Cuthbert v Perrine Architecture Pty Ltd
[2014] VCC 59
•20 June 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
COMMERCIAL LIST
GENERAL CASES DIVISION
Case No. CI-13-00300
| BRETT CUTHBERT | Plaintiff |
| v. | |
| PERRINE ARCHITECTURE PTY LTD | First Defendant |
| AND | |
| JEAN-MIC PERRINE | Second Defendant |
---
JUDGE: | His Honour Judge Cosgrave | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13-15 November 2013 | |
DATE OF JUDGMENT: | 20 June 2014 | |
CASE MAY BE CITED AS: | Cuthbert v Perrine Architecture Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 59 | |
REASONS FOR JUDGMENT
---
Subject:CONTRACT, TRUSTS
Catchwords: CONTRACT – Loan agreement – Debt paid by one person on behalf of another – Whether agreement formed – Account stated.
TRUSTS – Unit trust – Unitholder contributions.
Cases Cited:Ambridge Investments Pty Ltd v Baker & Ors [2010] VSC 59; Bank of New South Wales v Brown (1983) 151 CLR 514; Hardy Wine Company Ltd v Janevruss Pty Ltd [2006] VSCA 28; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; Pegela Pty Ltd & Ors v National Mutual Life Association of Australasia Ltd [2006] VSC 507; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; York Air Conditioning and Refrigerating (A/asia) Pty Ltd v Commonwealth (1949) 80 CLR 11.
Judgment:The plaintiff’s claim is dismissed.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Sowden | Zervos Lawyers |
| For the Defendants | Mr A Metaxas | DJH Pty Ltd |
HIS HONOUR:
Introduction
1 The plaintiff (“Cuthbert”), a hotelier and developer, entered an agreement with the second defendant (“Perrine”), an architect and director of the first defendant (“Perrine Architecture”), to assist in preparing documentation for development approval of a commercial property development in Yeppoon, Queensland (“the Yeppoon development”). Separately, Cuthbert and Perrine formed a business arrangement for the development of Boyne Island (“the Boyne Island development”). The issues in this case concern the liability of Perrine Architecture or Perrine to repay what Cuthbert alleges were two loans: one of $100,000 to Perrine Architecture or Perrine in relation to the Yeppoon development (“the first loan”); the other of $24,207 to Perrine in relation to the Boyne Island development (“the second loan”).
The first loan
2 Cuthbert, through a company he controlled, Brookport Holdings Pty Ltd (“Brookport”), purchased a parcel of land of about 6000 square metres at Yeppoon, Queensland, in about 2003. He intended to demolish the existing structures on the land and construct a multi-storey building comprising residential and retail spaces and a car park.
3 Cuthbert engaged Perrine Architecture to assist with the development approval application process for the Yeppoon development, having previously engaged Perrine and his company on a project of similar scale in Mullaloo, Western Australia.
4 Cuthbert, on behalf of his development company, agreed with the local Livingstone Shire Council (“the Council”) that the proposed car park requirements would be satisfied by expanding and developing the proposed car park not only on the land owned by Cuthbert but also, in part, on land owned by the Council. The Council land was immediately adjacent to the Yeppoon development land.
5 Pursuant to a written agreement between Perrine Architecture and Brookport, Perrine was to draw up architectural plans for the Yeppoon development. After discussions with the Council, it was agreed that the fees of Perrine Architecture in relation to its work on the car park were to be paid partly by Brookport and partly by the Council. It was in connection with this arrangement that Cuthbert’s first claim arises. Cuthbert alleges that he lent $100,000 to Perrine Architecture or Perrine as a temporary measure until the Council paid the monies it owed.
6 On 27 January 2007, Brookport or Rennet Pty Ltd (“Rennet”), a company that Cuthbert controlled, paid $100,000 into the bank account of Perrine Architecture. This transfer is central to the disputed issues between the parties on the first loan, namely:
(a) whether it was a loan; and, if so
(b) who were the parties to the loan.
(a) The plaintiff’s evidence
(i) Brett Cuthbert
7 According to Cuthbert, in about January 2007 Perrine, either on behalf of Perrine Architecture or in his own capacity, approached Cuthbert requesting a loan of $100,000.
8 On 25 November 2006, Cuthbert sent an email to Perrine stating that in relation to the works that were commissioned by the Council and for which it agreed to pay, Brookport would pay these fees if the Council failed to pay or as late in payment. Cuthbert said that, as a result of this email, there were several conversations between himself and Perrine in the period between 25 November 2006 and 11 January 2007.
9 Cuthbert said that he had discussions with David Shannon (“Shannon”), his business partner, prior to the email of 25 November, regarding what was owing to Perrine Architecture by the Council. According to Cuthbert, he told Shannon that he would pay personally what was owing, and that he had communicated this to Perrine.
10 Cuthbert said that Perrine approached him for a loan on the basis that it would save Perrine from having to “close up shop”. Cuthbert stated that, at the time that he and Perrine arranged the loan, he told Perrine that that he would pay the loan personally to prevent this consequence.
11 Cuthbert alleged that on 27 January 2007 he arranged for a payment of $100,000 to Perrine Architecture or Perrine through Rennet. The bank statement recorded the payment of $100,000 to the account of Perrine Architecture.
12 A fundamental aspect of Cuthbert’s case was that the money was his. He said that he was “constantly putting money in[to]” Rennet. This was the basis on which Cuthbert claimed that the $100,000 he lent to Perrine or Perrine Architecture gave rise to a debt payable to him personally, rather than to Rennet (or Brookport). Cuthbert also alleged that, at the time he told Perrine that he would give him a loan, he informed Perrine that he would lend the money personally.
13 Cuthbert claimed that Perrine acknowledged the $100,000 had been advanced to Perrine Architecture on Cuthbert’s behalf, and this acknowledgment was allegedly contained in emails dated 22 January 2007 and 27 May 2008.
14 Cuthbert gave evidence regarding several instances in which he alleged that Perrine acknowledged his indebtedness to Cuthbert personally. In particular, he referred to the following documents:
· An email dated 27 May 2014, in which Perrine wrote to Cuthbert saying, “On that basis we will refund you your $100,000”.
· An email dated 9 June 2008, in which Perrine wrote to Cuthbert saying, “Mercedes has been chasing down rent so we can pay back your $100,000. As soon as she collects that rent, we will credit your account”.
· An email dated 1 July 2008, in which Perrine wrote to Cuthbert saying, “I am today arranging an extension to my OD [overdraft] by providing further security to pay you out the agreed 100k”.
15 Cuthbert also gave evidence regarding numerous emails between the parties in which he referred to the $100,000 as “my money”. Cuthbert alleged that, because there was no correction by Perrine in his replies to those emails, these emails and their replies constituted acknowledgments by Perrine that the $100,000 was in fact Cuthbert’s personal money.
16 According to Cuthbert, on or about 22 May 2008 Bill Ludwig, the mayor of Yeppoon, informed Cuthbert that the outstanding amount in relation to the Yeppoon project had been paid to Perrine Architecture. As a result of this discussion, Cuthbert sent an email to Perrine that day, in which he provided his bank account details and requested repayment of the $100,000 loan. The account was in the name of B and JL Cuthbert at the National Australia Bank.
17 On 15 August 2008, Matthew Shaw, who was Perrine’s personal assistant, sent an email to Cuthbert regarding repayment of the $100,000. That day, Cuthbert received $20,000 from Perrine Architecture, which Cuthbert said was paid into his personal mortgage account. Cuthbert gave evidence that he received a further $20,000 into his personal mortgage account from Perrine Architecture on 22 August 2008. Cuthbert alleges that he has not been paid any further funds in relation to the loan.
(ii) David Shannon
18 Shannon gave evidence that he was the person responsible for arranging the transfer of the $100,000 to Perrine Architecture. This is corroborated by Cuthbert, who agreed that he gave Shannon instructions to transfer the $100,000 to Perrine. In the banking records, the reference next to the $100,000 transfer is “brookport”. Shannon said that this reference was put down on Cuthbert’s instructions.
19 Aspects of Shannon’s evidence supported the defendants’ contention that the $100,000 was a payment by Brookport to Perrine Architecture, rather than a loan from Cuthbert to Perrine. For example, Shannon said that he recalled a conversation where Cuthbert suggested Brookport make a payment to Perrine Architecture, and Shannon referred to the transfer of the $100,000 by saying that Cuthbert “asked [him] to pay the bill”.
20 Further, Shannon had no recollections of conversations with Cuthbert about Cuthbert making a personal loan to Perrine in or around November 2006. Shannon seemed to have some idea about the fact that Cuthbert said that it was a personal loan to Perrine, but he was not able to give any evidence of contemporaneous discussions with Cuthbert regarding any personal loan to Perrine prior to, or at the time of, the $100,000 being transferred.
21 Shannon’s evidence regarding the first loan was not of contemporaneous discussions with either Cuthbert or Perrine prior to, or at the time of, the transfer of funds. Rather, Shannon was only able to give evidence about what Cuthbert had said to him after the funds had been transferred. Shannon was either not present for, or could not recall, the telephone conversation between Cuthbert and Perrine on 25 January in which Cuthbert and Perrine had a discussion about the $100,000. Overall, his evidence in relation to the first loan was vague and general. He was unable to give relevant direct evidence of conversations.
(b) Perrine’s evidence
22 Perrine gave evidence that Cuthbert negotiated an agreement with the Council where the Council would allow Brookport to build part of the car park on the Council’s land. As part of that agreement, Brookport would pay for part of the car park that was necessary to fulfil the development approval, and the Council would pay for the extra capacity of the car park. Perrine Architecture would be responsible for design documentation, civil engineering, structural engineering and all consulting works in relation to the car park.
23 On about 6 November 2006, Perrine Architecture sent an invoice to the Council for $146,272.50 for architectural works in connection with the car park. Brookport was copied in to this invoice.
24 On 16 November 2006, Perrine met with Shannon in Perth, and there were discussions regarding the outstanding amount owed by the Council to Perrine Architecture. Shannon could not recall this meeting.
25 On 24 November 2006, Cuthbert emailed Perrine, saying “Brookport has stated that it will pay you these fees if the LSC fail to pay or are late on payment”. According to Perrine, this email was the result of a conversation that he had with Cuthbert two days prior to the email being sent. In that conversation, Perrine told Cuthbert that he had met with Shannon in Perth, and Perrine Architecture’s consultants were upset that they had not been paid despite Perrine Architecture having rendered an invoice to the Council. In response, according to Perrine, Cuthbert said that he would make enquiries with his bank in relation to the matter and that he would come back to Perrine.
26 By mid-December 2006, the Council had not paid the invoiced amount. Perrine said that, at about this time, he phoned Cuthbert and asked Cuthbert to contact the Council and ensure that the amount in the invoice was paid before Christmas 2006.
27 Perrine said that he spoke to Cuthbert by telephone on 22 January 2007. In the course of that conversation, according to Perrine, he told Cuthbert that the payment by the Council was still outstanding and Perrine needed to know when the payment would be made. Cuthbert informed Perrine that there were unresolved issues between the Council and Brookport which Cuthbert hoped would be resolved within two days.
28 Perrine’s evidence regarding the events of 25 January 2007 was as follows:
(a)Perrine spoke to Cuthbert by telephone and said to him words to the effect that:
· no payment had been made by the Shire;
· Brookport was responsible for Perrine Architecture doing the works for the Council, as part of the Yeppoon project; it was clear that the cause of the money not being paid to Perrine Architecture was the unsigned infrastructure agreement between Brookport and the Council;
· Brookport should pay Perrine Architecture the outstanding amount owed by the Council in relation to those works;
· Perrine Architecture would refund the money paid by Brookport in respect of the architectural services done for the Council when payment was received from the Council.
(b)During the course of the telephone conversation, Cuthbert told Perrine that if Perrine Architecture sent a tax invoice to Brookport for $100,000, which was a discounted amount of the outstanding fees owed by the Council, then Brookport would pay the invoice that day. Perrine agreed to accept this discounted amount to be paid immediately.
(c)Perrine Architecture sent an invoice to Brookport for $100,000. Perrine’s evidence was that this invoice was issued pursuant to the written agreement between Brookport and Perrine Architecture, signed by the parties on 27 March 2006, which entitled Perrine Architecture to charge fees for its architectural services and to submit regular invoices for progressive payments of these fees.
(d)$100,000 was paid into the bank account of Perrine Architecture. The transaction description on the bank account stated “RENNET P/L MULLA brookport holdings”.
29 On 27 May 2008, the Council paid Perrine Architecture $132,975 in relation to the Yeppoon works. Perrine spoke to Cuthbert by phone and advised him that the Council had made the final payment. Cuthbert told Perrine that he would send Perrine the details of the account into which the moneys that were due back could be paid. The account details which were given to Perrine by Cuthbert were for Cuthbert’s own account. Perrine gave evidence that this did not surprise him, as he expected to repay Brookport. He said that Cuthbert made it clear that he controlled Brookport and that it did not matter that the moneys were paid into his personal account.
30 On 13 August 2008, Perrine Architecture paid $20,000 to Brookport. Perrine gave evidence that this was part of the $100,000 owed to Brookport. On 22 August 2008, there was a further transfer from Perrine Architecture to Brookport of $20,000.
Consideration
31 Cuthbert asked the Court to infer that Perrine did not question why he was to repay $100,000 into Cuthbert’s personal mortgage account because he knew that the loan had been paid by Cuthbert personally through Rennet. I do not find this to be a persuasive argument. It is not the responsibility of Perrine, personally or on behalf of Perrine Architecture, to question what account Cuthbert wanted the funds paid into.
32 I accept the plaintiff’s allegation that the $100,000 (paid by Brookport or Rennet) was a loan to Perrine Architecture. I do not, however, accept the plaintiff’s allegation that this loan was between Cuthbert and Perrine personally. Rather, I consider that the loan was between Brookport (or Rennet) and Perrine Architecture.
33 Primarily I take this view because, viewed objectively, there is no proper basis to conclude that Cuthbert personally was the lender. The evidence discloses that the Cuthbert entity in the Yeppoon Project was Brookport. This company was referred to on the NAB payment document evidencing the payment into the Perrine Architecture account. Shannon recalled a conversation with Cuthbert where reference was made to Brookport making the $100,000 payment to Perrine Architecture.
34 I also note the clear evidence (both documentary and from Cuthbert) that the money paid to Perrine Architecture came from the Rennet account. Whether the loan was from Brookport or Rennet, it was not from Cuthbert. The fact that Cuthbert might be a director or shareholder in both companies and control one or both of them makes no difference. Nor is it relevant that Cuthbert does not distinguish, carefully or at all, between personal and corporate funds. They are legally distinct. It is similar to Cuthbert’s failure to distinguish between corporate and individual authority in another context. For example, early in his evidence, Cuthbert said that he bought the land and hotel at Yeppoon years ago with the intention of redeveloping. He later acknowledged that Brookport, not he, was the purchaser.
35 Further, the fact that Cuthbert directed Perrine to repay the money into a particular account does not mean that the account holder was the lender. Here, even if that were the case, it would mean that Cuthbert and his wife were joint lenders because Perrine Architecture repaid the money into their joint account. Mrs Cuthbert is not a party to the litigation or the claim made by her husband.
36 Both Cuthbert and Perrine seemed credible in their evidence, even though they had competing viewpoints and Cuthbert was loose in his language in terms of not distinguishing clearly between himself and the entities he controlled. As a witness, Shannon had difficulty remembering specific conversations and meetings, and was therefore unhelpful as an independent verifier of the facts alleged. Though voluminous correspondence occurred after the $100,000 was transferred, it was reflective of the subsequent conduct of the parties rather than their intentions prior to and at the time of the agreement in relation to the $100,000. I therefore place significant weight upon the contemporaneous documents regarding the $100,000. These documents, in particular the invoice from Perrine Architecture and the bank records from Rennet, do not contain references to Cuthbert personally.
37 Cuthbert referred to correspondence from the defendants in which Perrine, or at times his wife, referred to the $100,000 as “Brett’s money”. Cuthbert argued that these were acknowledgments by the defendants that the loan was a personal loan from Cuthbert. I do not agree with these submissions. It seems to me that both parties had a habit of referring to their various corporate entities as “Cuthbert” and “Perrine” rather than by the actual company names.
38 Furthermore, in relation to the subsequent correspondence between the parties, there were several emails in which Perrine made suggestions that were contrary to what Cuthbert now pleads was the original agreement regarding the loan. Cuthbert never corrected him, nor was there any contemporaneous evidence to support Cuthbert’s story, despite the position now adopted by Cuthbert in his statement of claim and his evidence. There were also no emails, prior to litigation being commenced, in which Cuthbert made clear his contention in relation to the first loan in the fashion that was subsequently pleaded.
39 There was no conduct by estoppel pleaded, nor was estoppel by convention pleaded. I do not agree with Cuthbert’s contention that, though the money was paid via Rennet with a reference to Brookport, the fact that Cuthbert used to transfer money in and out of Rennet at will meant that the $100,000 represented his personal funds and the loan was consequently a personal loan from him. Both Cuthbert and Perrine were experienced businessmen associated with various companies that dealt with significant amounts of money. Both Cuthbert and Perrine were, or should have been, aware of the distinction between personal property and corporate property.
40 If, as Perrine suggested, the $100,000 was not a loan but rather an agreement to accept a reduced sum in lieu of what he was owed by the Council, then there would be no reason for Perrine Architecture to pay Cuthbert’s personal mortgage account $20,000 on two separate occasions. During the course of his evidence, Perrine acknowledged that he expected to repay Brookport. Further, there were various emails in which Perrine referred to paying back Brookport.
41 I am of the view that Rennet or Brookport paid Perrine Architecture the $100,000 in relation to works done for the Council, and Rennet or Brookport was subsequently entitled to repayment of this $100,000 upon Perrine Architecture being paid the outstanding amount by the Council. To allow Perrine Architecture to retain the $100,000 advanced by Rennet or Brookport, as well as the $132,795 eventually paid by the Council in May 2008, would be to allow Perrine Architecture to, in effect, be paid twice for the same work.
42 If, as I have concluded, the $100,000 was a loan, then I find that the proper parties were most likely Rennet and Perrine Architecture. If Cuthbert advanced to Brookport the $100,000 which was then lent to Perrine Architecture via Rennet, then Cuthbert would be owed money by Brookport, not by Perrine or Perrine Architecture. Hence, Cuthbert cannot recover from the defendants the outstanding balance of the first loan alleged to be owing.
The second loan
43 In about 2005, Cuthbert, Shannon and Perrine went into business together to redevelop land at Boyne Island with a view to creating a golf course and accommodation facilities. The corporate vehicle assigned for the running of the Boyne Island development was Boyne Tannum Pty Ltd (“the BT company”), of which Shannon was director and secretary. Cuthbert and Perrine had been directors of the BT company during the period January 2006 to 15 March 2012 and each, together with Shannon, held 10 shares in the company. An ASIC search for the BT company shows that, at the time of trial, Shannon was the sole remaining director of the company. Brookport was not a shareholder of the BT company.
44 The company served as trustee for seven distinct unit trusts, each trust relating to a separate parcel of land within the Boyne Island development. Cuthbert, Shannon and Perrine were unitholders in these trusts in the following fashion:
· Cuthbert and his wife held 267 units;
· Shannon held 200 units;
· Brookport held 200 units; and
· Arrochar Pty Ltd (“Arrochar”), of which Perrine was director and which was trustee for Perrine’s family trust, held 333 units.
45 As a matter of course, Cuthbert, Shannon and Perrine would pool money into the BT company – which did not have funds of its own – to maintain the company’s cash flow in relation to the Boyne Island development. In an email to Cuthbert and Shannon dated 24 May 2005, Perrine forecast that the likely cost for preparation of a development plan for provision to the local council for the Boyne Island development alone would be between $200,000 and $500,000. Cuthbert’s claim against Perrine relates to an amount of $24,207.29 which he allegedly paid into the BT company on Perrine’s behalf.
(a) The plaintiff’s evidence
(i) Brett Cuthbert
46 Cuthbert said that the parties would make cash contributions from time to time into the account of the BT company at the direction of Shannon. Cuthbert could not recall the specific discussions between the parties which gave rise to the agreement to adopt this process. According to Cuthbert, Shannon would send an invoice and Cuthbert would pay his share in addition to part of Brookport’s share (the other part of Brookport’s share being paid by Shannon pursuant to a separate arrangement).
47 An invoice entitled “Boyne Tannum Invoicing” (“the BT invoice”) stipulated that $66,340.48 was payable to Burchill VDM (“VDM”), an engineering consultancy that was performing civil engineering services in relation to the Boyne Island development. The document showed an apportioning of the invoiced amount in the following percentages:
“PERRINE 33%
BRETT 26.67%
DAVID 20%
BPORT 20%”
Next to the line item for “PERRINE 33%” was a corresponding amount of $24,207.29 and the words “PAID BY BRETT”. Cuthbert claimed he became aware through Shannon that VDM was pursuing Perrine for moneys owed. Separately, Perrine conveyed this fact to Cuthbert in an email dated 18 November 2009 in which Perrine stated “VDM chased me today.”
48 While Cuthbert said that he did not prepare the invoice document, he had paid the amount attributed to “PERRINE” at the request of Perrine who, according to Cuthbert, could not contribute his share until he received funds from settlement of a property development in Western Australia. This property was mentioned in an email from Perrine to Cuthbert dated 22 October 2009, in which Perrine stated among other things:
“[G]iven Perrine’s circumstances Brett will support our share of owed fees and required fees on Boyne Tannum so the process is not stalled. This will be a debt repayable by Perrine when it’s [sic] titles issue at 8 Vic Ave. The amounts are 33% of the $67k (approx.) due to VDM and the $6k required for the valuation”.
49 The property was also mentioned in an email of 7 December 2009 from Cuthbert to Perrine, in reply to Perrine’s email of 18 November 2009. The email relevantly stated:
“… As discussed last week I have paid VDM for your share of the Boyne Island project out of my families [sic] personal funds. last week you were going to clarify in writing to me our understanding that as soon as your financial position has improved and your titles issued i would be paid back this money and these dealings, have nothing to do with our ongoing dealings on other projects being Yeppoon & Mullaloo.”
50 Perrine responded to that email later that day, stating “[a]pologies Brett … I so confirm in any case (as per your email) and will provide you detailed confirmation in a few days”.
51 Cuthbert stated that he believed the Vic Avenue property belonged to Perrine personally, though in cross-examination, he conceded that he did not in fact know who owned the property.
52 Cuthbert claimed that it was a term of his paying the $24,207.29 to VDM that Perrine would repay him as soon as settlement occurred. There was no reference to interest applying to the money. Nor was it ever discussed between Cuthbert and Perrine.
53 A National Australia Bank account statement for the period 7 November 2009 to 4 December 2009 in the name of Mrs J L Cuthbert, which Cuthbert claimed was a joint bank account between him and his wife, shows a debit on 3 December 2009 which Cuthbert said represented the payment he agreed to make to VDM on behalf of Perrine. In an email from Cuthbert to Perrine dated 7 December 2009, Cuthbert referred to this money as his “family’s personal funds”, and reiterated his position that Perrine was to repay the money “as soon as [his] financial position has improved and [his] title’s [sic] issued”.
54 Cuthbert gave evidence that, pursuant to an email from Perrine dated 18 October 2011, Perrine owed Cuthbert an amount of $92,539.80. This comprised $60,000 as the unpaid amount of the first loan and the remainder was from the second loan.
55 Cuthbert could not recall meeting with Perrine at Brisbane Airport on 22 October 2009. When shown an email from Perrine to him dated the same, he appeared to then recall the meeting taking place, although did not recall reading the email on or about 22 October 2009. Cuthbert denied that Perrine had informed him at the meeting that Perrine would not pay his share of the invoice in light of the fact that he, through his companies, had already performed services for the Boyne Island development in excess of the $24,207.29. Cuthbert conceded that it was discussed from time to time in various meetings and conveyed in emails that this was Perrine’s intention at the time.
56 Cuthbert’s evidence at trial was at times inconsistent. For example, in evidence he claimed that he believed the Vic Avenue property was held by Perrine personally. During cross-examination, Counsel revealed that Cuthbert did not in fact know who owned the property. On one view, Cuthbert’s initial response in evidence was arguably self-serving insofar as it advanced his claim. On another view, it at least suggested a propensity to provide definitive responses to questions when in fact Cuthbert did not know the answer.
57 In other instances, Cuthbert demonstrated an inability to recall matters which it seems should have been within his recollection. Most saliently, Cuthbert could not recall when or where the agreement was made between the parties with regards to contributions to the BT company. Instead, Cuthbert sought to defer to the knowledge he assumed Shannon had of such matters.
(ii) David Shannon
58 David Shannon gave evidence about the process by which he arranged the pooling of funds in the BT company, stating that at the end of each month he would collate bills from the various consultants and service providers in relation to the Boyne Island development and would email Cuthbert and Perrine with a request for contributions. At the development’s outset, the BT company did not have its own bank account. Hence, the parties would pay their respective share of liabilities directly to the creditor companies which undertook the work.
59 Shannon’s initial evidence about the split of liability between the parties pursuant to the invoices he raised was that amounts owing were divided on the basis of each party’s “percentage of the actual company”. By this I infer he meant the shareholding in the BT company. During cross-examination he conceded that the table on a specific invoice showed a split amongst unitholders in the various Boyne Tannum trusts, rather than shareholders in the BT company. Notwithstanding his alleged intention that Perrine be invoiced personally for the amounts owing, he conceded that a reference to “PERRINE” was in fact a reference to Arrochar as unitholder in the BT company.
60 Shannon stated that he was responsible for generating invoices such as the one in evidence in this case and, in the case of the BT invoice, had added the “PAID BY BRETT” notation upon receiving cheques for the amount from Cuthbert. When questioned, Shannon was not able to recall how many cheques Cuthbert gave him in relation to the amount, nor was he able to recall whether the cheque or cheques were made out to VDM or to the BT company.
61 Shannon identified a number of emails he received, including one dated 27 February 2009 from Perrine and another dated 5 November 2010 from Mercedes Perrine, Perrine’s wife. The email dated 27 February 2009 expressed Perrine’s frustration in awaiting settlement of the Vic Avenue property in Western Australia, stating that “I am not even able to afford $100 payment … and firmly ‘in the hands of god’ till its [sic] sorted”. The email dated 5 November 2010 states:
“If you and/or Brett can cover our portion, obviously we will repay this with the first fees you are able to provide us for Strand.”
The reference to “Strand” was a reference to the Yeppoon development.
62 Shannon recalled a meeting in Melbourne with Perrine and his wife on or about 1 November 2010 in which the parties discussed, amongst other things, liabilities to the BT company.
63 During his evidence, Shannon was shown a copy of an email dated 1 March 2011 from Perrine to himself and Cuthbert. The copy of the email as initially reproduced in the Court Book was missing a portion of text, presumably due to defective printing or photocopying. The email featured a table appearing to show debits and credits as between the parties in relation to both the first loan and second loan. A reprinted copy showing the entirety of the email and its text was substituted for this on the third day of trial. Shannon claimed that he recalled discussing the contents of the email at some stage and “had a lot of meetings” with Perrine, though he could not recall the content of any of the meetings.
64 Shannon gave evidence in relation to a series of emails passing between himself and Perrine on 18 July 2011, and conceded that the emails did not relate to the amount of the first loan.
65 Shannon recalled a conversation, which Perrine alleged occurred during a meeting between him and Shannon in Perth on 10 August 2009 (though Shannon could not recall this date) at which Perrine said he informed Shannon that he would not make any further contributions to the BT company on the basis that, by that time, Perrine Architecture had incurred hundreds of thousands of dollars worth of costs in relation to the Boyne Island development. Shannon in his evidence was of the view that this was merely Perrine’s “position” and was not something agreed to.
66 I have reservations about the utility of parts of Shannon’s evidence. As a witness called by Cuthbert (and as his brother in law), he sought to give evidence supporting the case put forward by Cuthbert.
67 In part, Shannon’s evidence was vague or inconclusive in nature. On a number of occasions, Shannon referred to the manner in which things were “always” done or the way in which things were “always” agreed. For example, with the issue of the substance of the agreement in relation to the second loan, Shannon stated that a particular apportionment of contributions to the BT company as between Shannon, Cuthbert and Perrine “was always agreed”. I find Shannon’s tendency to generalise and his inability to substantiate matters through a lack of recollection as to specific details unhelpful and unconvincing.
(b) Perrine’s evidence
68 Perrine said that he did not request that Cuthbert lend him $24,207.29 by paying a share of the debt owed to VDM. To the extent there was any liability to pay debts in relation to the BT company, this liability rested with Arrochar as Perrine’s trustee company which held units in the trusts.
69 Perrine denied that he was impecunious at the time when contributions were due to the BT company to settle amounts owing to VDM, and said that, instead, he “chose not to pay VDM because we were significantly ahead of Brett and David in contributions and we made that absolutely clear”. Perrine made a further claim later in cross-examination, stating that an email from his wife, Mercedes Perrine, to Shannon clarified that a contribution of $25,000 had been paid to Cuthbert “in excess of our amount” (that is, the $24,207.29). I note that this claim is not reflected in the amended defence filed in the proceeding. Nonetheless, this email, dated 28 June 2011, was reproduced in the plaintiff’s Court Book and was tendered by Cuthbert. The email states:
“Hi David
I refer to the list of outstanding accounts you sent to Jean-mic on 21/6/11.
…
The payment we made totalling $25,784.62 in April 2011 brought our contributions up to date and the accounts contributed to to [sic] that point included … VDM invoices up to and including the invoice dated 25/2/11.”
70 Perrine could not recall whether VDM had been chasing him or Cuthbert for unpaid fees.
71 To the extent moneys were payable into the BT company, Perrine said that he never personally made contributions; rather, it was Arrochar that did. Perrine stated that Arrochar never paid third parties and did not raise cheques of its own but instead “accounted for moneys incurred” as part of its holding in the Boyne Tannum Trust. Although Perrine could not say so with any certainty, it appeared that he assumed that Arrochar was a flow-through entity and received loans from Perrine Architecture “or one of the other entities that our accounts would have – and created a loan account in Arrochar”. Perrine stated that Arrochar was responsible for payments into the BT company, and any reference to “Perrine” was generic and “a quirk that is part of these correspondences”.
72 Perrine gave evidence about his role in the Boyne Island development, and about a meeting held with his wife and Shannon at Perrine’s office in Perth, where they discussed contributions towards paying VDM. Perrine could not recall when this meeting took place. According to him, he informed Shannon at the meeting that neither Perrine Architecture nor Arrochar was going to contribute further funds toward paying VDM.
73 Perrine claimed that he met with Cuthbert at Brisbane Airport on 22 October 2009 and sent an email to him that same day after the meeting. Perrine gave evidence that he informed Cuthbert at that meeting that neither he nor any of his corporate entities would contribute further to the amounts owing to VDM. According to Perrine, Cuthbert said in response that he would pay Arrochar’s amount owing, and that this was captured in an email from Perrine to Tony Parker of VDM dated 10 November 2009 (to which Cuthbert was copied in).
74 Perrine understood that the agreement between the parties involved making “a series of contributions … which were in excess of each other at various times”. During cross-examination, the wording of the email of 10 November 2009 was put to Perrine. In the context of the sentence “Brett Cuthbert has graciously offered to cover my share of the amount owing to VDM for the project in the meanwhile and this has David’s support”, Perrine stated that the use of the expression “in the meanwhile” merely indicated that there was disparity in the amount of contributions to the BT company as between the parties, and that this would be “caught up”. According to Perrine, the substance of the agreement with Cuthbert was that “when the titles issued … we would inject funds in and it would bring the contributions up to date or go ahead of [Cuthbert] but give that money back”.
75 As things transpired, money was not paid from funds raised from settlement of the sale of the units at Vic Avenue.
76 Perrine gave evidence that the Vic Avenue property in Western Australia was owned by a company, Twobox Pty Ltd (“Twobox”), owned and controlled by Perrine and his wife, and comprised a subdivision of approximately 20 titles. It emerged from Perrine’s evidence that no moneys were paid to Cuthbert or to any corporate entity associated with him since settlement of sale of that property, which occurred in 2012. The mortgagee bank had repossessed the property and had proceeded to sell it, having liquidated Twobox.
77 In relation to the email dated 1 March 2011 – showing a table with debits and credits in relation to moneys paid to Cuthbert and in relation to VDM’s invoicing – Perrine stated that he prepared the table. He said that the amount of $92,539.79 shown in the “Total Owing” column of the table was the same as the amount referred to in an email from Perrine to Cuthbert and Shannon dated 18 October 2011; the amount comprised $60,000 and the remainder was in relation to the Boyne Island development.
78 To the extent there was a conflict in the evidence as between Cuthbert – personally, and through Shannon – and Perrine at trial, I prefer the evidence of the latter. Whereas the evidence of Cuthbert and Shannon was at times self-serving and inconsistent, the evidence of Perrine was more reliable and assured. Perrine acknowledged gaps in his knowledge, clarifying instances in which he was making assumptions. He was more direct and appeared not to craft his answers to create a particular impression in the way Cuthbert especially did.
Consideration
(a) The parties’ divergent understanding
79 As Cuthbert has claimed that the second loan was repayable by Perrine, Perrine’s liability to repay hinges on whether there was an agreement that the money paid would be a loan to him which was to be repaid to Cuthbert. For the reasons that follow, I do not find that Cuthbert has proved on the balance of probabilities the existence of an agreement whereby Perrine was liable to repay Cuthbert for the amount of the second loan.
80 It seems to me that the parties had differing interpretations as to the process by which contributions were to be made in relation to amounts owing to VDM (and, for that matter, amounts owing to other third party contractors performing work in relation to the Boyne Island development). It was agreed that the parties should pay their respective share pursuant to the invoicing documents generated by Shannon. Perrine understood that he and his companies would bear their own costs in relation to the Boyne Island development. This was evidenced by Mercedes Perrine’s email of 5 November 2010, which states:
“… we are carrying the costs for both Boyne Tannum and Strand for all the work we are doing.”
81 The BT invoice and its table show the liability of each of the parties for amounts owed to VDM. The “PAID BY BRETT” comment on the line showing the “PERRINE” amount owing was consistent with the amount of the second loan being paid by Cuthbert. Further, the bank statement for the joint bank account of Cuthbert and his wife evidences that they paid the amount of the second loan to VDM.
82 It does not follow, however, that the liability to repay money owed pursuant to this invoice rested with Perrine personally.
83 Cuthbert was of the view that correspondence between the parties in relation to settlement of the property in Vic Avenue, Western Australia, indicated an acknowledgement of liability by Perrine to repay the second loan. Whatever significance this evidence might otherwise have had, it was diminished notably by the fact that the properties were in fact owned by Twobox, not Perrine personally.
84 Cuthbert, Shannon and Perrine each gave evidence about the way in which the name “Perrine” could be employed loosely to mean Perrine personally, or one of the companies of which he was director. Likewise, references by Cuthbert to things which were “his” could be a reference to him, him and his wife, Brookport (or Rennet).
85 This issue of loose usage becomes relevant because, if money were repayable to Cuthbert pursuant to an agreement (which I do not find there was), it was not repayable by Perrine personally. This is because any such loan was effectively made to Arrochar as unitholder. The parties agreed on the evidence that the BT invoice reflected amounts owed by the parties in proportions consistent with their respective unitholdings in the Boyne Tannum trusts. For this reason, I think it most likely that the amount of the second loan represented a unitholder contribution, rather than a shareholder contribution.
86 It is the starting point of contractual interpretation that an agreement must be viewed objectively.[1] The High Court In Toll (FGCT) Pty Limited v Alphapharm Pty Limited stated the principles as follows:
“This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principles of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”[2]
[1]See, eg, Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; Pegela v National Mutual Life Association [2006] VSC 507
[2](2004) 219 CLR 165 at 179; see also Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-2
87 Whatever the understanding between the parties as to the meaning of “Perrine” and the identity of who each party believed should be liable for repayments, I do not agree with Cuthbert’s claim that an agreement was made between himself and Perrine for repayment of the second loan. As I have discussed, a variety of expressions were used in the correspondence between the parties to refer to either the natural persons or the corporations in which they had a controlling interest. Viewed objectively, the BT invoice – which formed the basis for quantifying the amounts payable by the parties to VDM – called for payments to the BT company for on-payment to VDM. Contributions to the BT company, as trustee company of the various unit trusts in relation to the Boyne Island project, were therefore unitholder contributions. The parties’ respective unitholdings have been discussed above. The only way in which Perrine might have been personally liable to pay would be in the event that the contributions to the BT company as trustee of the Boyne Tannum trusts were to be shareholder contributions.
(b) Post-contractual conduct
88 Counsel for the plaintiff argued that post-contractual conduct should be taken into consideration by the Court in determining the boundaries of the agreement between the parties.
89 It has been held that post-contractual conduct may be probative in ascertaining the fact of the existence of an agreement. Vickery J in Ambridge Investments Pty Ltd v Baker & Ors[3] analysed the body of Australian authority on the subject, and in setting out “the relevant principles which apply to the admission of evidence relating to the existence of a binding agreement which arises by implication and its terms”, stated:
“8. Evidence of conduct which took place subsequent to the commencement of a commercial relationship is not admissible to resolve what the contract means, however, it may be admitted on the question as to whether and when a contract was formed and the content of its terms;
9. Subsequent conduct may therefore be used to determine the essential elements of the agreement in question, but not the construction of its terms …”[4]
[3][2010] VSC 59
[4]Ibid at [203]
90 It may be that Cuthbert paid what he believed to be Perrine’s share of liability owing to VDM, and on that footing believed that an agreement was made which entitled him to repayment by Perrine of that amount. However, the legal mechanics of unitholder contributions – which mean that the liability to pay VDM was that of Arrochar as unitholder, rather than Perrine personally – results in a different outcome. As stated in Pegela v National Mutual Life Association:
“… a court will not be authorised to make a better contract for parties because the provisions upon which the parties have agreed results in inconvenience to one or both of them.”[5]
[5][2006] VSC 507 at [176]; see also Hardy Wine Company Ltd v Janevruss Pty Ltd [2006] VSCA 28 at [11].
91 For this reason, even if one were to accept that there was an agreement between the parties in relation to a debt arising from Cuthbert’s payment of $24,207.29, and to do so on the basis of post-contractual conduct, this does not aid Cuthbert in claiming that the agreement was between him and Perrine personally.
92 In dealing with the issue of the second loan, I expressly do not make any finding that the payment of the $24,207.29 constituted a loan to Arrochar. Rather, I do not need to decide the point. Assuming for the purposes of the argument that it did constitute a loan, the borrower was not Perrine or Perrine Architecture. Hence, assuming without deciding that Cuthbert made the loan, he cannot recover it from either defendant.
Account stated
93 During the proceeding, Cuthbert relied upon various documents which he said demonstrated that Perrine accepted that he had a responsibility to repay debt owed to Cuthbert personally. He contended that such admissions or acknowledgments evidenced liability under an account stated. For example:[6]
· Cuthbert claimed that the email dated 10 November 2009 from Perrine to Tony Parker of VDM, on which Cuthbert was copied in, represented an “account stated” and an acknowledgement of a debt owed by Perrine to Cuthbert. Cuthbert pleaded this in the alternative to there being a loan agreement regarding the second loan.[7]
· Cuthbert also submitted that the email of 18 October 2011 from Perrine to him, where Perrine set out the “amounts you [that is, Cuthbert] think is [sic] owed to you”, evidenced an acknowledgement of indebtedness.
[6]In addition to other documents referred to earlier in the judgment
[7]I do not consider Cuthbert proved this agreement.
94 Counsel for the plaintiff submitted that, should an account stated be made out on the facts, it would cast an onus on the defendants to rebut the presumption that a debt was due to Cuthbert.
95 In Bank of New South Wales v Brown,[8] Brennan J discussed the two forms that an account stated may take. Citing existing authority, Brennan J stated:
“An account stated may take either of two forms (per Jordan CJ in Commonwealth Dairy Produce Equalisation Committee Ltd v McCabe). The two forms are explained by Viscount Cave in Camillo Tank Steamship Co Ltd v Alexandria Engineering Works:
‘The expression “account stated”, as Mr Jowitt pointed out in his able argument, has more than one meaning. It sometimes means a claim to payment made by one party and admitted by the other to be correct. An account stated in this sense is no more than an admission of a debt out of court; and while it is no doubt cogent evidence against the admitting party, and throws upon him the burden of proving that the debt is not due, it may, like any other admission, be shown to have been made in error. This is the plain result of the authorities such as Perry v Attwood and Laycock v Pickles. Where the transaction is of this character, it makes no difference whether the account is said to be stated or to be “stated and agreed”; the so-called agreement is without consideration and amounts to no more than an admission. There is a second kind of account stated where the account contains items both of credit and debit, and the figures on both sides are adjusted between the parties and the balance struck. This is called by Mr Justice Blackburn, in Laycock v Pickles, a “real account stated” …’
…
Although the former kind of account stated, being an acknowledgement of a debt, infers a promise to pay (per Viscount Haldane in the Camillo Case), the existence of the debt can be rebutted (Siqueira v Noronha). The acknowledgement does not discharge or require the discharge of the items on either side of the account. By contrast, the latter kind of account stated requires the discharge of the items on either side of the account, whatever their character, as consideration for a new liability created in their place.”[9]
[8](1983) 151 CLR 514
[9]Ibid at 535-6
96 Turning to each of the emails of 10 November 2009 and 18 October 2011, I do not consider that either of these emails amounts to an acknowledgment of indebtedness and an account stated within the meaning of the law.
97 As regards the email of 18 October 2011, it seems to me that the expression “the amounts you think is owed to you” does not amount to an acknowledgement of indebtedness. Rather, Perrine in this communication is seeking clarification from Cuthbert. Wilson J of the High Court in York Air Conditioning and Refrigerating (A/asia) Pty Ltd v Commonwealth held that, in order for a communication to be construed as an acknowledgement of indebtedness sufficient to give rise to an account stated, “the admission of the liability and of the amount due must be absolute”.[10] Although the statement made by Perrine in 18 October 2011 email contemplates an “absolute” amount, insofar as it is referable to a calculation prepared by Perrine in the table attached to the email of 1 March 2011, it does not does contain an admission of liability in “absolute” terms.
[10](1949) 80 CLR 11 at 33. See also Julian Bailey, “Lewis v Wilson: Account Stated Rears Its Ugly Head” (1997) 12 Journal of Contract Law 162.
98 In any event, the communication does not stipulate that the amount should be owed by Perrine personally to Cuthbert, and thus does not overcome the point that payments were more probably unitholder contributions rather than shareholder contributions.
99 The email of 10 November 2009 neither states an absolute amount owing nor contains an absolute admission of liability. Perrine in the email refers to “my share”, though he does not quantify this. In my view, the fact that, as the email describes, one party notes that another person has “graciously offered” to temporarily cover the first party’s share of an amount owing does not constitute an admission of liability with respect to repayment. I do not consider the email amounts to a sufficiently clear admission of liability for the purposes of being an account stated.
100 As noted earlier, the parties in this case have adopted loose or imprecise language at different times in their communications. Without stronger evidence or a different pleading, I do not consider it appropriate that the court should ignore the objectively known facts and contemporary documents which constitute the factual matrix within which the interaction between the parties took place. The court is not at liberty to ignore this objective context. On the contrary it must have regard to it. Contract law is fundamental to the operation of commercial relationships in society. Absent the factors referred to above, the court should not allow the inexact language used by the parties to detract from, and override, the objectively ascertained context.
Conclusion
101 Subject to hearing from counsel as to the final form of orders, I propose to order that:
(a)The plaintiff’s claim is dismissed.
(b)The plaintiff pay the defendants’ costs of the proceeding, including reserved costs, to be taxed in default of agreement.
- - -
8
0