan [K & K] would repay [Mr Arcaba] the sum of $1,600,000 from the sale of properties by [K & K] or from its interest in the consortium formed to develop land at Gledswood Hills in addition to the sum of $195,000 borrowed (Emphasis added).

In the Outline of the Defendant’s Closing Submissions at [6] it was stated that “Mr Arcaba’s new pleaded case” asserted that the events or the circumstances which was to trigger the payment of the $1.6M had not been discussed but that they were to be implied. The defendant contended that the “belated amendment” to the Amended Statement of Claim had changed the agreement on which the plaintiff sued in an important respect, and that this undermined his credibility and his case.

Background Matters

(i) The Plaintiff

The plaintiff was born on 10 August 1964 in Rijeka, Croatia. He stated in his affidavit that in 1989 he completed a degree in economics at a University in Croatia and in 1993 he completed a Diploma in Chemical Technology. In 2001, he said he established a finance brokerage business using a corporate entity known as First Class Mortgages Pty Ltd.
He said that after 2001, following the establishment of his mortgage business, his clientele mainly consisted of persons of Serbian background who were looking for home loans. He said that he referred potential buyers to Mr Kordek Snr who in turn referred clients to him in order to arrange finance.
In 2005 he began working as a broker for the Commonwealth Bank of Australia (CBA) in a business referred to as Commonwealth Bank Mortgage Innovations. He said that this was mainly involved in obtaining residential home loans for customers. His office was located in Liverpool. The plaintiff said his association with the CBA ended in or about November 2011.
In August 2012, the plaintiff purchased a franchise for a real estate agency business in Liverpool. He said in evidence that he continued to conduct both the finance brokerage business and the real estate agency business.
As at 2010, the plaintiff had for about eight years been carrying on business as a finance broker through First Class Mortgages Pty Ltd. By March 2009 another company owned by Mr Arcaba, Mortgage Café (NSW) Pty Ltd had been appointed as a broker of Commonwealth Bank of Australia Loan Products (Exhibit 1).
The plaintiff had over a number of years acquired in the course of his business arrangements with the CBA considerable experience with loan products and real property mortgages and securities and had been a money-lender for some years.

(ii) Mr Kordek, Senior

Mr Kordek Snr had been involved in broadacre developments through the defendant and other companies for over 20 years.
In his affidavit sworn 30 September 2014 he stated that he had known the plaintiff for a number of years. They had initially met socially at the Bonnyrigg Sports Club. He believed that this occurred in 2005-2006.
At that time, he said the plaintiff was working with the CBA. He said that they met regularly at the Bonnyrigg Sports Club or at the Cucina Restaurant in Liverpool.
Mr Kordek Snr said that since the late 1980s, his primary business partner had been a Dr Morven Dan. Dr Dan died on or about 1 March 2012. He and Dr Dan established a company, Kordan (Australia). Dr Dan and he purchased and developed properties through different corporate entities, including Kordan (Australia).
In about October 2009 it came to Mr Kordek Snr’s attention that a property at Oran Park was available for sale. It was unzoned but residential zoning Mr Kordek believed was going to be approved. An Expression of Interest for Oran Park was lodged soon after.
In due course, Kordan (Australia) made an improved offer for Oran Park at $5.6M. Kordan was to exchange contracts for the property on or about 8 December 2009. However, for various reasons, the process was delayed and the settlement of the property did not eventuate.
A Notice to Complete had been served by the vendor’s solicitors. Mr Kordek Snr looked for alternative partners to Dr Dan, who had lost interest in the property.
On or about 8 July 2010 the defendant’s solicitors received a Vendor’s Notice of Termination. Mr Kordek Snr sought funding from different sources and on or about 12 August 2012 the company entered into a Joint Venture deed with another company as trustee of the Oran Park Unit Trust (Joint Venture).
On 5 August 2010 the defendant commenced proceedings in this Court seeking specific performance of the sale and purchase of the Oran Park Property.
Ultimately, the defendant was unsuccessful both at first instance and in the Court of Appeal. It sought Special Leave from the High Court. Special Leave was refused on 12 November 2010. As a result of these proceedings, the defendant had been required to pay the amount of $2,228,197.69 into court. The money was not released in full until about 26 August 2011. On that date $250,000 was released to the defendant.
Against that background, Mr Kordek Snr in his affidavit sworn 30 September 2014 gave evidence as to the amounts advanced by way of loan by the plaintiff to the defendant: at [50]-[62].
Following the dismissal of the Oran Park special leave proceedings by the High Court on 12 November 2010 the plaintiff said that he telephoned the defendant on four occasions. He said he had a conversation with the plaintiff along the following lines:

KORDEK:    “We lost the court case, Milorad.”
ARCABA:    “I’m sorry to hear that.”
KORDEK:    “I owe you some money. I have to give it back to you. With interest, it rounds to about $200,000.”
ARCABA:    “I need to work out some accounts. Let’s meet tomorrow.”
KORDEK:    “Okay, let’s meet at the Bonnyrigg Sports Club.”

A few days later, on 18 November 2010, Mr Kordek Snr said he spoke with the plaintiff at the Bonnyrigg Sports Club about repayment of the loans. He said a conversation along the following lines took place:

KORDEK: “I will repay you from the money that is being released from the High Court soon. Is that okay Milorad?”
ARCABA: “Yes, of course, Michael.”

Mr Kordek Snr denied the conversation which the plaintiff recounted in paragraph [28] of his affidavit.
Against this background the plaintiff’s evidence and Mr Kordek Snr’s evidence in relation to the Deferral Agreement is set out below.

2. The Plaintiff’s Evidentiary Case

As noted in the plaintiff’s written submissions at [7] the crux of the proceedings was whether the conversation, in which the Deferral Agreement was alleged to have been made, in fact occurred.
It was accepted, of course, that the plaintiff had the onus of establishing the alleged oral Deferral Agreement and its terms: Watson v Foxman (1995) 49 NSWLR 315 at [318] per McLelland CJ in Eq.
It was also accepted that the Court would need to carefully consider the reliability of the evidence given by the respective witnesses in terms of both the evidence given and the manner in which it was given.

The Oran Park Project

According to the plaintiff, in March 2010 Mr Kordek Snr attended his office in Liverpool. At that time the plaintiff was contracted to the Commonwealth Bank as a Mortgage Innovation Manager. He said that on that occasion the following conversation took place:

KORDEK:   “My company K & K Real Estate exchanged a contract in December 2009 for some land at Oran Park. I have paid 10%, and the price is about $5.6 million plus GST. K & K needs finance, can you help me with a loan to complete the purchase?”
ARCABA:   “I would need the financial statements for K & K, and tax returns for the last two years.”
KORDEK:   “Business was slow in the last two years. K & K did very little development work and did not make much profit, and I don’t have any financial statements.”
ARCABA:   “Based on what you have told me, the Commonwealth Bank would not approve any loan. Your best option is to go through a finance company or private lender.”
KORDEK:   ‘I will think about it and speak to my partner who is putting 50% into the project.” (at [13])

The plaintiff said a few days later Mr Kordek Snr came to his office at Liverpool and they had a conversation in the following terms:

KORDEK: “I have got big problems, my partner is pulling out and I have to settle the purchase. I am in big trouble, I don’t know what to do.”

ARCABA:   “You may have to look for another business partner.”
KORDEK:   “I would like to put anyone in tomorrow, who is willing to be my partner. Can you recommend anybody?”
ARCABA:   “I will speak to some people and let you know.” (at [14])

According to the plaintiff, on the following day after that conversation he contacted a person who he knew by the name of Vic Petrovic, a solicitor from the firm, NSW Compensation Lawyers. He said he spoke to Mr Petrovic along the following lines:

ARCABA:   “I have a friend called Michael Kordek and his company is looking for a partner for a big development project at Oran Park.”
PETROVIC:   “I have heard of the name. I would be interested.”
ARCABA:   “I will arrange a meeting with you and Michael Kordek.” (at [15])

The plaintiff said that after that conversation he arranged a meeting between Mr Petrovic and Mr Kordek Snr. This occurred in early April 2010 at Cucina Restaurant located across the road from his office. He said he introduced the two men and then left. He said he was not involved in any conversation between them on that occasion.
The plaintiff said that after the meeting between the two men, Mr Kordek Snr came to his office and they had the following conversation:

KORDEK: “I really want to thank you for introducing Vic Petrovic to me. He has agreed to come in as a 50% partner. However, K & K needs a loan for its 50%.”
ARCABA: “As I said before you need to go through a finance company, and I think Paramount Mortgage Service at Bella Vista can help you. I will contact them and see if they can help you.” (at [17])

The plaintiff said that he then contacted Paramount Mortgage Service and referred Mr Kordek Snr to that entity. He said he was not involved in any further dealings between Paramount Mortgage Services and Mr Kordek Snr.
After this referral the plaintiff said that Michael Kordek Snr rang him and said, “I got loan approval, I want to thank you let’s go to lunch”.
The plaintiff said later that day they went to the Cucina restaurant and he had the following conversation with Michael Kordek Snr:

KORDEK:   “I really want to thank you for all you have done, getting me the loan and Vic Petrovic as a partner.”
ARCABA:   “I was happy to help.”
KORDEK:   “Because of your help I can go ahead and I want to give you 5% in the project when it is complete.”
ARCABA:   “Thank you, if you really think I deserve that, I appreciate it.”
KORDEK:   “You really deserve it and you will get it.” (at [18])

Following that conversation, he said they shook hands and finished their lunch.
The plaintiff said that in about late June or early July 2010, Mr Kordek Snr telephoned him and the following conversation took place:

KORDEK:   “The deal at Oran Park has not settled because of my delay, and the vendor wants to sell to someone else. I may have to go to court.”
ARCABA:   “How is that possible?”
KORDEK:   “Because K & K didn’t settle on time.” (at [19])

The plaintiff in his primary affidavit sworn on 5 May 2014, set out evidence concerning the loan advances he arranged, and provided to the defendant. He said that the initial conversation concerning a loan was in or about July 2010 with Mr Kordek Snr who came to his office at Liverpool and they had a conversation as follows:

KORDEK:   “I need about $100,000.00 to cover the legal costs for K & K in the court case. Can you help? If you can, you will be paid back by K & K as soon as the court case is finished.”
ARCABA:   “Yes I can, when do you need the money?”
KORDEK:   “As soon as possible.”
ARCABA:   “I will let you know, and who do I make the cheque to?”
KORDEK:   “K & K Real Estate Pty Ltd.” (at [20])

Gledswood Hills Project

It is the plaintiff’s case that the alleged Deferral Agreement arose in the context of the Gledswood Hills Project.
Mr Kordek Snr in his affidavit sworn 30 September 2014 gave evidence as to the background to that project as follows: The project only came into existence from about December 2011. Mr Kordek Snr said he came to know of the property from discussions he had had with members of an entity, Sekisui House, that purchased a neighbouring property at Gregory Hills, but Mr Kordek Snr noted at [75] of his affidavit that before November 2011 he never referred to the project as “Gregory Hills” as distinct from “Gledswood Hills”.
Mr Kordek Snr’s evidence was that on or about 23 November 2010 a company, The Broadacre Development Company Pty Ltd, was set up (BADC). The name for BADC had originally been reserved in mid-July 2010 for the proposed Oran Park development.
On or about 29 November 2010 BADC exchanged contracts for a property that was located at 650 Camden Valley Way, Gregory Hills (soon to be known as Gledswood Hills), being properties 668 & 659 Camden Valley Way, Catherine Field. The purchases settled in or about February 2011.
In order to complete the purchase, BADC obtained a loan from NAB in the amount of approximately $3.1M.
BADC contracted as trustee of the Catherine Field Development Unit Trust. The defendant held 31 units in the unit trust. The other unit owners included a company which was referred to as Mr Petrovic’s investment vehicle, with 31 units, Lulud Pty Ltd (Mr De Lutiis’ company) with 31 units and Bella Vista Realty Pty Ltd (Mr Covington’s investment company) with 7 units. The principals contributed part of the purchase price with the balance funded by the NAB.
The defendant company exited its interest from BADC in March 2012.
In February 2014 BADC sold Gregory Hills to an entity, Tribeca.
Accordingly the above corporate entities owned the shares in BADC and Masterton Homes (Masterton) was engaged for the development of the project in November/December 2012, Masterton being a contract home builder for the joint venture. Communications between the unit holders and Masterton, it was noted in the defendant’s submissions, were copied to Messrs Petrovic, De Lutiis, Covington and Cavric (Mr Petrovic’s offsider), but they were not copied to the plaintiff. This was relied upon by the defendant as being inconsistent with the plaintiff’s contention that Mr Kordek Snr bound the defendant, K & K, to give him the value of 8 blocks in the development. The plaintiff’s allegation of a Deferral Agreement, it was submitted, would, on his account, amount to “a private side deal” without Mr Kordek Snr informing his co-principals: Outline of the Defendant’s Closing Submissions at [79].
Mr Kordek said that the defendant company had a 31% economic interest in BADC as did “Vic” (Vic Petrovic) and “Ned” (Ned Cavric). Mr Kordek said the defendant funded “Vic’s share” of the deposit paid by BADC for Gregory Hills.
The plaintiff’s affidavit evidence included reference to the making of the loan by or through him by way of a bank cheque dated 4 August 2010 for $100,000 drawn in favour of the defendant: at [21].
The plaintiff also referred to the second, third and fourth loans in [22]-[26] of his primary affidavit.

Plaintiff’s Affidavit Evidence: The Gledswood Hills Project and the Deferral Agreement

In [28]-[30] of his primary affidavit the plaintiff gave the following evidence:

“28   In late November 2010, Michael Kordek telephoned me. I had the following conversation with Michael Kordek:-
He said:   ‘Milorad, I have bad news. K & K lost the court case, and the Oran Park project. The deposit is gone together with all legal costs. Can I come and see you?’
I said:      ‘Sure, when do you want to come?’
He said:   ‘Can I come soon?’
I said:      ‘Yes, I will wait for you.’

29   About one hour after the above telephone conversation, Michael Kordek came to my office at Liverpool, and we had the following conversation:-
He said:   ‘As I told you over the telephone, K & K lost the court case. I am in a very bad situation. The deposit is gone and the legal costs were so expensive. K & K has no more money and can’t repay you now, or in the near future.’
I said:   ‘Michael, what is the option for me. I gave your company $195,000.00. What is the solution, I need money as well.’
He said:   ‘I am looking at another project at Gledswood Hills with Vic Petrovic, and some other partners. It is a very big project and K & K will have 31% in the project. We are getting approval for 160 blocks of land. Because of your help, I want to pay you back your money, and if you can wait we want to also pay you back with the value of 8 blocks of land.’
I said:   ‘I am happy to wait for that kind of deal.’
He said:   ‘I am expecting at least $300,000.00 per block.’
I said:   ‘I accept your offer and will wait. But listen, I also want to be fair to you. It will cost you about $100,000.00 per block with the DA and all that goes with it. I am happy to accept $200,000.00 per block, so K & K pay me $1.6M on top of the $195,000.00.’
He said:   ‘I am happy with your proposal, we have a deal.’
We shook hands, and the conversation continued:-
He said:   For your comfort, I will tell my business partners to add your name to the documents.
I said:   ‘Yes, I would appreciate that because I have taken your offer seriously and I may need to use my share, the $1.6M as security in any future financial transactions that I have with other parties.’
He said:   ‘Milorad, don’t worry, you can use that as security because you have a share in the project, on what we agreed.’

30   In January 2011 I was having some financial difficulties, and needed money to pay some of my creditors, I telephoned Michael Kordek and I had a conversation with him as follows:-
I said:   ‘Michael, I am having some financial difficulties. Is there any chance to help me with some money?’
He said:   ‘I will see what I can do because the projects in Ipswich and Middleton Grange are not performing how I expected. I will see if K & K has some money to pay you something.’
I said:   ‘Whatever you can do would be appreciated. Can you at least give me something in writing as proof of my involvement in Gledswood Hills and that I would be getting $1.6M.’
He said:   ‘I will do something about that.’”

The plaintiff’s evidence was that a few days after this last conversation, Mr Michael Kordek Snr telephoned him indicating that he could pay $20,000 at that time and another $25,000 in a few days. The plaintiff said he gave him banking details.
On 25 January 2011, an amount of $20,000 was deposited into the plaintiff’s ANZ bank account.
On 27 January 2011, a further amount of $25,000 was deposited into the plaintiff’s bank account.
The plaintiff then gave an account of a conversation with a Mr Nenad Cavric in his office in February 2011. He said Mr Cavric was a lawyer working with Mr Petrovic. He said on that occasion the following conversation took place:

ARCABA: “How is the project at Gledswood Hills going?”
CAVRIC: “It’s moving along and I am also a part of the project with Vic Petrovic, as a silent partner. I used my house as security to raise my share, and Vic put cash into the project and he holds 31%. I will show you how the shares are held in the project.” (at [33])

The plaintiff then said that Mr Cavric wrote on his whiteboard and he recalled seeing names on the whiteboard and details of their shareholding in the Gledswood Hills Project. He said he did not see his name on the whiteboard, but saw the name K&K. He said he expected to see his name next to it. He said he had the following conversation with Mr Cavric:

“I said: Why isn’t my name listed because I have a share with K&K through Mr Kordek.
He said: You will need to speak to Michael Kordek, because he only told me to put his company down and he would arrange your involvement between the two of you.”

Mr Cavric did not give evidence. The failure by the plaintiff to call him as a witness was relied upon by the defendant as a basis for a Jones v Dunkel inference.
It is noted that the plaintiff had known Mr Cavric for some time, he having worked with Mr Petrovic: Plaintiff’s First Affidavit at [32]. Mr Cavric had been closely involved in the Oran Park Project. He had an involvement with Mr Petrovic in that project and the Gregory Hills Project.
Following the meeting, the plaintiff said he met with Mr Kordek Snr either at his office or in the Cucina Restaurant and that they had the following conversation:

“I said:   ‘Ned came to my office and he drew on my white board, the shares in the project. K & K was there, but my name was nowhere. I asked Ned why my name wasn’t there and he told me to speak to you. What is going on?’
He said:   ‘Milorad, it’s too complicated with so many parties involved. You are included as part of the 31% share in K & K. You have my word and you should not have to worry about that.’
I said:   ‘I trust you Michael, your word is enough.’” (at [34])

About this time, the plaintiff said that Mr Kordek told him that he was involved in two other projects, one in Ipswich Queensland and the other at Middleton Grange, near Liverpool. The projects were being conducted, according to the plaintiff’s account of Mr Kordek’s conversation, through Kordan (Australia) which had a 50% share.
Shortly after that conversation he said that Mr Kordek introduced him to a number of people associated with Masterton Homes.

Matters arising from the alleged conversations in paragraphs [29] and [30] of the plaintiff’s primary affidavit

On the plaintiff’s account of the conversation set out in paragraph [29] there was no reference as to how long the plaintiff was being asked to “wait” to receive repayment of the $195,000.
Secondly, there was no reference in the conversation as to timing of payment the amount of $1.6M, or as to the events that would trigger payment.
In submissions for the defendant it was observed that the plaintiff’s evidence established that at the time of these alleged discussions, the plaintiff had had no experience of subdivision costs and there was then no definition or feasibility plan as to what would be involved in the project if development approval was given. The defendant contended that there was no basis established whereby the plainiff could have assessed costs of the development at $100,000 per block.
Notwithstanding the above matters, the plaintiff’s evidence was that in the above discussions he said to Mr Kordek “I’m happy with your proposal, we have a deal”.
As noted above, it was after this conversation that the plaintiff said he told Mr Kordek Snr that he would appreciate having his name added to “the documents” in case he needed to use his “share” of $1.6M as security in relation to future financial transactions.
There is no reference in the plaintiff’s evidence as to what “documents” were being referred to and no statements as to how or when the “deal” would be documented.

The Plaintiff’s Credibility: A Central Issue

In the absence of any reasonably contemporaneous memorandum or other record of the Deferral Agreement the plaintiff’s credibility in terms of both his truthfulness and reliability essentially became a central issue in the proceedings. Fundamental to the defendant’s defence case was the asserted inherent improbability of the plaintiff’s case which asserted that in return for his agreement to extend the time for repayment of loans totalling $195,000, the defendant through Mr Kordek Snr volunteered to pay the plaintiff a very large amount of money, namely, a $1.6M share of profits from the Gledswood Hills development project.
By any measure such an arrangement would in broad terms represent an exceptionally generous outcome to the plaintiff for his agreement to extend the loan repayment date(s). The defence case challenged the claimed agreement at a number of levels. Additional to what was contended to be the inherent implausibility of any such alleged agreement, the defendant’s case directed attention to the conduct (the relevant acts and omissions) of the plaintiff following the alleged making of the agreement sued upon – the post alleged contract conduct – which the defendant contended was inconsistent with an agreement having been made and contradictory of it.
The plaintiff was cross-examined over three days. In the course of the cross-examination a number of credibility issues were raised with him, some of which went to the plaintiff’s motivation. For the purpose of analysis, these have been separated in the discussion that follows into five categories:

The plaintiff’s business model and financial pressures;

The alleged promise to add the plaintiff’s name to deeds concerning the project;

Caveats lodged on properties owned by “Kordek’s interests”;

The plaintiff’s delay in seeking legal advice in respect of the Deferral Agreement;

Mr Kordek Snr’s alleged avoidance of the plaintiff between March 2011 and October 2011; and

Conversations between the plaintiff and Mr Kordek Junior in 2012.

(1) The plaintiff’s business model/financial pressures

The plaintiff, as noted in the Introduction above, acted as a finance broker from approximately 2001. In or about March 2005 he became an authorised representative with CBA. In the period that he acted as a CBA representative he entered into a number of loan transactions in the name of corporate entities operated by him including in particular Mortgage Café. These related to residential home loan products. Whilst an authorised representative of CBA, the plaintiff was only permitted to broker products for the bank.
In cross-examination it emerged that over a period of years, the plaintiff operated what was referred to as a ‘business model’ borrowing funds from friends or other persons which he would then on-lend in the course of his business to others: (T 61-62). Over a period of time, the plaintiff or his corporate entities fell into default and failed to repay the loans. This resulted in various lenders who had advanced loans to him, threatening to take action, or actually taking action, to recover outstanding loan monies.
The plaintiff’s difficulties were compounded, due to the fact that in a number of instances he encountered problems in recovering monies that he had advanced by way of loans from defaulting borrowers. This combination of circumstances progressively brought significant increasing financial pressures to bear upon the plaintiff over a period of years.
He was cross-examined at some length in relation to these matters. They were said to provide both an explanation and a motivation for what the defendant maintained was a “false claim” in the present proceedings: (T 40).
The plaintiff was cross-examined upon the following loan transactions:

(i) Loans from Ray and Bonnie Miller and Beta Publishing Pty Limited

Exhibit 2 is a copy of a letter written by Wright Lawyers and Associates dated 16 January 2013 addressed to the Senior Legal Counsel of CBA.

In it, Wright Lawyers advised that their clients had entered into various loans in favour of the plaintiff over a period of 3 years (August 2008 to December 2010) for amounts totalling $500,000.

The letter stated that the plaintiff had allegedly held himself out to be acting for and on behalf of the CBA with him using the bank’s letterhead, business cards, facilities and technology information systems.

Wright Lawyers advised that as at the date of the letter, their clients maintained that no interest had been paid by the plaintiff or his company on the monies that their clients had loaned to him on or about 25 October 2011. The letter stated:

“(7) We confirm that Mr Arcaba was known to Mr Miller form [sic] approximately the middle of 2006 with Mr Miller having lent funds on a short term basis to Mr Arcaba [sic] Company First Class Mortgages (FCM).”

The letter stated that Wright Lawyers understood that the CBA was aware of the plaintiff’s actions while operating the Liverpool Mortgages Innovation Centre on behalf of the CBA. The letter foreshadowed legal proceedings.

(ii) The Cubrilo Loan

The plaintiff, via First Class Mortgages, borrowed loan funds from Jovas and Radojka Cubrilo on 23 December 2008. The plaintiff failed to repay the principal monies owing.

(iii) The Maric Loan

The plaintiff or one of his corporate entities borrowed $150,000 on 23 May 2008 from a Mr Velemir Maric. Mr Maric apparently made a complaint to police as to the failure by the plaintiff or any of his corporate entities to repay the loan monies. Included within Exhibit 3 is a copy of a statement dated 12 September 2011 in which the plaintiff confirmed that he had received from Mr Maric $50,000 and agreed to repay the money by 19 May 2011. The evidence indicated that the monies were eventually repaid (on 15 September 2011).

(iv) The Spoljar Loan

In about 2008-2009 the plaintiff borrowed $180,000 from Bartol and Ivana Spoljar. The plaintiff did not repay the loan monies on the due date and entered into an arrangement to repay by way of instalment payments.

The plaintiff said that as at the date of his cross-examination, he had not repaid all the monies: (T 58: 35-40).

Following the transaction entered into with Mr Maric, the plaintiff received a letter from the CBA addressed to him and Mortgage Café Pty Ltd dated 28 October 2011. The letter was entitled “Warning Letter”. It referred to notification to the bank of a dispute arising from allegations made by Mr Maric relating to what was referred to as an “over the counter withdrawal made from his deposit account…on 23 May 2008 for the amount of $50,000…”

The author of the letter stated:

“You responded to the allegations in the above meetings and although it is common practice to lend money within the Serbian community, you did acknowledge that it was a conflict of interest to borrow funds from client Maric that you have provided products for. You also acknowledge your actions in borrowings [sic] funds from Commonwealth Bank clients Bonny & Ray Miller and Bartol & Ivana Spoljar who you have also provided products for is deemed a conflict of interest.”

The letter advised that, without prejudice to any existing rights that the bank had, it had continued ongoing accreditation of the plaintiff’s company subject to matters set out on p 2 of the letter, one of which was that the plaintiff immediately cease entering into any future ‘personal’ borrowing arrangements with ‘friends’ who are clients of the Bank for which he also maintain a business relationship.

In cross-examination it was put to the plaintiff:

“Q. You’re under an enormous amount of pressure at this time from Mr and Mrs Miller and Beta, aren’t you?
A. Yes.
Q. And the pressure that you’re under is that they want their money, don’t they?
A. Yes.” (T 60: 35-50).

As indicated above, the reference to “at this time” is a reference to October 2011, being the date of the CBA’s abovementioned letter.

The plaintiff admitted in cross-examination that Mr Cubrilo had been chasing him for repayment of loan monies and that he had received a letter from Mr Cubrilo’s solicitor. It was put to him that CBA were not pleased with him as they had already given him a letter and a final warning. When asked what he had done with the money that he had raised, he replied “I lent money and I used it as capital in the company”: (T 61: 20‑25).

As to his method of operation it was put:

“Q. So the business model, as it were, is to borrow from Beta or Mr and Mrs Miller and/or others such as the Cubrilos and Maric and others--
A. Yes.
Q. –and on-lend to others at a higher rate. And is that right?
A. Yes.
Q. So the difference is your profit, effectively?
A. Yes.
Q. So you’re a moneylender, effectively?
A. Yes.”: (T 61: 35-50).

He agreed that his profit-taking depended upon people to whom he had loaned monies repaying him or his company but that the “model” broke down when people didn’t repay him.

“Q. So that if someone doesn’t repay you, you can’t repay your creditors, correct?
A. Correct.
Q. It becomes more difficult to repay your creditors?
A. Yes. Yes, it is.”: (T 62: 5-20).

He agreed that the Cubrilos had not been “easily put off” as some others had been and that they had been pressing him for payment. The plaintiff replied:

“A. Not really, but they’re just asking.
Q. Asking for payment?
A. Yes.
Q. How much did you owe them at that stage, about $700,000?
A. Yes.
Q. All they were doing was just politely asking you for payment?
A. Yes.”: (T 62: 40-63).

He agreed that at that time, persons to whom he had lent money had not repaid loan monies. He agreed, when put to him, that a great deal of money had been lost, that hundreds of thousands of dollars had “disappeared”. He answered in the affirmative: (T 64: 30-40).

It was then put to him:

“Q. Because you lent it without security?
A. Correct.
Q. And you had no way of repaying those to whom you owed money? 2011, 12, 13 and 14 and even today?
A. Yes. Yes.
Q. That has put an enormous financial strain on you, hasn’t it?
A. Which time?
Q . 2011, 12?
A. Yes, it is.
Q. 13, 14 and 15?
A. Yes.
Q. An enormous financial strain on you?
A. Yes.
Q. This case is a bit of a lifesaver for you, isn’t it? It enables you to re-establish yourself by winning this case and repaying your creditors, doesn’t it?
A. No.
Q. That’s not why you’re running this case?
A. No.
Q. I want to put to you and give you an opportunity to answer it directly: you have fabricated this entire case for the purposes of getting a judgment in order to repay your creditors.
A. It’s not true.”: T 64: 40-65.

The plaintiff said that on the specified date he left the CBA and sold his business: T 65: 30-40.

Exhibit 5 is a copy of a letter of termination addressed to the plaintiff from CBA dated 2 April 2012.

(2) The alleged promise to add the plaintiff’s name to deeds relating to the Gledswood Hills Project

It was part of the defendant’s case that, contrary to the plaintiff’s evidence, there had been no discussion on the subject of adding the plaintiff’s name “to the documents”. As noted above, on the plaintiff’s evidence, the conversation concerning the alleged Deferral Agreement and the statement as to his name being added “to the documents” occurred in late November 2010. On the defendant’s case, the plaintiff however failed to take any active steps to ascertain or have confirmed that his name had been added to “the documents” as he alleged Mr Kordek Snr promised. Given the amount allegedly promised by Mr Kordek Snr ($1.6M) in relation to the plaintiff agreeing to defer repayment of an amount of $195,000 the question as to why the plaintiff did not press for the Deferral Agreement to be recorded in writing was raised with the plaintiff.
In cross-examination, he was asked what he understood by his name being added to “the deeds”. The plaintiff replied:

“A. To put me in the deeds, from my understanding, he promised me to put on the shared holding where he was 31 per cent, you know, put in my name and as a deal that he owed to me 1.6 from his share. That’s my understanding, he promised me that.” (T 138: 15-20).

A little later he was asked:

“Q. No, I’m not asking for your understanding. I’m asking you something entirely different. Did he say to you, ‘I will put you on the share and on the deeds’? On the share or on the deeds? What did he say to you? That’s what we’re trying to get to.
A. Says to me, ‘I put you in deeds of my 31 per cent share where he’s saying that you will get $1.6M interest here and asking because to get something as a proof of that money from him owed to me I can use as a potential tomorrow, you know, security that I got it and expected some money in one or two years, you know, as my future transaction my business.
Q. So a key term, which you say you discussed with him, of the agreement, was that you would be put in the deeds as security, correct?
A. Correct.
Q. Is that anywhere in your Statement of Claim? That’s nowhere in your Statement of Claim, is it?
A. It have to be.” (T 138: 25-45).

It was put to him that there was no reference at all to that matter in the Statement of Claim, notwithstanding that he claimed that it was an “important term”: T 139: 1-6.
He was then pressed:

“Q. That’s because you didn’t instruct Mr Stojanovic to put that in your Statement of Claim. Correct?
A. Correct.
Q. So when you read and verified this, you were content from all the material allegations are fact, all the conversations, all the terms, all the material terms which you discussed with Mr Kordek Snr were correctly reflected in here?
A. Yes.
Q. So does it therefore follow that the omission of ‘I will be in the deeds of security’ was not something that was discussed or was not an important term of the agreement. Is that right?
A. It is very important.” T 139: 5-25.

In further cross-examination he was asked whether he had an understanding from his conversations with Mr Kordek Snr that “on the deeds” would require not only his agreement but also the agreement of others involved in the project, namely, Mr Petrovic, Mr De Lutiis and Mr Covington. The plaintiff replied that Mr Kordek Snr did not refer to that fact: (T 139: 45 to T 140: 10).
It is noteworthy that the plaintiff took no steps at this stage to seek any written confirmation of the Deferral Agreement, or that he would be entered in the “deeds” for the Gledswood Hills development project.
It was put to the plaintiff that his evidence concerning the entire Deferral Agreement referred to in paragraphs [12], [13] and [14] of the Statement of Claim, was a fabrication. He denied that proposition: (T 141: 20-25).
At a later point in his cross-examination, Mr Arcaba claimed that in his conversation with Mr Kordek Jnr in February 2012 he asked Mr Kordek Jnr to persuade his father to deliver on his promise: “To bring his father to me and bring his father to position that he put me on the 31 per cent in the paper together with another in his shareholding”: (T 176: 35-40).
Mr Kordek Jnr disputed and denied that there had been any conversation between him and the plaintiff to that effect. Mr Kordek Jnr’s account of his dealings with the plaintiff is discussed below.

(3) Caveats lodged by the plaintiff on properties owned by “Kordek’s interests”

In June 2012 the plaintiff lodged individual caveats on two titles relating to properties owned by Kordek Real Estate Pty Ltd and K & K Real Estate Pty Ltd. Copies of the caveats were included in CB1 at [246]-[249].
In Schedule 1 to the first caveat (ending in numbers 068K) the facts said to support the estate or interest claim were:

“The caveator in both caveats inserted in Schedule 1 the facts as supporting the estate or interest claimed in the following terms: ‘the caveat or loan the sum of $750,000 to the registered proprietor’.”

The plaintiff was cross-examined at some on the basis that the facts recorded in the caveats were inconsistent with the making of the Deferral Agreement.
On 29 June 2012 the solicitors for the two Kordek companies wrote to the plaintiff. A copy of the letter was included in CB1 at 250. The author of the letter of CBP Lawyers disputed the fact of loans for $700,000 having been made. The letter stated, “Firstly, our clients never borrowed any money from you and certainly never … advanced the amount of $750,000”.
The letter from CBP Lawyers stated that, on instructions, an amount had been invested by the plaintiff in a project at Oran Park which was unable to proceed and such monies were not by way of a loan.
It was noted that in any event, the plaintiff had been paid an amount of $95,000 of the $195,000 amount which the plaintiff originally “invested” though there was no obligation for him to do so.
It was also observed that the arrangements that the plaintiff had in respect of the Oran Park project had nothing to do with K & K Real Estate Pty Ltd or Kordeks Real Estate Pty Ltd and that the plaintiff had never advanced any funds to them.
The letter required the plaintiff to withdraw the caveats.
On 10 July 2012 the plaintiff replied to the letter from CBP. A copy of the letter of 10 July 2012 is included in CB1 at 263. The letter stated:

“I refer to your letter dated 29 June 2012.
Your letter contains a number of factual errors. I loaned the money to K & K Real Estate Pty Ltd in order that it may pay your fees in relation to the Oran Park Project that was lost in the High Court.
No doubt you will see the irony in the in present circumstances. I forward this amount of money at direction of Mr Michael Kordek, who is acting of [sic] behalf K & K Real Estate.
The terms of my agreement with Mr Michael Kordek were that, in return for the loan of $195,000, K & K Real Estate would ensure that I would receive $750,000 when it was in funds or within two years at the latest.
Alternatively, if the Oran Park Project was successful, Mr Kordek and K & K Real Estate would provide me with 5% of the gross proceeds of the Project.
It is evident that the return of certain sums of money, ie the $95,000 evidences that there was an agreement between myself, Michael Kordek and K & K Real Estate.
Accordingly I will be filing a Motion in the Supreme Court shortly to protect my interest and to fight lapsing order.
If you would like to discuss any aspect of the matter, please contact my mobile …” (Emphasis added)

The plaintiff was cross-examined on the above letter by him to CCBP: at (T 207-212).
In relation to the reference to “the terms of the agreement” in the plaintiff’s letter of 10 July 2012, he was questioned on inconsistency between his statements in his letter and his evidence concerning the Deferral Agreement:

“Q. So is his Honour to understand from this letter that this agreement extends to Gregory Hill or Gledswood Hills? When you’re talking about the ‘terms of my agreement’, that’s the agreement that you say entitles you to 1.6 million dollars?
A. Yes. It is.
Q. It is? Why is there, then, no reference to a deferral of the payment of $195,000, the 1.6 million that you get and the repayment of the 195? Why is that not set out in this letter?
A. Sir, I'm just, your Honour, I just reply this letter on request on, actually lodgement of caveat. And I was on that time so depressed, so upset, and I just got it given advice of the, I can't say advice, it's change opinion with Mr Nenad Cavric. And what he did to me on that morning, and I replied just to explain that 750 is being part of caveat amount what I put. And all the time we was meaning and thinking that Oran Park is fell, is gone, that our agreement stay what you see in after for Gregory, actually Gledswood, and I just answer to that company regarding what I did with one, actually two caveat. And I just referred that.
And I can't say how I just use it if you can understand me, to appropriate answer for that request from me, I use a 750 here, meaning only for caveat amount what I put, what I say yesterday, I try to protect my situation because when I got that information from Nenad Cavric and another gentleman who told me they're selling the property, Nenad he told me another things, Nenad I feel sorry you because he left the country. And another things is not fair what he did to you because he's got it, I got it very confidential information, I got it, that he got it, he was paid by his share for Kordek company, by 40 million dollars. He make me very angry why he didn’t come to you and pay your money back. He told me that, and after that I just gone in so big depression.
Try to see, actually, you know, see how I'm just been tricked from him, he use me and he didn’t from day 1 thought to do fair and correct what he promise me. And on that day when you see that letter, I've been paid just amount of 95,000. That means he even my money what I borrowed to him, 100,000, plus 1.6 he never come back. Actually they got it, I got it after 2 years, when he just send them letter. And another things, your Honour, Mr Kordek, when I sended that letter and I explain yesterday the full consequence and understanding what they mean caveat, that I been advised that I can't get any result because it was a interest of the property. But I try to make it noisy. And that time, maybe after one or 2 weeks I receive call from Mr Michael Kordek from Poland.
And he call me, ‘Mr Arcaba, Milorad, what you doing, I'm in very bad position, I'm very sick, I'm very, very sorry, what's that happened, I'm went to bad financial situation, that people over there’. I ask him ‘who people’ and after he told me ‘they did so bad things to me and don’t do that, what you doing, because you knew that it's not fair’ ”: (T 207: 8-45)

A little later, the plaintiff was further cross-examined about the agreement to which he referred in his correspondence with CBP:

“Q. Can I ask you though, so that we're clear, what you say was to occur in return for the non-immediate payment of $195,000, you say in this letter you were to receive 750,000, when it was in funds or within 2 years. And then you then say there was an alternative and that was in relation to Oran Park project. But what I'm wondering, why do you say nothing about Gregory Hills or Gledswood Hills. Isn't that the most obvious thing to say to Mr Roomor, ‘listen I'm due 1.6 million dollars, where's my money?’.
A. Yes. I didn’t.
Q. You didn’t.
A. Meaning just for answer for that caveat of 750 what I put.
Q. You didn’t understand yourself to have the obligation to explain to Mr Roomor the nature of your claim against the Kordek's and K & K. You didn’t think you needed to explained that?
A. Yes.
Q. But yet you explained the different claim you said you had against K & K and the Kordek's and that was for 750. Do you see that?
A. Yes.
Q. You mention nothing about Gregory Hills.
A. I didn’t.
Q. The reason this letter says nothing about Gregory Hills or Gledswood Hills is because you never had any agreed or any part of the project.
A. I had.
Q. At 5%, 8 blocks, 1.6 million, or any of these permutations or combinations?
A. It's not true. I had agreement.”: (T 210: 15-45); see also (T 216: 10-15).

A little later, he was again asked about the caveats as follows:

“Q. Do you remember yesterday when we, and I'm not traversing on old ground, your Honour, remember yesterday we had a conversation about how it is that each of the caveats had a $750,000 figure?
A. Yep.
Q. Do you remember yesterday, to paraphrase your answers you took a rough and ready valuation of two properties?
A. Yes.
Q. And you came to a figure that it would be, it was 1.7 or 1.5, but you were demanding 1.5. Here you only talk, here in the letter, in the fourth paragraph, you're only talking about 750,000?
A. Because it's letter just related to one caveat.
Q. That’s false evidence isn't it? That’s just a patent lie on your behalf now isn't it?
A. No.
Q. Can you go back to page 250 then. That’s Roomor's letter isn't it. That’s the letter you're replying to?
A. Yeah.
Q. Do you want to have a quick glance in that and in particularly the third last paragraph.
A. Last paragraph.
Q. Third last paragraph.
A. Yes. I read it.
Q. So this letter was about both caveats wasn’t it?
A. Correct.
Q. Why did you just tell his Honour that you were only writing about one caveat?
A. Because I, I probably missed it. I thought for only one, but is being two over there.
Q. You're just happy to say anything that comes to mind aren't you?
A. No. It's not true.
HIS HONOUR:
Q. Did you withdraw the caveats?
A. Yes. I did.”: (T 211: 31 to 212: 25).

On the issue of the caveats the plaintiff was challenged as to the inaccuracies contained within it as follows:

“Q. I should formally put to you that what you wrote in this letter was not true, correct, the letter of 263? There was no debt of 750,000. Correct?
A. Correct.
Q. There was no debt of 750,000 times two as in the caveats. Correct?
A. It's incorrect, it was that $1.6M.
Q. Two times 750,000 is?
A. Yeah, but
Q. Two times 750,000 is?
A. One and a half plus $100,000.” (T 215: 36-49).

The plaintiff’s attention was drawn to the fact that he had sworn statutory declarations stating, inter alia, that to the best of his knowledge the information and belief “…the caveator has a good and valid claim to the estate or interests set out in Schedule 1”. It is plain, of course, that the statutory declarations in respect of the plaintiff’s assertions as to the existence of an estate or interest in the specified properties contained deliberate falsehoods.

The plaintiff acknowledged in cross-examination that he knew what legal and equitable interests were: (T 186: 25-40) and that he had stated in the caveat that he had loaned the sum of $750,000 to the registered proprietor but admitted that in fact he had never lent either Kordek Real Estate Pty Ltd or K & K Real Estate Pty Ltd $750,000: (T 187: 5-11 and 189: 1-25).
In answer to the question how he could maintain that the statutory declaration was truthful, the plaintiff replied:

“A. Your Honour, I'd been advised by one of the neighbour, Mr Michael Kordek, that he advise his friend that he buying his house, and I start to be very nervous, very in the panic, thinking that he try to sell everything to leave. I understand what I did here, and he's got a property, the KK in Cecil Hills. It's a residential house property and he's got another block of land but it was under another company name, Michael Kordek, and I knew that I can't use it, but I make, like, a noise to stop it, that process of the selling, and after that I withdraw. I did it by my knowledge and after all that thinking, stress, whatever, to protect my position to bring them back to the table to protect my interest in Gregory Hills regardless that another two property was over there. I did it, try to protect and make a noise to him, to his partner, to everyone, and I - on the request of his solicitor, it was withdrawn. I knew it. Nobody advised me for this. I did it by myself because I'm very desperate in my mind what he did to me, what he try to do, and it's not come to me to talk, to prepare to make some final agreement to put in this. All right. There's the reason why I did it.” (T 189: 33-47).

He agreed to the proposition that he had completed and lodged the caveats in order “to bring pressure to bear”: (T 192: 45-46). He was then asked:

“Q. So is this a fair assessment: the end justifies the means, yes? In other words, anything that would force the Kordeks to do what you wanted, that was fair game, is that right? That’s what these caveats are. It’s a tactical weapon, isn’t it?
A. For me?
Q. Yes.
A. I just try protect, yes.
Q. The caveat, a third of the way up, or a quarter of the way, the caveat ‘or loan sum of $750,000 to the registered proprietor’, yes?
A. Yes.
Q. Do you see that? Now, of course there was no loan of $750,000 to K & K Real Estate Pty Limited. Do you see that?
A. Yes.
Q. Do you agree with that?
A. Yes. Agree”: T 193: 1-16.

During his cross-examination, the plaintiff was asked:

“HIS HONOUR
Q. Mr Arcaba, I understand your evidence to be this: that the rationale behind lodging these caveats was to bring some pressure to bear on the defendant to deal with you--
A. Yes.
Q. –in relation to what you said was the contract made in November 2010, whereby you were to be paid $1.6M?
A. Yes, your Honour.
Q. This caveats were lodged on or about 22 June 2012. Rather than using the devices of these caveats to bring pressure, why didn’t you simply just instruct a solicitor, Mr Stojanovic or some other solicitor, to put the matter on the record. Just to write and demand that the contract you say that was made be honoured?
A. Because I was scared when – if he sell it, he leave.
Q. Sorry?
A. I was scared if he selled it, you know, and he leave, because they already started talking that they – they leaving the country.
Q. Is that your explanation for not--
A. No.
Q. –coming out in the open, as it were and having a solicitor make a demand in terms there was an agreement made, a contract, that the terms of the contract were as you assert in these proceedings? And that you required the defendants to give an undertaking that they would honour the agreement, why didn’t you do that?
A. On a – I didn’t do that because on that time I didn’t have any documents to support and to prove that verbal agreement. I got it support and proof in the verbal from Ned Cavric and another people but I didn’t on that time got it any evidence, because I didn’t taught (sic) about that, I just tried to make a noisy to stop to sell it, to encourage to come back, talk with me”: (T 194: 1-35).

(4) The plaintiff’s delay in seeking legal advice in respect of the Deferral Agreement.

The plaintiff was asked why, as he had been talking to a lawyer (Mr Cavric) had he not sought legal action to be taken in respect of the Deferral Agreement:

“Q. Why not simply say ‘Ned, can you please write a letter to me on New South Wales compensation lawyers letterhead. Ned, tell them they owe me 1.6 million dollars.’ Why not instruct him to do that?
A. Because I couldn't find at that time that is being any positive effect because simply he left country. Because he left the country.
Q. But K & K was still here.
A. He left the country. He solded his interest, he didn’t pay me money back and his son told me ‘Don’t call me anymore, talk with my father and you make a deal with my father, don’t call me anymore’. And I just left, you know, and accept as a reality that I lost everything. That’s the reason.
Q. But you hadn't lost everything more than a year later. You issued proceedings against K & K?
A. Correct.
Q. So what I'm asking you, K & K Real Estate Proprietary Limited didn’t get on the plane and go to Poland. They were still here. Why not get New South Wales compensation lawyers, Mr Cavric to write a letter demanding
A. I don’t know why.
Q. You don’t know why?
A. No.”: (T 213: 32 to 214: 5).

The plaintiff was further questioned on this aspect:

“HIS HONOUR
Q. I'm sorry, I thought the whole idea of using the caveats as a lever to get K & K to face up to its responsibilities to you under the contract you allege?
A. Yes.
Q. That was the reason you lodged the caveats wasn’t it?
A. Yes. The reason
Q. Then why when you got the letter from Colin Biggers & Paisley at 29 June 2012 did you not use the opportunity? ‘I've now got their attention. Now I'm going to let them know the true story about the deal or the contract that was made, whereby I was to be paid 1.6 million dollars’. Why didn’t you then take it, take the opportunity, seize the opportunity to drive home the point that you were owed 1.6 million dollars under the contract you say was made?
A. Your Honour, simply because I, I couldn't find any way that I can get it because he just left. And I just got it even advice, not advice, Ned Cavric, and his son he told me that KK doesn’t have money and Mr Kordek he told me the company is like a going to bankruptcy, that he's a big financial problem. And I, I see now that I didn’t use in that time that opportunity, maybe I should, but I didn’t.”: (T 214: 10-30).

(5) Mr Kordek Senior’s alleged avoidance of the plaintiff: March 2011 to October 2011

It was part of the plaintiff’s case that Mr Kordek Snr from about March 2011 to October 2011 took steps to avoid having contact with him, including his alleged failure to answer the plaintiff’s telephone calls: Affidavit sworn 5 May 2014 at [40].
The plaintiff said that in about mid 2011 he attended the offices of NSW Compensation Lawyers at Liverpool. He said that he saw Mr Kordek Snr there and had a conversation with him in which the plaintiff claims to have said to him “I’m having a bad feeling that you have taken advantage of me, and I want to secure my $1.6M” and that Mr Kordek responded “At the moment, I am under huge pressure, but I promise you everything will be okay and you will get your money”: Affidavit 5 May 2014 at [41].
Mr Kordek Snr strongly disputed the allegation that he avoided the plaintiff during this period or that he did not answer his telephone calls.
In cross-examination, it was put to the plaintiff that between March and October 2011 there were in fact 121 phone calls from Mr Kordek Snr to him. The plaintiff simply responded that that was not true and it was impossible: (T 222: 40-50).
He agreed that he attended a lunch on 29 April 2011 in the presence of Masterton personnel. Mr Kordek Snr was also in attendance. He was asked why he did not on that occasion confront Mr Kordek Snr for avoiding him and simply asking him “where’s my money?” The plaintiff agreed that he did not say anything along those lines to him. A little later, the plaintiff said that he did not do so because he did not want to embarrass Mr Kordek Snr in front of others in attendance. When asked why he could not have taken him to one side and then raise the issue with him, he gave the following evidence:

“Q. You couldn’t call him to the corner and--
A. And because, because, because he told me, because he told me, ‘Milorad, you don’t worry, everything be fine, everything be fine, project going well’”: (T 223: 50 to T 224: 5)

When it was then put to him that these words were, on his account, being spoken by the man who, he claimed, had been avoiding him for a period of some two months, the plaintiff responded

“A. Yeah. He avoiding me to put, and come to make a, a, a agreement, onto this, what I expecting from him to protect me. I got it the security of 1.6 in his 31 per cent . That was the main reason why I said because --
Q. But why not simply say to him at the luncheon in a quiet corner ‘why am I not getting documents protecting my 31% interest?’?
A. He told me simply that ‘it's little bit complicated now, but you don’t worry’. When he told me little bit complicated from my understanding, that in arrangement and agreement how they set up that piece over there, it's something that he can't jump in, but I trust him that deals be, and I trust him that he do that by myself. And I—“ (T 224: 6-16).

Mr Kordek Snr in his affidavit sworn 30 September 2014 disputed the plaintiff’s evidence that he had avoided the plaintiff. In that respect, he stated at [101]:

“…I was not difficult to get in contact with between March 2011 and October 2011. I had numerous communications with Milorad about Middleton Grange, over the telephone, in person and by email. I saw Milorad numerous times at either the Bonnyrigg Sports Club or Cucina Restaurant.
Exhibited at pages 219 to 260 of exhibit MKS-1 is a series of emails showing communication between myself and Milorad in relation to Middleton Grange between March and October 2011. I continued to receive calls from Milorad until around 7 March 2012. Since the late 1980s, my mobile phone number has been xxx019. I have always known Milorad’s number to be .xxx818.”

In relation to email communications between Mr Kordek Snr and the plaintiff in 2011, the defendant relied upon copies of emails exhibited to Mr Kordek Snr’s first affidavit at pp 219 to 260 of exhibit MKS-1. He said that those emails related to communications with the plaintiff between March and October 2011. An examination of the individual emails in question, establishes that there was email contact between Mr Kordek Snr and the plaintiff on the following dates: 30 April 2011; 10 May 2011; 16 May 2011; 5 June 2011 email from Mr Kordek Snr to multiple persons, including to the plaintiff’s email address; and 25 July 2011 email from Mr Kordek Snr’s email address to the plaintiff’s email address.
The objective evidence as to the email correspondence directly calls into question the plaintiff’s credibility in relation to his allegation that Mr Kordek Snr had been avoiding him in the abovementioned period in that he would not answer his telephone calls and stopped coming to his office. (See also his evidence in cross-examination at T171-2 and T222.)
At a social level, I note that the plaintiff sent an email on 2 April 2011 which stated “Bonnyrigg W Eagles play home games tonight AG. APIA 7.pm. See there in Vic Petrovic box”: (CB4 at 1081).
The abovementioned luncheon held with the Masterton Homes personnel, of course, occurred in that period (29 April 2011). There is no evidence that explains why the plaintiff did not raise with Mr Kordek Snr the alleged failure to have recorded the plaintiff’s alleged entitlement to $1.6M upon the sale of Mr Kordek Snr’s interest in the Gledswood Hills Project.
When challenged as to why he failed to raise it with Mr Kordek Snr at the luncheon on 29 April 2011 “in a quiet corner”, or as it was put, ask him “Why am I not getting documents protecting my 31 per cent interest?” the plaintiff’s response at T 224: 10-16 was totally unconvincing, asserting that Mr Kordek simply responded “it’s little bit complicated now, but you don’t worry”.
In cross-examination it was put to the plaintiff that emails and text messages in relation to attending the Bonnyrigg White Eagles game and in relation to the Middleton Grange Project were said to undermine his evidence:

“Q. These are the texts to someone who’s avoiding you, are they?
A. Yeah. He avoid me on that time.
Q. He avoid you?
A. Yes.
Q. But nevertheless you make arrangements to see him at the game and you just tell him that you also got buyers and you procured finance for four people to buy five blocks of land at Middleton Grange, yes?
A. Correct. But he avoid me purposely for my affidavit where it says ‘he avoid to come to put me on the deeds’ and after that, you know, it is all that is here, true. I SMS’d to him because it’s only one way to be in touch with him. And you say that he call me. Yes, he did. But he tried to avoid me because we’ve been on the regular basis nearly every day in the contact.”: T 225: 40 to T 226: 5.

The plaintiff’s evidence on this aspect was dissembling and obfuscating. His evidence in further cross-examination at T 226-227 is also noted.

(6) Conversations between Mr Michael Kordek Jnr and the plaintiff in 2012

The background to the exchange between Mr Michael Kordek Jnr and the plaintiff (discussed below) is that between December 2011 and January 2012 Mr Kordek Snr underwent a prostate operation. Mr Kordek Snr said he was bedridden for a period. In mid March 2012 he left Australia for medical treatment in Croatia and then went to Poland to be with his wife to convalesce and recover. He remained in Poland until 6 September 2014: affidavit of Mr Kordek Snr 30 September 2014 at [89].
According to Mr Kordek Snr from about late January 2012 he had a number of conversations with the plaintiff during the course of which Mr Kordek Snr said that the plaintiff said words to the following effect:

“Michael, I need you to give me a piece of paper that says K & K owes me money. In return I will give you a piece of paper that says I owe K & K money. I need this paper, I will be murdered or I will go to gaol. I’m in big trouble.” (Mr Kordek Snr’s affidavit 30 September 2014 at [90])

Mr Kordek Jnr swore an affidavit in the proceedings on 30 September 2014. In it he stated that he is a director of the defendant company. His affidavit was made in response to the affidavit of the plaintiff sworn 5 May 2014.
Mr Kordek Jnr obtained his Real Estate Licence in 2004 and in 2006 graduated from the University of Sydney with a Masters of Professional Accounting.
From around 2008 he said he was the Accounts Manager of K & K and as such was responsible for recording all of the company’s financial transactions and supplying information to K & K’s accountants.
He became a director of K & K on or about 11 August 2010.
Mr Kordek Jnr set out a number of matters concerning the Oran Park Project, the Middleton Grange Project and loan advances from the plaintiff at [7]-[29] of his affidavit.
During his father’s illness he said that he moved into his father’s home/office.
At the end of January 2012 Mr Kordek Jnr said he received a call from the plaintiff. He says that they had a conversation to the following effect:

“Milorad: ‘Michael, I know your father is very sick, but I need his help with a serious financial problem I have. I owe a lot of money to some people and I haven’t got enough money to pay them back. Could you please ask him to write me a piece of paper stating that K & K owes me $550,000 payable in 24 months? I just need this to show my creditors to get them off my back. Don’t worry, I’ll never actually ask K & K to pay me this money. Can you please do this for me?’
Me: ‘I will speak to my father about this for you. Please be patient. As you know, he is very ill.’”

According to Mr Kordek Jnr he had previously met the plaintiff once several years before. He said he was not privy to the deal that the plaintiff had alleged existed between him and his father, although he said he was aware of the fact that there were loans obtained through the plaintiff as recorded in the books of K & K. He said that as he was not privy to all the conversations between his father and the plaintiff he thought it prudent to speak to his father about it. He then set out the conversation he had with his father at [34] of his affidavit.
On 17 February 2012 by reason of his father’s deteriorating health Mr Kordek Jnr was appointed under a General Power of Attorney.
Mr Kordek Jnr said that in February 2012 the plaintiff and he had a number of conversations and he set out the exchanges that he said took place at [36] of his affidavits. Mr Kordek Jnr’s evidence included the following:

“Milorad   ‘Can you provide me with a piece of paper?’
Me:      ‘K & K cannot do this.’
Milorad:    ‘Can we please meet so that I can explain my financial problems to you in detail. Some of the information I want to tell you is confidential and I don't want to tell you over the phone.
Your father told me I was in the Oran Park project; that I was a part of it. When the court case was over, your father told me he would give me a 5% interest in the Gregory Hills project as a reward, as a bonus, for helping him with money to pay the legal fees of The Oran Park Court Case. He told me he would put my name on the deeds, but that the other partners would have to agree to it. But when I looked at the deeds, my name was not there! The other partners did not accept me. I trusted your father, and now that trust has cost me my life.
You see, the problem I have now is that over the past 5 years, I've been borrowing money from the owner of the 'Vesti Newspaper'. I put the loans on Commonwealth Bank letterhead, but I accepted the loans into my private account. I owe him $700,000. I lent his money out to some Croatian guys, without any security, and now they've disappeared. Do you understand...I thought I had security in the Gregory Hills project, but my name is not there on the deeds! Now I don't have the money to pay back the owner of The Vesti Newspaper, and I'm scared I could be put into bankruptcy and I could also go to jail. My solicitor told me that if the owner of the Vesti newspaper ever lodges the loan agreements with the
Commonwealth Bank, I would be fucked and it would kill my position. I'm so stressed. I'm in a panic. I'm on the drugs.
Michael, I want to play....like a game. All I need from you is a piece of paper saying that K & K owes Milorad Arcaba $550,000 payable in 24 months. I can show this piece of paper to the owner of the Vesti Newspaper and, if he accepts it, this can buy me enough time for me to set up my new real estate business and make enough money to repay him. I'm going to call it something like ‘First Class Real Estate’. If it all goes to plan, in 24 months, I'll be a free man. I will organise the other $150,000 I owe him privately. Don't worry, I'll never ask K&K to pay me this $550,000. I'll write another piece of paper to you saying that I, Milorad Arcaba, owe K & K $550,000, less whatever I haven't gotten back from the money I put into the Oran Park Project. I will do this, on the table, in front of my solicitor, so I can't walk out on it.’”

Mr Kordek Jnr gave an account of a further communication with the plaintiff on 7 March 2012. In paragraph [37] of his affidavit he stated:

“On 7 March 2012, I received a text message from Milorad ‘Please call me back’. Exhibited at page 95 of Exhibit MK-1 is a screenshot of the text message from my mobile phone. Rather than calling Milorad myself, I asked my dad to call him, even though he was seriously ill. My dad called Milorad and I overheard their conversation, which my dad put on loudspeaker, to the effect of:
Milorad: ‘Michael, you need to do something to help me. These people have taken my money and run. About $1.4 million dollars all up. I have the evidence against them, but they're gone. Now my wife has left me and there is a divorce settlement. My daughter asked me for money to buy a book and I told her to ask her mother because I don't have any money.’

The plaintiff’s account of the alleged conversation in late November 2010 in which he stated that Mr Kordek Snr referred to the property the subject of the proposed development as Gledswood Hills Project but that suburb was not assigned that name until December 2011.

Evidence that is inconsistent with Mr Kordek Snr having referred in the alleged Deferral Agreement conversation in November 2010 as alleged by the plaintiff to the development involving 160 blocks. The objective evidence (referred to below) established that Mr Kordek Snr had anticipated the development of 158 blocks.

The evidence that was inconsistent with Mr Kordek Snr having stated that the defendant could not repay, then or at any time in the near future, the loan advances made by the plaintiff.

The alleged statement of Mr Kordek Snr in which the plaintiff claims that the defendant promised that if he could wait, the defendant would repay with the value of eight blocks of land. The objective evidence as to the plaintiff’s financial condition at that time makes it unlikely that he could wait.

The alleged statement of Mr Kordek Snr that he is expecting at least $300,000 per block was inconsistent with the evidence which indicates that Mr Kordek Snr was expecting $240,000 per block.

The objective evidence that establishes that Mr Kordek Snr’s assessment of Development Application and associated costs would exceed $100,000, being the amount the plaintiff alleged was discussed with Mr Kordek Snr.

The objective evidence against the proposition that Mr Kordek Snr promised to add the plaintiff to the “documents” or “the deeds” given the plaintiff’s experience/expertise in the drafting of loan documents and drafting mortgage securities. Had the conversation taken place, the plaintiff was well placed to take security for his position but did not. Additionally, in written communications between Mr Kordek Snr and his partners and prospective partners, the plaintiff was not copied into such communications.

If, as the plaintiff claimed, he explained to Mr Kordek that he might use his “share” (the $1.6M) as security in future financial transactions, then his taking of real estate security would have caused him to have documented his interest or “share” as a form of security but he did not do so.

In addition to the above matters, the defendant relied upon the inconsistency in the plaintiff’s pleaded case in which initially he sought to allege in paragraph 14A to the Amended Statement of Claim, that the basis for the timing and circumstances of payment were not discussed but were to be implied. However, in cross-examination he claimed that the timing issue was discussed: at [33] and [34].
Finally in relation to the submissions made as to “Version 1” set out in [32] of the closing submissions, it was noted that the plaintiff gave an account of a “whiteboard” conversation that he had with Mr Cavric in February 2011. However, Mr Cavric, who was subpoenaed to give evidence, was not called to give evidence and an adverse inference should be drawn against the plaintiff that Mr Cavric’s evidence would not assist him: at [36].
Submissions were also made on behalf of the defendant in relation to what was termed “Version 2: The recorded meeting between Mr Kordek Jnr and Mr Arcaba…” It was contended that the “extraordinary demands” made by the plaintiff upon Mr Kordek Jnr described or referred to his alleged agreement with the defendant in six ways during the course of one lengthy conversation. It is said that it was significant that during the conversation the plaintiff did not assert the agreement on which he sues, nor called for its performance: at [38]. These aspects will be dealt with below.
Included in the claimed six iterations of the alleged Agreement when the plaintiff met with Mr Kordek Jnr in January 2012 (paragraphs [40]-[54] of the Defendant’s Closing Submissions) reference was made to a number of matters that will be discussed in the ‘Consideration’ below.
In relation to what was termed “Version 3: The caveatable interest…” the defendant’s submission was that the lodging of the caveats by the plaintiff establishes that he was “…an untruthful witness or one who is reckless with his account of the salient events; either way, this Court ought not to accept his evidence”: at [61].
It was submitted that the caveats were:

“…the product of two knowingly false statutory declarations for which Mr Arcaba received s 128 certificates. When confronted with these false statutory declarations, Mr Arcaba refused to concede the position (T 189: 6-48). The false statutory declarations in these caveats identifying Mr Arcaba identify Mr Arcaba as a person prepared to do and say anything, provided it suits him. He cannot be believed on his oath.”: [59].

It was also submitted that the caveats bear no resemblance to the Deferral Agreement on which the plaintiff sues in these proceedings: Closing Submissions at [60].
The defendant submitted that in the correspondence written by the plaintiff in his communications with CBP Lawyers over the caveats, nothing was mentioned by the plaintiff in his letter about an interest (monetary or in realty) in the Gledwood Hills Project. It was submitted that the letter does not support the plaintiff’s case. It was noted that when confronted with this during cross-examination, the plaintiff could not explain why there had been no assertion in the letter of the terms of the Deferral Agreement or their non-performance: at [63].
In relation to what was termed “Version 6: The Cubrilo Account,” there was a reference to an alleged statement attributed to Mr Kordek Snr to the effect that the plaintiff had an interest in eight lots (distinguished from the claimed value of eight lots). It was submitted on behalf of the defendant that what Mr Kordek Snr is asserted to have said is open to a number of interpretations including:

That he was offering Mr Cubrilo one of the plaintiff’s blocks. This was said to be unlikely as the lots were not Mr Kordek Snr’s to deal with.

That Mr Kordek was offering Mr Cubrilo “the same deal” as that which the plaintiff had with the defendant. It was submitted that the “deal” under which the plaintiff had his eight blocks in Gregory Hills was that “friends” (such as the plaintiff) were allowed to build a house without paying for the land until the house was completed. It was submitted that in essence the deal was that the deal the defendant had with the plaintiff was that the plaintiff was a builder: at [70].

It was further submitted that the statement asserted was open to further interpretations, namely:

That the plaintiff was offering Mr Cubrilo one of his blocks on the same terms as the plaintiff had with the defendant. In this respect it was noted that, as a friend, the plaintiff had his eight blocks in Gregory Hills to build a house on, each without paying for the land until the house was completed. Under this scenario, the plaintiff was to pay for his eight blocks but not until he finished building dwellings on them. It was observed that this is not the plaintiff’s case in the present proceedings.

That the plaintiff was offering Mr Cubrilo one of the defendant’s blocks to build on the same basis as he had his eight blocks from the defendant (that Cubrilo could build on the defendant’s block without paying for the land until the construction was completed). It was submitted this is an unlikely interpretation because it required the plaintiff to be volunteering to Cubrilo what is not within his gift to provide.

The submission for the plaintiff was that whatever the correct interpretation of the conversation which Mr Cubrilo accounts, it was not the agreement which the plaintiff pleads or which he deals with in his affidavit evidence: at [71].
It was further submitted that Mr Cubrilo is not a witness on whom the Court can rely. In that respect:

Mr Cubrilo’s understanding of the “same deal” came from discussions with Mr Veljovic some 20-25 years earlier. When pressed as to what was meant by the “same deal” he could not explain the phrase: (T 339: 24-27).

Mr Cubrilo asserted that he became interested in Gregory Hills because of Masterton Homes’ involvement in Middleton Grange and that this prevented him from developing there. It was submitted that this was not true. Masterton Homes only had one third of the lots at Middleton Grange.

Mr Cubrilo asserted that he had been a home owner in 2009-2010. Title searches, however, demonstrated that he had not been a home owner since 2003.

In relation to the evidence of Mr Locke in which he stated that Mr Kordek Snr said “Don’t worry, Milorad. You still have those eight blocks at Gregory Hills” the defendant accepted that Mr Locke was an impartial witness and did his best to give accurate evidence: at [75]. However it was submitted that his evidence did not assist the plaintiff’s case for the following reasons:

The plaintiff did not advance a case for eight blocks of land.

Mr Locke’s reasoning for recalling Mr Kordek Snr making the eight block statement (that Gregory Hills was a competing development to Harrington Gardens) is objectively wrong: at [76.2].

Mr Locke gave evidence that he did not get involved in contract negotiations means that he would not have known which was a competitor site and which was not and this casts doubt on his recollection.

Mr Locke was unsure about the date of the lunch and this meant that he may also have been mistaken about what was actually said at the lunch. He accepted that other topics of conversation, including the sale of broadacre lots, were discussed.

Repayment of the Loan Advances

The defendant submitted that the repayment of the four loan advances is not unequivocal conduct that supports the existence of the Deferral Agreement. It is equally plausible with and without the Deferral Agreement. Accordingly, it does not assist the plaintiff’s case: at [77].

The Absence of a Written Demand

It was submitted that the plaintiff was repeatedly asked by the Court and during cross-examination why he did not write a letter of demand asserting the existence of the Deferral Agreement and its non-performance. He could not provide an added explanation for so simple a step: at [78].

Other Objective Facts

The Gregory Hills joint venture involved a number of interested parties, including Messrs Petrovic, De Lutiis, Covington and Kordek Snr, through their corporate vehicles as unit holders in the trust. The corporate vehicles owned shares in BADC. There was open and transparent communications with Masterton Homes in November/December 2010. These were not copied to the plaintiff. It was submitted this was inconsistent with the manner in which the plaintiff contends that Mr Kordek Snr bound the defendant to give him the value of eight blocks of the development: at [79].
It was further noted that the joint venturers of BADC mortgaged the Gregory Hills property to NAB to secure loan funding for the purchase. The joint venturers also gave corporate guarantees. It was submitted it was inherently implausible that an experienced developer knowing that BADC needed funding to complete the purchase and the need to provide security to the funder would “dilute its interest” in the project for the benefit of another, and yet not require that other (the plaintiff) to provide security to the NAB: at [80].
It was additionally submitted that the commerciality of the transaction for which the plaintiff contended, was one that converted $195,000 loan to $1.795M, an extraordinary multiple of 9. Further, it was submitted that the plaintiff was guaranteed $1.6M irrespective of the ultimate sale value of the lots or the associated costs of development. It was noted that this was in circumstances where the defendant had a net asset position of just under $7M as at 30 June 2010 and access to cash exceeding $1.2M in November 2010 (CB2 at 584; and CB 3 at 610-613). The submission for the defendant was that this was a commercially improvident transaction in the extreme and one that was unlikely that an experienced property developer such as Mr Kordek Snr would agree to: at [81].
It was submitted that the plaintiff’s “wholly inconsistent conduct post the alleged agreement of late November 2010 and the objective facts eviscerate Mr Arcaba’s case”: at [83].
It was the defendant’s submission that it was the plaintiff’s unpaid debts

“…which have forced him to invent the Deferral Agreement as a source from which to repay his creditors. Mr Arcaba has invented the existence of this Deferral Agreement because he formed the view that Mr Kordek Snr (the only person who had dealt with him on behalf of K & K) had fallen gravely ill and left Australia to convalesce in Poland…the naïve Mr Kordek Jnr who had no direct knowledge of the matters [and?] would not be able to withstand the case which Mr Arcaba brings.”

It was submitted by the defendant that the proceedings should be dismissed with costs.
The defendant also relied upon the document entitled “The Defendant’s response to points arising out of the Plaintiff’s Written Submissions of 4 April 2016”. I do not here reproduce all of the points therein made, other than to note:

That as to the financial position of the defendant as at November 2010, it was submitted, contrary to the plaintiff’s submission, that the financial graphs annexed to Mr Kordek Jnr’s second affidavit (CB 3 at 610-615) show that the defendant had approximately $1.2M of cash available to it. The defendant, it was submitted, was more than able to repay the debt of $195,000 and that neither Mr Kordek Snr nor Mr Kordek Jnr were challenged on this.

In relation to the “conditions for payment” it was contended that these had not been proved and no damages are due.

The defendant’s primary case, it was noted, however is and remains that the conversations on which the plaintiff relies to establish the Deferral Agreement did not occur and on that basis, the case fails.

If, however, the Court were to find that the conversations did occur, then it was submitted that the conditions for payment have not been proved and nothing is due to the plaintiff: at [11]. This aspect, I note, has been referred to in the defendant’s primary submissions above.

In the defendant’s response to the points raised in the plaintiff’s submissions, it was noted that the purchase of the Gregory Hills property was completed in February 2011, sold undeveloped to Tribeca in February 2014. It was submitted that there was no dispute between the parties about that and, at any rate, there was certainly no evidence to establish that Gregory Hills had been developed: at [11.1].

It was submitted that the alleged conversations between Mr Kordek Snr and the plaintiff which ground the claim was put on the basis that the Gregory Hills property would in fact be developed and that this was the basis upon which the plaintiff contended that he gave the defendant $100,000 per lot reduction: at [11.3].

It was submitted that there was no evidence contrary to the proposition that Gregory Hills has not been developed, nor, it was submitted, was there evidence that the defendant’s interest in BADC had been sold: at [11.3].

By reason of the matters set out at [11.1] to [11.4], it was submitted that there could be no repudiation of an agreement that remains executory (on the state of the evidence). On that basis, no damages are payable.

5. Consideration

In accordance with accepted principles, in a case such as the present where a party seeks to rely upon spoken words as a foundation for a cause of action based on contract, the conversation must be proven to the reasonable satisfaction of the Court and that any consensus reached was capable of forming a binding contract.
As earlier discussed, it has been observed that in cases involving reliance upon words spoken in the context of an alleged cause of action, in many cases (but not all) human memory of what was said in conversation is fallible for a variety of reasons, as observed by McLelland CJ in Eq in Watson v Foxman, supra. Ordinarily the fallibility of memory increases with the passage of time, particularly where dispute and litigation intervene, and the processes of memory are overlaid by perceptions of self-interest or conscious consideration of what could or should have been said.
The proceedings were conducted by the plaintiff largely upon the basis of the single factual issue as to the alleged making of the Deferral Agreement, as pleaded that:

“…In return for the plaintiff not seeking immediate repayment of the First Loan, Second Loan, Third Loan or Fourth Loan, [K & K] would repay [Mr Arcaba] the sum of $1,600,000 from the sale of properties by [K & K] or from its interests in the consortium formed to develop land that Gledswood Hills in addition to the sum of $195,000 borrowed (‘Deferral Agreement’)”: CB vol 4 at [13] (Amended Statement of Claim).

The determination as to whether or not the alleged Deferral Agreement was made, in circumstances in which no contemporaneous documentation to confirm it was made, has necessitated reliance by both parties on oral evidence and a significant volume of material in order to prove or disprove the alleged oral agreement.
Whilst ultimately the issue in the proceedings requires an assessment of the credibility of key witnesses, in particular of the plaintiff and Mr Kordek Snr, a large amount of the evidence was directed to proof of ancillary or collateral events and circumstances that were claimed as either confirming or negating and consistent or inconsistent with the making of the Deferral Agreement.
Whilst regard has been given to considerations of demeanour of the plaintiff, Mr Kordek Snr and Mr Kordek Jnr in giving evidence, the ultimate determination of the central issue largely depends upon the evidence given by each of them with regard to the central factual issue as to the alleged making of the oral Deferral Agreement and also to the collateral events and circumstances referred to the preceding paragraph.
Particular factual matters that have been the subject of consideration include the following:

(1) The absence of any note or record of the Deferral Agreement.

It was common ground that prior to 29 August 2013 (the date of a letter of demand from Stojanovic Solicitors) no note, memorandum, email or correspondence was made by either party concerning the Deferral Agreement or its terms. It was part of the defendant’s case that the plaintiff was a person who had familiarity with lending practices, finance brokerage and loan securities. With business experience of that kind the defendant argued, and as I accept, had the defendant in fact agreed to pay such a substantial amount of money to the plaintiff ($1.6M) it would be expected that the plaintiff would require or insist upon it being evidenced it in some formal way such as a written contract or note, memorandum or correspondence.
Whilst the plaintiff and Mr Kordek Snr communicated from time to time by email, there are no emails or correspondence by or on behalf of the plaintiff before 29 August 2013 asserting or referring to the Deferral Agreement.
Accordingly, the letter from Stojanovic solicitors dated 29 August 2013, addressed to The Manager, K & K Real Estate, represents the first communication approximately two years and nine months after the alleged Deferral Agreement was alleged to have been made asserting its occurrence or existence.
The letter referred to instructions to the effect that Mr Kordek Snr on behalf of the defendant informed the plaintiff that his company had lost the court case concerning the Oran Park land. At p 2 of the letter it was stated that, following that information (without referring to any particular date), in accordance with Mr Stojanovic’s instructions a further oral agreement was entered into by his client, the plaintiff, with the defendant.
The terms of the agreement, as asserted in Mr Stojanovic’s letter was:

“The agreement was oral, and provided that my client agreed, that in return for not seeking repayment of the earlier loans (totalling $195,000) your company would pay my client the sum of $1,600,000 from the proceeds of a 31% interest which your client had, in a consortium, formed to develop the land at Gledswood Hills, in addition to the sum of $195,000 borrowed.”: (CB 1 at p 269).

It may be noted that there was no reference here to any terms that specified the event or circumstance in which the sum of $1.6M would become payable. That was a matter, as earlier noted, that arose in the course of the hearing on an application on behalf of the plaintiffs to amend the Statement of Claim to allege that the event or events upon which payment would become due under the alleged Deferral Agreement was the subject of either an implied or express term.
Accordingly, the absence of any record, note or memorandum of the Deferral Agreement in or about November 2010 or in the period of two years nine months thereafter by the plaintiff, an experienced businessman, is to be assessed in the absence of any satisfactory explanation for not having recorded the alleged oral agreement.

(2) The alleged promise by Mr Kordek Snr to note the plaintiff’s interest in “the Documents” or “the Deed”.

As extracted above, in paragraph [29] of his affidavit sworn 5 May 2014, the plaintiff set out the conversation he alleges took place in late November 2010 with Mr Kordek Snr which he contended constituted the Deferral Agreement.
On the plaintiff’s own evidence at paragraph [30] of his abovementioned affidavit, he said that he was having “some financial difficulties” and needed money to pay some of his creditors. He said he asked Mr Kordek Snr for “something in writing” as proof of his involvement in the Gledswood Hills Project and that he would be receiving $1.6M.
The plaintiff’s evidence was that he later Mr Kordek Snr told him “It’s too complicated with so many parties involved. You are included as part of the 31% share in K & K. You have my word and you should not have to worry about that”.
A part of the rationale, according to the plaintiff’s evidence at [29] of his affidavit, sworn 5 May 2014, was to have his interest documented in the project, so that he could use his “share” or interest as a form of security. Though being pressed by his creditors there is no satisfactory explanation as to why the plaintiff did not take steps to create a written record of the Deferral Agreement and insist or require Mr Kordek Snr’s acknowledgement of a contractual obligation to pay him $1.6M.
The fact that he did not is remarkable given the amount of money allegedly promised, his pressing financial circumstances and that the at the outset of he requested documentary evidence of the agreement so that he could use it to show to his creditors so as to reassure or placate them. Against that background, the plaintiff, in my assessment, failed to advance a believable explanation as to why he failed to insist that Mr Kordek Snr fulfil his alleged undertaking to have his interest documented. His evidence that Mr Kordek Snr deflected him by simply saying that, in effect, it was all too complex does not in my opinion provide or constitute a cogent or believable explanation.

(3) Subsequent conduct of the plaintiff

In addition to the plaintiff’s failure to insist or pursue some form of written record or memorandum of the Deferral Agreement, his conduct in other respects raises a number of issues which go directly to his credibility concerning the alleged Deferral Agreement.
Whatever trust the plaintiff may have had in Mr Kordek Snr prior to June 2012, it became clear that that trust had dissipated or at least had begun to dissipate by the time he decided to caveat Kordek Properties (those of Kordek Real Estate Pty Ltd and K & K Real Estate Pty Ltd) in respect of monies ($750,000) which he claimed (wrongly) that he had loaned to the two companies, each of which was a registered proprietor of the land specified in the caveats. In other words, by June 2012 when he lodged the caveats, the trust he claimed that he had previously had in Mr Kordek Snr appears to have well and truly run its course. As earlier discussed, the plaintiff accepted in evidence that the facts stated in Schedule 1 to each of the caveats as supporting the estate or interest in the land described, were incorrect.
Following the letter dated 29 June 2012 from CBP denying that their clients ever borrowed the amount of $750,000, the plaintiff’s reply dated 10 July 2012 asserted that the terms of his agreement with Mr Kordek Snr were “…that, in return for the loan of $195,000, K & K Real Estate would ensure that I would receive $750,000 when it was in funds or within two years at the latest”.
The plaintiff’s above reply letter to CBP does not refer to the alleged Deferral Agreement, but to an asserted agreement that, in return, he would receive $750,000 on the terms stated.
In the fourth paragraph to the plaintiff’s reply letter to CBP, dated 10 July 2012, the plaintiff specifically stated that in return for the loan of $195,000, K & K Real Estate would receive an amount of money, namely, “…that I would receive $750,000 when it was in funds or within two years at the latest”. There was no reference to any agreement to pay an amount of $1.6M.
In the context of these proceedings the omission of any reference by the plaintiff in his letter of 10 July 2012 to the alleged Deferral Agreement, is significant.

(4) The plaintiff’s request to Mr Kordek Jnr for financial assistance

On the basis of the plaintiff’s evidence in cross-examination as to his financial position in 2012, it is apparent that not only had he lost trust in Mr Kordek Snr but he was also under serious financial pressure from his creditors. On the evidence it may be seen that his phone call to Mr Kordek Jnr at the end of the January 2012 in which he sought financial support was driven by his serious financial position at that time.
As discussed above, Mr Arcaba told Mr Kordek Jnr in his call to him at that time, that he needed help “…with a serious financial problem I have”: Affidavit of Mr Kordek Jnr sworn 30 September 2014 at [32]. In that telephone call he told Mr Kordek Jnr that he owed a lot of money to some people and he did not have enough money to pay them back. His request was:

“…Could you please ask him (referring to Mr Kordek Snr) to write me a piece of paper stating that K & K owes me $550,000 payable in 24 months? I just need this to show my creditors to get them off my back. Don’t worry, I’ll never actually ask K & K to pay me this money. Can you please do this for me?”

I have earlier indicated that I generally accept Mr Kordek Jnr’s evidence including in particular his evidence in relation to his recollection of this telephone call. The absence of any reference by the plaintiff in the telephone call to the Deferral Agreement or that the defendant was allegedly indebted to him bears directly, of course, upon the issue as to whether or not a Deferral Agreement was made as the plaintiff claimed. The amount of $550,000 referred to in the telephone call by the plaintiff was not said to have related to the Deferral Agreement or to any agreement. The fact that he wanted a piece of paper to say that that $550,000 was payable in 24 months confirms other evidence that the plaintiff’s financial position was in fact at a critical stage and that he was seeking to establish a false position to represent to creditors. In the latter respect, the request by the plaintiff to Mr Kordek Jnr in the telephone call reflects badly upon the plaintiff, in effect, in seeking Mr Kordek Jnr’s assistance in devising a stratagem that would falsely represent to creditors that K & K owed him a significant amount of money.
In relation to the conversation that Mr Kordek Jnr said he had with the plaintiff in February 2012 (at [36] of his affidavit) on Mr Kordek Jnr’s account of the conversation, which I accept, the plaintiff did not assert the making of a promise by his father, Mr Kordek Snr that he would be paid $1.6M for extending the loans amounting to $195,000. His request once again was for a piece of paper stating that the defendant owed him $550,000 payable in 24 months. Again, in seeking Mr Kordek Jnr’s cooperation, he was seeking to enlist his support to establish a deceptive and false stratagem when the defendant company was not in fact indebted to him for $550,000.
In summary, the request made by the plaintiff to Mr Kordek Jnr does not support and in many respects is materially inconsistent with the making of the alleged Deferral Agreement. Although at the time it appears on the evidence that the plaintiff had access to legal advice, no formal demand was made in 2012 of the defendant to honour any agreement and certainly not the alleged Deferral Agreement. This was despite his apparent loss of trust in Mr Kordek Snr and what appears through the 2012 to have been a deteriorating financial position for the plaintiff.

Amendment to the pleadings to rely upon an implied term

As discussed above, the plaintiff sought leave at the hearing of the proceedings to amend the Statement of Claim to rely in the alternative upon an implied term as to the event or events that would trigger the claimed obligation of the defendant to pay the amount of $1.6M under the alleged Deferral Agreement: Amended Statement of Claim dated 17 March 2016 at [13] and [14].
Amongst the many inconsistencies in the plaintiff’s evidence, was his assertion as stated above, that there was an express agreement between Mr Kordek Snr and himself that the amount of $1.6M was to be paid upon a specified event, namely, either the finalisation of the Gledswood Hills Project or the sale of the defendant’s share in the project.
On a significant matter such as this, it is difficult to accept that, not having previously given evidence in his affidavits of an agreement as to the events that would ‘trigger’ the payment of $1.6M, that the plaintiff, in the course of his cross-examination, gave evidence that he and Mr Kordek Snr discussed the events that would enable him to receive the benefit of $1.6M. It appears that he had not given instructions to his lawyers when his primary affidavit sworn 5 May 2014 was prepared that there had been any express agreement as to such an event or events that would trigger the alleged obligation to pay under the alleged Deferral Agreement.
The evidence of the plaintiff in the course of his cross-examination, to the effect that he and Mr Kordek Snr had in fact addressed and discussed the events or conditions upon which $1.6M became payable, had every appearance of evidence being manufactured in order to meet a perceived or potential weakness in his case.
During the course of the lengthy cross-examination of the plaintiff, I had an extensive opportunity to assess the plaintiff. Whilst making allowance for his less than perfect command of the English language, I was nonetheless left with the strong impression that he was both an unreliable witness and one who was prepared to adapt the evidence to meet the case which he sought to make out against the defendant.
The evidence concerning the plaintiff’s strategic use of the caveats to bring financial pressure to bear upon the Kordek interests and his preparedness to enlist Mr Kordek Snr and Mr Kordek Jnr in a strategic and misleading strategy to hold off creditors constitutes evidence of that in doing so he was prepared to act in a less than honest and straight-forward manner if to do so would work to serve or advance his interests.
In relation to the evidence of Mr Locke and Mr Cubrilo relied upon by the plaintiff in support of his cause of action, as earlier noted, the submission on his behalf properly acknowledged that neither what was heard by Mr Locke or Mr Cubrilo definitely supports the Deferral Agreement in terms, however, it was suggested that it was some evidence probative of an agreement of some kind involving the provision of eight blocks from the Gledswood Hills development.
Accepting the evidence of both witnesses as to what they said they heard, their evidence did not provide the full conversational context in which the words were spoken. Whether or not at some point, Mr Kordek Snr and the plaintiff had discussed the subject of blocks of land in the development and if so whether any were to be acquired by or provided to the plaintiff, the evidence does not establish whether any such discussions were contractual in nature. In summary, the evidence of the two witnesses, in my opinion, cannot be considered to be determinative of the alleged oral agreement upon which the plaintiff relied in these proceedings.
The approach to be taken in a case such as the present, as earlier indicated, requires a close examination of the evidence in order to determine whether or not the evidence of an oral agreement is precise and cogent enough to warrant an affirmative finding. In Brooker v Friend & Brooker & Anor [2006] NSWCA 385, McColl JA observed at [134]:

“The appellant’s evidence was substantially unchallenged. However, it was not incumbent upon the primary judge to accept evidence he found either unconvincing or incredible: Bulstrode v Trimble [1970] VR 840 at [848]. In particular, to the extent that the appellant’s case was based upon conversations, it was necessary that he prove those conversations with a degree of precision sufficient to enable the Court to be reasonably satisfied that they supported the relationship for which he contended, so that the primary judge could ‘…feel an actual persuasion of its…existence’: Watson v Foxman at [318]-[319]; Lahoud & Ors v Lahoud & Anor [2006] NSWCA 169 at [91] (per Hodgson JA, Handley and Ipp JJA agreeing). Whether the appellant’s uncontradicted evidence should be accepted as establishing the relationship pleaded depended on all the circumstances, including its inherent probability: Moukhayber v Camden Timber & Hardware Co Pty Ltd [2002] NSWCA 58 at [23], [28]-[30] per Heydon JA (Beazley JA and Santow J agreeing).”

In Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302, Hammerschlag J observed:

“[362] Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the Court which means that the Court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the Court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (2000) 49 NSWLR 315 at 319.”

See also Campbell v Campbell [2015] NSWSC 784 (Sackar J) at [73]-[79].
Having considered the evidence and the detailed submissions made on behalf of the plaintiff and the defendant, I am firmly of the view that the plaintiff has not discharged the onus of proof that he carries in these proceedings. I do not consider that the alleged Deferral Agreement was made through discussions between himself and Mr Kordek Snr or at all.
That is sufficient to dispose of the proceedings. However, in deference to the submissions made, I accept the further submission made on behalf of the defendant that it was incumbent upon the plaintiff to prove that the Gledswood Hills Project had been completed or alternatively that the defendant’s share in the project had been sold and that neither such circumstances or contingencies were proved to have arisen.
As indicated above, the plaintiff in cross-examination was charged with having manufactured or fabricated a false claim against the defendant in these proceedings. On the basis and for the reasons stated in this judgment, the plaintiff has failed to discharge the onus of proof in relation to the alleged Deferral Agreement. On that basis, the claim must fail. It is unnecessary for the purposes of the disposition of this case to make any adverse findings against the plaintiff in relation to the issue raised in cross-examination that he has fabricated the claim. In particular, a finding to that effect could only be made in accordance with the Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 standard. It being unnecessary to make any finding in that respect, I do not do so.
Accordingly, I propose to make the following orders:

Judgment for the defendant against the plaintiff.

In accordance with the provisions of s 98 of the Civil Procedure Act 2005 and under UCPR Part 42.1 costs should follow the event. Accordingly, I make an order that the plaintiff pay the defendant’s costs of the proceedings subject to any submission on costs made upon delivery of this judgment or upon the proceedings being re-listed for that purpose at 10.00am Wednesday 14 December 2016.

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Decision last updated: 13 December 2016

Medium Neutral Citation:	Arcaba v K & K Real Estate Pty Limited [2016] NSWSC 1793
Hearing dates:	14-18 March 2016 and 6 April 2016
Date of orders:	13 December 2016
Decision date:	13 December 2016
Before:	Hall J
Decision:	Judgment for the defendant against the plaintiff. The plaintiff is to pay the defendant’s costs of the proceedings. In the event that either party wishes to be heard further on the question of costs, I grant leave to apply in that respect.
Catchwords:	CONTRACT – plaintiff sued defendant for damages for breach of contract in respect of an oral agreement allegedly made between the parties whereby the plaintiff alleged that in return for not seeking immediate repayment of certain loan monies the defendant would pay him the sum of $1.6 million upon finalisation of a property development or the interest of the defendant in the project was sold or finalised – in addition to the repayment of the loan monies – principles as to proof of a cause of action based on contract where spoken words are relied upon as a foundation for such cause of action – requirement to prove the relevant conversation to the reasonable satisfaction of the court – the court should feel an actual persuasion of its occurrence – absence of any contemporaneous records corroborating the alleged oral agreement – credibility of the plaintiff and defendant’s directors
Cases Cited:	Allen v Carbone (1975) 132 CLR 528; [1975] HCA 14 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 3 Brooker v Friend & Brooker & Anor [2006] NSWCA 385 Campbell v Campbell [2015] NSWSC 784 Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302 Polon v Dorian and Ors (2014) 102 ACSR 1; [2014] NSWSC 571 Watson v Foxman (1995) 49 NSWLR 315
Category:	Principal judgment
Parties:	Milorad Arcaba (Plaintiff) K & K Real Estate Pty Ltd (Defendant)
Representation:	Counsel: G McGrath (Plaintiff) L Gor (Defendant) Solicitors: Stojanovic Solicitors (Plaintiff) Colin Biggers and Paisley (Defendant)
File Number(s):	2013/345560