Clarke v Verco-Jones - [2007] SADC 110

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CLARKE v VERCO-JONES
[2007] SADC 110
Judgment of His Honour Judge Chivell
24 October 2007
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES
Money lent to defendant and money paid on defendant's behalf - action for recovery of moneys due - judgment for plaintiff for $45,264.68
Limitations of Actions Act, 1936 s42(1), referred to.
Young v Queensland Trustees Limited (1956) 99 CLR 560; Moulas & Co P/L v Capelj [2007] SADC 97, applied.

CLARKE v VERCO-JONES
[2007] SADC 110

This is an action for the recovery of money which the plaintiff says he lent to the defendant over a period from 1991 to 2002, and for the recovery of amounts paid by the plaintiff to Mastercard for goods and services obtained by the defendant.
The action is set against a background that the plaintiff, who is a professional bookkeeper and office administrator, has known the defendant since he was a boy of 12. They had what the plaintiff called a strong friendship, and from time to time shared accommodation.
Money Lent
The plaintiff’s claim falls into two distinct parts.
Firstly, the plaintiff alleges that over a period prior to 1991, he lent to the defendant various amounts of money, and that he kept records of the loans in a book which he has since lost. He is unable to recall the amounts of each loan, or the date on which it was made, or other details. The only thing that he can recall is that they had been sharing a house in Croydon until they “parted company” in 1991, and the balance owing was then $5,000.00. He said he tried to recover the money from the defendant, but eventually he “gave up” (T27).
The defendant denies owing this money. In his closing address, he said that the plaintiff “ripped up” the book because any amounts previously owing had been paid in full in 1991 (T143), although there is no evidence of this.
There was no other evidence about this money. I am not satisfied on the balance of probabilities that this debt has been proved. The debt may have been paid, or it may have been forgiven, at some time prior to 1993. To the extent that the defendant acknowledged his indebtedness to the plaintiff later in these events, an issue I will discuss in more detail later in these reasons, I am not satisfied that this money was included in any such acknowledgment which would take the debt outside the Limitations of Actions Act 1936 (s42(1)).
The second category of alleged loans commenced in October 1996. The plaintiff said that contact between him and the defendant was re‑established in 1995 after the untimely death of the defendant’s mother.
Later in 1996, the first advance was made. The plaintiff’s evidence about that was [T27]:
A...... Then probably 18 months after that [the death of his mother] he came to visit me where I was living and told me that he had finished gaining his builder’s licence, his full builder’s licence, which I was very sort of pleased with, very proud of him, as a matter of fact, that he had gained a full builder’s licence. He wanted to actually go out on his own, so we had a little talk and I said ‘Well, okay, I’ll invest some money into your business on the basis of I’ll be doing the books and this money eventually will have to be repaid once your business grows’.
Q.Did he ask you for that $15,000, or did he ask you for a specific amount.
A.No, there was no specific amount that he asked me for. I had just then left a job that I had been in for some 17 years and got a long service leave payout, etc., so we looked at the situation and I said ‘What I’ll do is I’ll advance you $15,000 and then that way you can start your own show and we’ll take it from there’. I said ‘But to do that I will be the bookkeeper. That way I can keep an eye on the business’, because I’ve always done books.
Q.What was his response to that proposal.
A.Yes, that was quite suitable.
Q.When did you then start working as a bookkeeper for his building business.
A.I lent him that money in October 1996 and that’s when I commenced starting doing his books.
The plaintiff said the defendant’s business was quite successful initially, and he continued to do the defendant’s books each weekend (T29). He was a signatory to the defendant’s cheque account, so that he could pay creditors and the like. He said that all the financial records were kept at the defendant’s office, and the business was often discussed by the two of them.
The plaintiff said that he “chipped in” further money into the defendant’s account to prevent it going into overdraft. The quantum of these payments was agreed. A list of the payments, including the first one of $15,000.00, is as follows:
14 October 1996                  $ 15,000.00
                 8 January 1999  $   7,000.00
                 30 November 1999              $     500.00
                 20 December 1999              $   5,000.00
                 7 November 2000                $   5,000.00
                 21 November 2001              $   3,000.00
$ 35,500.00
In addition to these payments, another payment of $2,000.00 on 11 January 2001 is evidenced by the documents Exhibit P1. The total of these payments, including the $2,000.00, not agreed but which I find proved, is $37,500.00.
From this amount should be subtracted two payments made by the defendant, namely $1,000.00 on 8 October 2001, and $391.96 on 19 September 2003. That leaves a balance claimed of ($37,500.00 - $1,391.96) $36,108.04.
Defendant’s Version
The defendant, who was not represented by counsel, disputed the above claim on the basis that:
The whole idea of setting this up together was that it was with a view to purchase a property together and that way I would have an opportunity to pay him back and the efforts by matching his investment by way of labour. In the eight or nine years we’ve been running the business with the association of him, he has not ever purchased the property, although many good opportunities have come and gone. I state that I have been prejudiced to match his investment by way of labour, as he refused to purchase the property. (T109)
The defendant also alleged that the advances were made without his knowledge, but then contradicted himself by saying:
He often said he put in advances along the way, this was without my knowledge and he would always bash me over the head with ‘You owe me, you owe me’, it’s like I owe him a big favour for helping me out. (T110)
The defendant said that the plaintiff acted more as a “business partner” than as a creditor. He said:
I would like to reiterate with you about conducting himself as a business and such that many said debts should be borne by himself and I feel the matter should be dismissed. As I said, any losses I would have sustained, don’t show, they are just periods of lack of income. Mr Clarke took full responsibility in the running of the management of the business. It didn’t work out on a business level, it didn’t work out on a personal level. Sooner or later we had to part company. I regret the situation and ultimately he has to wear his own problems or his own creation of misfortune. (T118)
I reject all of these arguments. The fact that the defendant has not had the opportunity to repay the plaintiff in kind is not to the point. He acknowledged that this arrangement could only work if their relationship continued amicably, and clearly that has not been the case since the defendant terminated the plaintiff’s unpaid position as bookkeeper in May 2004 (T50, 62).
Further, I reject the defendant’s assertion that he was unaware of the advances made. He may have been inattentive to the details at the time, but I am satisfied that he was aware of them in a general sense, and that the nature of their relationship at the time (and it is apparent that there are other issues between the plaintiff and the defendant than the financial issues ventilated in court) is such that a request for these advances can be implied from the circumstances in which the advances were made, and the general nature of their relationship, to the extent that I have been made aware of it.
Money Paid
The plaintiff said that he obtained an “associate” Mastercard for the defendant’s use to enable him to purchase materials for his business. He said that the defendant would supply him with receipts, and he would go through the monthly statements and attribute each debit to either the defendant or himself (T34).
In order to avoid interest payments, the plaintiff said he would pay off the card in full each month. He said it was agreed that the defendant would pay him for the amounts attributed to him, and indeed, a number of such repayments were made by the defendant to the plaintiff. The defendant did not deny that he made such an agreement, his argument was as to the amounts claimed.
The documents which were tendered by the plaintiff (Exhibits P2-P10) demonstrate that the following amounts were incurred by the defendant in this way:
1 June 2001  $   1,631.99
                 1 July 2001  $   4,438.99
                 29 July 2001  $   2,586.84
                 3 September 2001                $   1,800.00
                 11 September 2001             $   1,000.00
                 10 January 2002                   $   1,775.92
                 27 January 2002                   $     584.73
                 30 March 2002  $     916.25
                 5 April 2002  $     950.00
$ 15,684.72
In addition, the documents Exhibits P6 and P9 establish that the plaintiff also paid the following amounts to the defendant’s private Bankcard account, again to avoid paying interest:
10 January 2002                   $   1,252.61
                 30 March 2002  $     500.00
$   1,752.61
The defendant made the following payments in relation to these debts:
29 December 2004              $   1,000.00
                 10 February 2005                 $     500.00
                 4 March 2005  $     500.00
                 4 April 2005  $     500.00
                 18 April 2005  $     500.00
                 30 May 2005  $     500.00
                 28 July 2005  $     500.00
                 31 January 2006                   $     200.00
$   4,200.00
Based on these figures, the total amount outstanding was therefore ($15,684.72 + $1,752.61 - $4,200) $13,237.33. The evidence given by the plaintiff became more confusing at this point, however, because he then referred to further payments made by the defendant. The outstanding Mastercard debt also accrued interest, which reduced when the plaintiff transferred the debt to an American Express account so as to reduce the interest rate applicable.
The upshot of all this, as set out in the Schedule prepared by the plaintiff (Exhibit P13), is that the plaintiff’s claim in relation to the Mastercard amounts and interest incurred thereon is $9,291.74 as at 19 September 2007.
Defendant’s Version
The defendant disputed only minor aspects of this claim. These were as follows:
·A bundle of 11 cheques (Exhibit D19), signed by the plaintiff and drawn on the defendant’s account, which he claimed should also have been credited to the amounts claimed. However, the plaintiff explained that the first (8 October 2001 for $1,000.00) was credited (see para [12] hereof), and the other 10 totalling $2,170.00 were the defendant’s drawings from the business (T88-89). This explanation has not been contradicted and I accept it.
·A payment by the defendant to the plaintiff of $2,300.00 in cash after the defendant’s holiday to Thailand in 2001. As to that, the plaintiff said (T104):
No, I do not recall that money. I have mentioned in a letter to the defendant that I think he’s getting confused, that money - there was money around but if he looks at the Mastercard statements his airfare to Thailand was never booked up and I’m led to believe that that money was used to purchase the airfare. That is what I’m led to believe. I’ve got no proof of that. All I know is there was no airfare ever booked up on the Mastercard.
In an action for recovery of a debt, the onus of proving that the debt has been paid is on the defendant (Young v Queensland Trustees Limited (1956) 99 CLR 560 at 569-70 per Dixon CJ, McTiernan and Taylor JJ). The defendant has failed to prove the payment of this money on the balance of probabilities, so his claim to have paid this amount is rejected.
·Two accounts from Camatta Lempens for $1,732.56 and $478.25 which the plaintiff explained were incurred in relation to the defendant’s matrimonial issues, and which he paid on the defendant’s behalf on the basis that the defendant would repay those amounts in the same way as all the other Mastercard debits (T95 & T104). I accept that explanation.
·Debits for $61.00 on 21 May 2001 for “aftershave” (Exhibit D23), and $74.10 on 18 June 2001 (Exhibit D24) in relation to a Thai restaurant which the defendant argued were expenses incurred by the plaintiff. The plaintiff was unable to refute that these amounts were charged to the defendant in error (T106). I will therefore subtract them from the amount claimed, leaving ($9,291.74 - $135.10) $9,156.64.
Limitation of Actions Act, 1936 (“the Act”)
Section 35(a) of the Act provides that an action founded upon a “simple contract express or implied”, as in the case here, shall be commenced “within six years next after the cause of action accrued and not after”.
In Moulas & Co P/L v Capelj [2007] SADC 87, Smith DCJ observed:
A cause of action for breach of contract accrues upon the happening of the breach (see Sykes v Midland Bank [1971] 1 QB 113, Hall v Foong (1995) 65 SASR 281 per Debelle J at 301).
In this case, the breach occurred when the defendant was in breach of his obligation to pay, which occurred upon the plaintiff’s demand to pay (Young v Queensland Trustees Limited (supra)).
The defendant pleaded the Act in his Defence (see para 1(c)). The plaintiff, perhaps in anticipation of such a plea, asserted in para 15 of the Statement of Claim that “between the 24^th August 2004 and the 24^th December 2005 the defendant acknowledged the debt .....”.
In Moulas & Co P/L v Capelj (supra) Smith DCJ helpfully reviewed the classic authorities in this area, including Tanner v Smart (1827) 6 B&C 603 at 609, In re River Steamer Company, Mitchell’s Claim (1871) L.R. 6 Ch. App 822 at 828, Green v Humphreys (1884) 26 Ch D 474, Spencer v Hemmerde [1922] 2 AC 507, Bucknell v The Commercial Banking Company of Sydney Ltd (1937) 58 CLR 155. I provided a copy of his Honour’s judgment to both parties during the hearing.
In Spencer v Hemmerde, Lord Sumner said, at p531:
If at any time after a debt is due, the debtor renews his promise to pay it, or makes such an unqualified acknowledgment of the debt being due that a promise to pay it may be inferred therefrom, he renews his liability from the date of such promise or acknowledgment, and cannot avail himself of the Statute of Limitations in respect of the preceding lapse of time.
In Bucknell v The Commercial Banking Company of Sydney Ltd, Dixon J said at p163-4:
An express promise in writing by the debtor to pay revives his liability.
.....
But although a document relied upon as an acknowledgement contains no express promise, it may affect a revival of the debtor’s liability if there is found in it a distinct admission of the debt. The law implies from an acknowledgment of the existence of the liability a promise to discharge it. Words clearly acknowledging that the writer is liable suffice to raise the implication .....
Section 42(1) of the Act is in all material respects a duplicate of the legislation being considered in the cases quoted above. It states:
In any action of debt or other action in the nature of an action founded upon simple contract no acknowledgment or promise by words only shall be deemed sufficient evidence of a new and continuing contract whereby to take any case out of the operation of this Act, or deprive any party of the benefit thereof, unless that acknowledgment or promise is made or contained by or in some writing to be signed by the party to be charged thereby or by his agent.
In this case, the plaintiff relies upon two alleged acknowledgments made by the defendant in the context of the part‑payments already referred to:
·In an email from the defendant to the plaintiff, dated 11 October 2005, in answer to a request for payment:
Be assured if my income was high enough to get a personal loan, I would have done so.
(Exhibit P16)
·In an “SMS” message sent to the plaintiff’s mobile telephone on 14 October 2005, the defendant said, in answer to a flurry of “SMS” messages from the plaintiff to the defendant, several of which are quite offensive and aggressive, in which the plaintiff demanded repayment of “the 60K you owe me”, the defendant said:
I will and always said I will honour the debt
(Exhibit P15)
In the latter exchange of emails, discussion took place about payment “in kind” in the event that the plaintiff purchased a house, but I do not interpret that as a conditional or qualified acknowledgment of the debt (see Spencer v Hemmerde and Bucknell’s case (supra)).
Having regard to that evidence, I find that the defendant has acknowledged his debt to the plaintiff in writing on at least two occasions, such that the defendant may no longer take advantage of the Act.
Having regard to the findings I have made, I find that the plaintiff has proved to my satisfaction on the balance of probabilities that the defendant is indebted to him in the following amounts:
·money lent  $ 36,108.04
·money paid  $   9,156.64
TOTAL       $ 45,264.68
There will be judgment for the plaintiff in the sum of $45,264.68. I will hear the parties as to any consequential orders.