Lunt v Briggs
[2009] WASC 134
•18 MAY 2009
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: LUNT -v- BRIGGS [2009] WASC 134
CORAM: EM HEENAN J
HEARD: 23-25 & 27 FEBRUARY, 3-6 & 9 MARCH 2009
DELIVERED : 18 MAY 2009
FILE NO/S: CIV 1501 of 2001
BETWEEN: WILLIAM TREVOR LUNT
Plaintiff
AND
PETER BRIGGS
Defendant
FILE NO/S :CIV 1974 of 2001
BETWEEN :WILLIAM TREVOR LUNT
Plaintiff
AND
NEW RESOURCE HOLDINGS PTY LTD
Defendant
Catchwords:
Contract - Remuneration for services - Debt - Novation - Existence of agreement - Whether executed - Handwriting evidence - Credibility - Acknowledgment of liabilities in company accounts - Turns on its own facts
Legislation:
Nil
Result:
CIV 1501 of 2001
Judgment for the plaintiff in the sum of $517,900 plus interest thereon at 8% to be calculated and in accordance with s 32 of the Supeme Court Act
CIV 1974 of 2001
Judgment for the plaintiff in the sum of $482,000 plus interest thereon at 8% to be calculated and in accordance with s 32 of the Supreme Court Act
Category: B
Representation:
CIV 1501 of 2001
Counsel:
Plaintiff: Mr W J Chesnutt
Defendant: Mr P G McGowan
Solicitors:
Plaintiff: B W Duckham & Co
Defendant: Vincent Partners
CIV 1974 of 2001
Counsel:
Plaintiff: Mr W J Chesnutt
Defendant: Mr P G McGowan
Solicitors:
Plaintiff: B W Duckham & Co
Defendant: Vincent Partners
Case(s) referred to in judgment(s):
Dillon v Gange (1941) 64 CLR 253
Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363
EM HEENAN J: These two actions, heard together, are money claims by the plaintiff for the balance of debts alleged to be due to him for services rendered to WRS Pacific Pty Ltd (WRS), one of the names by which New Resources Holdings Pty Ltd, the defendant in the second action, was once known.
The name of New Resource Holdings Pty Ltd has changed over the course of time. The details can be found in exhibit 118 which is an historical company extract showing the names of the company, the various directors and their time of office and incidental details. For present purposes it is enough to note that the name of the company has been as follows:
(a)from 24 June 1987 to 28 July 1991 -
Pacific Platinum NL
(b)from 29 July 1991 to 16 December 1992 -
WRS Pacific Limited
(c)from 17 December 1992 to date -
New Resource Holdings Pty Ltd
The plaintiff in each action relies upon a consultancy agreement, alleged to have been entered into between himself and WRS on 12 April 1991, as the source of the obligation by WRS to pay for the consultancy activities said to have been performed and to fix the rate or rates of remuneration for them. Mr Lunt also asserts that the 12 April 1991 consultancy agreement was extended by the directors of WRS by letter dated 23 June 1993. Both defendants deny that this, or any other consultancy agreement, was made with Mr Lunt and, further, assert that the document relied upon by the plaintiff, a document dated 12 April 1991 and apparently duly sealed by WRS, was never agreed by that company or executed by it and plead that this alleged document is not 'authentic'. Although this plea was hedged about with equivocations and the evidence and submissions on the point were similarly guarded, there is no escape from the conclusion that the defendants' positions amount to allegations that the apparent execution of the agreement bearing date 12 April 1991 is, at least in part, a forgery.
According to the plaintiff, a situation was reached by 30 June 1994 where the balance of moneys then due and owing by WRS to him under the consultancy agreement was $652,900 and this was accepted and recorded in the accounts of WRS at that date. The plaintiff's case is that, for reasons which will need to be examined in some detail but which were associated with negotiations for WRS to be taken over by a New Zealand publicly listed company, Max Resources Ltd (Max Resources) but which later culminated in Max Resources purchasing all the assets and undertaking of WRS, the defendant, Mr Peter Briggs, desired to have all the indebtedness of WRS to Mr Lunt removed from the balance sheet and extinguished as a liability of WRS. According to Mr Lunt he, and another consultant of WRS, a colleague, Mr Skidmore, who was in a similar position but whose debt was smaller, agreed for those debts to be removed from WRS but only on condition that the liability for them was assumed by Mr Peter Briggs personally or, in Mr Skidmore's case, by Mr Briggs' company Essex Properties Pty Ltd. In Mr Lunt's case, he claims that Mr Briggs agreed to this by a letter dated 20 June 1995 signed by Mr Briggs in the course of a luncheon with Mr Lunt and others at Coco's Restaurant, South Perth (the Coco's letter).
As a consequence of obtaining the Coco's letter Mr Lunt later prepared and delivered to WRS a letter signed by him forgiving and discharging WRS from any liability to pay the debt for the consultancy fees which had accrued to 30 June 1994. The plaintiff contends that this arrangement for the assumption of the liability to pay the then outstanding balance of the consultancy fees by Mr Briggs, in the place of WRS, and the consequent release by Mr Lunt of WRS from any liability in respect of that debt, amounted to a form of novation.
No issue has been raised in these proceedings as to whether or not, if those be the facts, this did amount to a novation or that the effect of such an arrangement by which WRS was to be discharged from liability and Mr Briggs was to assume the liability should have been recorded in a deed. Although the potentialities for these issues to arise in the circumstances were pointed out at any early stage in this trial, counsel on both sides disclaimed reliance on any such lines of argument and were content to treat the rearrangement of the liabilities alleged to have occurred as a contract between the parties for consideration which would be enforceable if the facts were essentially those as alleged by the plaintiff.
Mr Lunt further claims that as a result of subsequent transactions he was paid $135,000 on behalf of WRS, on or about 26 June 1996, in reduction of the sum then owing of $652,900, bringing the balance outstanding to $517,900. It is for that latter sum which Mr Lunt sues in the first action together with interest pursuant to s 32 of the Supreme Court Act which he submits should be allowed at the rate of 8% per annum.
While the debt of $652,900 shown on the WRS balance sheet of 30 June 1994 was removed and discharged in the manner described, Mr Lunt maintains that his consultancy agreement with WRS was not terminated but, in fact, continued having been extended by letter dated 11 June 1993. He claims that he continued to perform services for WRS from 1 July 1994 until 15 April 1997, so generating a further aggregate liability by WRS for consultancy fees in the amount of $482,000. It is for this sum, together with interest, again pursuant to s 32 of the Supreme Court Act and at 8% per annum, which Mr Lunt claims in the second action against the company itself.
At all material times WRS was effectively controlled by Mr Peter Briggs alone. For some years, including 1991, he was disqualified from acting as a director of any company yet it is clear that, during the period of the disqualification, he nevertheless effectively controlled WRS, and many other companies of which his wife, Mrs Robin Yvonne Briggs, was a director and his effective amanuensis.
In both actions, in the first personally, and in the second as the controller of New Resource Holdings, Mr Briggs defends the plaintiff's claims essentially for the same reasons. According to Mr Briggs WRS never engaged Mr Lunt for reward as a consultant whether pursuant to the alleged agreement of 12 April 1991 or at all. Rather, Lunt was a shareholder with 25% of the issued capital in WRS at the time (with Briggs holding 70% and Skidmore 5%) and was effectively a co‑venturer in the development of an enterprise for the manufacture and sale of technology and associated franchises for a fertilizer product to be made from chicken manure. This technology was being developed in various places, but principally in Indonesia, Pakistan, India, and France. Messrs Lunt and Skidmore were the original promoters. They later came to Mr Briggs and involved him, through WRS, as the source of venture capital for the developing enterprise. Consequently, according to Mr Briggs, the only reward or remuneration which Mr Lunt could expect to receive in the event of the success of the venture would be the income which would derive to him as a shareholder. He would have the potential to realise on that investment by the sale of shares in the company the value of which could be expected to appreciate significantly.
According to Mr Briggs, he was only ever willing to grant a consultancy status for reward, and enter into a consultancy agreement for the payment of fees, to Mr Lunt's colleague, Mr Skidmore, because the latter had all the technical and engineering expertise essential for the development of the venture. According to Mr Briggs, Mr Lunt was not entirely happy with this situation and constantly pressed for a formal consultancy agreement engaging him for reward but, so says Mr Briggs, this was never granted or agreed.
At this point, the controversy over the existence of the consultancy agreement becomes somewhat complicated because the evidence is clear that Mr Briggs' solicitors, on behalf of WRS, engaged in correspondence suggesting that a consultancy agreement would be granted, was in the course of preparation, had been prepared and, in fact, was prepared. This is the consultancy agreement which the plaintiff relies upon. However, Mr Briggs contends that he never authorised this and never entered into any legally binding arrangement to engage Mr Lunt as a consultant. He further contends that during this period (essentially from May 1990 until October 1991 or thereabouts) it was Mr Lunt who, on Mr Briggs' behalf, conducted most of the dealings on behalf of WRS with its solicitors and accountants and in the process purported to give instructions and made assertions to advance his own self interest but which he, Mr Briggs, never approved or authorised.
Next, Mr Briggs claims that the consultancy agreement of 12 April 1991 was never executed by WRS at the Briggs home that day in the presence of Mr Lunt, the company secretary, Mr Kevin Bond, the company secretary, Mrs R Y Briggs or himself as Mr Lunt contends. Mr Briggs says that the signature of Mrs R Y Briggs on the attestation clause of the company WRS as its director is not her signature and that no such agreement was ever validly executed by the company on any other occasion.
Further, Mr Briggs gave evidence that, because of his preoccupation with many other business affairs in the period from 1991 to 1995, he never read either the management accounts or the annual financial accounts for WRS for the years ended 30 June 1992 to 30 June 1994 inclusive and, accordingly, was not aware of the steady accumulation of any recorded liability by the company to Mr Lunt for consultancy fees as shown in the balance sheets of the company and other entries in the annual accounts over those years. He says that he left the running of the company to Mr Lunt and Mr Kevin Bond and that these repeated acknowledgements in the accounts of liability for consultancy fees to Mr Lunt found their way there entirely because of the self‑interest of Mr Lunt and his ability to influence Mr Bond.
However, Mr Briggs does say that by mid‑1995 he discovered that Mr Lunt was advancing his claim for consultancy fees and that entries in the company accounts at 30 June 1994 recording a substantial liability of the company for consultancy fees due to Mr Lunt had been made. He says that, on discovering this, he immediately sent for Mr Lunt, remonstrated with him, told him that this was 'a try-on', confirmed that there had never been a consultancy agreement nor any such entitlement and demanded that Lunt rectify the position and have the record of false indebtedness removed. According to Mr Briggs, Mr Lunt complied with this demand, and agreed to the removal of the recorded indebtedness from the books of the company, and prepared a letter to that effect to the company's accountants ‑ addressed to Mr Bond to confirm this position and to justify the accountants making the adjustment.
Consistently with this approach, Mr Briggs gave evidence that WRS had never authorised the extension of the (non‑existent) consultancy agreement as asserted by Mr Lunt and that the letter of extension of 11 June 1993 (exhibit 58) apparently bearing the signatures of Mrs R Y Briggs as director and Mr K Bond as secretary of WRS was a fabrication and that those signatures were not genuine. He made similar observations about another letter of the same date from another Briggs company, Essex Properties Pty Ltd, to the directors of WRS and apparently bearing the signature of Mrs R Y Briggs, which is exhibit 148.
Similarly, Mr Briggs denied ever agreeing to take over the (non‑existent) debt of WRS to Mr Lunt for consultancy fees accrued due to 30 June 1994 and denies ever having signed the Coco's letter (exhibit 104) asserting that the signatures on that document appearing to be his own and that of Mr Bond are not genuine.
As to the claims in the second action, Mr Briggs says that because there never was a consultancy agreement between WRS and Mr Lunt, the company was never under any liability for consultancy services after 1 July 1994 as alleged or at all. He said that none of the various invoices which Mr Lunt claims to have submitted progressively for such services was ever sent, that he had never seen them until at an advanced stage in this litigation, and that they have all been falsely fabricated by Mr Lunt. He asserts that Mr Lunt has, over many years, repeatedly made false claims against him, Briggs, or WRS or associated companies. It is obvious that, despite the apparent civilities, the animosity between these two men is very deep seated and has existed, with fluctuating degrees of intensity, since around 1994 until the present. Each has inclinations, motives and interests to disparage the other.
In response to these allegations that the consultancy agreement dated 12 April 1991 was never entered into by WRS, and that the apparent signature of Mrs R Y Briggs and her initialling of the correction at page 1 are not genuine, Mr Lunt points to a series of significant occasions in the past where Mr Briggs, or those acting on his behalf, have acknowledged or affirmed, either expressly or by implication, the genuineness of the 12 April 1991 consultancy agreement and the existence of the consultancy engagement by WRS of Mr Lunt. These occasions include:
(a) reference to such a consultancy agreement in the audited accounts of WRS for 30 June 1991 (exhibit 18); 30 June 1992 (exhibit 21); the audited accounts for the year ended 30 June 1993 (exhibit 22); and the audited accounts for the year ended 30 June 1994 (exhibit 55);
(b)the consultancy agreement bearing date 12 April 1991 was tendered on behalf of WRS in proceedings between Mr Lunt and the company in the State Industrial Relations Commission (proceeding number 1827 and 1912 of 2000) and relied upon in a successful challenge to the jurisdiction of the commission on the grounds that the nature of the engagement by the company of Mr Lunt was as a consultant and not as an employee upon which the jurisdiction depended;
(c)evidence in District Court proceedings 1131 of 2000 in which the plaintiff's wife was advancing a claim for alleged wages from WRS in the course of which the agreement bearing date 12 April 1991 was produced, shown to the witness Mrs R Y Briggs, who agreed that it was a consultancy agreement between the company and Mr Lunt and appeared to bear her signature;
(d)evidence in this court in action number 2289 of 2000 between Mr Lunt as plaintiff and Mr Briggs as defendant in which Mr Lunt was seeking recovery of the alleged debt to 30 June 1994 of $517,900 from WRS but whose claim was dismissed on a summary judgment application by the defendant company on the grounds that the debt due under the consultancy agreement to Mr Lunt had been forgiven and discharged by Mr Lunt.
The plaintiff also contends that because the consultancy agreement bearing date 12 April 1991 had been discovered in these proceedings its authenticity is deemed to be admitted pursuant to RSC O 30 r 4 and that the same deemed admission applies to the extension letter of 11 June 1993 which had also been discovered. The plaintiff contends that such deemed admission is not restricted to these proceedings, in which the 'authenticity' of both documents was challenged on the pleadings, but also arises from the discovery of the consultancy agreement in the District Court proceedings in CIV 1131 of 2000 and in a different action in this court in CIV 1489 of 2001. However, I do not consider that the issue of authenticity can be disposed of upon this latter ground.
The controversy over whether or not the signatures appearing on the document of 12 April 1991 and the extension letter of 11 June 1993 are genuine signatures of Mrs R Y Briggs has resulted in expert evidence from specialists in handwriting analysis being called on each side. Their evidence will be examined more closely later but each was given access to some originals and copies of the documents containing the disputed signatures together with other documents thought to be authentic examples of signatures by Mrs R Y Briggs. There is some controversy over the genuineness of these specimens used for comparative purposes but that can be put aside for the time being. The opinion evidence from the three handwriting specialists is not absolutely conclusive but I am satisfied that there is a clear consensus that, of all the apparent signatures of Mrs Briggs which have been examined, it is possible to say that there are two typical forms of signature. One has been called the 'cursive' form of signature and the other the 'upright' signature, and that the two forms of signature are noticeably different. At this point the consensus breaks down because one of the experts is of the opinion that the two forms of signature could be no more than two distinct varieties of signature used by the one person ‑ a phenomenon not entirely uncommon in handwriting ‑ whereas one other handwriting specialist is of the view that the probabilities are that the different forms of signature were used by two different people, one attempting, for whatever reason, to replicate the signature of Mrs Briggs.
A further complication is the question of whether or not, at material times, Mr Briggs occasionally signed documents in his wife's name, on her behalf, not as an attorney or as a per pro signatory but by signing her name in circumstances where it is to be supposed that he had her authority to do so or that she would ratify his action. The probabilities of this occurring are greater during the period when Mr Briggs was disqualified from acting as a director. When his wife was director of companies in his stead, he was still very greatly involved and was the directing mind and principal decision maker in the transactions then being conducted. Mr Briggs acknowledged that occasionally he might have signed his wife's name on documents or correspondence but denied that he did so in relation to any of these disputed documents in this case.
For reasons which will appear the probabilities are very much against the consultancy agreement bearing date 12 April 1991 relied upon by the plaintiff being executed, in his presence at the Briggs' home in the presence of Mr and Mrs Briggs on that date, as Mr Lunt so steadfastly maintained. The degree of detail which he gave in relation to the circumstances of that alleged execution, notwithstanding his later acknowledgement that the document may have been executed later, significantly undermines his credibility at least on that issue.
Reliability of witnesses
By now it should be obvious that the determination of the issues arising in this litigation and of the plaintiff's claims must depend, to a very great degree, upon issues of credibility and, indeed, the credit of a number of witnesses, not only Mr Lunt and Mr Peter Briggs. Unfortunately, I have been left in the position where I have very little confidence in the credit of several of the witnesses, so much so that the search for reliable testimony and facts which can be accepted as being correct or probable has been difficult. I am satisfied that a number of witnesses have given evidence which I cannot accept at all. The fact that this has occurred and that untenable versions of events have been paraded by certain witnesses are themselves factors in determining what conclusions can be drawn to the requisite degree of proof.
Many of the witnesses who gave evidence at this trial have had previous associations, and some still have continuing associations, with the parties. Those with the least connections and with no continuing connections, are the two former directors of Max Resources, Mr Robert Ivan Owen Shane and Mr Thomas William Johnson, both of whom I accept to be completely honest, independent and reliable witnesses. Their independence and reliability was challenged on behalf of the defendants by Mr Briggs, Mr Verheggen and by Mr M J Langoulant, but I do not accept any of those three as being reliable or completely frank and, in critical areas, I do not accept their testimony.
Other witnesses, some removed from the principal contestants, were Mr M Bowen who, at material times, had been the solicitor at Robinson Cox handling Mr Briggs' affairs, and Mr Kevin Bond, an accountant who, at material times, had been the secretary or co‑director of WRS with Mr Lunt. Neither Mr Bowen nor Mr Bond was directly aware of some of the critical episodes which are in controversy but each was aware of material background which places the critical contested issues of fact in context and allows certain basic facts to be established from which guidance can be taken when it comes to issues in sharper controversy.
I have already indicated that, in a number of material respects, portions of Mr Lunt's evidence must be regarded as unreliable and I formed the impression that he was not averse to attempting to improve his case by filling in gaps or creating explanations where uncertainties existed. Accordingly, in relation to his evidence, I consider that I should act upon it only where the facts are clearly established or where there is corroboration by direct testimony or inference from other evidence.
When it comes to the evidence of Mr Peter Briggs, I am afraid I am obliged to say that he was simply not credible and that there were many occasions in the course of his evidence‑in‑chief, and in cross‑examination, where it was apparent that no reliance could be placed on his testimony. This is why the search for reliable evidence is all the more important.
Because of the obscurity caused by the conflicting versions of events and having regard to the dubious reliability of the evidence of the principal parties, Mr Lunt and Mr Briggs, I consider that the surest way to a determination of the issues in this case is to address the following major issues of fact before moving on to the more detailed contentions of the parties. These are what I regard as keystone issues. They are:
(1)whether there was ever any agreement between Mr Lunt and WRS for the former to be paid consultancy fees at designated rates for his work in the promotion of the new technology;
(2)whether the accounting records showing an accumulation of outstanding fees due by WRS as a debt to Mr Lunt in various financial accounts up to and including 30 June 1994 were approved by the company and came to the notice of Mr Briggs before mid‑1995;
(3)whether Mr Briggs requested Mr Lunt to remove the outstanding liability of WRS to him, Lunt, from the balance sheet of the company as at 30 June 1994 in order to facilitate anticipated or actual negotiations with the representatives of Max Resources for the sale of the enterprise to that company;
(4)whether Mr Lunt continued to be engaged as a consultant by WRS after 30 June 1994 on the same terms;
(5)whether Mr Briggs and the other defendant have conducted themselves on past occasions on the basis that they have accepted the authenticity of the consultancy agreement bearing date 12 April 1991.
If some of those questions are answered positively then that would provide substantial, but not complete, confirmation of the plaintiff's cases and would go a long way to confirming the fundamental details of Mr Lunt's evidence. If, on the other hand, any of those were to be answered negatively that would greatly impair the reliability of the plaintiff's case and while, perhaps not confirming the details of the defendants' cases, would cast sufficient doubt on the plaintiff's claims to make them unacceptable as a matter of probability. It is with those issues in mind, therefore, that I now turn to the evidence.
The New Zealand witnesses
Max Resources was a New Zealand company listed on the Auckland Stock Exchange but which conducted business in Western Australia. Its principal shareholders and directors were Mr J J Verheggen and Mr M J Langoulant, who were both Australians. They had the major executive role in managing and operating Max Resources. However, because it was listed on the New Zealand Stock Exchange it was necessary for Max Resources to have at least two New Zealand based directors and so Messrs McShane and Johnson were chosen and appointed as the New Zealand based directors. They had only a very small shareholding in Max Resources but, I am satisfied, regarded their roles as directors of the company as important and requiring assiduous and scrupulous attention to its affairs. Regrettably, there can be no doubt that Messrs Verheggen and Langoulant saw their two New Zealand colleagues as little more than puppets who were not expected to exercise any deliberative role in the operations of the company or to do anything more than acquiesce in the decisions which they took themselves about its operations. I am satisfied that neither Mr McShane nor Mr Johnson realised this at the critical time and only learned, to their dismay, much later that their roles were given so little recognition.
In late 1996 and early 1997 there was a proposal for WRS's businesses, indeed, its entire enterprise, to be taken over by Max Resources either by Max Resources taking over the shares in WRS or by purchasing its assets. While this proposal was under consideration Messrs McShane and Johnson came several times to Perth to meet with Mr Briggs, other representatives or agents of WRS and, in their words, to be part of the 'due diligence' involved in the proposed acquisition of WRS's business by Max Resources. There were three visits by these New Zealand directors, which are of significance. Only one came on one of the visits but both came on the others. During those visits they had various conversations with Mr Briggs about the affairs of WRS and its balance sheet, and these touched on the position of Mr Lunt.
Mr McShane was born in New Zealand in 1941 and has had a major career in urban economics, planning and marketing involving senior consultancy positions to local government and government institutions. He had developed a special expertise in biological technologies and had worked in the public and private sector in Singapore, Hong Kong, and then had been involved in a number of technology businesses in North America, Europe and in Asia. In recent years he has been a self‑employed business consultant in New Zealand. He joined the board of Max Resources in 1996 at the invitation of Messers Verheggen and Langoulant.
Another prominent New Zealand citizen, Mr Thomas Johnson, was also invited to join the board at the same time, so that in early 1997 Max had four directors, namely, Messrs Verheggen, Langoulant, Johnson and McShane. Messrs McShane and Johnson were appointed to participate in the investigation of the acquisition by Max Resources of the Western Australian company, WRS, which was introduced by Mr Verheggen, who had a business connection with Mr Peter Briggs, the controlling shareholder of WRS. Initially at least, Messrs McShane and Johnson were told that the proposal was that Max Resources should purchase the shares in WRS from the existing shareholders and then take control of its assets, all of which were involved in technology franchises for the development of organic fertiliser, together with an interest in a fertiliser manufacturing plant then under construction in France, together with some other assets in Asia.
Both Messrs Langoulant and Verheggen had been associated with Mr Briggs in the past and, according to Mr McShane, they agreed that he and Mr Johnson should perform the due diligence as members of the company's audit committee. In the result, Messrs McShane and Johnson travelled to Perth on several occasions between January and April in 1997, each time staying at the Sheraton Hotel in Perth. According to Mr McShane, on their first visit they were concerned about the vagueness of Mr Briggs concerning the assets and liabilities of WRS because Mr Briggs claimed that the company owed him about $1 million. On reporting this to Messrs Verheggen and Langoulant a second visit to Perth was arranged for the specific purpose of ascertaining the exact position in relation to the assets and liabilities of WRS.
During this second visit Mr Briggs said that the liabilities of WRS primarily comprised a loan outstanding to one of his related companies in an amount of about $1 million. Mr McShane had been told earlier by Messrs Verheggen and Langoulant that WRS had other liabilities to employees Lunt and Skidmore. According to Mr McShane, he and Johnson raised this matter specifically with Mr Briggs, who told them that WRS had in 1995 and 1996 reduced its indebtedness to Mr Lunt and that the balance of consultancy entitlements due to Lunt as at 30 June 1994 had been forgiven upon Mr Briggs assuming personal responsibility for them. Amounts due after 1 July 1994 remained with WRS but Mr McShane was unable to recollect the amount.
Mr McShane said that Mr Briggs provided him and Mr Johnson with copies of documents showing the amounts which had been due to Messrs Lunt and Skidmore and confirming that he, Briggs, had resumed responsibility for the pre‑June 1994 debts. They sought further documents from Mr Briggs to confirm the position and he met them the following day at the Sheraton Hotel and gave them further documents which Mr Briggs stated confirmed the position as he had explained it. According to Mr McShane, Briggs had explained to him and to Mr Johnson that Messrs Lunt and Skidmore had both required an indemnity in respect of the debts due to them under their consultancy agreements before they would release WRS and that he, Mr Briggs, had agreed to such an indemnity. Messrs McShane and Johnson also contacted Mr Lunt by telephone when they were in Perth to seek confirmation of the advice given by Mr Briggs. According to Mr McShane, Mr Lunt confirmed the position just outlined but explained that there were further consultancy fees due to him and to Mr Skidmore. Neither Mr Johnson nor Mr McShane met with Mr Lunt on their visits to Perth but they did meet with him in New Zealand in May 1997 at the time when the resolution by Max Resources to acquire the assets of WRS was passed and Lunt then gave them further confirmation to the same effect.
According to Mr McShane, he and Johnson were concerned about the unsatisfactory debt position of WRS and for that reason were not disposed to proceed with the takeover of WRS as originally proposed by Mr Briggs, which would involve Max Resources assuming all the liabilities of the company. Instead they recommended that Max Resources should simply purchase the assets of WRS and enter into employment or consultancy agreements with its personnel rather than assume its liabilities. That is what eventually occurred. That acquisition was effected by an agreement between Max Resources and WRS made in May 1997 and prepared by Max Resource's solicitors in Perth, Messrs Robinson Cox. The consideration for the acquisition of the assets as agreed was the allocation of shares in Max Resources to WRS.
It turned out that interests associated with Mr Briggs had acquired major shareholdings in Max Resources without that becoming known by Messrs McShane or Johnson so that, shortly after the takeover the control of Max passed to Mr Briggs' interests. Mr Briggs became a director and shortly afterwards Messrs Johnson and McShane were removed or resigned as directors. More trouble for Max Resources followed. Mr Lunt, who had been employed by Max Resources, was discharged, allegedly for improper conduct, although Mr McShane said that he did not agree with Mr Lunt's dismissal. Some time afterwards Max Resources collapsed, leaving a significant financial scandal which was the subject of regulatory and police investigations in New Zealand and Australia, leading to the records which Mr McShane or Mr Johnson had being passed on to the authorities and no longer being accessible to them. Among these were many of the documents which Mr McShane said were given to him or to Mr Johnson by Mr Briggs at the meetings at the Sheraton Hotel which I have described.
It is obvious that the subsequent collapse of Max Resources and the investigations by the regulatory authorities were a severe shock to Mr McShane and an embarrassment to him. It is equally clear that he does not hold either Messrs Verheggen or Langoulant in high respect, nor does he have a high regard for Mr Briggs. Nevertheless, all that was many years ago and Mr Johnson asserts, and I accept, that he regards all those events as bad experiences from the past which no longer are of concern to him. My impressions of Mr McShane, when giving evidence, were that he was very particular and careful in the testimony which he was giving, was at pains to be correct, was a very well educated and fastidious person, with a sense of obligation and propriety which was obviously the product of many years of responsible senior professional work. I regarded him as balanced, unaligned and independent. He was cross‑examined on the basis that his memory was unreliable and had been affected by the serious cardiac disease which he experienced in 2007 and that he was personally hostile towards Mr Briggs. He disclaimed any hostility, although he maintained that he had a legitimate grievance against Mr Briggs because of the way Max Resources was run from 1997 onwards. It was suggested to him that it was not he and Mr Johnson who were charged with the due diligence but that Messrs Verheggen and Langoulant were also involved. He accepted that, in relation to other activities of WRS, for the due diligence, there was an involvement by Verheggen and Langoulant. His principal obligation was to look at the intellectual property. He was unswerving in his insistence that the first proposal by the Briggs' interests was for Max Resources to buy the entire company, by acquiring all its shares, and that it was only later that Max Resources decided to buy the assets instead. I am satisfied that there is no reason to doubt or to question the evidence of Mr McShane and I accept it.
Mr Johnson also gave evidence. He was born on 22 September 1938 in New Zealand and at the time of the trial was a senior lecturer in business studies at the Eastern Institute of Technology at Hawke's Bay in New Zealand. He holds the degrees of Master of Business Administration, a Masters degree in management, a Diploma in Business Sport and Recreation, and a Diploma in Business Marketing. Over a 30‑year career in senior management he had held a number of positions including that as a director of Max Resources from 1996 to 1998.
Mr Johnson and Mr McShane were members of the audit committee of Max Resources and were given the role of investigating the proposed acquisition by Max Resources of WRS Pacific Ltd in early 1997. This was a proposal which had been put forward by Mr Verheggen who, together with Mr Langoulant, informed him that they had been approached in January 1997 by Mr Peter Briggs with the proposition that Max Resources should acquire WRS by purchasing all the shares in that company. Mr Johnson and Mr McShane were asked to visit Perth and to meet Mr Briggs in order to carry out due diligence on his proposal. He visited Perth with Mr McShane on several occasions between January and April 1997 for this purpose, also staying at the Sheraton Hotel on each visit. There they met Mr Briggs, who gave them information about WRS and, in particular, its internal liabilities. According to Mr Johnson, Mr Briggs told them that the major liability was a debt of about $1 million to himself and to employees Messrs Lunt and Skidmore, the latter debts arising through employment contracts. He was told that Mr Lunt was owed about $1 million and Skidmore about $750,000 (which from other evidence I think should be regarded as a mistaken reference to $75,000) before part of their debt was forgiven upon Mr Briggs taking responsibility to pay the forgiven sum.
According to Mr Johnson, he came to Perth in connection with the WRS acquisition two or three times in all and that Mr McShane came once alone.
According to Mr Johnson, Mr Briggs told him and Mr McShane that Messrs Lunt and Skidmore had agreed to remove their debts as accrued to 30 June 1994 from the company balance sheet upon Mr Briggs taking personal responsibility for payments of the sums removed. Mr Johnson said that he and Mr McShane asked for documents to satisfy the debt position, especially the large amounts due to Messrs Lunt and Skidmore, but that these were not immediately forthcoming.
After that visit Mr Johnson and Mr McShane reported their concerns about these liabilities to Messrs Verheggen and Langoulant and a subsequent visit to Perth was arranged for the express purpose of inquiring into the full extent of the company's liabilities.
According to Mr Johnson, on this second visit he and McShane were told by Mr Briggs that WRS had in 1995 reduced its indebtedness to Mr Lunt by a payment of $20,000 and that his consultancy agreements had been reduced in 1996 by a further significant amount which he could not recall.
According to Mr Johnson, Mr Briggs told him and Mr McShane that the amounts due by WRS to Messrs Lunt and Skidmore at 30 June 1994 had been forgiven upon Mr Briggs assuming personal responsibility to pay them and that Mr Briggs acknowledged that the company had made payments to Messrs Lunt and Skidmore in 1996 to reduce the sums owing. Nevertheless, according to Mr Lunt, there was still a liability for services provided to the company from 1 July 1994 to 30 December 1996. In Mr Skidmore's case the liability of the company to him for moneys due up to 30 June 1994 had been taken over by another Briggs company but for services the provided by both Mr Lunt and Mr Skidmore from 1 July 1994 to 13 December 1996 the liability of WRS for payment remained.
Furthermore, according to Mr Johnson, Mr Briggs told him and Mr McShane that Mr Lunt had required an indemnity from Mr Briggs for the amount owing to him as at 30 June 1994 before he released WRS from its debt and this had been given. A similar arrangement had been made by Mr Skidmore but his debt was taken over by one of Mr Briggs' companies rather than by Mr Briggs personally.
According to Mr Johnson, he and Mr McShane told Mr Briggs that they would need to see documents confirming his statements that the debts due to Messrs Lunt and Skidmore as at 30 June 1994 had been forgiven and taken over by Mr Briggs or by his company and to see the documents relating to moneys due under the consultancy agreements from 1 July 1994 onwards.
Mr Johnson was most specific in stating that this information was later delivered to him by Mr Briggs in the foyer of the Sheraton Hotel and included:
•a copy of a release by Mr Lunt to WRS Pacific Ltd (exhibit 103)
•a copy of a debt novation by Mr Briggs (exhibit 104 and a copy of exhibit 34)
•a copy of a debt novation agreement by Essex Properties Pty Ltd relating to the Skidmore indebtedness (exhibit 105)
During this visit to Perth Mr Johnson says that he and McShane also contacted the auditor for WRS, Mr John Cooke, who confirmed to them the information provided by Mr Briggs that Messrs Lunt and Skidmore had removed part of their debts in return for Mr Briggs agreeing to pay the sums removed. This, of course, is not evidence by or on behalf of Mr Briggs but Mr Cooke was the auditor of WRS authorised to speak to these gentlemen about the company's affairs for the purpose of the planned takeover or acquisition and I consider, therefore, that his statements in this regard can be accepted as statements or admissions on behalf of the company, WRS. In these negotiations, the company and Mr Briggs were presenting a united front in the provision of information and details to the New Zealand directors of Max Resources.
Mr Johnson says that he kept the documents which had been given to him by Mr Briggs and much other Max Resources material which he had acquired and delivered it to his solicitors in Hastings, New Zealand. Because of the investigation conducted into the affairs of Max Resources by the New Zealand Securities Commission and the Australian Securities Commission he no longer had all the documents. Mr Johnson also stated that because of the substantial liabilities which WRS had, primarily to Messrs Lunt and Skidmore, he and Mr McShane recommended to the board of Max Resources that the company should not proceed with the takeover of WRS by acquiring its shares but that it should, instead, proceed by purchasing the assets and that is what eventuated.
From his cross-examination it became apparent that Mr Johnson also had a low opinion of Messrs Verheggen and Langoulant and had made a statement to the investigating authorities in relation to proceedings in Australia which were later commenced against Messrs Verheggen and Langoulant but which resulted in their acquittal. Neither he nor Mr McShane gave evidence in those proceedings. It was evident that Mr Johnson also had a low opinion of Mr Verheggen's veracity and of his role in the conduct of Max Resources in New Zealand after the acquisition in May 1997. He said that he ceased to be a director of Max Resources at the end of 1997 as a result of problems which had arisen after the acquisition.
I regarded Mr Johnson as a very careful, precise and experienced businessman of a traditional and conservative disposition who gave evidence in a plain and straightforward manner. He was a sophisticated and intelligent businessman who was, in my opinion, utterly truthful.
I accept the evidence of Messrs McShane and Johnson and reject the conflicting evidence of Messrs Verheggen, Langoulant and Briggs concerning the vital points of the visits of these gentlemen to Perth in early 1997. In particular, I accept that Messrs McShane and Johnson regarded themselves as being responsible to investigate the financial position of WRS, and in particular its liabilities, in order to advise the board of Max Resources as to whether or not it should entertain the Briggs' proposal for a sale of shares in WRS to Max Resources.
I reject the testimony of Messrs Verheggen and Johnson that there was never a proposal for the acquisition to take place in the form of a purchase of the shares of WRS by Max Resources and that the only proposal ever advanced or considered was a straight acquisition by purchase of the assets of WRS. Mr Briggs ventured the same version of events at first but acknowledged in cross-examination that there had, at a very early stage, been a proposal for the sale of all the shares in WRS to Max Resources.
I also accept the evidence of Messrs McShane and Johnson that in discussions with them during these visits Mr Briggs revealed that WRS had been indebted to Messrs Lunt and Skidmore in significant amounts for consultancy fees but that that indebtedness, to the extent that it had accrued to 30 June 1994, had been discharged upon Mr Briggs personally taking over the Lunt debt and, in Mr Skidmore's case, the debt being taken over by an associated Briggs company. I accept their evidence that further debt was due to both those men for services rendered after 1 June 1994. There would have been no point in Mr Johnson demanding and receiving a copy of the Lunt letter of forgiveness (exhibit 34) or discussing the position with the auditor, Mr Cooke, unless he had reason to be concerned about such a potential liability.
It follows from this that I accept that, at June 1994, there had been a significant outstanding liability for fees due by WRS to Mr Lunt and, for some reason not disclosed to these gentlemen, that debt was forgiven by Mr Lunt in exchange for it being taken over by Mr Briggs personally and, further, that the company continued to be indebted to Mr Lunt for services provided by him after 1 June 1994 in some unspecified but large amount. This evidence also amounts to an admission by Mr Briggs to the New Zealand directors of Max Resources that debts by WRS to Messrs Lunt and Skidmore were recognised by the company in its balance sheet at 30 June 1994.
Mr John Cooke, a chartered accountant and auditor, gave evidence for the defendants. He had done work for many of Mr Briggs' companies from 1992 onwards to the present but no longer does audit work for Mr Briggs' interests. He said that he had no recollection of any meeting with any gentleman from New Zealand in early 1997 or at all and has no record of any bill being raised for any consultation with such persons. He said that it was possible that he might have met with the men from New Zealand but that if the meeting had lasted longer than five or 10 minutes it would have been noted and billed and that there is no such entry.
In his first witness statement (exhibit 137A) Mr Cooke said that his firm had been engaged by WRS from about 1990 to 1995 to carry out the audits for its annual financial statements and that it audited each of the statements for the financial years from 1990 through to June 1994. However, Somes & Cooke did not complete the 1995 audit as they were not provided with sufficient information. He confirmed that, on his audit file, he had a copy of the letter from Mr Lunt dated 23 June 1995 addressed to the directors of the defendant and signed by Messrs Lunt and Bond. This had been obtained as part of the audit work for the 1994 financial statements. It is Mr Lunt's letter waiving any obligation and forgiving the debt by WRS for fees due to him accrued to 30 June 1994. Mr Cooke had no record nor any recollection of discussing the purpose or significance of this letter with Mr Briggs. In his supplementary statement (exhibit 137B) Mr Cooke said that it was likely that he would have had some conversation with Mr Lunt about this waiver letter in order to satisfy his duty as auditor although he had no specific recollection of this. He said he would not have been concerned with any alleged guarantee given by Mr Briggs to be answerable for that debt because that would not be a matter which concerned WRL or his audit and because he was not acting as a personal accountant to either Mr Briggs or to Mr Lunt. He confirmed that the release was only effective for the period up to 30 June 1994. In giving his oral evidence Mr Cooke recalled actually speaking to Mr Lunt about the waiver and warning him that once the debt was waived it could not be reclaimed. In cross-examination Mr Cooke confirmed that in the financial accounts for WRS for the year ended 1993 there was reference to the existence of consultancy agreements with Messrs Lunt and Skidmore providing for payments based on normal commercial terms and that in the financial accounts for the year ended 30 June 1994 there was an adjustment of $652,900 to reduce the debt due to Mr Lunt following his waiver.
Despite Mr Cooke's lack of any recollection of meeting directors of Max Resources from New Zealand, I consider that the account of that contact given by Mr Johnson is accurate. There are other aspects of Mr Cooke's evidence to which it will be necessary to return but it is significant that he confirmed that in the audited accounts for WRS for the year ended 30 June 1993 there was a large debt shown as owing to Mr Lunt for consultancy fees, and that in the notes for those accounts there was reference to the existence of consultancy agreements between Messrs Lunt and Skidmore respectively and the company for remuneration on commercial terms. Mr Cooke also confirmed that he had obtained a copy of the Lunt waiver letter (exhibit 35, 23 June 1995) for the purposes of completing the 1994 audit and this was obviously to confirm the basis for eliminating the liability of $652,900 previously recorded as due to Mr Lunt from the 30 June 1994 balance sheet of the company.
There are other references to Mr Lunt being entitled to receive benefits under a consultancy contract with WRS in various sets of accounts. There is one such reference at page 3 of the WRS accounts for the year ended 30 June 1991 (exhibit 18 page 186 and at 198 and at 200). In exhibit 21, which contains the financial statements for WRS for the year ended 30 June 1992 there are similar acknowledgements of a consultancy agreement with Mr Lunt (pages 218, 229 and 230). Both sets of accounts were audited by Mr Cooke, who expressed an auditor's qualified opinion but not relating to the existence of consultancy agreements. The company's accounts for the year ended 30 June 1993 are found in exhibit 22 and these too referred to an entitlement by Mr Lunt to receive fees pursuant to a consultancy agreement (page 245, 257, 259). In a set of accounts for WRS as at 30 June 1994 forwarded by Mr Kevin Bond (exhibit 27) there is a schedule (page 273) which shows that the amount of consulting fees then outstanding to Mr Skidmore was $39,700 and the corresponding amount due to Mr Lunt was $652,900.
The audited accounts of WRS for 30 June 1994 are exhibit 55. These refer to Mr Lunt receiving or becoming entitled to receive fees pursuant to a consultancy agreement (334) but at page 344 the amount shown as owing to Mr Lunt for 30 June 1994 is nil in contrast to the amount owing of 30 June 1993 being $326,480. These same accounts show a nil balance for consultancy fees due to Mr Skidmore of at June 1994 but an outstanding balance of $75,000 is shown as due to him at 30 June 1993.
Exhibit 32 is a letter from Mr Skidmore to Mr Briggs, care of Essex Properties Pty Ltd referring to an agreement by him and Mr Lunt to remove their debts from the balance sheet on the understanding that Mr Briggs assumed personal responsibility for the debts and Mr Skidmore demanding payment of $50,000 as the compromised figure then agreed to be payable to him by Essex Properties Pty Ltd.
Despite the removal of the liability of the company to pay consultancy fees to Mr Lunt to 30 June 1994, the company's 1994 accounts still show (page 347) the existence of consultancy agreements with Messrs Lunt and Skidmore for the provision of consultancy services to the company on normal commercial terms. Note 17 to those same accounts (page 350) refers to those consultancy agreements under the heading 'Commitments' and shows a total amount of $135,890 expected to fall due within the next two years. Those accounts were also audited by Mr Cooke. The directors' report for the year ended 30 June 1995 of WRS (exhibit 63) also contains a reference to Mr Lunt becoming entitled to receive consultancy fees (page 412). In the draft accounts for the year ended 30 June 1995, accompanying that statement (page 419) there is shown the amount of $199,646 being outstanding to Mr Lunt for consultancy fees. It was the 1995 accounts which were submitted to Mr Cooke for audit but not completed for lack of the provision of adequate information.
Consequently, there is unequivocal documentary acknowledgement by the company in its annual returns and accounts for each of the years ended 30 June 1991 to 30 June 1994, and again in the draft unaudited accounts for the year ended 30 June 1995, that there were consultancy agreements in existence between the company and Mr Lunt and Mr Skidmore and that the balance due to Mr Lunt at 30 June 1994, before the subsequent adjustment and waiver, was the amount of $652,900, as Mr Lunt has alleged. Those accounts were prepared and lodged under statutory obligations by the directors and officers of the company and were part of the public record with ASIC. They are, therefore, to be taken, at least prima facie, as accurate records of the company's position in relation to the matters stated. These accounts were prepared by the company's accountants, approved by directors and audited.
Mr Briggs seeks to deny the accuracy of the acknowledgement of a consultancy agreement with Mr Lunt and of the amounts recorded as being owing to Mr Lunt for such services on the grounds that it was he, Mr Lunt, who gave instructions for the preparations of those accounts, that he misled Mr Bond, the secretary and accountant, in that regard, and that these false entries escaped recognition or attention until he, Briggs, insisted upon their correction after confronting Mr Lunt about them in 1995. There is much evidence to suggest that Mr Briggs did not pay close attention to the details of the financial statements of companies in which he was involved and took a 'broad view' of his financial interests, leaving such matters to his accountants and advisers. Nevertheless, it is straining credulity beyond its limits to accept that false statements of the kind alleged would have gone unrecognised for four years or more and would then have been corrected without disciplinary or other action being taken against the transgressor and with the continuing commercial relationship being maintained with him. These accounts are, therefore, in my opinion, objective and reliable evidence that a consultancy arrangement existed between the company and Mr Lunt for payment of services and that the accumulated liability to 30 June 1994 for those services was $652,900 and that, although that amount was adjusted out of the accounts at that date, it was acknowledged that a commitment existed for a continuing accruing liability for the 1995 and following years. Just how that consultancy agreement was established and what were its terms does not appear from these accounts.
This idea of adjusting the accounts to move from the balance sheet as at 30 June 1994 the amounts shown owing to Messrs Lunt and Skidmore has a number of unexplained side effects which were not pursued by the parties at the trial. The amounts of those loans, $326,480 for Mr Lunt, and $75,000 for Mr Skidmore for the 1993 year were identified in Note 8 to the financial statements (exhibit 55, page 343) and were part of the total amount of creditors and borrowings shown in the balance sheet at page 337 being $325,000 for the 1993 year and $1,173,734 for the 1994 year (which did not include these consultancy liabilities). However, there was no suggestion that the reduction of liabilities resulting from the removal of those loans was accompanied by any other adjustment to the 1994 or earlier accounts. Presumably the consultancy fees paid progressively over previous years to Messrs Lunt and Skidmore were treated as expenditure or were brought to account in some other way so that their removal would have necessitated adjustment to the earlier accounts. The only item which I have been able to see, without the assistance of counsel, which may represent such an adjustment is an amount of $366,180 for development costs in prior years written back contained in the abnormal items under a note for operating loss at page 342 but that figure does not readily reconcile with the amount of the liabilities that were 'removed'.
What this does show is that up until 1994, indeed until later so far as reliance can be placed on the unaudited draft accounts for 30 June 1995, there was no revenue to speak of for WRS and that it was funded by loans or capital contributions from Mr Briggs and much of the expenditure, for consultancy fees and other outgoings, seems to have been capitalised under the asset 'Intangibles' (see note 7 on page 343 of exhibit 55) and so accumulated. Presumably this was done on the basis that once the project moved to the production and income producing stage those accumulated expenses could be written off or depreciated against income. All this is rather unsatisfactory when it comes to determining the reliance to be placed on the annual financial accounts and their significance to the shareholders and directors. It does reveal that the company was entirely dependent upon funding from external sources or loans for its operations and that the sources of these funds, principally Mr Briggs or other companies in his group, had no immediate concern about income. Mr Briggs or his companies were not in a position, or perhaps were not willing, to discharge these operating expenditures regularly possibly in anticipation that payment would have to be deferred until there was an adequate income stream.
This may account for Mr Briggs rather blasé attitude towards payment of Mr Lunt's expenses and claims for consultancy fees and his attitude that any question of payment would need to be deferred until the company was in a production phase or it could be sold to or taken over by some other enterprise. His attitude that Mr Lunt would need to wait until the project had reached that phase before having any hope for payment explains some of his conduct and evidence including his dismissive attitude towards Mr Lunt's repeated claims for money and pleas of financial embarrassment. What it does not explain, however, is the recognition by the accounts that a progressive liability existed and was accumulating. Whatever Mr Briggs' attitude may have been as to when and how that payment would ultimately be discharged does not overcome the fact that it was being recorded and acknowledged by the company in the accounts as an existing and growing liability from year to year.
Another witness whom I regard to be independent, truthful and reliable is Mr Kevin Bond. Mr Bond is by profession an accountant and is a graduate in commerce from the University of Western Australia. He was a partner in the firm of chartered accountants, Messrs Barrington Partners of Perth from March 1986 until November 1993 after which he practised on his own account. Mr Lunt had been a client of Barrington Partners and Mr Bond became involved in attending to his accounting affairs from before 1990. He became aware that Mr Lunt was involved in negotiations with Pacific Platinum NL (Pacific) concerning the sale of a proportion of Mr Lunt's interests in a fertiliser business. That led to an agreement of sale between Mr Lunt's company and Pacific on 21 May 1991 which he executed as company secretary of Baywill Pty Ltd. Under this sale agreement Pacific was to execute a consultancy agreement with Mr Skidmore a draft of which was attached. Such a consultancy agreement between the company and Mr Skidmore was executed and is dated 22 April 1991 (exhibit 11) However, the sale agreement did not refer to any consultancy agreement between Pacific and Mr Lunt although Mr Bond's notes of the meeting which he attended on 3 October 1991 record that it was then discussed that a consultancy agreement for Mr Lunt was then being prepared by Pacific's solicitors.
Mr Bond suggested that the preparation of such a consultancy agreement may not have been a high priority because Mr Lunt was then employed by WRS which was then being taken over by Pacific under the agreement of 22 May 1991. Mr Bond was then appointed as secretary to Pacific and as an alternate director for Mr Skidmore on 27 June 1991 and later, in June 1992 was appointed as a full director of Pacific. He continued to hold these offices until November 1996 when he resigned because of non‑payment of outstanding fees and his concern that the annual return for Pacific for the year ended 30 June 1995 had not been lodged with the ASIC.
Mr Bond made further notes at a meeting on 13 March 1992 which he attended with Mr Lunt and Mr Edmund Czechowski that the topic of the consultancy agreement with Mr Lunt was raised but deferred to a later meeting. According to Mr Bond's notes of a later meeting of directors of 22 May 1992 (exhibit 123) a consultancy agreement between Pacific and Mr Lunt was signed with a commencement date of 1 April 1991. These notes record that Mr Czechowski objected to signing the document because the start date was unclear and accordingly the document was altered to show a start date in April 1991 rather than April 1990 as originally proposed.
Mr Bond cannot recall the occasion when the consultancy agreement was signed but he notes that the common seal of WRS (Pacific) was affixed and witnessed by Mrs Robin Briggs as a director of Pacific and by himself as secretary. Exhibit 123 contains a note made by Mr Bond on Friday, 22 May 1992 which reads as follows:
WRS Pacific ‑ 10 - 25
* Consultancy agreement WL signed on 1/4/92 and EC objected to signing as start date is uncertain. Start date amended to 1/4/91.
Pacific changed its status and name to WRS Pacific Ltd in 1991.
The note of the second meeting with Mr Czechlowski suggests that the consultancy agreement may not have been executed ('signed') until about 22 May 1992 rather than on 24 March 1992 as recorded in the seal register (exhibit 129). That is a possibility but still points to a conclusion that the document was executed in or about the period March to May 1992.
Mr Bond went on to say that in conjunction with the other directors he prepared financial statements for the company for the year ended 30 June 1991, 1992, 1993 and 1994 which were all audited by Messrs Somes and Cooke and signed by the audit partner Mr Cooke. Each of these statements referred to the existence of consultancy agreements between the company and Messrs Lunt and Skidmore.
Mr Bond also maintained the general ledger from WRS from 1991 until his resignation in late 1996. This recorded the value of the consultancy fees payable to Mr Lunt together with his expenses. He obtained from Mr Czechowski details of the amounts which had been paid on behalf of the company by Mr Briggs or his associated companies and all were entered into the general ledger and the balances due to the Briggs' companies were checked with Mr Czechowski. According to Mr Bond, Mr Czechowski confirmed the balances direct to Somes and Cooke as part of the annual audits.
Mr Bond had no specific recollection of signing a document to extend Mr Lunt's consultancy agreement (exhibit 58) which is a letter on the letterhead of WRS Pacific Ltd addressed to Mr Lunt saying:
'Dear Mr Lunt,
The Directors are pleased to advise that your Consultancy Agreement with WRS Pacific Ltd is renewed and extended for a further four years to June 30, 1997.
Your contract with the company is renewed on the same terms and conditions as detailed in your existing Consultancy Agreement dated April 12 1990.
Please accept our thanks for a job very well done and the excellent advances and achievements you have obtained for the company are appreciated.
Yours faithfully
Signature
K Bond
Director/Secretary Signature
R Y Briggs Director
June 11 1993'
However, he acknowledged that it appeared to be his signature on the letter and that the accompanying signature appeared to be that of Mrs Briggs. He went on to explain that the audited financial statements for WRS for 30 June 1994 did disclose that Mr Lunt continued to have a consultancy agreement as did the draft financial statements for the year ended 30 June 1995.
Mr Bond said that while he could not specifically recall the details of discussions he thought that it was Mr Briggs who raised the proposal to remove the balance shown as debts due to Messrs Lunt and Skidmore for consultancy fees and to have those debts waived. He said that Messrs Skidmore and Lunt only agreed to the waiver of the debts when satisfied that Mr Briggs or an associated entity had agreed to take responsibility for them. It was he who drafted note 14 to the accounts of 30 June 1994 which recorded that the amount for consultancy fees due to Messrs Lunt and Skidmore had been waived.
The letter by which Lunt waived the consultancy fees due to 30 June 1994 itself dated 23 June 1995 (exhibit 35) was signed by Mr Bond as a witness. His recollection was that the terms of the letter were drafted by a solicitor, Mr Steven Pynt. He did not recall signing the document but he accepts that the signature must be his.
Similarly, Mr Bond is unable to recall the details of how the letter of indemnity by Mr Briggs dated 20 June 1995 (exhibit 34) came to be prepared nor could he specifically recall witnessing the signature of Mr Peter Briggs on the document. However, he accepts that his signature does appear on the document.
Mr Bond confirmed that in the management accounts for the company to 30 June 1994 which he prepared, before the consultancy debts were waived, the amount shown due to Mr Lunt was $652,900 was made up as follows:
Balance shown in 1993 financial statements
$326,480
Plus 1994 consulting fees
$231,420
Adjustment for the 1992 year
$ 95,000
$652,900
His worksheet showing the calculation of the amount of fees as at 30 June 1994 is exhibit 125. Once Mr Lunt had signed the waiver of debt (exhibit 35) Mr Bond made a journal entry in the books of WRS which was then posted to the general ledger to remove the $652,900 as a liability (exhibit 126).
Before his resignation Mr Bond prepared draft financial statements for the year ended 30 June 1995 and these recorded an amount due to Mr Lunt for consultancy fees for the year ended 30 June 1995 of $199,646. They covered the period from 1 July 1994 to 30 June 1995. The auditors, Somes and Cooke contacted Mr Bond on 16 August 1996 with a number of queries about the draft accounts to 30 June 1995 but none of these queries was related to the notes acknowledging the existence of the consultancy agreement with Mr Lunt or the amount shown due to him as at 30 June 1995 (exhibit 127) although they did make a number of quite detailed enquiries as to other aspects of the accounts.
Mr Bond made a second witness statement (exhibit 131) after examining the original of the consultancy agreement dated 12 April 1991 between WRS and Mr Lunt (exhibit 14). In this he expressed himself satisfied that it is his own original signature under the application of the common seal of WRS which he applied to the document. However, he had by then been provided with access to the seal register of WRS (exhibit 129) which had been maintained by him from about 1992 onwards. That contains an entry dated 24 March 1992 (CHECK) recording the use of the common seal on the consultancy agreement dated 12 April 1991 between WRS and Mr Lunt. He had also by then been provided with a letter from Messrs Robinson Cox, solicitors addressed to him as a director of WRS Pacific dated 6 November 1991 confirming his instructions for them to engross a consultancy agreement for Trevor Lunt. That is consistent with Mr Bond's note of 3 October 1991 referred to in [8] of exhibit 128 mentioned (exhibit 130).
That letter of 6 November 1991 contained an acknowledgment by the solicitors of Mr Bond's instructions to engross the consultancy agreement in accordance with the draft earlier forwarded under cover of their letter of 30 October 1991 and forwarded three copies of the consultancy agreement for execution. The earlier letter of 30 October 1991 containing a draft of the consultancy agreement is not in evidence but a similar letter with another draft dated 25 October 1991 from the solicitors to Mr Lunt comprises exhibits 113A and 113B.
Mr Bond again addressed the authenticity of the consultancy agreement (exhibit 14) in the light of the seal register of the company and the letter from Robinson Cox on 6 November 1991 and said that he was satisfied that it was authentic. This verification of the authenticity of the document, however, cannot be regarded as confirming that it was executed on 12 April 1991 and indeed Mr Bond did not suggest that. Plainly enough the date on the document is not the date of execution. It can only have been executed on or after 6 November 1991 and according to the seal register the seal was affixed on 24 March 1992. Furthermore, Mr Bond was not an office holder in WRS until he became its secretary in June 1991 and in cross‑examination acknowledged that the entry in the company's seal register indicated that only one rather than two or three copies of the consultancy agreement was sealed.
In cross‑examination Mr Bond's attention was directed to an email which he had sent to Mr Lunt on 3 October 2001 (exhibit 120) relating to other litigation but touching on some of these same events. In that Mr Bond recorded that he had been advised by a solicitor in Sydney to check carefully the authenticity of his apparent signatures on the Briggs' letter of 20 June 1995 (exhibit 34) the 'Coco's letter' and also Mr Lunt's letter of the waiver of 23 June 1995 (exhibit 35) and asking for access to original documents for the purposes of comparison. On the basis of this letter it was suggested to Mr Bond that he had not actually signed one or both of those letters and that his signature had been copied and transposed by some unknown method. He did not accept that this was so. Mr Bond had obviously thought very carefully about that possibility and had treated it seriously when being cross‑examined but in the end he maintained, that as far as he could tell, his signatures on both occasions were genuine. Mr Bond also acknowledged in cross‑examination that he was not in regular contact with Mr Briggs at the time during which he was the secretary or a director of WRS and that most of his contact was with Mr Lunt. Later this was relied upon by the defendants as a basis for suggesting that Mr Bond's source of information about the financial affairs of WRS, and hence his approach to the preparation of the accounts came entirely from Mr Lunt and that the accounts, as prepared recording progressive liabilities for consultancy fees were all due to the artifice of Mr Lunt. Mr Bond would not accept this and maintained that the accounts were prepared in the proper way circulated, audited and published and that had there been any error in the basic approach to the accounts or the transactions he would have expected that to have been drawn to his attention. One would have been inclined to expect that that would be so.
As indicated I accept Mr Bond as a truthful and reliable witness. Several important points emerge from his testimony. First of all he explains how the annual accounts for WRS for the years ended 30 June 1991 to 30 June 1994 plus the draft accounts to 30 June 1995 all refer to the existence of the consultancy agreement with Mr Lunt and demonstrate that there was an unpaid balance of fees owing at 30 June 1994 of $652,900. He also confirms that, as a result of the initiative begun by Mr Briggs arrangements were made for that indebtedness to be removed from the balance sheet as at 30 June 1994 and that this occurred in mid‑1995. As best as he was able to do he confirmed the authenticity of his signature on the extension letter (exhibit 58) of 23 June 1993, on the Coco's letter of 20 June 1995 (exhibit 34) and on Mr Lunt's letter of waiver of 23 June 1995 (exhibit 35). Significantly, he confirmed that instructions had been given by the company to its solicitors to prepare the consultancy agreement and that, after a series of negotiations, three copies of the consultancy agreement for engrossment were sent out by Messrs Robinson Cox on 6 November 1991. This establishes that the consultancy agreement could not in fact had been executed before that date. The seal register, so far as it is a guide indicates that the seal was affixed on 24 March 1992.
A further issue about the consultancy agreement (exhibit 14) bearing the date of 12 April 1991 arises from exhibit 132. This is a copy of the cover sheet and last two pages (8 and 9) of the consultancy agreement (exhibit 14) which was found among the audit file of WRS produced from the offices of Somes and Cooke. So far as can be ascertained or inferred it appears that a copy of the cover sheet and the last two execution pages of the document were made and sent to the auditors, to form a part of the audit trail for their reviews of the company accounts. These were kept by the auditors until the files were produced on subpoena for these proceedings. On the front page, in manuscript, it is noted as been recorded in the seal register of the company and having been sealed on 24 March 1992, corresponding with the seal register, (exhibit 129). This document is in the same typescript and format and carries the same word processing reference as the original exhibit 14. However, although it is signed on page 9 by Mr Lunt his signature is not accompanied by the signature of any witness although the original does bear the signature of a witness. Again, although exhibit 132 bears the common seal of WRS and the signature of Mr Bond as a secretary there is no signature on behalf of Mrs R Y Briggs as there is on the original. The only explanation can be that this copy sent to the auditors was made after a copy of the consultancy agreement had been signed by Mr Lunt but not witnessed, after the seal had been affixed by WRS and the signature of Mr Bond applied but before it had been signed by Mrs Briggs.
This presents as something of a mystery and is relied upon by the defendants to submit that Mrs Briggs' signature was forged on the document or, at the very least, that the document was not executed in the presence of Messrs Lunt, Peter Briggs, Mrs Briggs and Mr Bond at the Briggs' home in April 1991 as the plaintiff alleges and has testified.
The evidence from Robinson Cox, of course is that three copies of the consultancy agreement were forwarded to WRS for execution. Only one original has been produced and tendered in evidence and the seal manual records that the seal was only affixed once. When shown this document Mr Bond was unable to recall any of the details of the execution or the processing of the document, but was obviously alert to the implications which it was capable of conveying. In the end he acknowledged that there is every likelihood that he may have applied the company seal to the document, signed it as secretary, and that Mr Lunt had signed it before he, or Mr Lunt later took it to Mrs Briggs for her to sign as director and for Mr Lunt's signature to be witnessed. That is indeed a possibility. No point was made, if that course had in fact been followed it would not have amounted to a valid and enforceable execution of the document by WRS for want of proper formalities. The case was conducted entirely on the basis of whether or not Mrs Briggs, and for that matter Mr Bond had ever signed the document as officers of WRS and it is on that basis that I address the issues. I do not consider that it is possible to reach any conclusions about whether or not the consultancy agreement was properly executed or not on the materials described so far. Further evidence needs to be considered.
More information about the origin of the alleged consultancy agreement and its preparation came from Mr Michael Phillip Bowen, a partner of Robinson Cox in 1990 - 1992 who was acting for Mr Briggs, the company, WRS and who was dealing with the instructions given for the consultancy agreement. It should be said immediately that Mr Bowen was the partner in charge who was supervising the work of employed solicitors who were dealing directly with the instructions. The solicitor principally concerned in dealing with these matters appears to have been Mr Peter Charles Ransom but he was not called to give evidence and no point about this was made. It is necessary to appreciate, however, that Mr Bowen, while having final responsibility for the instructions and their implementation, was largely supervising the work of Mr Ransom.
Mr Bowen was admitted as a practitioner of this court in December 1979 and had been at the firm of Robinson Cox and a partner for some 16 years before moving to another firm Messrs Hardy Bowen. In 1991 he was practising on the commercial side at Robinson Cox and was the partner principally dealing with Mr Peter Briggs and his associated entities. Mr Briggs was then a long standing client of the firm. Mr Bowen was shown a folder of documents relating to his firm's file for Mr Peter Briggs re WRS Australia and confirmed that he had been the partner in charge of this file and that it was treated as a file for Mr Peter Briggs. He had no direct recollection of the events or details other than from reading the available papers. As a result of this transaction he came to know the plaintiff, Mr Lunt, and the firm Robinson Cox then dealt with Mr Lunt over the ensuing years. From the file Mr Bowen was shown two documents (exhibits 112A and 112B). The first of which was the Robinson Cox instruction sheet dated 27 April 1991 for the office outside clerk to stamp, as a matter of urgency, three copies of a consultancy agreement. The second was a stamp duty assessment lodging sheet prepared by Robinson Cox to accompany the documents lodged for assessment which were described as being two copies of an instrument between Pacific Platinum NL and R Skidmore estimating the duty payable as $9. That document was also dated 22 April 1991 and bore the signature of Mr Ransom. It was indorsed the same day by an assessor at the State Taxation Office and it carries an imprint of a receipt for stamp duty of $9. The instrument submitted to the assessment of stamp duty under cover of these last two documents was a consultancy agreement dated 22 April 1991 between Pacific Platinum NL (WRS under its former name) and Mr R N J Skidmore (exhibit 139). This was the document providing for the engagement of Mr Skidmore to provide consultancy services. It was signed by Mr Skidmore, and the seal of Pacific Platinum NL was affixed over the signature of Mrs R Y Briggs and the then company secretary. None of these materials relate to any consultancy agreement with Mr Lunt but exhibit 139 does provide a firm factual basis for the references in the subsequent annual accounts of WRS to a consultancy arrangement with Mr Skidmore.
Although not discussed with Mr Bowen there are other documents from Robinson Cox relating to the affairs of Mr Briggs and WRS in evidence. Exhibit 17 is a interim invoice rendered to Mr Briggs dated 14 January 1991 for a variety of conferences, advices and drafts of a joint venture agreement and draft service agreements and the conversion of the status of a company from a no liability company to a limited company and associated matters. Exhibit 11 is a photocopy of the original consultancy agreement with Mr Skidmore (exhibit 139). Exhibit 10A is an agreement dated 21 May 1991 prepared by Messrs Robinson Cox between Pacific Platinum NL, Waste Recovery Systems Limited, Essex Properties Pty Ltd and Baywil Pty Ltd which, essentially, provides for the purchase by Pacific of all the issued shares in WRS, a condition of which was that Pacific would enter into a consultancy agreement with Mr Skidmore in the form of an annexure, which is a draft of the consultancy agreement later entered into between Pacific Platinum and Mr Skidmore dated 22 April 1991 (exhibit 139). The sale agreement (exhibit 10A) made no provision for any consultancy agreement with Mr Lunt but it was signed by Mr Lunt as a director of Baywil Pty Ltd and was also signed by the secretary of that company, Mr Kevin Bond, revealing an association between Lunt and Bond in May of 1991.
That sale agreement (exhibit 10A), appears to be the eventual formalisation, with some significant variations, of an earlier agreement struck between Pacific Platinum NL and Waste Recovery Systems Ltd in May 1990 under which Pacific was to acquire all of the interest which Waste Recovery Systems Ltd had in the specified intellectual property for the organic fertiliser system. That initial agreement was expressed to be conditional upon 10 separate factors, the third of which was:
3. Agreements between WT Lunt and AR Mackinlay and PPNL whereby they agree to provide their time to PPNL as required from time to time at a rate A$1,000 per day when overseas for both of them and A$90 per hour for Mr A R Mackinlay with respect to work done within Australia.
The second handwriting expert for the plaintiff was Mr John Douglas Gregory, who gave evidence outlining the conclusions reached in his report of 19 February 2009, exhibit 138. It includes some photographs showing the questioned and comparison signatures under magnification (exhibit 138A) with varying degrees of enlargement. The questioned signatures which Mr Gregory was asked to examine were:
(a)the apparent signature of Mrs Robin Briggs on page 8 of the consultancy agreement bearing date 12 April 1991 (exhibit 14);
(b)the initials 'RYB' on page 1 of that same consultancy agreement;
(c)the apparent signature of Mrs R Y Briggs on the letter of 11 June 1993 from WRS Pacific Limited to Mr Lunt (the extension of the consultancy) (exhibits 45 and 58);
(d)a questioned signature of Mr Peter Briggs on the letter of 20 June 1995 (the Coco's letter) (exhibit 34);
At pages 6 and 7 of his report (exhibit 138) Mr Gregory tabulates a list of documents submitted to him as containing authentic copies of Mrs Briggs' signature for comparison and, on page 8, he tabulated a list of documents submitted to him which were said to be authentic copies of the signature of Mr Peter Briggs.
After explaining his methodology, including the use of an Electrostatic Detection Apparatus, which satisfied him that the consultancy agreement (exhibit 14) was in its current format when signed and initialled, proceeded to outline his conclusions, dealing first with the consultancy agreement of which he expressed the opinions that:
•the questioned signature of Mrs Briggs had been written with speed in a black ballpoint ink in a continuous formation and that the questioned initials had also been written with speed in a black ballpoint ink in one continuous movement.
•an examination of the comparison signatures revealed that there were two different signature styles attributed to the writer which he termed, respectively, the cursive style and the upright style, illustrations of which are at page 13 of the report. He went on to say that it was possible for a person to have more than one signature style and because examples of the upright signature style post‑date the questioned signature of 1991, this is indicative that the comparison signatures attributed to Mrs Briggs illustrate that she is either capable of writing two different styles or that the upright signatures have been written by another person signing on her behalf.
•the initials on page 1 of the consultancy agreement were compared to the capital letters used in the three comparison signatures and were of common authorship.
•the signature and initials on the consultancy agreement were written by the same person who wrote the comparison signatures 'Robin Briggs' on: the Essex Properties Pty Ltd letter of 26 March 1995; a directors' report of 15 December 1999; and a directors' statement of 15 September 1999. He added that he was of the opinion that the authorship of these signatures is either another style of signature written by Robin Briggs or a person signing on her on her behalf.
With regard to the apparent signature of Mrs Robin Briggs on 11 June 1993 (exhibit 58) (the extension of consultancy agreement letter) Mr Gregory said that this had a pictorial resemblance to the comparison signatures of Robin Briggs but that it was not possible to determine if the signature was written on the original of the document or had been reproduced by electronic manipulation or a cut and paste method. He was simply unable to express an opinion about the authenticity of the signature on that document without the original being available.
With regard to the apparent signature of Mr Peter Briggs on the letter of 20 June 1995 (exhibit 34, the Coco's letter) the examination was limited because the document was only a copy. Mr Gregory said that the questioned Peter Briggs signature had some pictorial resemblance to the comparison signatures of Mr Briggs but that it was not possible to determine if the signature was written on the original of the document or whether it had been reproduced by electronic manipulation or a cut and paste method. He was unable to comment one way or the other on the authenticity of that document without the original being made available.
The only handwriting expert to give evidence for the defendants was Mr John Harry Horton. The substance of his evidence was contained in his report of 2 February 2009 and the accompanying chart (exhibits 37 and 37A).
The questioned signatures which Mr Horton was asked to examine were:
(a)the apparent signature on the execution page of the consultancy agreement of 12 April 1991 (exhibit 14); and
(b)the apparent initials 'RYB' on page 1 of that same consultancy agreement.
The report did not address the authenticity of Mrs Briggs' apparent signature on the extension letter (exhibit 58) or Mr Peter Briggs' apparent signature on the Coco's letter of 20 June 1995 (exhibit 34), nor did Mr Horton address those queried signatures at all in his evidence. Nor did Mr Horton's report address the authenticity of Mrs Briggs' apparent signature on the extension letter of 11 June 1993 (exhibit 58) although, as appears below, his oral evidence and the transparencies (exhibit 140) did call that into question.
Mr Horton also provided two transparencies of disputed signatures said to be those of Mrs Briggs which were used in his report. These are within exhibit 140.
These transparencies (exhibit 140) show an apparent identical congruence between the signature 'R Y Briggs' on exhibit 58 (the extension letter of 11 June 1993) and an authentic sample of Mrs Briggs' signature on the Pacific document dated 21 May 1991, suggesting, so the witness opined, that in some way the authentic signature of Mrs Briggs on the Pacific Platinum document had been lifted or copied, traced or transposed, onto the copy extension letter.
There was no expert handwriting evidence at any stage adduced to suggest that the signatures apparently of Mr Kevin Bond; on exhibit 14, the consultancy agreement bearing date 12 April 1991; or the extension letter of 11 June 1993 (exhibit 58); or the Coco's letter from Mr Briggs of 20 June (exhibit 34) were not genuine or had been forged. As noted, there was some cross‑examination of Mr Bond about the degree of confidence which he had about the authenticity of his signatures on exhibits 34 and 35 but Mr Bond maintained that he believed that those were his signatures.
It follows from this that the only evidence which challenges the authenticity of the signature of Mr Peter Briggs upon the critical Coco's letter of 20 June 1995 (exhibit 34) is Mr Briggs' own denial. As I do not regard Mr Briggs as a witness of truth, that leaves the authenticity of the Coco's letter as being verified by Mr Bond and Mr Lunt. In this respect, I am not prepared to act on Mr Lunt's evidence alone but I regard Mr Bond as a credible witness and, as there is no expert evidence to question Mr Briggs' signature on that copy document, I accept it to be genuine.
Acceptance of the authenticity of the Coco's letter implies that Mr Briggs at that date did acknowledge that there had been a liability to Mr Lunt by the company for consultancy fees and that Mr Lunt would not discharge the company from that liability unless he, Briggs, personally accepted responsibility for that debt. A number of these inferences and conclusions are, to varying degrees, interdependent and, therefore, I do not think that it is safe to assume that if the Coco's letter is genuine then the signatures on the consultancy agreement must be authentic and/or that the signatures on the extension letter are also authentic. In a case where there are so many uncertainties and where the credibility of Messrs Lunt and Briggs are, to say the least, very tenuous, there is a need for greater care. Reliance upon this sequential form of reasoning is, therefore, of more limited assistance than might otherwise be the case.
Mr Horton also set out (in exhibit 37) the accepted signatures of Mrs Briggs which had been supplied to him and relied upon for purposes of comparison. These comprised his signature on the Skidmore consultancy agreement of 22 April 1991, a signature taken from company documents in 1995 and another signature taken from other company documents.
Having conducted his examinations, Mr Horton observed that there were differences between the signature and apparent initials of Mrs Briggs on exhibit 14, on the one hand, and accepted signatures of Mrs Briggs on the other. He outlined the details on pages 2 and 3 of his report and concluded, after illustrating the points of those disparities on a chart (exhibit 37A) that the signature and initials on the consultancy agreement were not those of Mrs Briggs.
In cross‑examination he acknowledged that it was not uncommon to find that one person had occasionally used different styles of signature. He was satisfied that the initials and the disputed signature on exhibit 14, the consultancy agreement, were made by the same person. He did not regard that script as being indicative of an uncomfortable style of handwriting and he also agreed that it was very probable that whoever signed the apparent signature 'R Y Briggs' in the four samples set out in exhibit 138A, as produced by Mr Gregory, was the same person who had signed the consultancy agreement. This is a conclusion which raises further difficult questions. The signatures on exhibit 138A include a number of signatures apparently of Mrs R Y Briggs which had been submitted to Mr Gregory as being authentic examples of her signature and which did not originate from exhibit 14. It therefore means that the style of signature for 'R Y Briggs' appearing on exhibit 14, with its admitted dissimilarities to the more cursive style of signature on other samples of her signature said to be authentic, have been found on other documents which have not been the subject of scrutiny in these proceedings. No doubt it is an appreciation of this that led Mr Gregory to observe that there were two distinct recognisable forms of signature for Mrs R Y Briggs among the various sample signatures which had been submitted to him for comparison. A further possibility is that some other person may have, on a number of occasions in the past, signed the name 'R Y Briggs' for or on behalf of Mrs Briggs either with her knowledge or approval or in the expectation that it would be ratified by her.
In cross‑examination it had been put to Mr Briggs that he may have on occasions signed his wife's signature on various documents with the knowledge and confidence that she would have approved of him doing so. It was suggested that he may well have done this during the period when he was disqualified from acting as a company director. Generally speaking, Mr Briggs rejected these suggestions but he did acknowledge that, on occasions of relative informality, he may have signed his wife's signature but the implication was that he would not have done so for any important legal document. I do not consider that I can dismiss the possibility that the second style of Mrs Briggs' two apparent forms of signature may, in fact, be signatures in her name made by Mr Briggs any more than I can dismiss the possibility that Mrs Briggs did, on occasion, sign in different styles. These remain uncertainties which need to be accommodated when addressing other aspects of the evidence in this case.
Again I accept the evidence of Mr Horton as being thoroughly independent, competent and trustworthy. In combination with the evidence of Mr Gregory, I think it must be accepted that there are two recognisable but different styles of signature for Mrs R Y Briggs and that her apparent signature on exhibit 14 is of the upright style which contrasts with the cursive style as it has been described and which appears on other documents. Whether this means that the signature is not a genuine signature of Mrs Briggs requires further consideration.
This view of Mr Horton that the signature of Mrs Briggs on exhibit 14 was not a genuine signature was, naturally, put by counsel for the defendants to Mr Gregory in the course of cross-examination. Mr Gregory's response was to say that there were comparable examples of that particular version of the signature 'R Y Briggs' among the samples of her signatures which had been submitted to him as being genuine. This led to an attempt to identify the source of the documents containing what were said to be authentic copies of Mrs Briggs' signature which had been supplied to Mr Gregory but this was not entirely successful. It was asserted that all such documents had come from the solicitors for the defendants but I am not satisfied that that was ever affirmatively established or conceded. But the fact that there are more than one or two examples of both forms of Mr Briggs' signature among the various documents which have been supplied is itself not entirely insignificant.
I regard this evidence as helpful but not determinative and I concluded that the question of whether or not Mrs Briggs was the signatory to exhibit 14 would be likely to depend more on other evidence and circumstances than upon the handwriting analysis.
It is now appropriate to go directly to the evidence of Mrs Briggs herself in relation to these issues. She is the wife of the defendant, Peter Briggs, and has been for many years in what appears to be an entirely stable and happy marriage. She said that she took no active role in the affairs of WRS and only signed legal documents concerning company affairs or otherwise with the advice and at the direction of her husband. On being shown the consultancy agreement (exhibit 14) Mrs Briggs said that she had never seen this document before the commencement of associated litigation in the District Court of Western Australia and that where it appears to be signed by herself and Mr Bond that was not her signature and she had never signed the document.
Much attention was given to where Mrs Briggs and other members of the family or household were on 12 April 1991 with a view to establishing that a meeting at her home, as described by Mr Lunt, could not have occurred on that day. Mr Briggs gave evidence to similar effect about his activities on 12 April 1991 and another witness, his former secretary, Ms Debra Anne Saunders, was also called to give evidence to like effect. It is unnecessary to examine this evidence because I am quite satisfied that, in fact, exhibit 14 was not executed on that day. This has a very real adverse impact on the credibility of Mr Lunt who gave so much specific evidence as to the circumstances of execution at the Briggs' home that day.
Mrs Briggs was also shown exhibit 58, the extension letter of 11 June 1993, and again said that she had not seen this document before this or associated litigation and that she would have not signed that letter. Having consulted her diary (exhibit 147) she explained that she was in Northam that day and that it was unlikely that she would have been available in Perth to sign the letter. She also said that she did not see Mr Bond sign the letter. She disclaimed any tendency to sign documents in a hurry or in awkward or uncomfortable positions. She could not remember Kevin Bond ever coming to her house. She also pointed out that there were other signatures in the style of the signature 'R Y Briggs' on exhibit 14 which were not hers. She said that her apparent signature on the letter of 20 June 1995 from Essex Properties Pty Ltd to Mr Skidmore acknowledging that WRS was indebted to Mr Skidmore for consultancy services and confirming that Essex would meet any such claim (exhibit 105) was not her signature. Yet the signature on that document resembles the upright style of signature which is on the consultancy agreement and it was not suggested that there was no indebtedness to Mr Skidmore or that there had been no agreement by Essex Properties Pty Ltd to take over responsibility for WRS's liability to Mr Skidmore.
Similarly, Mrs Briggs had no recollection of signing the extension letter of 11 June 1993 (exhibit 58) although she said that it appeared to be her signature. Nor did she remember exhibit 148, a letter from Essex Properties Pty Ltd to WRS Pacific of 11 June 1993 confirming Essex Properties' agreement to the renewal of Mr Lunt's consultancy agreement which had been referred to by Mr Dale in page 3 of his report (exhibit 36). But Mrs Briggs acknowledged that it was possible that she had signed them. It is an example of the cursive style of signature for R Y Briggs. There was then a call made for Mrs Briggs' diaries from 1991 and 1992 and she was asked about entries for 24 March 1992. She acknowledged that it was possible that Mr Lunt might have come to the Briggs' home that day but she had no record or recollection of him doing so. The substance of her evidence‑in‑chief is in her witness statement (exhibit 149).
I consider that Mrs Briggs had only an extremely limited appreciation of her husband's business affairs and did not attempt to involve herself in them at all closely. She was disposed to trust her husband, act only at his direction and to sign documents, letters or other materials whenever he asked her to do so, relying entirely upon his judgment in that respect without questioning him. Her memory of events, including major forensic contests in the District Court, in the Industrial Relations Commission and elsewhere involving Mr Lunt was extremely limited and unreliable. Not unnaturally, Mrs Briggs adopted the role of respecting and protecting her husband but I do not consider that she has a sufficiently good acquaintance with, or memory of, the events or documents in question to give any reliable account of her role in dealing with them. She appears to recognise that there are, in circulation among the documents, numbers of signatures purporting to be hers which fall into the two groups described by Mr Gregory but whether that is because she has two forms of signature, or whether occasionally Mr Briggs has signed on her behalf with her actual or tacit approval, or whether there is a third hand unlawfully imitating her signature cannot be resolved upon her evidence.
From 1998, at the latest, onwards there has been much litigation involving the affairs of Max Resources (Federal Court proceedings WAG 3002 of 1998), Mrs Lunt and WRS Pacific Pty Ltd (COR 358 of 1998), proceedings by Mr Lunt against WRS in the WAIRC (Number 1827 of 2000) already mentioned, proceedings in this court by Mr Lunt against WRS (CIV 2289 of 2000), proceedings in the District Court by Natural Resource Finance against Mr and Mrs Lunt (CIV 1165 of 2001), proceedings by New Resource Holdings against Mr Lunt and WRS (CIV 1489 of 2001) which in varying ways have involved controversies over Mr Lunt's role with WRS, whether or not he was engaged under a consultancy agreement, whether or not he or Mr Briggs or associated entities were in breach of duty in a variety of ways. This long course of complicated litigation has involved many serious allegations being put by the Lunt interests against Mr Briggs and by the Briggs interests against Mr Lunt and associated interests. On occasions adverse findings and judgments have been made against Mr Lunt and serious allegations have been made by him against Mr Briggs.
There is such a history of complicated litigation with associated animosity that there can be no doubt of the antipathy that exists between these two men and, despite the apparent civilities, the malevolence towards Mr Lunt displayed by Mr Briggs both in his evidence‑in‑chief and during the course of his cross-examination. In this long history of hostility both protagonists have obviously lost perspective, made unsubstantiated but extreme allegations and on occasion sought to bolster their respective cases or causes by unjustifiable means. This same attitude was apparent when each gave evidence in these proceedings and it is also because of my assessment of each of them when giving evidence that I am not disposed to place reliance on the testimony of either of them on any issue in conflict without corroboration or support for the matter or matters contended for through documentary evidence or from other witnesses whom I accept as trustworthy.
In this case, Mr Lunt has given much detailed evidence, with great particularity, about the manner in which the consultancy agreement was executed at the Briggs' home on 12 April 1991 in the presence of Mr Peter Briggs, Mrs Robin Briggs, himself and Mr Bond. I have already indicated that I do not accept that the document was executed on that occasion and therefore I conclude that Mr Lunt's evidence is seriously wrong in this regard.
I have given much attention to whether or not this is deliberate dishonesty or whether as a result of the storm of conflicts in which he has been engaged with Mr Briggs, by which his entire reputation and fortune has more than once been placed in jeopardy, Mr Lunt has simply lost his way and, being so overcome with bitterness and indignation at the way in which he believes Mr Briggs has acted towards him, has set out to embroider his case whenever and however possible. I think that to an extent there is quite an element of this approach in Mr Lunt's evidence. He is certainly obsessive. He is preoccupied with demonstrating detail to the point where it is obviously unsustainable and he is capable of inventing facts and circumstances to advance his end without realising the full impact of his actions.
As for Mr Briggs, it is perhaps better to say less. Except to the extent that his evidence is confirmed by contemporary documents, or acknowledged to be true, I am not prepared to act on it. His demeanour and attitude in the courtroom, his denial of any knowledge of the accounts of WRS, or of the existence of a consultancy agreement, his method of dealing with the Max Resources purchase, and his denial of meetings or discussions with the New Zealand directors are just some of many demonstrations that his evidence is not deserving of acceptance.
Counsel for Mr Lunt has submitted that on a number of occasions there have been estoppels raised by the conduct of the defendants or by decisions made in other courts or tribunals in associated litigation concerning the status of the alleged consultancy agreement (exhibit 14). However, I am not satisfied that any such estoppel or, for that matter, any res judicata has occurred or been established because I am not satisfied that there has been any final, as opposed to an interlocutory, judgment entered between the same parties on the issue of whether or not Mr Lunt was engaged by WRS under the consultancy agreement bearing date 12 April 1991 or that any such consultancy agreement was authentically signed by Mrs R Y Briggs in the process of being executed on behalf of WRS ‑ see Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363.
Nevertheless, the positions taken by Mr Briggs and on certain occasions by Mrs Briggs in relation to the existence of a consultancy agreement and its effect and whether or not the signature of Mrs Briggs presently disputed was effective are relevant and of significance on issues of general credibility.
By the application to the Industrial Relations Commission proceedings (1827 of 2000) already mentioned (exhibit 115) Mr Lunt sought to recover from WRS the sum of $314,000 said to be due to him for consultancy services rendered during the period 1 July 1994 to 30 June 1995 on the basis that under the consultancy agreement of 12 April 1991 he was an employee. The claim was defended by WRS, at the direction of Mr Peter Briggs, on the basis that Mr Lunt was not an employee because the terms of the consultancy agreement demonstrated that he was a consultant and, accordingly, that the claim was outside the scope of the jurisdiction of the WAIRC. Mr Briggs was called as a witness for the respondent company, WRS, in the proceedings in the WAIRC and in the course of examination by his own counsel on 10 April 2001 (exhibit 62) said (ts 5 and 6) that Mr Lunt was an independent contractor or independent partner/consultant and (ts 4) said that Mr Lunt certainly consulted with the company from time to time. On being shown a copy of the consultancy agreement of 12 April 1991 Mr Briggs said to the Commissioner:
This is a consultancy agreement between WRS Pacific Ltd and William Trevor Lunt.
…
It's the 12th day of … 1991 between WRS Pacific and William Trevor Lunt.
…
Well, it's the common seal of WRS Pacific, the signature of my wife, and the signature of … I think that's Kevin Bond, who was the company secretary at the time, a chartered accountant. And on the next page is the signature of William Trevor Lunt and I think the witness is his wife but I'm not sure.
And then, in response to a question about the intention of the document, Mr Briggs said that it was to have Trevor as a consultant for the company. Counsel for the company actually tendered a copy of the consultancy agreement in the proceedings in the WAIRC (see page 8 exhibit 100). For reasons given by Commissioner J F Gregor on 4 May 2001 (exhibit 94) the WAIRC dismissed Mr Lunt's claim on the basis that the consultancy agreement did not establish an employee/employer relationship and hence the claim was outside the jurisdiction of the Commission and for this conclusion relied upon the terms of the consultancy agreement.
In his defence to the proceedings in the WAIRC Mr Briggs lodged a form of answer (exhibit 93) in which he referred to a consultancy agreement of 12 April 1991 as an alleged agreement not seen by the present directors of WRS until 2000. He further relied on the letter of waiver of 23 June 1995 (exhibit 35 in these proceedings) as a forgiveness 'of all moneys owed under the alleged agreement'.
Some submissions were made on behalf of the defendants that it was unnecessary to address the authenticity of the consultancy agreement in the proceedings in the WAIRC because it was sufficient to establish that, even if it was genuine, it did not create an employer/employee relationship but there is nothing to suggest such a reservation by Mr Briggs or his counsel in the course of proceedings before Commissioner Gregor. I consider that I can and should conclude that at least in April and May of 2001 WRS and Mr Briggs were treating the consultancy agreement as valid and effective according to its terms.
In a statutory declaration made by Mr Briggs on 14 December 2001 (exhibit 159) Mr Briggs deposed to a series of events concerning an Ohio plant in which WRS was then involved. In par 2 of that declaration he said:
In approximately 1991 I took over from William Trevor Lunt a company involved in the chicken manure processing business. Lunt maintained a shareholding and continued to act as a consultant to the company.
In proceedings in the District Court of Western Australia when giving evidence on 11 March 2003 Mrs R Y Briggs was shown a copy of the consultancy agreement now exhibit 14 and was asked whether her signature appeared alongside the seal of WRS. The following questions and answers are recorded on the transcript, exhibit 101.
Is that your signature witnessing the common seal there?---Yes, it appears to be.
So you have seen the document before?---If I've signed it I would have.
You acknowledge your signature there?---Yes.
…
Do you recall - evidence was given this was signed at your residence on or about 12 April 1991 and was followed by a celebration? Do you recall that?---No, I don't.
Could that have been the case?---It could have been. Mr Lunt used to come to our home, yes.
Because you're not denying it, you said it could be the case?---Yes.
In the same proceedings in the District Court on 12 March 2003 when giving evidence Mr Peter Briggs (exhibit 102) was asked about the apparent signature of his wife on the consultancy agreement (exhibit 104).
Do you recognise the signature on that agreement?---It looks like my wife's signature, yes.
This evidence in the District Court which proceeded on the footing that the consultancy agreement was executed at the Briggs' home on the afternoon of 12 April 1991 appears to be the basis upon which that litigation proceeded. Nothing was produced as evidence in this case to establish that the date or place of execution of the consultancy agreement was an issue in the case in the District Court or was finally and authoritatively determined by any judgment in those proceedings. There is, therefore, no reason why I should not treat that as simply a collateral issue in those proceedings now that I am satisfied, on the evidence in the present cases, that the agreement cannot have been executed in the Briggs' home that day.
In proceedings in the Federal Court of Australia, Number WHE 3002 of 1998, in which Messrs Johnson and McShane were making claims against Max Resources, Mr Briggs made and filed an affidavit sworn 2 April 1998 (exhibit 56A) addressing some of the issues in those proceedings which included reference to his dealings with Max Resources. In par 6 of that affidavit he swore:
I, and interests associated with me, sold our interests in the organic fertiliser business in early 1997 for shares in Max Resources Ltd ('Max'), a New Zealand publicly listed company. My then manager, Trevor Lunt ('Lunt') and now a consultant to Max, used to keep me informed of the progress of Max…
And in the same Federal Court proceedings Mr Briggs swore another affidavit, this one dated 7 April 1998, exhibit 56B, in which he said, at par 4:
In 1995 Lunt worked for WRS Pacific Ltd and he went to France to negotiate a French joint venture for our technology with CR2i, a French agricultural engineering company.
It is, of course, not possible to say whether or not the nature or terms of Mr Lunt's association with WRS were issues which were material to the proceedings in the Federal Court but the language of these two affidavits is certainly consistent with the plaintiff's claim that he was, at the material time, employed as a consultant for WRS.
There was also other earlier litigation between Mr Lunt and WRS in this court in which Mr Lunt was seeking the recovery from the company of the balance of the $652,900 said to be owing to him for consultancy fees accrued to 30 June 1994 less the amount of a subsequent payment. An application for summary judgment on behalf of the defendant company was made in those proceedings which was determined by the Master, resulting in the dismissal of the claim. The basis for the grant of summary judgment dismissing the action was the production by the defendant of Mr Lunt's letter of waiver (exhibit 35) dated 23 June 1995 which the Master held was an effective discharge of the debt which, on the allegations being advanced by Mr Lunt, meant that the company was not liable. It was after that decision that the present proceedings were commenced, this first action being against Mr Briggs on his alleged assumption of liability in place of the company and the second against the company for the post 1 July 1994 consultancy fees.
These events illustrate that the allegation that the consultancy agreement was not validly executed by WRS because Mrs Briggs' signature is either not genuine or was forged are of comparatively recent origin. Mr Lunt was relying on the consultancy agreement in the Industrial Relations Commission proceedings but no such allegation was made in relation to the defence of the claim on those grounds. In the District Court proceedings both Mr and Mrs Briggs appear to have accepted that the signature of Mrs Briggs as attesting witness to the affixation of the seal of WRS on the consultancy agreement was genuine and resembled her signature. Mr Briggs has made affidavits or statutory declarations on other occasions which acknowledge, if only in broad terms, that Mr Lunt was at the material times employed as a consultant by WRS without suggesting that that was only in a voluntary role. Taken with what I accept to be reliable evidence from Mr Bond about the actual execution of exhibit 14 with the knowledge and authority of Mr Czechowski, I have concluded that WRS and Mr Briggs previously and for many years had accepted the validity and authenticity of the consultancy agreement (exhibit 14) and had treated the execution of it by WRS, apparently including the signature of Mrs Briggs, as valid and effective.
The allegations of lack of authenticity amounting to forgery have only been made after long and bitter controversies between Mr Briggs and Mr Lunt had developed to a point of extreme intensity. I am satisfied that Mr Briggs, Mr Verheggen and Mr Langoulant have not given true and frank evidence about what was clearly a proposal for the shareholders in WRS to sell all the shares in the company to Max Resources. The reason for this was a false attempt to refute the explanation given that removal of the consultancy fee liabilities from the 30 June 1994 balance sheet was undertaken in order to promote or to facilitate a proposed sale of shares in the company then under contemplation by Mr Briggs.
I do not accept Mr Briggs' explanation that the recorded liability in the books of WRS to Mr Lunt for consultancy fees was a contrivance or an artifice improperly achieved by Mr Lunt misleading Mr Bond on the subject. There was unquestionably a similar, but smaller, liability to Mr Skidmore for consultancy fees and these were removed by agreement with Mr Skidmore resulting in the acceptance of the liability by Essex Properties Pty Ltd ‑ although even that led to further dispute with Skidmore. False entries or fraud by Mr Lunt might possibly explain the reason why the recorded liability to Lunt as at 30 June 1994 had to be removed but it does not provide a reason for the removal of the Skidmore liability. I am satisfied that the true reason for the removal of those liabilities was to facilitate a desired takeover of the shares of the company which had always been Mr Briggs' long‑term ambition for realising upon his investment. There would be no reason for Mr Lunt to accept this unless he were satisfied that the liability would be taken over by another person or body which would, hopefully, discharge it eventually. That is what, I am satisfied, occurred in that respect.
That conclusion in itself strengthens the case for the authenticity of the consultancy agreement and weakens the case that Mrs Briggs' signature was not validly affixed. I am satisfied that the consultancy agreement was validly executed on behalf of WRS. There does remain some uncertainty arising from the handwriting evidence and because of the two varieties of signature for Mrs Briggs. I am satisfied that the answer to this is either that Mrs Briggs occasionally used a different form of signature, which the samples submitted to the plaintiff's handwriting consultant, Mr Gregory, strongly suggest, or that someone else was in the habit of signing on her behalf in the knowledge that he or she had Mrs Briggs' authority to do that or could expect her ratification. The plaintiff's case was not put on the second basis but the ways in which the consultancy agreement was treated: in the accounts of the company; in subsequent proceedings; and by the recognition of the need to remove the debt from the books of the company as it stood as at 30 June 1994; all amount to compelling evidence that the company had always accepted the authenticity of the document.
I am satisfied, therefore, that the evidence establishes that exhibit 14, although not bearing the date on which it was executed, was validly executed on behalf of WRS and established a legal entitlement by Mr Lunt for payment of consultancy fees according to its terms.
There were many more contested issues of fact in the conflicting evidence of Mr Lunt and Mr Briggs about events which transpired from 1998 onwards concerning the affairs of WRS and Max Resources. Having regard to the lack of credit which I am able to give to the evidence of those two witnesses, I do not consider that it is possible, or necessary, to attempt to resolve those conflicts, none of which is decisive of any of the issues in this case. One, however, requires mention and it is Mr Briggs' evidence that the $135,000 which Mr Lunt claims to have received and appropriated to himself from other funds of WRS in 1996 was an unauthorised payment by Mr Lunt amounting to a misappropriation of the funds of the company. Contrary to Mr Lunt's evidence, Mr Briggs says that Mr Lunt was never authorised to utilise the funds in question for the partial satisfaction of his consultancy fees and that this was an improper payment which is the subject of other litigation and adverse findings against Mr Lunt. According to Mr Briggs, that is not a payment to which Mr Lunt is in any way entitled. It must follow from Mr Briggs' evidence in this respect that if, as I am satisfied, Mr Briggs is liable for the unpaid consultancy fees as at 30 June 1994, that is the total $652,900 as recorded in the accounts, there should be no reduction of that liability because of the unauthorised appropriation to himself by Mr Lunt of $135,000. Mr Lunt says this is not so and that he was justified and authorised to appropriate the $135,000 to himself as he did and that he is giving credit for that payment in these proceedings.
No matter where the rights or wrongs of this particular dispute may eventually rest, the most advantageous position for Mr Briggs is that his liability for $652,900 should be reduced by the payment which Mr Lunt has offset against the claim. That has always been Mr Lunt's position in the action and it is difficult to understand why Mr Briggs is asserting the contrary unless it is part of his attempts to disparage the character of Mr Lunt, as it may well be. No advantage of any kind can possibly be derived from attempting to go into this issue further. I accept that the Lunt claim should be reduced by this amount, leaving the outstanding balance from the date of payment at $517,900.
Accordingly, I am satisfied that the plaintiff in the first action is entitled to judgment against Mr Briggs in the sum of $517,900 and that the plaintiff should also recover interest on that sum or so much of the sum as was outstanding at various times at 8% per annum pursuant to s 32 of the Supreme Court Act from 1 July 1994 to date. As there may be some issues arising about the calculation of interest which have not been addressed by the parties, I shall invite written submissions from counsel upon the calculation and the extent of interest in the hope that this can be agreed but, failing agreement, I will entertain further submissions in relation to the calculation and quantification of interest.
I am also satisfied that the plaintiff has established that in the second action he is entitled to judgment against WRS, now New Resource Holdings Pty Ltd, in the amount of $420,000. I also consider that the plaintiff in the second action is entitled to interest on so much of that sum as has been outstanding from time to time at 8% per annum, pursuant to s 32 of the Supreme Court Act. Again I will allow the parties to confer in the hope of reaching agreement about the calculation of interest and, failing agreement, to make submissions as to the calculation and quantification of interest.
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