Interjet Pty Limited v James Charles Black

[2006] NSWDC 136

CITATION:	Interjet Pty Limited v James Charles Black [2006] NSWDC 136
HEARING DATE(S):	Wednesday 6 December 2006
JUDGMENT DATE:	11 December 2006
JUDGMENT OF:	Rolfe DCJ
DECISION:	1. Verdict and Judgment in favour of the defendants.; 2. Costs should follow the event on the ordinary basis but I will entertain submissions if there is a good reason to do so.; 3. I direct that the exhibits be returned.
CATCHWORDS:	Claim for Restitution based on Unjust Enrichment said to have arisen out of mistaken payment by plaintiff into defendants' bank account. - Alleged mistake was a belief that the defendants' account was a trust account. - Held that plaintiff had given specific instructions to deposit funds into defendants' account, that there was no evidence the account was a trust account and that the plaintiff had deposited the money in the account on behalf of a third party who was indebted to the defendants. - Held that the plaintiff had allowed the third party to discharge his debt to the defendants and therefore no mistake had been made by the plaintiff in making the payment into defendants' account. - Plaintiff's claim therefore fails.
CASES CITED:	David Securities Pty Limited v Commonwealth Bank of Australia (1991-92) 175 CLR 353 Lipkin Gorman v Karpvale (1991) 2ALR 548 Commercial Bank of Australia v Younis (1979) 1NSWLR 444 Jones v Dunkel (1959) 101 CLR 298 Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177
PARTIES:	Interjet Pty Limited (Plaintiff) James Charles Black & Anor (Defendants)
FILE NUMBER(S):	2261/05
COUNSEL:	T A Alexis SC with H Woods (Plaintiff) G D Sirtes (Defendants)

JUDGMENT

1 The 1st defendant, James Charles Black, is an accountant. In July 2001 he was introduced to Hamish Watson who claimed to be a futures trader and share trader. Watson represented to Black that he had dealt with high profile individuals.

2 On 7 December 2001 Black and his wife, Janice Mary Pitman Black, the 2nd defendant, lent Watson $100,000 on condition that it would be repaid on Monday 10 December 2001 with interest of $5,000.

3 Watson defaulted and did not repay the loan on 10 December 2001.

4 The Blacks chased Watson for the money over the next two months. Watson kept promising them that he would repay the money, excusing his default on the basis of a “slight delay”.

5 On 1 February 2002 the amount of $100,000 was deposited into the Blacks’ account No. 10124033 with the Commonwealth Bank of Australia, Carindale, Queensland, branch. On that date Watson told Black that he had paid him back. When one looks closely at annexure B to exhibit 1, there is nothing about the entry in the Blacks’ account on 1 February 2002 which would suggest otherwise than that Watson had paid the Blacks what he owed them, with the exception of the interest amount of $5,000 The Blacks did not ever recover this amount from Watson.

6 On 21 May 2004 a sequestration order was made in relation to Watson’s estate (exhibit 6).

7 On 8 June 2005, more than three years after the Blacks had received the payment of $100,000 on 1 February 2002, the plaintiff, Interjet Pty Limited, commenced proceedings against them.

8 Charles Kennett is the director of Interjet. In paragraph 3 of the Statement of Liquidated Claim filed on 6 June 2005, Interjet pleaded that on or about 1 February 2002 Watson had requested Kennett to lend to the Blacks $100,000 on the basis that this amount would be deposited “into the trust account of Harris Black, chartered accountants” and would be repaid within one to two days. In his opening, counsel for the plaintiff conceded there was no consideration to support such a loan.

9 On 27 April 2006 Interjet filed an amended Statement of Claim in which it abandoned its previous allegation that on 1 February 2002 Kennett had been requested by Watson to lend the $100,000 to the defendants. Instead, Interjet alleged that in the conversation on 1 February 2002 Kennett was asked by Watson to lend the money to him. In addition, Interjet alleged for the first time that it paid the money into the defendant’s account on the basis of Kennett’s belief that this was a trust account of Harris Black chartered accountants. Interjet therefore alleged for the first time that because the defendants’ bank account into which the $100,000 had been deposited was “not the trust account of Harris Black chartered accountants”, that the payment had been made by the plaintiff acting under a mistake.

10 The final version of the plaintiff’s claim is the Amended Statement of Claim filed on 19 June 2006 in which Interjet alleges that because of the plaintiff’s mistake the defendants have been unjustly enriched and the plaintiff is therefore entitled to restitution or repayment of the amount of $100,000 from the defendants. The plaintiff relies on the High Court’s decision in David Securities Pty Limited v Commonwealth Bank of Australia (1991-92) 175 CLR 353 to make good its claim as well as Lipkin Gorman v Karpvale (1991) 2ALR 548 and Commercial Bank of Australia v Younis (1979) 1NSWLR 444.

11 Kennett’s evidence in support of the plaintiff’s claim was that he had dealt with Watson over a considerable period of time. As at February 2002 Kennett and other family members and their companies had invested amounts up to $6,000,000 with Watson. In Kennett’s case he said he had invested between $1,700,000 and $2,000,000. His investments had shown substantial gains.

12 Kennett’s evidence concerning his discussion with Watson on 1 February 2002 is set out in paragraph 3 of exhibit A. The conversation was only read by counsel for the plaintiff on the basis that it was purely evidence of the words having been said, but not the truth of those words.

13 In my assessment, Kennett was an unsatisfactory witness. Other than the concessions Kennett made in cross-examination, I do not accept his evidence.

14 Notwithstanding the original instructions he had given to the plaintiff’s solicitors that the $100,000 was a loan to the defendants and his subsequent instructions to the plaintiff’s solicitors that it was instead a loan to Watson, Kennett asserted in the witness box that, although he had been in business for 18 years and well knew what a loan was, that the amount advanced by Interjet to Watson “wasn’t a loan”. He maintained in his evidence that he had refused to lend Watson money. However, when confronted with the contents of paragraph 3 of exhibit A, Kennett asserted that he had not said to Watson that he would not lend him the money. He said “it was conditional on it going to the trust account of the accountants (Harris Black)”.

15 I am satisfied Kennett well understood what the nature of a trust account was because he had dealt with solicitors and accountants in the course of his business for many years and was familiar with how trust accounts worked.

16 Kennett said in cross-examination that he had asked Watson for the details of the account into which the $100,000 was to be deposited. Kennett asserted that Watson simply told him the account number and that he should use the name “Black”. Kennett said he then contacted Westpac and gave them these details.

17 It is not in dispute that the $100,000 was sourced from the account of Pacific Blue Metal Pty Limited (“PBM”), a related company of Interjet. As between Interjet and PBM, PBM has been reimbursed the amount of $100,000 which was withdrawn from its account on 1 February 2002.

18 Importantly, the mechanism by which funds were withdrawn from the PBM account on 1 February 2002 and deposited into the account of the defendants was by way of the bank warrant, a copy of which is set out in annexure G to exhibit A. The warrant clearly authorised Westpac to pay into the account of “JC & JMP Black” the amount of $100,000 on 1 February 2002 “as per customer instructions”.

19 I am comfortably satisfied that the instructions to Westpac could only have come from Kennett. I therefore do not accept his explanation that he did not give to Westpac the precise details of the defendants’ bank account which appear on the warrant. I am satisfied that the reason Kennett denied doing so was because he knew there is no evidence whatsoever on the warrant documentation of the defendants’ account being in any way, shape or form a trust account.

20 There is another vital document in evidence and that is the bank statement from Interjet’s account which is annexure B to exhibit A. The entry of 17 June 2002 in respect of cheque 402786 represents a debit of $100,000. The handwritten words “REPAY BPM” appear on this entry and Kennett conceded that he had written this. Kennett wrote the words to record the repayment by Interjet of its loan from PBM. His evidence was that as at that date his relationship with Watson had deteriorated and the clear inference to be drawn is that Kennett knew he was going to have trouble recovering the funds. Since he was not the major shareholder in PBM, I am satisfied that Kennett wanted to ensure PBM was reimbursed. Kennett had decided that Interjet would have to chase Watson for the money.

21 As well as the words “REPAY PBM” on annexure B to exhibit A, Kennett also wrote underneath them those words “WATSON LOAN”. In my assessment, Kennett wrote these words not long after the funds had gone into the defendants’ account because he had always believed that he was lending the money to Watson and in this respect I am satisfied that, contrary to Kennett’s evidence, and to put it in the vernacular, there were “no strings attached” to the loan. I am fortified in coming to this conclusion by reason of Kennett’s failure to do anything to follow the matter up with the firm Harris Black. In fact, it took Kennett nearly 18 months to do anything positive to trace where the funds had gone. In my assessment, this was because Kennett realised that Interjet had lent the money to Watson and Watson had used the funds for his own purposes. It was only after Kennett’s relationship with Watson deteriorated significantly that Kennett started applying his mind to how he might recoup his loss. It was not until January 2004 that demands were made and even then those demands related, at least in part, to an allegedly different loan, namely, one in which Cheska Investments Pty Limited was supposedly involved.

22 The one person who could have shone some light on the plaintiff’s claim was Watson. The plaintiff chose not to call Watson. It is therefore appropriate to draw an adverse Jones v Dunkel inference against the plaintiff in this respect for its failure to call Watson to give evidence on its behalf. ((1959) 101 CLR 298).

23 Accordingly, I am comfortably satisfied that the plaintiff lent $100,000 to Watson and that the payment of the $100,000 into the defendants’ account was therefore a payment made on behalf of Watson, not the plaintiff, nor PBM. (See Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177). In other words, the plaintiff allowed Watson to use its money to pay Watson’s debt to the defendants. In the circumstances I am comfortably satisfied that there was never any mistake made by the plaintiff when it allowed its funds to be used for such a purpose. I am satisfied that Kennett knew the money was going into the defendants’ personal account. I do not accept Kennett’s evidence that he believed the money would be deposited into a trust account on behalf of the plaintiff.

24 The plaintiff’s claim therefore fails.

25 In the result there will be a Verdict and Judgment in favour of the defendants. Costs should follow the event on the ordinary basis, but I will entertain submissions if there is a good reason to do so.

26 I direct that the exhibits be returned.

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