Automotive Holdings Group Ltd v Prime Constructions Australia Pty Ltd

[2018] NSWSC 1960

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Automotive Holdings Group Ltd v Prime Constructions Australia Pty Ltd [2018] NSWSC 1960

Hearing dates:

7, 11, 12 & 13 September, 6 October 2017

Date of orders:

20 December 2018

Decision date:

18 December 2018

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Plaintiff’s claim dismissed. Plaintiff ordered to pay the third defendant’s costs on the ordinary basis unless a special costs order is to be sought.

Catchwords:

RESTITUTION – unjust enrichment – defence of change of position – third defendant allows fraudster to use her identity to set up a bank account in a company name – fraudster arranges for funds stolen from the plaintiff to be paid into the bank account – fraudster directs the third defendant to pay monies out of the bank account to third parties and the third defendant complies – injunctions obtained to prevent further distribution of funds from the bank account – the funds paid to third parties are lost – plaintiff seeks restitution from the third defendant for the monies paid to the third parties – whether the third defendant has been unjustly enriched at the plaintiff’s expense by the funds into the bank account – whether as a result of paying the funds out of the bank account the third defendant can avail herself of a defence of change of position – whether any change of position defence is unavailable due to the third defendant’s participation in and knowledge of the fraudster’s illegality.

  DECEIT – tort of deceit – whether the third defendant participated in conduct together with the fraudster which misled the plaintiff in circumstances amounting to the tort of deceit – what parts of the fraudster’s activities was the plaintiff aware.

Cases Cited:

Australian Financial Leasing Services Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14
Ballard v Multiplex [2012] NSWSC 426
Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391
Black v S Freedman & Co (1910) 12 CLR 105; [1910] HCA 58
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678; [2004] NSWCA 140
Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11
Fistar v Riverwood Legion and Community Club Limited (2016) 91 NSWLR 732; [2016] NSWCA 81
Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252
Hill Industries Ltd v Australian Financial Services and Leasing Pty Ltd [2012] NSWCA 380
Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548
Magill v Magill (2006) 226 CLR 55; [2006] HCA 511
McKernan v Fraser (1931) 46 CLR 343; [1931] HCA 54
Miller v Miller (2011) 242 CLR 446; [2011] HCA 9
Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676
Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25
Perpetual Trustees Australia Ltd v Heperu Pty Ltd (2009) 76 NSWLR 195; [2009] NSWCA 84
Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; [2014] NSWCA 310
State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 426
Williams v Hursey (1959) 103 CLR 30; [1959] HCA 51
Wood v Balfour [2011] NSWCA 382

Texts Cited:

P Birks, Unjust Enrichment (2nd ed, 2005, Oxford University Press) at 208-212; AS Burrows, The Law of Restitution (3rd ed, 2011, Oxford University Press) at 526)

Category:

Principal judgment

Parties:

Plaintiff: Automotive Holdings Group Limited
First Defendant: Prime Constructions Australia Pty Limited
Second Defendant: National Australia Bank Limited (ACN 004 044 937)
Third Defendant: Therese Ann Tsirekas

Representation:

Counsel:

 

Plaintiff: B. Skinner
Third Defendant: J. A. Darvall

 

Solicitor:

  Plaintiff: Christopher James Swanson, Swanson & Symonds Lawyers
Third Defendant: Geoffrey F. Cohen, Mylora Law

File Number(s):

2016/271144

Publication restriction:

No

Judgment

1. At one level, this case presents a familiar legal problem: which of two parties is to bear the loss of money stolen by a fraudster? But at another level it presents a disturbing example of the sustained internet manipulation of a woman by a person she met on a dating website.

2. The defendant, Mrs Theresa Tsirekas, lived alone after separating from her husband in 2013. In March 2016, she met a person online, who claimed to be a man called “Mr James Prindle”. Even though that is almost certainly not the person’s real name, these reasons will, for convenience, identify the person through this alias.

3. Between March and September, 2016 Mr Prindle groomed Ms Tsirekas into a personal relationship that was conducted entirely online, by email and over the telephone. Throughout this period, he gave various pretexts for not meeting her in person. In early September, after opening a bank account using her identity, he stole the funds of the plaintiff, the Automotive Holdings Group Limited (“Automotive”).

4. The theft was clever and simple. Mr Prindle acquired a copy of Ms Tsirekas’ passport. Using her passport, he set up the bank account in the company name, Prime Constructions Australia Pty Limited (“Prime Constructions Australia”). Mr Prindle told Ms Tsirekas about his creation of this bank account only after the event. Mr Prindle persuaded Ms Tsirekas that the account was for his legitimate business purposes and it would be used to receive money properly payable to him.

5. But separately, Mr Prindle had a mole inside, or associated with, a construction company, Prime Constructions Pty Limited (“Prime Constructions”), a company that was undertaking substantial building works for Automotive. Mr Prindle’s mole was a woman, who went by the alias “Hannah Phillips”. Prime Constructions received regular large progress payments from Automotive to pay for completed building work.

6. In late August 2016, Mr Prindle’s mole telephoned Automotive’s Accounts Department and notified Automotive of a change in Prime Construction’s bank account details and that the change would affect Automotive’s next progress payment to Prime Constructions.

7. The mole’s request to Automotive’s Accounts Department was plausible enough for Automotive to act on it. The change requested was for Automotive to cease making payments to Prime Constructions’ existing genuine account, which was styled “Prime Constructions Pty Limited”, and instead to make payment to the new account Mr Prindle had set up (at a different bank, the NAB) styled “Prime Constructions Australia Pty Limited”.

8. In September 2016 Automotive’s fraud control systems were deficient. This change in payment details was made without proper prudential enquiry on behalf of Automotive to anyone at Prime Constructions with actual authority to approve such a change.

9. In early September 2016, Automotive paid Constructions into the Prime Construction Australia bank account a progress payment of $3,199,060.60 that was then due to Prime Constructions. Mr Prindle immediately gave instructions to Ms Tsirekas to distribute the monies received, first into Westpac accounts she controlled and then to third parties.

10. Ms Tsirekas began distributing the money at Mr Prindle’s direction. But on 8 September 2016, her further distribution of funds from the account was restrained by an injunction granted by this Court. Automotive recovered the undistributed balance of the Prime Constructions Australia account. But the money Ms Tsirekas had distributed at Mr Prindle’s directions was lost. Automotive now seeks to recover from Ms Tsirekas the monies that she caused to be paid out of the account at Mr Prindle’s direction. Automotive grounds its claim for relief against her both in restitution and in fraud that cannot now be recovered from the NAB account or her Westpac accounts. The net amount claimed is $552,627.88.

11. Ms Tsirekas defends the claim in restitution on the basis that she has not been unjustly enriched by any monies that passed into her control and that she changed her position to her detriment before she had notice of Automotive’s claim. In response to Automotive’s fraud claim, Ms Tsirekas says she was not part of any fraud upon Automotive with Mr Prindle.

12. Mr B. Skinner of counsel, instructed by Christopher James Swanson of Swanson & Symonds Lawyers, appeared for Automotive. Mr J.A. Darvall of counsel, instructed by Geoffrey F. Cohen of Mylora Law, appeared for Ms Tsirekas.

13. This judgment holds that Ms Tsirekas is not liable to Automotive either in restitution or in fraud.

14. These reasons shortly commence a narrative of the Court’s findings. But some preliminary observations about Ms Tsirekas’ evidence should first be made.

Some Preliminary Observations About Ms Tsirekas

15. It is temptingly easy to approach Ms Tsirekas’ email and text message correspondence with Mr Prindle with sceptical hindsight. That Mr Prindle was the alias of a manipulative fraudster is now apparent. But the Court’s analysis in the factual narrative must examine Ms Tsirekas’ true state of mind at the time. This can only be done by analysing how her communications with Mr Prindle unfolded, what she said in evidence about what she believed at that time, and whether, at each stage of these communications, she is to be accepted as honestly believing him to be the man he claimed to be.

16. On these measures, Ms Tsirekas firmly emerges as genuinely believing for a long time that Mr Prindle was the person he claimed to be. Her contemporaneous emails and text messages and her account in oral evidence, show her complete acceptance of Mr Prindle at face value. It was only at the very end of their dealings that any doubts crept into her view of him. The extent of those doubts and the precise time that they arose is a matter for closer analysis. Ms Tsirekas’ overall account in evidence of her relationship with Mr Prindle was compelling and the Court mostly accepts it.

17. Ms Tsirekas was a very difficult witness to assess. She was a witness of substantial truth. Yet it was hard to understand her mental state at the time of the events in these proceedings. The text messages and emails she exchanged with Mr Prindle makes clear that she was conducting by telephone, by text message and by email what she thought was a relationship of a most intimate and personal kind even though she and he had never met face-to-face. It is neither practical nor necessary to reproduce all the detail of these text messages in this judgment. But many examples are given in the narrative. They show constant declarations of her endearment to Mr Prindle. They evidence a passionate, albeit entirely electronic, relationship with Mr Prindle. Sometimes she communicated with him several times a day by text. Additionally, every day or so, and sometimes more often, they would speak by telephone.

18. Mr Prindle actively groomed Ms Tsirekas. He gave her exactly what she wanted to hear: messages of affection, enquiries about her daily life and communications about more intimate forms of physical contact. She initiated and reciprocated similar communications.

19. It is difficult to read their mutual text messages other than by concluding that Ms Tsirekas believed she had found a deeply satisfying life partner, who understood her needs for emotional support and affection and with whom she wished to share all her thoughts and feelings. She believed that Mr Prindle was genuinely romantically interested in her until the last day or two of their relationship. Ms Tsirekas was not aware and did not suspect until the last moment that Mr Prindle was involved in criminal activity. To her, the relationship was, as she said several times in her oral evidence, “real”.

20. Mr Prindle’s communications play upon Ms Tsirekas’ insecurities and her overwhelming need to be in a relationship in which she was valued strongly by her partner. She was vulnerable to this kind of manipulation by him. He understood this and exploited it relentlessly. She lived out her relationship with Mr Prindle in every part of her life.

Ms Tsirekas, Mr Prindle and Automotive – March to September 2016

21. The following section of these reasons contains a chronological narrative of the Court’s findings on contested and uncontested issues. The parties filed a substantial amount of material on both sides. It is not possible for basic reasons of economy to make findings about all of the evidence adduced. Nevertheless, this narrative makes findings about the matters of relevance to the Court’s ultimate conclusions. Even on contested matters, the narrative does not always include reference to the evidence that the Court has rejected in favour of the Court’s actual findings.

Ms Tsirekas Before Meeting Mr Prindle

22. At the time of the hearing, Ms Tsirekas was 56 years of age. She grew up in Sefton, and has a brother and a sister with whom she is still close.

23. After leaving high school in Year 10, Ms Tsirekas attended Business College and completed a secretarial course, learning shorthand and general secretarial skills. She was employed as a secretary and receptionist for approximately 23 years, in different businesses. Following this period, Ms Tsirekas redeployed her skills and began working for a large café in Balmain. She developed an interest in the food and catering industry.

24. After completing a cooking course at TAFE Ultimo in 2005, Ms Tsirekas worked as a chef for a catering company for a short time and then opened her own café in Balmain. But she ceased trading after 15 months and did not work for a further two years as a result of the breakdown of her marriage. She later commenced employment as an Assistant Manager at a Country Road store in suburban Sydney. She was still employed in that capacity at the time of the hearing.

25. Ms Tsirekas is a mother of two children in their 20s. She was previously married; separating from her husband in March 2013. But at the time of the present hearing, her divorce was not finalised. The Court accepts that, for many years, her marriage was deeply unhappy for her. During her marriage, Ms Tsirekas says, and I accept, that she was subject to emotional abuse and that her husband made her feel “that I had no real worth…I had no confidence in myself”. Ms Tsirekas was the major bread winner and financially sustained the family. Ms Tsirekas’ husband never demonstrated his affection to her by giving her things such as birthday or Christmas gifts. She became aware during the marriage that her husband had relationships with other women. This led to their formal separation in March 2013.

26. Upon the breakdown of their marriage, Ms Tsirekas continued to live in the matrimonial home. She says, and the Court accepts, that since her separation she has been “very lonely and [I] have had no confidence in myself”. She has not had any face-to-face romantic relationships with anyone she has met in person since her separation from her husband.

27. But she has had two online relationships. Some two years after her separation, a female friend of Ms Tsirekas’ suggested that she join an online dating service. She did, joining a service called “match.com” in 2015. Through that service, she met a man who went by the name of “Arthur”. She had an online relationship with Arthur for 15 months, during which she made loans to him. Ms Tsirekas describes herself as feeling “quite close emotionally” to Arthur and that she was “overwhelmed as I was excited that someone was interested in me”. But this relationship worked out very badly.

28. She made a series of advances totalling $180,000 over a six-month period beginning in February 2015. At the time of making those advances, Ms Tsirekas had accepted what Arthur had told her online. She believed that Arthur was living in New York. But Arthur was actually living in South Africa. Ms Tsirekas never met him face-to-face during their relationship. She and Arthur parted ways when she realised that he was only interested in taking financial advantage of her, and that he was unlikely to ever repay the money she had loaned him.

29. Arthur did not disappear from her life entirely. Even after Ms Tsirekas became involved online the next time, Arthur was still trying to make contact with her. Even during her text message exchanges with Mr Prindle in August of 2016, Ms Tsirekas mentions that Arthur “is also asking me NOW for more money”. At one level, this was a reminder late into the relationship with Mr Prindle that there were fraudster’s such as Arthur around. But interestingly, the text messages never seemed to draw any analogy even implicitly between what Arthur was like and what Mr Prindle was like.

30. Ms Tsirekas’ experience with Arthur presents a conundrum in the consideration of her case. Automotive contended that Ms Tsirekas’ unfortunate experience with Arthur must have led to her being cautious about online dating and to have raised her general awareness about online scamming such that a person in her position would have a heightened suspicion of people who were attempting to extract money from her whilst engaging with her romantically online. This led to Automotive’ s contention that she must have been aware that Mr Prindle was a fraudster and was seeking to take advantage of the opportunity for financial gain that he might afford her.

31. Were Ms Tsirekas a person of ordinary caution, fortitude and sensibility, such an argument would have force. But it is evident from Ms Tsirekas’ correspondence with Mr Prindle and from her statements to the Court that she had an unusual personality, features of which made her vulnerable to this kind of scamming: an over readiness to share personal information with strangers online and a deep thirst for affection, or at least attention. Ms Tsirekas seemed to have little insight into these aspects of her personality. That this should happen to her twice is indeed not surprising.

32. Although the Court has never met the mysterious Mr Prindle, he clearly well understood Ms Tsirekas’ weaknesses. He had an sophisticated ability to exploit his knowledge of her weakness to control her behaviour and manipulate her into doing what he wanted. He was clever, artful and dishonest at every level.

33. After the experience of Arthur, Ms Tsirekas did not react with circumspection to Mr Prindle’s devices. His techniques were differed from Arthur’s. She was still hoping to find a genuine life partner online. She construed all her interactions with him to fit the image of the man that she wanted and who would treat her with the recognition that she had not had romantically before in her life.

34. Ms Tsirekas’s online relationship with Mr Prindle led to her to giving over identity information to him about herself, including her passport and her bank account details. Her trust in Mr Prindle developed quickly, somewhat confirming her evidence that her online relationship with Mr Prindle felt even “more real” to her than what had happened between her and Arthur.

35. All her contemporaneous correspondence and her evidence to the Court fitted this confounding pattern. This is an unusual case but this is what happened.

Ms Tsirekas Meets Mr Prindle Online – March 2016

36. In early 2016, after learning about another online dating service, “Academic Singles”, Ms Tsirekas joined. On or about 10 March 2016, she met Mr Prindle through that service. They exchanged email addresses on 16 March 2016. From then on, they began emailing each other on a regular basis. In their early emails, they introduced themselves to each other.

37. The following day, 17 March, Ms Tsirekas gave Mr Prindle her mobile phone number. About two weeks later, on 31 March 2016, they spoke over the phone for the first time. Mr Prindle explained to her that he had trouble getting through to her by telephone because he was on a ship, the MSR(c) Oscar.

38. Mr Prindle had a slightly exotic and not implausible story to tell her about himself. She was ready to listen. He told her that he was a Swedish-American, living around Port Kembla, New South Wales. He said that he was a ship fabricator and electrical engineer of “international repute”. He had worked on oil vessels and cargo ships in parts of the world ranging from the Middle East to Far East Asia. He said to her he had also supplied ship materials to international maritime companies and customers.

36. And he convened his family in his story. He said that he had a son aged 18 years, who was studying medicine in the United Kingdom. He said that his son’s mother had passed away when the boy was only three years old and that he had been coping as a single parent ever since. He had been a relationship since her death but the other person “was a cheat and I left”. Overall, the picture he created was of a sincere and talented individual, who life had treated unfairly but who was trying honestly to make the best of the hand that life had dealt him.

37. Attached to his email of 17 March 2016, Mr Prindle sent two photographs he claimed to be of himself. If the aim of the photographs was to present an attractive image of an eligible man to Ms Tsirekas, they succeeded. The first photograph features a man with stubble and a cap lounging in front of a fireplace adorned with gold ornaments. The second photograph features the same man, again with stubble and a cap, leaning against, what is presumably, a lookout over a beach-scape. The pictures Mr Prindle sent had an effect on Ms Tsirekas. Shortly afterwards she began to address him in emails as, “My gorgeous James”.

38. On 17 March 2016, Ms Tsirekas also sent an email to Mr Prindle introducing herself. She told him about her children, what it was like to run a business, her unsatisfactory relationship with her former husband and what she was now looking for in a relationship. On the basis of his communications with her up to that point, she said she thought Mr Prindle seemed “very gentle and passionate.”

39. She disclosed enough about her former husband to show Mr Prindle that she had suffered badly from his infidelity and poor appreciation of her. She was signalling to Mr Prindle that she was looking for an honest, stable, loyal and hardworking man. One cannot read her email correspondence without being struck by its candour. The Court accepts that she honestly meant the sentiments expressed within it.

40. Mr Prindle well knew how to respond to such signals. Such that in an early email, dated 18 March 2017, Mr Prindle began to convey an image of himself that fitted the profile of the man Ms Tsirekas wanted in her life. He described his childhood growing up in California and Ontario, Canada. He said:

“I just want to spend the rest of my life enjoying the fruit of my labor. I want a woman who would be my best friend and everything. You know someone whom we would still love each other more as the days pass by…”

44. Within the very first weeks, when he saw that Ms Tsirekas seemed genuinely interested in him, Mr Prindle changed his form of address to her from “Hello Therese” to “Good Evening My Queen Therese” with the subject heading “Wow!! My Queen”.

45. Mr Prindle also began to lay a foundation for why he could not meet her in the short term. By email on 2 April, Mr Prindle explained that he was having problems communicating with Ms Tsirekas, as the ship that he had been working on, the “MSR (C) Oscar”, had a “major engine fault” which had caused it to anchor near the Spratly Islands, located in the South China Sea off the coast of Vietnam, the Philippines and Malaysia.

46. His choice of this location was a clever ruse of an intelligent fraudster. It offered him many potential excuses for delay in seeing her. The Spratly Islands in the South China Sea, near the Phillipines were in 2016, as now, an area of strategic international contest. The area provides fertile grounds for the generation of untestable excuses for unexpected delay and difficulties in communication with a ship at sea.

47. But Ms Tsirekas was not without the capacity to check up on Mr Prindle and she did so from time to time. This started with his explanation that he was an engineer doing contract work on the MSR Oscar, a cargo ship sailing from Port Kembla ultimately to San Francisco. She actually looked the ship up on the internet and ascertained that a ship of that name was on such a route. She felt fortified in the accuracy of what she was told by the verification that came from this reasonably basic research.

48. By 2 April 2016, Mr Prindle was addressing Ms Tsirekas in most affectionate terms, opening text messages with “Good evening my queen Therese” and concluding them with “love you with all my heart”. He was emphasising the dangers of his work but declaring to her his good fortune: “never did I imagine that I would ever meet you, especially not in the form of an email friend”; and “I want you to know that you have been the best thing that has ever happened to me here”. He said that he was eliminating his profile from the dating website where they had met and invited her to do the same.

49. Many of Mr Prindle’s statements even added a level of predestination in their relationship and hope for an ever closer future, “God has got his own reasons for us to meet and come this far. But I hope our love will flourish beyond what it is right now”.

50. At first, Ms Tsirekas’ responses were more modest. She was more reticent in making declarations of affection. Initially she would sign off her letters with words such as “Please take care”, “Miss you”, “All my love”. Her later communications are more committed.

51. Her messages contained many questions, which he answered. His answers would not satisfy a person of sceptical bent but they satisfied her, in part because he gave her the implied respect of explaining himself to her and was ready to do so. Her early correspondence shows that she did not go into this online relationship without a natural caution. But as their Iater correspondence will show, by August, that early caution had gone. She was fully committed to the online relationship.

Mr Prindle Tests Ms Tsirekas – April 2016

52. In an email dated 3 April 2016, Mr Prindle told Ms Tsirekas that he had received a fax which stated that there were sea pirates from Taiwan blocking the sea and that the pirates were about 312 kilometres from the ship’s location. In that same email, Mr Prindle asked for Ms Tsirekas’ address, stating that, as a result of the threat of pirates, the captain of the ship had ordered the passengers to offload their goods and he wanted to send his “contract Documents and my saves (sic) so that you can help me to secure it in your place until I have the chance to make my trip and meet you this month”.

53. Ms Tsirekas’ first reaction to Mr Prindle’s 3 April 2016 email was one of mixed caution and sympathy. She said, and the Court accepts, her account as genuine, that he “sounded so desperate and needed my help” and when he first broached the subject, asking for money was not an issue. He simply wanted to send his belongings to her. Her reaction, which the Court accepts was genuine, was that this approach “made me feel worthwhile and [I] wanted to think that he trusted me”.

54. Ms Tsirekas’ answer to Mr Prindle’s 3 April 2016 email was not without its questions. There is much she did not understand. She opened by asking him this:

“I am sort of taken back with your email. I am scared for you and not really understanding if a massive Ship like the one your on is in such danger. I understand about where you are but I don’t understand why there is no-one coming to help you out. Isn’t there security that you can call on?”

55. He replied the next day to answer her questions, accepting her doubts as understandable. He explained that “Yes, you are right security measure [h]as been putting in place, but we don’t have to put things at jeopardy!”

56. In poor English, he changed the subject and explained that everyone had nevertheless been advised to do this and that has assisted him to decide to sell off much of his old goods. He explained, “i want to come back and start new life and new beginning buy the new house and everything new with my Queen”. He explained he needed more cash for such a purchase and as he was self-employed, he needed to liquidate materials. To anyone of a financial sophistication, what he says does not make much sense. But Ms Tsirekas was not a person of any financial sophistication. His response and his willingness to respond seemed to satisfy her doubts. This led her to proceed.

57. Mr Prindle soon increased the pressure on Ms Tsirekas. On 6 April 2016, he sent her an email saying that he was going to forward his personal belongings to her and that their shipment was all paid for in full. Ms Tsirekas says, and the Court accepts, “I didn’t understand why he was doing this”. She told him not to send them to her but to send them instead to his son. He in turn replied that his son was studying and that he did not want to him. Mr Prindle told her that he would be arriving back in Australia, so it would be more convenient for him to send them to her. By then, she had given some basic information about her home address to him and he had her email address.

58. Mr Prindle sent Ms Tsirekas documents that indicated he was shipping his goods through a company called Weason Security to her home address and that he had paid in advance the sum of US$12,417.00 for the shipment.

59. On 6 April 2016, Ms Tsirekas received an email from a company using the name of Weasan Security. It informed her that a shipment, presumably from Mr Prindle, had arrived at their branch in China. But Weasan Security explained in this email that, before it could release the shipment, it required further proof of her identification as well as a fee of $US1,280.75.

60. This apparently independent communication seemed genuine enough to Ms Tsirekas. But in truth, it was part of his scheme. Third party communications added an air of authenticity to his dealings with her. After speaking with Mr Prindle about how payment was to be made and what proof of identification should be provided, Ms Tsirekas was induced to provide a scanned copy of her passport by email to Weasan Security. She did this later in April because she was assured by Mr Prindle that her passport was required because the package he was sending her was valuable. I accept Ms Tsirekas’ evidence that she asked more questions about the need for this but was satisfied by Mr Prindle’s answers. She also paid another fee of $AU1,721.67 to Weasan Security. By further email of 8 April 2016, Weasan Security confirmed that Ms Tsirekas’ payment had been received but that they required a further payment of $US5,500.25, comprised of US$2,440 for insurance and US$3,060.25 for administrative charges.

61. The correspondence on behalf of Weason Security is conducted by a person purporting to use the name, “Wu Han Lee”. To an intelligent reader with knowledge of international placenames, the correspondence has mistakes. But to the unsophisticated reader, such as Ms Tsirekas, it was convincing. When she entered into corresponded with Weason Security, she believed it to be a real organisation.

62. Mr Prindle’s requests for this money prompted Ms Tsirekas to start making inquiries about Mr Prindle. She tried to search him out on Facebook and LinkedIn but could not find him. This puzzled her. So she asked Mr Prindle why she could not find him. His response seemed plausible to her. He said that he did not need to advertise himself because he was well-established in the shipping industry.

63. Ms Tsirekas was aware that she had been tricked by Arthur into paying a substantial amount of money and was cautious that she did not end up in a similar relationship. She did have her guard up as a result. But her explanation for paying out money again on Mr Prindle’s behalf was that she had been communicating with him on a daily basis for some weeks and felt that she was in a close personal relationship and that he was genuinely interested in her. She did not feel that she was being exploited.

64. On 25 April 2016, Ms Tsirekas complied with Weason Security’s request for further proof of identification and sent a scanned copy of her passport to them by email. Ms Tsirekas also queried why a copy of some form of identification of her was necessary.

65. Ms Tsirekas had trouble sending the funds for Weason Security about 25 April 2016. Ms Tsirekas initially thought that Mr Prindle was in the Philippines when she transferred the funds and the passport identification details to Weason Security. This seems partly to have been induced by some messages she received from an email that purported to be from a bank in the Philippines. She was communicating with two people there, one of whom purported to be “Lilibeth Alday” and the other person, “Nina Csh”. When she discovered that Mr Prindle was not in the Phillipines but was probably still in China, she sought to have her money released to a gentleman that she knew in the Philippines, Mr Justiniano Lagoudis.

66. But communications were difficult. The correspondence she had with this organisation in the Philippines on her part seems to have been perfectly genuine. By nature courteous, Ms Tsirekas did not press home her request for the return of the money. Just how this request ended up is a little unclear on the evidence. But it may be inferred from the fact that Ms Tsirekas was told the goods were still coming to Australia that she believed the money she had been sent had been applied to obtain Mr Prindle’s belongings. So the issue became less important to her in the short term.

67. But there was delay between late April and early June in shipping Mr Prindle’s goods to Australia. Finally, in an email on 8 June 2016, Mr Wu Han Lee confirmed the consignment had been shipped out and should arrive at its Australian port of entry by the following Thursday.

Mr Prindle’s Goods Purport to Arrive in Australia – 8 & 10 June 2016

68. Mr Prindle’s personal belongings never arrived at Ms Tsirekas’ home address. Mr Prindle needed a plausible explanation for Ms Tsirekas to account for their failure to arrive. After all, she had paid a little over $6,000 to contribute to the cost of their arrival in Australia and had given her passport details to Weason Security.

69. Mr Prindle’s scheme to achieve this was two-fold. First, Weason Security purportedly sent an email to Ms Tsirekas on 8 June 2016 informing her that the consignment had been shipped from the Phillipines and “should arrive in Australian port of entry by Thursday”. The email implied that the money that had been paid so far for the goods had been used to process the re-export of the goods from the Phillipines.

70. The second part of Mr Prindle’s scheme was to send an email from someone who purported to be an official of an Australian Government Department associated with Homeland Security. An email dated 10 June 2016, under the signature block of a Dr John Simpson of the “Australian National Securities”, declared: that the package had arrived in the port of Brisbane; that it had been scanned and screened; that some undisclosed items had been detected; but that Homeland Security had concluded that there was no terrorist threat to Australia and that a legal fee of AUD$49,860.00 was required to procure the goods for clearance.

71. Ms Tsirekas explained to Mr Prindle that she did not “have that kind of money to send” and that she “thought that everything had been paid” already by Mr Prindle, by the money she had sent previously. He asked her if she could come up with $10,000 and he said he would ask his co-workers to help with the $40,000 balance. Ms Tsirekas agreed to pay $10,000. Her partial payment meant that the successful delivery of Mr Prindle’s belongings to her could not be assured. Thus there was some reason why she did not receive the goods.

72. Ms Tsirekas said that, in retrospect, she knew she should not have sent this money. But she explained that she genuinely believed at that time, “that he needed my help”. I accept that she also believed that, because she was in a close relationship with him, she should help him in this way.

73. Ms Tsirekas was not without caution. She accepts that she sent these monies to Mr Prindle willingly but she also says, and the Court accepts, that she asked numerous questions of him about why the funds were needed. She confessed that she did not always “understand what he was saying”. But she was impressed that he had “an answer for everything” that “at the time seemed to make sense”. She also said that, when she discussed these kinds of money matters with him, he always appeared to be “in a rush”, with little time to talk to her and that he was in danger of “losing the package if the payment was not made”.

74. Her explanations about these events must also be judged by the quality of the correspondence occurring between them at the time. Their online relationship had deepened so it seemed more logical to her to trust him, given that the need for these monies seemed to be explained to a level that satisfied her. The amounts of money that Mr Prindle was asking for from her was far smaller than what she had advanced to Arthur.

75. When the package had not arrived, Ms Tsirekas asked Mr Prindle about it. He reassured her that it had in fact arrived safely. According to the false letter from Dr Simpson, it had arrived in Brisbane at least. And Mr Prindle assured her that he would be home soon.

76. But Ms Tsirekas did ask Mr Prindle for her money back. He gave a number of excuses for not paying her back immediately. His main excuse was that “all will be fine” when he arrived back in Australia. This did not seem to be far away to her, so she accepted this at face value.

Mr Prindle is Marooned in China – June/July 2016

77. Not all the emails and text messages are available for the June/July 2016 period. And there were undoubtedly telephone calls during the period between the two as well. Mr Prindle purported to be awaiting for his ship to be repaired. Ms Tsirekas summarises in her evidence the effect of what happened over these months, a summary which the Court accepts. She said:

“I then started asking for my money back. James said that all will be fine when he arrives. I kept on asking about the return of my money but he seemed to disregard my questions and said that that’s not his problem now. He said that when the ship arrives in the United States, and because he is a contractor, he has to buy equipment and will be travelling about the States to different suppliers and online to different companies to purchase the equipment. Most of the equipment has been resourced from the ship whilst he was working on-board. He said that he needed money to do this. I told him that I didn’t have money and he assured me that he has the money. I said to James that if he was a contractor he should have his own bank accounts but whenever I raised the topic he always talked around it.”

78. On 9 May 2016, Mr Prindle emailed Ms Tsirekas a series of quotations for equipment which he said he would be purchasing. They were all made out to “Ms Therese Tsikeras” and listed her home address as the billing address. But some of the emails that she relies upon are all dated early September 2016. The Court infers that Mr Prindle told Ms Tsirekas about the purchase of this equipment in July. But he probably only sent her these quotations when he needed to give her some plausible explanation for why in early September he was asking her to pay money out of the Prime Constructions Australia bank account.

79. The explanation that the ship was held up in China seems to have covered the whole May, June and July period. But once he reported to her the ship was sailing, he gave her detailed updates about where the ship was. The transmission of these updates is quite evident from the detailed text message exchanges that are available after 3 August 2016. She had little opportunity to verify what he was saying, but its detail contained a degree of authenticity that tended to convince her that he was flooding her with incidental detail about his daily life.

The Tsirekas/Prindle Relationship – Early August 2016

80. The principal events that give rise to these proceedings commenced on Thursday, 18 August 2016. But those events cannot be viewed in isolation. They must be viewed in the context of the relationship which had, by then, developed online between Mr Prindle and Ms Tsirekas. By then, they were sending text messages to one another every day and usually many times per day. Mr Prindle was investing vast energy into his communications with Ms Tsirekas. His text messages covered a wide range of human emotions and moods from playful, to erotic, to melancholy.

80. Samples of these exchanges from the first half of 2016 are useful. Ms Tsirekas often signed off in text messages at end of the day or greeted him at the beginning of the day. These messages are regular examples of the ready terms of endearment with which she expressed herself to him. They are by no means the most intimate of the messages that passed between this couple but they give examples of the affection she expressed to Mr Prindle, affection he always encouraged.

81. The times recorded in all these text messages appears to be Australian Eastern Standard Time. The messages are recorded in Ms Tsirekas’ telephone, which has registered their sending and receipt in local time. The messages contain abbreviations and spelling and grammatical errors on both sides. The text messages are reproduced in their original form below without correcting any of these errors.

82. On Wednesday, 3 August 2016 the following exchange took place. It started with a series of rapid exchanges at 6.02pm on that day and finished on 4 August 2016 as follows:

3 August 2016 at 6.02pm

Ms Tsirekas   “What time is it for you now?”

Mr Prindle:   “Sweetie… I still need my sleep right now

Will check on you later on

It’s 2am”

Ms Tsirekas:   “Okay my darling. Love you and take care okay.

Oh! Yes go back to sleep now. I didn’t know it was that time.

Have a nice day and take good care of yourself…

Love you with all my heart.”

[heart emoticon]

4 August 2016 at 7.02am

Ms Tsirekas:   “How’s my hunnicutt going? I’m just getting ready for work and wanted to say hello and just to say thank you for txting me last nite. You woke at 2am to txt me!!!!! Wow! That made me feel very special. Hope your having a good day so far and everything is going okay”

84. Ms Tsirekas continued this conversation, commencing somewhat apologetically about having woken him up the night before. Their exchanges continued in the following vein between 7.25am and 7.40am:

4 August 2016 at 7.25am

“Ms Tsirekas:   “I just don’t want you waking up in the middle of the nite to txt me. You need your sleep bcause of your work. So I wanted to say hello now [kiss emoticon]”

Mr Prindle:   “Yes you are so special to me and that’s why I have to dedicate time to chat with my angel.”

Ms Tsirekas:   “Your special to me so very much.

Is it afternoon for you now?

It’s been raining really heavy all nite and it’s still raining now. Such miserable weather. Anyway my gorgeous James I’m just about to leave now for work. I feel happy I’ve heard from you and your okay out in the big sea somewhere. Sending you my love and kisses my love. Take care and talk soon [kiss, heart, kiss, heart, kiss, heart emoticons]”

Mr Prindle:   “Yes still afternoon here my queen

Oh bad!!! You need loving mom on et before leaving for work to keep you warm all day [smiley emoticon]”

But don’t worry…everything will be fine soon…have a nice day and take good care f yourself for me…love you will all my heart [smiley kisses]”

85. On Friday, 5 August 2016 Ms Tsirekas and Mr Prindle sent about 50 text messages throughout the day, commencing at about 6.45am and concluding in the evening. It is not necessary to reproduce many of them their frequency is worth noting in itself.

86. The text messages that morning commencing at 7.35am started with Mr Prindle greeting Ms Tsirekas. Along with various messages of endearment he explained to her that the weather he was facing was quite rough. Over a period of approximately one hour, they continued to exchange text messages. He complimented her in different ways whilst she expressed her concern for his safety:

Mr Prindle:   “Good morning my queen and how are you doing today

Hope you had a nice sleep and lovely dreams.

We are holding on for the past 12 hours now because of the bad ocean wave ahead!!! The reception is bad!! But am happy I could get to send out a text message right now babe

Please take good care of yourself and be happy for me

Love you with all my heart”

Ms Tsirekas:   “Hello handsome’ how are you

I did have a nice sleep thank you

Big ocean waves! Are you okay?”

Mr Prindle:   “Oh that’s nice to hear my queen”

Ms Tsirekas:   “You too”

Mr Prindle:   “Yes we are OK.. just that’s we have to wait till we notice the nautical miles ahead that the ocean waves as reduce”

Ms Tsikeras:   “Wow! Are you scared?”

Mr Prindle:   “Not at all…am not”

Ms Tsirekas:   “I’d be sending out the SOS if it was me

Is the ship rocking a lot?”

Mr Prindle:   “At least my wife Thessy is praying for me and we are making things fine”

Ms Tsirekas:   “I would be of no help to you if I was on the ship. I would se sea sick.

Are any of the staff sea sick?”

Mr Prindle:   “Some do”

Ms Tsirekas:   “Poor things”

Mr Prindle:   “But they have no choice to sail through all

Lol”

Ms Tsirekas:   “Mr That would be the worst to have to just kept going when you feel like that. You must be an adventurous person then!

You would probably love bungee jumping! Or hang gliding off cliffs! Or jumping out of planes!”

87. After about an hour, Mr Prindle and Ms Tsirekas signed off this conversation. But the conversation appears to have ended in apparent reception difficulty with Ms Tsirekas asking:

Ms Tsirekas:   “What is your time now?”

Mr Prindle:   “4.32pm

Oh that’s good for them…good concept

So you relaxing all day today at home”

Ms Tsirekas:   “Oh! Your still working

Yes at home this morning”

Mr Prindle:   “Wow!! Heavily raining outside!!

Ms Tsirekas:   “It’s horrible”

Mr Prindle:   “You need good cuddle and snuggle

With happy ending”

Ms Tsirekas:   “I need all of that and you need that from me as well. I’ll talk soon my gorgeous James”

Mr Prindle:   “yes babe

Need to go too and will check on you later on

Have a nice day and take good care if yourself my queen”

Ms Tsirekas:   “When do you think you will be arriving in the States?

Plus how long will you be there for?

Are you there?”.

88. No further communication took place on Friday, 5 August 2016 after 11.07am. Ms Tsirekas initiated the next communication at 6.18am on Saturday, 6 August 2016. She had not heard from Mr Prindle for almost 24 hours, so she sent a series of emails over a period of nine hours that day, seeking a response. She received no reply that day:

Ms Tsirekas:   “Hello’ good afternoon How are you?

How’s my dare devil Hunnicut going?

It’s just 6.20am Saturday morning and I wanted to say hi and find out how your day is

I’m having a cup of tea and then going to the flower market this morning to buy some flowers because I’m going to a friends place for dinner tonite. Wish you were here so you could come with me.

Must be a bad connection but I want to say I’m thinking of you and missing you [heart emoticon]

I miss you [kiss emoticon]”

89. She received no further communication from Mr Prindle on Sunday, 7 August 2016 either. But in the course of the day, Ms Tsirekas sent him the following text message:

Ms Tsirekas:   “I’m missing not hearing from my beautiful James and all your gorgeous txt’s that you send me that makes me feel so lovely.”

90. In the evening of Monday, 8 August 2016, Ms Tsirekas still had not heard from Mr Prindle. So she initiated contact, showing some distress that she had not heard from him since Friday. A few hours later, he responded:

Ms Tsirekas:   I’m really feeling sad I haven’t heard from you. I really really miss you [heart emoticon]”

Mr Prindle:   “Hello my queen…OMG!!!! We had a bad reception for the past 3 days and I could not get in touch!!! In fact ocean waves were bad and we just have to be static in a this place for the past 3 days…but right now according to what we noticed and saw nautalically…it’s got good to be fine later today and we keep moving…we are arriving in United States this weekend by the grace of God…I really miss you so much and will try ring you later on…it’s 5.39am right now babe”

91. The first text message in which Mr Prindle began to entrap Ms Tsirekas into executing his scheme was sent on Thursday, 18 August 2016. That message is discussed in more detail below. The request he made in that email was designed to minimise the possibility that she would think he was doing anything suspicious and, in my view, it does. But the ten days of text messages that precede 18 August 2016 show Mr Prindle giving Ms Tsirekas constant and intense romantic attention. She responded with her own strong declarations of commitment to him. It would be a mistake merely to look at the text messages after 18 August referring to the transactions the subject of these proceedings. The playful and affectionate interplay between these two people in the preceding ten days is important context in judging Ms Tsirekas’ state of mind during the later period, 18 August to 8 September, and during the period in which the financial transactions took place.

92. Hindsight instructs that, during this ten day period, Mr Prindle was softening up Ms Tsirekas for the series of requests he planned to begin on 18 August 2016. Her ignorance of his true motivations is evident from a reading of these text messages. What follows are some samples through this period of their exchanges. These are not the most intimate of their exchanges. To publish more would serve no useful purpose. But these samples well represent the close endearment being expressed on each side.

93. On Tuesday, 9 August 2016, Mr Prindle wrote the following:

Mr Prindle:   “Hello my queen thessy…how is my angel doing today…sorry I could not call late night on your morning time!!! network just getting better for now.

Guess you are busy right now at work babe!! I will ring you later my time on sea”

94. He then called her but the call was missed. He wrote a final text message to her for that night:

Mr Prindle:   “I need to go back to sleep…just want to say I love you from the depth of my heart”

95. The following day, Wednesday, 10 August 2016 Ms Tsirekas sent him a text message apologising for missing his calls:

Ms Tsirekas:   “Hello

I’m sorry missed your calls yesterday. I was checking all day and just thought that the connection was bad.

Are you there handsome?

We kept missing each other”

96. They connected again on Friday, 12 August 2016. Mr Prindle sent a text message at 7.05am, to which Ms Tsirekas responded a few minutes later:

Mr Prindle:   “Good morning my angel and hope you had a nice sleep and lovely dreams

Really miss you so much babe and we are moving forward nicely and we should arrive at San Francisco by Sunday morning or evening…horray”

Ms Tsirekas:   “Hi”

Mr Prindle:   “Are you going to work today so that I can know the best time to ring you on phone”

Ms Tsirekas:   “No not today

I’ve missed you

Lots

What time is it for you

Woo hoo your nearly there!!!!”

Mr Prindle:   “Yes its 4.08pm right not on Haiti sea”

Ms Tsirekas:   “I was beginning to think you had run away from me

Afternoon then”

Mr Prindle:   “hahaha haha…run away!!! Bad thought!!! And how on earth would I ever think of that!@”

97. On the morning of Sunday, 14 August 2016, Mr Prindle and Ms Tsirekas made contact again at about 8.40am and exchanged the following text messages:

“Mr Prindle:   “Hello my queen…how are you doing today

Hope you had a nice sleep and lovely dreams

We are on the El Salvador sea now…with slow sailing!!! Thinking and missing my baby

Just want to say I love you with all my heart”

Ms Tsirekas:   “Hey

How are you?

So your in the pretty seas now!!!

Yes I’m missing you my gorgeous love

With the slow sailing will you make it to San Francisco by Sunday?”

98. They made contact that same evening at 6:10pm. They discussed everything from where his ship was, what they were doing that day, what they were eating and what it would be like the first time they meet. They signed off that evening with mutual declarations of affection:

Ms Tsirekas:   “I miss you and thinking of you

Take care and I love you”

Mr Prindle:   “Love you with all my heart”

…

Mr Prindle:   “Happy Sunday my angel and hope you are having a beautiful Sunday babe. Just want to say I love you from the depth of my heart”

Ms Tsirekas:   “Ahh! So sweet. Thank you. You should be asleep right now”

99. On Monday, 15 August 2016, they greeted each other in the morning. An exchange such as this early each day became a ritual:

Mr Prindle:   “Hello sweetie

Are you there”

Ms Tsirekas:   “Hi my darling

Wow! So nice to hear from you”

100. They exchanged text messages about many subjects over the next two days. Late in the evening of Tuesday, 16 August 2016 they signed off in the following way at 4.22pm:

Mr Prindle:   “How I wish to chat more with my queen…but my eyes is calling back to sleep”

Ms Tsirekas:   “I’ll see James soon

Sleep tight

Mr Prindle:   “[MISSING first line]

Have a nice evening”

Ms Tsirekas:   “I’d love that. miss you”

Mr Prindle:   “Love you with all my heart”

101. On Wednesday, 17 August 2016, they exchanged a series of text messages about exercise and other personal matters. Mr Prindle took the opportunity when asked about how stressed he was to imply that his hard work at sea meant that he was earning money, “for our future”. This is a vague reference to a future life together.

102. On the afternoon of Thursday, 18 August 2016, Mr Prindle telephoned her but did not get through. He tried to contact her again at 4.56pm, this time successfully. They then spoke about her health and the progress of his sea journey. She compared his regular calls to being like “an alarm”. He agreed he was reliable “if it is to chat with my queen”. He then seamlessly moved into his real objective: he mentioned funds he was expecting to receive. It is evident from these text messages that he had discussed these funds with her before, probably on the telephone.

Setting Up the Prime Constructions Australia Account – 18 August 2016

103. On 18 August 2016 at 5:08pm, Ms Tserikas received a text message from Mr Prindle. He framed it as good news. He notified her that certain of his debtors required the payments they were making to be remitted to a company name in which he had previously contracted with them. He revealed to her that, to facilitate this, he had incorporated and registered a company, Prime Construction Australia Pty Ltd, naming her as its sole director and guarantor. The following exchange of text messages revealing this news took place over a period of four minutes. He captured her at a spirited moment and deliberately extended their role play as a future husband and wife while he floated the idea of her opening a new bank account for him.

18 August 2016 at 5:08pm

Mr Prindle:   “The Debtor said they can only paid (sic) into the said name of company that i used to got (sic) a contract from them years back…”

Ms Tsirekas:   “Who would that be?”

Mr Prindle:   “and I already closed its (sic)…so I got them instructed to got (sic) new registration and put my wife to be name on its (sic)…to be Sole signatory to the account”

Mr Prindle:   “So its has (sic) been done

i got all the document (sic) with me and will send that to your email”

Ms Tsirekas:   “So I’m the wife?

Is that what you mean?”

Mr Prindle:   “YES YES YES my silly queen”

…

Ms Tsirekas:   “So my darling husband what are the documents!

HAhahahahahah

OMG!!! How funny”

Mr Prindle:   “So right now.. all you need to do.. is print out the 7 documents… and take its down to NAB bank around you to open a business account … if they as what the purpose of the account opening… tell them its for construction job…”

Ms Tsirekas:   “I’m in stitches of laughter

Okay.”

104. One feature of these messages is that Mr Prindle referred to Ms Tsirekas as his “wife”. Ms Tsirekas says that she just laughed off being called his “wife” and that she thought of it as merely “silly talk”. She says, and the Court accepts, that “I had feelings for him but not like – not as far as being a wife. I’d just come out of a horrendous marriage and getting married not being on my cards, in my mind.” She explained her “feelings” this way: “…he was just constantly ringing me, texting me, emails. Yes, I liked the attention because I had lacked that for so long”. She says that the communications were “more intense” than what they had been in her other online relationship with Arthur. She really treated this as a little play acting on Mr Prindle’s part. So she played along: calling him “my darling husband”.

105. Mr Prindle forwarded an email to Ms Tsirekas which attached all the documents relevant to the incorporation of Prime Constructions Australia. He then proceeded to ask Ms Tsirekas, via text message, to open a bank account with the National Australia Bank (NAB) in Prime Construction Australia’s name. He emphasised that the bank account needed to be opened as soon as possible and that, if anyone asked, she should say that the bank account was “for [a] construction job”:

Mr Prindle:   “So right now.. all you need to do.. is print out the 7 documents… and take its down to NAB bank around you to open a business account … if they as (sic) what the purpose of the account opening… tell them its for construction job…”

…

Mr Prindle:   “so you will signed (sic) its all.. and they will give you the bacnk account… which just got open

and you might have the online details the same day… or next day

just take care of that”

Ms Tsirekas:   “Okay”

Mr Prindle:   “let me send the documents to you now”

Ms Tsirekas:   “You know it’s Friday tmorrow right!”

Mr Prindle:   “Yes…”

Ms Tsirekas:   “I’ll check my email”

Mr Prindle:   “check your email now

i just sent its

yes its friday.. you can just go have its handle (sic) first thing

then go to work”

Ms Tsirekas:   “Okay Boss!”

106. Ms Tsirekas questioned Mr Prindle before opening the bank account. She asked the obvious questions that a trusting amateur would ask: what was the account for, in whose name it would it be and how would it operate. She already has a Westpac account in a company name, Group of Companies Pty Limited (“TAG”) associated with a business she previously operated. He know about TAG and mentioned it as an example of what needed to be done to set up the new company:

18 August 2016 at 5:19pm

Mr Prindle:   “check your email and go through the document (sic) sweetie”

Ms Tsirekas:   “Okay my darling I will now

Just on my computer now and checking your email”

Mr Prindle:   “ok”

Ms Tsirekas:   “Who is prime Constructions?”

Mr Prindle:   “yes

its my past construction company name

which I used to got (sic) the contract with the debtor”

Ms Tsirekas:   “Okay

So”

Mr Prindle:   “so that’s where they want to pay in”

Ms Tsirekas:   “Okay”

Mr Prindle:   “You are the sole Signatory to its (sic) all”

Ms Tsirekas:   “So when I open an account do I open it in my name?”

Mr Prindle:   “No

the prime construction name”

Ms Tsirekas:   “Prime construction”

Mr Prindle:   “you just be the sole signatory

to the account

its all much explain (sic) in the documents

like you have a TAG company

but you are the sole signatory”

Ms Tsirekas:   “That’s a lot of responsibility my darling your giving me but you can trust me with your life”

Mr Prindle:   “How wont i trust you with all I have and my life?....we have both went though lots of stress and both ups and down in life!”

Ms Tsirekas:   “How did you do this without my signature?”

Mr Prindle:   “Lol…am the Boss… its just the instruction i gave to them.. and i did forwarded (sic) your passport to them to conclude the meeting and have your name as the sole signatory

But you need to sign with the bank account open form

at NAB

I know you understand that.”

107. This was an important moment, in which context plays a special part. By mid-August 2016, Ms Tsirekas had known Mr Prindle online for five months. Her trust levels in him had grown consistently. This was not a request for more money. It was not a moment that was likely to bring back to Ms Tsirekas memories of Arthur.

108. Ms Tsirekas’ questions show an intelligent desire on her part to find out why this account was being opened. Her perspective on the moment is well captured by her statement, “that’s a lot of responsibility my darling, you’re giving me but you can trust me with your life”. Ms Tsirekas saw this moment as Mr Prindle placing trust in her by asking her to handle his money. In her mind, it was a tangible demonstration of that trust. It is understandable that that would have neutralised any suspicions she might have had about what he was requesting.

107. He gave her the reassurance that she was looking for, “How won’t I trust you with all I have and my life?...we have both went through lots of stress and both ups and downs in life!”.

108. But she questioned him. And her questions drift uncomfortably close to the centrepiece of his deception. She innocently asks him: “How did you do this without my signature?”. What now appears to be one of the critical acts of dishonesty on his part was dressed up in his response, “lol...I am the Boss…it’s just the instruction I have to them…and I did forwarded your passport to them to conclude the meeting and have your name as the sole signature”.

109. By his response, “lol…I am the Boss” with the “laugh out loud” abbreviation, Mr Prindle deflected her sensible inquiry with humour. At this stage of their online relationship, and given his humorous characterisation of this event as an act of trust on his part, her questioning him further might tend to show that she doubted his sincerity. What he was offering was a sufficient token of his trust in her. And she accepted it at face value, at first.

Down to the Bank – 19 August 2016

112. Many of Ms Tsirekas’ questions about the new account show her financial naivety and dependence upon Mr Prindle in the executing of what she saw as an administrative task on his behalf. She asked him in the same series of text messages on 18 August 2016, “How much is going into the account? Do I need to know that? Will they ask that?” He gave her instructions on these matters and she replied, “Got it!”

113. Mr Prindle had just sent her the necessary company documents for Prime Constructions Australia, including the certificate of incorporation, to enable her to open the account in its name, with her as a director and shareholder.

114. On the following day, Friday 19 August 2016, Ms Tsirekas attended the NAB branch at Five Dock and set up the bank account that became the Prime Constructions Australia NAB Account 5835. This account actually was opened as an account at the St Leonards branch of the NAB. This occurred as a matter of administrative convenience within the Five Dock branch, as was explained by Ms Athanasia Apostolopoulos, the branch manager of the Five Dock branch. There is no doubt Ms Tsirekas opened the account. She agrees she did. And Ms Apostolopoulos recognised her both because their daughters had previously attended Greek dancing classes together and because Ms Tsirekas’ former ex-husband was the former mayor of the local Canada Bay municipality.

115. Ms Apostolopoulos was busy with other customers when Ms Tsirekas came in, so the account was opened by phone call made from the Five Dock branch of the NAB to the NAB Business Centre at St Leonards. The account number and other account details given to the NAB Business Centre were confirmed back to the Five Dock branch. Ms Tsirekas says that she cannot remember opening the bank account with the St Leonards NAB branch. She can only remember opening the bank account at the Five Dock branch and assumed that is where it was located. This is not surprising. Ms Apostolopoulos herself says that she did not know that the primary account that Ms Tsirekas opened was actually at the St Leonard’s branch, despite inputting the relevant account information into the NAB banking software program so as to confirm the creation of the new bank account.

116. But the important matter is that Ms Tsirekas opened the account and was its sole signatory, as is shown by the NAB Account Authority card for Account 5835, countersigned by Ms Apostolopoulos.

117. But before Ms Tsirekas went to the bank Mr Prindle engaged in 20 minutes of conversation with her, confirming that she had the right information and saying, “I trust my Queen for that and it’s the reason am entrusting that with you babe”. By this exchange, he emphasised, once more, that he was placing his trust in her. His real object was to secure her trust in him. When she arrived at the bank, she remained in communication with him, reporting on her progress in opening the account. She relayed to Mr Prindle that it would take about two days to open the account, which was predicted to be ready by Tuesday, 23 August 2016.

118. Ms Tsirekas gave Mr Prindle the account details and explained that NAB had to do, “a 100 point check” of her identity and that NAB would let her know when the account was ready to use. But she made a crucial mistake of one digit in the BSB number, substituting a “3” for a “2”. This later caused Mr Prindle some unexpected inconvenience in executing his fraud on Automotive. Mr Prindle must have been very satisfied with the progress of his scheme that day because he signed off with a message to her slightly more intense than usual: “Just want to say I love you from the depth of my heart”.

119. Ms Tsirekas also immediately passed on to Mr Prindle the NAB banking identification number for online banking on the new account and a password which she made up herself. By this stage, she had known him for five months and she anticipated that they would meet face-to-face within about six months of their meeting. It is some indication of her passionate mental commitment to this online relationship that she selected the password, “6monthsfever” for the account.

120. But Ms Tsirekas was troubled. She has been thinking since Friday about the question she had asked Mr Prindle about opening the account and that he had deflected. She returned to the subject on Saturday, 20 August to seek reassurance. The text messages show her innocent naivety on this subject and his masterful manipulation of her:

Ms Tsirekas:   “Can I ask you something?”

Mr Prindle:   “Go ahead babe”

Ms Tsirekas:   “How did you get to open a company online? How did you pay for it?”

Mr Prindle:   “Oh you wrong…As I told you that it’s has to be the name of the company that I sued to secured a contract with my debtor long time ago. It’s the same they want to pay in…so I explain I don’t have an account and closed the name if the company long time ago…so I instructed them to do that on my behalf and deduct whatever it’s cost out of the outstanding balance…then given them who I want to be my sole signatory to the account…which is my wife to be…and they handle it’s all…and I gave them your name and details to get that done.”

Ms Tsirekas:   “okay”

Mr Prindle:   “I don’t want to stress you looking for any money in doing that!

Looking I mean

So they got its handle”

Ms Tsirekas:   “I was a little taken back that you didn’t let me know beforehand

But I understand”

Mr Prindle:   “Though I got the noticed about 10 days ago…just don’t want to stress you out looking for the money to open and register for its”

Ms Tsirekas:   ‘it’s only because like I said to you that I have a lot of money away to another guy who I meet online and that turned out to be false”

Mr Prindle:   “So I have to know that everything is fine…before letting you know”

Ms Tsirekas:   “I get it now

When you come home I’ll tell you just how much I gave hime”

Mr Prindle:   “Yes you told me and I also told you about my passed experienced in life…we just have to give trust a chance!! And forget about the pass and face the future…to make our life a better place”

Ms Tsirekas:   “your right”

Mr Prindle:   “Yes I would really love to know much about its all when I arrive back home”

Ms Tsirekas:   “I do trust you

You will get a shock with the amount I sent him”

Mr Prindle:   “Looking at your seat eyes while you tell me everything about the so call damn ripper!!”

Ms Tsirekas:   “Yeah that he was

Then months and months later I meet you”

Mr Prindle:   “We are still alive baby…and we going to work its out by investing and starting real estate business together when I arrive…so Old things has passed away!!! And all things become new”

Ms Tsirekas:   “new beginnings is a blessing and we will do it together”

121. She never again returned to this subject. After confessing to Mr Prindle about her prior experience with Arthur, and confiding in him her shame at how much was given away to Arthur, Mr Prindle cynically emphasised how unlike Arthur he was. Ms Tsirekas was convinced by what he had to say.

Mr Prindle Arrives and Account 3835 Operates – 22 August 2016

122. By Tuesday, 22 August 2018, Mr Prindle had apparently arrived, so he said, by ship in San Francisco. From this time on, his text messages were peppered with information about his travels and proposed travels within the United States of America and the people he knew there. Shortly before he arrived, he had made a request over the telephone to Ms Tsirekas for just a little more money to tide him over travelling within the United States until the NAB account became operative. She was not entirely happy about this. Their exchange of text messages on 22 August shows her deflecting his request for money twice, in between affectionately exchanging information about trying to activate the NAB account.

Ms Tsirekas:   “Are you having a drink now?”

Mr Prindle:    “Not yet start :-)

Still chatting with my angel

Yes every dealers has their product specialization and what they are good on”

Ms Tsirekas:   “I’m missing you more every day and when I don’t hear from you I get worried about you.”

Mr Prindle:    “So I have a list of places that I need to touch to see and check what I am gonna purchase

Oh sweetie .. I understand it’s al and when I don’t get to talk to you ..I feel down and not happy … but so soon now.. It’s will be of a story while we hold each with a. great smile :-)

But just my worried right now before money gets in the account anytime from Wednesday when the bank as infirm you that it’s ready to receive funds”

Ms Tsirekas:   “You’ll be really busy then for about a week doing all of that. I wish I was with you but when we will be together we can share so many things

Yes I have to call tomorrow

To find out if everything is ok”

Mr Prindle:   “Is that I need about 1500 … for the traveling to cities for materials check up and feeding ad I told you on phone last week !”

Ms Tsirekas:   “Yes you told me and I know that”

Mr Prindle:    “Yes everything will be fine by tomorrow for sure

I don’t even have time to check the login details that you gave me Lol

Did you login to check yourself”

Ms Tsirekas:   “Your so busy

Yes I have logged in and checked the account and that’s all fine. It’s just the waiting to make sure everything is above board with the new company name.

The guy said he will call me when that has been done

Either today or more likely tmorrow”

Mr Prindle:   “Tomorrow is already at the corner”

Ms Tsirekas:   “If I haven’t heard from him by tomorrow he said to call him

Yeah it is”

Mr Prindle:   “Cool”

Ms Tsirekas:   “Good

I’ll check and make sure. You don’t have to worry

You were clumsy with your phone and I was clumsy yesterday as well.”

Mr Prindle:   “Ok sweetie … hunnie .. I don’t like to stress or disturb you!!! ….. but it’s just that I need this little funds with me for miscellaneous expensive you know .. the travelling down to LA ..to Illinois and other places this week”

Ms Tsirekas:   “I drove Alex’s car yesterday which is a gold and I thought the hand break was”

Mr Prindle:   “Lol”

Ms Tsirekas:   “forget that bit”

Mr Prindle:   “Great minds thinks alike”

Ms Tsirekas:   “Yes I know you do”

123. Ms Tsirekas was reluctant to part with any more money to him. But nothing in her text messages at this time or in her oral evidence betrays any sense that she had lost or was losing faith in him. Through this period, her messages to him unmistakably show she had an undiminished level of affection for, and trust in, him. They are very similar to the messages cited in more detail above from the first half of August 2016. I accept that was her state of mind. She clearly had no idea of his wider criminal purpose to fraudulently misuse the bank account she had just set up for him.

124. Throughout 22 August 2016, Mr Prindle reported in great detail about the plans to unload the ship, day-to-day events and his further plans to travel to Los Angeles and Chicago. He continued to shower her with affection and attention.

125. At the end of that day, she tried to call him many times to tell him the NAB account had been opened. She was unmistakably excited about this for him because he wanted this result so much. Her text messages are remarkable for their absence of her requesting any reward or entitlement to any of his funds for her work..

Mr Prindle Tightens His Grip – 23 August to 1 September 2016

126. The days that followed between Tuesday, 23 August and Monday, 29 August were largely filled with mutual reassurance of affection and, on her part, confiding in him a great deal about her feelings about many subjects including her experiences with Arthur and her ex-husband. One cannot read this material without being struck by her complete candour with him about so much of her personal life, candour that signals the desire to build trust. And once more, although the bank account was in place and ready to receive a large amount of money, she at no stage in this period asked him for a share of the money. This is consistent with the Court’s overall view of her that she was not financially motivated in her relationship with Mr Prindle.

127. But Mr Prindle wanted Ms Tsirekas to give him more money. To persuade her, he moved into the next phase of his deception. He started to talk about travelling within the United States the following Tuesday, 30 September, as far as Chicago and other places “to start meeting dealers”. A critical part of his final deception was to convince Ms Tsirekas that the money that he was going ask her to pay out of Account 5835 was for legitimate business transactions in a business, he said, involved the buying and selling of equipment. He conveyed that he needed to do this kind of business in the near term, because he was onshore in the US, and would soon be returning to Australia. He asks for about US$3,200. She replied, “the most I can give you is $2K my darling”. She cited understandable domestic responsibilities that she had, “some bills to pay” including an electricity bill of $800.

128. What he is asked for puzzled her a little and she lightly chided him for not keeping some money in reserve for when he got to shore.

129. He also revealed to her that the amount he would receive could be of the order of $700,000. She was innocently amazed at this and said, “how did you let it go for so long and not do anything about it. That’s a lot of money not to chase it up long ago”. In response, he deftly deflected her concern by confessing that she “[was] right”, accusing himself of being “too soft”. Their subsequent text messages show that this was enough to genuinely satisfy her curiosity.

130. On 29 August, Mr Prindle repeated his request for a little money to tide him over. She questioned him at first, “Can’t someone [on the ship] loan you the money?” She also said that she was short on funds.

131. But Ms Tsirekas set out to transfer by Western Union or MoneyGram the $AU2,000 she had agreed to send to Mr Prindle. Mr Prindle directed her to an account in the name of “Charles Gilbert of Flossmoor IL 60422”, one of the dealers with whom Mr Prindle said he was doing business. But before this money was transferred, Ms Tsirekas did a Google search could not find Mr Gilbert’s address. So she had to confirm Charles Gilbert’s address with Mr Prindle. Mr Prindle had no doubt just made up an address for a fictitious Mr Gilbert. But Ms Tsirekas faithfully did her best to get the correct details without ever suspecting she was playing a real part in a case of fictitious characters. Once the address was changed, the transfer was successful.

132. On 1 September 2016, Mr Prindle sent a text message to Ms Tsirekas telling her that “we made a big mistake my love!!!” and “I mean you made a big mistake with the NAB bsb number that you gave me sweetie”. Mr Prindle had discovered the incorrect BSB number in the banking details she forwarded to him. But she quickly responded, providing him with screenshots of the relevant banking details by text message and they worked out together how she had made a mistake.

133. He even used this event to manipulate her to his advantage. He firmly blamed her for the error and made her feel that she must not let him down again. In the days that followed, she was profusely and repeatedly apologetic for causing him inconvenience from her error. She did not want him to think she could not be trusted. This made her ever more willing to follow his instructions in the important days that followed.

134. On that same day, Mr Prindle informed Ms Tsirekas that he was expecting $3 million to be deposited into the NAB bank account. He was indeed. He expected the payment because it was the proceeds of a crime he (and perhaps others with him) was planning. This announcement to her represented a turning point for Mrs Tsirekas in two dimensions. First, it, and all that followed with the arrival of the money in Account 5835, was a growing reassurance to her that Mr Prindle was not another Arthur, a person who was feigning affection to take large amounts of her money. And secondly, as before when Mr Prindle asked her to take a position of trust in relation to his money, her quick reaction was to co-operate because she thought she should prove herself worthy of the trust he was placing in her.

135. It is necessary now to leave Mr Prindle’s manipulation of Ms Tsirekas to one side to examine how Mr Prindle was able to divert in excess of $3 million of the plaintiff’s funds and how they were paid into the Prime Constructions Australia NAB bank account.

136. These reasons will return later to Ms Tsirekas to examine what she did when she learned that over $3 million had been paid into the Prime Constructions Australia NAB account, as Mr Prindle had predicted.

Mr Prindle Diverts Automotive Contract Payment – 22 August to 6 September 2016

137. Automotive is a Western Australian based listed company involved in a number of Australian automotive markets. Automotive owns and operates over 180 automotive dealerships across Australia and New Zealand. It also owns Australia’s largest refrigerated logistics business, holds the Australian importation and distribution rights of KTM and Husqvams motorcycles, as well as wholesale parts distribution.

138. Mr Prindle orchestrated his fraud by successfully diverting a payment that Automotive was due to make to Prime Constructions in early September 2016. In 2016, Automotive was expanding its sales outlets in the Eastern states of Australia. To achieve that objective, it was a party to a contract with Prime Constructions for the provision of construction services to complete additional Automotive sales outlets. Under that construction contract, Automotive was required in early September 2016 to pay Prime Constructions the sum of $3,199,060.60 for building works that Prime Constructions had completed on Automotive’s Hoxton Park Road NSW Corporate Headquarters and new Dealership.

139. The fraud was effected by exploiting Automotive’s poorly developed anti- fraud internal controls and some fortuitous circumstances. The fraud was executed on 2 September 2016 when Automotive paid $3,199,060.60 to Prime Constructions Australia. When Automotive discovered the fraud shortly afterwards, it commenced these proceedings on 8 September 2016 and obtained restraining orders against Prime Constructions Australia, as first defendant, the NAB as second defendant and Ms Tsirekas as third defendant, preventing their dealing with the $3,199,060.60 or its proceeds. Automotive only proceeded to final hearing against Ms Tsirekas.

140. In support of its application for restraining orders, Automotive advanced an affidavit of Mr Frank Vredenbregt, Automotive’s Group Credit Manager. He explained that the fraud had been effected as a result of Automotive acting on emails apparently sent by a Ms Hannah Phillips apparently on behalf of Prime Constructions, advising that the bank details for Prime Constructions had changed to Account 5835 at the NAB. Mr Vredenbregt’s affidavit and the evidence of other Automotive employees explained what had happened within Automotive to complete the fraud.

206. Ms Tsirekas was cross-examined about the references in her affidavit to “Mr James Pringle”, as distinct from “Mr James Prindle” who appears in all the text messages. It was suggested to her in substance that she did not know who she was dealing with. But forceful and creative though Mr Skinner’s cross-examination was on this subject, the reality was that the most common sense explanation for the difference is that a lawyer drafting her affidavit has made a repetitive error throughout the affidavit, which has not been picked up before she swore it. This issue does not diminish her credit, in my view, at all.

207. In light of the findings in this factual narrative, these reasons now undertake a closer analysis of Automotive’s case against Ms Tsirekas.

Conspiracy to Defraud

219. The plaintiff pleads a conspiracy between Ms Tsirekas and a person or persons unknown to defraud the plaintiff and to deprive her of the sum of $3,199,060.60 the plaintiff, Automotive. The plea relies upon a series of alleged overt acts between Ms Tsirekas and person or persons unknown. These acts need not be fully detailed but which cover the following range of conduct.

220. The overt acts are said to include the registration and incorporation of the first defendant, Prime Constructions Australia, her appointment as its director, the supply of information and identity details associated with the registration of the company. Further overt acts pleaded are the opening of NAB Account 5835 in the name of Prime Constructions Australia, conduct which is said to have no trade related purpose other than for the deposit of fraudulently obtained funds at the direction of a person or persons unknown. The overt acts also allegedly include all the incidental account opening acts including the provision of her identity to employees of the NAB to allow the bank account to be opened. And the overt acts are said to include Ms Tsirekas’ knowledge that any monies likely to be deposited into Account 5835 would be so deposited as a result of dishonest conduct by a person or persons unknown. Finally, the overt acts plead that the conduct of third parties, namely the false letter from Prime Constructions Pty Ltd dated 22 August 2016 falsely advising Automotive of the banking details of Account 5835.

221. The plea concludes that as a result of the false representations made to it pursuant to the alleged conspiracy, Automotive paid $3,199,060.60 in favour of Prime Constructions Australia. Finally, it is pleaded that Ms Tsirekas knew by 5 September 2016 that each of these acts and the deposit of the funds was brought about by her dishonest actions and those of other unknown person or persons in furtherance of a conspiracy.

Applicable Legal Principles

222. The tort of conspiracy may take two forms. In the present case, the relevant form is that of an alleged agreement between two persons (Ms Tsirekas and Mr Prindle) to commit an unlawful act (fraud) with an intention to injure the plaintiff, and that unlawful act is carried out and achieved.

223. In Ballard v Multiplex [2012] NSWSC 426 at [65] (“Ballard”), McDougall J concisely summarised the elements of a conspiracy to defraud in the following terms:

“At common law, the parties to an agreement may incur civil liability to a third party if by their agreement they ‘combine’ for the purpose of causing harm to that third party; if they execute their agreement by the performance of overt acts; and if thereby the third party does suffer harm.”

224. Conspiracy to defraud does not require the plaintiff to establish that the predominant purpose, or intention, of the conspirators was to cause the plaintiff injury or damage. Rather a mere intention, or purpose, to cause injury or damage to the plaintiff is sufficient: Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678; [2004] NSWCA 140 at [13]-[20] (“Fatimi”)). Thus, in Williams v Hursey (1959) 103 CLR 30 at 78; [1959] HCA 51, it was held that if the conspiracy and the unlawful means were directed at the plaintiff, damage to the plaintiff that was foreseen or foreseeable or was necessarily caused in carrying out the conspiracy would satisfy the requirements for this branch of conspiracy.

225. To prove the purpose of the conspiracy, however, it must also be shown that the defendants agreed upon the purpose or that one defendant, having that purpose, made it known to the other parties and the other parties joined or continued with, or performed, the conspiracy (McKernan v Fraser (1931) 46 CLR 343 at 407-408; [1931] HCA 54 (“McKernan”); see also Ballard at [66]).

226. In addition, the plaintiff must show that the conspiracy to defraud has been performed, in whole or part (McKernan at 407) and that the plaintiff has suffered damage (Fatimi at [41]).

227. Conflicting authority on whether the allegation of conspiracy to commit a tort is superfluous and should be struck out: Williams v Hursey (1959) 103 CLR 30 at 78-79; [1959] HCA 51.

228. But this tort is not maintainable against Ms Tsirekas for the same reasons that the tort of deceit is not maintainable against her (see below). Automotive cannot establish Ms Tsirekas was involved in any agreement with Mr Prindle to commit any unlawful act. It was essential to the success of his plan involving Ms Tsirekas that she never suspect he was acting contrary to the criminal law. He succeeded because she never did suspect until the time these proceedings were commenced.

229. The overt acts of the alleged conspiracy are all accounted for in the Court’s findings without active dishonesty on Ms Tsirekas’ part. The overt acts can be dealt with in groups. The registration and corporation of Prime Constructions Australia and the supply of information for that purpose was not undertaken voluntarily by Ms Tsirekas. She was, in truth, the victim of a misuse of her identity. When she questioned that misuse as a reasonable and honest person in her position would do, the answers given to her were designed to exploit her credulous nature into accepting that it was legitimate for a company controlled by her to be used to assist in the receipt of funds in Mr Prindle’s business. She did not believe that her identity details were being misused, in part because she had control over the operations of Account 5835.

230. The claimed overt act of setting up of Account 5835 does not demonstrate dishonesty because from her point of view she had control of the account, she was given explanations that satisfied her as to what was coming into the account. She did not believe Mr Prindle was dishonest and that he proposed to use the account for his legitimate business purposes.

231. Ms Tsirekas did not believe that submitting the account authority card signed by her to Ms Apostolopoulos was fraudulent or misleading. It represented from her point of view a genuine account in a company name of a company that she controlled of which she was a director which she was legitimately putting at Mr Prindle’s disposal for what she understood to be his legitimate business purposes. Those beliefs on her part were false but only because she too was deceived by Mr Prindle.

232. Finally, Ms Tsirekas has nothing to do with the Prime Constructions letter sent to Automotive on 22 August 2016.

Tort of Deceit

233. In the alternative to the conspiracy case, Automotive pleads that Ms Tsirekas knew on 5 September 2016 that the funds deposited into Account 5835 was stolen monies to which Prime Constructions Australia and Ms Tsirekas had no lawful entitlement. Automotive repeats the particulars pleaded as overt acts in the conspiracy case and alleges that Ms Tsirekas acted fraudulently and dishonestly in making two withdrawals on 5 September 2016, totalling the sum of $1,516,270. This is comprised of the two withdrawals on 5 September 2016 from the NAB Account 5835 of $16,200 and $1,570. The pleading continues that in her capacity as sole director and shareholder of Prime Constructions Australia Ms Tsirekas knew that the company had no entitlement to receive the sum of $3,199,060.60 from a source unknown to her.

234. Alternatively, Automotive says that by withdrawing these monies from Account 5835 without making proper enquiries she acted fraudulently by reason of her recklessness in making withdrawals without any regard to the source of the monies.

Applicable Legal Principles

235. The elements of the tort of deceit were summarised in the plurality judgment in Magill v Magill (2006) 226 CLR 551; [2006] HCA 511 at [114] as follows:

“The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance on the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation (footnotes omitted).”

See also Wood v Balfour [2011] NSWCA 382 at [58]-[59].

236. Automotive cannot make out this tort against Ms Tsirekas. Automotive has not been able to connect Ms Tsirekas with the making of any representations to Automotive. Whatever Mr Prindle did to Automotive, he was, at all relevant times, actively misleading Ms Tsirekas as he was misleading Automotive. She was not a knowing accessory to any of his conduct directed at Automotive. She had no real understanding, or even suspicion, of his schemes until 8 or 9 September 2016.

237. She received the Transfer Confirmation Certificate which mentions Automotive by about 5 September, before the last of the payments were made out of her Westpac accounts. But the name Automotive was effectively meaningless to her. She has no appreciation then that Mr Prindle has been making false representations to Automotive to induce it to pay the $3,199,060.60 into Account 5835.

238. And Ms Tsirekas had made some enquiries about the source of the funds. Her questions to, and interaction with, Mr Prindle over time had given her a loose understanding that various people owed money to Mr Prindle, he had been slow to collect it, it had not been easy for him to do so whilst on a ship, the money related to a business he was conducting by and selling ships equipment and the transfer of the money as a proper business transaction was recorded in a Transfer Confirmation Slip. In my view, Ms Tsirekas asked the kind of questions which would be appropriate for her limited level of commercial knowledge and to demand more enquiry from her as to judge her a standard of commercial sophistication that she did not have.

Moneys Had and Received and the Defence of Change of Position

239. Automotive’s claim for money had and received pleads that Ms Tsirekas withdrew the two amounts totalling $1,516,270 for her own use and benefit, knowing they had been fraudulently and deceptively obtained and to which she had no entitlement.

240. The money had and received count pleads what is uncontroversial in the proceedings that Automotive has recovered from the NAB Account 5835 and from Ms Tsirekas’ two Westpac Banking Accounts, monies that were there when injunctions were granted. But that there was still an unrecovered balance of $552,627.48 which is the subject of this action. Automotive claims judgment in that sum.

241. Although the claim was pleaded as one of common law money had and received, in final submissions Automotive also relied upon doctrines of constructive trust which are dealt with below.

The Action for Monies Had and Received

242. The entitlement to recover money mistakenly paid to another in an action for money had and received was recognised by Lord Mansfield in Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676 as the notion that retention of the money by the payee was against conscience. Here, there is no issue that Automotive paid the money in question under operative mistake.

243. In David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; [1992] HCA 48 (“David Securities”), a case in which payment was made by mistake, the plurality explained an action in money had and received in the following terms,

“The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent [or, in this case, the third defendant] to make restitution. Before that prima facie liability is displaced the respondent must point to circumstances which the law recognises would make an order for restitution unjust. There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust.”

See also Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; [2014] NSWCA 310 at [28].

244. The monies sought to be recovered here were all sufficiently received by Ms Tsirekas to make out the plaintiff’s action. The monies were either paid at Ms Tsirekas’ direction into her or her company’s Westpac bank accounts for payment on to third parties, or directly to her, to satisfy debts Mr Prindle owed her.

The Defence of Change of Position

245. Ms Tsirekas deploys a defence of change of position. That is, she submits that it would be inequitable, or unjust, to require her to repay the money received in circumstances where she has so far altered her position in relation to that receipt that it would be detrimental to her if she was now required to repay it.

246. The defence operates pro tanto, relieving Ms Tsirekas from the obligation to make restitution to the extent of her detrimental change of position.

247. Automotive first argued that Ms Tsirekas had not pleaded a defence of change of position in answer to Automotive’s claim for monies had and received. But that argument is not persuasive. Whereas at first it might have been said that the claim was not clearly pleaded, the Court directed the parties to attend to this issue and for Ms Tsirekas to make the raising of the issue clearer on the pleadings. As a result of the Court’s directions, the trial was finalised on the basis that this defence was being fielded in answer to the plaintiff’s claim. Detailed written submissions addressed the issue. The defence may now be considered.

248. Detriment. In David Securities, the High Court identified at [59] the core requirement of the change of position defence that “the defendant has acted to his or her detriment on the faith of the receipt”. This identified essential requirement was affirmed by the plurality in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 at [77] (“AFSL v Hills Industries”), who considered that the defence should apply where “the recipient has so far altered its position in relation to the receipt that it would be a detriment to it if it were now required to repay”.

249. Professors Birks and Burrows consistently argue that “detriment”, in the context of the change of position defence, is concerned with disenrichment; namely, that only changes of position that lead to the loss of all or part of the value of the benefit received will count for the purpose of the defence (P Birks, Unjust Enrichment (2nd ed, 2005, Oxford University Press) at 208-212; AS Burrows, The Law of Restitution (3rd ed, 2011, Oxford University Press) at 526).

250. However, the High Court rejected a “disenrichment” analysis of “detriment” in AFSL v Hills Industries. Whilst accepting that disenriching changes of position may attract the defence, the High Court unanimously rejected the necessity of disenrichment, particularly because it invites an exclusion or marginalisation of non-pecuniary changes of position and therefore requires “a mathematical assessment of enduring economic benefit” (at [84], per Hayne, Crennan, Kiefel, Bell and Keane JJ). This does not reflect the reality, as French CJ put it at [23], that “there may be changes of position which are difficult or even impossible to value which are not, on that account, irrelevant for the purpose of the defence”: see Gageler J at [157].

251. The “irreversibility” of the change of position is another means by which the High Court in AFSL v Hills Industries measured detriment to the defendant. In that case, AFSL, a financier, was induced by a fraudulent person to make payments to a number of businesses, including the respondents, Hills and Bosch, for the purchase of non-existent equipment. The fraudulent person then informed Hill and Bosch that the payments were for the discharge of debts owed to them. In reliance on their receipts, Hill and Bosch changed their position by, inter alia, continuing to trade with the fraudulent person’s companies and giving up the opportunity to pursue remedies in enforcement against those companies (for failing to discharge debts). French CJ (at [29]-[30]) and the joint judgment (at [95]) emphasised that the changes undertaken by the respondents there were substantial and irreversible, and thus detrimental to the respondents’ position. This was because by the time the fraud had come to light and AFSL gave notice of its mistake, steps towards enforcement, or securing the debt, could no longer be taken.

252. Here, the irreversibility of Ms Tsirekas’ payments to third parties is not in question. The payments were made to oveaseas bank accounts. The speed with which they were paid out under the fraudulent direction of Mr Prindle is a basis to infer that those overseas accounts were probably quickly drained. No one seriously argued that the monies are now recoverable in any practical sense.

253. Causation. For the defence of change of position to apply, the defendant must establish that the detrimental change of the position must have caused or contributed to the impugned transaction. On the element of causation, the joint judgment in Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391; [2012] NSWCA 381 stated at [6]:

“The circumstances in which the payee acts on the faith of, or in reliance on, the receipt will be many. It will be a factual question in each case. The acts and omissions will occur in the context of a certain body of knowledge which will include knowledge of the receipt and of facts that support reliance upon the stability of the receipt and an entitlement to treat the receipt as able to be dealt with. In many cases it will be a matter of fact and degree as to whether there was any such reliance. This introduces both some degree of mental advertence to the existence of the receipt, and a causal element to the analysis of the relationship between the payment and the change of position; the ascription of the latter to the former: see Perpetual Trustees v Heperu at [133]; and J Edelman and E Bant, Unjust Enrichment in Australia (2006) Oxford at 326-331. The nature and degree of the causal connection may vary from case to case. It is unnecessary to discuss what questions of approach as to causation may intrude at this point: see the discussion in E Bant, The Change of Position Defence (2009) Hart at 30-41. It is sufficient for the resolution of this case to express our agreement with what Barrett JA has said on this subject at [84] - [86].”

254. And Barrett JA, as he then was, stated at [86]:

“The reference in David Securities Pty Ltd v Commonwealth Bank of Australia to expenditure or financial commitment ‘which can be ascribed to the mistaken payment’ therefore contemplates a cause and effect relationship between receipt of the mistaken payment and the subsequent expenditure or financial commitment. If it is found that the subsequent action would not have been taken ‘but for’ the receipt, the causal link will be established. I do not say that it might not also be established by proof of some less clear-cut connection; but, given the facts of the present case, that is a question that need not be pursued.”

255. Causation is not an issue here. A strong inference exists of a causal connection between the receipt of the $3,199,060.60 into Account 3835 on 4 September 2016 and Ms Tsirekas dealing with this money. Her third party payments were only possible by using the proceeds of the $3,199,060.60. The payments upon which she relies for her defence would not have occurred but for the receipt of the money now sought to be recovered.

256. Good Faith. Good faith on the part of the defendant has always been a requirement of the change of position defence (see Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 579-580 (“Lipkin”); David Securities at [9], [48], [58]).

257. There is a long line of authority for the proposition that the defendant must have “a foundation of information obtained in connection with the receipt to justify acting on the basis of the receipt” (Perpetual Trustees Australia Ltd v Heperu Pty Ltd (2009) 76 NSWLR 195; [2009] NSWCA 84 at [139]; see also Hill Industries Ltd v Australian Financial Services and Leasing Pty Ltd [2012] NSWCA 380 at [204]-[205]).

258. Thus, a defendant will not have acted in good faith if the defendant irreversibly changed their position in reliance on the fact of receipt alone. This was the case in State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350. In that case, the plaintiff bank paid $20 million to the defendant bank on the basis that it would be credited to a customer’s account, but failed to identify the relevant customer. The defendant bank, however, credited the $20 million to a customer on the advice of a third party, even though only the plaintiff bank could have identified the intended payee. The New South Wales Court of Appeal held (at 356) that the change of position defence did not apply, as the defendant bank could only “bring itself within the change of position defence if it shows that at the time of disbursement it knew or thought it knew more than the fact of receipt standing alone” and it could show this.

259. Moreover, the requirement that a defendant must “show … that at the time of disbursement it knew or thought it knew more than the fact of receipt standing alone” also necessitates an examination of whether the defendant’s actions are consistent with that knowledge. Thus, if a defendant recipient knows of the payer’s mistake and uses the money anyway, it is likely that they will be found to have not acted in good faith (Lipkin at 580). Similarly, the defence has been found to not apply in failure of consideration cases, namely where the defendant has acted inconsistently with a known condition of receipt (see State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350).

260. Ultimately, however, when assessing the issue of good faith, all the circumstances surrounding the receipt of the benefit and the defendant’s consequent change of position must be considered.

261. Gageler J’s Synthesis. Agreeing in the result with the plurality and in a summary not inconsistent with the reasoning of the plurality, in his reasons in AFSL v Hills Industries (at [157] – [158]) Gageler J conveniently stated the elements of the defence of change of position as follows:

“The defence of change of position is established where a defendant proves the existence of two conditions.  The first condition is that the defendant has acted (that is, done something the defendant would not otherwise have done) or refrained from acting (that is, not done something the defendant would otherwise have done) in good faith on the assumption that the defendant was entitled to deal with the payment which the defendant received.  The defendant need not for the purpose of meeting this condition have acted on knowledge derived from the payer.  Whether the defendant needs also to have acted reasonably is a question which does not now arise for determination.  The second condition is that, by reason of having so acted or refrained from acting, the defendant would be placed in a worse position if ordered to make restitution of the payment than if the defendant had not received the payment at all.  The detriment constituted by that difference in position need not, in every case, be financial or pecuniary.  If financial or pecuniary, it need not, in every case, be established with precision.  It can be an opportunity forgone.  It must, in every case, be shown by the defendant to be substantial.”

262. Ms Tsirekas’ defence of change of position succeeds. She satisfies the two elements of the defence that Gageler J identified in AFSL v Hills Industries. First, she acted in good faith upon the assumption that she was entitled to deal with the monies that she received. Throughout her dealings with Mr Prindle and up until the time that she applied the payments that are now sought to be recovered, she believed that the monies that she received belong to Mr Prindle and that he was legitimately instructing her to deal with them as an agent on his behalf. And from time to time she declared her belief that the monies were his and that she was acting as his “PA”.

263. In order for this element of the defence of change of position to succeed, it is not clear that the defendant must show that the defendant acted reasonably. This case is a illustration of how difficult it would be to apply a test of reasonableness to a person in Mrs Tsirekas’ position. A test of reasonableness imputes the placing of a person of objective judgment in her position. In this case, conceptually that is only possible by also assuming that that person in her position also was in the position of special disadvantage that she found herself in relation to Mr Prindle. She was so enmeshed in Mr Prindle’s spider web of deceit and so controlled through her own online infatuation with him that is hard to define the characteristics of a reasonable person in her position. All that can really be said is that she behaved as an honest person with all her vulnerability and frailties is likely to have behaved.

264. She also satisfies the second element that Gageler J identified in AFSL v Hills Industries. Having so acted, Ms Tsirekas would be placed in a worse position if now ordered to make restitution of the payment than if she had not received the payment at all. This is a case where the detriment is capable of precise measurement, being the money that she paid away at Mr Prindle’s direction, which is no longer recoverable by her. She will be left out of pocket to this extent if the defence does not succeed.

265. Ms Tsirekas As A Creditor. The payment of $16,200 authorised by Mr Prindle and received by Ms Tsirekas directly out of Account 5835 reduced his indebtedness to her. The claimed amount of the then indebtedness was $15,301.32. She clearly immediately benefited from this payment. When she received this money, she was a creditor of Mr Prindle, whoever he was, and those monies were received by her in that capacity, as her text messages with Mr Prindle contemporaneously make clear.

266. Automotive disputes that Ms Tsirekas had any indebtedness to Mr Prindle. But the text message evidence strongly supports that conclusion and the Court accepts her oral evidence to that effect.

267. Ms Tsirekas’ position as a creditor in this amount protects her to that extent from any claim for monies had and received by the plaintiff. The law on this may be clearly stated. If a creditor’s existing and enforceable debt is discharged by debtor using funds which, unknown to the creditor, belong in equity to a third party, the creditor is not a volunteer and is not liable to disgorge the funds through a claim of monies had and received: Fistar v Riverwood Legion and Community Club Limited [2016] NSWCA 81; (2016) 91 NSWLR 732.

268. The Court has found here that, when Mrs Tsirekas paid herself these funds, she did not know that they belonged in equity to Automotive. Ms Tsirekas was a creditor not a volunteer for this sum. She is not obliged to disgorge the $16,200 which was received by her for her benefit as creditor.

269. Illegality. Finally, the change of position defence will not apply where its application would undermine or stultify an overriding policy or prohibition of the law. This rule reflects the overriding principle of “coherence” of the law: Miller v Miller (2011) 242 CLR 446; [2011] HCA 9.

270. The principles that inform the substantive defence of illegality apply where illegality acts as a bar to the change of position defence. In Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25, McHugh J expressed the circumstances in which a claim would be refused on the basis of illegality in the following terms:

“(a)    the statute discloses an intention that those rights should be unenforceable in all circumstances; or

(b)(i)    the sanction of refusing to enforce those rights is not disproportionate to the seriousness of the unlawful conduct;

(ii)    the imposition of the sanction is necessary, having regard to the terms of the statute, to protect its objects or policies; and

(iii)    the statute does not disclose an intention that the sanctions and remedies contained in the statute are to be the only legal consequences of a breach of the statute or the frustration of its policies.”

271. These categories are said to be neither exhaustive, nor self-exclusive. But here, Ms Tsirekas is not a knowing party to any relevant illegality that might attract the application of these principles and inhibit her deploying the defence.

272. Constructive Trust and Money Had and Received. Automotive’s case outline places reliance of recent statements by the High Court and the New South Wales Court of Appeal that a trustee who admits to an unconditional obligation to pay a specified sum of money to a beneficiary can thereby become liable to an action at law for the recovery of that amount of money had and received to the benefit of the beneficiary: Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11 at [16], [81], [87], and [105] and see Fistar v Riverwood Legion and Community Club Limited (2016) 91 NSWLR 732; [2016] NSWCA 81 at [31].

273. Automotive then argues that on the basis of decisions such as Black v S Freedman & Co (1910) 12 CLR 105; [1910] HCA 58 and Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 426 that where money has been stolen it is trust money in the hands of the thief and the thief cannot divest it of that character, so it becomes the subject of an institutional constructive trust arising independently of any Court order.

274. This kind of analysis does not assist Automotive of any further in this case. Ms Tsirekas is not a thief from Automotive against whom doctrines of institutional constructive trust might be invoked. She had neither the knowledge or the participation to be classified as a thief for the application of these doctrines.

275. She was, at best, an innocent volunteer who received stolen money. Such a person may be required to restore the fund remaining in his or her hands, whether in its original form or in its traceable product, when the true position is discovered. Allsop P (at [154]) explained in Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 that of the innocent volunteer who received stolen money “the extent of the personal equity involved, created by the circumstances in question, is the touching of a conscience of the volunteer recipient to deal with the property of another conformably with the interest of the owner, now discovered”.

276. But none of the fund remains in Ms Tsirekas’ hands. The outstanding amount claimed of $552,627.48 in substance represents the monies paid away to the overseas bank accounts which she no longer holds. As a voluntary equity does not require her to do more than disgorge what she holds when the true position is discovered.

277. Ms Tsirekas also deployed defences of contributory negligence and proportionate liability. In light of the Court’s findings it is not necessary to decide if they were available to Ms Tsirekas.

Orders

278. For these reasons, the Court makes the following orders and directions:

1. The plaintiff’s claim against the third defendant is dismissed;

2. The plaintiff shall pay the third defendant’s costs of these proceedings;

3. The Court notes upon the giving of judgment that the third defendant proposes to seek a special costs order that may lead to a variation of Order 2, and for that purpose the Court further directs as follows: (a) any evidence and submissions upon which the third defendant wishes to rely on such an application must be filed and served by Friday, 25 January 2019; (b) and any evidence and submissions in reply must be filed and served by Friday, 1 February 2019; and (c) the hearing of the motion is listed at 9.30am on 8 February 2019 before me, or at such other time as the parties agree is mutually convenient to counsel appearing in the matter.

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Amendments

21 December 2018 - [235] change 55 to 551 in the CLR citation.

[243], quoting the High Court, change "that payment" to "that the payment", change "payment is unjust" to "payment is not unjust".

[248] change majority to plurality.

[248] change Leasing Services to Services and Leasing, in the name of the High Court decision.

[248],[250],[251] change AFLS to AFSL, in the abbreviated name of the High Court decision.

[250], after "per" add "Hayne,".

[250], quoting French CJ, add a comma after "account".

[251], first sentence, change Hill to Hills in the name of the case.

[261] change ina to in a.

[261], quoting Gageler J, delete the square bracket after "forgone".

[261],[262],[264] change Hills to AFSL v Hills Industries.

[262] and [264], change Gaegeler J to Gageler J.

Decision last updated: 21 December 2018