Christopher Kinsella v Wayne Jones

[2009] NSWSC 423

CITATION:	Christopher Kinsella v Wayne Jones [2009] NSWSC 423 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	18/05/09
JUDGMENT OF:	McDougall J at 1
EX TEMPORE JUDGMENT DATE:	18 May 2009
DECISION:	See paragraphs [13] to [17] of the judgment.
CATCHWORDS:	CONTRACTS - whether of loan or for investment - no question of principle.
CATEGORY:	Principal judgment
PARTIES:	Christopher J Kinsella (First Plaintiff) Catherine S Kinsella (Second Plaintiff) Wayne C Jones (Defendant)
FILE NUMBER(S):	SC 50232/08
COUNSEL:	M B J Lee / J C McDonald (Plaintiffs) J Jobson (Defendant)
SOLICITORS:	Price & Company (Plaintiffs) Unrepresented (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

18 May 2009 (ex tempore – revised 18 May 2009)

50232/08 CHRISTOPHER J KINSELLA & ANOR v WAYNE C JONES

JUDGMENT

1 HIS HONOUR: By their summons and commercial list statement filed on 31 October 2008, the plaintiffs sue the defendant to recover some $755,000 that they claim to have lent to the defendant, over a number of separate transactions, together with interest thereon at what they say was the contractual rate and costs on the indemnity basis.

2 That commercial list statement alleges the making of some eight agreements for loan. It alleges also that each time such an agreement was made, the first plaintiff caused the principal amount of the loan to be deposited into a bank account nominated by the defendant.

3 In each case, the commercial list response acknowledges the payment in question, but denies that it was paid by way of loan. The defendant's position, as it appears from his amended commercial list response filed on 11 May 2008, is that each of the advances was made by way of investment in a business. It is not necessary to look at the details of the business.

4 For reasons recounted in my judgment given earlier today on the defendant's application to vacate the hearing date, the defendant sought to have the date vacated. I dismissed that application. The defendant’s counsel, Mr Jobson, was instructed to proceed no further than to present the application for adjournment. Once I refused that application the hearing of the plaintiffs' claim proceeded in the absence of the defendant.

5 As I have said, the real question between the plaintiffs and the defendant is whether the moneys were advanced by way of loan or whether they were advanced on some investment basis.

6 The affidavit of the first plaintiff is clear on this. He says that each of the advances was made pursuant to a request by the defendant for a loan, in whatever was the agreed sum at the relevant time.

7 Further, on a number of occasions, the defendant provided the plaintiffs with an interest calculation spreadsheet. This was done on I think some four occasions. On each occasion when it was done, the spreadsheet referred to "advances" that had been made to the date when it was prepared, and calculated interest on those advances at what the plaintiffs say was the agreed contractual rate: 20% per annum, payable monthly in arrears. Those spreadsheets of themselves are entirely inconsistent with the transaction being one of investment, as the defendant has said.

8 Further, on some three occasions, the plaintiffs and the defendant entered into written agreements relating to the transactions up to that date. On each occasion, the written agreement referred to prior advances and to the agreement to make further advances. The first of those written agreements was dated 27 November 2006. It referred to a principal sum of $250,000, and by clause 2.1 stated that the plaintiffs agreed to lend, and the defendant to borrow, that principal sum. By clause 3.1, it provided for the payment of interest at the "specified rate": defined as 20% per annum.

9 The next agreement, dated 29 March 2007, was in similar form although this time the recitals stated more accurately that loans totalling some $350,000 had already been made, and that the plaintiffs would lend a further $150,000. The principal sum was defined as $500,000 and the agreement for loan in clause 2.1 was for the lending and borrowing of that principal sum.

10 The last written agreement that has been proved is dated 11 February 2008. Although there was some allegation in the amended commercial list response as to the circumstances in which that agreement was signed by the defendant, his signature does appear; it is witnessed by Ms Lilian Nash, and the plaintiffs have read her affidavit dealing with the circumstances in which, according to her usual practice, Ms Nash signed as witness.

11 That agreement recited that loans totalling $600,000 had been made and that a further $155,000 had been agreed to be lent. Otherwise, it is in substantially similar form to the previous agreements, including as to the payment of interest.

12 The February 2008 agreement provided that the principal sum was to be repaid on the "termination date" (11 February 2009) or on prior demand by the plaintiffs. It is common ground, and in any event I am satisfied on the evidence, that on about 23 May 2008 the plaintiffs, by their then solicitors, made demand on the defendant for repayment of the loan.

13 In the circumstances, I am satisfied that the plaintiffs are entitled to the relief claimed. As to principal and interest: my reasons for being so satisfied will appear from what I have just said as to the facts.

14 As to the claim for indemnity costs: clause 5.2 of the agreement of 11 February 2008 deals with "enforcement expenses". By that clause, the defendant agreed to indemnify the plaintiffs in respect of all legal costs and disbursements incurred by them in enforcing or attempting to enforce their rights under the loan agreement. In my view that means one of two things. One is that the plaintiffs may recover the amount of their costs (once proved) by way of judgment pursuant to the contractual right given by clause 5.2. The other, and in my view simpler, path to the same result is that the plaintiffs should have their costs on the indemnity basis.

15 I direct entry of judgment for the plaintiffs against the defendant in the sum of $755,000 together with arrears of interest and with interest at the contractual rate on the principal sum up until the date of entry of judgment.

16 I order the defendant to pay the plaintiffs’ costs of these proceedings on the indemnity basis.

17 I stand the proceedings down to 12.30. Upon the filing in court of the affidavit and the presentation of an appropriate draft minute of judgment, I will direct entry of judgment.

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25/05/2009 - Counsel's name MBJ Lee - Paragraph(s) Coversheet