Coastline Constructions (Aust) Pty Ltd v Kakavas - [2009] NSWSC 1438

No judgment structure available for this case.

CITATION: Coastline Constructions (Aust) Pty Ltd & Ors v Kakavas & Ors [2009] NSWSC 1438

HEARING DATE(S): 24 August 2009, 25 August 2009, 26 August 2009, 27 August 2009, 28 August 2009, 2 September 2009

JUDGMENT DATE :
18 December 2009

JUDGMENT OF: Schmidt J

CATCHWORDS: CONTRACTS - general contractual principles - three oral agreements - offer and acceptance - agreement contemplating execution of written agreement - two agreements found - sale of property - no executed contract - substantial money advanced - acknowledgment of debt - termination of agreement - parties to contract - orders sought against non-party refused - breach of second agreement established - orders - third agreement not established - breach of contract - claims dismissed restitutio resulting from unenforceable, incomplete contract - recovery of money paid - order made - CONVERSION - intangible property - claims dismissed - TORT - assault - general principles - exemplary and aggravated damages - provocation - criminal proceedings - no order as to exemplary damages - order made - claim for assault and threats - claim dismissed - PROCEDURE - Supreme Court procedure - further amendment to claim - conversion - leave granted - RESTITUTION - recovery of money paid under duress or compulsion

LEGISLATION CITED: Civil Procedure Act 2005
Evidence Act 1995
Land Sales Act 1984 (Qld)
Property Law Act 1987 (QLD)

CATEGORY: Principal judgment

CASES CITED: Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd; Brown v Hodgkinson [2009] NSWCA 386
Aon Risk Services Australia Limited v Australian National University [2009] HCA 27
Dennis v Australian Broadcasting Corporation [2008] NSWCA 37
Emilien v Cabbala [1989] 1 Qd R 620
Ferguson v Eakin [1997] NSWCA 106
Fontin v Katapodis [1962] HCA 63; (1962) 108 CLR 177
Freedom v AHR Constructions (1987) 1 Qd R 59
Gray v Motor Accident Commission [1998] HCA 70; (1998) 196 CLR 1
Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1
Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) 232 CLR 635
Masters v Cameron (1954) 91 CLR 353
Niven v SS [2006] NSWCA 338
Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146
Risk Services Australia Limited v Australian National University [2009] HCA 27
Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 185 ALR 335
State of NSW v Riley [2003] NSWCA 208; (2003) 57 NSWLR 496
Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2005] NSWSC 951
Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2008] NSWSC 1209
Wilson v Darling Island Stevedoring & Lighterage Company Limited [1956] HCA 8;(1956) 95 CLR 43

PARTIES: First Plaintiff - Coastline Constructions (Aust) Pty Limited
Second Plaintiff - Crackers Corporation Pty Ltd
Third Plaintiff/Cross Defendant - Jarrod McCracken
First Defendant/Cross Claimant - Harry Kakavas
Second Defendant - William Kerwick
Third Defendant - Jerry Pilarinos

FILE NUMBER(S): SC 14406/07

COUNSEL: Plaintiffs - Mr MR Gracie with Mr DA Neggo
First Defendant/Cross Claimant - Mr D Robinson SC with Mr M Darke and Ms D Bampton
Second Defendant - Mr R Montgomery
Third Defendant - Mr R Horsley

SOLICITORS: Plaintiffs - Crisp Legal
First Defendant/Cross Claimant - Gells Lawyers
Second Defendant - Ghs Legal
Third Defendant - Horowitz & Bilinsky

- 114 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SCHMIDT J

Friday, 18 December 2009

14406/07 COASTLINE CONSTRUCTIONS (AUST) PTY LTD AND ORS v HARRY KAKAVAS AND ORS

JUDGMENT

: By a third further amended statement of claim filed in Court during the course of the hearing, the plaintiffs claim a total sum of $5,250,000 plus interest, in accordance with s 100 of the Civil Procedure Act 2005, for moneys which they claim the defendants have received, but have refused and/or failed to repay. This sum comprises:

1 $3,650,000, which the plaintiffs claim Mr Harry Kakavas, the first defendant, received from the second plaintiff, Crackers Corporation Pty Limited ('Crackers Corporation')

2 $600,000 which the plaintiffs claim Mr Kakavas received from the first plaintiff, Coastline Constructions Pty Limited ('Coastline Constructions').

2 By a cross claim filed in August of 2008, Mr Kakavas claims damages, including aggravated and exemplary damages, from Mr McCracken in respect of an assault, as well as judgment in the sum of $750,000 in respect of moneys allegedly paid to Mr McCracken as the result of that assault.

3 The proceedings arise out of events which began in 2006. They concern factually complicated claims and counter claims. The plaintiffs allege that they resulted in three agreements. The existence of two of the agreements was not in dispute. The third agreement was denied and instead, it was claimed that an entirely different agreement had been made. As to the cross claim, it was not in dispute that Mr McCracken assaulted Mr Kakavas on 10 November 2006, but that it was the assault which led Mr Kakavas to make the $1 million payment he pursues by his cross claim, is denied. It is not in issue that Mr McCracken’s wife received $1 million paid in three instalments by Mr Kerwick, the second defendant, which was funded by Mr Kakavas. Mr Kakavas seeks repayment of $750,000 of that sum from Mr McCracken. What the payment was for, is in dispute. The defendants deny that it was in repayment of $2 million given by Mr McCracken to Mr Kerwick under the third agreement and wrongly paid for Mr Kakavas’ benefit, by Mr Pilarinos, the third defendant, to whom Mr Kerwick paid the money.

4 While the various payments sought to be recovered were made by the corporate plaintiffs, there is no claim that they were ever parties to any of the three agreements on which the plaintiffs rely. Those payments were all made on Mr McCracken’s behalf.

The second agreement

5 It is convenient to begin with the second agreement, which was made between Mr Kakavas and Mr McCracken in October 2006. It is not in dispute that Mr McCracken agreed to loan Mr Kakavas $500,000, in order that Mr Kakavas could lay a bet on a football game. The money was due to be repaid by the end of October. Mr McCracken claims that $250,000 of that debt remains outstanding. Mr Kakavas claims that $250,000 of the $1 million paid to Mrs McCracken, should be treated as having repaid this debt.

The first agreement

6 Mr Kakavas was the sole director, secretary and shareholder of Elite Property Investment Group Pty Limited ('Elite'), which was the owner of a commercial property at Broadbeach in Queensland. At the time of the hearing Elite was in administration. It was not a party to the proceedings. It was common ground that in June 2006, over a lunch attended by Mr McCracken and Mr Kakavas, it was agreed that Mr McCracken, or his nominee, would buy this property from Elite.

7 There was no claim that Mr Kakavas was a party to this oral agreement. It was common ground that particulars of the agreement included:

(a) Elite would sell and McCracken, or his nominated entity, would purchase the Broadbeach property.

(b) The purchase price was $14,000,000.00.

8 The fourth term was claimed to be:

9 It was common ground that $4 million was paid in instalments to Mr Kakavas, as Mr McCracken explained it, in dribs and drabs by both Coastline Constructions and Crackers Corporation, before written contracts were exchanged. Mr McCracken’s evidence was that he understood that the money would be used for refurbishment work underway on the building. Mr Kakavas’ evidence was that Mr McCracken knew that he used the money to gamble with. It was also common ground that it was agreed that the settlement was to be delayed until January 2007, when Elite’s mortgage on the property fell due for repayment.

10 A written sale agreement was later prepared on Mr Kakavas’ instructions by Ramsden Fae solicitors. There was a dispute as to some of the terms of that written agreement and whether it was ever signed. Neither Mr Kakavas nor Mr McCracken retained a copy of this document, but it was common ground that contracts were never exchanged and that the sale did not proceed. There is also a dispute as to whether that outcome was brought about by Mr McCracken, or Mr by Kakavas.

11 Mr Kakavas' case was that neither he nor Elite had any obligation to repay the $4 million deposit which had been paid, but that he had personally repaid $1 million of the deposit, under duress after the assault. Mr McCracken claims that this was a repayment made in respect of the third agreement. By his cross claim Mr Kakavas claims that apart from $250,000, the balance should be repaid to him.

The third agreement

12 The plaintiffs' claim that there was a third oral agreement made between Mr McCracken and the three defendants in October 2006, which all three defendants deny.

13 This agreement is alleged to have contained a number of elements. Firstly, Mr Kerwick was to purchase a Queensland property from Mr Pilarinos, the third defendant. Secondly, Mr Pilarinos was to purchase Mr McCracken’s family home where he lived with his wife and children. Thirdly, Mr McCracken was to advance $2 million to Mr Kerwick, to be used as the deposit on his purchase from Mr Pilarinos. Fourthly, Mr Pilarinos was to repay that deposit to Mr Kerwick, who would then repay Mr McCracken, if Mr Pilarinos did not obtain finance for his purchase of Mr McCracken’s home. Fifthly, Mr Kakavas would act as agent on the two sales and would guarantee that they would proceed, and that if they did not proceed, that the $2 million advanced by Mr McCracken to Mr Kerwick, would be refunded to Mr McCracken.

14 Mr McCracken claimed that Mr Pilarinos did not obtain finance for his purchase. Instead of then repaying the $2 million deposit to Mr Kerwick, in order that it could be repaid to Mr McCracken, Mr Pilarinos paid it to Mr Kakavas, who lost the money gambling.

15 There is no question that Mr McCracken paid Mr Kerwick $2 million. Mr Kerwick and Mr Kakavas claim that this payment was made in respect of another transaction entirely, namely an agreement between Mr McCracken and Mr Kerwick, that Mr Kerwick would sell a property which he owned, situated at Palm Beach Queensland, to Mr McCracken. Mr McCracken denies that there was any such agreement ever discussed or agreed.

16 There is also no question that Mr Kerwick paid Mr Pilarinos $2 million, but they claim that this was not a payment made under the third agreement. Their case is that Mr Kerwick paid Mr Pilarinos $2 million, in order to repay a debt of $800,000 and to make a $1.2 million investment in an $80 million property development which Mr Pilarinos had underway in Melbourne. Neither of these transactions were documented. They, too, were oral agreements, Mr Kerwick and Mr Pilarinos claimed.

17 Mr Pilarinos did not seek any finance to purchase Mr McCracken's house. His case was that he never intended, or even discussed with Mr McCracken buying his family home. Mr Kerwick and Mr Pilarinos also claim that they never agreed that Mr Kerwick would purchase any property from Mr Pilarinos. Mr Kakavas claims that he never agreed to act as agent in respect of such sales.

18 It was Mr Pilarinos and Mr Kakavas’ case that Mr Pilarinos loaned Mr Kakavas over $4 million for gambling and that these loans had nothing to do with the third agreement, or the $2 million given to Mr Pilarinos by Mr Kerwick, which he had received from Mr McCracken. There is no question that Mr Pilarinos did not repay $2 million to Mr Kerwick. He later paid Mr Kerwick $300,000, he and Mr Kerwick claim, when Mr Kerwick wanted part of the $2 million he had invested with Mr Pilarinos for other purposes.

The assault and payment of $1 million

19 As to Mr Kakavas’ cross claim, there is no issue that at around midday on 10 November 2006, Mr McCracken met with Mr Kakavas at his home, and that Mr McCracken then assaulted Mr Kakavas. This was Mr Kakavas’ wedding day. Mr Kakavas claims that Mr McCracken subsequently made threats that he would cause Mr Kakavas and his father harm, if he did not repay Mr McCracken $6,250,000. Mr Pilarinos and Mr Kerwick conveyed these threats to Mr Kakavas, as did another mutual friend, Mr Chrysaffis. While Mr McCracken does not deny the argument and the assault, he denies making such threats or claiming such payment. On his case, he only then wanted $2 million repaid.

20 On 11 November 2006, Mr Kakavas signed a document which he had handwritten, acknowledging that he owed Mr McCracken $6,250,000. Mr Kakavas claims that this document was not signed voluntarily, but that it was in terms dictated by Mr McCracken and that Mr Chrysaffis conveyed those terms to him, together with threats to his safety and that of his father. He signed the document and subsequently paid Mrs McCracken $1 million, through Mr Kerwick, money which he did not owe Mr McCracken, other than $250,000, as a result of his fear of Mr McCracken. Mr McCracken denies that he obtained the document by these means. While he had asked for an acknowledgement, he did not extract it by threats and did not dictate the terms in which it was given. He understood that the payment was made in relation to the $2 million he had given Mr Kerwick under the third agreement.

21 On Mr McCracken’s case, when Mr Kakavas produced the acknowledgement, he was seeking only repayment of the $2 million owing under the third agreement. The first agreement was then still on foot. Mr Kakavas denies this, claiming that on 10 November, Mr McCracken also told him that he was not proceeding with the first agreement. Mr McCracken was then claiming repayment of $6,250,000 in total.

22 Payments totalling $1 million were made by Mr Kerwick to Mrs McCracken between November 2006 and July 2007. The plaintiffs accept that Mr Kakavas provided these funds to Mr Kerwick. Mr Kakavas claims that he asked Mr Kerwick to pay the money to Mrs McCracken, because of Mr McCracken’s assault, his threats and because he no longer wanted to have any direct dealings with Mr McCracken, after the breakdown of their relationship.

23 Mr Kakavas seeks to recover $750,000 of the payments made by Mr Kerwick, accepting that Mr McCracken is entitled to retain $250,000, that being what he owed him under the second agreement.

24 Mr Kakavas also claims, in the alternative, that in March 2007 another agreement was made with Mr McCracken, that any moneys owed to the plaintiffs would not be payable until judgment or settlement of certain proceedings which he had brought against Crown Casino in the Supreme Court of Victoria, with interest accruing at nine per cent in the meantime. In those proceedings, Mr Kakavas claims Crown Casino owes him in excess of $20 million. Mr McCracken denies that such an agreement was made.

The further amendment of the claim

25 After the hearing commenced, it was indicated that the plaintiffs proposed to seek to further amend their claim, in terms then provided to the other parties. Those terms were further refined, while Mr McCracken gave his evidence. At the conclusion of that evidence, leave to further amend was sought and opposed. During the course of the parties’ submissions, those amendments were explained and even further refined. Finally, they were contained in the third further amended statement of claim. The plaintiff was given leave to proceed on those pleadings and I indicated that I would later give reasons for granting that leave.

26 There was no real explanation for the late amendments, other than that there were problems with the pleadings as they stood. That appeared to reflect the unusual circumstances which brought the parties before the Court.

27 There was no issue that very substantial sums of money had passed from the plaintiffs to Mr Kakavas and Mr Kerwick, to Mr Pilarinos and Mr Kakavas and from Mr Kakavas to Mr Kerwick and through him, to Mrs McCracken. There was a very substantial dispute as to what the contractual or other arrangements underpinning those payments were. The plaintiffs undoubtedly paid $6,250,000 in total to Mr Kakavas and Mr Kerwick. They received nothing in return, other than the $250,000 repayment in respect of the second agreement and the $1 million Mr Kerwick paid Mrs McCracken, $750,000 of which Mr Kakavas claims the plaintiffs have no entitlement to. On the defendants’ cases, pursuant to the agreements under which the payments were made, the plaintiffs were entitled to have received nothing in return for the $4 million paid to Mr Kakavas and the $2 million paid to Mr Kerwick.

28 The amendments to the statement of claim sought to ensure that even if it was found that no enforceable agreements of the kind claimed had been made, that the defendants would be ordered to repay what the plaintiffs had paid them, they having no right to retain any of the money they had obtained from the plaintiffs.

29 In considering the parties’ respective cases, I took the view that it could not be overlooked that by the time the hearing commenced, the original statement of claim had already been amended a number of times. The further amendments pressed in relation to Mr Kakavas, in respect of the first agreement, were sought to be pressed on the additional basis, in summary, of:

30 The further amendments pressed in relation to the third agreement, in respect of the outstanding sum of $1 million (the plaintiff’s pleadings treating Mr Kerwick’s payment of $1 million to Mrs McCracken as a repayment of the $2 million which he received (allegedly under the third agreement) were, in summary:

Against Mr Kakavas, on the basis of unconscionable conduct, resulting in unjust enrichment and damages for converting those moneys to his own use.

Against Mr Kerwick, on the basis of a debt due and owing and in the further alternative, breach of contract

31 For Mr Pilarinos, in addition to delay and no explanation having been given for the late amendments, it was submitted that the amendments sought would be futile. No action for conversion could be advanced in relation to a money claim as here pressed against him, the Court of Appeal’s judgment in Ferguson v Eakin [1997] NSWCA 106, being binding. There it was held at p 7 that 'there can be no conversion of a chose in action and that monies in a bank account were a chose in action'. 'Conversion must be goods or property capable of possession or being subject to a right of possession'. There was no such right in relation to money in a bank account. The same submission was made for Mr Kakavas.

32 For Mr McCracken, nevertheless, it was argued that leave to amend would be granted, because there was a prospect that this view of the law would be revisited. In Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2005] NSWSC 951, White J had refused to strike out a claim for conversion of intangible property, taking the view, amongst other things, that what must be determined is whether the cause of action is reasonably arguable, depending on whether the Court of Appeal, or High Court, might consider the cause of action viable (at [24]). Reliance was also placed on the observations of Bergin J in Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2008] NSWSC 1209 at [180] - [181]:

Telecom Vanuatu Ltd v Optus Networks Pty Ltd

Hoath v Connect Internet Services Pty Ltd

Ferguson v Eakin

OBG Ltd v Allan

OBG

Mr Hoath’s right to use the domain name, the IP addresses and the AS number was recorded in an electronic form on the database of the internet registrar. … However, Mr Hoath was never the owner nor did he have a right to possession of the chattel or chattels being, I infer, a hard disk, or a server, or some other piece of computer equipment, on which the information as to his right to use the domain name, IP addresses and AS number was stored. In my view, the defendants did not act in a way which was repugnant to any right which Mr Hoath had to the ownership or possession of a chattel. That is to say, although Spin and Com-Cen’s interference with the internet registrar’s records has deprived Mr Hoath of what I assume is his intangible property, namely the right to use the domain name, the IP addresses and AS number, they have not interfered with his ownership or right to possession of goods. Accordingly, the fiction by which a person may recover damages in conversion for the loss of a chose in action where the defendant has wrongly dealt in a chattel which contains, or, possibly, evidences, the chose, is of no avail to him. It would only be if the law of conversion were extended to dealings in intangible property that Mr Hoath could sustain these causes of action.

33 It became apparent from the cases which the parties each advanced that the claims and their defence rested on the same facts already pleaded and that if the leave sought was granted, the claims sought to be brought in conversion would, nevertheless, have to be dismissed, it being unarguably the law that no claim in conversion could be pressed in relation to the money here pursued by the plaintiffs. The granting of the leave would thus only preserve any case which the plaintiffs might seek to pursue on appeal. In those circumstances, it seemed to me that no injustice could flow to the defendants in granting the leave sought in relation to the conversion claim. The law was on their side and no additional hearing time, or adjournment, or any other prejudice in the hearing could flow from the grant of the leave.

34 As to the other amendments proposed, it had to be noted that in the original statement of claim filed in 2007, the second and third agreements were not expressly pleaded. Mr Kakavas was then the only defendant. Breach of only the first agreement was alleged. It was claimed that the plaintiffs were the beneficial owners of all of the outstanding $5,250,000; that Mr Kakavas had been unjustly enriched, by failing or refusing to repay the money; in the alternative, that the plaintiffs were entitled to restitution; in the further alternative, that the plaintiffs were entitled to sue Mr Kakavas, for moneys had and received and that Mr Kakavas owed the moneys to the plaintiffs, who sued for that amount. It was Mr Kakavas who raised the second agreement in his defence.

35 In the amended statement of claim filed in May of 2008, Mr Kerwick and Mr Pilarinos were named as defendants. The three agreements now pursued were pleaded. Breaches of the third agreement by Mr Kakavas, Mr Kerwick and Mr Pilarinos were alleged. Against Mr Kakavas $5,250,000 was claimed for moneys had and received. Against Mr Kerwick and Mr Pilarinos, jointly with Mr Kakavas, $1 million was claimed. Unjust enrichment and restitution were not pleaded.

36 The basis of the claims advanced in the second further amended statement of claim, was similar to that advanced in the amended statement of claim and the further amended statement of claim. The various amendments there made went to the details of which of the plaintiffs were entitled to repayment of several of the sums claimed to have been advanced from time to time under the three agreements. In the second further amended statement of claim it was also alleged that Mr Kakavas had converted the $2 million paid under the third agreement, ($1 million of which was later repaid).

37 It followed, as was argued for the defendants, that while the new claims sought to be pursued by the amendments which finally found their way into the third further amended statement of claim, arose out of the same factual matters pleaded in the second further amended statement of claim, new bases were sought to be advanced, for money orders in favour of the plaintiffs, in the event that they failed to establish the existence of the three agreements which they claimed had been breached.

38 The provisions of s 64 of the Civil Procedure Act governed the application for leave to so amend. The application had to be determined in accordance with the requirements of sections 56, 57 and 58 of the Civil Procedure Act, which require that the discretion be exercised in accordance with the dictates of justice and that the overriding purpose of the Act and the Rules, the just, quick and cheap resolution of the real issues in the proceedings, be facilitated.

39 There was no question that what has always lain at the heart of the plaintiffs' case was that they had advanced various moneys, all of which ended up in the hands of Mr Kakavas, who had no entitlement to retain it and who was bound to repay it, given what had been agreed. Similar claims have been made against the other two defendants.

40 In considering this application and deciding what justice required as between the parties, attention had to be paid to what then had recently been said in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27. There, the High Court took the view that a trial judge had erred in granting an adjournment of a hearing, in circumstances where a substantial amendment to the claim was foreshadowed. The judgment in Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, arose for consideration, a decision given before the enactment of the Civil Procedure Act, but which has been regarded to be of continuing relevance to the application of the provisions of that Act, albeit in the way discussed by the Court of Appeal in cases such as Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 and those which have followed that decision.

41 The circumstances which arose here were considerably different to those dealt with in Aon Risk Services. While this case, on one view, involved parties of considerable commercial sophistication, involving as it does claims and counter claims made between a number of businessmen involved in very substantial property transactions, on another view it concerned a serious falling out amongst close friends, who had not dealt with each other on a commercial basis, because of that friendship. Assaults and threats of violence to Mr Kakavas and members of his family were said to explain why an acknowledgment of a very large debt, which does not represent the true position, was given.

42 It was apparent that the plaintiffs had had a sufficient period time to put their case on a proper footing. While originally, in 2007, claims of unjust enrichment and restitution were advanced, they were abandoned and not claimed when Mr Kerwick and Mr Pilarinos became parties to the proceedings. There was little explanation for the very late amendments pressed at the commencement of the hearing, a matter which the High Court emphasised required explanation, if an application such as this is to be granted. The explanation such as it was, was advanced in the context of the very unusual situation which came forward to be considered and the need to identify a basis upon which orders could be made in favour of the plaintiffs, given the position they were in and the difficulties presented by these unusual circumstances.

43 It seemed to me that there was much in the circumstances which weighed against the leave sought being granted. Undoubtedly, the defendants would have had to have been given an opportunity to amend their defences and to consider whether further evidence should be called, or whether further cross examination of Mr McCracken should be undertaken, had they submitted that was necessary in the circumstances, if the leave sought was to be granted.

44 No such case was pressed however. After explanation of the claims sought to be advanced and their basis, none of the defendants finally suggested that any real prejudice would flow to them from the leave sought being granted. No adjournment was thought necessary, no further cross examination of Mr McCracken was required and it was not thought that any other evidence would have to be called in any of the defendants’ cases.

45 Seeing that no real prejudice would flow from the grant of the leave and that there might be serious disadvantage flowing to the plaintiffs from its refusal, I concluded that justice required that the leave sought be granted.

Credit

46 In these proceedings, a great deal turned on the credit of those who gave evidence. The respective cases each had seemingly implausible elements. Resolving what was in dispute meant that either the evidence of Mr McCracken, or that of Mr Kakavas, largely had to be rejected. A similar contest lay between Mr McCracken on the one hand and Mr Kerwick and Mr Pilarinos on the other.

47 Having carefully considered the evidence, particularly that given in cross examination, I have came to the conclusion that there was real difficulty in accepting that Mr Kakavas, Mr Kerwick or Mr Pilarinos were entirely truthful in the evidence which they each gave. There were also certain difficulties with Mr McCracken’s evidence, but to a much lesser degree. The conclusion which I have reached is that the evidence of the three defendants had to be approached with particular caution. I found aspects of their evidence entirely without credit. In most instances, where there was a contest between their evidence and that of Mr McCracken, I have reached the view that his evidence had to be preferred. I have also concluded that Mrs McCracken’s evidence must be preferred over that of Mr Kakavas.

48 Unraveling what truly transpired between these four men was difficult, requiring close consideration of affidavit and oral evidence, as well as various documents. For their part, the defendants relied on the changing claims which emerged from the various amended statements of claim advanced by the plaintiffs, Mr McCracken having repeatedly sworn affidavits attesting to the truth of the different claims advanced. While a relevant consideration, this was finally but of relatively little assistance in resolving the various issues lying between the parties, particularly those lying between Mr McCracken and Mr Kakavas.

49 This was because consideration also had to be given to the affidavits sworn by Mr Kakavas supporting various defences he advanced, as well as his other affidavits and oral evidence which cast quite a different light on what had transpired between he and Mr McCracken, to what had been suggested in these defences.

50 In the original statement of claim, filed in August 2007, Mr McCracken claimed that $6,500,000 was paid to Mr Kakavas under the first agreement and that it was in October 2006, that he learned the Elite sale was not to proceed. He explained this was a typographical error and that this had occurred in November. He was closely cross examined as to other apparent errors in this and other claims. For his part, in his defence, filed in November 2007, Mr Kakavas denied that such an agreement had been made or that he received payments in accordance with the first agreement; he pleaded the second agreement, $250,000 of which had been repaid and claimed that he had only provided an acknowledgement of debt of $6,250,000 and subsequently made payments totaling $1 million through Mr Kerwick, because of Mr McCracken's threats. No reference was made in the defence to any agreement in relation to the sale of Mr Kerwick’s property to Mr McCracken, under which it was later claimed by Mr Kerwick and Mr Kakavas, that $2 million had been paid to Mr Kerwick by Mr McCracken.

51 So far as Mr Kakavas was concerned, the claimed agreement between Mr McCracken and Mr Kerwick only emerged in an affidavit which was sworn in May 2009, after the statement of claim had been amended to allege the existence of the third agreement and Mr Kerwick and Mr Pilarinos had been joined as defendants and they had filed their defences.

52 Before those defences were filed, the first agreement was admitted in Mr Kakavas’ amended defence, filed in July 2008. There he claimed that he and Mr McCracken had recorded this agreement in writing in September 2006; that it was a term of the agreement that $4 million would be paid prior to the end of September 2006 and that it would not be refundable, in the event that Mr McCracken failed to complete the purchase. It was then also admitted that $4 million had been given to Mr Kakavas as part payment of the purchase price under the first agreement. It was also claimed that on 10 November, Mr McCracken had advised that he would not proceed with the purchase. While the third agreement was denied, there was no mention made of the alleged agreement in relation to the sale of Mr Kerwick’s property.

53 In Mr Kerwick’s original defence, filed in November 2008, the third agreement was denied and the alleged agreement in relation to the sale of his property, in respect of which it was claimed that Mr McCracken had paid him $2 million, was first pleaded. In Mr Pilarinos’ defence, also filed in August 2008, the third agreement was also denied, as was any obligation to refund any money to Mr Kerwick.

54 It was not until Mr Kakavas filed a defence to the third further amended statement of claim in September 2009, that he claimed that it was a term of the written contract which evidenced the first agreement, that the $4 million deposit paid in relation to the first agreement was not refundable at all, because of special conditions which he had drafted. Still, there was no reference made to the claimed sale of Mr Kerwick’s property to Mr McCracken, a transaction in which Mr Kakavas claimed he had been closely involved, having drafted special conditions for the written sale agreement which Mr Kerwick claimed he had signed and provided. For his part, Mr McCracken denied that such an agreement had ever been made, documented or provided to him.

55 The way in which the claims and defences emerged in the pleadings undoubtedly had to be considered in resolving the conflicts in the evidence of Mr McCracken, Mr Kakavas, Mr Kerwick and Mr Pilarinos. So did the respective interests which the various parties had in the outcome of the proceedings.

56 The interest which Mr McCracken and Mr Kakavas each had was obvious. Mr Kerwick and Mr Pilarinos each had an interest not only in resisting the claims made against them, but also in Mr Kakavas succeeding. This was because, on their evidence, they had each loaned Mr Kakavas very substantial sums, which he was not in a position to repay. Mr Kerwick had loaned Mr Kakavas between $1 and $2 million and Mr Pilarinos, over $4 million. On his evidence, entities associated with Mr Pilarinos had also loaned Mr Kakavas further millions of dollars. These transactions were all undocumented. It was plainly in their interests to have Mr Kakavas succeed in his resistance of the case brought against him.

57 There were three other witnesses who should be mentioned at this point, whose evidence I found credible, for reasons which will become apparent. They were Mrs McCracken, Mr McKenzie–McHarg and Mr Chrysaffis. Mrs McCracken also had an obvious interest in the outcome of these proceedings. So did Mr McKenzie–McHarg.

58 Mr McKenzie–McHarg was a friend of Mr Kakavas, who had worked with him at Colliers International in Melbourne, where Mr McKenzie–McHarg was the chief executive officer when Mr Kakavas worked there as a salesman in the 1980s.

59 He had loaned Mr Kakavas $500,000, which Mr Kakavas gave to Mr Kerwick in November 2006, to pay to Mrs McCracken, after Mr McCracken had assaulted him, money which Mr Kakavas could not repay. Mr McKenzie-McHarg loaned Mr Kakavas the money, because of his account of the assault. There was no suggestion that Mr McKenzie–McHarg had anything to do with Mr Kakavas and Mr McCracken’s dealings with each other, or that Mr Kakavas or Mr Kerwick owed Mrs McCracken any money.

60 Mr Chrysaffis was a friend of both Mr McCracken and Mr Kakavas, who had known Mr Kakavas since they had met in Melbourne in 1984. Only Mr Chrysaffis had not loaned Mr Kakavas any money, appeared to have no ongoing business dealings with Mr Kakavas and had no other obvious pecuniary interest in the outcome of the proceedings. He had witnessed the assault on 10 November and was closely involved in the creation of the acknowledgment which Mr Kakavas signed on 12 November. I found his evidence, that he knew Mr McCracken to be an honest man, of particular relevance in unraveling the conflicting stories which emerged from Mr McCracken, Mr Kerwick, Mr Pilarinos and Mr Kakavas.

61 The last witnesses who should be mentioned were Ms Dixon, the solicitor who acted for Mr Kakavas in relation to the first agreement and Ms Carter, a real estate agent to whom both Mr Kakavas and Mr McCracken were known. Neither had any personal interest in the proceedings and their evidence was also of assistance in resolving certain conflicts in the evidence of other witnesses.

What happened on 10 November to bring the relationship between Mr McCracken and Mr Kakavas to an end?

62 A myriad of factual issues lay between the parties. Resolving what happened on 10 November 2006, which resulted in the breakdown of a friendship of the closest kind between Mr McCracken and Mr Kakavas and their business dealings with each other, throws much light on other matters which are in issue. What occurred that day also had ongoing ramifications for the friendship which had existed between Mr McCracken, Mr Kerwick and Mr Pilarinos. To resolve that question, some matters of background must be considered.

63 Both Mr Kakavas and Mr McCracken each described the other as their best friend. They first met in 2002 and quickly formed a bond of friendship out of their business relationship. Their families socialized and holidayed together. Between 2004 and 2006, Mr and Mrs McCracken accompanied Mr Kakavas and his fiancée on various trips to Las Vegas, paid for by a casino where Mr Kakavas was a large gambler. Mr McCracken was due to be a groomsman at Mr Kakavas' wedding on 10 November 2006.

64 Mr McCracken, a former professional footballer, was then pursing a living as a property developer, an occupation which he had commenced in 1989. He conducted a business buying, improving and selling commercial and residential properties through various companies, including the corporate plaintiffs. Mrs McCracken was also involved in that business. On Mr McCracken’s evidence, in 2006 he had substantial property holdings throughout Queensland. What they were was not explored in the evidence.

65 When Mr McCracken met Mr Kakavas, he understood Mr Kakavas to be working as a real estate consultant, selling residential and commercial properties in the Gold Coast area. Mr McCracken was then developing three residential apartments at Albatross Avenue, Mermaid Beach and Mr Kakavas sought the opportunity to list and sell these properties. Mr Kakavas’ work was successful, with the properties being sold for $10 million. He later gave Mr McCracken other advice, for which he was paid. It was common ground that over time Mr Kakavas and Mr McCracken came to make a number of property deals with each other, on the basis of handshake agreements, not recorded in writing.

66 On Mr McCracken’s evidence, in 2004, he and his wife purchased a house from Mr Kakavas at 89A Albatross Avenue, where they proposed to live, selling their Townsville home, for which Mr Kakavas found a purchaser. These agreements were not documented. A similar arrangement was made in 2003 in relation to the purchase and sale of a property at Hedges Avenue. The point was reached where the transactions in which Mr Kakavas and Mr McCracken were involved with each other, were rarely documented and they loaned each other money, amounting to millions of dollars, on the basis of a handshake.

67 For his part, Mr Kakavas’ evidence was that certain of the details of the transactions about which Mr McCracken gave evidence were inaccurate. For example, it was Mrs McCracken who was the purchaser of the Albatross Avenue property and he was not its owner, but had been paid commission on the sale, because of his introduction of the purchaser to the buyer. The Hedges Avenue property had involved a put and call option which Mrs McCracken had entered. That property was later sold to another purchaser introduced by Mr Kakavas, after the option was assigned.

68 Little turns on the details of these transactions. It was not in dispute that a personal and business relationship of the closest kind existed and that Mr McCracken and Mr Kakavas helped each other out on numerous occasions. On Mr Kakavas’ evidence, the first time that he loaned Mr McCracken money was in 2003, when he loaned him $1 million under an oral agreement. The money was later repaid, Mr McCracken not being asked to pay any interest on the loan. Subsequently they made substantial short term loans to each other, always by undocumented oral agreements. Such loans were always repaid.

69 By 2005, Mr McCracken had become aware that Mr Kakavas gambled a lot and that his gambling had become more frequent and involved larger amounts of money. Mr Kakavas had told him that he had won $11 million on one occasion and he was aware that on others, Mr Kakavas had lost over $1 million on a night. Mr McCracken accompanied Mr Kakavas when he gambled in certain high roller rooms, where Mr Kakavas made numerous bets, for very large sums. In August 2006, while they were together in Las Vegas, Mr McCracken counseled Mr Kakavas that he had to stop gambling, because it would get him into trouble. While the details of the conversation were not agreed, Mr Kakavas agreed that there was such a conversation.

70 For his part, Mr Kakavas described himself as a pathological gambler, who had lost over $30 million gambling and whose addiction had ruined his life. In 1994, he had been convicted of an offence of obtaining property by deception, and had been sentenced to four months in prison, with a one year, eight month sentence suspended. When he gave his evidence, he was being sued in respect of credit of $1 million extended to him by a casino in the Bahamas, during his honeymoon in November 2006. There were other proceedings on foot, brought against him by another casino, in relation to another line of credit of $1 million. He owed very significant sums of money to various people from whom he had borrowed money for gambling. Mr Kakavas was himself then pursuing a claim in excess of $20 million against Crown Casino in the Victorian Supreme Court.

71 Mr McCracken made the first agreement with Elite in June 2006, without any documentation as to what had been agreed. He understood from Mr Kakavas that the $4 million deposit was to be used to refurbish the property. He agreed to a settlement in January 2007, when the mortgage on the property fell due for repayment.

72 On Mr Kakavas’ evidence, he agreed to sell Elite’s property for $14 million, even though it was worth $15 million, because of his friendship with Mr McCracken. He required a substantial deposit to be paid before settlement. There is no question that the $4 million was paid in instalments, as had been agreed. It was common ground that Mr McCracken was anxious to have a written contract put in place and that steps were later taken by Mr Kakavas to have one drawn up. There were issues as to when that occurred, what the document provided and what happened to the document, which Mr Kakavas claims he signed and provided to Mr McCracken, who also signed it. This Mr McCracken denies.

73 The second agreement, involving a loan of $500,000 was then made later in 2006 and the third, involving the $2 million paid to Mr Kerwick, was on Mr McCracken's case, made in early October.

74 Mr McCracken’s evidence was that Mr Pilarinos was another friend, who he had met through Mr Kakavas in 2002. The proposal which led to the third agreement came from Mr Kakavas. Mr Kakavas raised it with him in a conversation at which Mr Pilarinos was present. Mr Kakavas and Mr Pilarinos deny this. At the time, because of Mr McCracken’s concern about Mr Kakavas’ gambling, he also had a private conversation with him, seeking an assurance from Mr Kakavas that the $2 million he was to advance to Mr Kerwick would not be used to fund Mr Kakavas’ gambling. Mr Kakavas assured Mr McCracken that it would not and that he would make sure that it came straight back, if the deal fell through. Mr Kakavas also denied this.

75 On Mr McCracken’s case it was he who then spoke to Mr Kerwick, to tell him what had been proposed and that Mr Kerwick agreed. Mr Kerwick denies this. Mr Kerwick was also a friend of Mr McCracken’s, but not as close a one as Mr Kakavas. They were also neighbours.

76 There was also a disagreement as to whether the first agreement was brought to an end by Mr McCracken on 10 November, or by Mr Kakavas, when he put the property on the market on 11 November, which Mr McCracken learned of later. It was Mr McCracken’s evidence that this was Mr Kakavas’ decision, made after the assault and that it was a decision which he accepted. Mr Kakavas denies this. He claims that it was Mr McCracken who told him on 10 November that he did not want to proceed with the deal.

77 On Mr Kakavas’ evidence the reason for Mr McCracken’s decision was that he had come to the belief that he had agreed to pay too much for the Elite property. On 22 September, he had attended an auction of a National Australia Bank building with Mr McCracken. This was a property comparable to that which Elite had agreed to sell to Mr McCracken, although the Elite property was more substantial and generated greater rental income than the NAB property. The NAB property was passed in for $11.2 million. On 29 September, there was a newspaper report that the property had been sold for $12 million. Mr McCracken spoke to Mr Kakavas about the $14 million he had agreed to pay for the Elite property. Mr Kakavas told him the price was right, because his property was a 20% better one. On 10 November, Mr McCracken spoke to Mr Kakavas by phone and told him that he did not want to proceed with the purchase and wanted the deposit he had paid back, although he was happy to wait until Mr Kakavas had sold the property. Mr McCracken denies these events.

78 Mr Kakavas’ evidence was that on 10 November they had also discussed another purchase. In April 2006, Mr McCracken had told Mr Kakavas that he needed to sell his family home, but Mr Kakavas counseled him to move in and freshen the place up first. Mrs McCracken had the house under a put and call option, which was not due to settle until later in the year. In October 2006, he introduced Mr McCracken to a property at Mermaid Beach which Mr Kerwick had bought. That property required renovating and he believed Mr McCracken could get it for between $5 - $6 million. Mr Kakavas then told Mr Kerwick of Mr McCracken’s interest and Mr Kerwick fixed a price of $5.5 million.

79 It was Mr Kakavas and Mr Kerwick’s evidence that they then met with Mr McCracken at the house and a price of $6 million was agreed, with a delayed settlement and a $2 million deposit, to be released to Mr Kerwick. Mr Kakavas filled out a blank contract for sale of land provided to him by Mr Kerwick, who executed the contract and Mr Kakavas witnessed his signature. Mr Kerwick’s evidence was that he then dropped the contract in Mr McCracken's letterbox. They kept no copy. Mr McCracken denied any such discussions or agreement, or that he had ever received such a contract.

80 Mr Kakavas’ evidence was that on 10 November, he also discussed this transaction with Mr McCracken on the telephone, as well as the Elite sale, which Mr McCracken did not want to proceed with. Mr McCracken, who had earlier paid Mr Kerwick a $2 million deposit, said that he did not want to proceed with this purchase either and wanted his money back and that Mr Kakavas, who had got him into the deal, had to get him out. Mr Kakavas concluded the conversation by saying that he did not want to discuss ‘that stuff’ that day. Mr McCracken denied such a discussion.

81 On Mr McCracken's evidence, it was in early November that Mr Kakavas informed him that the third agreement, under which Mr Pilarinos was to purchase his house had fallen through. Mr McCracken asked for the return of the $2 million he had paid Mr Kerwick. While Mr Kakavas promised to see to its return, it was not repaid and so Mr McCracken followed the money up with him. Mr Kakavas promised that it would be in Mr McCracken’s account by 10 November, Mr Kakavas’ wedding day.

82 When the money had not arrived in his bank account that day, Mr McCracken spoke to Mr Kakavas, who promised to follow the matter up with Mr Pilarinos. Mr McCracken did not hear back from Mr Kakavas. Instead, at about 9.30 am, he had a phone call from his wife, who told him that she had seen Mr Kakavas in the street. He had stopped her and told her that he had taken the $2 million and sent it to a casino in Las Vegas, to pay off gambling debts which he owed. Mr Kakavas had told her that he could not tell Mr McCracken this himself. Mrs McCracken's evidence corroborated Mr McCracken’s account of their conversation. Mr Kakavas denied having such a conversation with Mrs McCracken.

83 On Mr Kakavas’ evidence, what he told Mrs McCracken on the morning of 10 November, when they met in the street shortly after he spoke to Mr McCracken, was that Mr McCracken had told him that morning that he did not want to proceed with the Elite purchase; that he had told Mr McCracken that he did not want to discuss it that day and that in any event, he could not give the money back, because he didn’t have it.

84 Mrs McCracken rang to tell Mr McCracken what Mr Kakavas had told her and that she would come home to talk to him. When Mrs McCracken returned home at about midday, she explained to Mr McCracken how she came to be stopped in the street by Mr Kakavas and what he had said to her. On his evidence, Mr McCracken formed the view that Mr Kakavas had stolen the $2 million, having promised him that it wouldn’t go to the casino. He was enraged and felt betrayed. This was what caused him to go to see Mr Kakavas at his home, to confront him. This was what led to the assault.

85 On Mr Kakavas’ evidence, Mr McCracken telephoned him at about midday, told him that he had a gun and threatened to come and kill him. Mr McCracken denies this, but does not deny that he assaulted Mr Kakavas after he arrived at the house. It was common ground that Mr McCracken had no gun and did not threaten Mr Kakavas with a gun at his home.

86 Unraveling what in truth happened between Mr McCracken and Mr Kakavas, particularly on 10 November is difficult. Much is disputed. What there is no doubt about at all, is that the dealings between Mr McCracken and Mr Kakavas on 10 November were out of the ordinary. That was the direct result of what Mr Kakavas told Mrs McCracken that morning. It was what Mrs McCracken understood from Mr Kakavas and what she then conveyed to Mr McCracken, which led to Mr McCracken’s assault of Mr Kakavas and the shattering of their relationship.

What did Mr Kakavas tell Mrs McCracken on 10 November 2006?

87 Resolving this issue assists in resolving the dispute as to what Mr Kakavas and Mr McCracken discussed by telephone earlier that morning. It is that discussion on which depends the question of who it was that brought the first agreement to an end.

88 The two accounts of the conversation between the two men were:

Mr McCracken’s version

"Look, the money hasn't hit my account yet. That money is supposed to be there. You said it will be in there by Friday at the latest."

"I'll contact Jerry and see what's happened."

Mr Kakavas’ version

"Harry, I paid too much for 16 Queensland Avenue. It's not worth $14 million, it's only worth $12 million. I don't want it. I'm under too much pressure. I want the money I've already paid you back. But, because I'm pulling out of the contract, I'm happy to wait until you sell the property to get it. I don't want to proceed with The Esplanade property either. I want the $2 million I paid to Kerwick back straight away. You got me into the deal you get me out of the deal.

"Mate, I don't want to be talking about this stuff today. I'll see you later."

89 Mr Kakavas’ evidence was, essentially, that when he spoke to Mrs McCracken, when he then encountered her by chance in the street, as she drove by him, he said no more to her than he had earlier told Mr McCracken. That evidence was not credible. It is difficult to believe that it was only because Mr Kakavas repeated what Mr McCracken had earlier told him to Mrs McCracken, that Mr McCracken became so enraged, as to assault Mr Kakavas hours before he was due to be a groomsman at his wedding, after Mrs McCracken recounted that conversation to him. It is much more likely that Mr Kakavas told Mrs McCracken something rather different, given Mr McCracken’s enraged reaction to what she told him.

90 For a number of reasons, I have concluded that Mrs McCracken’s evidence as to what Mr Kakavas told her must be preferred over his evidence. Mrs McCracken's account of the conversation in her affidavit was:

Kakavas: "I'm not sure if you know, but Jarrod had loaned two million dollars to Bill, that was then loaned to Jerry. It was to be used for Jerry to buy a property from Jarrod. Anyway, Jerry's finance fell through and the deal couldn't go ahead. Jerry was supposed to transfer the money back to Bill who would then transfer it to Jarrod."

Michelle: "Yes, I know. Jarrod told me that the money was supposed to be coming back today."

Kakavas: "Well, a problem came up. I owe a lot of money to some casinos in Law(sic) Vegas and they are chasing me for payment. I don't have any money for payment and I'm afraid it may get serious. I told Jerry to transfer the two million dollars to my account and I would give it to Jarrod. When Jerry transferred the money to me I paid it to the casinos."

Michelle: "What? Jarrod's going to hit the roof."

"I need you to tell him for me. Tell him I wanted to tell him myself but I just couldn't."

91 Mr Kakavas’ affidavit evidence as to their conversation was:

Kakavas: "Jarrod called me this morning and said he did not want to proceed with Queensland Avenue and wants his money back. I told him today wasn't the day to discuss it."

Michelle: "I don't know the precise arrangement you two had, but I'm sure you'll sort it out."

Kakavas: "I can't give him the money back anyway, because I don't have it."

92 Mrs McCracken’s account was expanded in her oral evidence, when she was asked to comment on Mr Kakavas’ version of their conversation. She said that after an emotional discussion in her car about whether he could proceed with his wedding later that day, Mr Kakavas said to her:

93 The evidence went on:

"And Harry said that Alex Paranti had come over from Las Vegas and he had had a talk to Harry. And he said if some money wasn't paid to the Las Vegas casinos things would get a bit nasty. So he got the money from Jerry and instead of it coming back to Jarrod he talked Jerry into giving him the money. And then he give it to Alex Paranti to give to the Las Vegas casino. And then he said sorry, I'm just a little bit nervous, yeah.

He then got the sorry, I've just like lost everything. I'm just really nervous because Harry's looking at me and you looked at me in the eye, Harry, and you made me look at you and you said that you would never hurt me and my family and you promised to get that $2m back. And now you sit here in a court and deny it. And I don't know how you could do that to us and look me in the eye that day and say that.

And then Billy, (indicated), you, you knew that conversation happened. You came around the corner and picked Harry up in the car, in your car, in the black BMW. You pulled him up in the cross street of Patrel Avenue and picked him up that day.

94 It was clarified that ‘Billy’ was Mr Kerwick. In cross examination, Mrs McCracken agreed that this account was more extensive than the account given in her affidavit evidence, but she insisted that it was true and denied that she had made it up, in order to assist her husband’s case. She also denied that the money she and Mr Kakavas had referred to in their discussion, was the $4 million deposit paid in relation to the Elite sale.

95 When Mr Kakavas gave his oral evidence, he denied being in Mrs McCracken’s car; said that she was the last person in the world that he would have discussed his impending marriage with; that if he had confided in anyone, it would have been Mr McCracken and otherwise denied this account of their conversation. There was no evidence from Mr Kerwick denying Mrs McCracken’s account of his presence that morning, when he was later called to give evidence.

96 I am unable to accept Mr Kakavas’ version of this conversation over that of Mrs McCracken. Mr Kakavas’ evidence about his relationship with Mrs McCracken sat uncomfortably with the terms of a note which he had handwritten while holidaying together in Las Vegas with both Mr and Mrs McCracken, earlier in the year. There he wrote:

"Dearest Jarrod,

I am deeply humbled by your genuine care, support, understanding and friendship. I am so proud to call you my great friend because that is the least you deserve. Both you and Michelle are beautiful people with big hearts and I know that your friendship is unconditional . I deeply respect the enormous trust you have always shown me and assure you that I will never do anything to lose that. Thank you for coming on this trip as you have provided me great moral support and the strength to believe that there are better days ahead. I will never forget the kind words spoken by you and Michelle - thank you so much."

97 Mr Kakavas stopping Mrs McCracken in the street to discuss repayment of money which Mr McCracken was pursuing with him, money which he could not repay because he had lost it gambling, seems quite consistent with his own description of Mrs McCracken, his relationship with her, his gratitude to her and with his own account of his gambling habits. As Mr Kakavas said in his own evidence, Mrs McCracken’s account of their conversation sounded like him. By way of contrast, Mr Kakavas’ evidence about what occurred this day was contradictory and implausible in a number of respects. Mrs McCracken’s evidence was not.

98 Mr Kakavas’ version of his conversation with Mrs McCracken was inconsistent with his own account of his conversation with Mr McCracken earlier that morning. If that version were accepted, when Mr Kakavas stopped Mrs McCracken in the street, he understood that Mr McCracken was content to wait for the return of the $4 million deposit until the Elite property was later sold elsewhere. While Mr McCracken wanted the return of the $2 million he had given to Mr Kerwick, on Mr Kakavas’ account, Mr McCracken did not demur, when Mr Kakavas told him that he did not want to talk about ‘that stuff’, that day. Why then would Mr Kakavas discuss with Mrs McCracken the repayment of the $4 million Mr McCracken was prepared to wait for and make no mention of the $2 million paid to Mr Kerwick, which he had also raised?

99 Mr Kakavas was due to leave for his honeymoon to the Bahamas early the following week. On Mr Kakavas’ account, Mr McCracken had no difficulty waiting for his money, as Mr Kakavas had asked. That accorded with the evidence of the nature of the relationship between the two men to that point. If this was the case, there was no reason for Mr Kakavas to have stopped Mrs McCracken in the street, to speak to her about his earlier discussion with Mr McCracken, or to speak to her about the matter at all. What motivated him to do so? Having the conversation which he claimed he had with Mrs McCracken, on his evidence, would have been both unnecessary and contrary to his relationship with her.

100 On Mr McCracken’s account, he had earlier asked Mr Kakavas for the return of the $2 million, he understanding from early November, that the third agreement was not to proceed and that accordingly, the $2 million was to be returned to him. They had not discussed the $4 million paid in respect of the Elite property at all. As far as Mr McCracken was concerned, the Elite purchase was proceeding. It was when the promised $2 million had still had not arrived by 10 November, that he rang Mr Kakavas, who promised to follow it up with Mr Pilarinos.

101 That account provides a plausible reason for Mr Kakavas stopping Mrs McCracken to speak to her in the street. He was close friends with both Mr and Mrs McCracken and could not bring himself to tell Mr McCracken that he was unable to return the $2 million which had been given to Mr Kerwick, because he had spent it. That scenario also sat quite comfortably with the oral evidence which Mr Kakavas gave, as to his intentions in relation to the money here at issue between he and Mr McCracken, even if he succeeded in resisting the claims brought against him in these proceedings and with the evidence as to what occurred to the $2 million paid to Mr Kerwick, which I will deal with later.

102 Mrs McCracken’s description of Mr Kakavas’ behaviour was not only consistent with Mr Kakavas’ emotional language and demeanor in the witness box, it also explains Mr McCracken’s reaction to what his wife told him, a reaction seemingly entirely out of character, given the two men’s relationship to that point. From Mrs McCracken, Mr McCracken learned that instead of pursuing the return of the $2 million with Mr Pilarinos as he had promised, Mr Kakavas had himself in fact gambled that money away and was not in a position to repay it to Mr McCracken.

103 Mr Chrysaffis’ evidence also shed some light on what was occurring at the time. That Mr McCracken had some concern, and that there was some problem between the two men shortly before the wedding, was confirmed by Mr Chrysaffis. His evidence was that he was a close friend of both men; he was the other groomsman at the wedding; he had spent time with the two families in the week before the wedding and he was not aware of any problems between Mr Kakavas and Mr McCracken. Still, he had noticed that Mr McCracken was preoccupied and reserved. That demeanor is entirely consistent with a growing concern on Mr McCracken’s part, that Mr Kakavas had promised to ensure the return of the $2 million and that the money had not been forthcoming, despite his promises. Mr McCracken had himself borrowed the money and needed to repay it.

104 There was a question as to why it was that Mr McCracken did not go to Mr Kakavas’ house until around midday, when his wife had spoken to him at about 9.30 am, after she spoke to Mr Kakavas. Mr Kakavas’ case was that Mr McCracken had delayed in order to put ‘maximum pressure’ on him, to repay money which he did not owe Mr McCracken. On Mr Kakavas’ own evidence, that would have been entirely out of character for Mr McCracken, given their relationship and inconsistent with their discussion that morning. The only explanation Mr Kakavas gave for Mr McCracken seeking the return of $4 million from him was that Mr McCracken had changed his mind about the Elite purchase, because he came to believe that the price was too high, given the price for which the NAB building sold. The case advanced for Mr Pilarinos was that Mr McCracken had overextended himself, a matter to which I will return, but that Mr Kakavas then had such an understanding, was not apparent from his evidence. He claimed that Mr McCracken had just changed his mind about the purchase. He often changed his mind.

105 Mrs McCracken’s explanation for her delay in returning home to speak to her husband, as she told him she would when they spoke on the phone, was that she had a hairdressing appointment for the wedding and was on her way to collect Mr Chrysaffis’ partner, Sophie, when stopped in the street by Mr Kakavas. After she spoke to her husband, she said she would go home to speak to him, but first continued with her hairdressing appointment. She did not return home until shortly before Mr McCracken left to go to Mr Kakavas’ house. I am unable to reject Mrs McCracken’s explanation. I did not find her to be an untruthful witness and the explanation seems a plausible one, in the circumstances.

106 On 10 November, Mr McCracken was concerned about the return of the $2 million he had been pursuing with Mr Kakavas for some time. Waiting for several hours for his wife to return, ruminating over what she had earlier told him, namely, that the money could not be repaid because Mr Kakavas had lost it gambling, explains why Mr McCracken went to confront Mr Kakavas in a fit of anger, after Mrs McCracken returned at around midday. Then he learned the details of her conversation with Mr Kakavas. Mr and Mrs McCracken’s evidence as to what occurred that morning was credible, particularly when considered in the light of Mr Kakavas’ own description of the nature of his relationship with Mr McCracken to that point and Mr Chrysaffis’ evidence that Mr McCracken’s behavior was out of character, in the week before the wedding. Mr McCracken’s explanation as to how he then felt was:

107 That evidence was emotionally given. So was much of Mr Kakavas’ evidence. It will be necessary to deal with that evidence later, but convenient to observe at this point, that the close relationship which existed between Mr McCracken and Mr Kakavas was undoubtedly what drove their actions that day and in the days which have followed. They were not men of business simply dealing with each other at arms length in relation to ordinary commercial dealings.

108 It should be observed that a reading of this judgment, or the transcript, is likely to give but a small insight into the extraordinary emotion displayed at times by Mr Kakavas and to a lesser extent by Mr McCracken and Mrs McCracken, during their oral evidence. At some points, Mr Kakavas was moved to tears, at one point he apologised to Mr McCracken, at another he claimed to have protected him, at another he threatened him. It will be necessary to say something further about Mr Kakavas’ outburst. At this point, however, it is sufficient to observe that by his unrestrained oral evidence, Mr Kakavas revealed that he regretted that he had been unable to repay the money Mr McCracken was claiming, even though he was relying on defences available to him to resist those claims. He, nevertheless, felt a moral obligation to repay what Mr McCracken sought. That it seems to me reflected a consciousness on Mr Kakavas’ part that the evidence which he had given was not entirely truthful.

109 For these reasons, I have concluded that Mrs McCracken's evidence as to what Mr Kakavas told her on 10 November and what she subsequently told her husband must be accepted.

What did Mr McCracken and Mr Kakavas discuss on the morning of 10 November?

110 It follows that Mr McCracken’s account of his conversation with Mr Kakavas at about 9 am on 10 November must also be preferred over Mr Kakavas’ account. I am satisfied that what Mr McCracken was asking of Mr Kakavas when they spoke that morning, is what Mrs McCracken described Mr Kakavas having told her about half an hour later, namely that Mr McCracken wanted the $2 million paid to Mr Kerwick repaid. They did not discuss the termination of the Elite sale. It was after Mr McCracken learned from his wife that Mr Kakavas had gambled and lost that $2 million and that Mr Kakavas was too embarrassed himself to tell his best friend what he had done and that he was not in a position to repay the money, that Mr McCracken went to confront his friend in a fit of anger, seeking repayment.

111 Support for that conclusion is also provided by the evidence as to what transpired when Mr McCracken went to Mr Kakavas’ home.

112 Mr Kakavas’ affidavit account was that when Mr McCracken confronted him at his home on 10 November, he was screaming ‘[y]ou fucking dog, Kakavas! Where is my money? I want my fucking money back!’. Mr McCracken and Mr Chrysaffis gave a similar account. On Mr Kakavas’ own evidence, from their earlier conversation that morning, Mr McCracken had asked for the return of the $2 million paid to Mr Kerwick, but was prepared to wait for the $4 million deposit, until the property was sold, but accepted that they would not discuss the matter further that day. On Mr Kakavas’ evidence nothing that had occurred in the meantime, could have given him to understand that Mr McCracken had changed his mind about waiting for the $4 million. Mr McCracken did not mention any particular money amount during the confrontation at the house. It follows that nothing which Mr McCracken had done, could have given Mr Kakavas to understand that he wanted both the $2 million and the $4 million repaid. No amount was mentioned, as Mr Chrysaffis’ evidence confirmed.

113 Also to be considered is Mr Kerwick’s evidence that it was on 12 November that Mr McCracken spoke to him about the return of the $2 million. He has also not spoken to Mr McCracken since that day. Mr Kerwick’s evidence as to their conversation was:

"McCracken: It's Jarrod here. I want that 2 million dollars back.

Kerwick: We have a deal, now stick to it.

McCracken: I want that money back or we're going to have a fucking problem. You won't be safe walking down the street and I can't guarantee Kakavas' father's safety if I see him walking down the street.

Kerwick: You must be joking. That's out of order.

McCracken: That's the way it is.

Kerwick: If you don't fulfil your obligations to the contract, it will be void and you will lose the 2 million.

McCracken: I don't give a fuck. I'm getting it back one way or another. I'm not proceeding and you can tell your fucking wog mate Kakavas he got me into this deal and he's going to pay one way or another.

O.K. That's it. As far as I'm concerned the contract is cancelled.

114 Mr McCracken denies such a conversation Mr Kerwick claims that he then spoke to Mr Kakavas and their conversation was:

"Kerwick: Harry, McCracken just rang me and he wants his $2 million back. He made some threats against us including your father. He was pretty wild.

Thanks for letting me know.

115 Mr Kakavas’ account of this conversation was to quite different effect:

"Kerwick: "Harry, I have just had a call from McCracken. He wants the $2 million deposit back on Palm Beach. He also told me to tell you that he cannot guarantee your father's safety walking down the street and that you are going to pay for this. He said he borrowed the $2 million for my deposit from some people in Sydney who are very heavy."

Kakavas: " He is completely mad. What have I got to do with the $2 million?"

"I told him he was out of line."

116 There are some obvious inconsistencies between these accounts. I am unable to accept Mr Kerwick’s evidence over that of Mr McCracken. Even Mr Kerwick and Mr Kakavas’ accounts do not coincide and contain some curious omissions.

117 While Mr Kerwick claims that he told Mr Kakavas that both they and Mr Kakavas' father had been threatened, by Mr McCracken, Mr Kakavas makes no mention of any threat to Mr Kerwick. That is consistent with there having been no such conversation or threat made. Mr McCracken’s understanding was that it was Mr Kakavas who had spent this money, after it was given to him by Mr Pilarinos. On Mr Kerwick’s account, Mr Kakavas did not claim to have had nothing to do with the $2 million, as was his account. Even that is consistent with Mr Kakavas having spent the money.

118 Tellingly, in neither Mr Kerwick nor Mr Kakavas’ account was anything said about Mr McCracken also demanding to be repaid $4 million in respect of the Elite sale. Given the nature of their relationship and the fact that by 12 November, Mr Kakavas had already put the Elite property on the market and had acknowledged owing Mr McCracken $6,250,000, that he did not mention to Mr Kerwick, that Mr McCracken was also pursuing him for the repayment of the $4 million deposit in respect of the Elite sale, also suggests that as Mr McCracken claims, he was not doing so at that time.

119 Nor was anything said about the $2 million Mr Kerwick and Mr Kakavas were discussing having been paid by Mr McCracken as a non-refundable deposit on the sale of Mr Kerwick’s house. Given Mr Kerwick and Mr Kakavas’ evidence as to the terms on which Mr Kakavas came to organise this sale between his two friends, that neither said anything to the other about the $2 million not being repayable to Mr McCracken, seems a most unlikely omission from their discussion, if those terms had in fact been agreed. Given Mr Kakavas’ command of the details of the various transactions in which he has been involved with Mr McCracken and what he claims was his emotional state at the time, that he would have had such a short and dispassionate discussion with Mr Kerwick about the threats which he claims Mr Kerwick recounted to him, also seems rather unlikely. I am entirely sceptical that there ever was such a conversation.

120 To my mind, if such a conversation did occur between Mr Kerwick and Mr Kakavas on 12 November over Mr McCracken seeking repayment of $2 million, that tends to support Mr McCracken’s evidence as to what led him to go and confront Mr Kakavas on 10 November and what he was then pursuing with Mr Kakavas, namely repayment of the $2 million he had given to Mr Kerwick under the third agreement, not the $4 million paid in respect of the Elite sale. That they made no mention of the basis on which they now claim that Mr Kerwick had no obligation to repay that amount, also tends to support Mr McCracken’s evidence that there was no such agreement and that the conversation simply did not take place.

121 For those reasons, I have concluded that on 10 November, Mr McCracken and Mr Kakavas did not discuss the Elite sale, or its termination.

The first agreement

Who decided that the Elite sale would not proceed?

122 The consequence of these conclusions is that it must be accepted that it was Elite which brought this agreement to an end, after Mr Kakavas decided that the sale would not proceed. That decision was made by Mr Kakavas after the assault. He and Mr McCracken have never discussed that matter.

123 I accept Mr McCracken’s evidence that the Elite transaction was not discussed between he and Mr Kakavas on 10 November. It was common ground that they have not spoken since the assault. Mr Kakavas put the property on the market on 11 November without discussion with Mr McCracken. While it was common ground that Mr McCracken asked Mr Kakavas, through Mr Chrysaffis and Mr Pilarinos, to give him an acknowledgement of what he owed, I accept that Mr McCracken only learned of Mr Kakavas’ decision to put the property on the market when he received that acknowledgment. On Mr McCracken's evidence, his attitude when he heard of Mr Kakavas' decision was that Mr Kakavas was entitled to proceed with that sale. That was not only consistent with the basis of their dealings with each other, but as he explained, Mr McCracken did not understand that he had a binding contract with Elite, because the written agreement had not been executed.

124 On Mr McCracken’s evidence, to that point he had no reason to believe that the Elite sale would not proceed, despite the falling out. He was in a position to proceed and was not unhappy with the price. He did not learn that the two properties had been put onto the market, until he received the acknowledgment of debt on 12 November. He had nothing to do with the second property. He explained that he had asked for the acknowledgment on 11 November, because there was no document evidencing any of the transaction and he wanted something to protect his position, before Mr Kakavas left the country on his honeymoon. That was why he approached Mr Pilarinos and Mr Chrysaffis for help and why he later sought his solicitor's help, after he received the acknowledgement and learned that the Elite sale was not proceeding.

125 This conclusion is also consistent with Mr Kakavas’ evidence, that after the assault he resolved to have nothing more to do with Mr McCracken. Such a resolution was entirely consistent with a decision on his part, that Elite would not proceed with the sale and with his view that he was selling the property to Mr McCracken at a very substantial discount of $1 million, given their friendship. On 11 November, Mr Kakavas put both the Elite property and another property which Elite also owned, onto the market, as he said in the acknowledgment which he handwrote that day. Those steps were also consistent with his financial situation, the need to find another purchaser for the Elite property, before the mortgage fell due in January and his impending departure on his honeymoon.

323 Despite all of this evidence, Mr Kakavas denied that he had provided the acknowledgement of debt, for reasons such as these, insisting that it was extracted by duress and that he never had any intention of honouring it. That evidence was not believable. Mr Kakavas plainly intended honouring the acknowledgement. That was why he paid Mrs McCracken $1 million through Mr Kerwick and why he insisted that he intended to pay Mr McCracken more, even though he owed him nothing.

324 If the payments had truly been made under duress, or as the result of fear, why did Mr Kakavas not raise these matters with the police, when he finally reported the assault, long after these proceedings had been commenced? Why did he send a message to Mr McCracken, through Mr Pilarinos and Mr Chrysaffis in March 2007, that he would pay him what he owed after the Crown Casino case concluded and why was an agreement to this effect raised as a part of his defence?

325 In my assessment, the payments were not extracted by duress, by threats, or by the assault. Those payments were a reflection of how these close friends had always dealt with each other and Mr Kakavas’ continuing feelings towards Mr McCracken, his closest friend, even after the assault and alleged threats. The payments reflected Mr Kakavas’ view that whatever the legalities were, he intended to repay the money which Mr McCracken claimed initially by the sale of the two properties mentioned in the acknowledgment. For good reason, it seems on his own evidence, Mr Kakavas felt obligated to Mr McCracken for a sum of $6,250,000; that was what he acknowledged, in his own words and that is why he began making payments to Mrs McCracken.

326 By his evidence in these proceedings, in reality Mr Kakavas stands by that acknowledgment. He intends to honour it, no matter the outcome of these proceedings and he hopes to have the means to do so, when his proceedings against Crown Casino are resolved. At one point, looking directly at Mr McCracken sitting in the body of the Court, Mr Kakavas said:

‘

327 Mr Kakavas explained the assault charges and why he finally pursued them years later, claiming that he only went to the police to stop Mr McCracken from doing ‘something silly’, not to get him into trouble. There was no suggestion of any further threats from Mr McCracken at that time. These proceedings were then on foot. Mr Kakavas did claim that he agreed to more serious charges against Mr McCracken being dropped by the police. This evidence was difficult to accept, particularly when considered with the rather extraordinary and repeated claim that Mr Kakavas had done Mr McCracken a ‘big favour’ by eventually going to the police, after his affidavit in these proceedings had been sworn. Why that was so, was not explained. There was no evidence that at the time, other than the pursuit of these proceedings, Mr McCracken and Mr Kakavas were having any dealings with each other.

328 The truth was that Mr Kakavas was never in fear of Mr McCracken. He paid part of the money which his best friend had asked for, undoubtedly sorry about what he had told Mrs McCracken on 10 November; how he had used his best friend’s money to gamble with and what that had done to their friendship.

329 It follows that no basis for any orders in favour of Mr Kakavas in relation to the $1 million he paid Mrs McCracken was established on the evidence. There was no basis established upon which it might be concluded that Mr McCracken was obliged to repay that money to Mr Kakavas. It was entirely open to Mr Kakavas to repay part of what he and Elite owed Mr McCracken, by giving money to Mrs McCracken, as he did. That he made the payment he did to Mrs McCracken through Mr Kerwick, is reflective of what he had had told her on 10 November he had done with the $2 million which Mr McCracken was seeking to have repaid and the promise which he then made to her, that he would try to find funds to repay it.

330 There was no basis in the evidence upon which it may be concluded that by that payment, Mr Kakavas was intending to repay Mr McCracken the $250,000 which he owed him under the second agreement. Indeed, he claimed that the payment was made in relation to the $4 million deposit. It follows that the claim that $250,000 of that payment should be treated as repayment of the debt owing under the second agreement, must also be refused.

Damages for assault

331 Mr Kakavas plainly had very mixed emotions over what had occurred. He undoubtedly felt humiliated. His wedding was thereby delayed by 2 hours. On his evidence his mother was so upset that she did not attend the wedding. He was outraged that a man of Mr McCracken’s size could have assaulted his brother in law, a much slighter man and that he confronted his father. That account of what occurred was inconsistent with Mr Chrysaffis’ evidence. He explained that it was Mr Kakavas’ father who confronted Mr McCracken, it was not he who threatened Mr Kakavas’ father.

332 Nevertheless, Mr Kakavas’ evidence also reflected that he blamed himself for what his best friend had been driven to do. That Mr McCracken was provoked by Mr Kakavas’ actions earlier that day, when he told Mrs McCracken what he had done, is not open to question.

333 Mr Kakavas’ case was that there was no need for him to prove any injury or harm, in order for at least nominal damages to be ordered against Mr McCracken. An award of aggravated damages was however claimed, given the evidence of Mr McCracken's ongoing threats. (See State of NSW v Riley [2003] NSWCA 208; (2003) 57 NSWLR 496 at 525.) Provocation was also argued to be no defence, nor could it reduce damages payable (see Fontin v Katapodis [1962] HCA 63; (1962) 108 CLR 177 at 187.) This was submitted to be a case for exemplary damages, despite the conviction and fine in the later criminal proceeding. As to this it was agreed between the parties that:

(a) Assault occasioning bodily harm;

334 Even if the facts warranted any consideration of exemplary damages being awarded, which in my view they do not, given the criminal proceedings, they are not available. The High Court observed in Gray v Motor Accident Commission [1998] HCA 70; (1998) 196 CLR 1 at 14:

41. There are at least two reasons in principle why that is so.

42. First, the purposes for the awarding of exemplary damages have been wholly met if substantial punishment is exacted by the criminal law. The offender is punished; others are deterred. There is, then, no occasion for their award.

43. Secondly, considerations of double punishment would otherwise arise. In R v Hoar [(1981) 148 CLR 42] Gibbs CJ, Mason, Aickin and Brennan JJ said that there is ‘a practice, if not a rule of law, that a person should not be twice punished for what is substantially the same act’. That practice or rule would be breached by an award of exemplary damages in the circumstances described.”

335 In this case, while the criminal proceedings did not result in 'substantial punishment', but rather in the orders aforementioned, that does not lead to the conclusion that the conduct in question was not dealt with in accordance with the criminal law. Rather, it seems to me, the result was reflective of the minor nature of the assault in question.

336 In Niven v SS [2006] NSWCA 338, it was observed:

62 As I have said, the High Court in Grey left open the position that might arise if relevant criminal proceedings ended in the accused’s acquittal prior to the hearing and determination of the civil proceedings for the same conduct. In such an event it would be difficult to suggest the whole of the plaintiff’s action including a claim for exemplary damages should be struck out given the differences, particularly with respect to the standard of proof, between a criminal and a civil trial. In my opinion, the position is a fortiori where the acquittal occurs after the conclusion of the civil trial.

63 The fact is that the appellant having been acquitted of the charges preferred against him in the criminal proceedings, no question of double punishment arises. There is no possibility of any punishment. Where, as in the present case, there is no challenge to the primary judge’s findings on liability or with respect to the factual considerations which he took into account in determining to award of exemplary damages, I am not prepared to accede to the appellant’s submission that this Court should, as a matter of policy, apply by analogy the decision of the New Zealand Court of Appeal in Daniels as affirmed by the Privy Council in W v W to strike out or dismiss a claim for exemplary damages where the appellant has been acquitted of the charges preferred against him subsequent to the conclusion of the civil trial at which exemplary damages were awarded.

64 In my view the whole tenor of the High Court’s approach in Grey to the award of exemplary damages is consistent with that position and this is so even though the Court in that case was at one with the New Zealand Court of Appeal in Daniels in concluding that exemplary damages should not be awarded in a civil trial where the defendant, in a preceding criminal trial, had had inflicted upon him or her “ substantial punishment ”. Even in Grey , the Court left for another occasion the meaning of “ substantial punishment ” particularly if only a nominal penalty for reasons personal to the accused or other reasons had been imposed in the criminal proceedings.

Grey

substantial

337 Given the result of the criminal prosecution of Mr McCracken, I am satisfied that the approach here urged for Mr Kakavas is not available. That the assault was regarded to be a minor one, is simply reflective of what in truth occurred between these men.

338 Nor do I accept that Mr Kakavas’ outburst at the hearing supported an order in his favour being made. It was a most extraordinary outburst, for which he later apologised. Mr Kakavas shouted at Mr McCracken from the witness box, when asked whether Mr McCracken had come to him on his wedding day, because that was when he first found out what had occurred with the $2 million. The context in which this occurred was:

"Q. There is not much point in lying if you are going to admit it?
A. I don't lie. When I lie I will tell you. I didn't steal any money from this man. I respected this man and I wanted this man to buy a property. I was never going to steal, cheat him or his family and that went through 2 million. I would have refunded his four million dollars. I would have given it back to him even though he had assaulted me, assaulted members of my family, instilled so much fear in my mother that she was too traumatised to come to my wedding. Even though he bashed a bloke this big, a dwarf in front of his ten year old son and he has never said sorry.

Q. Where is your Mum?
A. On the Gold Coast. Do you want me to traumatise her further? She had a question to ask Mr McCracken.

Q. Where is the dwarf?
A. With his family.

Q. Who is that?
A. That is my brother in law Mr Kostas.

Q. Where is Mr Kostas?
A. In Melbourne with his family, too traumatised to see this man because he bashed him.

Q. And your sister Sophie?
A. Again, too traumatised because he was abusing me. You are telling me he didn't put me in fear or my family?

Q. Your father?
A. 84 years of age and he knew at the time he had a heart condition, he is standing over my father. He is standing over my father who had nothing to do with it. He is standing over my father. He could've come to me any other time. He could have smashed my head in anywhere. He didn't have to come at my wedding day. He didn't have to do it and he never said sorry.

Q. He came on your wedding day because that is when he first found out?
A. He came on my wedding day because he wanted maximum impact and that is what he got. Let him come again. Come again.

339 Having observed that extraordinarily unrestrained outburst, I can only conclude that what Mr Kakavas was doing was himself threatening Mr McCracken. But for his immediate apology, some other steps might have been necessary.

340 I have dealt with the evidence that Mr McCracken threatened Mr Kakavas and his father on 10 November and subsequently. On the cross claim, this was particularised as Mr Kakavas claiming that Mr McCracken told him before he arrived that he had a gun and was coming to kill him, which Mr McCracken denies. I have earlier dealt with Mr Kakavas’ evidence in that regard, which I do not believe.

341 I accept Mr Chrysaffis’ evidence as to Mr McCracken’s behaviour on 10 November and subsequently. I have rejected Mr Pilarinos' and Mr Kerwick’s accounts of subsequent threats, but as I have observed, like Mr Kakavas, if those threats were made, neither they nor Mr Kakavas took them seriously. That is understandable in the face of the relationship between all these men. Not all threatening words are intended to be, or are understood to be threats. In this case, no one was sufficiently concerned to go to the police. Only Mr McKenzie-McHarg counselled Mr Kakavas to do so, but Mr Kakavas told him that would only have made matters worse.

342 How could that have been so? The reality was that Mr Kakavas had no reason to go to the police. The assault was minor, he was not in fear of Mr McCracken and intended to repay him. The distinct impression I was left with was that the harrowing account of the assault and threats given to Mr McKenzie-McHarg, was given to extract a $500,000 loan from him. That account, after all, was quite at odds with the claims made in these proceedings and with Mr Chrysaffis’ evidence of what had occurred and even with what was put before the Court in the criminal proceedings, given the result in those proceedings.

343 The account given by Mr Kakavas to Mr McKenzie-McHarg, must have been considerably embellished, given his resulting concerns. What he perceived was 'a desperate situation', which he thought might have escalated 'into something quite out of control'. He was frightened, having picked up his concerns from Mr Kakavas who he described as having been 'very frightened and very disturbed'. He described this is an 'incredible experience', which he did not wish to repeat. No-one else gave such an account, not even Mr Chrysaffis who witnessed it and was the go-between who obtained the acknowledgement which Mr Kakavas gave.

344 Mr McKenzie-McHarg's concerns were sufficient to cause him to loan Mr Kakavas $500,000, without even any documentation, an action which Mr McKenzie-McHarg described as being entirely out of character on his part. I am satisfied that the truth was that Mr Kakavas thought that Mr McCracken posed no real threat to him and was not in fear of him. Had that not been the case, Mr Kakavas would have accepted Mr McKenzie-McHarg's advice and gone to the police, long before he went some two years later.

345 Still, that the assault which occurred as it did, within hours of Mr Kakavas’ wedding, delaying and disrupting it as it did, as Mr McCracken would have known given the role which he was to play in the wedding, may not be overlooked. In Fontin it was observed:

3. There remains a question relating to damages. The learned trial judge found that, as a result of his injuries, the plaintiff had incurred expense for medical and hospital treatment amounting to 100 pounds. He assessed the damages for earnings lost up to the date of the trial and for reduced earning capacity in the future at 1,600 pounds and went on to say "in respect of his general pain and suffering and loss of amenities and enjoyment of life I find that a fair figure for compensatory damages would be a further 1,250 pounds". This, as his Honour said, would normally result in a verdict against Fontin for 2,850 pounds. He was of opinion, however, that since Fontin's action in throwing the glass had been provoked by the plaintiff, that fact might be taken into account in mitigation of damages. Accordingly he reduced the amount which he otherwise would have awarded to 2,000 pounds. In this respect, I think his Honour fell into error. In an action for assault, as in many other cases of tort, the conduct and motives of the parties may be taken into account either to aggravate or mitigate damages. In a proper case the damages recoverable are not limited to compensation for the loss sustained but may include exemplary or punitive damages as, for example, where the defendant has acted in a high-handed fashion or with malice. But the rule by which the defendant in an action in which exemplary damages are recoverable is entitled to show that the plaintiff's own conduct was responsible for the commission of the tortious act and to use this fact to mitigate damages has no application to damages awarded by way of compensation. It operates only to prevent the award of exemplary damages or to reduce the amount of such damages which, but for the provocation, would have been awarded. The subject is discussed at length in Chap. XI of Sedgwick on Damages 8th ed. In s. 383 of that work, the learned author says "Since the cause for inflicting exemplary damages is a malicious intent on the part of the defendant, and the amount is regulated according to the degree of wrong, all circumstances bearing on the defendant's intent may be shown to the jury, to be considered by them. All circumstances which negative the existence of malice, or show the malice to have been but little, may be shown to mitigate the damages". And, in s. 384, he says "The existence of provocation, though it may not be a defence, will prevent the allowance of exemplary damages". To the same effect is the statement in Halsbury's Laws of England, 3rd ed. vol. 11 p. 224 that "a plaintiff, however, who has provoked the defendant's conduct by his own, will not be entitled to exemplary damages". We were referred, however, to the case of Griggs v. Southside Hotel Ltd (1946) 4 DLR 73 which, it was submitted, was an authority for the proposition that compensatory damages may be reduced where the defendant's act giving rise to the cause of action is provoked by the plaintiff's conduct. The report does not make it clear whether or not the learned trial judge in that case reduced the amount of the compensatory damages which he would otherwise have awarded or merely treated the plaintiff's actions as justifying a refusal to grant exemplary damages. If he took the former course, I think, with respect, that he was wrong. (at p187)

346 Here there was no evidence of any medical expenses incurred, or damages such as loss of earnings suffered, as the result of the assault. The physical consequences of the assault were minor. Any damage suffered was emotional. There was no suggestion that any medical attention was required, either for any physical or emotional damage. The assault resulted in a short delay of the wedding, albeit there were other disruptions which followed. The honeymoon was delayed for several days, while Mr Kakavas arranged to make a payment to Mr McCracken, but even this is not claimed to have given rise to any additional expense. Seemingly, there was no monetary loss or expense flowing from the assault.

347 The real claim went to the consequences of the assault for Mr Kakavas’ feelings. Undoubtedly, there was provocation by Mr Kakavas. I have outlined Mr McCracken’s explanation of how he felt when he learned of Mr Kakavas’ betrayal from his wife. This clearly did not excuse the assault. In Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1, the High Court observed:

348 As I have also explained, exemplary damages are not available here. What compensation, if any, is appropriate on account of aggravated damages, compensatory in nature, for the injury to Mr Kakavas feelings? They must reflect the evidence as to how Mr Kakavas was truly affected by the assault and not his anger over Mr McCracken’s pursuit of these proceedings and his failure to accept settlements offered. That there were very mixed feelings, on his part, was evident, as I have explained, but that there was insult and humiliation as the consequence of the admitted assault, was also unquestionable.

349 Having sought to weigh the evidence, I have concluded that damages in the sum of $2,000, properly reflects all of the evidence, to which I have referred.

Orders

350 The parties should confer on the terms of the orders to be made. Orders of $1,250,000 must be made against Mr Kakavas and the claims against Mr Kerwick and Mr Pilarinos dismissed. Orders of $2,000 should be made against Mr McCracken on the cross claim. The parties have not addressed on the question of costs which should in the ordinary course follow the event. If the parties are unable to agree on the terms of the orders to be made in that respect, they should approach.

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Citations

Coastline Constructions (Aust) Pty Ltd v Kakavas [2009] NSWSC 1438

Most Recent Citation

Coastline Constructions (Aust) Pty Ltd v Kakavas [2010] NSWSC 62

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2

Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59

Coastline Constructions (Aust) Pty Ltd v Kakavas [2010] NSWSC 62

Cases Cited

20

Statutory Material Cited

4

Ferguson v Eakin [1997] NSWCA 106

Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2005] NSWSC 951

Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2008] NSWSC 1209

CITATION:	Coastline Constructions (Aust) Pty Ltd & Ors v Kakavas & Ors [2009] NSWSC 1438
HEARING DATE(S):	24 August 2009, 25 August 2009, 26 August 2009, 27 August 2009, 28 August 2009, 2 September 2009
JUDGMENT DATE :	18 December 2009
JUDGMENT OF:	Schmidt J
CATCHWORDS:	CONTRACTS - general contractual principles - three oral agreements - offer and acceptance - agreement contemplating execution of written agreement - two agreements found - sale of property - no executed contract - substantial money advanced - acknowledgment of debt - termination of agreement - parties to contract - orders sought against non-party refused - breach of second agreement established - orders - third agreement not established - breach of contract - claims dismissed restitutio resulting from unenforceable, incomplete contract - recovery of money paid - order made - CONVERSION - intangible property - claims dismissed - TORT - assault - general principles - exemplary and aggravated damages - provocation - criminal proceedings - no order as to exemplary damages - order made - claim for assault and threats - claim dismissed - PROCEDURE - Supreme Court procedure - further amendment to claim - conversion - leave granted - RESTITUTION - recovery of money paid under duress or compulsion
LEGISLATION CITED:	Civil Procedure Act 2005 Evidence Act 1995 Land Sales Act 1984 (Qld) Property Law Act 1987 (QLD)
CATEGORY:	Principal judgment
CASES CITED:	Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd; Brown v Hodgkinson [2009] NSWCA 386 Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 Emilien v Cabbala [1989] 1 Qd R 620 Ferguson v Eakin [1997] NSWCA 106 Fontin v Katapodis [1962] HCA 63; (1962) 108 CLR 177 Freedom v AHR Constructions (1987) 1 Qd R 59 Gray v Motor Accident Commission [1998] HCA 70; (1998) 196 CLR 1 Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) 232 CLR 635 Masters v Cameron (1954) 91 CLR 353 Niven v SS [2006] NSWCA 338 Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 Risk Services Australia Limited v Australian National University [2009] HCA 27 Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 185 ALR 335 State of NSW v Riley [2003] NSWCA 208; (2003) 57 NSWLR 496 Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2005] NSWSC 951 Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2008] NSWSC 1209 Wilson v Darling Island Stevedoring & Lighterage Company Limited [1956] HCA 8;(1956) 95 CLR 43
PARTIES:	First Plaintiff - Coastline Constructions (Aust) Pty Limited Second Plaintiff - Crackers Corporation Pty Ltd Third Plaintiff/Cross Defendant - Jarrod McCracken First Defendant/Cross Claimant - Harry Kakavas Second Defendant - William Kerwick Third Defendant - Jerry Pilarinos
FILE NUMBER(S):	SC 14406/07
COUNSEL:	Plaintiffs - Mr MR Gracie with Mr DA Neggo First Defendant/Cross Claimant - Mr D Robinson SC with Mr M Darke and Ms D Bampton Second Defendant - Mr R Montgomery Third Defendant - Mr R Horsley
SOLICITORS:	Plaintiffs - Crisp Legal First Defendant/Cross Claimant - Gells Lawyers Second Defendant - Ghs Legal Third Defendant - Horowitz & Bilinsky