Kosserkas v Bhavya Holdings Pty Ltd
[2015] WADC 152
•16 DECEMBER 2015
KOSSERKAS -v- BHAVYA HOLDINGS PTY LTD [2015] WADC 152
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 152 | |
| Case No: | CIV:669/2015 | 26-27 NOVEMBER 2015 | |
| Coram: | WAGER DCJ | 16/12/15 | |
| PERTH | |||
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff | ||
| PDF Version |
| Parties: | TOM KOSSERKAS BHAVYA HOLDINGS PTY LTD |
Catchwords: | Execution of deed Property Law Act 1969 (WA) s 9(1) Whether deed properly executed |
Legislation: | Property Law Act 1969 (WA) |
Case References: | Brice v Chambers [2014] QCA 310 Netglory Pty Ltd v Caratti [2013] WASC 364 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
BHAVYA HOLDINGS PTY LTD
Defendant
Catchwords:
Execution of deed - Property Law Act 1969 (WA) s 9(1) - Whether deed properly executed
Legislation:
Property Law Act 1969 (WA)
Result:
Judgment for the plaintiff
Representation:
Counsel:
Plaintiff : Mr A P Hershowitz
Defendant : Mr C M Slater
Solicitors:
Plaintiff : Paiker & Overmeire
Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Brice v Chambers [2014] QCA 310
Netglory Pty Ltd v Caratti [2013] WASC 364
1 WAGER DCJ: The plaintiff Mr Kosserkas seeks to enforce a deed of acknowledgement of debt that he claims was signed by Mr Paari as director on behalf of Bhavya Holdings Pty Ltd (Bhavya) in compliance with the formalities required for a deed to be lawful and binding pursuant to s 9 of the Property Law Act 1969 (WA).
2 Bhavya denies the document was signed in compliance with the formalities of deed required by s 9 of the Act and asserts that the deed is not enforceable.
3 Both parties agree that in order to be an enforceable lawful deed strict compliance with the formalities set out in s 9 of the Act is required.
4 The history of the matter is that Mr Kosserkas had been employed as a financial controller for a company controlled by Mr Paari, Reymer Pty Ltd (Reymer). Reymer registered the OKA Motor Company Ltd (OKA) business name with ASIC in 2004 and Mr Kosserkas was an alternate director of Reymer until 14 June 2011, holding one share in the company. Mr Paari also controlled Bhavya that had previously been known as Bondshaw Holdings (Bondshaw), having changed its name in 2011. Bondshaw was, in substance, the holding company of Reymer.
5 Mr Kosserkas claims that on 27 February 2009 he and Bhavya represented by Mr Paari entered into a deed titled 'Acknowledgement of Debt' between Bondshaw as the debtor and Mr Kosserkas as the creditor. The acknowledgement of debt records that Bondshaw is indebted to Mr Kosserkas in the sum of $150,000. The deed is to acknowledge the debt and to repay the sum of $150,000 by 30 June 2009 with a requirement that interest be paid on the principle if the debtor fails to repay by that date of 14% interest per annum until date of payment.
6 An original acknowledgement of debt bearing the signatures of Mr Paari, Mr Gold as his witness, Mr Kosserkas and Mr Grasa as his witness is exhibit 2. Bhavya pleads that Mr Kosserkas produced this acknowledgement of debt to Mr Paari for the first time on 31 October 2011. Mr Paari claims he has no recollection of signing the acknowledgement of debt and disputes its operation and the existence of contemporaneous attesting signatures. He asserts his signature lacked a contemporaneous attesting witness.
7 Section 9 Property Law Act 1969 provides:
Formalities of deed
(1) Every deed, whether or not affecting property —
(a) shall be signed by the party to be bound thereby; and
(b) shall be attested by at least one witness not being a party to the deed but no particular form of words is required for the attestation.
(2) It is not necessary to seal any deed except in the case of a deed executed by a corporation under its common or official seal.
(3) Formal delivery and indenting are not necessary in any case.
(4) Every instrument expressed or purporting to be an indenture or a deed or an agreement under seal or otherwise purporting to be a document executed under seal and which is executed as required by this section has the same effect as a deed duly executed in accordance with the law in force immediately prior to the coming into operation of this Act.
8 In Netglory Pty Ltd v Caratti [2013] WASC 364, Edelman J set out a comprehensive history of the law relating to the formal requirements for a deed and the reasons why strict compliance with s 9 of the Act is required. His Honour rejected the submission that the attestation does not require the witness' presence to be recorded on the deed as an attesting witness: [147]. Relevant to this trial his Honour set out the reasons why attestation must be contemporaneous with the signature witnessed: [148] - [169] ([154] – [167]):
My research suggests that modern authority concerning the timing of the statutory requirement of attestation is very limited. However, as a matter of principle, the approach of the majority in Wright should be preferred in the interpretation of s 9 of the Property Law Act for five reasons.
First, this interpretation is consistent with the authority which preceded s 9 in cases which involved a requirement of attestation under other statutes and powers, including the leading case of Wright. As I have explained above, the decision in Wright was approved by the House of Lords in the watershed case of Burdett v Spilsbury, 77 which considered the requirement for written signature of an attesting witness.
The assumption of contemporaneous attestation is also embodied in Roberts v Phillips, 78 (which was described by the Privy Council as having 'invariably been followed'79): 'it should be subscribed by the witnesses in the presence of the testator; i.e. that they should subscribe their names upon the will in his presence'.
The passage on attestation in the leading work, Norton on Deeds, is also premised upon the assumption that attestation (including signature) is contemporaneous with witnessing: 'Attestation means that one or more persons are present at the time of the execution for that purpose (i.e. for the 75 Doe on the Demise of Mansfield v Peach (1814) 2 M & S 576, 582; 105 ER 496, 498. 76 Doe on the demises of John Hotchkiss and his wife Mary v Pearce (1815) 6 Taunt 402; 128 ER 1090. 77 Burdett v Spilsbury (1843) 10 C & F 340, 363; 8 ER 772, 781. 78 Roberts v Phillips (1855) 4 El & Bl 450, 453; 119 ER 162, 164. 79 Shamu Patter v Abdul Kadir Ravuthan [1912] UKPC 66; purpose of attesting the execution) and that as evidence thereof they sign the attestation clause ... .'80 (Emphasis in original).
Section 9 was enacted against, and ought to be interpreted as incorporating, this historical understanding of the meaning of attestation.
Secondly, there is little reason to deny validity to a purported deed where the attesting witness signs after the party who was witnessed has died, as in Doe v Peach, but, at the same time, to permit the attesting witness to sign at any time, possibly many years later, when the party whose signature was witnessed is still alive. Many years after the event the living party might have little or no memory of the event.
Thirdly, s 9 of the Property Law Act sought to create uniformity of the requirements for creation of a deed. Parliament cannot have intended to do so in a manner which would undermine the purposes of attestation. If subsequent signature by an attesting witness were permitted then at least one of the purposes of the formality of written signature could be easily defeated.
One purpose of the attestation requirement in s 5 of the Statute of Frauds 1677 29 Car 2 was the goal of avoidance of fraud including by a written signature from an attesting witness. This purpose would be undermined if an alleged witness could simply sign the deed, many years later, even immediately before litigation or possibly even in the witness box.
Fourthly, s 9 of the Property Law Act was introduced to provide 'a simple and uniform method for execution of a deed and [to] dispense with the necessity for sealing, indenting and formal delivery'. 81
The intended simplicity of the formality in s 9 would be significantly undermined if the signature of an attesting witness were required (as explained above) but that signature could be affixed at any time after the transaction.
The consequent complications undermining the intended simplicity of s 9 might be expressed as a series of questions. How could a person wishing to rely upon the deed recall if the deed had been witnessed, especially after the passage of many years? How could any suspected witness be located without any subscription of his or her name? What would be the status of the purported deed which had not satisfied the 80 Morrison JA and Goolden H, A Treatise on Deeds by Robert Norton (2nd ed 1928) 24. 81 Explanatory Memorandum, Property Law Bill 1969 (WA) 3, requirement of signature but might do so in the future? Could a purported deed be invalid due to the absence of an attesting signature (as explained above) but subsequently become valid at an unknown point in time when the attesting witness signs? If so, would the cause of action accrue only when the deed became valid? Would the limitation period run only from that point in time so that the running of time might be indefinitely postponed? How could that point in time be determined if the attesting witness did not date his or her signature?
Fifthly, although contemporary authority on this point is slim, one modern reference touching on the issue of timing occurred in Edwards v Skilled Engineering Pty Ltd. 82 In that case, Priestley JA (with whom Kirby P and Meagher JA agreed) considered whether initials or 'a very stylized signature' was sufficient attestation. In finding that it was, Priestley JA said that the 'formalities necessary for the execution of the deed are, on the face of the deed, complied with'.
9 I adopt his Honour's reasons and conclusion.
10 The onus is on Mr Kosserkas to prove on balance of probabilities that the deed is enforceable. The signed deed (exhibit 2) is prima facie evidence of an enforceable deed, however Bhavya has led evidence disputing its validity. The onus is therefore on Mr Kosserkas to prove on the whole of the evidence on balance of probabilities that the deed complies with s 9 of the Act.
11 Four witnesses gave evidence at trial. Mr Kosserkas gave evidence on his own behalf and Mr Gold was called as a witness by Mr Kosserkas. Mr Paari gave evidence on behalf by Bhavya and Mr Grasa was called as a witness for Bhavya. The four witnesses who gave evidence at trial were the four people who Mr Kosserkas claims were present at the time in Mr Grasa's office on 27 February 2009 and who signed and witnessed the acknowledgement of debt.
12 Exhibit 2, the original acknowledgement of debt in favour of Mr Kosserkas contains the four relevant signatures and, on its face, appears to be executed in accordance with s 9 of the Act. The fact that the signature was made by the named party is not disputed.
13 Exhibit 1.1 is a copy of the acknowledgement of debt that contains Mr Paari's signature on behalf of Bhavya. The space for a witness to Mr Paari's signature is blank. Mr Kosserkas' signature appears on the document witnessed by Mr Grasa.
14 Exhibit 4 is a copy of an acknowledgement of debt in materially identical terms in favour of Mr Gold that contains all four signatures. The fact that the signature was made by the person whose name appears is not disputed.
15 Exhibit 1.1 also contains a copy of the acknowledgement of debt in favour of Mr Gold. This copy is signed by Mr Paari on behalf of Bondshaw however Mr Paari's signature is not witnessed. Mr Gold's signature and the signature of Mr Grasa as witness on behalf of Mr Gold appear on the document.
Evidence of Mr Kosserkas
16 Mr Kosserkas states that he was the financial controller for both Reymer, an automotive researcher and developer that was a fully owned subsidiary of OKA Motor Company Ltd, and its holding company Bondshaw. Mr Paari was the director of both entities and Mr Kosserkas acted as power of attorney and as an alternate director in respect of Reymer in Mr Paari's absence. Mr Gold was the chief executive officer of OKA Motor Company Ltd that subsequently became Reymer. Both Mr Kosserkas and Mr Gold started working for OKA in 1992.
17 Prior to 27 February 2009 Mr Kosserkas, Mr Gold and Mr Paari had discussed the need for a deed of acknowledgement in respect of a sum owed or to be provided by way of entitlement from Bondshaw to Mr Kosserkas. A similar document was discussed in respect of Mr Gold.
18 Mr Kosserkas had instructed George Grasa, solicitor of GG Legal, on a number of matters related to Reymer and the two had a long-standing friendship. Sometime prior to 27 February 2009 Mr Kosserkas asked Mr Grasa for a precedent document for an acknowledgement of debt. Mr Grasa duly emailed him a precedent. Mr Kosserkas says he knew how to read documents and he made all the necessary changes to the acknowledgement of debt on advice from Mr Paari, although he received the instructions from Mr Gold who he understood had spoken to Mr Paari. Mr Kosserkas inserted the names of the relevant parties, that is, Bondshaw and his own name, and, in respect of the acknowledgement of debt relating to Mr Gold, Bondshaw and Mr Gold's name. He also inserted the monetary sums. Mr Kosserkas acknowledges that the sum written on the acknowledgement of debt expressed in words is written as 'one hundred thousand dollars' and expressed in figures is $150,000. This was a transposition error. It was his intention to insert $150,000 only into the documents consistent with discussions and agreement.
19 He denies in cross-examination that $150,000 is a rounded figure. He denies it is a figure picked from the air and says it was added because Mr Paari and Mr Gold had instructed him to enter the amount onto the document.
20 Mr Paari was living in Malaysia in 2009 and would return to Perth on occasion. On 27 February 2009 Mr Paari told Mr Gold, who in turn told Mr Kosserkas, to make an appointment to go down to Mr Grasa's office so that the deed could be signed and witnessed at a time before Mr Paari left Australia. Mr Kosserkas rang and made arrangements for signing with Mr Grasa. He then printed off three copies of the acknowledgement of debt relating to him and three copies of the acknowledgement of debt relating to Mr Gold. In cross-examination Mr Kosserkas denies that the document was prepared in a rush. On further cross-examination he agrees that if he was doing something else there may have been a rush when he prepared or printed the documents but he is unable to say. He agrees that in the context of printing off the documents there may have been a rush because of the limited time period. The documents needed to be signed on 27 February because Mr Paari was intending to return to Malaysia on 28 February and Mr Paari wanted the whole document executed before he left for Malaysia.
21 Mr Kosserkas drove himself to Mr Grasa's office for the signing on 27 February. On arrival he saw that Mr Gold had driven Mr Paari. The four men being Mr Grasa, Mr Paari, Mr Gold and Mr Kosserkas then went into Mr Grasa's office and signed the document. They signed each of the three copies of the documents in the order in which the signatures appear.
22 Mr Kosserkas is emphatic in his evidence that Mr Paari had not signed the document prior to arriving at Mr Grasa's office and he is equally emphatic that all four men were present during the course of signing the documents. He says the process took half an hour to one hour and then Mr Gold and Mr Paari went off to another location and he returned to work.
23 Mr Kosserkas says he asked Mr Paari if he wanted a copy of the signed document when they were at Mr Grasa's office, however Mr Paari told him 'No need, Tom. Just put them in the company file'.
24 Mr Kosserkas subsequently made an appointment with Mr Grasa at a time when Mr Grasa was available on 6 March 2009 in order to provide instructions for the lodgement of caveats consistent with the content of the signed acknowledgement of debt deeds. Although payment of the $150,000 became due on 30 June 2009, Mr Kosserkas did not receive any money nor did he take any steps to enforce payment because, he says, the deed entitled him to 14% interest on the money.
25 In 2011 Mr Paari asked Mr Kosserkas to send him a copy of the deed of acknowledgement by email. Soon after, a forensic audit was conducted in respect of Bhavya by KPMG. As part of the audit KPMG requested that Mr Kosserkas attend an interview and answer all questions asked. He asserts that he did this.
26 In 2012 Mr Paari wrote to Mr Kosserkas with queries about some financial matters and referred to the caveat: exhibit 1.3. After Mr Kosserkas received the letter he and Mr Paari met and had discussions during which Mr Kosserkas asked Mr Paari if he would pay the money owing in respect of the deed. Mr Paari said he would get back to Mr Kosserkas, however he did not do so nor was any money paid to Mr Kosserkas. Mr Kosserkas did not respond to Mr Paari's letter in writing, although Mr Paari had requested him to do so. Mr Kosserkas also refused to lift the caveat when requested, however once the caveat lapsed he did not take any steps to lodge a further caveat.
27 In cross-examination Mr Kosserkas acknowledge the need to be accurate when dealing with accounts. He describe his work as 110% accurate, however he acknowledges the acknowledgement of debt contained an error in relation to the relevant sum in that the words of one hundred thousand dollars and the figure of $150,000 were both included. Mr Kosserkas is emphatic that this was a transposition error only and denies it reflects haste or any lack of agreement in relation to the acknowledgement.
Evidence of Mr Gold
28 Mr Gold held the position of chief executive officer for both Bondshaw and Reymer in 2009 having been with the companies since 1992. He worked for Mr Paari who was the owner of all intellectual properties of the company and considers Mr Paari to be a work colleague and friend. Mr Gold admits that the signatures on the acknowledgements of debt that were signed and witnessed by all parties in Mr Kosserkas' favour and in his own favour (exhibit 2 and exhibit 4) were witnessed and signed by him on 27 February 2009.
29 Mr Gold admits that his signature appears on the copy document in his favour that shows Mr Paari's signature without the attestation of a witness in respect of Mr Paari (exhibit 1.1).
30 Mr Gold says that the acknowledgements of debt documents in respect of both Mr Kosserkas and Mr Gold arose because there had been monies lent to Mr Paari over the years. Mr Paari said to Mr Gold that he would come down from Malaysia where he lived in 2009 in order to sign the acknowledgement of debt relevant to the monies lent. Although Mr Paari lived in Malaysia Mr Gold spoke to Mr Paari about 15 times each day. He says he would have spoken to him about seven times in relation to the acknowledgements of debt (ts 54). Mr Paari's response to the subject of the acknowledgements of debt was, in general terms, 'I'm happy to come down and sign it. You guys have been very good to me. I'll just come and sign the acknowledgement of debt next time I come down' (ts 54).
31 Mr Gold says that once Mr Paari had authorised the preparation of the acknowledgements of debt Mr Kosserkas was instructed to prepare the documents. Mr Gold was aware that Mr Grasa was the solicitor involved in the process, however he was not aware of the details of the preparation of the documents. Given that Mr Gold was chief executive officer and Mr Kosserkas was the financial controller under his direction, he spoke to Mr Kosserkas about 15 - 20 times each day.
32 Mr Gold had met Mr Grasa once prior to 27 February 2009. He says that meeting was about a year earlier when Mr Gold had attended Mr Grasa's office with Mr Kosserkas in relation to a mortgage issue.
33 In 2009 Mr Gold kept a business diary that he updated daily in case anything ever went wrong. He noted in the diary at 4.00 pm on Friday, 27 February 2009, 'Paari – acknowledgements of debt'. He says that entry refers to the signing of the acknowledgements of debt documents. The diary also records that at 3.30 pm on Saturday, 28 February 2009 Mr Gold dropped Mr Paari off at the airport. The Saturday diary notation is consistent with independent evidence of Mr Paari's departure from Western Australia obtained from the Department of Immigration: exhibit 1.10.
34 Mr Gold says that on 27 February 2009 he, Mr Paari and Mr Kosserkas attended Mr Grasa's office in Fremantle. He drove Mr Paari in his car. Mr Kosserkas went in a separate car. They arrived within a few minutes of each other and all three men walked in together to see Mr Grasa. He says that Mr Kosserkas had a briefcase and other documents that he put on the table.
35 Mr Gold says they told Mr Grasa why they were signing the documents and told him that Mr Paari was happy to do it. The only question Mr Gold had for Mr Grasa in relation to the signing of the documents was 'Are you sure we can sign each other's as a witness?' (ts 57). He raised this question because he was concerned that each man was signing the other's acknowledgement and the three men were all associated with Bondshaw and had interrelated roles including that Mr Kosserkas held the role of power of attorney for Mr Paari and Mr Gold was the chief executive officer. Mr Grasa said it was fine to sign and all three duly signed. In cross-examination he was asked:
… Do you know why (after signing Mr Kosserkas) walked away with the documents? – Because basically he had Paari's power of attorney and he looked after his financial and his … personal paperwork. I'd class this more as a personal thing than a company thing to be honest. (ts 71).
36 Mr Gold says he was not keen to proceed with the acknowledgement of debt in the first place. He was not personally involved in the lodging of caveats and he lifted the caveat relevant to his acknowledge of debt in order for the land to be dealt with when requested to do so by Bondshaw at a later time. Mr Gold left the company at the time of the forensic audit and, although requested by letter from Mr Paari to answer questions on a number of matters raised by KPMG in writing, he did not respond in writing: exhibit 1.5.
37 Mr Gold was unaware that there was a discrepancy in relation to the sum involved in the deed being expressed in words as one hundred thousand dollars and in numbers as $150,000 until it was brought to his attention in cross-examination.
Evidence of Mr Paari
38 Mr Paari was a director of Bondshaw the company that owned Reymer. Reymer held the automotive assets in respect of OKA. In 2009 Mr Paari was living mainly in Kuala Lumpur, Malaysia, however he would come to Perth on occasion. Sometimes this would be with his daughter who required medical treatment at Princess Margaret Hospital on three or four occasions per year normally for about a week each and then normally for about a month at some time in July or August. Mr Paari however would also come to Perth on other occasions and cannot recall the reason why he was in Perth in February 2009.
39 When in Perth Mr Paari would meet face to face with Mr Kosserkas and Mr Gold. Mr Paari has had a financial interest and an involvement as a director of companies related to Reymer and Bondshaw since about 1990. It was his business practice from the 1980s onwards to sign each and every page of a document and not just the execution page in the context of the contracts and he maintained this practice with Reymer and Bondshaw.
40 Mr Paari does not dispute that the signatures that appear on the execution pages of the respective acknowledgements of debt of Mr Kosserkas and Mr Gold are his however he denies signing any acknowledgements of debt in favour of Mr Kosserkas. He says that he has no recollection of signing the deeds and, given that each acknowledgement of debt involved a sum of $100,000 or $150,000, he would have recalled the documents had he signed them. Mr Paari says that had he been aware of the acknowledgement of debt he would definitely have told Mr Stephen Pynt about it. Mr Pynt had been chairman of the OKA Board and had advised legally. Mr Pynt and another also held Mr Paari's shares in Bondshaw in trust on Mr Paari's behalf. Given the sum of money involved in the two acknowledgements of debt was a sum of up to $300,000 Mr Paari says he would definitely have shown Mr Pynt. He has no recollection of doing so. Mr Pynt was not called as a witness in these proceedings and accordingly there is no evidence one way or another in respect of any knowledge that Mr Pynt had in respect of the acknowledgements of debt.
41 Mr Paari cannot give an explanation for his signature appearing on page 6 of exhibits 1.1, 2 and 4. He speculates that the pages may have been given to him singly or that the execution page may have been attached to the body of another document. He says that because he trusted both Mr Kosserkas and Mr Gold he may have signed them. It was put to Mr Paari in cross-examination that, given his practice of signing all pages of documents he would not have signed a single page with the number 6 on the bottom nor would he have signed an additional execution page if it was attached to another document and did not relate to that document. It was also put to Mr Paari that he would not have signed three copies of each of the acknowledgements of debt, being six signatures in total on six execution pages each bearing the number 6 if those pages did not join up with the other pages nor would he have signed them singly. Mr Paari cannot give an explanation for his signature appearing on any of the pages however he says that he trusted Mr Kosserkas and Mr Gold.
42 Mr Paari says that he did not attend Mr Grasa's office on 27 February 2009. He asserts that he has only attended Mr Grasa's office on one occasion with Mr Gold. This is contrary to Mr Gold's evidence because Mr Gold says that he had attended Mr Grasa's office with Mr Kosserkas on a prior occasion but had only attended there with Mr Paari on 27 February 2009. Mr Paari clarifies that when he attended with Mr Gold at Mr Grasa's office on a prior occasion Mr Kosserkas was in Bangkok. There is no evidence in relation to a time period relevant to this assertion.
43 Mr Paari acknowledges that he signed and sent letters to both Mr Kosserkas and Mr Gold after KPMG had started investigative work on 2 April 2012. He agrees that prior to writing the letter to Mr Kosserkas he had received a copy of the acknowledgement of debt that appeared to have been signed by him and by Mr Kosserkas and appeared to be witnessed by Mr Gold and Mr Grasa: exhibit 2. However, in the letter (exhibit 1.3 at page 3) he had said:
Acknowledgement of debt
On 27th of February 2009 an acknowledgement of debt deed (7 appendix G) was created stating Bondshaw Holdings Pty Ltd as the debtor to Tom Kosserkas (the creditor) for the sum of $150,000. The document contains discrepancies in the amount indebted, showing 'one hundred thousand dollars' and subsequently '$150,000'. Please provide an explanation for this discrepancy.
44 In cross-examination Mr Paari denies that by writing to Mr Kosserkas in these terms he was admitting the existence of the acknowledgement of debt and merely questioning its precise value. He denies his query was in the context of the amount of $100,000 or $150,000 as opposed to whether the acknowledgement of debt was a signed document that existed at all. Mr Paari admits that he did not raise whether the acknowledgement of debt existed or whether it had been properly executed in his letter dated 2 April 2012. Mr Paari says the reason for this is because KPMG had drafted the letter and he just signed it. Further, KPMG had not completed their investigations at the time the letter was sent.
Evidence of Mr Grasa
45 Mr George Grasa of GG Legal, Fremantle is a solicitor with 22 years' experience. Mr Kosserkas has been his personal friend and client. Mr Grasa has represented entities with which Mr Kosserkas has been associated. From 2002 to 2009 Mr Grasa opened six to eight files for Bondshaw and Reymer. He has met Mr Gold two to three times however he only knew him through Mr Kosserkas as his associate. He has also met Mr Paari but on a maximum of two to three occasions.
46 Mr Grasa confirms that as a solicitor he had signed and witnessed hundreds of documents. He has no independent recollection of the signing process relevant to the acknowledgements of debt in favour of Mr Kosserkas and Mr Gold. He has looked through file notes and diary notes from six years ago and from these records he compiled a letter dated 20 March 2015 which is a summary of his dealings in relation to the acknowledgement of debt.
47 Mr Grasa does not have a file note nor a diary note in respect of the process of signing the acknowledgement of debt documents. Having sighted the documents that were on a file opened by him by his firm in respect of the lodgement of caveats including exhibit 1.1, he confirms that his firm's reference does not appear on the documents. The lack of a no reference is consistent with Mr Kosserkas having prepared the documents from blank precedents sent to him by Mr Grasa. Mr Grasa agrees that had he sent a blank precedent to Mr Kosserkas he would not have opened a file nor charged Mr Kosserkas for this and, accordingly, it would be unusual for him to have made a note.
48 Mr Grasa confirms that, given his knowledge of the requirements in respect of deeds he would have requested that three copies of the acknowledgement of debt be signed. He also agrees with the following proposition (ts 124).
In your years of experience, Mr Grasa, whether three copies of a document to be signed, has it ever come to pass in your experience that one set perhaps is not fully signed by all the parties? – I've seen that, yes.
49 Mr Grasa says in evidence that he does not know why there is no witness signature to Mr Paari's signature on the copy documents that were held on the caveat file. He confirms in cross-examination that he would have checked the documents in the event that he was lodging the caveat. This task may have been delegated to Mr Dale, a solicitor who was employed by Mr Grasa at the relevant time.
50 Given that he has no independent recollection of the signing process, he confirms that he has relied on his signature being on the respective acknowledgements of debt in favour of Mr Kosserkas and Mr Gold. He has not signed to witness Mr Paari's signature and, accordingly, cannot state one way or another whether Mr Paari was present. Mr Grasa's letter from GG Legal to Jackson McDonald dated 20 March 2015, exhibit 1.6 that refers only to the attendance of Mr Kosserkas and Mr Gold in the context of signing is not inconsistent with Mr Grasa evidence nor does it impact adversely on my assessment of Mr Grasa's credibility.
Findings of fact
Credibility
51 Counsel for Bhavya submit that I should not accept Mr Kosserkas' evidence because he did not answer the questions that were asked and had a demeanour in court consistent with giving erratic and subjective answers, however I do not draw this inference from Mr Kosserkas' demeanour. Mr Kosserkas was the first witness called in a matter in which he is the plaintiff. He was clearly nervous and keen to ensure that his version of events was given. I find that all four witnesses did their best to tell the truth when giving evidence. Given the passing of time since 2009 and the nature of the responsibilities held by all witnesses in 2009, I accept that their recollections differ. I find that Mr Gold who is still a friend of Mr Paari, and Mr Grasa who conducted himself professionally in his dealings with the parties are both reliable and credible witnesses. I favour their evidence where a conflict in evidence arises.
52 I make the following findings:
1. Mr Gold was not comfortable with the acknowledgement of debt being created in 2009 nor with caveats being lodged in respect of the acknowledgement of debt. He did not appear comfortable giving evidence at trial. Mr Gold's evidence is that Mr Paari was aware of the nature of the acknowledgements of debt and the sums involved, being $150,000 in respect of each of the two acknowledgements of debt. I accept his evidence that Mr Paari communicated about seven times with Mr Gold about the acknowledgements of debt prior to any arrangement in relation to the signing of the documents. Mr Kosserkas was the driving force in the drafting and signing of the documents and the subsequent registration of caveats however that occurred following discussion and instruction. Although reluctant, Mr Gold signed his acknowledgement of debt, witnessed Mr Paari's signature and Mr Kosserkas' acknowledgement of debt and did not dissuade Mr Kosserkas from arranging to have the caveats lodged.
2. Mr Gold's evidence is consistent with Mr Kosserkas' evidence that Mr Gold drove Mr Paari to Mr Grasa's office on 27 February 2009 where they met up with Mr Kosserkas at a prearranged appointment with Mr Grasa. Mr Paari accepts that he was in Perth on 27 February 2009. He cannot say why he was in Perth at that time. It was Mr Gold's practice to drive Mr Paari around. There is no challenge to the diary entry of Mr Gold noting the acknowledgements of debt on 27 February 2009 and noting dropping Mr Paari off at the airport on 28 February 2009 consistent with immigration records tendered by consent, exhibit 1.10. Mr Gold understood that the acknowledgement of debts related to $150,000. He was unaware of the reference to $100,000 in the document until trial. I note that Bhavya has not challenged the sum of $150,000 by way of pleadings. I accept that the written number 'one hundred thousand' on the acknowledgements of debt are a transposition errors rather than evidence consistent with a hastily prepared or misleading document.
3. Three copies of the documents were printed off by Mr Kosserkas for signing. Consistent with the evidence of Mr Grasa three copies of the document may have been signed although all three may not have signed and witnessed in full. Mr Grasa's evidence is consistent with at least one copy of the acknowledgement of debt being signed in full in compliance with s 9 of the Act: exhibit 2.
Mr Grasa's evidence does not assist one way or another on the question of whether Mr Paari was present. He has no recollection of the meeting and signing at all, however he states from his records and from his witnessing of signatures that both Mr Kosserkas and Mr Gold were present on 27 February 2009. Mr Gold's evidence is only that the parties who signed the acknowledgement of debt were present at Mr Grasa's office on 27 February 2009. Although Mr Gold concedes it was possible that Mr Paari may have signed prior to attending the meeting he does not consider this to be likely because Mr Paari was present at the meeting that was arranged to have the documents signed.
4. Mr Paari has no memory of signing the acknowledgements of debt. I accept he is usually a cautious man who is experienced in business matters. He says what he 'would have' done in respect of speaking to Mr Pynt on behalf of Bhavya however there is no evidence of Mr Pynt's recollection about whether or not any discussion occurred. Mr Paari says it is his practice to sign every page of every document. Although only the execution page is signed on the acknowledgement of debt contrary to his practice I do not accept that he would have signed six copies of an execution page numbered page 6 without any other supporting documents nor would he have failed to question the document if the execution page had been inserted into an incorrect document that did not relate to an agreement between Bhavya and Mr Kosserkas or, in respect of Mr Gold, between Bhavya and Mr Gold.
5. I am satisfied on the balance of probabilities that all four men whose signatures appear on exhibit 2 were present at Mr Grasa's office on 27 February 2009 and each signed the document in the presence of the other. I am satisfied that Mr Paari's signature was witnessed by Mr Gold in the office when all four men were present and that Mr Paari's signature was attested by Mr Gold immediately after Mr Paari signed consistent with six documents being signed in a period of 30 minutes to one hour. The existence of a copy of the acknowledgement of debt bearing an unwitnessed signature of Mr Paari does not negate the validity of the document that was signed in full and executed in accordance with s 9 of the Act.
53 Accordingly, pursuant to the deed Bhavya is required to pay Mr Kosserkas the sum of $150,000 with interest from 30 June 2009 at a rate of 14% per annum until the date of the payment. That interest is not defined as being compounded or simple. The absence of an expressed reference to rests or capitalisations are indicators that only simple interest was intended. The interest to be paid is simple interest at a rate of 14% per annum: Brice v Chambers [2014] QCA 310, 164.
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