Dieter Kottmann Machinery P/L v Helftewes
[2007] NSWSC 631
•19 June 2007
CITATION: DIETER KOTTMANN MACHINERY PTY LTD v HELFTEWES [2007] NSWSC 631 HEARING DATE(S): 18-19/06-2007
JUDGMENT DATE :
19 June 2007JURISDICTION: EQUITY JUDGMENT OF: Bryson AJ at 1 DECISION: (1) Give judgment for the plaintiff against the first defendant Axel Helftewes for $232,049.71 with costs; (2) Give judgment for the second defendant Rainer Helftewes. CATCHWORDS: EMPLOYMENT - claim by employer against former office manager for numerous misappropriations and false claims - no question of principle. LEGISLATION CITED: Supreme Court Rules 1970 PARTIES: Dieter Kottmann Machinery Pty Ltd t/as Homag Australia - Pltf
Axel Helftewes - 1st Dft
Rainer Helftewes - 2nd DftFILE NUMBER(S): SC 3604 of 2005 COUNSEL: Ms M. Painter - Pltf
Defendants did not appearSOLICITORS: Schweizer Kobras, Lawyers & Notaries - Pltf
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
BRYSON AJ
19 JUNE 2007
3604/05 - DIETER KOTTMANN MACHINERY PTY LTD T/AS HOMAG AUSTRALIA v AXEL HELFTEWES & 1 ORS
JUDGMENT
1 HIS HONOUR: I now publish my revised reasons for the orders I made on 19 June 2007 in these proceedings. I stated those reasons orally on 18 and 19 June 2007, but I have revised them because some decisions I was at first inclined to make were altered when counsel pointed out pieces of evidence I had overlooked, and on 19 June counsel read a further affidavit of Mr Dieter Kottmann which explained some matters which I earlier did not regard as clear. I have also rearranged the order of expression.
2 In these proceedings the plaintiff, in a claim now stated in its amended statement of claim filed on 18 June 2007, which significantly reduced the claim earlier made, is a small private company which for some years carried on business in Australia under the name Homag in the sale and service of machinery and equipment for woodworking systems. The principal figure in the plaintiff is Mr Dieter Kottmann who had long experience in Germany, he says from 1971 to 1983, working for a German company called Homag De which sells and services machinery and equipment relating to woodworking systems; then for some years ran his own business in Germany working with and doing jobs for Homag De; then from 1989 to 1993 he was employed by Homag De in Australia.
3 The plaintiff's business was established by Mr Kottmann in 1993. The equipment in which it dealt included equipment obtained from Homag De in Germany. Its organisation was small. Mr Dieter Kottmann was its only Director and Secretary. It had two shareholders only, Mr Dieter Kottmann held one share and Mrs Brigitte Kottmann held the other.
4 The second defendant, Mr Rainer Helftewes, whom Mr Kottmann had known in Germany for many years, suggested that the first defendant, Mr Axel Helftewes, who was to come to Australia, should be looked after by Mr Kottmann, who agreed, and there was some association during Mr Axel Helftewes' first working period in Australia in 1998 and 1999 when he was employed by another company.
5 Late in 1999 Mr Kottmann and Mr Axel Helftewes agreed that Mr Axel Helftewes would come to Australia again and work for the plaintiff in the office; and assisted him with payment for training and airfare and also with sponsorship for a working visa. At first Mr Axel Helftewes lived in Mr Kottmann's family home. Unusual confidence was reposed in him, and in understanding this I have regard to the long association which had existed between Mr Rainer Helftewes and Mr Kottmann. Mr Kottmann said he trusted Mr Axel Helftewes entirely, and his business conduct shows that this was so.
6 Mr Axel Helftewes was employed as office manager in this very small organisation, and was responsible for internal administration and accounting within the organisation. The plaintiff did not employ a professionally trained accountant for work internally and had a consultant accountant in a outside firm. Not very long after he was employed Mr Axel Helftewes was given the use of a company American Express card, was made a bank signatory and was given access to operation of the company's internet banking. He was wholly responsible for decisions to reimburse employee's expenses, including his own, and for actually carrying out the reimbursement by cheques or bank transfers. He was for some years not kept under effective supervision; obviously very high trust and confidence were preposed in him. He incurred duties under the common law which implies duties of good faith and honesty into his employment contract.
7 The plaintiff sold its business to Homag Australia Pty Limited with effect on 1 July 2002, but Mr Kottmann continued to provide services relating to management of the business and its conduct to Homag Australia Pty Limited, in the course of which he obtained and provided the services of Mr Axel Helftewes, for which Homag Australia Pty Limited, in effect, paid. However, the sale of the business was a large turn of events as Homag Australia Pty Limited undertook the conduct of its business and the protection of its interests on different principles to those which had been followed by the plaintiff and Mr Dieter Kottmann.
8 Mr Axel Helftewes returned to Germany at some time in 2003, in which year his four year working visa would expire. The plaintiff's consulting accountant discovered and told Mr Dieter Kottmann of some discrepancies in the accounting records of the company; these were further investigated. Mr Kottmann went to Germany in October 2003 and met Mr Axel Helftewes by appointment at Frankfurt airport; he confronted Mr Axel Helftewes with two items with respect to which he challenged the basis on which money had been paid by Mr Axel Helftewes to himself when he controlled internal administration. One of these sums $3,365.19, the other $9,524.32. In the conversation Mr Axel Helftewes said words to the effect that the payments had been made by mistake. He later repaid the payment for $9,524.32, and there is no claim for that payment in the proceedings. Mr Dieter Kottmann confronted Mr Axel Helftewes with other anomalies and received an explanation which was in no way complete, but included the statement: “I bought things and always intended to pay you back later".
9 There is significant corroboration of Mr Dieter Kottmann's evidence in important respects. The affidavit of Mr Dieter Bender, the proprietor of DO House Technics shows that there was no underlying transaction supporting a payment of $38,000, which according to accounting records was paid to DO House Technics on 20 June 2000; and further shows that the amount was not in fact paid to DO House Technics. Mr Bender's evidence also falsifies Mr Axel Helftewes's explanation for the transaction.
10 The affidavit of Mr Norbert Laumeier of Kuper Maschinen also shows that transactions between the plaintiff and Kuper Maschinen were distorted or fabricated, and that the payments as they appear in the plaintiff’s records were overstated or falsified. These facts and circumstances have supported my decision that I should accept and rely on Mr Dieter Kottmann's evidence where in conflict with that of Mr Axel Helftewes (and it is in conflict on any matter which is in any way important), and that I should make findings in reliance on Mr Dieter Kottmann's evidence.
11 The position taken by Mr Axel Helftewes in his affidavit avers two themes recurrently. One is that Mr Kottmann himself appropriated a number of amounts of money which are items in the claim. The other is that Mr Kottmann and Mr Axel Helftewes made agreements or arrangements under which Mr Helftewes was authorised to appropriate funds for his own purposes and, it would seem, to make misleading records relating to the moneys so dealt with so as to make up an allowance additional to the agreed salary which Mr Axel Helftewes was to have: the additional sums were not to be treated as salary paid to Mr Axel Helftewes in the payroll (which would have attracted liability for taxation imposed on Mr Axel Helftewes) but, on the other hand, they were to be written up in way which gave the appearance that they were business expenses and for taxation purposes were available to be treated as business expenses by the plaintiff.
12 Mr Kottmann has dealt on affidavit with these claims not, I would say, in a rigorous and comprehensive or altogether satisfactory way but in a way which shows that he disputes them, and shows that clearly.
13 The defendants did not appear at the hearing. They have had every opportunity which the rules of Court allow them to appear at the hearing or otherwise to take part in the proceedings. I required Mr Axel Helftewes's affidavit to be read as a term of the leave which I gave to the plaintiff to prove its case on affidavits. I did this without any view to treating the plaintiff as responsible for the material in his affidavit but rather because I had the impression, based on the way in which the defendants have conducted these proceedings and communications from them to the Registrar of which I have taken notice, that they may have thought that the procedure followed was one in which (as is common in civil law systems) the Court actively investigates the facts and pursues investigations into suggestions raised by pleadings or affidavits.
14 To take that further it would be necessary to cross-examine Mr Kottmann and confront him with allegations which are, I think, distinctly hostile to his credibility and, indeed, to his character. In the system of procedural law followed here, I am not able to do that. I am not able to embark on proving or advancing the case for either party. The opportunity to cross-examine is available only to a party, and an endeavour by me investigate the facts further or cross-examine or challenge the evidence could well vitiate the whole process.
15 On the one hand I do not feel that I have any duty or other motivation to embark on cross-examination and challenge of Mr Kottmann's evidence, and on the other hand it would be markedly imprudent of me, as a judge, to do so or attempt to do so.
16 The defendants have had quite long enough to decide what they wish to do in defence of these proceedings and to obtain legal advice on how to go about it. Mr Kottmann was present and available at the hearing to give further affidavit evidence either at my wish or if cross-examined. Mr Axel Helftewes has filed an affidavit making some firmly stated assertions about Mr Kottmann's conduct. He has not put his evidence forward in admissible form or even in an altogether clear form and has not either attended at the hearing or made any other arrangements to have his evidence taken overseas. My view is that there has been no effectual challenge to the credibility of Mr Kottmann's affidavit evidence in relation to the matters put forward by Mr Axel Helftewes's affidavit and I should proceed to dispose of the litigation by examining each claim and the evidence relating to it in detail - and there are many items - but I should do so on the basis of acceptation of Mr Kottmann's affidavit evidence.
17 It may be that on detailed examination in relation to some item or items that that evidence does not go far enough. That is a stage that I have not yet reached. I will ask counsel to take me through the claim item by item following the itemisation in Mr Kottmann's affidavit sworn today, the annexure to which takes the place of a schedule of the claims. In so far as I am able to I will give a ruling after counsel points out to me, in relation to each item, what there is in support of or against it.
18 I first attend to the items listed on page 5 of Mr Kottmann's affidavit of 18 June 2007, which relate to Unauthorised Credit Entries and Receipt of Cash Payments. Some claims based on cash payments and cheques have been withdrawn in the amendment to the statement of claim. Mr Kottmann's account is that in the plainitff’s cheque books there are stubs for cash cheques (and that refers to cheques which were cashed, not necessarily cheques made out to cash), corresponding to credit entries in respect of which he could find no supporting documentation.
19 In Mr Axel Helftewes' affidavit, paragraph 9, in so far as his explanations were admitted in evidence, he attributes these payments, or most of them, to credits appearing "in the books" of the plaintiff company. In the clearest example, Knebel Kitchens, Mr Helftewes says to the effect that Mr Kottmann told him to clear all credit notes in the books by writing cheques which could be cashed. Mr Helftewes took the cheques to the bank (and it should be understood he means that he cashed them) and handed the money to Mr Kottmann. Mr Kottmann has distinctly denied that these were the underlying events.
20 With respect to three cheques, which according to the company's records were made out in favour of Lahey Joinery but for which Mr Kottmann's evidence is that no supporting documentation can be found for related entries, the amounts of the three cheques add up to $20,000. Mr Axel Helftewes gives a strange explanation for this to the effect that Mr Kottmann raised $20,000 by selling a machine which was not in the asset register, and then directed the $20,000 to Mr Helftewes "as an award for my work".
21 Splitting $20,000 into three payments of apparently irregular amounts is suspicious enough in itself, and the suspicion is not helped by the explanation put forward by Mr Helftewes in which Mr Kottmann decided for reasons that do not appear that the $20,000 should go to Mr Helftewes. What is clear is that it did go to Mr Helftewes, because the three cheques can be clearly traced into his bank account; and he says that he did pay the money into his account.
22 To my mind on the evidence the probabilities are strongly against Mr Kottmann's having been involved in the events relating to the three Lahey Joinery cheques, I should accept Mr Kottmann's denial of this account of the matter and I should not accept Mr Helftewes' narration. This establishes in a fairly clear way that there was manipulation of recovery of moneys which, according to entries in cheque stubbs but not according to other records, were payable to companies with which the plaintiff could well have been trading, but were not in fact paid to them.
23 There are other elements of suspicion such as the absence of reference to the ledger accounts out of which, if there were credits due to the companies for whom the cheques were drawn, the amounts would have been paid; in several instances, perhaps all of them, the cheques are referred to in a Reconciliation sheet in which the ledger account is referred to as "zero", which could not be right in any well-ordered system.
24 In my view the plaintiff has established entitlement to charge Mr Axel Helftewes $122,583.87 as appears on page 1 of 11.
25 I turn to page 2 of 11 in annexure A to Mr Kottmann's affidavit of today. Item K2 relates to $359, which is claimed on an expenses form as "workshop". That sum was in fact paid to Strathfield Car Radios for speakers. Mr Helftewes admits that they were fitted into his car, he says a company car, and says that Mr Kottmann agreed that the plaintiff would carry the costs for the speakers. Mr Kottmann has denied this in his most recent affidavit. In accordance with my overall view, I accept Mr Kottmann and allow item K2.
26 K3 relates to $581.99, which relates to computer accessories and DVDs. The DVDs from their descriptions "Scream 3" and "The Green Mile" were very unlikely to have been purchased for business purposes. Mr Helftewes acknowledges that they were for private purposes and says: "I settled the amounts for the DVDs but out of company expenses that were paid by me”. He gives no particulars and I do not accept what he says.
27 Mr Kottmann says that he disputes that the computer accessories were expenses incurred in the course of employment. Mr Helftewes says in his affidavit that they were purchased for the plaintiff and were used for back-up purposes for bookkeeping. Their description is “external drive assembly for a lap top as well as the appropriate data media”. Mr Helftewes has not shown any facts or circumstances which make it probable in my judgment that the goods were purchased for the plaintiff or were used in his business. I allow item K3, $581.99.
28 Item K5, $1,867 for household goods to a company "the Good Guys". According to Mr Kottmann's evidence, this relates to the purchase of household equipment from a department store and the nature of the equipment is domestic and not business. Mr Helftewes says that the kitchen appliances were bought the company itself except that a dryer and bread maker were bought for his private consumption and settled for other company expenses for which he paid. He gives no particulars and Mr Kottmann denies awareness of any settlement out of other expenses.
29 I was not at first happy to deal with item K5 forthwith because I was of the view that I would be assisted if Mr Kottmann dealt specifically with the claim that some kitchen appliances were bought for a home unit associated with the plaintiff, unit 3/10 Blackstone Street, Wetherill Park. I said that I would return to this item when there had been an opportunity to consider this.
30 Item K6 is a claim for $1,250 spent at the Good Guys for a flat screen television set claimed on a company form as “electrical goods”. In his affidavit, however, Mr Kottmann gives this item as $1136.36. Mr Helftewes' explains this as a purchase on the company's account but bought for Mr Helftewes' benefit, of which Mr Kottmann approved, and says "the costs were settled with other expenses I paid for".
31 Mr Kottmann's answer at paragraph 21 of his in reply affidavit is to the effect that this was not settled with other company expenses. Indeed, he says "at no stage did Axel Helftewes pay any company expenses from his own funds".
32 In the absence of any real specification by Mr Axel Helftewes of what he did to settle this item, in accordance with my general view of credibility I decided to allow this item but at $1,136.36 and not at $1,250. Later I reconsidered this.
33 Item K8, which is a claim in respect of $387.90 paid to Ikea Homebase for household goods was claimed on a company form as “in-store promotions". Mr Kottmann disputes that this was an expense incurred for employment purposes. Mr Axel Helftewes says that part was bought for the plaintiff but he does not specify whether the other part was for private consumption, and he says that this has been settled with other expenses he paid for. Mr Kottmann denies this. I allow item K8, $387.90.
34 Item G5, $650, was dealt with together with item G6, $950, in paragraph 28(f) of Mr Kottmann's principal affidavit.
35 According to Mr Kottmann the true transaction was the purchase of a mobile telephone for $1600, but the receipts show two transactions, one a repair of mobile telephone for $950 and repair of a hands-free kit for $650. Mr Axel Helftewes' explanation was largely inadmissible, but did include an acknowledgment that he bought a new mobile phone, including a hands-free kit, which he said was a company mobile phone. However, Mr Kottmann's reply affidavit says he was not involved in this transaction which means, of course, that he did not approve of it or the strange form that it took. I allow items G5 $650 and G6 $950.
36 Item G4 relates to the purchase of an aquarium for $1302 which Mr Kottmann disputes are expenses incurred for employment purposes. Mr Helftewes acknowledges that this was bought for his private consumption, but contends "The costs have been settled with other expenses I paid for"; he gives no particulars. In substance, he gives no explanation at all. I allow item G4 $1302.
37 Item 7 relates to $955 spent at Western Mowers and Chainsaws. Again, Mr Kottmann disputes that this was incurred for employment purposes. The passage in Mr Axel Helftewes' affidavit dealing with this was inadmissible and was rejected. Mr Kottmann further says that this was a private purchase by Mr Helftewes. I allow item G7 $955.
38 Items G1 and G2 relate to expenditure totalling $5500 to a dating agency. Mr Axel Helftewes' affidavit acknowledges that this was a private expenditure and says that he intended to pay the cost back to the plaintiff and forgot to do so. That is to say, this expenditure is wholly indefensible. It has had a part in my thinking overall in showing readiness to make significantly large, unauthorised expenditures and treat them as expenses of the plaintiff. That is to say, the plaintiff was treated as if it were a money box out of which money could be drawn if it were put back in at some other time. This is not an appropriate attitude for a person employed in a position of trust with authority to deal with money; this had some influence on other parts of my reasoning. I allow item G1 $3,300 and G2 $2200.
39 Item K19 $1376.15 is dealt with by Mr Kottmann's principal affidavit in which he says he disputes that it is an expense incurred within the course of Mr Axel Helftewes' employment. This relates to the purchase of wine, and the plaintiff has produced a tax invoice from Liquor Brothers of Castle Hill liquor merchants for the supply of quite a large quantity of wine. Mr Axel Helftewes says it was bought for the plaintiff but consumed by employees and contracting parties, mostly while he was overseas on business. Mr Kottmann denies that any wine was purchased and consumed by employees and contracting parties. I accept what Mr Kottmann says and allow item K19 $1376.15. That is to say I accept the items under the heading "Falsification of Expenses" at page 2 with the exceptions of Items K5 and K6.
40 I return to item K6. I have now had my attention directed to the tax invoice from the Good Guys at exhibit A page 209 which shows that the total charge was $1250 including $1136.36 for the television set and $113.64 for GST. I allow item K6 at $1250.
41 The plaintiff makes a claim for unauthorised travel and related expenses. There are several similar claims, the ones with which I am dealing total $29,276.28 and are at pages 3 to 7 of annexure A to Mr Kottmann’s affidavit of 18 June 2007 under the heading "Reimbursement of Personal Travel Expenses". These are the disputed parts of expenses claims totalling $64,135.45 in exhibit A part B. Mr Axel Helftewes deals with this claim first by putting forward an explanation about additional remuneration in inadmissible terms, which was rejected. Second, he says that he charged the company accommodation costs for Mr Grant Jones and for a student apprentice, Mrs Tina Hornberger, and he maintains that Mr Kottmann told him that he should pay her, and I understand this means pay her for her accommodation and salary, out of his private pocket and not through the payroll and recharge the cost via travel expenses. He further says that she stayed at his private home, and the cost of doing so was charged back by way of travel expenses, and that on one occasion when she could not be accommodated at his home she was accommodated at a hotel for which he charged the company $494. In short, Mr Axel Helftewes' explanation is to the effect that Mr Kottmann told him and authorised him to conceal various expenses under the heading "travel expenses". Mr Kottmann, in his reply affidavit, has disputed each part of this explanation. I observe that of course the explanation shows that the claims for travel expenses are not literally true and that these sums were not payable as travel expenses.
42 There was a forensic burden on the defendant of establishing participation by Mr Kottmann in this strange and evasive arrangement, no less so because the legal burden of proof is on the plaintiff throughout. Mr Kottmann says on affidavit that there was no agreement about additional remuneration: there was no arrangement about Mr Grant Jones staying at Mr Axel Helftewes private house; that he paid Ms Hornberger privately and did not ask Axel Helftewes to pay him out of his own pocket; that she was at his house for no more than a few days: I am not prepared to accept Mr Axel Helftewes's strange answers to this part of the claim. I allow the plaintiff $29,276.28 to redress false claims for travel and other expenses.
43 With respect to the items under "Misuse of American Express Card" at pages 89 and 100 of the Annexure Mr Axel Helftewes does not deal specifically with the first group of items under "Goods and Services", but he does deal incidentally with the last item K4, which relates to the Argyle Street Hotel bottle shop, $594. He refers to that in the context of the attendance of Ms Hornberger and her need to stay in a hotel, at paragraph 29 of his affidavit. The voucher for the payment of $594 refers to the bottle shop but at another place refers to accommodation. Still I do not regard Mr Axel Helftewes' affidavit as giving a satisfactory explanation for incurring $594 and charging it to the plaintiff. In view of Mr Kottmann's treatment on affidavit of Mrs Hornberger's accommodation, notwithstanding what Mr Axel Helftewes says, I will allow item K4. The remaining items under this heading are not disputed by him and I allow a total of $6,706.98.
44 With respect to accommodation and travel items totalling $3,665.16, Mr Axel Helftewes gives particulars of his grounds of dispute at paragraph 32 of his affidavit. In subparagraphs (a), (b), (c), (e) he says that the amounts were private but settled with other expenses he was entitled to. I do not accept what he says. With respect to item (d) he says that the accommodation costs were charged to a customer, but again he gives no particulars and I do not accept what he says. With respect to item J71 at para 32(f), $1,033.90 for accommodation for a technician from Brandt Kantentechnik, Germany, at the Carlton Hotel, Parramatta, he gives an explanation in terms of accommodating a technician who came from Germany to Australia to repair faults in some machines which had been sold. Mr Kottmann deals with this explanation in paragraph 31 of his affidavit of 31 October 2006 and says: “I have never paid accommodation costs for a technician from Brandt Kantentechnik GMBH".
45 What he says in this passage does not literally meet the point, but I thought he may be directing himself to never having agreed to pay such costs. I was left with the feeling that there may be something in Mr Axel Helftewes' treatment of this item, and unless it was further explained (and I gave the plaintiff an opportunity to do so) I was not disposed to treat this item as a charge upon the first defendant. I return to this item later.
46 With respect to Item J73, accommodation costs at Albergo Firenze, Milan, Mr Axel Helftewes says that this was a business trip, that he visited an exhibition in Milan, visited suppliers and arranged a visit to two customers. Mr Kottmann says that it was a private holiday and not a business trip. I have the impression that Mr Axel Helftewes' claim means that he did a little business while on a holiday, but this does not justify charging his accommodation in Milan. At first I decided to allow $2,631.26 of the claim for $3,365.16, but I deal further with Item J71 later.
47 I turn to items under "Misuse of American Express Card" with a subheading "Meals and Entertainment" at pages 9 and 10 of annexure A to Mr Kottmann's affidavit of 18 June 2007. Under the subheading "Meals and Entertainment" there are many items relating to expenses at hotels and restaurants both in Australia and abroad. In his principal affidavit Mr Kottmann, paragraph 33, said: “I can state that none of these meals were in relation to entertainment of any clients of the plaintiff or were in any way related to the business of the plaintiff".
48 The defendant, Mr Axel Helftewes in his affidavit of 9 September 2006 took up a relatively small number of these claims to deal with in detail. Item J4 relates to $205.30 Australian dollars, but spent in Euros, at the Gasthof Krone, and asserts that he organised a tour with customers across Germany, spent one night at Gasthof Krone, and that this item represents what customers drank. He says the plaintiff paid and I suppose he means that he accepted the charge on behalf of the plaintiff. Mr Kottmann in reply in his affidavit of 31 October 2006 disputes that Mr Axel Helftewes was authorised to make a charge in this way, and says that Mr Helftewes agreed (and I take it this means he was directed) to collect money for dinner and drinks from each customer and pay out of the common pool. In short the plaintiff's evidence is that there was no authorisation to charge drinks in this way. I accept this evidence and I allow item J4.
49 Item J5 for AUD$138.94 is generally similar in form; Mr Axel Helftewes says that he entertained a customer at an establishment in Cologne and that the dinner was business related. Mr Kottmann's reply affidavit says there was no such business related journey to Cologne. I accept this and I will allow item J5.
50 Mr Axel Helftewes deals also particularly with items J 46 and 47 but these no longer appear in the plaintiff's claim. He also disputes items J48, J49, J50, J51, J62 and J74 but these no longer appear in the plaintiff's claim.
51 He then makes a general claim that all other listed invoices were business related, to which Mr Kottmann makes an equally general denial. I intend to act on Mr Kottmann's evidence and I allow these items at page 9 and 10.
52 The next set of items relates to claims for $44,979.26 for fictional authorisations for payments nominally made to Kuper Maschinen, which refers to Heinrich Kuper GMBH & Co KG, which is in business at Rietberg in Germany. The evidence of Mr Norbert Laumeier, the managing director of Kuper Maschinen shows that the claims totalling $44,979.26 under this head are well based, and that the payments were not made to his company; and his evidence shows that invoice documents and other documents found in the plaintiff's records which appear to support them were falsified.
53 Mr Axel Helftewes, in his affidavit, gives a series of explanations for these transactions to the effect that they were falsified or significantly altered for the purpose of concealment in the interests of the plaintiff. Much of what he said was inadmissible and was rejected. I am satisfied that I should act on the evidence of Mr Laumeier and allow these items totalling $44,979.26.
54 On the second hearing day the plaintiff filed in court, by leave, the affidavit of Dieter Kottmann dated 19 June 2007 which I have read. I refer again to item K5 at page 2 of the schedule annexed to Mr Kottmann's affidavit of 18 June 2007 and at page 6 of the affidavit which relates to the plaintiff's claim for $1,867 and to household goods purchased from a department store called The Good Guys. Mr Axel Helftewes explained the two purchases from The Good Guys in his affidavit, partly in terms of claims to have offset private purchases against payment by himself of company expenses (and I have not accepted this explanation) and partly in terms of purchase of a list of kitchen appliances for the plaintiff's company kitchen at unit 3/10 Blackstone Street, Wetherill Park.
55 Mr Kottmann's affidavit of 19 June 2007 shows that he made arrangements relating to fitting out a kitchen and appliances to the effect that Mr Axel Helftewes was to pay for them and was to live in the residence; Mr Kottmann's affidavit clearly and with circumstances denies authorisation to purchase the goods and charge the company. I accept his denial. I propose to allow item K5. So that I am satisfied that the plaintiff is entitled to recover all items under the heading "Falsification of Expenses" totalling $15,179.04 on page 2 of that schedule.
56 I turn to item J71 on page 8 of the same schedule and page 12 of the affidavit which relates to accommodation at the Carlton Hotel Parramatta for $1,033.90. Mr Axel Helftewes in his affidavit at page 10 para(f) gives an explanation in terms of incurring accommodation costs for a technician from Brandt Kantentechnik GMBH, who he says came to Australia to repair faults in some edge banders which had a design flaw. Mr Kottmann's affidavit of 19 June 2007 deals with the attendance of technicians from Brandt Kantentechnik in terms which show that it is highly improbable that Mr Axel Helftewes' account of events is true. Mr Kottmann gives circumstances about the attendance of technicians from Brandt Kantentechnik which make it extremely unlikely that a person with the name Charlie Blackmann, to whom the accommodation is attributed in the Carlton Hotel Parramatta invoice, attended on behalf of Brandt Kantentechnik or did any work such as Mr Axel Helftewes refers to. Mr Dieter Kottmann's affidavit also shows that he does not know of any arrangements for the plaintiff to pay the costs of employees of Brandt Kantentechnik in Australia and that he did not approve the payment himself. I accept Mr Dieter Kottmann's evidence and will allow item J71. The consequence is that all items on pages 8, 9 and 10 of the schedule relating to misuse of the American Express card have been allowed and have been shown to be sums which the plaintiff should recover against Mr Axel Helftewes totalling $20,031.26. The sums which it has so far been shown that the plaintiff is entitled to recover against Mr Axel Helftewes total $187,070.45.
57 I turn to address the claims against the second defendant Mr Rainer Helftewes. In the amended statement of claim paragraphs 20 to 23 claims relating to dealings with Kuper Maschinen are made against both defendants; there is no other claim against Mr Rainer Helftewes. The allegations in paragraphs 20 and 21 are to the effect that the fraudulent conduct relating to dealings with Kuper Maschinen was all carried out by the defendants acting together. The only matter specifically charged against the second defendant is in particular (f), that a payment made by Mr Axel Helftewes on 28 September 2001 of $9,285.94, which I am satisfied was not an authorised or appropriate payment, was made into Mr Rainer Helftewes' account with Dresdner Bank in Freiburg.
58 Mr Rainer Helftewes has not given any evidence but he has filed a defence which contains some relevant statements which I think should be treated as admissions; but in treating them as admissions the statements must be taken in whole. In Mr Dieter Kottmann's affidavit of 20 July 2006 he asserts at paragraph 35 that Mr Rainer Helftewes was Managing Director of Kuper Maschinen and had direct access to the account at the Dresdner Bank of Kuper Maschinen into which another payment was made.
59 In the defence Mr Rainer Helftewes says, among other things: “Also as a subsidiary manager I do not have any access to the bank account". That is to say, in the context of a reference to Kuper Maschinen's bank account at Dresdner Bank he admits that he was a subsidiary manager but at the same time says that he did not have any access to the bank accounts; I have to take all these statements together when I treat them as an admission. In dealing with the purchase of the Butfering sanding machine, he says that it was invoiced at Deutschmarks 63,000; he also says in the defence "The machine had to be removed from a company which was not producing any more. For this activity workers had to be organised. Also a crane, truck and forwarding agent had to be ordered. I paid these costs and settled them with the mentioned difference. I informed my son, Axel Helftewes, that the machine does not get dispatched before the cleared funds are in Germany. By mistake my son transferred the money for the machine into my personal account. This transaction nearly cost me my professional career. I could convince my employer credibly through presentation of my statements of account that I did not enrich myself through this transaction”.
60 That is to say, the defence admits some connection between Mr Rainer Helftewes and his bank account and this transaction, but the admission must be taken in whole and so taken it means that the extra charges in addition to the 63,000 Deutschmarks were paid into the account by mistake and that he did not enrich himself.
61 In my view there are no admissions in the defence which assist the plaintiff's claim that Mr Rainer Helftewes was a party to the wrong dealings relating to Kuper Maschinen. There are some circumstances which might well raise suspicion of his involvement. Mr Dieter Kottmann's evidence shows that Mr Rainer Helftewes was well-known to him and had been known to him over many years; first as a fellow worker. Of course Mr Axel Helftewes was closely associated with Mr Rainer Helftewes as his son; and had visited Australia with him and had met Mr Dieter Kottmann here. Mr Rainer Helftewes held a management position with Kuper Maschinen. In my view, these circumstances go no higher than indicating grounds for suspicion; they do not make it probable that the claim in the statement of claim that Mr Rainer Helftewes participated in the Kuper Maschinen frauds is correct. In my view I should give judgment for the second defendant.
62 My Orders are:
(2) Give judgment for the second defendant Rainer Helftewes.
(1) Give judgment for the plaintiff against the first defendant Axel Helftewes for $232,049.71 with costs.
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