Kelly v Australia and New Zealand Banking Group Limited
[2014] NSWSC 426
•11 April 2014
Supreme Court
New South Wales
Medium Neutral Citation: Kelly v Australia and New Zealand Banking Group Limited [2014] NSWSC 426 Hearing dates: 8/7/13-18/7/13; 15/8/13 Decision date: 11 April 2014 Jurisdiction: Civil Before: Hall J Decision: (1) There was no contract whereby the defendant (ANZ Banking Group Limited) agreed to place the plaintiff on its panel of quantity surveyors if the plaintiff and his wife took out loans with the defendant.
(2) The defendant did not engage in conduct that was misleading or deceptive, or likely to mislead or deceive.
(3) Proceedings be re-listed at 2.00pm on 22 April 2014 for the purpose of making any further directions and final order(s).
Catchwords: CONTRACT LAW - alleged breach of contract - alleged misleading and deceptive conduct pursuant to s 52 of the Trade Practices Act 1974 (Cth) - whether the defendant promised to appoint the plaintiff's company to its panel of quantity surveyors in exchange for the plaintiff remaining a customer of the defendant and taking loans from the defendant - whether this promise constituted a contract between the plaintiff and the defendant - neither the defendant nor its representatives made the alleged promise - no contract to the effect pleaded in the Statement of Claim - the defendant did not engage in conduct that was misleading or deceptive or likely to mislead or deceive - evidence fabricated by the plaintiff - cross-claim by the defendant in respect of monies owed in respect of the loans to be heard and determined Legislation Cited: Evidence Act 1995 (NSW)
Electronic Transactions Act 2000 (NSW)
Limitation Act 1969 (NSW)
Trade Practices Act 1974 (Cth)Cases Cited: Briginshaw v Briginshaw (1938) 60 CLR 336
China-Pacific SA v Food Corporation of India (The Winson) [1981] QB 403
Commonwealth Bank of Australia v Serobian [2009] NSWSC 302
Legione v Hateley (1982) 152 CLR 406
Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170
Osborne v Boral Resources (NSW) Pty Ltd [2012] NSWCA 155
VPlus Holdings Pty Ltd v Bank of Western Australia Ltd (2012) 91 ACSR 545
Watson v Foxman (1995) 49 NSWLR 315
Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23Texts Cited: The Revised Professional Conduct and Practice Rules 1995 Category: Principal judgment Parties: David Kelly (Plaintiff/First Cross-Defendant)
Australia and New Zealand Banking Group Limited (Defendant/Cross-Claimant)
Norizah Kelly (Second Cross-Defendant)Representation: Counsel:
J Button, solicitor (Plaintiff/Cross-Defendants)
AJ McInerney SC; K Tang (Defendant/Cross-Claimant)
Solicitors:
Longmores Lawyers & Property Conveyancers (Plaintiff/Cross-Defendants)
Gadens Lawyers (Defendant/Cross-Claimant)
File Number(s): 2011/201022
Judgment
PART A - INTRODUCTION
These proceedings were initially commenced on 20 June 2011 by way of Statement of Claim filed on behalf of the first plaintiff, David Kelly (Mr Kelly), and the second plaintiff, Lucrum Consulting Pty Ltd ("Lucrum").
Mr Kelly is a quantity surveyor. The second plaintiff, Lucrum, formerly known as Gleeds Australia Pty Ltd ("Gleeds Australia") was a company of which Mr Kelly was a shareholder and director.
The defendant, Australia and New Zealand Banking Group Limited ("ANZ"), filed a cross-claim against Mr Kelly and his wife, Mrs Norizah Kelly on 27 October 2011, in respect of alleged defaults under various loan agreements and mortgages it entered into with Mr and Mrs Kelly. Mrs Kelly is not a plaintiff to the primary proceedings. Accordingly, there is no claim made on her behalf in these proceedings.
Lucrum was placed into liquidation on 27 September 2011 pursuant to a members voluntary winding up. The claim brought by that company was dismissed on 5 April 2012. Accordingly, there is no claim by that company in these proceedings.
Representation
The hearing commenced on 8 July 2013, at which time Mr Kelly was represented by Mr P Loiterton solicitor. Subsequently, Ms J Button, solicitor, appeared in the proceedings from 10 July 2013. The Plaintiff's Submissions - Liability dated 9 August 2013 and the Plaintiff's Reply Submissions - Liability, undated, lodged on 4 November 2013 were prepared by Ms Button. On the latter date, Ms Button, by letter to my Associate, noted that her firm, Longmores Lawyers & Property Conveyancers ("Longmores"), had filed a Notice of Ceasing to Act. Thereafter, Mr Kelly has represented himself.
Mr AJ McInerney SC and Mr K Tong appeared on behalf of ANZ.
Factual Background
The primary factual matters relied upon in support of the claim brought by Mr Kelly in these proceedings occurred approximately six years prior to their commencement. It is upon the basis of an alleged verbal representation, or promise, said to have been made in 2005 by an employee of ANZ to the effect that ANZ would place Mr Kelly's company on its panel of quantity surveyors in exchange for Mr Kelly entering into a transaction with ANZ. Mr Kelly relies on this alleged promise in support of his claim for damages for alleged breach of contract in respect of alleged breaches by the defendant bank of the provisions of s 52 of the Trade Practices Act 1974 (Cth).
Before examining the factual matters relied upon to support the claim, I set out below a summary of the relevant loan transactions.
Commercial Loan
(i) The loan arose from Mr Kelly's acceptance of an offer from ANZ dated 13 April 2005. That offer was accepted on 19 April 2005.
(ii) A variation to the loan as recorded in an ANZ letter dated 10 June 2008.
(iii) A further variation to the loan as recorded in an ANZ letter dated 8 September 2008.
(iv) The above loan was secured by a first registered mortgage over a property at Arthur Street, North Sydney ("the North Sydney premises").
(v) Mrs Kelly provided a Guarantee and Indemnity in respect of the loan obligations.
Home Loan
(i) A letter from ANZ dated 9 September 2008 was accepted on 15 September 2008.
(ii) The loan was secured by a first registered mortgage and a second registered mortgage in respect of a property at Dural.
Residential Investment Loan
(i) An offer of a loan by ANZ on 22 September 2008 was accepted on 29 October 2008.
(ii) The Residential Investment Loan was secured by a first registered mortgage over a property at Blackwall.
Affidavit Evidence
Affidavits were filed on behalf of Mr Kelly and ANZ. For convenience I set out below a list of the affidavits:
Plaintiff's Affidavits
Ian Ross Pratt sworn 30 January 2012
Norizah Kelly sworn 12 February 2012
David John Kelly sworn 12 February 2012
David John Kelly sworn 13 February 2012
David John Kelly sworn 22 February 2012
Ian Pratt sworn 28 June 2012
David John Kelly sworn 6 July 2012
Gerald Merwin Olstein sworn 6 July 2012
John Paul Noller affirmed 6 September 2012
David John Kelly sworn 23 August 2012
David John Kelly sworn 27 August 2012
David John Kelly sworn 12 September 2012
David John Kelly sworn 20 March 2013
David John Kelly sworn 6 June 2013
David John Kelly sworn 17 June 2013
Defendant's Affidavits
Matthew James Spicer sworn 24 February 2012
Clinton John Towers affirmed 4 September 2012
Anthony Bruce Robins sworn 9 May 2012
Wayne O'Neill sworn 14 May 2012
George Kostov sworn 16 May 2012
Tod Matthew Wills sworn 16 May 2012
Holly Elizabeth Borwick sworn 18 May 2012
Saif Ahmed sworn 18 May 2012
Greg Richard Asher sworn 18 May 2012
Ravi Vijaykumar Shah sworn 18 July 2012
Saif Ahmed sworn 14 August 2012
Hitender Dewan affirmed 28 August 2012
Anthony Bruce Robins sworn 28 August 2012
George Kostov sworn 28 August 2012
Tod Matthew Wills sworn 29 August 2012
Rajib Dey affirmed 29 August 2012
Wayne O'Neill sworn 30 August 2012
Peter John Nass sworn 4 September 2012
Michael Cerny affirmed 4 September 2012
Greg Asher sworn 5 September 2012
Ajoy Ghosh sworn 22 February 2013
Ajoy Ghosh sworn 22 February 2013
Ajoy Ghosh sworn 5 June 2013
Ajoy Ghosh sworn 5 June 2013
Greg Asher sworn 4 July 2013
Wayne O'Neill sworn 17 July 2013
Written Submissions
The plaintiff relied upon the following written submissions:
(i) Plaintiff's Outline of Submissions, 4 July 2013.
(ii) Plaintiff's Submissions - Liability, 9 August 2013
(iii) Plaintiff's Reply Submissions - Liability, served 4 November 2013.
ANZ relied upon its written and oral submissions. These included:
(i) ANZ Outline of Submissions, 5 July 2013.
(ii) ANZ Outline of Submissions on the Cross-Claim, 10 July 2013.
(iii) ANZ's Outline of Final Submissions, 13 August 2013.
(iv) ANZ's Supplementary Outline of Submissions, 14 November 2013 (subject to application for leave - see below).
PART B - OVERVIEW
The Plaintiff's Case
The essential factual allegation made by Mr Kelly against ANZ was set out in paragraph [7] of the Statement of Claim in the following terms:
"On about 7th April 2005 the Defendant, by its servant or agent Greg Asher orally represented to the First Plaintiff and the Second Plaintiff and offered to the First Plaintiff and the Second Plaintiff that the Second Plaintiff would become a member of the Defendant's panel of quantity surveyors if:
(a) The First Plaintiff remained a customer of the Defendant, and
(b) The First Plaintiff proceeded with the purchase of offices at [XXX] Arthur Street, North Sydney ("the offices") and take a commercial loan from the Defendant to fund the purchase of the offices."
As noted above, the second plaintiff is Lucrum Consulting Pty Limited.
Mr Kelly alleges that he wrote to Mr Asher of ANZ on 12 April 2005 in relation to the proposed purchase of the North Sydney property. The authenticity of that letter is a strongly contested issue in the proceedings. In this respect, in paragraph [8] of the Statement of Claim Mr Kelly alleged:
"On 12th April 2005 the First Plaintiff confirmed in writing to the said Greg Asher that he would not purchase the offices if the Second Plaintiff was not made a member of the panel of quantity surveyors of the Defendant."
In paragraph [9] of the Statement of Claim, Mr Kelly further alleged:
"On 19th April 2005 in the belief that the Second Plaintiff would be made a member of the Defendant's panel of quantity surveyors and in consideration of the offer referred to in paragraph 7 above, the First Plaintiff accepted the Defendant's written offer of finance for the purchase of the offices."
As discussed below, Mr Kelly's version of the terms of the conversations he said he had with Mr Asher in relation to the alleged oral representation relied upon in support of his claim (as well as the dates upon which the critical conversation was said to have taken place), varied in his evidence-in-chief and in cross-examination.
According to the Statement of Claim, on 17 June 2005 Mr Kelly proceeded to acquire the premises in North Sydney with funds borrowed from ANZ to complete the purchase. He alleged that he did so in consideration of the promises made by the Defendant to the First Plaintiff, and in reliance upon the representations referred to in paragraph [7] of the Statement of Claim.
ANZ's Defence
In ANZ's Amended Defence filed on 27 September 2012, ANZ denied the allegations pleaded in the Statement of Claim including, in particular, paragraphs [7] to [15].
In paragraphs [16] and [17] of the Amended Defence, ANZ raised limitation defences firstly, pursuant to s 82(1) of the Trade Practices Act and secondly, under s 14(1) of the Limitation Act 1969 in respect of the claim for damages for breach of contract.
In addition, in paragraph [18] of the Amended Defence, ANZ pleaded as a defence the fact that the second plaintiff had been wound up and liquidator appointed, that in consequence the bare right to litigate under s 82(1) of the Trade Practices Act had ceased with the second plaintiff and further the right to litigate under that provision did not vest in the liquidator as a matter of law and was not capable of assignment to Mr Kelly.
ANZ additionally relied upon the fact that the claim in any event had been dismissed with costs on 5 April 2012 and there had been no purported assignment of any bare right to litigate that claim or the claim for damages for breach of contract from the second plaintiff to Mr Kelly.
In addition, in paragraph [18](e) of the Amended Defence it was pleaded:
"The first plaintiff has no standing, and as a matter of law is not able, to sue to recover damages in respect of any loss and damage alleged to have been suffered by the second plaintiff."
ANZ's case in respect of the claim made by Mr Kelly in the Statement of Claim was summarised at paragraph [27] of ANZ's Outline of Submissions dated 5 July 2013 in the following terms:
"(a) ANZ did not make a representation, or promise, to Mr Kelly;
(b) Mr Kelly did not send the email and PDF to ANZ;
(c) ANZ did not receive the email and PDF alleged to have been sent by Mr Kelly;
(d) There was no contract to the effect pleaded in the Statement of Claim;
(e) ANZ did not engage in conduct in trade or commerce which was misleading and deceptive, or likely to mislead or deceive;
(f) In any event, there was no reliance by Mr Kelly on any conduct by ANZ;
(g) In any event, there is no causation between any loss alleged by Mr Kelly and any conduct by ANZ;
(h) In any event, Mr Kelly suffered no loss by any conduct of ANZ;
(i) Further, Mr Kelly is prohibited from suing in respect of any loss alleged to have been suffered by ACN 112 171 034 due to the reflective loss principle;
(j) In any event, the claim in contract made by Mr Kelly is statute barred;
(k) In any event, the claim in misleading and deceptive conduct alleged by Mr Kelly is statute barred."
In elaboration of point (d) set out above ("There was no contract to the effect pleaded in the Statement of Claim"), ANZ relies upon relevant principles that apply in relation to the formation of verbal contracts. Whilst ANZ denied the various statements attributed by Mr Kelly to employees of ANZ, and relied in that respect upon the affidavits and oral evidence of each of the witnesses called in its case, it contended that in any event the terms of the alleged promise were insufficiently precise and inherently ambiguous, such that they could not operate as a variation of the loan agreements: ANZ's Outline of Submissions at [23].
Reliance was placed, by analogy, upon the decisions in Legione v Hateley (1982) 152 CLR 406 at 435-436; Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23; and China-Pacific SA v Food Corporation of India (The Winson) [1981] QB 403 at 429-430.
Attention was also drawn to the observations made in Commonwealth Bank of Australia v Serobian [2009] NSWSC 302 by Hammerschlag J at [362] in relation to cases where spoken words are used as a foundation for a cause of action. In that respect his Honour referred to the proposition that the Court must feel an actual persuasion of their occurrence or existence. Additionally, a court in such cases must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. I will return to these principles in the discussion below.
In addition, ANZ relied upon the requirement that where particular conduct is alleged to have been misleading or deceptive and is constituted by words spoken, such words must be proved with a degree of precision that is sufficient to enable a court to be reasonably satisfied that they were in fact misleading in proved circumstances: Watson v Foxman (1995) 49 NSWLR 315 at 318-9 per McLelland CJ in Eq.
ANZ's further submission was that, having regard to the objective intent of the parties, the factual matrix, and the commercial circumstances surrounding the loan agreements, it is clear in this case that the parties intended that the written loan agreements and associated security transactions were to be an all-embracing and binding record of the terms and conditions of the agreements between the parties: Outline of Submissions at [24].
ANZ also relies upon a defence that "Mr Kelly is prohibited from suing in respect of any loss alleged to have been suffered by ACN 112 171 034 due to the reflective loss principle". ANZ's submission was that the "reflective loss" principle applies in this case, namely, that a shareholder of a company cannot recover damages merely because the company has suffered damage, and that he or she cannot recover damages that are merely a reflection of a loss suffered by the company: VPlus Holdings Pty Ltd v Bank of Western Australia Ltd (2012) 91 ACSR 545 at [28].
In this respect, ANZ's contention was, in effect, that there was no loss suffered personally by Mr Kelly that was separate and distinct from the loss of his company. That principle, it was further contended, cannot be avoided by pleading a cause of action separate and distinct from the cause of action that the company might have: ANZ's Outline of Submissions at [19].
PART C - CHRONOLOGY
I set out below a chronological summary of material events that occurred prior and subsequent to the ANZ loan transactions and which were not in dispute.
On 1 February 2005, Gleeds Australia Pty Ltd commenced trading. Mr Kelly was from that time identified as its Managing Director.
On 10 January 2005, Mr Kelly met Mr Gerald Olstein, finance broker. Thereafter Mr Olstein spoke to Mr Asher, the then ANZ Relationship Manager, and subsequently collected an ANZ Commercial Application Form. Mr Olstein made an appointment to see Mr Kelly on 24 January 2005.
On 27 January 2005, Gleeds Australia entered into a lease of the North Sydney premises. It provided for a three-year term commencing 1 February 2005.
On 28 January 2005, Mr and Mrs Kelly signed an ANZ Commercial Application Form. They also completed a Personal Statement of Financial Position. That statement included the following information:
- A mortgage of $450,000 in respect of the Dural property.
- An investment loan of $200,000 (in respect of the Blackwall residential investment property).
On 31 January 2005, Mr Kelly made an offer of purchase for the North Sydney property in the amount of $725,000 less any outstanding rent-free period.
On 7 February 2005 Mr and Mrs Kelly signed an Originator Services Loan Application with ANZ for the following loans, totalling $740,000:
- A Home Loan Fixed Rate - $300,000
- A Residential Investment Loan - $280,000
- An Equity Manager Loan - $160,000
On 9 February 2005, Burling Realty wrote to Mr Kelly in respect of his decision to purchase the North Sydney property and congratulated him on his decision to proceed with the purchase.
On 11 February 2005, Mr Olstein delivered the Originator Services Loan Application to Mr Asher.
On 18 February 2005, Mr Kelly entered into an Employment Agreement with his company, Gleeds Australia.
On 8 March 2005, Mr Kelly sent letters on behalf of Gleeds Australia to a number of banking institutions and other financiers indicating an interest in applying for inclusion in the quantity surveyor panel of each. They were: ANZ, Macquarie Bank Ltd, Commonwealth Banking Corporation, St George Bank Ltd, Bank of Western Australia Ltd and Suncorp-Metway Ltd.
On 22 March 2005, a Credit Memorandum in respect of Mr Kelly's loan application was prepared by ANZ.
On 29 March 2005, Mr Asher of ANZ confirmed to Mr Olstein that indicative approval had been given for the following facilities:
- $720,000 Business Loan in respect of the North Sydney property. The term was for a notional period of three years fixed with interest only payments at 8.42%.
- $300,000 three-year Fixed Rate Residential Home Loan (payment being principal and interest) at 6.99%.
- $135,000 Equity Manager Account at 7.32%.
- $285,000 three-year Fixed Rate Interest Loan at 6.99% (payment being interest only).
On 13 April 2005, a Letter of Offer was sent by ANZ to Mr Kelly in respect of an ANZ Business Loan (Fixed Rate) with a facility amount of $720,000 for a maximum period of six years for the purchase of the North Sydney property with a fixed interest rate of 7.77% for three years.
On 19 April 2005, Mr Kelly signed an Acceptance to the Letter of Offer dated 13 April 2005. Mrs Kelly executed the Guarantor Acknowledgment dated 20 April 2005.
On 20 April 2005, Mr Kelly signed the relevant mortgage in respect of the North Sydney property. On the same date, Mr and Mrs Kelly signed the mortgage in respect of the Dural property.
On 4 May 2005, ANZ sent a Letter of Offer for a home loan in the amount of $300,000 for a three-year Fixed Rate Home Loan at 6.85% per annum.
On the same date, 4 May 2005, Mr and Mrs Kelly signed the mortgage in respect of the Dural property.
On 11 May 2005, ANZ sent a Letter of Offer to Mr Kelly in respect of an ANZ Residential Investment Loan in respect of the Blackwall property for an amount of $300,748.77 at a three-year fixed rate of interest of 6.85%.
On 17 May 2005, a deposit was paid in respect of the North Sydney property in the amount of $72,000, and contracts were subsequently exchanged. Settlement occurred on 22 June 2005.
On 24 November 2005, Mr Kelly made a request to ANZ to increase his facilities by an amount of $30,000. On that date, ANZ sent a Letter of Offer to Mr Kelly to increase the facilities in that amount.
On 22 December 2005, Mr Kelly accepted that Letter of Offer.
On 10 June 2008, ANZ sent a Variation Letter to Mr Kelly to vary his ANZ Business Loan in respect of the North Sydney property under the ANZ Business Loan (Fixed Rate) in the amount of $719,998 for a maximum loan period of four years and eight months to expire on 6 May 2010.
On 3 September 2008, Mr Kelly sought a further variation of his ANZ Business loan.
On 8 September 2008, ANZ sent a Variation Letter in respect of the ANZ Business Loan (Fixed Rate) to Mr Kelly which varied the facility detailed in the Letter of Offer dated 13 April 2005. The Acceptance was signed by Mr Kelly on 15 September 2008.
On 9 September 2008, ANZ sent a Letter of Offer in respect of his Home Loan for the Dural property and granted Mr Kelly a new home loan with a credit amount of $482,901.72 at a rate of 8.67% per annum.
On 15 September 2008, Mr and Mrs Kelly signed the receipt and Acceptance for this new home loan.
On 22 September 2008, ANZ sent a Letter of Offer to Mr Kelly in respect of a new ANZ Residential Investment Loan in respect of the Blackwall property with an amount of credit of $298,494.12 at a rate of 8.67% per annum.
On 29 October 2008, Mr Kelly signed the receipt and Acceptance in respect of that loan.
PART D - EVIDENCE IN THE PLAINTIFF'S CASE
The Plaintiff's Personal Background
Mr Kelly graduated from the University of Technology, Sydney in 1993 with a Bachelor of Building (Construction Economics) with Honours.
Subsequently he practiced as a quantity surveyor both in an employed capacity and later as a director of his own practice.
Since 1993 Mr Kelly has served on a number of industry associations, particulars of which were set out in paragraph [12] of his affidavit sworn on 12 February 2012.
Mr Kelly is a Fellow of the Australian Institute of Quantity Surveyors and served over a number of years in various positions including as Chairman, Australian Institute of Quantity Surveyors Funders Representative Committee from 2006-2007, and Vice-President of the Australian Institute of Quantity Surveyors from 2005-2007.
He has written and contributed to a number of articles and newsletters and books in respect of cost estimating, quantity surveying, property tax depreciation, liquidated damages and related construction-industry costs issues.
On or about 25 October 2004 he prepared a proposal that was submitted to an entity, Gleeds, which formed the basis of his selection as Managing Director of Gleeds Australia Pty Ltd.
Gleeds Australia was established in Australia on 1 February 2005. Mr Kelly described it as the Australian arm of the international Gleeds Consultancy and it comprised one of 31 offices affiliated with Gleeds worldwide: Affidavit of Mr Kelly sworn 12 February 2011 at [21].
Mr Kelly's evidence was that Gleeds Australia was engaged to carry out quantity surveying work on major projects in Australia and overseas. Gleeds Australia is also said to have provided cost management services on various projects, details of which are set out in his affidavit.
Prior to becoming the Managing Director of Gleeds Australia, Mr Kelly said that he spent four years working as a sole trader. He became involved with Gleeds when he was approached by the directors of a company, CQS Pty Ltd, a business which Gleeds had purchased in Australia.
Mr Kelly explained that many developers of construction projects required finance and their financiers required the services of a quantity surveyor in respect of the estimated costs of development.
His evidence was that a number of practitioners carrying out quantity surveying work specialised in undertaking bank services. Such work can provide supplementary income, with the work often requiring the provision of reports during the course of a particular construction project.
Mr Kelly said that he had in the past undertaken work for ANZ on some projects, including in particular the refurbishment of Grace Bros in Pitt Street, Sydney.
The Plaintiff's Professional Experience
The evidence establishes that Mr Kelly, at all material times, was a well-educated person who had acquired both practical experience in a number of areas including, in particular, quantity surveying work, the review of construction contracts and the provision of advice in relation to the same, and the formalities involved in concluding a contract. In addition to the degree of Bachelor of Building (Construction Economics) which he obtained in 1992, he studied law through the Solicitors Admission Board, although he never completed the course. The course of study with the Board took place in about 1992, 1993 and 1994. In that course he studied contract law.
In addition to his other qualifications, he said that he was a registered tax agent and had been registered for some three years.
In 2004, he wrote a book entitled "The Property Depreciation Handbook", a book that dealt with the calculation of depreciation of property and it was relevant to the application of certain provisions of the Income Tax Assessment Act 1997.
In the course of undertaking his legal studies, he prepared an article in 1992 entitled "Liquidated Damages", an article concerned with liquidated damages in construction contracts.
In the course of his study for the degree of Bachelor of Building (Construction Economics) he stated he studied basic construction law, arbitration law and contract law.
Mr Kelly also stated that he is a qualified mediator. Although he obtained that qualification, he said he had never actually practiced as a mediator.
In addition, he has been engaged in the preparation work for litigious matters and has also provided evidence on the cost of construction, in particular the cost of piling. He undertook such work in 2004 and 2005.
Following graduation he practiced as a qualified surveyor including the position of assistant quantity surveyor and then senior quantity surveyor with an entity, Davis Langdon Australia. That entity undertook work for banking panels. It was whilst with that entity that he worked on the Grace Bros refurbishment.
In 1998 he left Davis Langdon Australia and went to Resolve Engineering. He was responsible for project management of AMP's Capital Works Program which involved determining and managing budgets, procuring works, defining scopes of work, liaising with building owners, tenants and other parties within AMP. A good deal of the work involved a contract management role, and in this capacity he was engaged to undertake work in relation to commercial contracts, including, in particular, construction contracts. He was required to provide advice internally in relation to such contracts. He agreed that the review of contracts, and providing advice in relation to them, was part and parcel of what a quantity surveyor did.
Mr Kelly agreed that between 1986 and 1998 he would have been involved in giving advice to clients on hundreds, if not thousands, of occasions, including, in particular, advice in relation to the terms of contracts, the parties to contracts and whether the formalities with respect to concluding such contracts had been completed.
At Resolve Engineering from and after 1998, his role required him to be responsible for preparing the scope of work and the contract between Resolve Engineering and AMP. He agreed that it was a very significant commercial contract. He also agreed that he worked in conjunction with solicitors then known as Mallesons in relation to that project over an extended period of time.
On occasions Mr Kelly put forward proposals for the wording of contracts and submitted them to Mallesons. He agreed that he felt comfortable in doing such work and that he had sufficient experience and expertise to do so. He stated that his position in relation to the contract between Resolve and AMP was a very senior position.
Between 2001 and 2004 David J Kelly and Associates obtained work whilst on particular banking quantity surveyor panels including, in particular, from St George.
Mr Kelly was asked a number of questions in cross-examination as to his experience of having performed work following an appointment to a banking panel. In particular, he was taken to an agreement at the St George Bank being an agreement between the financier and the Bank. Part of his role as a quantity surveyor before 2005 was to review such agreements to ensure that the formalities between the relevant three parties - the bank, the builder and the borrower - had been completed.
He was taken to an annexure to his affidavit of 6 July 2012, DKL-25, being a letter responding to a request expressing an interest in his company gaining an appointment to Suncorp's panel of quantity surveyors. In relation to the document which set out formal matters including scope of work parameters, Mr Kelly signed the acknowledgment contained within the documentation on 29 April 2005, thereby accepting Suncorp's offer to be appointed to its panel of quantity surveyors.
He gave evidence of the process, based on his experience up to 2005, whereby a firm of quantity surveyors may obtain appointment to a panel with a bank, and said that it involved a number of steps. They included:
(i) That the quantity surveyor would have to express an interest in being so appointed.
(ii) That the bank would ordinarily request information from the quantity surveyor to form a view as to whether or not the quantity surveyor met the bank's criteria.
(iii) The bank would then communicate in writing to the quantity surveyor if the bank was proposing that the quantity surveyor be appointed to the bank's panel.
In relation to the third point, Mr Kelly maintained that it was not always the case that the bank would communicate in writing if it was proposing to appoint an entity as a quantity surveyor. Mr Kelly went further and suggested that it was in fact uncommon that the bank would do so in writing.
Mr Kelly, however, agreed that it was typical in his experience that there would be an exchange of written communication about the payment terms of the quantity surveyor's fees.
He further agreed it was common that there would be an exchange of written communication between the bank and the quantity surveyor with respect to the terms and conditions of the bank's panel.
He also agreed that it was common, based on his experience, for there to be an exchange of written communication between the bank and the quantity surveyor dealing with matters concerning confidentiality and upon other terms such as the circumstances in which a quantity surveyor's services could be terminated, provisions dealing with conflicts of interest, and the nature and scope of the services to be provided by the quantity surveyor.
It was put to Mr Kelly in cross-examination:
"Q. Each of those matters I have just identified to you with which you have agreed are matters which would be the subject of a written communication between the bank and the quantity surveyor before the quantity surveyor was appointed to the bank's quantity surveying panel, don't you agree?
A. No, all the items that you have mentioned are the items you would expect before an engagement.
Q. Is your position that before there could be an engagement, each of those matters would need to be agreed in writing between the bank and the quantity surveyor?
A. I would agree." (T 101:1-11)
At the time Mr Kelly approached ANZ in 2005, he was clearly an experienced businessman. He was also familiar with the practice of quantity surveying. He had a clear understanding of matters concerning contract formation and in setting the terms and conditions of a contractual relationship. He himself had had experience in negotiating contracts to that end and experience in drafting contractual documents.
As earlier discussed, Mr Kelly had in the course of his tertiary education undertaken a study of contractual principles. The details of his professional background and experience are set out in his affidavit sworn on 12 February 2012 at [7]-[19] (see also T 80-89).
Gleeds Australia Pty Limited
In late 2004, it was anticipated that Gleeds UK would purchase the goodwill of the entity CQS and that a new Australian company, Gleeds Australia would be developed. The shareholders would include Mr Kelly.
Mr Kelly's evidence was that Gleeds Australia commenced trading on 1 January 2005. Part of the agreement between it and Gleeds UK was that the latter would provide the Australian company with a minimum amount which was equivalent to three months' operating costs, with such monies being held in reserve. That arrangement was implemented after 1 January 2005 with Gleeds UK providing financial funding to Gleeds Australia during each year it traded from 1 January 2005.
Mr Kelly said the financial assistance from Gleeds UK was just short of $200,000 in total for the financial year 2005, although he was unsure as to whether that applied to the calendar year: T 105:44-50.
He agreed that for the 2006/2007 year the financial assistance from Gleeds UK was approximately $200,000 and that financial accommodation was again provided in the 2007/2008 financial year.
Mr Kelly said that at some point, financial assistance from Gleeds UK came to an end in late 2009, perhaps in September 2009: T 106:40-50.
He was cross-examined on a number of agreements that were required in the establishment of the business to be conducted by Gleeds Australia. They included:
(i) The agreement between Gleeds UK and David J Kelly and Associates for the incorporated joint venture, Gleeds Australia.
(ii) The shareholder's agreement between Gleeds Holdings and himself.
(iii) The employment agreement prepared by Gleeds UK in respect of services to be rendered by him.
Mr Kelly stated that Mr Duncan Scott had been his solicitor for five or six years before the latter part of 2004. However, he did not consider that he needed legal advice in order to understand the legal effect of the abovementioned agreements: T 122-125.
PART E - THE NORTH SYDNEY PROPERTY
Leasing and Acquisition of the North Sydney Property
On 22 December 2004, solicitors acting for the lessor of the Arthur Street premises, Staunton & Thompson, sent Mr Scott a lease in duplicate for the premises at Arthur Street which was in due course executed by Mr Kelly. The proposed lease contained rental clauses requiring substantial rent to be paid over a three year lease, being $66,540 for the first year, $69,201.60 in respect of the second year and $71,969.66 in respect of the third year: T 125:5-20.
Mr Kelly understood that the rent was payable monthly in advance with a commencing rental of $5,545 per month: T 125:35-50.
He was required to provide a personal guarantee with respect to the obligations of the lessee. There were also provisions for a bank guarantee or a cash bond. As guarantor he understood that he was assuming the obligations contained within relevant clauses of the lease: T 129:10-20.
Employing his experience in contract negotiation, Mr Kelly agreed that he reviewed the lease. He proposed changes to it to the agent acting for the lessor, or at least raising issues for their consideration.
In relation to the proposed acquisition of the Arthur Street premises he understood that the ANZ business loan had an indicative interest rate of 7.65% on borrowings of approximately $725,000: T 130:5-10.
As earlier noted, in relation to his personal statement of financial position in the application for the loan from ANZ, he disclosed that his liabilities included at that time a home mortgage of $450,000 and an investment of $200,000: T 130:30-40.
The home loan related to the Dural property, and the residential investment loan with Suncorp related to the Blackwall property: T 131:1-5.
The Timing of Mr Kelly's Commitment to Purchasing the North Sydney Property
In considering the purchase of a commercial property such as the North Sydney office premises, it was Mr Kelly's evidence that he was very nervous because of his limited personal experience with commercial property and by reason of market fluctuations in commercial property which were more marked than residential property. Additionally, he said his company's practice was still growing and he did not want to over-commit.
As of 9 February 2005, Mr Kelly said that he had agreed on a price for the purchase of the North Sydney property, but said that he had not made a decision to purchase it at that time: T 135:20-30.
He stated that the price for the North Sydney property was agreed at $720,000 plus GST as at 9 February 2005: T 135:15-20. It was then put to him that he had made a decision to purchase the property by 9 February 2005, to which he responded "No": T 135:20-25. He said that he had agreed on the price but had not made a decision to purchase: T 135:25-26.
Mr Kelly agreed that as at 7 February 2005 he was seeking from ANZ a loan or loans in the amount of $740,000 and that there was a proposal for refinancing the Suncorp loans for the Dural property and the Blackwall property: T 135:25-35.
He was taken to a letter sent to him by Christine Lane from the agent, Burling Realty, in which Ms Lane congratulated him on proceeding with the purchase of the North Sydney property: T 136:1-5. Details of the sale were enclosed for his information: T 136:5-10.
Three conditions for the purchase were noted by Ms Lane. First, that the contract would be in the terms of the proposed contract for the purchase, secondly that it would be subject to the existing lease, and thirdly it was to be subject to finance approval: T 136:10-25.
It was put to him that he did not tell Ms Lane that the purchase of the North Sydney property was in any way linked to Gleeds Australia being appointed to the ANZ quantity surveyor panel. Mr Kelly stated: "She was the real estate agent. I didn't think it was necessary": T 136:21-24.
He agreed from having reviewed the leasing file of Mr Duncan Scott that there was no document recording the fact that he was contemplating the purchase of the North Sydney property on a condition that Gleeds Australia was appointed to the ANZ quantity surveyor panel: T 137:1-17.
Before 13 April 2005, Mr Kelly knew that he had a guaranteed tenant for a three year lease, being his company, Gleeds Australia: T 139:44-46. He also knew that Gleeds Australia was "good for any money under the lease because it had the shareholding support from Gleeds UK": T 139:45-50. He also knew that there was an option for renewal of the lease for a further three years: T 140:1-5.
The Purchase of the North Sydney Property Considered a Good Investment
There were commercial reasons that made the purchase of the North Sydney an attractive proposition and Mr Kelly agreed that, as at the date of purchase of the property, it appeared to him to be a good investment. He conceded his assessment at the time was based upon the following:
(i) That the property was the subject of a three-year lease, with an option for renewal of three years.
(ii) That Gleeds Australia was secure in respect of rental required under the lease because of its shareholding with Gleeds UK.
(iii) That it represented a good investment for negative gearing purposes to reduce his overall taxable income.
(iv) That at the time of purchase it was his belief that it would represent a long-term investment with capital gain.
(v) That it represented a good long-term investment until there was a falling out with Gleeds UK in 2009: see T 139:46-T 140:1-41.
Specifically in cross-examination the following matters were put to him:
"Q. And at the time you went into the purchase of the North Sydney property, you were confident that you would be able to build the relationship with Gleeds UK through the incorporated joint venture, Gleeds Australia, didn't you?
A. Yes.
Q. At the time you went ahead to purchase the North Sydney property, it was your belief that the purchase of the North Sydney property would be a good long-term investment for you, correct?
A. Yes, yep.
Q. And it was your belief at that time, that over time you would recoup the capital gain from that purchase, do you agree?
A. Yes, on paper.
Q. And it was your intention in proceeding with the purchase to take a loss on the purchase of the property?
A. Yes.
Q. Because that was the very point of negatively gearing that investment, do you agree?
A. Yes." (T 140:27-50)
Financial Benefits from Appointment to the ANZ QS Panel Not Quantified
In cross-examination it was put to Mr Kelly that he knew at the time he proceeded with the purchase of the North Sydney property that the ability of Gleeds Australia to meet rental commitments under the lease had nothing to do with any proposed appointment of the company to a new banking panel. His response was simply that he anticipated income from being on the panel: T 141:7-13.
He conceded, however, that he was unable to point to any document which would indicate or reflect that he had given any thought to Gleeds Australia receiving income from being appointed to a banking panel as a basis for purchasing the North Sydney property. In response Mr Kelly said, "Not that's on evidence": T 141:19.
He went on to state that there had been an internal document known as the "MPSR", a monthly reporting document. He claimed that it had included an allowance for future income from May 2005 which anticipated being on the ANZ panel. It was then put to him:
"Q. So this is a document not in evidence?
A. No.
Q. Not referred to in any of your affidavits, correct?
A. No.
Q. And this is the first time you've told anyone about this document, is it?
A. I have advised my solicitor about it originally.
Q. When did you advise your solicitor about it?
A. Two months ago.
Q. And nothing has been done with it in that two months, is that right?
A. No.
Q. And you haven't told your solicitor about it before the two months ago, I take it, is that correct?
A. No.
Q. And it's not here now, I take it.
A. No." (T 141:28-48)
PART F - THE ALLEGED PROMISE
The Plaintiff's Applications to Financial Institutions
In the month prior to concluding the commercial loan with ANZ, Mr Kelly had written to a number of banking institutions seeking to have his company placed on the institution's quantity surveyor panel. Copies of the letters written by him were in evidence. They included:
(i) Letter to ANZ Bank dated 8 March 2005.
(ii) Letter to Commonwealth Banking Corporation dated 8 March 2005.
(iii) Letter to Macquarie Bank Limited dated 8 March 2005.
(iv) Letter to Bank of Western Australia dated 8 March 2005.
(v) Letter to St George Bank Limited dated 8 March 2005.
(vi) Letter to Suncorp-Metway Limited dated 8 March 2005.
Mr Kelly was examined about the correspondence to these entities. He agreed that the letters were based on a common template. Each letter referred to the fact that as of 1 February 2005, Gleeds finalised the purchase of the quantity surveyor practice, CQS.
The position with Bank of Western Australia at the time was different to the other institutions to whom he had written, insofar as there had been an existing relationship between it and Gleeds UK.
Mr Kelly agreed that he had received a response from St George and Suncorp-Metway, and that the Bank of Western Australia advised by telephone that they would change existing details on their panel.
He said he did not receive any reply to the letter to Macquarie Bank Limited.
He received a reply from the Commonwealth Bank on 11 March 2005 advising that it was not looking to add to its existing panel.
Suncorp-Metway replied on 26 April 2005 offering Mr Kelly's company a position on the group's panel of consultants subject to acceptance of the Bank's standard requirements.
The Bank of Western Australia replied on 7 May 2005 setting out the requirements it had for appointment to its preferred list of quantity surveyors.
Alleged Discussions in March-April 2005
Mr Robins (ANZ)
Mr Kelly's evidence in his primary affidavit sworn 12 February 2012 at paragraph [34] was that before writing to ANZ he spoke to a Mr Tony Robins who was then in ANZ's Property and Construction Financing Department. He said the conversation was to the following effect:
MR KELLY: "Could you please tell me how I can have my company, Gleeds Australia Pty Ltd, put onto the ANZ QS panel."
MR ROBINS: "I suggest you write to me with your details."
Mr Kelly said that he wrote a letter dated 8 March 2005, a copy of which was annexed as DJK-4 to his affidavit. The letter was written by Mr Kelly as Managing Director of his company, Gleeds Australia. It was marked to the attention of Mr Tony Robins. So far as is relevant, it recorded:
"Dear Tony
Re: QS Services
Further to our conversation, we would like to apply to be included in your QS panel.
As of 1 February 2005, Gleeds finalised the purchase of the QS practice previously known as the Conduit Group Quantity Surveyors or CQS. By way of introduction, we include the following brief information about our organisation ..."
On the same date he wrote to Mr Robins, Mr Kelly also wrote to the financial institutions referred to in [123] above. Copies of letters written on that date were annexed to his affidavit sworn on 12 February 2012 (at pp 42 -55).
Mr Kelly's evidence was that on or about 15 March 2005 he called Mr Robins in order to follow-up on the letter he said he had sent. He said the conversation was to the following effect:
MR KELLY: "I'm calling to follow up on my letter. Is the ANZ going to put Gleeds on the ANZ QS panel?"
MR ROBINS: "That would be unlikely as the ANZ has enough quantity surveyors on the panel".
MR KELLY: Would it make any difference if I was an ANZ customer?
MR ROBINS: "I don't know".
In or about March 2005, Mr Kelly's evidence was that his personal home loan at that time was not with ANZ. He said the time was approaching when refinancing would become necessary, and he was considering whether or not to become a customer of ANZ.
Mr Asher (ANZ)
It is part of Mr Kelly's case that ANZ's managers, including in particular Mr Asher, had authority to place his company on its panel of quantity surveyors. He said in evidence in relation to such "authority" that he relied, inter alia, on the relevant mortgage documents which contain provisions that define "an ANZ officer" (clause 1.1), Part 2 - "Background to the Mortgage", and clause 10.1 of the relevant mortgage.
Mr Kelly alleged that the representation or promise which he says he relied upon and forms the basis for his claim in these proceedings was made by Mr Asher in his capacity as an ANZ officer and that he was entitled to rely upon such representation as:
"... 'valuable consideration moving from ANZ' to him under Part 2 of the Memorandum of Mortgage and in consideration of which the First Plaintiff (and his wife) complied so far as they could with the provisions of the facility provided by the ANZ Bank to them": (Plaintiff's Outline of Submissions at [67]).
Mr Kelly's evidence was that he received a telephone call from Mr Asher of the ANZ Hornsby Business Centre: Affidavit of Mr Kelly sworn 12 February 2012 at [42]. He did not specify the date of the call, but the context of his affidavit suggests that it occurred in April 2005. According to Mr Kelly it was to the following effect:
MR ASHER: "I'm the ANZ's Relationship Manager and I'm calling from the ANZ Hornsby Business Centre. I have been given your details by Gerard Oldstein [sic] and I understand you are wanting to refinance and are also interested in a loan for a commercial property you are thinking of purchasing. I am calling to arrange for a valuer to assess the property."
MR KELLY: "Well, I'm in the office most of the time, so you can come any time."
MR ASHER: "So you are considering purchasing your office?"
MR KELLY: "Yes, but I have reservations about purchasing it as I don't really understand commercial property. It would help a great deal if you could get my company, Gleeds Australia, onto the ANZ QS Panel. I have tried several times and I've also sent Gleeds' details in to the ANZ but I keep getting told the panel is full. I can't really understand why because the ANZ doesn't have anything to lose by putting Gleeds on the panel."
MR ASHER: "The ANZ supports its business customers and I am sure we can get you on the panel, especially if you have commercial loans with us."
Mr Kelly's evidence was that he had approximately two further conversations with Mr Asher. On those occasions he said he reiterated his concerns about commercial property and getting onto the ANZ panel. He said that he finally said to Mr Asher words to the effect:
"The only reason I am going through with the purchase of the office is to get on your panel": (Affidavit of Mr Kelly sworn 12 February 2012 at [44]).
Mr Kelly's evidence was that subsequently he completed the necessary documentation for the loan prepared by the broker Mr Gerald Olstein.
Mr Kelly said that on or about 7 April 2005, he called Mr Asher and had a conversation to the following effect:
MR KELLY: "Greg, I am thinking that I may not proceed with the purchase of the office. I am not convinced that the investment potential is as good as I first thought. Can you tell me, if I do go ahead with it, can you get us onto the QS panel at the ANZ? I have tried and keep getting told it is full"
MR ASHER: "I am sure I can get you onto the panel if you are an ANZ customer, especially if you have commercial loans with us."
MR KELLY: "Are you sure about this, because to be frank about it I will not continue with the purchase otherwise."
MR ASHER: "I am sure, ANZ supports our business customers."
At this point I note the following matters. First, the statements attributed to Mr Asher are all cast in the nature of a forecast or a prediction, for example, "... I am sure I can get you on the panel." Second, there is no reference in the discussion as to how or by what process appointment to ANZ's panel could be accomplished. Third, there is no reference to an unqualified undertaking by Mr Asher that he would see to it that an appointment of Mr Kelly or his company would be made by those whose responsibility it is to receive, asses and decide on appointments.
I will refer below to Mr Asher's evidence in which he denies that a discussion along the above lines occurred.
Mr Kelly said at this time ANZ had been running advertisements to the effect that it supported small business customers.
In paragraph [49] of his primary affidavit, Mr Kelly stated that he sent a letter to Mr Asher via email on or about 12 April 2005 and annexed a copy of a document marked "DJK-5" as an annexure to his affidavit. It is that letter which is the subject of expert evidence on the basis of which ANZ has submitted that the document is a fabrication. Mr Asher has denied receiving DJK-5. As indicated above, DJK-5 is a separate and substantive issue for determination.
DJK-5 was in the following terms:
"12 April 2005
ANZ
Attention: Mr Greg Asher Via email: [email protected]
Dear Greg
[Description of property] ... [XXX] Arthur Street, North Sydney
Further to our discussions I want to just confirm a couple of issues which would probably not be included in any mortgage documents. As I mentioned, with my interest in purchasing this property the investment qualities of this property are secondary. My primary interest is to get Gleeds Australia Pty Ltd on the ANZ's QS panel of your property finance group. You confirmed that if I proceeded in this purchase you will make sure we Gleeds are included on this list. Please advise if this is not the case as I will not proceed with this purchase if this is not the case.
Yours faithfully
David J Kelly"
In paragraphs [50] and [51] of his primary affidavit, Mr Kelly stated:
"50 Due to a computer crash in July 2007 I no longer have a record of the actual email transmission record as we were unable to recover the mail server data items, however I have a copy of the original letter from our archive back-up showing that the document was created on 12 April 2005. Annexed hereto and marked 'DJK-6' is a true copy of that document.
51 I also have the email address of Greg Asher retained in my address book. Annexed hereto and marked 'DJK-7' is a true copy of a download of my email address book."
Mr Kelly set out details of the ANZ offer to provide commercial finance in the same affidavit: at [52]-[55].
His evidence was that in or about July 2005 he found out that his company had not been put on ANZ's panel and stated that he contacted the defendant on numerous occasions to follow up on the issue of the company being placed on the ANZ panel. ANZ disputes that evidence.
Mr Kelly gave evidence of a meeting which he said took place in or about July 2005. He said he had found out that ANZ had not put Gleeds Australia on its panel, and that he called Tony Robins of the defendant's Property and Construction Finance Department. He set out the conversation he alleges took place with Mr Robins. He said that Mr Robins said that he, Mr Kelly, would have to speak to Mr Asher about being placed on the panel.
Mr Kelly agreed in cross-examination, however, that he did not include in his affidavit reference to a conversation between himself and Mr Asher following the conversation with Mr Robins in July 2005: T 251:17-22.
He agreed that if he had had such a conversation with Mr Asher he would have included it in his affidavit. It was put to him that it may be taken that, not having included it in his affidavit of 12 February 2012, that he did not in fact have a conversation with Mr Asher following the conversation with Mr Robins. He replied "Not that I could honestly recall": T 251:32.
I note that in the same affidavit, at paragraph [64], he stated that following the conversation with Mr Robins he felt "stunned and immobilised".
It was put in cross-examination:
"Q. I suggest you were entirely taken aback by what you had just found out from Mr Robins, correct?
A. Correct.
Q. And it's the case, isn't it, that you took no step following any conversation with Mr Robins to raise at all with ANZ throughout 2005 any allegation that there had been some breach of promise by Mr Asher concerning the appointment of Gleeds Australia to ANZ's quantity surveying panel, correct?
A. Correct.
Q. And you can't offer any explanation, can you, why it is that if you had the conversation with Mr Robins at paragraph 63 in or about July 2005 why you didn't raise it with anyone from ANZ throughout the rest of 2005, correct.
A. I'm sure I would have raised it but I don't have a file note or any record of it.
Q. When you say 'I'm sure I would have', you have no recollection of doing so, do you?
A. No.
Q. And if it had happened you would have put it in your affidavit, wouldn't you?
A If I could honestly recall it I would.
Q. And the fact that you honestly can't recall it means you don't know whether it ever happened, correct?
A. I don't.
Q. Because the first time you make any suggestion of raising the allegation, the breach of promise with ANZ is over twelve months later, correct, in July 2006?
A. Other than my discussion with Mr Robins, yes.
Q. I'm talking about the discussions, Mr Kelly.
A. Okay. Yes.
Q. Why didn't you write to someone following your discussion with Mr Robins and raise it with ANZ, a serious matter that a promise had been broken to you by ANZ?
A. As I have explained I took a commercial position on this to try and do it through relationships rather than go into writing.
Q. But you agree, don't you, that doing it through relationships one would have to raise it with Mr Asher, correct?
A. Yes.
Q. And you didn't do so, did you?
A. No."
HIS HONOUR:
"Q. Mr Kelly, what would you have to fear in July 2005 about raising this matter quite frankly and openly?
A. Nothing, your Honour. I think it was just time probably got away by the time I got around to it Mr Asher had left ..." (T 252:16-T 253:18)
Mr Kelly accepted that his relationship had been good with Mr Asher and that it would have been very easy for him to have raised it with him: T 253:34-36.
Mr Asher left ANZ in September 2005. Mr Kelly agreed that he had not raised the matter with him at all before he left.
When it was put to him that he did not have the conversation that he recorded in paragraph [63] of the last-mentioned affidavit with Mr Robins, he insisted that he had, and denied that he was lying about that: T 253:47-T 254:1-5.
The fact that it was clearly open to Mr Kelly to have raised and pursued the promise he claimed Mr Asher had made, but that he did not take up and pursue the issue with anyone in ANZ after Mr Kelly found out he had not been appointed to the quantity surveyors panel (including Mr Asher), does not sit well with Mr Kelly's allegation that a promise had been made. Additionally, the basis for any expectation of being appointed to the ANZ panel in circumstances in which he had not made a detailed application setting out his qualifications and background experience and other material establishing compliance with the criteria for appointment to the ANZ panel are all matters requiring close examination of the evidence.
Inconsistencies in the Plaintiff's Evidence
Mr Kelly's affidavit evidence as noted above, was that the critical promise was made by Mr Asher in April 2005. However, he also gave evidence that in the middle of February 2005 Mr Asher told him that he was on ANZ's quantity surveyors panel: T 117:50-T 118:4.
The variation in his evidence on that aspect is a matter that calls into question the reliability of Mr Kelly's evidence, especially as it goes to a central issue in the proceedings.
In cross-examination it was put to him:
"Q. And nowhere in any of your affidavits have you ever alleged that you were told by Mr Asher in mid-February 2005 that Gleeds Australia would be appointed to the quantity surveying panel of ANZ after settlement of the North Sydney property, is there?
A. I can't recall if it's specifically in my affidavits." (T 175:15-20).
Q. And you proceeded to exchange a binding contract for the purchase of the North Sydney property without any indication from the bank that you had been appointed to the ANZ quantity surveying panel, correct?
A. Yes." (T 167:35-38)
He agreed in evidence that he had made no inquiry of Mr Peter Nass of ANZ who supervised appointments to the Bank's panel, nor of Mr Anthony Robins, at any time before 18 May 2005 to ascertain whether or not Gleeds Australia had been appointed to the Bank's panel: T 169:10-37.
Whilst Mr Kelly's evidence moved between an account that he had been informed in mid-February 2005 that he had been placed on the Bank's quantity surveyor panel to one of having been told that he or his company would be placed on the panel if he entered into the mortgage or mortgages in question, he was strongly tested on the latter:
"Q. Mr Kelly, as I understand what you are telling the Court this morning, on a couple of answers to my questions you have indicated that you had an expectation that Gleeds Australia would be appointed to the ANZ quantity surveying panel after settlement of the North Sydney property?
A. That is correct.
Q. And is that something you have never mentioned anywhere in any of your affidavits before?
A. I can't recall.
Q. Do you want a moment to think about it, Mr Kelly? It is something you would recall, wouldn't it, if you had included that information in any of your affidavits?
A. I honestly can't recall at the moment.
Q. It would have been an important matter to include in your affidavits if that is what you believed back in 2005, that after settlement of the North Sydney you were to be appointed to the ANZ quantity surveyor panel, wouldn't it?
A. Yes, it would." (T 169:40-T 170:10)
Mr Kelly received ANZ's "Letter of Offer" dated 13 April 2005 in respect of the mortgage over the North Sydney property. He said that he read the offer and understood it was made on the terms and conditions set out in the letter and in the attached "Small to Medium Enterprise Banking Finance Conditions of Use": T 145:25-31.
He agreed that the maximum term of the business loan offer was six years, which was a period that was in accordance with the then current lease arrangements: T 145:43-50.
Mr Kelly accepted that he, as "... an experienced businessman and familiar with many contracts ..." (T 149:2) would have read through the terms and conditions that applied to the ANZ business loan before he signed the Letter of Offer dated 13 April 2005: T 149:3-7.
He understood that by signing the acceptance of the conditions offered, the agreement between him and ANZ concerning the loan for the North Sydney property were those set out and contained within the Letter of Offer: T 150:15-20.
He accepted that nowhere in ANZ's Letter of Offer was there any mention of Gleeds Australia. Nor was there any mention of it in the Standard Conditions of Use. He agreed that from his experience and knowledge gained through his tertiary education he knew that, so far as ANZ was concerned, the agreement between it and him was wholly contained within the Letter of Offer of 13 April 2005.
However, Mr Kelly asserted that he considered the (disputed) email that he said he sent on 12 April 2005 "to be an acknowledgment or a confirmation that ANZ would include Gleeds on their panel upon settlement of this facility": T 151:40-43. In that respect he was asked:
HIS HONOUR:
Q. How could it be an acknowledgement?
KELLY:
A. Sorry?
Q. How could it be an acknowledgement?
A. "Acknowledgement" is probably the wrong word.
Q. "Confirmation" was the other word you used.
A. "Confirmation", sorry, yes.
Q. Confirmation by you?
A. Confirmation by me to the discussions I had had with Mr Greg Asher.
Q. And as to confirmation by ANZ?
A. There was no confirmation by ANZ. But it was as a result of a series of conversations ranging - starting all the way back in February." (T 151:45 to T 152:10)
In respect of each of the residential loans, he accepted that the Letter of Offer from ANZ included ANZ's specified Terms and Conditions. He agreed that he understood the agreement made was formed on those conditions and that there was no reference in them to his company being placed on the bank's panel: T 174:33-42.
It was put to him that in respect of the residential investment loan, the Letter of Offer was dated 11 May 2005 and that he was aware at that time that he had not received any written indication from ANZ that Gleeds Australia had been appointed to the ANZ quantity surveyors panel. He said that was correct: T 173:48-T 174:2.
It was put to him that in respect of each of the loans, the ANZ business loan, the home loan for the Dural property and the residential loan for the Blackwall property, that he accepted the Letter of Offer dated 19 April 2005 in respect of the first of those loans and the Letters of Offer dated 11 May 2005 in respect of the second two loans, and he understood that Gleeds Australia was not a party to those three contracts: T 174:5-30.
Mr Kelly accepted that as at 18 May 2005, the date of the exchange of contracts for the North Sydney property, he knew that he had nothing in writing from ANZ to indicate that Gleeds Australia would be appointed to the ANZ quantity surveyors panel following settlement of that contract: T 174:33-42.
It was put to him that as at 18 May 2005 he knew that he had no oral indication by anyone from ANZ that Gleeds Australia would be appointed to the ANZ quantity surveyors panel following settlement of the contract for the purchase of the North Sydney property. He said that was not the case. When asked who had given such an oral indication that the company would be appointed to the panel after settlement, he said "Greg Asher": T 174:44-T 175:5.
He was asked:
Q. "Are you saying in February 2005 Mr Asher told you specifically that you would be appointed to the ANZ --
A. He did." (T 175:8-10)
In the Plaintiff's Outline of Submissions it is stated:
"35. The First Plaintiff submits that Greg Asher represented that if the First Plaintiff proceeded with the commercial loan and transferred his residential loan and investment property loan to the ANZ Bank, the Second Plaintiff would be placed on the ANZ Bank's panel of quantity surveyors and his conversations with Greg Asher were noted in a contemporaneous notebook and followed up in an email sent that the First Plaintiff maintains was sent to Greg Asher by email on or about 12 April 2005." [footnote references to the evidence was given in support of those submissions.]
In Mr Kelly's second-last affidavit filed late in the proceedings, being the affidavit sworn by him on 6 June 2013, there was annexed documents marked "DK-A" said to be true copies of the relevant pages from Mr Kelly's notebook. In paragraph [3], Mr Kelly referred to the fact that:
"During the last week of May 2013, in the process of preparing for these proceedings, I located a notebook from 2005 in which I recorded, in the following sequence ..." [there is then reference to the fact of conversation between Mr Kelly and Mr Gerald Olstein on 10 January 2005, an undated conversation with Mr Asher on or about 13 January 2005 and an alleged conversation between Mr Kelly and Mr Asher on 3rd February 2005.]
The authenticity of the entries in the notebook emerged during the oral evidence as a further strongly contested factual issue. ANZ has submitted that Mr Kelly concocted the Schedule of Events document (Exhibit 9) and then added entries to his 2005 notebook at pages 28 and 46: ANZ Final Submissions at [222]-[227].
In paragraph [9](a) of his affidavit sworn 6 June 2013, Mr Kelly referred to his earlier affidavit sworn on 12 February 2012, at paragraph [47], in which he referred to the conversation with Mr Asher as having occurred "on or about 7 April 2005". He stated:
"...Now having located the notebook referred to above, I confirm there was more than one conversation in which Mr Asher confirmed the defendant would put my company on the QS panel, one of which having occurred on or about 13 January 2005 and another on 3 February 2005 ...".
Whilst Mr Kelly's evidence, as noted above, was originally that the alleged promise by Mr Asher had been made "on or about 7 April 2005", in cross-examination, as also noted above, he said that Mr Asher had told him that he had in fact been appointed to the ANZ panel in the middle of February 2005: T 118:2-10; 118:4-50. This clearly represents a major inconsistency in Mr Kelly's evidence. Plainly his revised account as to having been informed of an appointment in February 2005 depends upon the assessment of his credibility as a witness.
Mr Kelly said that in or about July 2005 he discovered that ANZ had not put his company on its quantity surveyors panel: Plaintiff's Outline of Submissions at [60].
He agreed that by 13 April 2005 he had not received any notification from ANZ concerning an appointment to its quantity surveyors panel. Mr Kelly maintained that he had "verbal confirmation" from Mr Asher: T 117:1-4. Mr Asher denied having given any such confirmation.
Mr Kelly agreed that in 2005 Mr Peter Nass was the head of the ANZ panel. Below him was Mr Tony Robins.
He agreed that Mr Asher was a "relationship manager" out at the Hornsby Business Centre and that Mr Nass worked out of premises in the city. It was put to him that he had never before 13 April 2005 communicated with Mr Nass. Mr Kelly accepted that was the case saying: "Not that I recall": T 117:15-25.
He agreed that no one from Mr Nass' section within ANZ advised that Gleeds Australia had been appointed to ANZ's quantity surveyors panel: T 117:25-30.
It was put to Mr Kelly that any decision to be made concerning the appointment to ANZ's quantity surveyors panel had to be made by Mr Nass. Mr Kelly responded "Not necessarily, no": T 117:30-35. He said that he understood that Mr Asher was in fact talking to Mr Nass: T 117:35-45. He stated that he could not recall whether he had stated that understanding in any of his affidavits: T 117:45-47. Mr Kelly was then asked:
"Q. Now, when is it that Mr Asher, do you say, told you that you had been appointed to the ANZ quantity surveying panel?
A. Mr Asher advised me that we were on the panel.
Q. When did he do that, Mr Kelly?
A. During the middle of February.
Q. You are suggesting, are you, that Mr Asher had told you that you were on the panel in the middle of February before you had even sent the letter of 8 March 2005 to ANZ?
A. Correct.
Q. At 13 April 2005 you had no understanding of the criteria to be satisfied for the ANZ quantity surveyors panel, did you?
A. I assumed the criteria was the same as other panels."
It was put to Mr Kelly that at no time before 13 April 2005 did he ascertain the criteria that needed to be satisfied for appointment to the ANZ quantity surveyors panel. He then claimed that he had asked Mr Robins about the criteria. He agreed, however, that he had not made any reference to any such conversation about the criteria with Mr Robins in any of his affidavits: T 118:35-42.
Mr Kelly maintained that not only had his appointment to the ANZ quantity surveyors panel been confirmed by Mr Asher in mid-February 2005, but that: "Just about every conversation I had with him I asked him about it and he confirmed each time": T 118:50-T 119:1.
Mr Kelly subsequently stated this would have occurred on three or four occasions. He suggested this occurred in February and April 2005, but could not recall anything said on the matter in March 2005: T 119:10-15.
A further inconsistency arose in Mr Kelly's evidence in cross-examination. He was taken to the letter he had written to ANZ on 8 March 2005 in which he stated "We would like to apply to be included in your QS panel". It was put that it would be "incredulous" that he would write that letter in those terms if he had already been told that he had been included on the ANZ quantity surveyors panel. Mr Kelly responded:
"A. No, I had been advised by Mr Asher that I would be included if I took out the mortgage." (T 119:40-45)
He agreed there was nothing in the letter he had written on 8 March 2005 that referred to anything about the need to take out a mortgage: T 119:45-50. It was put to him:
Q. You don't in terms say that, 'Look, I have been appointed to the QS panel subject to taking out a mortgage, can you please confirm that'?, do you?
A. No." (T 119:49-T 120:1)
It was put to him that he understood that Mr Asher at that time would not have had any authority to appoint him, or his firm, to the quantity surveyors panel. Mr Kelly replied that he did not have such an understanding: T 120:3-6.
In relation to his letter of 12 April 2005 to ANZ, he was asked:
HIS HONOUR: Is there some reason why you didn't mention that fact in your letter of 8 March, that you had already been given something of a green light?
A. Oversight, your Honour. I couldn't come up with any other reason other than oversight." (T 120:15-21)
He agreed, when put to him by Mr McInerney of Senior Counsel:
Q. You agree it would have been a very important matter to include in this letter?
A. In hindsight, yes." (T 120:32-34)
He added that in hindsight, "I should have included it.": T 120:39
It was put to him that he did not include it because it had not happened. He disagreed and said that he had simply forgotten about it at the time: T 121:1-5.
Mr Kelly's letter of 8 March 2005 is of course a complete contradiction of his evidence of having been told of his appointment to the panel in February 2005. In particular, as a contemporaneous record of events, it undermines his evidence in paragraph [7] of his affidavit sworn 6 June 2013 in which he said Mr Asher confirmed his company's appointment to the quantity surveyors panel on or about 13 January 2005 and on 3 February 2005.
The Absence of Written Complaint to ANZ
Mr Kelly's case was initially built upon the proposition that ANZ had agreed in April 2005, and this was later changed to February 2005. On either basis, (if true) this would reasonably give rise to an anticipation that his company would then have the benefit of being on the Bank's panel.
However, before 2011 Mr Kelly made no written inquiry about any such appointment, nor did he make any complaint in writing to ANZ about a failure to appoint his company to its quantity surveyors panel or its non-receipt of quantity surveying work.
In determining whether or not a promise had been made by Mr Asher, post-contractual conduct (assuming of course that a contract was made) may play an important role in the determination.
In cross-examination the matter was raised with Mr Kelly in these terms:
"Q. Now, at no time following your acceptance to the loan terms and conditions proposed by ANZ did you make any complaint in writing to ANZ about any suggestion by you that you had an understanding that you were to be appointed to the ANZ QS panel until 13 April 2011; that's correct, isn't it?
A. Nothing in writing, no." (T 152:14-19)
The explanation proffered by Mr Kelly for not having written to ANZ in respect of the alleged promise which he maintains was made and broken by ANZ, was far from plausible.
He said that he thought that it was better to deal with the promise allegedly made by Mr Asher by handling it in a "commercial" way or what he described as "managing the relationship" through verbal discussions.
Prior to Mr Kelly's financial problems in respect of the ANZ loans (discussed below), there was nothing revealed in the evidence suggesting that there was any risk of Mr Kelly writing and inquiring about the appointment or failure to appoint his company to ANZ's quantity surveyors panel. He accepted that he could have made a written inquiry in polite and undemanding terms. However, he did not.
Mr Kelly's account of having raised from time to time with nominated employees the fact that a promise had been made by Mr Asher encountered emphatic denials by each relevant employee. Their evidence is analysed below. The fact that Mr Kelly did not write to ANZ after its employees denied that a promise was made, as he claimed they did, in the absence of a cogent explanation by him, is capable of supporting the adverse inference that no promise as alleged was made.
In relation to discussions that occurred at face-to-face meetings with Mr Kelly, relevant ANZ bank employees had the advantage of contemporaneous notes taken at the time of interviews with Mr Kelly. Mr Kelly, on the other hand, had no reliable contemporaneous notes as to precisely what he had said to ANZ employees and they to him. In those circumstances his credibility becomes an issue of central importance.
The Plaintiff's Expression of Appreciation to ANZ
Mr Kelly was questioned about an email which he sent to Mr Tod Wills on 27 March 2007. The email followed a reception that had been held by Gleeds Australia.
He agreed that he took the trouble to write to Mr Wills following the reception to update him about how Gleeds Australia was progressing: T 182:20-45.
In the final paragraph of the email it read:
"From hereon in, we are onward and upward, but could not have done it without your support, and for that we thank you." (T 182:50-T 183:4)
He agreed that nowhere in the email did he make any complaint to Mr Wills about the fact that Gleeds Australia had not been appointed to the ANZ quantity surveyors panel: T 183:5-10.
He was asked to explain that if he remained aggrieved that ANZ had not placed Gleeds Australia on the Bank's panel, why he was thanking Mr Wills for his support. He replied "It was a feel good email sent to him": T 188:23.
The Plaintiff Continues to Deal with ANZ Knowing There Was No Appointment To The ANZ QS Panel
Although Mr Kelly knew that ANZ had not appointed him or his company to its quantity surveyors panel, he was prepared to continue to do business with ANZ notwithstanding.
The evidence indicates that he applied, and received, from ANZ the variations in the loan facilities to increase the amount of them referred to above.
First Loan Variation: 2005
A diary note dated 24 November 2005 (p 541 of MFI 4) indicates that Mr Kelly requested an increase in facilities of $30,000 in respect of the ANZ business loan which was granted: T 179:29-33. He agreed in cross-examination that he sought the increase to help clear a debt with the Australian Taxation Office: T 189-190.
In relation to the increase in the facility limit, Mr Kelly received a letter from the Bank dated 24 November 2005. He said he read and understood that ANZ was making an offer set out in the letter on the conditions specified. He said he read the letter and the enclosed ANZ "Business Banking Finance Conditions of Use": T 180:35-40.
He accepted that it contained the usual clause that the written agreement with him and the Bank contained the relevant terms and conditions "for the loan": T 180:40-47.
It was put to him, and he agreed, that as at 24 November 2005 no one from ANZ had given him an indication, either in writing or orally, that Gleeds Australia had been appointed to the ANZ quantity surveyors panel: T 180:48-T 181:7.
It was additionally put to him:
"Q. And knowing that Gleeds Australia had not been appointed to the ANZ quantity surveying panel, you sought further finance from the ANZ to an amount of $30,000, didn't you?
A. I did.
Q. And you understood that by accepting this letter of offer and the attached ANZ Business Banking Finance Conditions of Use that you had agreed to vary the loan, the ANZ business loan, correct?
A. I did." (T 181:14-22)
Mr Kelly agreed that he accepted the offer on 22 December 2005 with full knowledge that Gleeds Australia had not been appointed to the ANZ quantity surveyor panel: T 181:24-32.
Furthermore, he agreed when put to him that he made no complaint to anyone before accepting ANZ's the offer of 22 December 2005 about Gleeds Australia not having been appointed to the Bank's quantity surveyors panel. He agreed he decided to vary the business loan fully knowing that his company was not on the Bank's panel: T 181:30-43.
He further agreed that he knew as at 24 November 2005 that he had initiated a new contractual relationship with ANZ which had nothing whatever to do with any requirement that Gleeds Australia would be appointed to the ANZ quantity surveyors panel: T 181:44-49.
Second Loan Variation: 2008
In June 2008, the business loan was varied at Mr Kelly's request. He received a letter dated 10 June 2008 from ANZ concerning the variation. He agreed that it was to be on the conditions of the existing facilities, that is, as detailed in the original Letter of Offer of 13 April 2005 (see T 192:15-30).
The Letter of Offer of 10 June 2008 which was accepted by Mr Kelly ("the variation letter") changed both the term of the loan and the interest rate: T 194:10-20. Mr Kelly agreed that the changes made by the variation were important changes. He also agreed that he knew that by agreeing to the variations, there was nothing within the contract by his acceptance of the Letter of Offer which made any reference to any asserted promise by Mr Asher to appoint Gleeds Australia to the Bank's panel: T 194:25-35.
He agreed that at the time of signing the acceptance to vary the ANZ business loan on 11 June 2008, he did so knowing that as at that date Gleeds Australia had still not been appointed to the ANZ quantity surveyors panel: T 194:35-40.
It was put to him:
"Q. You proceeded to vary the business loan entirely disregarding any allegation that Gleeds Australia ought to have been appointed to the ANZ quantity surveying panel, correct?
By the time Mr Kelly made his first complaint about the alleged promise, he was under increasing financial pressure and was in default under the loan agreements with ANZ. The delay of over six years to raise the issue of ANZ's alleged breach of "the promise" is one matter amongst others discussed above that tells against the alleged promise.
The DJK-5 Issue
I turn to the other matter upon which the plaintiff relied to support the making of "the promise", namely, the email and PDF - "the DJK-5 issue".
The email DJK-5 was an important part of the plaintiff's case and it was reproduced into paragraph [2] of the Plaintiff's Primary Submissions. If DJK-5 were accepted as genuine or authentic, it is capable of corroborating aspects of a conversation said to have taken place between Mr Kelly and Mr Asher.
The authenticity of the disputed email became an issue of central importance to both the question as to whether the alleged promise by Mr Asher was made in the terms alleged and to the issue of Mr Kelly's credibility.
In its Outline of Submissions dated 5 July 2013, ANZ foreshadowed that it would rely upon the evidence of Mr Ghosh to prove that DJK-5 was a fabrication: at [14](a).
In ANZ's Outline of Final Submissions, it was submitted that:
- Mr Kelly did not send the email and PDF, "DJK-5", to ANZ: at [2](b).
- Mr Kelly created the PDF, DJK-5, on 26 May 2011 for the purpose of pursuing a claim for damages against ANZ knowing that claim to be false, and in circumstances where the facilities were in default and a claim by ANZ for debt and possession was imminent, and was known by Mr Kelly to be imminent following ANZ's letter to Mr Kelly dated 24 May 2011: at [3](b).
- Mr Kelly fabricated his case for the purpose of seeking to avoid the inevitable judgment for possession and debt in respect of the ANZ Business Loan, Home Loan for the Dural Property, and the Residential Investment Loan for the Blackwall Property.
ANZ's case was that Mr Kelly gave false evidence in saying that he located the email DJK-5 and conducted an experiment on his computer between 26 May 2011 and 29 May 2011. Contrary to Mr Kelly's evidence, (summarised in paragraph [161] of ANZ's Outline of Final Submissions), ANZ contended that:
"The emails retrieved from Mr Kelly's laptop indicate that the first time Mr Kelly sent the pdf, "DJK-5", to anyone was on 29 May 2011. Mr Kelly sent a copy of the pdf, "DJK-5", by email on 29 May 2011 at 11:40pm to his accountant, Mr Pratt, and stated 'My IT guy restored the files from the period I was talking to ANZ about my mortgage for the office and here is the letter I mentioned earlier'." (at [162])
In paragraph [185] of those submissions, ANZ submitted:
"Mr Kelly did not send the pdf, "DJK-5", to ANZ until 11 July 2011. The pdf, "DJK-5", was anomalous in two respects. The first is that "DJK-5" was on the letterhead of David J Kelly & Associates notwithstanding that Mr Kelly had been using the branding of Gleeds Australia on his emails, and other correspondence, since that business commenced on 1 February 2005. The second is that the email address stated on "DJK-5", [email protected], was incorrect for two reasons. The first reason is that the part of the email address before the "@" sign on "DJK-5" stated "gasher" rather than "asherg". The second reason is that the part of the email address after the "@" sign on "DJK-5" stated "anz.com.au" rather than "anz.com"."
The serious issue of claimed fabrication in relation to the disputed email DJK-5 depends, in large part, although not exclusively, upon the analysis and expert evidence of Mr Ghosh.
Mr Kelly was on notice from at least 7 October 2011 (the date of Gadens' letter to the liquidator which was copied to Mr Kelly's solicitor), that ANZ was querying the authenticity of the alleged email.
Mr Kelly, as earlier noted, retained Mr Towers as an expert. At the outset of the concurrent evidence of Mr Towers and Mr Ghosh, Mr Towers stated that:
"I have come to this matter very recently and have had little time to get up to speed on it." (T 479:49-50)
Mr Towers stated that he would "prefer that other persons identify relevant issues and I can comment if required": T 480:17-18.
Thereafter Mr Ghosh was cross-examined by Ms Button on behalf of Mr Kelly: T 480-487. The cross-examination did not challenge essential matters that were fundamental to Mr Ghosh's analysis or conclusions. Mr Towers made some comments on particular matters at T 487-488 but they did not undermine the basis or substance of Mr Ghosh's evidence.
I have earlier referred to Mr Ghosh's evidence on specific matters which I do not repeat here. They, however, are relevant in my assessment of Mr Ghosh's evidence. His evidence established a strong basis for his conclusion that the disputed email DJK-5 was not sent to ANZ on 12 April 2005 or on any other date in the 2005 year, and that the first time the PDF, DJK-5 was sent to anyone was on 29 May 2011. Mr Ghosh's evidence, which I accept, was that the disputed email was created after 20 April 2010: Report dated 7 September 2012 (Exhibit 15), at [9]. In that respect, Mr Ghosh determined that the Primo PDF software was installed on Mr Kelly's laptop on 20 April 2010 based upon the matters identified by him in paragraph 17(a) to (d) of that report. It followed that the PDF DJK-5 could not have been created on the laptop prior to that date. The conversation log established that the relevant PDF was created on the laptop.
The relevant events leading to the creation of DJK-5 were detailed in Mr Ghosh's report at paragraph [23].
The document marked DJK-5 attached to Mr Kelly's affidavit sworn 12 February 2012 is a printout of an electronic document which was in the Portable Document Format. Mr Ghosh accordingly refers to it in his reports as "the PDF".
Mr Ghosh's analysis and findings led him to conclude that the PDF which purported to have been created on 12 April 2005 was not created on that date, but was created some years later as discussed below.
In his reports Mr Ghosh developed and refined his findings in relation to the creation of the PDF/email allegedly created on 12 April 2005 as follows:
(i) In his report of 4 September 2012 his summary of findings were:
(a) the PDF must have been created after August 2007; and
(b) the PDF was probably created after 19 April 2010: at paragraph [3].
(ii) In his report of 7 September 2012 Mr Ghosh stated that his further examinations referred to in that report enabled him to narrow his findings of his prior report. In summary, he stated that his findings now were that the PDF was created after 20 April 2010: Report at [9].
(iii) In his report of 20 February 2013, Mr Ghosh stated that the affidavit of Mr Kelly when considered with the LNK files affected his prior findings by:
(a) confirming that the PDF was created using the Sony Vaio laptop with the HP Pocket Drive attached; and
(b) probably narrowing the date of creation (ie, by manipulating of the system clock) to 26 May 2011, although he stated he could not be certain of those dates because some of the evidence he would have expected appears to have been wiped. He added, " I can be certain that the PDF was created after 20 April 2010": at [76].
(iv) In his affidavit sworn on 5 June 2013 Mr Ghosh stated his findings contained in his reports on 20 February 2013 and 22 February 2013 as follows:
(a) At some time, definitely after 20 April 2010 (and probably on 26 May 2011) Mr Kelly created the PDF exhibited at "DJK-5" to his affidavit of 12 February 2012.
(b) The PDF was created by Mr Kelly's Sony Vaio laptop with the HP Pocket Drive attached to it.
(c) To create the PDF, steps were taken as set out in subparagraphs (i) to (vi).
(d) The computer clock was changed back to the real date, ie, 26 May 2011.
(e) The PDF was copied from HP pocket drive to Sony Vaio laptop. This resulted in the "File Created" date for the PDF on the Sony Vaio laptop - being set to 26 May 2011.
(f) The Microsoft Word document and the copy of the PDF on the HP pocket drive were both deleted.
(g) The PDF on the Sony Vaio laptop was accessed on 29 May 2011, which is the "Last Accessed" date recorded in DJK-6.
(h) Mr Kelly subsequently overwrote the free-space on the Sony Vaio laptop with zeros to delete evidence of the PDF being created on the Sony Vaio laptop with the HP pocket drive attached to it.
Mr Ghosh summarised his reasoning with respect to subparagraphs [6](a) to (h) later in his affidavit.
In paragraph [8] of Mr Ghosh's affidavit sworn on 5 June 2013 he explained the reasons for his conclusion that Mr Kelly created the PDF exhibited at DJK-5 of his affidavit of 12 February 2012 at some time after 20 April 2010 (and probably on 26 May 2011).
Mr Ghosh analysed the report of Mr Towers annexed to his affidavit dated 20 February 2013. He concluded that the matters in Mr Towers report (and in the affidavit of Mr John Noller dated 6 September 2012) did not affect his prior finding: at paragraph [75].
Mr Kelly sought to challenge Mr Ghosh's evidence in the Primary Submissions by raising matters not put to Mr Ghosh, in particular at paragraph [39] of those submissions and in subsequent paragraphs. A submission was there made that Mr Ghosh:
"... ignores the sequence of Word operation within the Event Viewer of the computer, which shows that a Word document was closed on 12 April 2005 - this being between two entries for 29 May 2011."
The plaintiff's submission proceeded with a contention, not put to Mr Ghosh, that the only conclusion to be drawn was that the Word document in the "Event Viewer" must be the experimental version bearing date 12 April 2005. That record, it was submitted, could only have been closed on 29 May 2011 according to the "Event Viewer" stamps: at [40].
The submission continued that the Court could reach its own conclusions as set out in paragraph [41] of the Primary Submissions.
As ANZ's Outline of Final Submissions at paragraphs [332]-[337] noted, and I accept, the matters relied upon were not put to Mr Ghosh.
The plaintiff's Primary Submissions at paragraphs [32]-[83] did not seek to engage with matters that Mr Ghosh identified as supporting his conclusions.
Those submissions, rather, sought to specifically construct an argument that Mr Ghosh's analysis ignored what is referred to as the "sequence of Word operation": at [39].
The plaintiff's submissions developed on this basis at paragraphs [39]-[41], and additionally contained a number of assertions upon which a submission is made that Mr Ghosh ignored a particular fact (concerning the sequence of Word) and therefore did not consider the conclusion suggested in the written submissions.
In ANZ's response to the plaintiff's submissions on liability in Part L of its Outline of Final Submissions, ANZ submitted that the matters now sought to be relied upon by the plaintiff in paragraphs [39]-[41] of the plaintiff's Primary Submissions are misplaced on two bases:
(i) That the thrust of the plaintiff's submissions was that the Court should not accept the evidence of Mr Ghosh. This submission, however, was advanced in circumstances where there has been no effective challenge to his evidence, and where no credible basis has been put forward for rejecting it: ANZ's Outline of Final Submissions at [324].
(ii) Apart from the failure to put the matters to Mr Ghosh in cross-examination, the submissions, in part, relied upon Mr Kelly's affidavit sworn 12 September 2012 at paragraph [32], but that that paragraph was not read at the hearing.
In order to consider the plaintiff's submissions and ANZ's submissions in response, I note paragraphs [39]-[41] of the plaintiff's Primary Submissions.
Firstly it is to be observed as noted above that paragraph [32] was not amongst the paragraphs read in the affidavit of the plaintiff dated 12 September 2012. In that respect, I refer to the transcript, 11 July 2013 at T 64-65.
Secondly, a copy of Mr Kelly's affidavit sworn 12 September 2012 was provided to Mr Ghosh as referred to in his report of 20 February 2013 (Exhibit 16): at [4](e) and [5](c).
Thirdly, Mr Ghosh was not cross-examined upon that affidavit, including in particular, Figure 2 in paragraph [32] (which paragraph, as noted above, was not read in the proceedings).
Fourthly, the submission at paragraph [41] of the Plaintiff's Primary Submissions proceeded upon the basis, not established, that it does not "... take expert evidence", by a process of reasoning to arrive at the suggested conclusions set out in paragraphs [41](a) and (b).
Fifthly, the submission in paragraph [41] that it would be open to the Court to conclude, on the basis of the information in the "Event Viewer" referred to in the submissions that there were in fact two PDF files - one termed the "real" PDF file and the "experimental" PDF file - is mere assertion by the plaintiff. It was not put, as noted above, to Mr Ghosh as a proposition that was open on the basis of his analyses or on any analysis. The further proposition that the PDF that was modified was the "real" PDF, again, was not put to Mr Ghosh for his comment nor used to contradict the findings and conclusions expressed by him.
Upon consideration, the matters raised in the plaintiff's Primary Submissions do not, in my assessment, establish any basis for a contention of identifiable error in any of the analyses undertaken by Mr Ghosh or for not otherwise accepting his findings and conclusions. The matters raised by the plaintiff in the submissions to which I have referred above were matters for expert evidence not pursued with Mr Ghosh and not the subject of any evidence given by Mr Towers. There is no basis for the submissions in paragraph [41] referred to above.
It is noted, firstly, that there is no suggestion that Mr Towers, Mr Kelly's expert, identified the issue raised concerning the "Event Viewer", or if he did, that he placed any significance upon it as suggested by the plaintiff in his written submissions.
Further, it is not open to the plaintiff to invite this Court to accept the plaintiff's abovementioned arguments without having put the matters relied upon in submissions to ANZ's expert when called to give evidence. It is clear, as stated above, that Mr Ghosh had received Mr Kelly's affidavit dated 12 September 2012 and was therefore made aware of its contents. In those circumstances, had the plaintiff wished to raise the issues now relied upon with Mr Ghosh in paragraphs [39]-[41] of the plaintiff's written submissions, they could have been explored with Mr Ghosh, but they were not.
I do not consider that the matters raised in the Plaintiff's Primary Submissions constitute a basis for arriving at a conclusion that in some respect Mr Ghosh's analyses was flawed.
I have, as stated above, concluded that Mr Ghosh's evidence presented a cogent and sound analysis and I accept the conclusions expressed by him.
Upon that basis, as previously stated, I am satisfied to the requisite standard that the email PDF DJK-5 was a fabrication.
The consequence of that conclusion, of course, is twofold. First that no email or other record was created by the plaintiff in 2005 and sent to Mr Asher in which he contended that a promise had been made by Mr Asher. Second, the serious adverse finding as to fabrication which I have made fundamentally impugns the credibility of Mr Kelly.
That said, the ultimate findings and conclusions which I make in these proceedings rest upon a consideration of all the facts and circumstances established in evidence referred to in the foregoing analysis.
The Issue of the Plaintiff's 2005 Notebook and the Sequence of Events Schedule (Exhibit 9)
Mr Kelly gave evidence that during the last week of May 2013 he located a notebook from 2005 which recorded the following sequence (Affidavit of Mr Kelly sworn 6 June 2013 at [3]):
(i) A conversation with Gerald Olstein on 10 January 2005 in which he said he discussed with Mr Olstein interest rates with various lenders, including the ANZ bank;
(ii) A conversation that he had with Mr Asher on or about 13 January 2005; and
(iii) A conversation that he said he had with Mr Asher on 3 February 2005.
Annexure "A" to Mr Kelly's affidavit sworn 6 June 2013 included copies of pages said to have been taken from the 2005 notebook.
In ANZ's Outline of Final Submissions it was noted that Mr Kelly had made no mention of any original notebooks from 2004 or 2005 in his affidavits sworn on 12 February 2012 or 13 February 2012: at [208].
ANZ also observed that Mr Kelly made reference in his affidavit sworn on 6 July 2012 to his original notebook for 2006 but made no mention of any original notebooks from 2004 or 2005: ANZ's Outline of Final Submissions at [209].
In ANZ's submissions it was also observed that Mr Kelly first referred to the original notebook from 2005 in his affidavit of 6 June 2013 and first referred to an original notebook from 2004 in his affidavit sworn 17 June 2013: at [210].
In his affidavit sworn 6 June 2013, Mr Kelly stated at [7](a):
"On 12 February 2012 I swore an affidavit in which:
a. in paragraph 47 I refer to a conversation with the defendant's Mr Asher that I said occurred on or about 7 April 2005. Now having located the notebook I've referred to above, I confirm there was more than one conversation in which Mr Asher confirmed the defendant would put my company on the QS panel, one of which having occurred on or about 13 January 2005 and another on 3 February 2005. I recall that after the second of these conversations, in which I was asked to provide more detail and background on Gleeds, I provided a series of brochures provided to me by Gleeds UK.
...
b. I prepared a document on Gleeds specifically for this purpose. On 14 March 2005, I was requested by Greg Asher to provide a specific document detailing our experience on the funder's representative projects for their records only. I prepared such a document and I saved it as a PDF and provided it to Greg Asher. I cannot now recall the manner of sending this but I think it would have been sent to him by email, however due to my computer crash, all emails were lost irretrievably. Below is a screen shot from my computer, which refers to the document.
[screen shot set out]
I have managed to recover this document from my hard drive and a copy is annexed hereto and marked "DK-C".
c. ..."
Plaintiff's Schedule of Alleged Events - A Fabrication? (Exhibit 9)
Mr Kelly gave evidence in which he claimed that he had put together a schedule of all events that had happened.
Mr Kelly produced a schedule of events that was marked MFI 8 in the proceedings, and later became Exhibit 9.
Mr Kelly's schedule, Exhibit 9, includes the following entries for 13 January 2005 and 3 February 2005:
Date
Details
Reference
13/1/05
Gerald met with Greg Asher and pick up forms for me
Gerald Olstein affidavit para 8
13/1/05
Phone call from Greg Asher introducing himself. At that time I said that the reason I was looking at ANZ was because as a customer I wanted to get onto their QS panel. He said he did not know much about it but would find out. He said he did not think it would be a problem if I took out commercial loan. Apparently commercial customers are treated differently. I told him that I was expecting some large transfers over the next few weeks and I would direct them to the ANZ account instead of our Suncorp account
3/2/05
Phone call from Greg Asher requesting information on who Gleeds are. Also said would go on panel.
It was put to Mr Kelly in cross-examination that he prepared MFI 8 first and then went looking for his original 2005 notebook: at T 374:20-40. He disagreed. He said it was prepared simultaneously. It was then put:
"Q. And I suggest to you that you, having reviewed certain documents on your HP backup, certain documents from this court case that you then included within the schedule MFI 8 a version of events first and then it was only later that you went to locate the original 2005 notebook and that it was only later after you had prepared the schedule which I have described as MFI 8 that you then created and fabricated the handwritten entries which you were cross-examined about yesterday at page 28 and page 46 of the original 2005 notebook?
A. That is incorrect." (T 374:32-40)
The Court made an order for a forensic document and handwriting expert to be appointed to undertake an examination of various entries in the First Note Book dated 2004 and in the Second Note Book dated 2004 belonging to Mr Kelly with a view to determining the relative sequence in which the entries in question were written.
Ms Michelle Novotny was appointed and examined the relevant pages. She provided an initial report dated 4 July 2013 (Exhibit A) and a Booklet to accompany the Preliminary Summary Report (Exhibit A2) dated 15 July 2013.
In her first report Ms Novotny examined the entry on page 46 which stated:
"Greg Asher
send more detailed/background gleeds
- panel OK."
Ms Novotny stated in her interim report (pp 2-3) that there were five optically distinguishable writing inks on the page upon which that entry appears. These entries she said were made respectively by a black ballpoint pen ink, a different black ballpoint pen ink and a further different black ballpoint pen ink ("ink 4"). The latter entry "ink 4" was the entry extracted above commencing "Greg Asher ...".
Ms Novotny's examinations were unable to establish conclusive findings.
In ANZ's Outline of Final Submissions at paragraph [9](e) it was submitted that on the basis of Ms Novotny's evidence the Court should:
"... find that Ms Novotny's evidence does not assist Mr Kelly's case because Ms Novotny's evidence is not inconsistent with ANZ's case that the entries made on pages 28 and 46 of in the 2005 notebook were a recent invention which were fabricated for the purpose of assisting Mr Kelly's case in the litigation:
Ms Novotny's opinion was that the entry 'Greg ANZ... 9482 009' on page 28 of the 2005 notebook was written after the entries on page 30 with which it intersects (noting that Mr Kelly agreed that he wrote the entry 'Greg ANZ... 9482 0009' sometime after the other entries on that page, and that Mr Kelly conceded under cross-examination that Mr Asher did not in his first conversation with Mr Kelly, alleged by Mr Kelly to have occurred on 13 January 2005, confirm that Gleeds Australia would be put on ANZ's quantity surveying panel); and
Ms Novotny was inconclusive as to whether the entry 'Greg Asher... OK' on page 46 of the 2005 notebook was written before or after the entries on page 48 with which it intersects (noting that Mr Kelly conceded that the entry 'Greg Asher...OK' on page 46 of the 2005 notebook was written after the other entries on that page);
Ms Novotny's opinion was that the unsourced impression found on page 46 of the 2005 notebook was written after the entries on page 48 with which it intersects."
The submissions for ANZ in relation to the matters recorded included the following:
"220. When Mr Kelly came to swear his affidavit of 6 July 2012, he was very much aware about the dates concerning when he first initiated discussions with ANZ to borrow money for the North Sydney property, the Dural property and the Blackwall property. In addressing the allegation put forward in Mr Wills' affidavit about a meeting on 11 July 2006, Mr Kelly specifically had regard to his 2006 notebook and made reference to that notebook in his 6 July 2012 affidavit.
221. Notwithstanding this, Mr Kelly asserted he did not give any consideration until 2013, to looking at the original notebooks for the period 2004 through until April 2005 because he 'just didn't pick up the dates at the time', and that 'didn't pick up the dates until [his] counsel suggested [he] do the schedule and then [he] realised."
222. ANZ submits that the review of the Schedule prepared by Mr Kelly, Exhibit 9, and Mr Kelly's evidence under cross-examination in respect of that Schedule [T 16 July 2013 at 372.29-374.6] demonstrates that Mr Kelly's evidence about locating entries at pages 28 and 46 of the 2005 notebook is false, and further permits the Court to find that the entries at pages 28 and 46 of the 2005 notebook are a fabrication which were added to the 2005 notebook after Mr Kelly had typed up the Schedule, Exhibit 9.
..."
Paragraph [222] of ANZ's Outline of Final Submissions then set out the evidence of Mr Kelly at T 374:27-40 and T 372:29-374:6.
ANZ submitted that the circumstances in which the Schedule of Events (Exhibit 9) came to be prepared in June 2013 are sufficiently suspicious of themselves, having been prepared by him approximately nine months after the allegation of fabrication of DJK-5 had first been raised in proceedings in September 2012. It was submitted that this would permit the Court to find that Exhibit 9 was another recent invention, and was created by Mr Kelly for the purpose of "corroborating" his claim: at [224].
ANZ submitted that Mr Kelly concocted the Schedule and then added entries to his 2005 notebook, at pages 28 and 46, and the unsourced impression on page 46 of his 2005 notebook, to give the appearance of a contemporaneous note of phone conversations with Mr Asher on 13 January 2005 and 3 February 2005: at [227].
ANZ identified the following matters in support of its submission that the notebook entries made in Mr Kelly's 2005 notebook at pages 28 and 46 were fabricated, and the Schedule was another "recent invention created by Mr Kelly for the purpose of 'corroborating his claim': at [224]:
(i) Mr Kelly made no mention of any original notebooks from 2004 or 2005 in his affidavits sworn 12 February 2012, 13 February 2012 or 6 July 2012.
(ii) The Schedule, now Exhibit 9, was only prepared by Mr Kelly in June 2013, nine months after the allegation of fabrication of the purported email DJK-5 had been raised in proceedings in September 2012.
(iii) The Schedule, which commences on 25 October 2004 and concludes with the entry dated 13 April 2005, set out a number of events with date references. It was said it would be highly improbable that the Schedule would have been prepared without Mr Kelly having consulted his 2005 notebook: at [225].
(iv) If Mr Kelly had not consulted his 2005 notebook until after he had prepared the Schedule, Exhibit 9, it was unbelievable that he would have identified the same dates, 13 January 2005 and 3 February 2005, in his Schedule (being dates indicated in the 2005 notebook) as the date on which he spoke to Mr Asher about the ANZ "promise": at [226].
(v) The Schedule, Exhibit 9, provides a reference to source material for most of the entries contained in it. There are no sources identified for the disputed entries made on 13 January 2005 and 3 February 2005: T 373-4.
(vi) It was only after Mr Kelly prepared Exhibit 9 that he then turned to creating and fabricating the handwritten entries at pages 28 and 46 of the original 2005 notebook (denied by Mr Kelly): at T374:30-40.
ANZ's primary submission in respect of the 2005 notebook, as noted above, was that Mr Kelly concocted evidence by adding the following entries into his 2005 notebook some time after the surrounding entries, and in all likelihood at some time in 2013 after Mr Kelly prepared the Schedule, Exhibit 9, to corroborate his case against ANZ:
(i) The entry on page 28 of the 2005 notebook starting with "Greg ANZ" and ending with "9482 0009".
(ii) The entry on page 46 of the 2005 notebook starting with "Greg Asher" and ending with "- panel OK";
(iii) The unsourced impression on page 46 of the 2005 notebook.
In the alternative, ANZ submitted that Mr Kelly's case is not established on his evidence which was:
(a) unreliable;
(b) implausible; and
(c) inherently unlikely: Outline of Final Submissions at [3] and [4].
In the plaintiff's Reply Submissions, it was submitted:
"69 The ANZ Bank gives a detailed case theory in paragraphs 222-227 which although clever is incorrect and is denied. The plaintiff submits that it is entirely plausible that the plaintiff, while running an office, and dealing with multiple directions hearings and interlocutory applications since September 2012, would have had limited time to prepare in a focused way for the proceedings until a few weeks beforehand and only then, with the pressure of an impending hearing, turned his mind to the task at hand and in doing so, located and actually read through the notebooks and observed the relevant entries."
Conclusions On Exhibit 9
Mr Kelly's evidence established that in early 2005 he dealt with Mr Asher, in particular, from January 2005 (when he said he collected forms from him).
The dealings between Mr Kelly and ANZ having commenced in January 2005, there is no rational explanation as to why Mr Kelly would not at an early stage of these proceedings have examined his 2004 and 2005 notebooks and having done so make reference to relevant entries for inclusion in his primary affidavits of 12 February 2012 and 13 February 2012, or at the latest, in his affidavit of 6 June 2012.
Mr Kelly's first reference to his 2005 notebook was not made until he made his affidavit on 6 June 2013, some eight years after the relevant events, that is, the reference to an entry dated 3 February 2005.
The fact remains, however, that he now seeks to put forward an entry appearing on page 46 of his 2005 notebook as a contemporaneous note and as corroborative evidence, namely, an entry commencing "Greg Asher" on the page of the notebook dated 3 February 2005.
The 2005 notebook had not been misplaced. It, like his other original notebooks, was kept in his office at North Sydney, a place to which he had daily access.
As indicated earlier, it was contended that the relevant chronology of events indicates that Mr Kelly would have been aware that he had dealings with ANZ reaching back to January 2005, a period he said that he was concerned to set up an arrangement with ANZ for his appointment to its quantity surveyors panel. There is no plausible explanation for the delay before he filed his affidavit sworn on 6 June 2013.
The evidence given by Mr Kelly in cross-examination in relation to the preparation of Exhibit 9 raises doubts as to the veracity of his evidence. I refer in particular to his evidence given on 16 July 2013 at T 374:27-40 and at T 372:29-T 374:6. There, he stated that he prepared the Schedule, Exhibit 9, in about June 2013 before he located his original notebooks for the period 2004 up to April 2005. If that evidence was true, then it is extraordinary that he was able to make the entries for 13 January 2005 in respect of the phone call from Greg Asher and the entry on 3 February 2005 in relation to a further call from Mr Asher in which entry Mr Kelly suggested Mr Asher said "... also said would go on panel". He did not indicate in Exhibit 9 in relation to "Reference" the basis upon which he was able to construct the wording for each of those two entries.
Having earlier given evidence at T 374 that he prepared his Schedule of Events, Exhibit 9, in about June 2013 before he located the original books for 2004 up to April 2005, his later evidence was contradictory. He was asked:
"Q. And is this correct, that you provided the schedule MFI 8 to Ms Button before you located the original 2004 and the original 2005 notebooks?
A. No, it's not." (T 373:23-25) (emphasis added)
He was then asked as to when, as part of the process of preparing the Schedule, he located the original notebooks for 2004 and 2005. His answer, somewhat surprisingly, was: "It would have been simultaneously."
He could give no explanation as to why he had not put a reference to his 2005 notebook (as the source) in the appropriate column in the Schedule of Events. In relation to that aspect he was asked:
"Q. And do you agree that it is the date entry 13 January 2005 contained within MFI 8 which is the relevant date entry for page 28 of the original 2005 notebook?
A. I agree.
Q. To which you were taken in evidence yesterday?
A. I agree.
Q. And do you agree that it is the date entry 3 February 2005 which is the relevant date entry for page 46 of the 2005 notebook to which you were taken in evidence yesterday?
A. I agree.
Q. You cannot offer any explanation why it is that the reference column in the schedule MFI 8 does not contain any reference to the original 2005 notebook?
A. No, I can't." (T 372:41-374:6)
A finding that evidence has been fabricated is, of course, an extremely grave one. Such a finding may only be made on the basis of cogent evidence which admits no other rational explanation. The circumstances to which I have referred throws significant doubt upon the authenticity of the entries in question in the 2005 notebook.
Having considered this aspect of the proceedings, I consider that I should resolve the disputed issue as follows.
In the circumstances, including the very late production of the entries in the 2005 notebook by Mr Kelly, the circumstances concerning the two entries in question (13 January and 3 February 2005) are highly suspicious. I am not satisfied that the evidence relied upon by Mr Kelly establishes, on the probabilities, that the entry on page 46 of the notebook, namely, 3 February 2005, was made on that date. However, in light of the limited conclusions of Ms Novotny I do not consider the evidence is sufficiently cogent for a finding of fabrication of those entries to be made.
That said, I am not satisfied that the words "panel OK" provides sufficient corroboration for the making of the alleged promise by Mr Asher, as pleaded in the Statement of Claim. Mr Kelly had been in the industry for a long enough period to have appreciated that the simple indication by a relationship manager of "OK" could not be taken or relied upon as creating a binding obligation on ANZ in the limited circumstances known about Mr Kelly's professional experience and background (and of his company's history and performance) as at 3 February 2005.
I have earlier referred to the need for caution where a cause of action is dependent upon proof of spoken words. I am not persuaded that the words "panel OK" are sufficiently clear and unambiguous to establish a consensus had been reached between Mr Kelly and ANZ as to constitute a binding contract. Those words are to be considered in the context of the whole of the evidence. Had Mr Asher made a promise, one would expect that a note to that effect would have been written in terms saying so. That was not done in January-February 2005, nor as stated above, was any written record created by Mr Kelly of any such promise before 2011.
PART L - CONCLUSIONS
Conclusions on the Plaintiff's Claim
The premise upon which the plaintiff based his claim was that ANZ made a contract with him to put his company, Lucrum Consulting (formerly known as Gleeds Australia), on ANZ's panel of quantity surveyors and that he and his wife took out the loans in question on that basis.
The plaintiff's claim was for damages for breach of contract and for alleged misleading and deceptive conduct.
Upon analysis of the evidence and the submissions set out above, I have concluded that the plaintiff has not established on the balance of probabilities that a promise, as alleged, was made by or on behalf of ANZ. Indeed, the evidence, in my assessment, affirmatively establishes that on the probabilities no such promise was made.
Accordingly, on that basis, I make the following findings:
(1) There was no contract to the effect pleaded in the Statement of Claim.
(2) ANZ did not engage in conduct that was misleading or deceptive, or likely to mislead or deceive.
Conclusions on ANZ's Cross-Claim
Finally, in ANZ's submissions on its cross-claim it was submitted that ANZ was entitled to the orders sought for the debt owed in respect of each of the facilities as specified therein and additionally that it was entitled to the orders sought for possession of the Dural property, the Blackwall property and the North Sydney property.
ANZ pleads and relies upon its entitlement in the above respects by reason of default under the facilities, and mortgages securing them, such defaults on the evidence in the proceedings arising from the plaintiff's failure to pay as required the amounts due and payable under the facilities.
Additionally, since the filing of the Statement of Claim, the ANZ Business Loan has expired and the full amount has become due and payable.
ANZ relies upon Notices of Demand and statutory notices issued to Mr and Mrs Kelly the act of non-compliance with those demands.
The Defence to Cross-Claim was filed on 25 November 2011. A number of grounds of defence are interrelated to the issues determined above arising on the Statement of Claim. There is no issue raised as to the facts concerning the amounts loaned, applicable conditions as to the plaintiff/cross-defendant's obligation to make payment in accordance with the loan conditions or as to the defaults pleaded and relied upon by ANZ. There may arise a need for the evidence on such matters to be updated. I will provide below for directions in respect thereof.
Finally, in ANZ's Amended Defence filed 27 September 2012 a defence was pleaded under s 82(2) of the Trade Practices Act 1974 (Cth) and s 14(1) of the Limitation Act 1969 that the plaintiff's claim was statute barred. In light of the determination that no contract or promise as alleged was made, the issue of the enforceability of any contractual obligations pleaded by the plaintiff do not arise. Accordingly, it is unnecessary to say anything further.
I will deal with the making of final orders below.
PART M - ORDERS AND FURTHER DIRECTIONS
At the outset of the hearing of the proceedings, liability issues were identified for the purpose of setting a program for the hearing. The hearing proceeded upon the basis that I would determine:
(1) In the plaintiff's case, the following issues:
(i) The alleged agreement
(ii) The issue of reliance
(iii) The issue of causation
(2) In ANZ's case on its cross-claim, the following issues:
(i) The loan agreement/mortgages
(ii) Default
(iii) Orders as to the debt claimed and ANZ's claim for possession
There remains for consideration the issue as to whether ANZ seeks a determination upon Ground 18 of its Amended Defence (the "reflective loss" principle), in light of the conclusions set out above.
To the plaintiff's claim seeking damages based upon alleged breach of contract, ANZ raised a defence to any entitlement of Mr Kelly to claim damages based upon the reflective loss principle: ANZ's Outline of Submissions at [17]-[19]. This ground of defence was further addressed in ANZ's Outline of Final Submissions at [277]-[281].
The question arising from Ground 18 accordingly was whether the damages claimed in these proceedings is, as a matter of substance, reflective of Lucrum Consulting's loss.
ANZ has submitted that Mr Kelly has not suffered any loss which is not the subject of the "reflective loss" principle. In this contention it was noted that the Court dismissed the claim by Lucrum Consulting on 5 April 2012.
Ground 18 of the Amended Defence accordingly raises a discrete issue. Should ANZ seek that there be a determination upon that ground, I propose to give such directions as necessary for the plaintiff to file any written submissions on a strict timetable that will ensure a determination can be made upon that ground on an expedited basis.
I propose to give any further directions in relation to the cross-claim as required, including a direction for the filing of any additional evidence with respect thereto.
I propose to list the proceedings in relation to:
(i) Final orders, in particular, those required to give effect to this Judgment.
(ii) Costs.
(iii) Any other ancillary orders.
Order and Direction
(1) I direct that the proceedings will be re-listed at 2.00pm on 22 April 2014 for the purpose of making any further directions and final order(s).
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Decision last updated: 11 April 2014
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