Long Term Financial Services Pty Ltd v Dimasi
[2009] VCC 1108
•18 September 2009
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
| AT MELBOURNE CIVIL DIVISION COMMERCIAL LIST – GENERAL DIVISION |
Case No. CI-09-00033
| LONG TERM FINANCIAL SERVICES PTY LTD (ACN 094 611 202) | Plaintiff |
| v | |
| FERNANDO ANTHONY DIMASI | First Defendant |
| and | |
| OLIVER STANKOVSKI | Second Defendant |
| and | |
| COLABETON PTY LTD (ACN 101 542 027) | Third Defendant |
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| JUDGE: | HER HONOUR JUDGE KENNEDY |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 7, 8, 9, 10 September 2009 |
| DATE OF JUDGMENT: | 18 September 2009 |
| CASE MAY BE CITED AS: | Long Term Financial Services Pty Ltd v Dimasi and Ors |
| MEDIUM NEUTRAL | [2009] VCC 1108 |
| CITATION: |
REASONS FOR JUDGMENT
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Catchwords: Loan agreement – rule in Pigot’s case - whether material alterations made to loan document so as to discharge second defendant from liability
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A.E. Klotz | Septimus Jones & Lee |
| For the First Defendant | Mr T.P. Warner (7.9 only) | Eales & MacKenzie |
| For the Second Defendant | Mr S.T. Pitt | Hicks Oakley Chessell Williams |
| For the Third Defendant | (No appearance) | |
| HER HONOUR: |
1 Long Term Financial Services Pty Ltd seeks repayment of a loan and interest in an amount of $209,677.42 from Mr Oliver Stankovski. It relies on a loan agreement which it claims was signed by both Mr Stankovski and Mr Dimasi on 9 July 2008.
2 Mr Stankovski concedes that the loan agreement contains his signature on the execution page, but says that he signed that page as a witness only and that material alterations were made to the document he signed which alterations included the insertion of his name on the front page as a borrower.
3 Long Term then says that, even if material changes were made as alleged, Mr Stankovski would still be bound by the document he did sign.
4 Accordingly, the issues in the case are:
(a) whether the loan agreement relied on by Long Term was materially different to that signed by Mr Stankovski on 9 July 2008; and (b) if yes, whether Mr Stankovski would be bound to repay the monies in any event. 5 An earlier defence based on an alleged fraudulent misrepresentation by Long Term was withdrawn by Counsel at the conclusion of the evidence.
Background
the parties
6 Mr Yi, a finance consultant and mortgage broker operates a mortgage broker business through his company, Long Term. The incorporation of Long Term is admitted. Mr Yi first met Mr Dimasi in 2006 who later introduced him to Mr Stankovski. He assisted both men with personal loans as well as with business loans where they were undertaking developments together.
7 Mr Dimasi is the first defendant to this proceeding. In its Amended Statement of Claim, Long Term seeks repayment of a (one month) loan of $20,000 allegedly entered into with Mr Dimasi on 6 June 2008 as well as repayment of the alleged joint (three month) loan of 9 July 2008 entered into with both Mr Dimasi and Mr Stankovski. Mr Dimasi sought to defend these allegations by the suggestion, inter alia, that the loan funds were advanced in each case to Colabeton Pty Ltd (the third defendant) and not himself. However, on 3 September 2009 he became bankrupt on his own debtor’s petition. As a result, the proceeding against him is stayed under s58(3) of the Bankruptcy Act 1966. Long Term has also been directed by the Court to give consideration to an order that the proceeding against Mr Dimasi be struck out without an adjudication on the merits and with no order as to costs, subject to the attitude of the trustee in bankruptcy. Long Term will be asked to address this matter upon delivery of these reasons.
8 Mr Stankovski graduated from the Victorian University of Technology with a Bachelor Degree in Business Management Marketing/Human Resources in 2000. He is a member services manager at the Victorian Association of Newsagents. He and Mr Dimasi had both been directors of a company, Prosperity Consultants (Aust) Pty Ltd. Mr Stankovski gave evidence that the total loans of Prosperity were at one point around $650,000 to $700,000. Mr Stankovski had also previously loaned Mr Dimasi $115,000.
9 Following on from the filing of Mr Dimasi’s defence, Long Term also sought relief against Colabeton Pty Ltd, the third defendant in this proceeding, by amending its Writ on 12 August. Mr Dimasi was the sole director and shareholder of this company which was a consultancy company.
10 Mr Yi’s evidence was that the net proceeds of the first loan ($18,000: being the amount of $20,000 less $2,000 prepaid interest) were paid to Colabeton. The net proceeds of the $100,000 loan of 9 July (of $78,000: being $100,000 less costs and interest) were also paid to Colabeton by cheque dated 9 July. In relation to the 9 July loan, the sum of $78,000 was also credited to Colabeton’s bank account by “special clearance” on the same day. Mr Dimasi’s evidence was that the funds were then predominantly used to pay the creditors of his lighting business operated through one of his companies, Osfad Pty Ltd.
11 Long Term alleges that if the advances made constituted an advance to the third defendant and not to the first and second defendants under the loans (as alleged by Mr Dimasi)[1], then the agreement was varied to include the third defendant or alternatively Long Term is entitled to judgment against Colabeton in restitution. However, as referred to below, I accept that the advance under the 9 July loan was made pursuant to the 9 July loan agreement. The evidence of Mr Yi was also that the advance of $18,000 was made to Mr Dimasi under the earlier 6 June agreement. It may be inappropriate to pursue the third defendant on the amended pleading in these circumstances notwithstanding that Colabeton has not filed an appearance and would otherwise be entitled to pursue judgment. Nevertheless, Long Term has also requested that its claim against Colabeton be adjourned pending delivery of these reasons to determine whether it should pursue judgement. I have acceded to this request but Long Term will be required to address this issue following delivery of these reasons.
9 July loan
[1] Paragraphs 13, 16, 28 and 31 Amended Statement of Claim
12 The loan agreement relied upon by Long Term with both Mr Dimasi and Mr Stankovski is dated 9 July 2008. It is some 17 pages in length and:
(a) includes both Mr Dimasi and Mr Stankovski over the description of
“the Borrower” and includes the address of each;
(b) specifies the principal sum of $100,000 on both the front and in
Schedule 1;
(c) specifies interest of $19,000 in advance and a default interest rate
of 10 per cent per month in Schedule 1;(d) is dated 9 July 2009 on the front and on the Schedule; and
(e) contains Mr Dimasi’s signature on the Schedule.
13 Importantly it includes an execution page which contains the signature of Mr Stankovski next to his name as well as under his name as a “witness.” The execution page also contains the signature of Mr Dimasi and the signature of a witness, Mr Mak, to the signature of Mr Dimasi, A copy of this execution page is annexed to these reasons as Annexure A.
Mr Stankovski’s case
14 The general rule is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms and affect legal relations is bound by those terms and it is immaterial whether that person has read the document.[2]
[2] Toll v Alphapharm Pty Ltd (2004) 219 CLR 165 at 185
15 Mr Stankovski’s claim that there was some fraudulent misrepresentation made to induce him to sign on 9 July was abandoned at the commencement of his Counsel’s closing submissions. However, as indicated already, Mr Stankovski seeks to defend Long Term’s claim on the basis that the document he signed on 9 July was executed by him in his capacity as a witness only and that it was materially different to the loan agreement tendered in evidence in this case.
16 More particularly he claimed that he was only provided with “three to five pages” of a document on 9 July and that the document provided:
(a) did not have his name included on the front page as a borrower;
(b) specified an amount of principal “between $70,000 and $80,000”;(c) specified interest “between $12,000 and $15,000”;
(d) was undated; and
(e) did not contain Mr Dimasi’s signature on the Schedule.
17 He relied on the rule in Pigot’s case[3] that a “material alteration” was made to the signed contract while it was in the hands of Long Term so that Mr Stankovski is discharged from liability.
[3] (1614) 11 Co Rep 26b;77 ER 1177
18 The rule in Pigot has been confirmed more recently in the case of Farrow Mortgage Services v Slade & Nelson.[4] However, it was noted in that case that there is a need in modern conditions to confine the nullifying operation of the rule to cases which fall strictly within its ambit and to interpret the rule as liberally and reasonably as possible.[5]
[4] (1996) 38 NSWLR 636
[5] Ibid at 640 per Gleeson CJ
19 Nevertheless, if the changes alleged by Mr Stankovski were made, there may be no contract at all on first principles as there may be “no meeting of the minds” as suggested in the Second Defendant’s Outline of Submissions.[6] This is particularly so given the allegation that Mr Stankovski was allegedly “added” as a borrower.
[6] at paragraph 40
20 The question of “material alteration” is therefore necessary to resolve in this case.
Whether document materially altered
Evidence of witnesses
Long Term’s witnesses
21 Long Term called Mr Yi, Ms Lam, the solicitor who prepared the loan documentation, and Mr Mak, the accountant whose signature appears on the execution page as a witness to Mr Dimasi’s signature.
22 The evidence of Ms Mak and Ms Lam will be referred to below.
23 The evidence of Mr Yi was that he was approached by Mr Dimasi to borrow up to $250,000 worth of funds based on the equity in his house. He was told that the purpose of the loan was to clear some of his personal debts so as to be able to “move forward” to purchase a business called Triveni Infotech with Mr Stankovksi.
24 He advised that Mr Dimasi did not have sufficient equity in his home so that he would only lend the money if both Mr Stankovksi and Mr Dimasi became responsible for the loan.
25 Mr Yi then conducted a meeting in his office on 27 June between himself and Mr Dimasi and Mr Stankovski, wherein he confirmed that the both of them were to “take the responsibility” for the loan. Further that the interest rate was going to be very high.
26 Mr Dimasi then came into Mr Yi’s business premises in St Kilda Road on 8 July. At that time Mr Yi gave him a copy of the draft loan agreement which had been prepared by Ms Lam.
27 The next day Mr Dimasi called to make an arrangement to come in the afternoon to sign the loan agreement with Mr Stankovski. Mr Dimasi later arrived between 1.00 and 2.00 p.m.. Mr Dimasi raised an issue that the draft loan was only $80,000 at the time which wasn’t sufficient as he needed a loan for $100,000 at least. Mr Yi agreed to this and then requested Ms Lam to prepare a new amended loan agreement for $100,000.
28 Upon receipt of the amended loan document from Ms Lam, Mr Dimasi was provided with it and looked through the document. Mr Yi then called in Mr Mak, an accountant, and his receptionist to witness the signatures of Mr Dimasi which occurred in a meeting room on level 5 of his office building.
29 Mr Yi then went downstairs with Mr Dimasi to a coffee shop where Mr Stankovksi was present between 2:00 p.m. and 3:00 p.m.. He passed the loan document to Mr Stankovksi who went through it and highlighted the interest rate. Mr Stankovksi then went to the last page and signed below his name. Mr Yi then told him he had to sign next to his name not below his name. Mr Stankovksi said nothing in response to this and signed.
30 The meeting then terminated - both he and Mr Stankovski were in a rush - and Mr Yi then went upstairs to give Mr Dimasi the cheque for $78,000. He then left to see a client in Balwyn.
31 Mr Yi maintained that the “whole document” provided by the solicitor was presented to Mr Stankovski and denied making alterations to the loan document after the execution by Mr Stankovski.
32 I found each of the witnesses called by Long Term, including Mr Yi, to be straightforward and am satisfied that they attempted to give a reliable and accurate account as best as they were able. I am generally satisfied that their evidence can be relied upon.
33 Mr Stankovski criticized aspects of the testimony of both Mr Yi and Ms Lam but I am satisfied that any gaps in their memory are readily explicable by the passage of time. Ms Lam, in particular, was an impressive witness, having no apparent interest in the outcome of the proceeding. Her evidence will be referred to further, below.
Witnesses called by Mr Stankovski
Mr Stankovski
34 Mr Stankovski’s evidence was that he was approached in late June by Mr Dimasi to attend a meeting as a witness to the loan agreement between Mr Yi and Mr Dimasi so Mr Yi “felt comfortable” with the process and the loan. He denied that he attended any meeting on 27 June with Mr Yi.
35 He attended the meeting on 9 July on the request of Mr Dimasi at around 2:45 p.m. in a cafe below Mr Yi’s office in St Kilda.
36 He claimed that Mr Yi signed, then Mr Dimasi and then himself while at the cafe. He signed immediately after seeing his name. Mr Yi then pointed to the right of the document saying that he needed to sign to the right hand side and that Mr Stankovski “drew no attention to that comment, I really didn’t expect to acknowledge that there was anything to do with that, so I...just took it as face value and signed it, next to-next that name, next to my name.”
37 His evidence was unsatisfactory on aspects that were crucial to the case. Thus he was unable to recall whether the loan document was allegedly varied from $70,000 or $80,000. He was also unable to recall the precise amount of interest figure. This notwithstanding the gravamen of his (serious) complaint was that the document he signed on 9 July was materially altered in specific ways. He was also vague as to precisely what was said by Mr Yi, and appeared to be fortified only under cross-examination alleging then for the first time that “Mr Yi confirmed that I was there as a witness prior to me signing that agreement.”
38 I do not accept his suggestion that Mr Yi confirmed his capacity as a witness as he belatedly suggested. I cannot be confident that Mr Stankovski’s account of events and issues is complete and substantially accurate.
Mr Dimasi
39 Mr Dimasi’s evidence was that within two weeks of executing the earlier 6 June 2008 loan he told Mr Yi that he needed further funding for his lighting business. Mr Yi responded that he would “see what he could do.” He was later told by Mr Yi that he needed Mr Stankovski as a witness to the loan agreement in order for that to proceed. He then advised Mr Stankovski of this requirement. He denied attending the meeting of 27 June or 8 July as alleged by Mr Yi.
40 He claimed that a meeting took place in the coffee shop only on 9 July wherein Mr Yi handed Mr Stankovski “predominantly” three pages: the front cover with his name and $70,000 on it; a schedule; and an execution page. Mr Yi and Mr Dimasi signed these documents and another “five” pages were handed to Mr Stankovski. Mr Stankovski commented on the high interest and then signed above the word “witness” at the bottom of the execution page. Mr Yi then said “you also need to sign next to the signed, sealed and delivered section.”
41 Mr Dimasi then gave detailed evidence of conversations that allegedly took place regarding Mr Stankovski’s capacity which were not the subject of evidence from Mr Stankovski and which were not put to Mr Yi. This was to the effect that Mr Stankovski queried why he needed to sign in the spot indicated to which Mr Yi allegedly responded: “that to complete this witness schedule you have to sign there as well.” Mr Dimasi then gave evidence of an alleged conversation he had with Mr Stankovski in Mr Yi’s presence that they discussed the front cover page to make sure he was the only borrower and Mr Dimasi said: “it seems like...you are witnessing the document and I believe that it’s safe.” Further, that Mr Yi allegedly said “Oliver you are a witness you are definitely not a borrower.”
42 Mr Dimasi claims that Mr Stankovski then departed (for a dinner engagement) and that he was then handed a cheque for $47,000. He queried this amount and then Mr Yi said they would have to go upstairs and issue another cheque. Once upstairs, Mr Yi brought back a new schedule which he “made [Mr Dimasi] sign” and handed him a new cheque for $78,000. Mr Dimasi then left the building to go to the bank to bank his cheque.
43 I am unable to consider Mr Dimasi a reliable witness. He appeared motivated by a desire to assist the case of Mr Stankovski rather than to give accurate and reliable evidence.
44 For example, he initially claimed the amount on the loan documents was $70,000 but later “would not dispute $80,000.” He also initially gave very specific evidence that he was calling an employee on 9 July at 3:00 p.m. in the lift at Mr Yi’s business premises while going upstairs, but was later forced to acknowledge this was an “error” (because he was actually phoning his bank manager) only upon being presented with relevant telephone records. He has also denied liability in this proceeding notwithstanding that his statement of affairs provided to his trustee in bankruptcy includes $120,000 as a debt owed to Long Term. His expansive evidence as to Mr Yi’s representations at the 9 July meeting were also not credible nor consistent with Mr Stankovski’s evidence.
45 I therefore generally preferred the evidence called by Long Term in this case. However, I accept that it is appropriate to examine all the evidence in the case, including the objective evidence, in order to make appropriate findings.
Factors relied on by the Mr Stankovski
46 The second defendant’s outline of submissions referred to a number of alleged “objective factors” which were said to support his case. I have considered these submissions. Many of the matters contained therein were not truly “objective” as fairly conceded by Counsel, nor do they necessarily suggest that a material alteration was made as alleged. The more significant were:
(a) that an examination of the purpose and benefit of the loan
supported Mr Stankovski;
(b) that an examination of the loan agreement itself supported Mr
Stankovski;
(c) the description of the loan in various documents was consistent withMr Stankovski’s case;
(d) the fact that there was a missing cheque (50) supported Mr
Dimasi’s evidence that he was initially handed a cheque for $47,000;
(e) that the electronic diary notes report the meeting of 9 July 2008 as
being with Mr Dimasi only;
(f) the use of a “boilerplate” (precedent) loan agreement was relevant;
and(g) that a computer print-out showed that the loan agreement was last modified on 9 July 2008 at 3:25p.m. which was consistent with an alteration being made after execution.
(a) purpose of the loan
47 Mr Stankovski emphasized that, on any view of the evidence, the benefit of the loan funds were not for the benefit of Mr Stankovski. Further that Mr Yi’s evidence[7] was improbable given Mr Dimasi was not in a financial position to actually purchase Infotech.
[7] that Mr Dimasi advised Mr Yi that he needed the money to clear his debts so as to free him up to purchase into Triveni Infotech with Mr Stankovski
48 Firstly, the fact that the loan monies did not benefit Mr Stankovski is not to the point. A party may be a party to a loan without receiving any benefit. The evidence of Mr Yi was that he needed the personal liability of Mr Stankovski before he would lend the money. This appeared probable in the light of the fact that he had already lent Mr Dimasi money in June which remained unpaid (though it was due on 6 July).
49 Secondly, whether or not Mr Dimasi was actually to purchase Infotech is also inconsequential. The relevant matter is what was advised to Mr Yi. Given the fact that the two defendants had been engaged in business together before it is not improbable that Mr Dimasi gave this impression even if this was not the actual intention. Mr Mak, the accountant, also gave evidence that he was appointed by both to undertake due diligence for the acquisition of Infotech. His emails of 4 June 2008 and invoices support this evidence regardless of who actually paid the invoices (there was evidence that the invoices were paid by Mr Stankovski/ with funds owed to Mr Stankovski). It is perfectly possible that the impression of a joint enterprise was also conveyed to Mr Yi regardless of whether this would actually occur or not.
50 The nature and purpose of the loan does not assist Mr Stankovski.
(b) the loan document
51 In terms of the loan document itself, Mr Stankovski emphasized the fact that the document had clearly been re-stapled. However, the document may have been re-stapled for photocopying purposes as suggested by Ms Lam. The re- stapling does not suggest that a material alteration was made as alleged by Mr Stankovski.
52 The fact that Mr Dimasi alone is mentioned on the Special Power of Attorney as highlighted by Mr Stankovski is also insignificant. The Attorney was concerned with relevant powers over the properties which were held as security by Mr Dimasi alone. There was no reason to include Mr Stankovski in this Attorney.
53 The signing of the Schedule by Mr Dimasi only was explained by Mr Yi as an oversight given he and Mr Stankovski were both in a rush. I have no reason to doubt this explanation which is also consistent with the telephone records which suggest that Mr Yi was “on the move” after 3:00 p.m. (a call from South Melbourne is recorded at 3:06 p.m.).
54 The fact that “borrower” singular is referred to is also explicable by the evidence of Ms Lam that the document was originally prepared for one borrower only. The definition of “borrower” on the face of the document also clearly includes both Mr Dimasi and Mr Stankovski. Significantly this then matches the execution clause which contains the signatures of both of these men.
55 Further, while it is true that Mr Stankovski has apparently signed as “his own witness” (consistent with the evidence of everyone that this was the way he first signed) it was not suggested that the signature of a witness was necessary given Mr Stankovski clearly admitted to signing the document. What is more significant is that he signed the document on the right hand side of his name consistent with being a borrower in his own right.
56 Although the loan agreement contains some irregularities, these are explicable and consistent with the evidence of Mr Yi and Ms Lam. As highlighted below, the execution page of this document also strongly weighs against the account of Mr Stankovski.
(c) description of the transaction in other documents
57 Mr Stankovski relies on various documents dated after the execution on 9 July (referred to at the top of page 12 of his outline of submissions). He also relies on the email from Mr Yi to Ms Lam of 8 July.
58 Even if there is a “failure” to include Mr Stankovski in documents dated after 9 July, this may be suggestive of carelessness or imprecision but it is not suggestive of a material change as suggested. If, as Mr Stankovski alleges, Mr Yi was ready to go to the trouble of materially changing documents, there seems no reason he would want to hide that fact.
59 In any event:
•
Ms Lam explained the reference in her tax invoice of 9 July to Mr Dimasi alone given her computer allowed her to fill in a lengthy description but did not print it out. I accept this explanation;
•
the fact that Mr Yi readily conceded that the cheque butt for the 9 July payment to Colabeton originally referred to “Fernando” alone is inconsequential as a short hand note of the transaction;
•
the reference in correspondence regarding CBFC to Mr Dimasi alone in October 2008 is explicable since CBFC was a creditor of Mr Dimasi’s company alone. The fact that Mr Dimasi appears to be wanting to “restructure the loan” is also consistent with the fact that the benefit of the loan was for Mr Dimasi alone;
•
the reference in the email of 4 August 2008 to “Fernando” alone is explicable given the email was concerned with a settlement of one of his properties. This email was also consistent with evidence of Mr Yi that the initial loan given to Mr Dimasi was to be settled by way of sale of one of his properties; and
•
the correspondence between the solicitors in December 2008 wherein debt is alleged and denied does not assist either party. I accept that Mr Stankovski denied the debt through his solicitors on 16 December 2008. However, against this denial stands evidence of an earlier admission made to Mr Mak, which will be referred to below.
60 The email of 8 July records instructions of Mr Yi to Ms Lam for a loan of $80,000 and the subject is recorded as “Fernando Dimasi” alone. Although I accept that Mr Yi was somewhat unclear as to whether the original draft was created in Mr Dimasi’s name alone, the reference to Mr Dimasi alone is explicable on the basis of Ms Lam’s evidence. She explained that the loan agreement was originally created for one borrower only but that she subsequently received verbal instructions to change the principal amount to $100,000 and to add the extra borrower being Mr Stankovski which changes she then effected to create the “second” loan agreement.
61 Overall then the documentation is consistent with Long Term’s case. It provides little in the way of objective evidence to suggest that the loan document was materially altered after execution as alleged by Mr Stankovski.
(d) missing cheque
62 In terms of cheque butt 51, Mr Stankovski suggested that this was consistent with Mr Dimasi’s evidence that he was initially handed a cheque for $47,000 given that the cheque to Colabeton of 9 July for $78,000 was numbered 51. The $47,000 calculation was said to be justified on the basis of a $80,000 loan less $20,000 for the first loan; $12,000 in interest and $1,000 in fees; with all these amounts except the first loan being referred to in the email of 8 July.
63 Mr Yi gave evidence that cheque 50 was for an amount of $20,000 and was originally intended for a Mr Yohan Budiawan who had been going to collect it on 9 July but did not show up. The cheque butt for number 50 has “loan payment for Yohan” written on it in an amount of $20,000. Mr Yi said that he had ripped up the actual cheque rather than marking it void or cancelled as he had with other cancelled cheques (though later he was unsure if he had ripped it up). He also tendered an email of 7 July from a “ybudiawan” apparently written “on behalf of Yohan” referring to the fact that an amount of $20,000 was due to him at that time.
64 Mr Yi also stated that the first loan was to be repaid through a settlement of Mr Dimasi’s properties, a matter substantiated by the email of 4 August and was not to be taken into account in relation to the July loan.
65 Ultimately the missing cheque suggests little in itself except that it was never presented. There is no objective evidence to suggest it was for an amount of $47,000 as alleged by Mr Dimasi. It is capable of being explained by both parties and is of little assistance.
(e) electronic diaries
66 The diary entry of 9 July records a “Fernando meeting” at 1:00 p.m. on 9 July. However, this does not assist Mr Stankovski given he was clearly present on his own case on 9 July. Moreover the diary notes actually support Mr Yi’s evidence in a more significant way since they record a meeting on 27 June with both Mr Stankovski and Mr Dimasi and also a meeting with Mr Dimasi on 8 July.
(f) use of boilerplate
67 It was suggested that the document of 9 July was based on a boilerplate given its similarily with the June loan document and given the erroneous reference to “Bozer Developments” in clause 13.5. It was then suggested that I should find that the use of a boilerplate was consistent with Mr Dimasi’s evidence that it was Mr Yi’s custom to present him with only a selection of documents.
68 It does not follow that the use of a boilerplate supports any such specific custom as alleged by Mr Dimasi.
69 Mr Dimasi’s evidence as to the alleged custom was also never put to Mr Yi and is to be treated with great care given my concerns as to the reliability of Mr Dimasi’s evidence.
70 The use of a boilerplate does not assist Mr Stankovski.
(g) computer print out at 3:25p.m.
71 This document contained a computer print out of Ms Lam’s related to “81154
loan agreement 2.doc.” It showed that the document was “modified” on 9 July at 3:25 p.m.
72 This document does present an objective piece of evidence in support of Mr Stankovski’s case. However, Ms Lam’s explanation for this notation was that she often left multiple documents open on her screen as a busy general practitioner and that it was possible that this occurred on 9 July with a prompting occurring for her to save the final loan document at 3:25 p.m. when she later went to close the document. She did not believe that she modified the document at that time as she gave the document to Mr Yi before that time. I accept this evidence.
73 More significantly, if, as is being suggested by Mr Stankovski, the document was altered between 2:50 p.m. and 3:25 p.m. to include him as a borrower[8], there would also be a need to alter the execution page to include him as an independent signatory. There would be no need to include him on an execution page in his own right unless he was also a borrower in his own right. However, the case for Mr Stankovski is that he signed the execution page in his own right in circumstances where he was not included as a borrower on the front page and prior to 2.55 p.m. (which was his estimate of his departure). In my view this is highly unlikely as I will highlight, below.
[8] Second Defendant’s Outline of Submissions at para 31
74 Most of the alleged “objective” factors do not assist the resolution of this case without regard to the oral evidence. The computer entry of 3:25 p.m. is potentially more significant but it needs to be considered in the light of all the evidence, and particularly the fact that Mr Stankovski has admitted signing an execution page which clearly designates him as a borrower.
Resolution of whether document materially altered
75 For reasons expressed below, I am satisfied that Mr Yi’s evidence may be relied upon and that the 9 July loan document was not materially altered.
76 As highlighted already, Mr Stankovski admitted to signing a page headed “executed as a Deed” next to an execution clause specifically prepared for him and which clearly designated him as a party.
77 Given Mr Stankovski’s qualifications and commercial background it is highly improbable that he would place his signature in this position without intending to be a borrower in his own right. I also do not find it credible that he would have placed his signature next to the execution clause on the prompting of Mr Yi without question if he really intended to be a witness only.
78 Mr Stankovski’s signature also does not appear in the position as witness for Mr Dimasi’s signature which contains the signature of Mr Mak. However, on Mr Stankovski’s version all three parties signed at the same time and under cross-examination he specifically claimed that, when signing the execution page, the signature of Mr Mak was not present beneath Mr Dimasi’s name. If he really was present to sign as a witness only there was no reason for him to sign where he did rather than the natural position – which was blank and available - which would be as a witness below Mr Dimasi’s name.
79 It is also not probable that Mr Stankovski would be required to be present as a witness by way of “comfort.” The evidence of both Mr Yi as supported by Mr Mak was that both Mr Mak and the receptionist were able to, and did, witness the signatures of Mr Dimasi.
80 The evidence of Mr Mak and Ms Lam also weigh against the material alteration suggested by Mr Stankovski.
81 Ms Lam gave specific evidence that she prepared the loan agreements such that each execution clause on the execution page indicated who the parties were on the front. Consistent with what would be appropriate, it was only when she included Mr Stankovski as a borrower in the second draft of the agreement that she added the last execution clause for the second borrower. She further stated that she received the document back on or very close to 9 July and made no alterations after the document was signed by the parties.
82 In these circumstances, it is highly unlikely that Mr Stankovski would be provided with the execution page of the “second” draft of the loan agreement but the “non-matching” cover page of the “first”.
83 The evidence of Mr Mak as to what occurred at a meeting on 14 July also supported Long Term’s case. His evidence was that he spoke to Mr Stankovski and advised him that he was personally liable as a guarantor under the loan agreement. Although he was not in fact a guarantor, Mr Stankovski made no denial of the suggestion that he was personally liable. This would be improbable if Mr Stankovski had signed merely as a witness as he now claims.
84 There were also telephone records in evidence which undermined Mr Dimasi’s evidence as to timing. Thus Mr Dimasi’s phone records suggest he was in South Yarra at 3:00 p.m. on 9 July at a time at which he claimed he was still at Long Term’s St Kilda premises in the lift calling his employee. The phone records of Mr Yi also placed him in South Melbourne at 3:06 p.m. consistent with his evidence that he was on his way to an appointment in Balwyn. Mr Stankovski suggested that these records were not completely accurate in recording the location of callers but, in the absence of expert evidence of this, they provide further support for Long Term’s case.
85 Having regard then to all of the evidence as well as my assessment as to the reliability of the witnesses in this case, I am satisfied that Mr Stankovski executed the loan agreement tendered in evidence dated 9 July as a borrower which document was not subsequently altered in any way. I also reject the evidence of Mr Stankovski and Mr Dimasi to contrary effect.
Other matters
86 I am satisfied that the other matters necessary to establish the claim have also been established. The evidence of Mr Yi was that the cheque for $78,000 to Colabeton was paid at the request of Mr Dimasi in circumstances where he was advised that the loan proceeds were generally sought to benefit Mr Dimasi. The sum of $100,000 was thereby advanced pursuant to the 9 July agreement which was constituted by the $78,000 cheque, $19,000 of prepaid interest, legal fees of $2,000 and an application fee of $1,000. Further, Mr Yi’s evidence was that the amount outstanding under this loan is $209,677.42 (based on the interest rate of 10 per cent) which amount was not challenged.
87 In these circumstances the plaintiff is entitled to judgment.
88 It is also unnecessary to consider the further submission of Long Term that Mr Stankovski would be liable on the documents he did sign in any event even if there had been a material alteration.
Conclusion
89 Long Term is entitled to judgment against the second defendant, Mr Stankovski, in the amount of $209,677.42.
90 I will hear from the parties as to the final form of orders, including as to appropriate orders against Mr Dimasi and Colabeton, as well as on the question of costs.
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