Kalache v Way Right Investments Pty Ltd

[2023] NSWDC 507

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Kalache v Way Right Investments Pty Ltd [2023] NSWDC 507

Hearing dates:

9, 10, 13 November 2023

Decision date:

13 November 2023

Jurisdiction:

Civil

Before:

Newlinds SC DCJ

Decision:

1. Order that the first’ defendant’s motion for summary judgment filed 2 August 2023 be dismissed;

2. Order the plaintiff’s claim be dismissed;

3. Order the plaintiff pay the defendant’s costs of the proceedings, including any costs associated with the notice of motion seeking summary judgment;

4. Dissolve the injunction presently in place to the intent that the monies currently held in the solicitor’s trust account be immediately released as the direction of the defendants.

Catchwords:

CIVIL – Contracts – Proof of oral contract – Inferences – Quality of evidence on which Court will act

Cases Cited:

BlatchvArcher [1774] 1 Cowp 63 at 65; [1774] 98 ER 969 at 970

HovPowell (2001) NSWCA 168; (2001) 51 NSWLR 572

RobertSmithvFairfaxPublication Pty Limited (No 41) [2023] FCA 555

Category:

Principal judgment

Parties:

Nasser Kallache (plaintiff)
Way Right Investments Pty Ltd (1st defendant)
Vincent Movizio (2nd defendant)

Representation:

Counsel:
D Allen (plaintiff)
A Connolly (1st defendant)
B Loukas (2nd defendant)

Solicitors:
Kekatos Lawyers (plaintiff)
Cutri & Associates (1st defendant)
Galluzzo Lawyers (2nd defendant)

File Number(s):

2023/175715

Publication restriction:

None

JUDGMENT: EX TEMPORE

Introduction

1. HIS HONOUR: By amended statement of claim filed 22 June 2023, the plaintiff claims against each of the defendants the sum of $174,216.05 together with interest. The plaintiff contends the principal sum was advanced by him to each of the defendants on 15 October 2021 pursuant to a loan agreement also made on that day.

2. The plaintiff contends that he performed his part of the bargain when on 15 October 2021 he “caused” a company, Stella Bella Pty Ltd (“Stella Bella”) to transfer three amounts totalling $174,216.05 to the account of the first defendant (“Way Right”) which money has not been repaid in breach of contract. In the alternative the plaintiff claims the return of the money, as monies and received under the principals of restitution.

The plaintiff’s case

3. The agreement relied upon by the plaintiff is oral and is said to have been formed in a conversation on 15 October 2021 between the plaintiff and the second and third defendants which was set out at para 18 of the plaintiff’s affidavit sworn 21 June 2023. That conversation is said to be in the following terms:

“18. At the Conference, I had a conversation with Vincent and Tom with words to the following effect:

Nasser Kalache: ‘Since our last meeting in June, I have made up mind to also buy a part of the Fairfield property’.

Vincent Movizio: ‘How much are you looking to buy?’.

Nasser Kalache: ‘That’s fine by me, what about you Tom?’.

Tom Lu: ‘It works for me as well’.

Nasser Kalache: ‘The other thing is that the property in Fairfield owned by Way Right Investments is mortgaged to the ANZ Bank, and I understand that a default notice has also been issued’.

Tom Lu: ‘Yes, we have to pay the arrears of $174,216.05, otherwise ANZ Bank will sell the property’.

Nasser Kalache: ‘I can make a transfer of $174,216.05 to the bank account of Way Right Investments as a loan to the company and both of you. I will require repayment of the loan on call with interest at court rates and I want a charge on the property for the repayment of the loan amount plus interest (“the Agreement”)’.

Tom Lu: ‘Okay’.

Vincent Movizio: ‘No problem’”.

4. That conversation is said to have been in the context of an earlier conversation said to have occurred in June 2021 which is set out at para 10 of the same affidavit and is in the following terms:

“10. At the meeting, I had a conversation with Vincent and Tom with words to the following effect:

Nasser Kalache: ‘Vincent and Tom, I have called this meeting because I want to buy fifty percent of Way Right Investments’.

Vincent Movizio: ‘Okay, how do you plan to pay for the share?’.

Tom Lu: ‘That’s okay, we can figure out the details later’.

Nasser Kalache: ‘That’s fine by me, but I want to get a valuation done of the property owned by Way Right Investments’.

Vincent Movizio: ‘Okay, can we get a valuation done for the Fairfield property’”.

5. The plaintiff and the third defendant (Mr Lu) have resolved the claim and so the plaintiff is proceeding against the first defendant Way Right Investments Pty Ltd (Way Right) and the second defendant (Mr Movizio).

6. Also listed before me today is an application by the plaintiff for summary judgment against the first and second defendants. There is also an application by the plaintiff to amend his claim made during the course of the hearing and relies on a Deed of Assignment between Way Right and the plaintiff which is in evidence. I do not think the Deed is dated but is said to take effect as at 31 May 2023.

7. The plaintiff’s submissions in support of the Summary judgment application (and indeed as far as opening was concerned in support of the case in its entirety) are as follows:

“2.    The case is supported by the fact, the sum was received by Way Right.

3.   The defences filed:

(a) puts the “plaintiff” to proof and

(b) do not give a different characterisation for the payment.

…..

5.   In the circumstances, of the money being received and the evidence of Kalache that he had a company, Stella Bella Pty Ltd, transfer money to Way Right as Kalache directed, judgment ought be given against Way Right.

6.   In the case of Movizio, Kalache pleads he was a borrower. This is denied by Movizio. As Movizio does not plead some other transaction, Kalache’s evidence ought to be accepted.”

8. So, it can be seen the plaintiff’s case relies on a pleading point as the reason the plaintiff’s evidence must be accepted.

The defences

9. Each of Way Right and Mr Movizio takes issue with the plaintiff’s claim.

10. In each of their defences the alleged loan agreement is denied. There is no issue but that Way Right received the sum of $174,216.05 on or about 15 October 2021, and the source of that money was the company known as Stella Bella, but the defendants by their evidence say that payment is explicable because at the relevant time another company (or companies) controlled by the person behind Stella Bella (Anthony Fedele), either Stella Bella or another company known as Master Property Services Pty Ltd, was either indebted to Way Right in an amount exceeding the amount that was paid representing unpaid rent and that the transfer of monies was in partial discharge of that debt. Alternatively, it is said that Mr Fedele had an equal motivation, as might have the plaintiff, to advance monies by way of loan or other arrangement for the purpose of assisting Way Right in discharging its obligations as they stood at the time to the ANZ Bank.

11. The defendants also point out that Stella Bella is not a company which appears to be related to the plaintiff; he is not a shareholder or a director of Stella Bella; rather, its sole director and shareholder is Anthony Fedele (Mr Fedele). It follows, so the submission of the defendants goes, that the fact monies were paid by Stella Bella to Way Right does not prove in any way shape or form on its own and advanced by the plaintiff to Way Right.

Are there any issues appropriate for a final hearing on the merits?

12. Notwithstanding the beguiling simplicity with which the plaintiff puts his case, I do not think the plaintiff is entitled to succeed simply by demonstrating no more than the relevant amount of money was transferred from Stella Bella to Way Right on 15 October  2021. Accordingly, I propose to dismiss the motion for summary judgment and to hear the matter on its merits.

13. To my mind for the plaintiff to succeed I need to be satisfied on the balance of probabilities of the following:

1. Was there a loan agreement as alleged between the plaintiff and both the first and second defendants?

2. If there was such an agreement, was the money transferred on 15 October a payment pursuant to that loan agreement by the plaintiff to the defendants?

14. Obviously enough, the issues are interrelated and ought not be considered without reference to the other. The most obvious relationship between the issues is that if the money that was transferred on 15 October was in fact a transfer of money by the plaintiff to the defendants, that fact would be extremely probative in determining whether there was in fact a loan agreement as alleged between the plaintiff on the relevant day.

15. To decide those issues, it is necessary for me to resolve a number of contested issues of fact.

Who is who?

16. In order to understand the issues, it is necessary to understand who the parties and related entities are and what their relationship to each other was at the relevant time. The interrelationship is complicated and was not set out in any one place by any of the parties. Whilst parts of it are clear enough there is one aspect which is entirely opaque to me having heard the evidence, that being the relationship of the company Master Property Services Pty Ltd to any of the other players at the relevant time in not just a commercial sense but also in a legal or equitable sense.

17. With that proviso I make the following findings as to the commercial interrelationship of the relevant parties as at 15 October 2021.

18. Way Right was the registered proprietor of land at Nelson Street, Fairfield, NSW (“the Premises”). From the Premises a real estate business which had previously been known as Ray White Fairfield had been conducted for many years. That business was conducted by Mercantile Property Group Pty Ltd (“Mercantile”), a company owned and controlled by Mr Movizio and the third defendant Mr Lu.

19. Mr Movizio and Mr Lu were also the owners and directors of Way Right.

20. The plaintiff had for many years worked for Mr Movizio and Mr Lu, probably through Way Right, at Ray White Fairfield as a maintenance officer. He seems to have worked as an independent contractor through his company NSW Maintenance Solutions Pty Ltd (“Maintenance”).

21. Anthony Fedele also had worked for many years at Ray White Fairfield. He is the controlling shareholder of Stella Bella  and another company, Master Property Services Pty Ltd (“Master”).

22. For many years Way Right had a loan agreement with the ANZ Bank and had mortgaged the premises as security for that loan.

23. In June 2021 Way Right was in default of that loan and the ANZ Bank had sent default notices giving 31 days to remedy the default.

24. As at 5 October 2021, the arrears owing by Way Right to the ANZ was $174,216.05.

25. As I think I have already said Stella Bella and Master Property Services Pty Ltd were both companies which were controlled by Mr Fedele in the sense that he was the sole director and shareholder.

26. Master owned a business name - “RW Partners”.

27. Master had entered into a tradename licence agreement with Mercantile on 18 October 2021 which allowed Mercantile the non‑exclusive use of the name “RW Partners”.

28. At some point, presumably around early October 2020 but it is not clear, the Ray White franchise ceased (apparently because of failure to pay franchise fees) and the real estate business operating at the premises began to operate under the name of RW Partners Fairfield.

29. Since that time Mercantile has been trading as RW Partners Fairfield as a licensed real estate agent from the premises.

30. There is also a strong suggestion in the evidence that Master was also trading from the same premises at the same time as a real estate agent, albeit it did not have a relevant licence during the whole of this period. Quite how that was happening and under what arrangements is the matter about which I have said I find entirely opaque.

31. It is said by both the plaintiff and Mr Fedele that Stella Bella owed money to Way Right in excess of $174,216.05 as at 15 October 2021. For reasons I will come to I am not satisfied that this has been proved.

32. The plaintiff was made bankrupt on 6 February 2021 and was discharged in February 2023.

Commercial setting

33. Whilst the evidence presented by the plaintiff was, to say the least confusing, it is clear enough that at the time of the advance of the $174,216.05 the commercial setting between the various parties was as at least as follows.

34. First, Way Right owned the land but was in default of its obligations to the ANZ Bank to the tune of $174,216.05. Second, the business operated by Mercantile had lost its right to operate as a Ray White franchise and was operating as RW Partners Fairfield. Third, the ANZ Bank had issued default notices and was threatening to take possession of the property for the purpose of a mortgagee’s sale. Fourth, Way Right had in place a lease arrangement with Mercantile wherein Mercantile, as might be expected, was required to pay rent to Way Right. The term of that lease had expired and so it was operating on a month-to-month basis. Fifth, both Way Right and Mercantile were controlled by Mr Lu and Mr Movizio. Sixth, Mercantile was not paying any rent to Way Right which no doubt, at least in part, was the reason Way Right was not paying money to the ANZ Bank. Seventh, the plaintiff and Mr Fedele had for many years worked in the real estate business. Eighth, they each wanted, either individually or together, to buy a share of the real estate business and/or the land and were both aware of the financial difficulties Mr Movizio and Mr Lu were encountering. Ninth, negotiations to do some sort of deal were underway. Tenth, Master had been incorporated and was in some way also operating a real estate business under RW Partners Fairfield from the same address. Whether that was the same business as was being by operated by Mercantile or a different business, or some sort of merged business, is entirely unclear.

35. I think what the most likely explanation as to what was going on is that the parties all anticipated that their negotiations would eventually resolve into a concluded agreement wherein the plaintiff and Mr Fedele, through whatever corporate vehicles they chose, would become the proprietors in some way shape or form of some share of both the business and the premises. I think that in anticipation of an agreement along those lines coming into existence Master had in some way commenced operating at the premises.

36. There were negotiations between the parties which were never finalised wherein the general plan was that a deal might be structured so as to allow the plaintiff and or Mr Fedele to buy a share of the land and an interest in the business with the money they (he) paid being used to discharge the liability to the bank and also, as part of the arrangement, there would be a new lease entered into ‑ the one in place being on a month-to-month basis ‑ so as to allow the business to have a long term tenure on the land.

37. As I have said, those negotiations eventually came to nothing, but it is in the context of those negotiations that the money the subject of these proceedings was transferred and that any discussions about that took place. They are therefore the commercial setting known to all the parties at the relevant time which needs to be taken into account when coming to a conclusion as to what the proper characterisation of that advance of money is.

Summary of contentions

38. The plaintiff's case is simple. He says that he reached an agreement to lend money to Way Right, Mr Movizio and Mr Lu, so that Way Right could pay the money it owed the ANZ Bank. He says his motivation for doing that was to keep the premises under the control of Way Right so that in due course when the negotiations concluded the premises would still be under the control of the person he hoped to buy some or all of the business and land from.

39. He says that at the relevant time Stella Bella owed him in excess of $174,216 and that at his direction Mr Fedele caused Stella Bella to pay that money for the benefit of Way Right.

40. The basis of the debt said to be due by Stella Bella to the plaintiff was not the subject of any evidence at all other than the bare assertions contained in the affidavit evidence of both the plaintiff and Mr Fedele.

41. Both Mr Fedele and the plaintiff in their affidavit evidence did no more than assert that Way Right was indebted to the plaintiff in an amount in excess of $174,000 at the time. No explanation at all was offered as to how or why this liability existed. Whether I am prepared to act on that “evidence” is a topic to which I will return.

42. The plaintiff provided very helpful written submissions wherein at para 6 the following objective facts are pointed to in support of the plaintiff’s case. I set out as follows:

“6. The relevant facts are:

a.    Three transfers of money were made.

b.    The transfers were made to 3 separate mortgage accounts.

c.    The transfers were in the amount of arrears on each account.

d.    The transfer was from Stella Bella to Way Right Investments.

e.    Kalache and Fedele give evidence that the transaction was undertaken because, Kalache said he was lending money to Way Right Investments and asked to make the transfers on his behalf.

f.   Fedele agreed to transfer the money.

g.   He did so.

h.   He narrated the transfer as a “loan”.

i.    Way Right accepted the money, it did not pay the money back.

j.   No complaint about the narration, “loan” was made by Way Right Investments.

k.   Fedele does not say the loan was from Stella Bella.

l.   Neither Movizio nor Lu say the money was a loan from Stella Bell.

m.   Way Right Investments does not tender any business record which characterises the transfers with a different characterisation.”

43. There was some debate between counsel for the plaintiff and myself during final submissions as to whether the alleged “objective fact” set out in para (e) is really an objective fact or is more properly characterised as a fact that should be found by me upon accepting the evidence to that effect of Mr Kalache and Mr Fedele or both of them.

44. I think the latter characterisation is the better one.

45. The defendants’ submissions really boil down to this. It is accepted that the transfers of the money took place. It is accepted that the transfers were for the purpose of discharging Way Right’s obligation to the ANZ Bank. It is accepted that the transfer went from Stella Bella to Way Right, but it is not accepted that any of that proves that that transfer was pursuant to a contract that had been made or is evidence of a contract whereby the plaintiff agreed to lend money to the defendant. The alleged conversation at paragraph 18 is emphatically denied.

46. The defendants say that “RW Partners Fairfield”, which by the middle of October 2021 was a business being conducted at the premises by either Mercantile or Master or perhaps both where one or both of those companies was a tenant at the Fairfield property (this is disputed by Mr Fedele). The defendant points to the fact that there is at least some evidence to suggest that both Master and Mercantile were operating from the premises and therefore one might infer had an obligation to pay some rent in relation to that occupation. The defendant also points to the commercial setting whereby Mr Fedele had as much commercial motivation as the plaintiff had to advance monies so as to keep the ANZ Bank at bay so as to allow the negotiations that they were actively engaged in to continue, his ultimate objective being to purchase some or all of the business and the premises whether on his own or with the plaintiff.

47. It is the defendant's case that the payment of the money on 15 October 2021 may well have been a payment of a debt owed by either Mercantile or Master to Way Right or may have been an advance of some character by Stella Bella or some other entity controlled by Mr Fedele. Otherwise, the defendant’s position is that in all the circumstances I would not be satisfied of the two central issues in the case, the first being whether there was any agreement between the plaintiff and the defendant as alleged, and the second being, whether the advanced money has been shown on the balance of probabilities to in fact have been an advance by the plaintiff to the defendant.

Resolution

48. It seems to me that the matter can be resolved by me firstly deciding what if anything was said between the plaintiff and the defendants in October 2021, and construing those words so as to determine whether there was an agreement to lend money at all, and what its terms might have been.

49. True it is that it is not necessary when determining a question of whether a contract has been proved or not to be satisfied by direct evidence of the precise terms of a contract. Rather, the better approach is to step back and look at all of the proved facts to ultimately determine whether the Court is satisfied to the requisite degree that there was a contract. Nonetheless, the starting point in determining an oral contract is to try and identify what was said in a conversation between prospective parties to an alleged contract.

50. Next, and very much related to the first issue, is to determine whether the transfer of funds of $174,216.05 was pursuant to that loan agreement as is contended by the plaintiff or was a payment by Stella Bella to Way Right for some other purpose ‑ as is contended by the defendants.

The plaintiff’s witnesses

51. The first and most important witness in the case was the plaintiff himself.

52. The commercial context that I have attempted to explain is not in any way shape or form explained in either of the plaintiff’s affidavits. As far as one could glean from his affidavit evidence, the position was that Way Right was in default of its obligations to the ANZ Bank, there was a meeting in June 2022 (para 10) where the plaintiff said he wanted to buy 50% of Way Right Investments (ie the land). A valuation of the land was then obtained and thereafter there was a discussion on 18 October 2021 (para 18) wherein the plaintiff gives evidence that, if accepted, would amount to an enforceable oral loan agreement.

53. The plaintiff was a most unimpressive witness to say the least. Without going too much into the excruciating detail, ultimately, he was driven to concede that almost every sentence of both paras 10 and 18 of his affidavit was not at all accurate. He blames this on his solicitors and the fact that his affidavit was rushed when it was prepared and that he did not apparently read it at any stage between swearing the affidavit, giving his second affidavit and giving his evidence in Court.

54. Eventually, his evidence morphed (or to put it as it was put by counsel “reformulated”) into something like this. He was in negotiations to buy some share in the property and or the business. The bank was pressing for payment of its debt and the business, and the property were in jeopardy because the bank was threatening to take possession. He then advanced the $174,216.05 not on terms of a loan “repayable on call with interest at court rates”, as is pleaded and is his affidavit evidence, but rather as some sort of down payment for his anticipated purchase which if the purchase went ahead would be a credit against the purchase price but if it did not then the money would be repayable.

55. That explanation is almost diametrically different to the explanation given in his affidavits which is that the money was advanced as a loan at call.

56. Without going into the other inconsistencies between paras 18 and 10 on their face, and the other matters about which the plaintiff could at best be described as confused, whatever else I make of the plaintiff’s evidence I cannot and do not accept any part of what is in para 10 and 18 of his principal affidavit.

57. As far as an “oral contract” is concerned the best the plaintiff ‑ and this needs to be emphasised, the plaintiff being a party to the alleged oral contract ‑ the best the plaintiff could say was that there were sums of money similar to the one subject to this case which were advanced by him (what happened to them and whether they have been paid back or not is a mystery) and that it was “always my understanding” that if the transaction did not go ahead the money would be repaid after “everything is sorted out”. He apparently can give no evidence at all of any particular conversation being the genesis of that arrangement.

58. True it is, as I have said, that it is not an essential component of proof of a contract. But in circumstances where the alleged contract is an oral contract, and the witness in question is said to be a party to the oral conversation which gives rise to the oral contract, the absence of any ability of that person to give any acceptable evidence about the relevant conversation is, at least, not a promising start to a successful claim based on that contract.

59. The next issue of fact which the plaintiff’s evidence concerns is that he asserts ‑ without any particulars ‑ that the money that was transferred which went from Stella Bella to Way Right represented a debt which Stella Bella owed him and which he directed Mr Fedele to advance to Way Right at his direction. Accordingly, so the theory goes, the payment was a payment by direction and therefore represents the advance by the plaintiff to Way Right.

60. I think there are significant problems with this aspect of the plaintiff’s evidence which, it seems to me, is essential to both the contract case and the alternative case based in restitution. Those problems include there is no evidence as to how or why Stella Bella came to be indebted to the plaintiff at the relevant time. It seems unlikely to me that Stella Bella would have been indebted to the plaintiff at that time. The plaintiff had been a bankrupt and was discharged in early 2021. There is in evidence his statements of assets and liabilities which disclose no asset in the shape of monies owed to him by Stella Bella at that time. If the debt existed at all it had to come into existence in about a six-month period following the plaintiff’s discharge from bankruptcy until the time of the advance. There is no evidence as to how that might have happened. Nor are there any documents at all that support the existence of such a debt. As I have said I have no more than just a mere assertion of this important fact. True it is that assertion comes from not just the plaintiff but Mr Fedele but on both sides of the alleged transaction the same criticism can be made. It is the barest of bare assertions.

61. When one looks for objective evidence explaining the actual transaction between Stella Bella and Way Right the bank statements of both Stella Bella and Way Right are in evidence. They prove the advance of the money on the relevant day. However, both of them have notations which must have been made at the time (presumably on the instructions of Mr Fedele) ‑ indeed the plaintiff gave evidence that Mr Fedele made the entry at his suggestion. Those entries can only, in my judgment, be sensibly understood as objective evidence supporting the proposition that the transactions represented a loan from Stella Bella to Way Right. Mr Allen on behalf of the plaintiff submits that to make that finding would be overstating the meaning that can be read into those notations. Perhaps that is right but even if that is right the notations are certainly inconsistent with the plaintiff’s case which is that the loan was in fact a loan from him to the defendant. The plaintiff was cross‑examined on why it is, if he believed at the time the transaction was a loan from him to the defendant, and if he, as he said was the case was the person that gave instructions to Mr Fedele as to what notation should be made in the bank statements why it is that he did not instruct Mr Fedele to record the transaction as a loan from the plaintiff to the defendants. He was given a number of opportunities to explain that and to my mind failed spectacularly in so doing.

62. It seems to me this case, to a large degree, then boils down to whether I am prepared to act on the assertion that as at 15 October 2021 Stella Bella was indebted to the plaintiff in an amount exceeding $174,216.05. If I was satisfied of that fact, notwithstanding the absence of any real evidence that I would otherwise act on as to the basis of that transaction, there would at least be a need to have a sensible enquiry, perhaps a shift in the evidential burden to the defendants, to explain that advance of money.

63. This is the type of circumstance which the courts have grappled with for many centuries. That is, the important question of what quality of evidence a court will be prepared to act on in any particular case will often depend on the quality of evidence that the court knows that the proving party could have tendered but chose not to tender. The best explanation of the concept is that found in Lord Mansfield’s famous speech in Blatch v Archer [1774] 1 Cowp 63 at 65; [1774] 98 ER 969 at 970 where his Lordship said:

“That all evidence is to be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to have contradicted may affect the assessment of matters which are relevant to whether the limited material before the Court is an appropriate basis on which to reach a reasonable decision”.

64. This rule or maxim was approved by the Court of appeal in Ho v Powell (2001) NSWCA 168; (2001) 51 NSWLR 572 and most recently by Besanko J in the Federal Court in Robert Smith v Fairfax Publication Pty Limited (No 41) [2023] FCA 555. In my judgment, it has real resonance to the resolution of this case.

65. Ultimately the plaintiff bears the onus of satisfying me to the requisite degree, that is to the balance of probabilities, of the essential facts that he has sought to prove.

66. In circumstances where it is, if not essential, a fundamental fact in the plaintiff’s case, both to prove the existence of a contract but also to prove performance of the alleged contract, that there was in fact a debt due at the relevant date from Stella Bella to the plaintiff, and where in the plaintiff’s case the plaintiff called himself and the controlling mind of Stella Bind and the best either of them could do was to assert without any detail at all the existence of such a debt, I know by the application of common sense, that the plaintiff had it within his power to call much better direct, and if you like compelling evidence, to prove that fact, that I am not prepared to act on those mere assertions so as to conclude that such a debt was owing.

67. If one then takes out of the equation the asserted fact by the plaintiff that there was money due by Stella Bella to the plaintiff as at the relevant time of the advances, and if I put to one side the oral evidence of the plaintiff in paras 10 and 18 of his affidavit, there is then a need to look at, or to ask the question is there any other objective evidence left upon which I could rely so as to find in favour of the plaintiff, either in support of his contract case or his restitution case.

68. I think the plaintiff at this point of the analysis is driven back to what he said in opening, that is, the only objective evidence is the transfer of the funds from Stella Bella to Way Right on the relevant date. I do not think that is enough to persuade me that the plaintiff is entitled to succeed on any of the causes of action.

69. I also have taken into account the fact there are other rational explanations available for the advance. Master Property Services did own the business name RW Partners which business name had been effectively licensed to Mercantile which was trading at the premises at the time under the name RW Partners Fairfield. The question as to whether Master was operating any part of that real estate business, or its own different real estate business, is something which I cannot resolve. But there is a strong suggestion in the evidence that is what was going on because Master was paying invoices which can only have been relevant to the conduct of a real estate business from those premises. So I do find that it was conducting some sort of business from the premises. As I have also said, Mr Fedele did have a commercial motivation to himself to advance money, at least as strong a motivation as the plaintiff.

70. Perhaps surprisingly (although in this case it should not now not be surprising) there is no objective evidence ‑ indeed there is no real evidence at all as to the alleged tenancy or the alleged state of accounts between Way Right and the plaintiff to provide any corroboration for the proposition of at the relevant time Way Right was indebted to the plaintiff. Equally surprisingly there does not seem to be any documentation at all recording any state of account between Stella Bella and Way Right at the relevant time. Nor is there any evidence of the state of a rent account between Way Right and the various entities who may have been occupying the premises at the time.

Resolution – the contract case

71. The first question is whether a particular oral contract formed at a particular time (as pleaded and alleged in the affidavit) has been proved.

72. The only direct evidence of such a contract is in para 18 of the plaintiff’s evidence.

73. As I have said, I'm not prepared to act on the plaintiff's evidence in that regard. Indeed, I am not prepared to act on the plaintiff's evidence at all, unless it is corroborated by other evidence which I consider to be reliable. I do not think that there is any objective evidence that allows me to infer such a contract. Indeed, the objective evidence as there is ‑ and in particular the notations in the various bank statements ‑ all points in the other direction.

74. At the risk of repetition my reasons include, first, the plaintiff’s complete departure from his pleaded case and his affidavit evidence during his cross‑examination. Second, the implausibility of the revised case presented by the plaintiff in cross‑examination to the effect that the advance was a down payment of any transaction that might be agreed in the future, but if no such transaction occurred then it would convert to a loan repayable at that time ‑ the reason I say that is implausible is that it is not consistent with anything the plaintiff pleaded or said in his affidavits, or the particulars of the caveat that he lodged. Third, that the contemporaneous records, as little as they are, comprise the bank's statements of both Stella Bella and Way Right, which both record the transaction ‑ perhaps not clearly ‑ but the better reading of the notation is that they recorded as a loan from Stella Bella to Way Right. Mr Fedele’s evidence was that he made those notations at the direction of the plaintiff. The plaintiff seemed to accept that but could offer no explanation as to why, if in fact the transaction was an advance from him to Way Right, he did not instruct Mr Fedele to make a notation to that effect (eg loan from Kalache to Way Right). The fact that the plaintiff when he lodged a caveat in support of the same debt in May 2023 on the title of the property had as particulars of the alleged claim an agreement said to have taken place in February 2020. Like his explanation for the discrepancy between what he says really happened and his affidavit evidence and his pleaded case, he blamed this discrepancy in his caveat again on his solicitors. There becomes a point where the plausibility of anything inconsistent with the parties’ case being the fault of not that party but of their solicitor loses attraction. In this case the plaintiff is well past that point.

75. Next, there are a series of requests for particulars of the alleged contract where solicitors on the part of the plaintiff responded, it must be said somewhat aggressively, by insisting that all particulars necessary for the defendants to understand the case were to be found simply by reading para 18 of the affidavit and that it was presumptuous of them, and indeed, improper of them to be asking any different particulars. I think I am entitled to infer that those letters were written on instructions ‑ there was no cross‑examination about them.

76. Finally, whilst I am not sure whether the plaintiff was being dishonest on or not, the general impression I formed from the way he gave his evidence was that he was an entirely unreliable witness.

77. As for Mr Fedele I thought he was a reasonably reliable witness. However, the only real evidence he gave of note was of his understanding of the state of accounts between Stella Bella and the plaintiff at the relevant time, and for reasons I have already given, I am not prepared to act on that evidence.

Can a contract be proved otherwise?

78. It is of course theoretically possible that any contract can be proved without direct evidence of the actual formation of the contract. There are many cases where that has happened, and it accords with common sense. If the totality of the evidence is such that the only inference is that they there must have been a contract between the relevant parties, then such a finding can be safely made by a court.

79. However, this is not this is not that sort of case. If one puts to one side the oral evidence of the alleged conversation, all the plaintiff is left with is the fact that the money was transferred from Stella Bella’s account to Way Right’s account. It would of course be a completely different case if the money was transferred from the plaintiff's account to Way Right’s account. That would be a step in the right direction in proving a loan agreement so long as the plaintiff could provide evidence ruling out some other explanation for the transfer. At that point the evidentiary burden might shift to the defendants to provide an explanation. However, as I have said, not only is the transfer not from the plaintiff to Way Right, it is also recorded in Way Right’s books and records (at the direction of the plaintiff) as a loan from Stella Bella to Way Right, or even if that is overstating things, it is certainly not recorded in any of the books and records of anyone as a loan from the plaintiff to the defendants.

Was the money paid by the plaintiff?

80. I have already largely dealt with this topic, but I add to what I have already said, the fact that I find it inherently implausible to the point of fanciful that at the relevant time Stella Bella was indebted to the plaintiff in any significant amount of money at all.

81. My reasons are first, the absence of any direct or cogent evidence explaining how such a liability came to exist is significant. The plaintiff and/or Mr Fedele both of whom gave evidence in the plaintiff's case, were both in a position to give direct and detailed evidence as to how any such liability but chose not to do so.

82. In those circumstances, for reasons I have explained, it seems to me it is a matter for me as to what weight, if any, I give to their evidence. First, without repeating what Lord Mansfield said in 1774, in the circumstances of this case I am not prepared to give any weight to the extraordinary, slight and unpersuasive evidence the plaintiff did chose to put before the Court in circumstances where he could have given much more direct and persuasive evidence. Second, the recent bankruptcy of the plaintiff adds to my scepticism as to how it is such a liability came to exist. It is not mentioned in the plaintiff’s statement of affairs to his trustee, and if it was it would have been lost to the plaintiff as an asset as it would have formed part of his bankrupt estate. Third, at the risk of repetition, I just cannot accept that if the plaintiff believed at the time that what was occurring was a loan from him to Way Right that he would not have instructed Mr Fedele to record that in the records of Stella Bella.

83. For all those reasons, I am not satisfied that the plaintiff has proved that he advance any money to the defendants, let alone the $174,216.05 with which this case is concerned.

Restitution

84. Of course, as a matter of legal theory, if the plaintiff failed to prove a contract enforceable at law but had proved that the money was advanced by him to one or more of the defendants at their request, then subject to various well understood defences, he would probably be entitled to recover that money as “monies had and received" under the principle of law known as restitution.

84. However, because I am not satisfied that the plaintiff advanced any such money a claim framed in restitution must also fail.

Application to amend / resolution of amended claim

86. Finally, there was tendered in evidence a Deed of Assignment between Stella Bella and the plaintiff, amongst other places in the evidence it was found at p 82 of exhibit A. The Deed does not seem to be dated but is said to be operative from 31 May 2023.

87. The recitals of that Deed are as follows:

“A.   The Assignor transferred $174,216.05 to Way Right Investments Pty Ltd (“Way Right Investments”) on the instructions of the Assignee (“transfer”).

B.   Way Right Investments claims that the money was not paid on behalf of the Assignee by the Assignor.

C.   The Assignee and the Assignor have agreed that in order to prove and give effect to the transfer the Assignor will assign to the Assignee all the Assignor’s legal and equitable interests in and arising out of the transfer and entitlements under the Securities including any Guarantee in support of the transfer.

D.   The Assignor and the Assignee acknowledge that the Assignment became operative on 31 May 2023.”

88. The operative provision of the Assignment is para 2.2 which I will set out in the final version of these reasons.

“2.2    With effect from the receipt by the Assignor of the Settlement Sum, the Assignor assigns, and the Assignee takes an assignment of, all the legal and equitable interests arising out of the transfer and entitlements under the Securities including any Guarantee in support of the transfer.

89. Mr Allen, on behalf of the plaintiff, made an application during the hearing to amend his claim so as to rely on a claim by his client based on an assignment of any debts owed by the defendants to Stella Bella as at the date of the Assignment.

90. I have decided to allow that amendment application notwithstanding that the defendants did not have an adequate opportunity to answer it. The reason I am doing that is I have decided that case is bound to fail and so the better course for me to take is to allow the amendment and then to dismiss the claim.

91. My reasoning is this.

92. The plaintiff has not satisfied me that he has proved a claim as alleged against the defendants but this is not because I have been satisfied on the evidence that Stella Bella was owed as at 31 May 2023 any money by the plaintiffs. True it is that there is evidence in this case that tends to suggest some sort of arrangement by way of loan between Stella Bella and the plaintiff created by the transactions, but I have nothing more than the bank statements and the sworn evidence of the plaintiff and Mr Fedele who was, of course, at the relevant time the operative mind of Stella Bella. An advance by Stella Bella to Way Right by way of loan is one of the rational explanations for the advance, but I am not prepared and do not make such a finding.

93. Mr Fedele gave no evidence at all to suggest that any time he believed that there was a debt owed by the defendants to Stella Bella. Moreover, whilst cl 2.2 is at large and captures all potential debts the recitals in the Deed, which I do think I can take into account when construing cl 2.2, very much limit the topic of the Deed to the payment alleged to have been paid by the plaintiff to the defendants, the subject of this claim, and not any other claim.

94. Accordingly, I conclude that the amended claim by the plaintiff relying on the Deed of Assignment must also fail because it has not been proved to me that there was any debt owed by the defendants to Stella Bella as at the operative date of that Deed being 31 May 2023. On that basis there was no debt in existence capable of being assigned.

Conclusion

95. For those reasons I:

1. order the first defendant’s motion for summary judgment filed 2 August 2023 be dismissed;

2. order the plaintiff’s claim be dismissed;

3. order the plaintiff pay the defendant’s costs of the proceedings, including any costs associated with the notice of motion seeking summary judgment;

4. I dissolve the injunction presently in place to the intent that the monies currently held in the solicitor’s trust account be immediately released as the direction of the defendants.

Mr Allen if you want a deferral on that dissolution of the injunction to think about an appeal.

ALLEN: No.

HIS HONOUR: I would give you that if you asked for it. I would give you 14 days or something. Do you make such an application?

ALLEN: No your Honour.

HIS HONOUR: Well those will be my orders. You will get a typed version of that in couple of weeks.

**********

Amendments

22 November 2023 - misspelling on coversheet

Decision last updated: 24 November 2023