Di Natale v Hatch
[2024] VSC 575
•18 September 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 00488
| GIOACCHINO DI NATALE (known as JACK DI NATALE) the Executor appointed under the will of the late KEVIN RICHARD McCROHAN | Plaintiff |
| v | |
| HARRY HATCH | Defendant |
---
JUDGE: | Waller J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 August 2024, last submissions received 12 August 2024 |
DATE OF JUDGMENT: | 18 September 2024 |
CASE MAY BE CITED AS: | Di Natale v Hatch |
MEDIUM NEUTRAL CITATION: | [2024] VSC 575 |
---
RESTITUTION – Money had and received – Funds advanced to the defendant for the purchase of shares to be registered in the plaintiff’s name – Restitutionary damages for failure of consideration – Defendant absent at trial.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr PW Collinson KC with Mr R Boadle | Kingdon Lawyers |
| No appearance for the Defendant |
HIS HONOUR:
A. INTRODUCTION
The defendant, Harry Hatch, was a friend of the late Kevin Richard McCrohan and occasionally gave Mr McCrohan recommendations in relation to share investments.
Between 14 August 2015 and 12 September 2017, Mr McCrohan paid Mr Hatch a total of $3,880,000 to purchase shares for Mr McCrohan in various companies.
Despite paying that amount, none of the shares were registered in Mr McCrohan’s name when they were purchased. Instead, the shares were registered in the name of Mr Hatch or Gasmere Pty Ltd (‘Gasmere’), a company controlled by Mr Hatch.
In 2022, after this proceeding had been commenced, Mr McCrohan died. The plaintiff, Gioacchino Di Natale, is the executor of the estate of the late Mr McCrohan. Mr Di Natale, on behalf of Mr McCrohan’s estate, seeks restitutionary damages of $3,573,126.44 plus interest.
For the reasons set out below, the plaintiff should be awarded restitutionary damages in the amount sought, together with interest.
B. THE ABSENCE OF THE DEFENDANT AT TRIAL
On 11 October 2023, Connock J fixed the proceeding for trial to commence on 5 August 2024.
On 28 June 2024, my chambers emailed both parties’ solicitors confirming that the trial was scheduled to commence on 5 August 2024.
On 19 July 2024, Woronczak JR granted leave to the defendant’s solicitors, Pointon Partners, to file and serve a notice of ceasing to act pursuant to r 20.03(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
On 1 August 2024, my chambers emailed the plaintiff’s solicitor and Mr Hatch, asking both parties to confirm their readiness to proceed with the trial.
The Court has received no communication from Mr Hatch since his solicitors ceased to act for him.
Mr Hatch was absent when the trial commenced on 5 August 2024. As both parties were given reasonable notice and no application was made to adjourn the trial, I determined that the trial should proceed.[1]
[1]See Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 49.02(1)(b).
Where a defendant does not attend a trial, the plaintiff must still establish their case by evidence in order to obtain judgment. The plaintiff is then entitled to the relief claimed in the statement of claim.[2]
[2]See Stone v Smith (1887) 35 Ch D 188, 189 (Kekewich J); Macquarie Bank Ltd v Seagle (2005) 146 FCR 400, 406–7 [24] (Conti J); Electrolux Home Products Pty Ltd v Delap Impex KFT (2015) 110 IPR 164; [2015] FCA 62, 169–70 [24].
To prove the amounts of money paid by Mr McCrohan to Mr Hatch, the plaintiff relied on various admissions made by Mr Hatch (through his lawyers) contained in his pleadings, written submissions and a table of transactions which Connock J ordered each of the parties to prepare.[3] A lawyer has implied authority to make admissions on behalf of their client during litigation, either for the purposes of dispensing with proof at trial or in certain other respects.[4]
[3]Defendant’s Table of Transactions filed on 11 November 2022 pursuant to the order of Connock J dated 12 October 2022 (‘Defendant’s Table’); Transcript of Proceeding (5 August 2024) 5.5-5.10, 6.17–6.21, 9.14–9.19 (‘Transcript’).
[4]Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314, 318–19 [18]–[19], [34] (Rares J), cited in Slea Pty Ltd v Connective Services Pty Ltd (No 9) [2022] VSC 136, [429] (Robson J), undisturbed on appeal in Millsave Holdings Pty Ltd v Connective Group Pty Ltd [2023] VSCA 326, [105] (McLeish and Macaulay JJA, Lyons JA agreeing at [1053]–[1054]).
Whether an admission in the defendant’s documents constitutes an admission pursuant to s 87 of the Evidence Act 2008 (Vic) is a question of fact in the circumstances.[5]
[5]Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (2022) 404 ALR 553, 569–70 [98] (Downes J), quoting Australian Competition and Consumer Commission v Pratt (No 3) (2009) 175 FCR 558, 593–5, [70], [72]–[73]; Capic v Ford Motor Company of Australia (2021) 154 ACSR 235, 419–20 [815]–[817] (Perram J), reversed (2023) 300 FCR 1 but not on the question of admissions, special leave granted by the High Court in Capic v Ford Motor Company of Australia Pty Ltd [2024] HCASL 27.
Further, the defendant’s defence must be weighed in light of his failure to lead any evidence at trial. As the High Court of Australia has recognised in Australian Securities and Investments Commission v Hellicar,[6]
[d]isputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led. Principles governing the onus and standard of proof must faithfully be applied. And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken into account in determining whether a party has proved its case to the requisite standard.
[6](2012) 247 CLR 345, 412 [165] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) (‘Hellicar’).
In G v H, Brennan and McHugh JJ stated:[7]
when a court is deciding whether a party on whom rests the burden of proving an issue on the balance of probabilities has discharged that burden, regard must be had to that party’s ability to adduce evidence relevant to the issue and any failure on the part of the other party to adduce available evidence in response.
[7](1994) 181 CLR 387, 391–92, quoted in Hellicar (n 6) 441 [250] (Heydon J).
In the circumstances, I consider that it is appropriate to treat representations made in documents filed by Mr Hatch and his lawyers as admissions, to the extent that they establish the amounts of money paid by Mr McCrohan to Mr Hatch and the fact that the shares when purchased were not registered in Mr McCrohan’s name.
C. FACTUAL BACKGROUND
Strandline Funds
On 8 October 2015, Mr McCrohan paid Mr Hatch $210,000 to purchase shares in a company known as Strandline Resources Limited (‘Strandline Funds’).[8] Mr Hatch has admitted to receiving the Strandline Funds ‘in respect of the issue of shares in Strandline’[9] or to ‘purchase shares in [Strandline] for [Mr McCrohan]’.[10]
[8]Second Further Amended Statement of Claim filed on 24 June 2022, [2] (‘Statement of Claim’); Plaintiff’s Table of Transactions filed on 28 October 2022 pursuant to the order of Connock J dated 12 October 2022, 1 (‘Plaintiff’s Table’); Court Book filed on 28 April 2024, 221–6, 763–70 (‘CB’).
[9]Second Amended Defence filed on 18 November 2022, [2](a) (‘Defence’).
[10]Defendant’s Table (n 3) 1.
Mr Hatch may have applied the Strandline Funds for the purchase of 30,000,000 Strandline shares (‘Strandline Shares’),[11] but, assuming this occurred, he failed to register those shares in Mr McCrohan’s name.[12]
[11]Statement of Claim (n 8) [3]; Defence (n 9) [3](a); Defendant’s Table (n 3) 1.
[12]Statement of Claim (n 8) [3]; Defence (n 9) [3](b).
Consolidated Zinc Funds
Between 21 September 2015 and 16 May 2016, Mr McCrohan paid Mr Hatch $330,000 to purchase shares in a company known as Consolidated Zinc Limited (‘Consolidated Zinc Funds’).[13] Mr Hatch has admitted receiving the Consolidated Zinc Funds ‘in respect of the issue of shares in Consolidated Zinc’.[14]
[13]Plaintiff’s Table (n 8) 1–2; CB (n 8) 218–19, 245–8, 274–9.
[14]Defence (n 9) [15](a).
To the best of Mr McCrohan’s knowledge, Mr Hatch applied the Consolidated Zinc Funds for the purchase of 6,600,000 Consolidated Zinc shares (‘Consolidated Zinc Shares’),[15] but, assuming this occurred, Mr Hatch failed to register those shares in Mr McCrohan’s name.[16]
[15]Statement of Claim (n 8) [16]; Defence (n 9) [16](a).
[16]Statement of Claim (n 8) [16]; Defence (n 9) [16](b).
Prenolica Funds
Between 14 August 2015 and 16 March 2016, Mr McCrohan paid Mr Hatch $450,000 to purchase shares in a company known as Prenolica Limited (‘Prenolica Funds’).[17] Mr Hatch has admitted receiving the Prenolica Funds ‘in respect of the issue of shares in Prenolica’[18] or ‘to purchase shares in [Prenolica] for [Mr McCrohan]’.[19]
[17]Statement of Claim (n 8) [28]; Plaintiff’s Table (n 8) 2–3; CB (n 8) 197–208, 209–17, 240–1, 263–8.
[18]Defence (n 9) [28](a).
[19]Defendant’s Table (n 3) 4–7.
To the best of Mr McCrohan’s knowledge, Mr Hatch applied the Prenolica Funds for the purchase of 15,000,000 Prenolica shares (‘Prenolica Shares’),[20] but, assuming this occurred, Mr Hatch failed to register those shares in Mr McCrohan’s name prior to the commencement of this proceeding.[21]
[20]Statement of Claim (n 8) [29]; Defence (n 9) [29](a), [29A](a); Defendant’s Table (n 3) 4–7.
[21]Statement of Claim (n 8) [29]; Defence (n 9) [1M].
In his original defence, Mr Hatch alleged that Prenolica shares ‘have been issued by Prenolica but are retained by Prenolica for Kevin’s benefit as treasury stock’.[22] Mr Hatch particularised that allegation by stating that ‘[t]reasury stock consists of shares in a company held by the company pending transfer to the shareholder, in this case the plaintiff.’[23] In his subsequent defences, Mr Hatch amended the allegation to allege that Prenolica shares ‘were issued by Prenolica and retained by Prenolica’. It now appears from subpoenaed documents that Mr Hatch’s amended defence came about because he contacted Prenolica in or around October or November 2021, requested Prenolica to transfer Prenolica shares from Gasmere to Mr McCrohan and requested that Prenolica records be backdated to appear as though Mr McCrohan had been a Prenolica shareholder since 4 October 2017.[24] It appears from a contemporaneous document that Mr Hatch considered the transfer of Prenolica shares to Mr McCrohan ‘super important and need[ed] to be done urgently…’.[25]
[22]Defence filed 10 May 2021, [1M].
[23]Defendant’s Response to Request for Further and Better Particulars dated 30 September 2021, [5].
[24]CB (n 8) 847–80; Witness Outline of Harry Hatch filed on 26 September 2022, [31] (‘Hatch Witness Outline’).
[25]CB (n 8) 847.
Heurston Funds
Between 12 February 2016 and 12 September 2017, Mr McCrohan paid Mr Hatch $2,890,000 to purchase shares in a company known as Heurston Group PLC (‘Heurston Funds’).[26]
[26]Statement of Claim (n 8) [41]; Plaintiff’s Table (n 8) 3–8; CB (n 8) 230, 233–6, 255–6, 261–2, 280–1, 282–6, 297–304, 306–11, 326–7, 339–45, 412, 423–8, 434–8, 440–5, 451–2, 455, 458–63, 771–8.
Mr Hatch’s position on the Heurston Funds changed over the course of the proceeding. In his initial defence, Mr Hatch admitted that Mr McCrohan paid ‘sums of money in respect of the issue of shares in Heurston’ and that Mr Hatch applied ‘the sums of money…to the issue of shares in Heurston’.[27] Mr Hatch particularised those admissions by stating that the ‘sums of money’ were amounts totalling only $580,000.58.[28] In his witness outline filed on 26 September 2022, Mr Hatch changed his position by admitting that he received $2,233,126.44 from or on behalf of Mr McCrohan for the purchase of Heurston shares.[29] Finally, in the Defendant’s Table, Mr Hatch admitted receiving $2,583,126.44 for the purchase of Heurston shares.[30]
[27]Defence filed 10 May 2021, [41](a), [42](a). Heurston had a significant shareholding in a company known as Streamark — references to Streamark in evidence may be read as references to Heurston: Transcript (n 3) 36.3–36.14, 73.25–73.29.
[28]Defendant’s Response to Request for Further and Better Particulars dated 30 September 2021, [21], [23].
[29]Hatch Witness Outline (n 24) [32]–[35].
[30]Defendant’s Table (n 3) 8–19.
As at the time of trial, Mr Hatch has admitted receiving $2,633,126.44 of the Heurston Funds and in effect admitted that $2,583,126.44 of those funds were received for the purchase of Heurston shares.[31]
[31]Defence (n 9) [41]–[41A]; Defendant’s Table (n 3) 8–19.
To the best of Mr McCrohan’s knowledge, Mr Hatch applied the Heurston Funds for the purchase of 5,250,000 Heurston shares (‘Heurston Shares’),[32] but, assuming this occurred, Mr Hatch failed to register those shares in Mr McCrohan’s name.[33]
[32]Statement of Claim (n 8) [42]; Defence (n 9) [42](a); Defendant’s Table (n 3) 8–18.
[33]Statement of Claim (n 8) [42]; Defence (n 9) [1R].
Nature of the arrangement between Mr McCrohan and Mr Hatch
Mr Hatch has admitted, and the evidence outlined above establishes, that Mr Hatch received a total of $3,573,126.44 from Mr McCrohan (being the Strandline Funds of $210,000, the Consolidated Zinc Funds of $330,000, the Prenolica Funds of $450,000 and $2,583,126.44 of the Heurston Funds) and that he received those funds to purchase the relevant shares.
Mr Hatch expressly admits ‘receiving $210,000 in respect of shares in Strandline’,[34] ‘receiving $330,000 in respect of shares in Consolidated Zinc’,[35] ‘receiving $450,000 in respect of shares in Prenolica’[36] and ‘receiving funds in respect of shares in Heurston…[but] there is a difference [between the parties concerning the amount received by Mr Hatch] of approximately $300,000’.[37] Mr Hatch made similar admissions in contemporaneous documents received in evidence.[38]
[34]Defendant’s Outline of Opening Submissions filed on 17 May 2023, [13] (‘Defendant’s Submissions’).
[35]Ibid [19].
[36]Ibid [22].
[37]Ibid [25].
[38]See, eg, CB (n 8) 763–78; Transcript (n 3) 87.23–88.8.
Mr Hatch further admits that:[39]
he had discussions with Kevin regarding the purchase of shares in the four companies, that he received sums of money from Kevin, and that he or Gasmere Pty Ltd acquired shares in the companies….[and] [h]e or Gasmere Pty Ltd held the shares pending instructions from Kevin to transfer them elsewhere.
[39]Defendant’s Submissions (n 34) [5].
Mr Hatch also admits that the relevant ‘shares would be transferred to Kevin at a later time’.[40] Accordingly, Mr Hatch admits the essential features of the arrangement alleged by the plaintiff.[41]
[40]Ibid [6].
[41]Transcript (n 3) 10.4–10.25.
Events leading to this proceeding
Prior to his death, Mr McCrohan, via his representative Mr Di Natale, made repeated requests of Mr Hatch for share certificates in relation to the relevant shares, initially assuming that Mr McCrohan was the registered shareholder,[42] and requesting details from Mr Hatch regarding the relevant shares.[43] These requests commenced in or around January 2018.
[42]CB (n 8) 470–4, 502–3, 517–19; Transcript (n 3) 33.28–36.21, 50.27–54.11, 57.10–58.25.
[43]CB (n 8) 619–20; Transcript (n 3) 69.7–70.31, 71.13–71.16.
Mr McCrohan, via Mr Di Natale,[44] also made requests of the relevant companies for share certificates, again either wrongly assuming that Mr McCrohan was the registered shareholder or unsure whether that was the case.[45]
[44]Transcript (n 3) 45.18–45.29, 49.13–50.13.
[45]CB (n 8) 504, 559–60; Transcript (n 3) 36.22–36.31, 54.12–54.22, 56.18–57.9, 70.31–71.10, 79.25–80.10.
Mr McCrohan received from Mr Hatch documents styled ‘share trust certificate(s)’ as apparent evidence of Mr McCrohan’s Heurston shares.[46] Communications with Heurston directors and officers, however, confirmed that they did not recognise the ‘share trust certificates’ and that Mr McCrohan did not in fact hold Heurston shares.[47] Further, Mr Hatch failed to disclose the true price at which he or Gasmere acquired shares in Heurston, apparently using some (but not all) of Mr McCrohan’s money, until Mr Hatch was confronted by Mr Di Natale following extensive efforts to verify the true position.[48]
[46]CB (n 8) 611–18; Transcript (n 3) 37.5–37.19, 58.26–59.26, 63.5–65.24.
[47]CB (n 8) 621–33, 640–4; Transcript (n 3) 37.21–39.18, 60.6–63.4, 66.6–66.30.
[48]CB (n 8) 645–53, 655–6, 658–61, 663–6, 669, 674–7, 682–705; Transcript (n 3) 71.19–71.31, 72.3–74.11, 74.16–77.28, 78.21–79.24, 80.15–82.21.
On 18 September 2018, after Mr Hatch had continued to ignore Mr Di Natale’s requests, Mr Di Natale informed Mr Hatch that legal action would be taken unless Mr McCrohan’s funds were repaid.[49]
[49]CB (n 8) 679; Transcript (n 3) 80.11–80.13.
On 21 December 2018, Davies J of the Federal Court of Australia made freezing orders against Gasmere and Mr Hatch on the application of the Deputy Commissioner of Taxation (‘Freezing Orders’).[50]
[50]CB (n 8) 710–31.
On 25 February 2021, the plaintiff commenced this proceeding.
In addition to seeking restitutionary damages, the statement of claim alternatively seeks damages for breach of agency or equitable compensation for breach of fiduciary duties. At trial the plaintiff only pressed his claim for restitutionary damages based on the defendant’s admissions and the unchallenged evidence. This had the advantage of shortening the evidence that was led at trial,[51] allowing the Court to adhere to the ‘standard common law judicial technique of deciding no more than what needs to be decided’.[52] It is also consistent with authorities suggesting that equitable compensation is only available when restitution is not appropriate.[53]
[51]Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560, 601 [87] (Gageler J).
[52]Ibid 597 [76] (Gageler J).
[53]See, eg, O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262, 273 (Spigelman CJ, with whom Priestley JA (at 280) and Meagher JA (at 281) agreed).
D. ANALYSIS
Restitution
The origins of restitutionary damages can be traced to the old common law action of indebitatus assumpsit, for ‘money “had and received [by the defendant] to [or for] the use of the plaintiff”’.[54]
[54]Australian Financial Services and Leasing Pty Limited v Hills Industries Limited (2014) 253 CLR 560, 605 [109] (Gageler J) (‘Hills Industries’); Redland City Council v Kozik (2024) 98 ALJR 544, 557 [60] (Gageler CJ and Jagot J) (‘Kozik’).
A plaintiff’s entitlement to recover in restitution based on these principles has its roots in the decision of the Court of King’s Bench in Moses v Macferlan.[55] As explained by Gageler J in Australian Financial Services and Leasing Pty Limited v Hills Industries Limited,[56]
[t]he pleading of an action of indebitatus assumpsit, although brief, required the plaintiff to aver breach by the defendant of a promise to pay a debt to the plaintiff. In some cases, the pleaded promise was a fiction. One of them was Moses v Macferlan. There, in 1760, the Court of King’s Bench held that the debt would be implied and the action would lie ‘as it were upon a contract (“quasi ex contractu,”…)’ where ‘the defendant be under an obligation, from the ties of natural justice, to refund’. Examples given included money ‘paid by mistake; or upon a consideration which happens to fail’.
[55](1760) 2 Burr 1005; (1760) 97 ER 676 (‘Moses’).
[56]Hills Industries (n 54) 606 [110] (citations omitted).
The plaintiff submits, and I agree, that the facts of this case are an illustration of the second example in Moses v Macferlan,[57] being a failure of consideration. The plaintiff seeks to recover an amount of money paid by Mr McCrohan because the ‘consideration’ for which the money was paid has failed.
[57]Moses (n 55), cited in Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516, 525, [15] (Gleeson CJ, Gaudron and Hayne JJ) (‘Pall Mall’).
As Deane and Dawson JJ observed in Baltic Shipping Co v Dillon,[58] ‘the receipt of a payment of money for a consideration which wholly fails “is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution … to the person who has sustained the countervailing detriment”’.[59] Failure of consideration is one of the categories of cases in which the law allows a person to recover a benefit retained by another.[60]
[58]Baltic Shipping Co v Dillon (1993) 176 CLR 344 (‘Baltic Shipping’).
[59]Ibid 375. See also Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662, 673 (Mason CJ, Wilson, Deane, Toohey and Gaudron JJ).
[60]See Kozik (n 54) 578 [179] (Gordon, Edelman and Steward JJ); Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498, 516–18 [30]–[33] (French CJ, Crennan and Kiefel JJ) (‘Equuscorp’).
In the context of restitution, the term ‘consideration’ takes on a broader meaning than it does in contract law, nor is it confined by contract law principles.[61] Here, ‘consideration’ does not necessitate the existence of a formal contract between the parties.[62] Instead, it refers to ‘a basis, purpose, or condition’ underlying a transaction where one party confers a benefit upon another.[63] This broader interpretation allows the principles of restitution to apply in a wide range of situations where strict contractual relationships may not exist.[64]
[61]Equuscorp (n 60) 517 [32] (French CJ, Crennan and Kiefel JJ), citing Pall Mall (n 57) 556–7 [103]–[104] (Gummow J).
[62]Kozik (n 54) 580, [185] (Gordon, Edelman and Steward JJ); Pall Mall (n 57) 525 [16] (Gleeson CJ, Gaudron and Hayne JJ), 555–7, [102]–[104] (Gummow J).
[63]Kozik (n 54) 579 [183] (Gordon, Edelman and Steward JJ); Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560, 627 [168] (Nettle, Gordon and Edelman JJ) (‘Mann v Paterson’).
[64]Hills Industries (n 54) 615 [129]–[131] (Gageler J).
The ‘basis’, ‘purpose’, or ‘condition’ underlying a transaction is determined objectively. It is not based on ‘some subjective uncommunicated belief of either party’.[65]
[65]Kozik (n 54) 580 [185] (Gordon, Edelman and Steward JJ).
Viewed objectively, the basis underlying the payments made by Mr McCrohan to Mr Hatch was to enable Mr McCrohan to receive shares in the relevant companies. The basis of the transaction failed when, within what the Court deems a reasonable time after requesting the shares and certainly before the commencement of legal proceedings, Mr McCrohan did not receive the shares he had paid for. This failure of the fundamental purpose of the transaction is the essence of Mr McCrohan’s claim for restitution.
Except for the shares in Prenolica, Mr McCrohan never received the relevant shares. After this proceeding commenced, Mr Hatch caused Prenolica shares to be registered in Mr McCrohan’s name.[66] By that time, however, Mr McCrohan’s cause of action in restitution had already accrued. Mr McCrohan has a right to recover the Prenolica Funds (in addition to the other funds) despite Mr Hatch’s subsequent actions.[67]
[66]See paragraph 24 above.
[67]Subject to making counter-restitution in respect of the Prenolica shares, see paragraphs 58–9 below.
In this case, the ‘basis’, ‘purpose’ or ‘condition’ failed when Mr Hatch was unable or unwilling to register the shares in Mr McCrohan’s name. The Court does not need to determine the precise time when the failure occurred, although the evidence referred to above suggests that the failure occurred in early 2018, shortly after Mr Di Natale’s first formal request to Mr Hatch for share certificates in relation to the relevant shares and details of the relevant shares.
Analogy may be drawn to principles of contract law concerning the test for determining what is a reasonable time for performance of an obligation. This is a question of fact, assessed objectively, which may be affected by the nature of the obligation to be performed.[68]
[68]See Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd (2022) 165 ACSR 332, 387–90 [192]–[197] (Connock J).
In this case, a reasonable time would be measured in weeks from no later than the time of clear requests regarding the shares commencing around 25 January 2018,[69] having regard to the nature of the relationship between the parties and the clear admissions by Mr Hatch that the relevant shares were Mr McCrohan’s shares.
[69]CB (n 8) 470–1.
It is no answer that the Freezing Orders in some way prevented Mr Hatch from transferring the shares or repaying the funds as Mr McCrohan’s cause of action in restitution had already accrued well before the Freezing Orders were made. In late 2018 the parties were discussing repayment of Mr McCrohan’s money,[70] prior to the Freezing Orders being made,[71] and subsequently were negotiating with a view to applying to vary the freezing orders to permit some of the shares to be transferred, but only if that could be done quickly.[72]
[70]CB (n 8) 706–9; Transcript (n 3) 82.22–83.17.
[71]CB (n 8) 710–31, Transcript (n 3) 83.24–87.21.
[72]CB (n 8) 779–82, 784–5, Transcript (n 3) 88.9–92.12.
Appropriate relief
As Nettle, Gordon and Edelman JJ held in Mann v Paterson Constructions Pty Ltd,[73]
[t]he availability of restitution, and the form of restitutionary remedy awarded, will depend on the type of enrichment alleged. Generally speaking, a personal restitutionary remedy will be assessed as money had and received where the alleged enrichment is the receipt of money…
[73]Mann v Paterson (n 63) 626 [167] (citations omitted).
The basis of restitutionary relief is not compensation for loss or damage but restoration of what has been received from the plaintiff without justification.[74] The Court awards a plaintiff ‘the monetary equivalent of what the defendant has taken or received…Because the object of restitutionary relief is to divest the defendant of what the defendant is not entitled to retain, the court does not assess the amount of its award by reference to the actual loss which the plaintiff has sustained’.[75]
[74]Mason v New South Wales (1959) 102 CLR 108, 146 (Windeyer J); Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51, 73 (Mason CJ) (‘Royal Insurance Australia’).
[75]Royal Insurance Australia (n 74) 74 (citations omitted).
In the context of a case involving an overpayment of tax, in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd, Mason CJ said:[76]
[r]estitutionary relief, as it has developed to this point in our law, does not seek to provide compensation for loss. Instead, it operates to restore to the plaintiff what has been transferred from the plaintiff to the defendant whereby the defendant has been unjustly enriched. As in the action for money had and received, the defendant comes under an obligation to account to the plaintiff for money which the defendant has received for the use of the plaintiff. The subtraction from the plaintiff’s wealth enables one to say that the defendant’s unjust enrichment has been “at the expense of the plaintiff”, notwithstanding that the plaintiff may recoup the outgoing by means of transactions with third parties.
On this approach, it would not matter that the plaintiff is or will be over-compensated because he or she has passed on the tax or charge to someone else. And it seems that there is no recorded instance of a court engaging in the daunting exercise of working out the actual loss sustained by the plaintiff and restricting the amount of an award to that measure.
[76]Ibid 75 (citations omitted).
The High Court’s more recent decision in Mann v Paterson[77] might mean that some of the general statements in the previous paragraph require qualification if the parties’ relationship was governed by a contract. In this case, however, the parties’ relationship was not at any time governed by an enforceable contract.
[77]Mann v Paterson (n 63).
As Nettle, Gordon and Edelman JJ observed in Mann v Paterson,[78]
[a] claim for restitution is a liquidated demand which, by contrast to an unliquidated claim for damages, may provide easier and quicker recovery including by way of summary judgment. And as Leeming JA observed in Fistar v Riverwood Legion and Community Club Ltd, ‘there is nothing foreign to the Australian legal system in a plaintiff having alternative claims arising out of the same facts’.
[78]Ibid 641 [198] (citations omitted).
In determining the availability of restitutionary remedies, the Court does not carry out a mathematical assessment of any enduring economic benefit that the defendant received,[79] but has a ‘degree of flexibility in fashioning the just measure of recovery on an action such as that for money had and received’.[80]
[79]Hills Industries (n 54) 598 [84] (Hayne, Crennan, Kiefel, Bell and Keane JJ).
[80]Equuscorp (n 60) 545 [114] (Gummow and Bell JJ), quoted in Kozik (n 54), 559 [70] (Gageler CJ and Jagot J).
To the extent that the defendant is liable to the plaintiff in restitution for moneys had and received, that liability must be offset for any benefits received from the defendant. A claimant who seeks restitution of an unjust enrichment must make counter-restitution of benefits received from the defendant in exchange.[81]
[81]Keith Mason, JW Carter, GJ Tolhurst, Mason and Carter’s Restitution Law in Australia (LexisNexis Australia, 4th ed, 2021) [1330]; Charles Mitchell, Paul Mitchell and Stephen Watterson, Goff & Jones On Unjust Enrichment (Sweet & Maxwell, 10th ed, 2022) [31-01].
As the Prenolica shares were belatedly transferred to Mr McCrohan, restitution of the sum of $450,000 in respect of the Prenolica Funds will require counter-restitution necessitating the transfer of the Prenolica shares held by the plaintiff to Gasmere.
E. CONCLUSION AND ORDERS
For the reasons set out above, I have concluded that the plaintiff is entitled to be paid the sum of $3,573,126.44 as restitutionary damages for money had and received by the defendant to the use of the plaintiff.
Restitution of the sum of $450,000 in respect of the Prenolica Funds will be subject to the plaintiff transferring the Prenolica shares held by the plaintiff to Gasmere.
The plaintiff seeks interest on the sum of $3,573,126.44 from the commencement of the proceeding pursuant to s 60 of the Supreme Court Act 1986 (Vic). I will make an order to that effect.
I will hear the plaintiff as to the appropriate form of order and as to costs.
---
0
25
0