Mackenzie v Albany Finance Ltd - [2004] WASCA 301

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: MACKENZIE & ANOR -v- ALBANY FINANCE LTD [2004] WASCA 301

CORAM: MALCOLM CJ
EM HEENAN J
LE MIERE J

HEARD: 23 JUNE 2004

DELIVERED : 16 DECEMBER 2004

FILE NO/S: FUL 117 of 2003

BETWEEN: JAMES MACKENZIE
JOAN EDNA MACKENZIE
Appellants (Plaintiffs)
AND
ALBANY FINANCE LTD
Respondent (Defendant)

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :McLURE J
Citation  :MACKENZIE & ANOR -v- ALBANY FINANCE LTD [2003] WASC 100
File No  :CIV 2657 of 2000

Catchwords:

Debtor and creditors - Onus of proof of repayment - Depositor/finance company - Deposit repayable on demand - Accrual of action - Set off - Effect of alleged part repayments - Appropriation of payments - Right of appropriation - Significance of potential counterclaims - Late amendments to defence after trial - Issues not examined at trial

Legislation:

Cheques Act 1986 (Cth), s 22, s 25, s 26 and s 29

Limitation Act 1935 (WA), s 38(1)

Result:

Appeal allowed
Cross appeal dismissed

Category: B

Representation:

Counsel:

Appellants (Plaintiffs) : Mr D H Solomon
Respondent (Defendant) : Mr G R Donaldson

Solicitors:

Appellants (Plaintiffs) : Solomon Brothers
Respondent (Defendant) : Blatchfords

Case(s) referred to in judgment(s):

Christianos v Westpac Banking Corporation (1991) 5 WAR 336
Cory Brothers & Co Ltd v Owners of the Turkish Steamship Mecca (The Mecca) [1897] AC 286
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Ellis v Ellis [1924] SASR 379
Esso Petroleum Co Ltd v Alstonbridge Properties Ltd [1975] 3 All ER 358
Friend v Young [1897] 2 Ch 421
Hazcor Pty Ltd & Ors v Kirwanon Pty Ltd (1995) 12 WAR 62
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
Leeson v Leeson [1936] 2 KB 156
Lloyd v Grace‑Smith & Co [1912] 1 AC 716
Miller v Race (1758) 1 Burr 452
New South Wales v Lepore (2003) 212 CLR 511
Parsons v The Queen (1999) 195 CLR 619
Paterson v McNaghten (1905) 2 CLR 615
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Scott v Davis (2000) 204 CLR 333
Stepney Corporation v Osofsky [1937] 3 All ER 289
Young v Queensland Trustees Ltd (1956) 99 CLR 560

Case(s) also cited:

Aequitas Ltd v Sparad No 100 Ltd (2001) 19 ACLC 1006
Arab Bank Ltd v Barclay's Bank (Dominion Colonial & Overseas) [1954] AC 495
Aries Tanker Corporation v Total Transport Ltd [1977] 1 WLR 185
Astley v Austrust Ltd (1999) 197 CLR 1
Atkinson v Bradford Third Equitable Benefit Building Society (1890) 25 QBD 377
Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478
Bank of New South Wales v Fremantle Auto Centre [1973] WAR 161
Bank of New South Wales v Laing [1954] AC 135
Bateman's Bay Local Aboriginal Land Council & Anor v The Aboriginal Community Benefit Fund Pty Ltd & anor (1998) 194 CLR 247
Beach Petroleum NL v Johnson (1993) 115 ALR 411
Bradsma & Crockett Pty Ltd v Heindal Pty Ltd (2002) 26 WAR 323
Brockway & Anor v Pando & Anor (2000) 22 WAR 405
Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410
Currabubula Holdings & Anor v State Bank of New South Wales [1999] NSWSC 276
Charles v Blackwell (1876) 1 CPD 548; (1877) 2 CPD 151
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Commissioners of the State Savings Bank of Victoria v Permewan, Wright & Co Ltd (1914) 19 CLR 457
Concut Pty Ltd v Worrell (2000) 176 ALR 693
Coyne v Citizen Finance Ltd (1991) 4 WAR 213
Croton v The Queen (1967) 117 CLR 326
Dearman v Dearman (1908) 7 CLR 549
Eagle Star Nominees Pty Ltd v Merril [1982] VR 557
Flotilla Nominees Pty Ltd v Western Australia Land Authority & Anor [2003] WASC 122
Geraldton Building Co v Christmas Island Resort (1992) 11 WAR 40
Griffiths v Commonwealth Bank of Australia (1994) 123 ALR 111
Hart v Sangster [1957] Ch 329
Hawkins v Clayton & Ors (1998) 164 CLR 539
Honey v McLennan (1997) 18 WAR 384
In re Airedale Co-operative Worsted Manufacturing Society [1933] Ch 639
In re Brookers (Aust) Ltd (in liq); Brooker v Pridham (1986) 41 SASR 380
In re Cleadon Trust [1939] Ch 286
In re Tidd [1893] 3 Ch 154
Indrisie v General Credits Ltd [1985] VR 251
Ingram v Mohren (1993) 10 WAR 497
Joachimson v Swiss Bank Corporation [1921] 3 KB 110
John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503
Lane & Anor v Conlan [2004] WASC 15
Macleod v The Queen (2003) 214 CLR 230; 197 ALR 333
Martin v Nadel [1906] 2 KB 26
Morgan v Banning (1999) 20 WAR 474
Murphy v Lawrence & Anor [1960] NZLR 772
Nelson v Nelson (1995) 184 CLR 538
Phillips Fox (a firm) v Westgold Resources NL [2000] WASCA 85
PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 201 CLR 648
Purvis v State of New South Wales (Department of Education and Training) (2003) 133 FCR 63; 202 ALR 133
Re Australia and New Zealand Savings Bank Ltd; Mellas v Evriniadis [1972] VR 690
Re French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008
Robinson v Midland Bank Ltd (1925) 41 TLR 402
Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516
Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121
Smith v Commercial Banking Co of Sydney Ltd (1910) 11 CLR 667
Stoney Stanton Supplies (Coventry) Ltd v Midland Bank Ltd [1966] 2 Lloyd's Rep 373
Sullivan v Moody (2001) 207 CLR 562
Thompson v Roche Bros Pty Ltd [2004] WASCA 110
VL Finance Pty Ltd v Legundi [2003] VSC 57
Westgold Resources NL v St George Bank Ltd, unreported; SCt of WA; Library No 980717; 9 December 1998
Westwind Air Charter Pty Ltd v Hawker de Havilland (1990) 3 WAR 71
Wik Peoples v Queensland (Pastoral Leases Case) (1996) 187 CLR 1

MALCOLM CJ: This is an appeal from a judgment of McLure J delivered on 30 May 2003 by which it was ordered that the respondent pay the appellants the sum of $78,826.23; the second‑named appellant, $22,462.01; and pay 40 per cent of the appellants' costs and disbursements of their action against the respondent. For convenience, I will refer to the appellants as Mr and Mrs MacKenzie respectively.
The appellants seek an order that the judgment of the learned trial Judge be set aside and that in lieu thereof there be a judgment for the appellants in addition to the judgment in favour of Mrs MacKenzie for $22,423.37 and interest from 16 July 2003 (which is part of the $78,269.22 referred to above), the sums of:
(1)$64,000 (item 9) and compound interest on that sum from 21 June 1989; alternatively, $64,000 from 21 June 1989 to 21 March 1990; $58,000 from 22 March 1990 to 19 July 1990 and $42,421.77 from 10 July 1990 and compound interest on those sums from those dates; and
(2)the rates and amounts of compound interest referred to in paragraphs 1.1 and 1.2, in the absence of agreement between the parties within 14 days, be referred to an inquiry before a Master to ascertain:
2.1the rates of interest payable on deposits on the terms of items 9 and 13 at all times from the date of the deposit to the present; and
2.2the amount of compound interest on each of item 9 and item 13 applying the rates of interest referred to in paragraph 2.1.
A number of other ancillary orders are also sought.
There are nine grounds of appeal supported by some 22 particulars of alleged errors, including a ground as to costs (ground 9). There is also a notice of contention by the respondent. Contention 1 is that the decision of the learned trial Judge to deduct amounts set out in par [265] of the principal reasons from the amount payable by the respondent to the appellants in respect of the deposit described as item 9 should be affirmed on a basis other than that stated by her Honour, namely, that the whole of the appellants' claim to the principal of the deposit described as "item 9", including the amount set out in par [265] of the reasons for judgment was statute‑barred by s 38(1)(c)(v) and the proviso to s 38(1) of the Limitation Act 1935 (WA).
Contention 2 is that, in the alternative to contention 1, the decision of the learned trial Judge to deduct the amounts in par [265] from the amount payable in respect of item 9 should be affirmed on a different basis, namely, that the respondent could set off against those amounts the amount otherwise payable by the respondent in respect of the deposit the subject of item 9. The reasons for this, as set out in the particulars, are that:
(i)the amount set out in par [265] impeached the appellants' claim to be repaid the whole of the item 9 deposit; and
(ii)if the respondent was not able to set off such amounts, the appellants would be paid those amounts twice.
The respondent's cross‑appeal seeks to have the judgment below set aside and that the claims by the appellants in respect of items 9 and 11 be dismissed. Alternatively, the respondent seeks leave to amend its defence in terms of pars 3B and 12A(b) of a minute of further amended defence to the appellants' statement of claim dated 20 June 2002.
Ground A of the cross‑appeal contends that the learned trial Judge erred in law in finding that the appellants' claim to the item 9 deposit was not statute‑barred and that her Honour should have held that the claim was statute‑barred under s 38(1) of the Limitation Act 1935 (WA). Ground B contends that there was a similar error in relation to the deposit described as item 11.
I have the advantage of reading in draft the reasons for judgment to be published by E M Heenan J. As his Honour has pointed out, the appeal and cross‑appeal concerned only three of the alleged deposits the subject of the action by the appellants against the respondent which were referred to as item 9, the subject of a deposit made on 21 June 1989 in an amount of $64,000; item 11 in respect of a deposit of $10,500 made on 3 December 1992; and item 13 in respect of a deposit of $8000 made on 29 January 1998, each of which was deposited with the respondent. The respondent's defence at trial was that the deposits the subject of items 9 and 11 had been repaid in full and that there had been no such deposit the subject of item 13 in the sum of $8000.
The appellants contended that none of the alleged repayments and credits totaling $46,322.31 should have been deducted from their claim in respect of the deposit of $64,000 the subject of item 9. Their second contention was that the claim for $8000, the subject of item 13, should have been upheld in the light of the undisputed evidence that their cheque for the deposit payable to the respondent had been delivered to an agent of the respondent who had endorsed it in the name of the respondent to the third party, LKJA.
It was further contended that the learned Judge erred in permitting the respondent to reamend its defence after the delivery of the reasons for judgment so as to claim that certain payments by the respondent and a credit found to have been made in the total sum of $46,322.31 had been made in partial reduction of the deposit of $64,000, the subject of item 9.
So far as the cross‑appeal was concerned, the respondent contended that the limitation defence in respect of the portion of the claim in respect of item 9 which was allowed, and to the whole of the claim the subject of item 11, should have been upheld and/or alternatively, the learned trial Judge was in error in refusing the respondent's application to amend its defence to plead that the alleged repayments and credits of $46,322.31 in respect of the deposit the subject of item 9 should have been allowed to have been set‑off against the claim, together with a further amount of $315.62 alleged to have been paid on 30 June 1989 as interest.
Thus, the issues the subject of the appeal and cross‑appeal concerned the amount, if any, which the respondent was entitled to credit in respect of the deposit of $64,000, the subject of item 9, and said to amount to $46,322.31; whether the respondent received the deposit of $8000, the subject of item 13; and whether the claims in respect of items 9 and 11 were statute‑barred.
The respondent contended by way of a notice of contention that the judgment should be affirmed on grounds other than those relied upon by her Honour. The respondent contended that the whole of the appellants' claim in respect of the deposit, the subject of item 9, including, in particular, the four partial repayments amounting to $46,322.31 was statute‑barred under the Limitation Act 1935 (WA). Alternatively, it was contended that the decision by the learned trial Judge to deduct the repayments of $46,322.31 in respect of item 9 should be set‑off by the respondent against the amount otherwise payable by it to the appellants.
I agree with Heenan J that the only separate issue raised by the notice was the contention that if the partial repayments of $46,322.31 found to have been made were not partial repayments of the $64,000 deposit, the repayments could be set‑off against the liability arising in respect of that deposit. There is an issue whether the amendment should have been refused in the proper exercise of discretion in any event, even if it otherwise had some merit.
The evidence in relation to these matters has been canvassed in great detail by Heenan J.
I agree with Heenan J for the reasons his Honour has expressed that the appellants are entitled to recover the whole of the undischarged debt of $64,000, together with interest for the reasons his Honour has stated. It follows from those reasons that the finding by the learned trial Judge that the amounts totalling $46,322.31 referred to in par [265] of her Honour's reasons must be brought to the credit of the respondent so that the appeal must be allowed in this respect.
As Heenan J has pointed out, this has the effect that the principal sum outstanding in August 1990 was $46,322.31 more than that found by the learned trial Judge. Compound interest must be calculated on that amount with quarterly rests at the rates prevailing from then until judgment. I agree that the parties should be given an opportunity to bring in an agreed minute to establish the component of interest to be added as a result of this finding, and failing agreement, for the matter to be determined by a Master upon an inquiry.
It follows that the question whether or not the finding that $24,744.08 was repaid on 31 August 1990, the subject of ground 2 of the notice of appeal, is of much diminished significance. I agree with Heenan J that the respondent failed to show that it had been repaid. That is a valid reason for refusing credit for that amount. Even if it was concluded that it was paid, it should not be credited as having been made in reduction of the liability of the respondent in respect of the deposit item 9 for the reasons stated by Heenan J.

The Cross‑Appeal and Notice of Contention

I agree with Heenan J for the reasons his Honour has stated that there is no basis for a set‑off of repayments of $46,322.31 against the respondent's liability to the appellants under item 9 for the reasons his Honour has stated.

Limitation Act

I agree with Heenan J that the learned Judge correctly concluded that it was an implied term of the contracts of deposit that the principal‑accrued interest was repayable on demand. It followed that no cause of action by the appellants arose until demand was made. The demand was made within six years of the commencement of the proceedings so that the defence under the Limitation Act was correctly rejected. Consequently, I agree with Heenan J that the respondent's cross‑appeal should be dismissed.

Amendment to Defence After Trial

I agree with Heenan J that while it was open to her Honour to make a finding that four alleged payments totaling $46,322.31 had been made by the respondent to the appellants, it was not open at that stage of the proceedings to permit an amendment of the defence to allow a plea that such payments had resulted in part repayment of the deposit, the subject of item 9.
There was no evidence that the payments were made by the respondent and accepted by the appellants in reduction of that particular liability, or that they had been credited by the appellants toward the reduction of that liability. The issue of appropriation was not one which was the subject of evidence at the trial. In addition, the appellants were not given an opportunity to plead by way of reply that any such payments, even if established, would not constitute part satisfaction of that liability. No evidence was given in the course of the proceedings on the question whether there had been any acceptance of an appropriation of the alleged payments in reduction of the relevant liability.
I agree with Heenan J that the respondent had the burden of proof that all or any of the relevant payments, or credit given in respect of them, was accepted or appropriated in reduction of the liability, the subject of item 9, with the result that the exercise of discretion to allow the amendment miscarried and the amendment should not have been allowed.

Costs

I agree with Heenan J that it would be appropriate to order that the respondent pay to the appellants 80 per cent of their taxed costs of the action. I also agree that no significant reason has been advanced to reconsider or vary the decision of the learned trial Judge that there should not be any special orders or allowances for costs with the result that the cross‑appeal with regard to costs should be dismissed.
So far as costs are concerned, s 60(1)(e) of the Supreme Court Act 1935 (WA) provides that without the leave of the Judge making the order, an appeal may not be brought from an order as to costs only which are by

law left to his or her discretion. In my opinion, this was not an appeal as to costs only. Given that this Court has upheld the appeal and set aside the judgment of 29 July 2003, it would be open to the Court to exercise its discretion so as to vary the order for costs in relation to the trial to reflect the outcome of the appeal.

EM HEENAN J: By an action commenced in this Court in December 2000 the appellants sued the respondent for moneys alleged to be due to them as a result of interest bearing deposits made by the appellants with the respondent (and in one instance rolled over to a new deposit) during the period between November 1987 and December 1992. In addition, the appellants claimed compound interest at changing rates during the periods from the dates of the respective deposits until judgment. Including the one deposit which was later rolled over and became the subject of a second deposit, there were eight deposits alleged to have been made totalling $161,344.85 which, together with the compound interest also sought, represented the aggregate of the appellants' claims.
The substantive defences relied upon by the respondent were that three of the alleged deposits had never been made with it and that, after taking into account the deposit which had been rolled over, the four remaining deposits had previously been repaid in full. The respondent also alleged that each of the causes of action was time barred by virtue of the limitation period prescribed by s 38(1) of the Limitation Act (1935) on the basis that the debt owed by the respondent for the repayment of each deposit accrued immediately upon the date when each deposit was made and that more than six years had elapsed since the date of the latest deposit before the appellants had commenced their action. The appellants maintained that no cause of action for the recovery of any of the deposits accrued until demand for repayment was made and that, as the first demand for payment was made on 29 November 2000, the action had been commenced within the limitation period.
The learned trial Judge dismissed the appellants' claims in relation to six of the alleged deposits (including the one which had been rolled over). Her Honour upheld part of the claim in relation to one of the two other deposits and upheld in full the claim for the other, eventually giving judgment for the amounts found to be due together with compound interest in amounts agreed between the parties to be applicable to the principal found due.

The present appeal, as distinct from the cross‑appeal, is against the findings of the learned trial Judge only in respect of two of the deposits

(Items 9 and 13) where her Honour concluded that part of the deposit the subject of Item 9 had been repaid and that the money the subject of Item 13 had not been deposited with the respondent. In the cross‑appeal the respondent contends that in respect of the two deposits (Items 9 and 11) for which the appellants were successful, or partially successful, the claims should have been dismissed and that its limitation defence was wrongly rejected. The respondent also contends, in its cross‑appeal, that it was wrongly refused leave to amend its defence, after judgment, to introduce a plea of set‑off. The cross appeal can be left aside at this point.

Because the appellants had only been partly successful on their various separate causes of action which had all been joined in the one set of proceedings, the learned trial Judge decided, in the exercise of a general discretion, to award them only 40 per cent of their costs of the action. The appellants also seek to appeal, as of right, against this order for costs contending that they should have been awarded 80 per cent of the costs of the action as a result of the judgment which, otherwise, was entered. There was no objection to the competency of this appeal insofar as it related to the order for costs alone which by law are left to the discretion of the trial Judge and no submissions were made about the potential significance of s 60(1)(e) of the Supreme Court Act. No leave to appeal from the costs order only was sought or obtained from the learned trial Judge. Accordingly, if all the other grounds of appeal were to fail it would be necessary to decide whether or not, in the particular circumstances, the appeal in relation to the costs order only could be maintained.
As the appeal and the cross‑appeal concern only three of the alleged deposits sued upon, it is only necessary to deal with those parts of the decision at first instance which deal with those claims. The three claims which are now the focus of the appeal and cross appeal, together with the nature of the appellants' claim and the respondent's defence, was tabulated by the learned trial Judge as follows:

Item

Number

Date

Amount

Appellants'

Claim

Respondent's

Response

9

21.6.89

$64,000

All

Repaid in full

11

3.12.92

$10,500

All

Repaid in full

13

29.1.98

$8,000

All

No deposit made

Item 9

The learned trial Judge found that the deposit for $64,000 known as Item 9 had been made with the respondent but that it had been partially repaid by three subsequent payments from the respondent and a credit as follows:
•9 July 1990                 $14,000.23
•9 July 1990                   $1,578.00
•31 August 1990           $24,744.08
•21 March 1990              $6,000.00     (the credit)
$46,322.31
leaving a balance of principal outstanding of $17,677.69 ($64,000 ‑ $46,322.31). Her Honour also concluded that the initial sum of $64,000 but as progressively reduced by these four credits, should carry compound interest at applicable rates until judgment.

Item 11

The learned trial Judge found that this deposit of $10,500 had been made as alleged by the appellants and had not been repaid. The appellants were therefore entitled to judgment in respect of this amount together with compound interest accruing until judgment.

Item 13

The appellants' claims in respect of this alleged deposit of $8,000 were dismissed because her Honour found that this amount had never been deposited with the respondent but, rather, with the consent of the appellants had been deposited with a different entity, the firm Leon K Jamieson & Associates ("LKJA").

Judgment after trial and late amendment of defence

The trial of the action took longer than the parties had estimated and, because of this, was adjourned part heard on two occasions and was eventually completed after a total of 12 days of hearing. The learned trial Judge reserved her decision, later delivered reasons for her decision and then stood over motions for judgment until the parties had an opportunity to consider the effect of the findings made and, if possible, reach agreement on the interest which should be calculated on the amounts found due. The parties availed of this opportunity and were able to reach agreement upon the interest accruing on the amounts found due but, before motion for judgment, the respondent applied for leave to reamend its defence in several respects. That application was opposed by the appellants but allowed, in part, by her Honour.
The effect of the late amendment to the defence which was allowed was to introduce a plea (par 3A of the defence) that the four "payments" totalling $46,322.31 found to have been made in respect of the deposit of $64,000 known as Item 9 had been made on or about the dates alleged by the respondent and as found by her Honour. The significance of this amendment was that this plea of partial repayment of Item 9 was added, as an alternative, to the plea which had been on the record until then that that deposit had been repaid in full, a plea advanced without reference to, or with particulars by reference to, any of the four alleged partial repayments. Other amendments to the defence sought by the respondent, including a plea that the four payments totalling $46,322.31 could, otherwise, be set‑off against any liability to repay the $64,000 deposit were refused.
After dealing with the application to reamend the defence in this way and upon hearing further submissions, the learned trial Judge entered judgment (so far as is material to the appeal and cross appeal) in the following terms:
"1.1the respondent (defendant) have leave to amend its defence in the terms of par 3A and 12A(a) of the minute of 23 June 2003;
1.2the respondent (defendant) pay the appellants (plaintiffs) the sum of $78,826.32;
1.3the respondent (defendant) pay the second‑named appellant (plaintiff) the sum of $22,462.01;
1.4the respondent (defendant) pay 40 per cent of the appellants' (plaintiffs') costs and disbursements of the action to be taxed;
3the appellants' (plaintiffs') claims otherwise be dismissed."
The sum of $78,826.32 referred to in subpar 1.2 of the judgment is made up of the amount of principal of $17,677.69 found due in respect of Item 9 together with agreed compound interest. The sum of $22,462.01 referred to in subpar 1.3 of the judgment is a reference to the principal of $10,500 found to be due in respect of Item 11 together with an amount of compound interest agreed to be due in accordance with the findings made after trial.

Issues on the appeal and cross‑appeal

The basic contentions of the appellants in the appeal are:
•None of the three alleged repayments and credit totalling $46,322.31 should have been deducted from their claim in respect of the $64,000 deposit the subject of Item 9. The consequence of accepting this submission would be to increase the principal recoverable under that item to the sum of $64,000 (from $17,677.69) and to increase, by an appropriate recalculation, the compound interest due in respect of Item 9.
•The claim for $8,000 the subject of Item 13 should have been upheld on the grounds that the uncontested evidence showed that the appellants' cheque for the deposit payable to the respondent had been delivered to an agent of the respondent who had indorsed it in the name of the respondent to the third party LKJA.
•The respondent was wrongly permitted to reamend its defence after the completion of the trial and the delivery of reasons for decision to allege that certain payments by the respondent and a credit which had been found to have been made totalling $46,322.31 had been made in partial reduction of the deposit of $64,000 (item 9).
The principal contentions of the respondent in its cross appeal were:
•the limitation defence to that portion of the claim on Item 9 which was allowed, and to the whole of the claim under Item 11, should have been upheld;
•additionally or alternatively, the learned trial Judge wrongly refused the respondent's application for leave to amend its defence to plead that the alleged repayments and credits totalling $46,322.31 made in respect of deposit Item 9 should have been allowed to have been set‑off against the claim together with a further amount of $315.62 alleged to have been paid on 30 June 1989 as interest.
Accordingly, despite the quantity of evidence canvassed at the trial and the attention necessarily given in the judgment to the details, controversies and effects of the other deposits alleged to have been made, the disposition of this appeal and cross‑appeal comes down to examining the significance of the alleged repayments and credits totalling $46,322.31 found to have been made in respect of the deposit of $64,000 (Item 9), whether it was established that the respondent had received the deposit of $8,000 (Item 13) and whether the limitation defence to the claims under Items 9 and 11 should have succeeded. Before those issues can be examined it is necessary to go back and relate material parts of the dealings between the present parties and others.

Notice of contention

In addition to its cross appeal the respondent has filed a notice of contention. By this it contends that the judgment of the learned trial Judge should be affirmed on other grounds additional to those relied upon by her Honour. In this respect it is contended that:
•the whole of the appellants' claim in respect of the deposit of $64,000 (Item 9), but in particular including the four partial repayments totalling $46,322.31, is statute barred by virtue of the Limitation Act;
•alternatively to the learned trial Judge's decision to deduct the four partial repayments totalling $46,322.31 found to have been made in respect of the deposit of $64,000 (Item 9), the total of these payments can be set‑off by the respondent against the amount otherwise payable by it to the appellants in respect of Item 9.
Obviously these contentions overlap, to a considerable extent, the grounds advanced by the respondent in its cross‑appeal and, to that extent, do not require separate consideration. The only separate and independent contention advanced by this notice is the contention that if the challenged partial repayments totalling $46,322.31 found by her Honour to have been made, are not partial repayments of that $64,000 deposit they can, nevertheless, be set‑off against the liability arising in respect of that deposit. This is another way of advancing, as a contention in opposition to the appeal, the substance of part of the amendment sought to the defence but refused after the reasons for decision had been delivered. Whether or not this contention would have been a defence to this aspect of the appellants' claim is one question. Whether, as a putative good defence, it should have been permitted to have been introduced by amendment at that late stage of the proceedings is another. Both those questions can be dealt with together in the course of dealing with the appeal and cross appeal.

Background

For a long time before the year 2000 James MacKenzie and Joan Edna MacKenzie had been depositors with the respondent, Albany Finance Ltd ("Albany Finance"). Throughout this time Mr Leon K Jamieson ("Jamieson") was the manager of the respondent and the person authorised on its behalf to receive deposits. These deposits were usually for fixed terms at a rate or rates of interest then specified by the respondent until the maturity date. However, it was not uncommon and in many of the instances examined in this litigation it was the case for money to be left on deposit after maturity. Because of the terms of the original deposit, this resulted in the deposit continuing still carrying interest at the prescribed rates prevailing from time to time but from then on repayable on demand.
At the same premises in Albany Jamieson also conducted the business of a licensed finance broker under the name Leon K Jamieson & Associates ("LKJA"). LKJA was a partnership conducted by Jamieson and his wife. It arranged unsecured loans, loans secured by mortgage, loans from other finance companies and placed client moneys on deposit with other finance companies. It did not hold a credit provider's licence under the Credit (Administration) Act 1984 and, to Jamieson's knowledge, was not entitled to and did not take money on deposit or make loans as a principal. As a result, moneys placed with LKJA by clients or others for investment was held by the partnership on trust so that usually, unlike a banker or a finance company such as the respondent, the beneficial interest in the chose in action for the money received did not pass to the partners. The business of LKJA ceased operations on 7 August 2000 and Jamieson then entered into a Pt X arrangement under the Bankruptcy Act (1966) (Clth).
Also, in mid‑2000 it was discovered that large sums of money were missing from the business of LKJA leading to Jamieson being charged with stealing and various fraud offences. It is important to note, however, that he was not charged with any offences in respect of any of the transactions with Mr and Mrs MacKenzie which are the subject of this litigation.
These events led Mr and Mrs MacKenzie to examine closely the state of their investments with Albany Finance and, in consequence, to commence this litigation against the finance company for moneys which they believed were owing on various deposits which they had made between November 1987 and January 1998 and to claim compound interest.
Of the eight alleged deposits (including one which was rolled over into another) which were sued upon, seven had been made by Mr and Mrs MacKenzie jointly or jointly and severally. These included the deposit of $64,000 of 21 June 1989 (Item 9) and the deposit of $8,000 said to have been made on 29 January 1998 (Item 13) which her Honour found had been made with LKJA and not with the respondent. One of the deposits sued upon, for $10,500 made on 3 December 1992 (Item 11), was made on behalf of Mrs MacKenzie alone. This accounts for the separate judgment in favour of the second appellant but, otherwise, nothing in the appeal or in the cross‑appeal turns upon these distinct and separate interests of the two appellants in the deposits.
The learned trial Judge found that the resolution of many of the issues arising at the trial was rendered difficult by the absence or unreliability of many of the contemporary written records. Because of the time which had elapsed since the earlier transactions in 1987 and 1988 the memories of the witnesses, and in particular the memories of the appellants, so far as they remained at all, were found to be unreliable. Many of the contemporary financial records and the customary written correspondence of the respondent relating to deposits and their redemptions were missing. Some of these had been destroyed or discarded over time and other parts had been seized by the police in the course of their investigations or taken by the trustee in bankruptcy and could not be found or produced at the trial.
Some of the correspondence and other written records which were produced were found to be unreliable or false because of the practices of Jamieson, either in attempts to deceive other directors of the respondent or because of his jugglings with the funds of the respondent and his own firm LKJA. In this respect her Honour found that among the records of the respondent there were copies of letters purporting to confirm that cheques in repayment of certain deposits had been made to the appellants at various dates but these were false and the letters or the cheques had never been sent. Similarly, there were financial records showing that certain deposits, or parts of deposits, made by the appellants with the respondent had been transferred to LKJA and then used to make unauthorised advances through LKJA to third parties borrowing from that firm. In the same way the financial records showed repayments of certain moneys from LKJA to the respondent to the credit of the appellants in total or partial satisfaction of some of these unauthorised advances to LKJA. It was necessary for the learned trial Judge to undertake an extremely difficult and laborious task in an effort to identify which of these transactions could be accepted as being genuine and, for those that were, whether they were authorised, known or ratified by the appellants. Her Honour found that some were and that some were not.
The careful and elaborate examination of the evidence undertaken by the learned trial Judge showed that, quite apart from the eight alleged deposits sued upon by the appellants together with incidental and subordinate transactions deriving from or associated with these, there had been a long course of dealings between the appellants and the respondent over the years from 1987 onwards involving the appellants placing money on deposit with the respondent and also placing money with Jamieson for LKJA to invest on their behalf on mortgage and otherwise. Throughout the period of these dealings, although not continuously or with the regularity which could have been expected, the appellants received repayments of various deposits and mortgages and payments of interest on their advances from time to time. In other words, there was a substantial history of payments and repayments to and from the appellants and the respondent and to and from the appellants and the firm LKJA (sometimes going via the respondent), reaching far beyond the transactions in issue in these proceedings.
This history of dealings with Albany Finance and LKJA is material, in the appellants' submissions, when it comes to consider the effects of the three payments and credit totalling $46,322.31 found by her Honour to have been made in partial reduction of the deposit of $64,000 comprising Item 9. Especially is this important, submit the appellants, in the light of the onus of proof upon the respondent to show that such payments were not only made, but were accepted or should be regarded as having been accepted, in partial reduction of that single deposit. Another way of considering this same point advanced for the appellants is to examine whether or not the evidence reveals that each of the three constituent payments and credit totalling the $46,322.31 which were found to have been made, was appropriated in reduction of the respondent's liability to repay that deposit or should be regarded as having been so appropriated. Clearly enough, the respondent's cross‑appeal and notice of contention which both seek to raise the defence of set‑off arising from these payments, which her Honour rejected, is intended to meet the contingency that the evidence and findings at trial do not support a conclusion that the payments and credit totalling $46,322.31 were accepted, or should be treated as having been accepted, in partial discharge of the respondent's liability in respect of the $64,000 deposit.
Accordingly, it is necessary to note, expressly, some of the findings which were made by the learned trial Judge about the general dealings between the appellants, the respondent and LKJA. Her Honour rejected the evidence of the appellants at the trial that they did not know of any difference between the business of the respondent and the business of LKJA and that they believed that their various deposits and investments were all with the respondent. At [212] her Honour found that at all material times the appellants knew that the business conducted by LKJA was separate from that conducted by the respondent and that the appellants knew that they (to use a neutral term) "had money" with LKJA from time to time. Her Honour found that by 1995 (and certainly by 1997 at the latest) the appellants were aware that they had money with LKJA in addition to the funds connected with mortgages brokered by LKJA. However, her Honour also found that Jamieson had misrepresented to the appellants that LKJA received the appellants' funds as principal rather than as agent. Earlier, at [179] her Honour accepted that the appellants did not have knowledge of the unsecured loans and borrowings recorded in the LKJA trust account in their names and that they did not authorise the borrowing from the TW Investment Trust. Her Honour rejected Jamieson's evidence that he had the appellants' authority, express or implied, to make the loans recorded in the LKJA trust account on behalf of the appellants. Such loans from the LKJA trust account to third parties of funds held in the appellants' names were not authorised by them.

At [216] ‑ [227] the learned trial Judge examined a number of transactions occurring between the respondent, LKJA and borrowers from the latter firm which had employed or involved deposit 346 (the $64,000 deposit plus interest the subject of Item 9) after it had been deposited with the respondent in June 1989. It was the respondent's case that this deposit had been redeemed in part by a series of repayments which had been transferred to the LKJA trust account and held there in the appellants' names. Her Honour concluded [218] that, on each occasion when this was alleged to have been done, the respondent's letters were false in stating that a cheque for the redeemed amount was enclosed when it was not. Further, each of the letters failed to mention the alleged instructions from the appellants to transfer the funds to LKJA. At [219] her Honour concluded that the appellants' moneys, said to have been redeemed from deposit 346 and initially held on trust by LKJA in the names of the appellants, was used for unauthorised purposes, being unsecured loans to LKJA clients. There were other factors identified by her Honour which reinforced those conclusions, all of which led to the findings at [225]:
"Further, I am not satisfied that the appellants [plaintiffs] were aware of the link between deposit 346, [the $64,000 item 9] the moneys transferred into and out of LKJA, deposits 524, 525 and 568 and (eventually) the moneys on deposit with LKJA."
and, at [226]:
"Having regard to all of the matters to which I have referred, I am not persuaded that the [appellants] plaintiffs authorised or ratified the redemption of deposit 346 in September 1989 and its transfer to LKJA or any other subsequent transaction into or out of the [respondent's] defendant's accounts held on behalf of the plaintiffs."

Item 13

Before passing to the findings which the learned trial Judge made in relation to each of the disputed claims, Items 9, 11 and 13, it is necessary to explain more fully the issues in controversy concerning Item 13 - the alleged deposit by the appellants on 29 January 1998 of $8,000 with the respondent. The defence to this claim at the trial, and upheld by her Honour, was that no such deposit was ever made with the respondent. Having regard to the manner in which the case was conducted, I consider that that finding should also be taken to include a finding that this alleged payment of $8,000 from the appellants was never received by the respondent.
The learned trial Judge examined this claim at [294] ‑ [307]. Mr MacKenzie had no actual recollection of the circumstances surrounding the making of the alleged deposit or of its terms and conditions, nor did his wife. The direct evidence in this regard came from Jamieson and was that around 29 January 1998 Mr McKenzie said words to him to the effect of "Can you do with some money?" No mention was made of the respondent and as Mr MacKenzie had used words like that previously when talking about making a deposit or investment in LKJA, Jamieson believed that Mr MacKenzie was discussing making an investment with LKJA. Jamieson also said that his belief was that at this time the respondent was not seeking any deposits at call or on short term and that he had been instructed by the directors not to take such deposits at that time. There is no documentary evidence of a deposit with the respondent and no written communications from the respondent to the appellants in relation to this.
The mechanism leading to payment of this alleged deposit of $8,000 was as follows: Mrs MacKenzie drew a cheque on the joint account of herself and her husband held with the Home Building Society and addressed to the latter's banker, the Australia and New Zealand Banking Group Ltd dated 29 January 1998 for $8,000 payable to Albany Finance or bearer. The cheque was crossed "Not Negotiable". The original cheque is in evidence as Exhibit 16A and a copy of the cheque showing front and back is Exhibit 16. Mr MacKenzie took the cheque to the office of the respondent, which was also the office of LKJA, and left it with the office staff in the absence of Jamieson. In accordance with the usual practice of the office any new cheque was left by the staff on Jamieson's desk for his directions upon his return.
Her Honour found that Jamieson's recollection was that he knew a cheque for LKJA was coming because of his previous conversation with Mr MacKenzie and when he saw this cheque it appeared to him that it had been drawn to pay the respondent in error and that it should have been drawn payable to LKJA. He then indorsed the cheque to be payable to LKJA. The indorsement appearing on the back of the cheque reads:
"Pay L K Jamieson & Assoc Trust Account
L K Jamieson
Albany Finance Ltd"
Although not expressly found by the learned trial Judge, it is evident that the cheque as indorsed was presented for payment by LKJA by depositing it to the credit of that firm's trust account. The cheque was duly met after presentation and the funds were credited to the trust account of LKJA. The cheque was not presented for payment to the credit of the respondent, nor was any of its proceeds after collection paid to the respondent. The evidence of Jamieson was that he could not recall whether he had spoken to Mr MacKenzie before or after indorsing the cheque but that he did speak to Mr MacKenzie who either approved beforehand or confirmed afterwards that the cheque could be indorsed across to LKJA.
An issue arose at the trial as to whether or not Jamieson had the authority of the respondent to indorse cheques payable to the respondent in favour of other parties and her Honour found that he did not have such express authority. This issue was examined by the learned trial Judge at [301] as follows:
"In September 1993 the [respondent's] defendant's auditors advised the [respondent] defendant in writing that security over cheques received from customers would be improved by stamping them with a restrictive crossing indicating that the cheque was only to be paid into a bank account for the [respondent] defendant, a practice said to be common place with banks, building societies and most government agencies. The purpose of the restrictive crossing was to prevent cheques made payable to the [respondent] defendant from being deposited into third party accounts without the [respondent's] defendant's knowledge by creating an audit trail. The [respondent's] defendant's auditor, Mr Morgan gave evidence that the recommendation was implemented after his report in 1993. Thus, it was not the [respondent's] defendant's policy to allow indorsement of cheques in 1998 and Mr Jamieson admitted that he did not have express authority to do so. Mr Morgan described the indorsement of the cheque as inappropriate conduct."
The question for decision, therefore, resolved by the learned trial Judge in favour of the respondent, was whether or not the indorsement of this cheque for $8,000 by Jamieson, contrary to the standing instructions from the respondent, constituted an acceptance of those funds by the respondent from the appellants, whether on deposit or otherwise.
Even if the proceeds of the cheque were not deposited with the respondent, but the cheque was indorsed by it or on its behalf to LKJA, that could nevertheless constitute a receipt of the cheque and a dealing with it in a manner which transferred entitlement to the ownership of the cheque and its proceeds to the indorsee, an act which if unauthorised would constitute a conversion of the cheque. The conversion would occur through dealing with it inconsistently with the rights of the payee (the respondent) or with the rights of the MacKenzies if it had been their intention to deliver the cheque to the respondent only for its own use. No attention seems to have been given at trial to the fact that Exhibit 16 was a "bearer" cheque, although crossed "Not Negotiable". This meant that, strictly speaking, it did not require indorsement by the respondent to be paid to the credit of LKJA or to the credit of any other bearer who might present it, although it can be noticed that it is not an uncommon precaution by banks to request indorsement of bearer cheques by a named payee where they are presented for payment to the credit of some other.
In such circumstances, I consider that the indorsement of this cheque by Jamieson on behalf of the respondent must be taken as an acknowledgement of receipt of the cheque by the respondent and its consent to the collection of the proceeds by the indorsee. It also connotes a notional delivery of the cheque from the respondent to LKJA for presentation and collection by the latter. Whether the indorsement and the notional delivery of the cheque by the respondent to LKJA, and the presentation and collection of the proceeds by LKJA were authorised by the respondent, or more importantly by the appellants, seem to be the crucial questions.
Considerable attention in the submissions made by the parties on this appeal was given to whether or not an unauthorised indorsement of a cheque, not amounting to a forgery or an impersonation, was an effective indorsement in the particular circumstances of this case. With respect, that appears to me to be an unnecessary and irrelevant issue because, the cheque having been met on presentation, there is no occasion to consider whether or not the indorser is liable as a party to the cheque. It simply serves to emphasize that the issues requiring decision are whether or not the cheque was received by the respondent and, if so, whether its indorsement and delivery to LKJA were done with the authority of the appellants or were subsequently ratified by them.

Findings in respect of items 9, 11 and 13

The conclusions reached by the learned trial Judge in relation to the appellant's claim for a repayment of the deposit of $64,000 (Item 9) are to be found in pars [251] and [312]. Her Honour found in this respect:
(a)The appellants deposited the sum of $64,000 with the respondent on 21 June 1989 for a term of six months maturing on 21 December 1989.
(b)At the expiry of the term the moneys on deposit (principal and interest) were at call and due and payable only upon demand.
(c)Until repaid, the deposit would earn interest at the rate offered by the respondent to depositors from time to time on at call deposits on the amount that should have been standing to the appellants' credit in deposit 346 as at 21 December 1989.
(d)Interest would be paid quarterly on the last day of March, June, September and December and interest not paid directly to the appellants on the due date would be compounded and added to the deposit and carry interest at the applicable rate referred to in par (c) until judgment.
(e)The respondent paid to the appellants interest in the sum of $315.62 on deposit 346 for the quarter ending June 1989 but paid no other interest to the appellants. (Note this $315.62 is part of the cross appeal.)
(f)The redemption of deposit 346 and the subsequent transactions (in and out of the respondent and LKJA) were not authorised by the appellants.
(g)The claim is not statute barred.
(h)The following amount should be deducted from the amount owing at the stated dates:
(i)$14,000.23 - 9 July 1990;
(ii)$1,578 - 9 July 1990;
(iii)$24,744.08 - 31 August 1990;
(iv)$6,000 - 21 March 1990.
(i)The respondent owes to the appellants the sum of $64,000 and interest thereon as calculated in accordance with pars (c) and (d), less the amounts referred to in pars (e) and (h). (Showing that the $315.62 has been taken into account.)
The learned trial Judge also addressed the issue of whether those four payments had the effect of reducing the respondent's indebtedness to the appellants in respect of the $64,000 deposit (Item 9) and held that they did. The evidence established that portion of the proceeds of the deposit had wrongly been transferred to LKJA but later re‑transferred to the respondent, again without authority, to become deposits 524, 525 and 568, together totalling $30,000 (see [169] and [257]) but this was held not to be any repayment, or pro tanto repayment of the deposit to the appellants. The repayments which were found to have been made were moneys standing to the appellants' credit in deposits 571, part of 540 and 615 (see [169] and [261]).
The appellants, at trial, had submitted that any such repayments as may be found to have been made could not, in the circumstances, constitute repayment of the deposit of $64,000 in part or in full. They submitted that these should be regarded as unauthorised payments made by the respondent, due to the efforts of Jamieson to juggle the problems being experienced because of his unauthorised payments of moneys from the respondent's account to LKJA and other payments going the other way.
As such, so the appellants submitted, the respondent might have a claim in restitution against the appellants for moneys wrongly paid due to breach of duty by Jamieson or for moneys paid by mistake or without consideration. Any such claim in restitution, the appellants submitted, would be a separate and independent cause of action upon which the respondent would bear the onus of proof and one which might well be prone to an effective limitation defence by the appellants on the basis that the right of action accrued at the time the wrongful payments were made. In this regard it might also be added that to such a claim in restitution the appellants might also have had a change of position defence under s 125(1) of the Property Law Act (1969) or upon the principles examined in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353.
It is important to realise, however, that the ability of the respondent, postulated by the appellants in their submissions at trial and again on this appeal, to recover by a restitutionary claim these payments on the basis that they were unauthorised, or were not intended to be made, or accepted as being made, in partial reduction of the $64,000 deposit (Item 9), would not arise if the respondent had established that the payments had been made to the appellants and accepted by them in partial reduction of the respondent's liability on the $64,000 deposit - Young v Queensland Trustees Ltd (1956) 99 CLR 560. However, proof that the payments had that character of effective partial repayments, and were accepted by the appellants (either expressly or by implication from subsequent ratification) was required and the onus of proof on these issues lay with the respondent.
In her reasons for decision the learned trial Judge addressed this aspect of the case as follows:
"[261]I do not accept the plaintiffs' fundamental proposition that they were not entitled to the funds which I have found were paid to them, being the moneys standing to the credit of the deposits 571, part of 540 and 615. What is paramount is the intention of the defendant. It is to be inferred from all of the surrounding circumstances, including the source of the funds transferred to and from LKJA, the fact that LKJA held the funds on trust for the plaintiffs, the opening of the accounts with the defendant in the name of the plaintiffs and the payment by the defendant to the plaintiffs of the proceeds standing to their credit, that the defendant intended to transfer title in the moneys to the plaintiffs in discharge of the defendant's indebtedness which can be tracked back to deposit 346. For these reasons, I find that the plaintiffs received title to the moneys and accordingly no restitutionary claim by the defendant was open.
[262]The remaining issue is whether the payments can be set off against the defendant's indebtedness in respect of deposit 346. I am satisfied they can be. Firstly, the connection between the payments and deposit 346 is established by the paper trail, in particular, the LKJA Trust Account records. I infer from the significant contraction in the number and quantum of the plaintiffs' claims by the time of trial that the matters the subject of the action encompass all potential claims available to the plaintiffs against the defendant. Further, having regard to my findings in relation to the balance of the claims [the appellants' claims in relation to the causes of action on the other six deposits which were dismissed], I am satisfied that these payments were intended to and do relate to deposit 346 and that it in these circumstances is unnecessary for an account to establish an overall balance. Accordingly, I am satisfied that the payments should be applied to reduce the defendant's indebtedness in respect of deposit 346."
Two features of these conclusions were submitted by counsel for the appellants to require different consideration. In the first place the conclusion by the learned trial Judge that it was the intention of the respondent when making the payments which was paramount, was said to be contrary to the principle that a debt for a fixed sum payable on a prescribed or ascertainable date can only be discharged by payment in full in the prescribed manner and that the tender of part payment will not discharge the debt, even pro tanto, unless so accepted by the creditor - Paterson v McNaghten (1905) 2 CLR 615 at 633 and Young v Queensland Trustees Ltd (supra). Therefore, in order to show pro tanto satisfaction of the deposit by these various payments it was necessary for the respondent, according to the appellants' submissions, to establish that in making the payments the respondent had appropriated them towards the discharge of this particular obligation and that that appropriation was accepted or ratified by the appellants.
A second feature in the passages set out from the judgment of the learned trial Judge which, the appellants submit, should be reconsidered, was the inference drawn from her Honour's conclusion that the matters which were the subject of this action encompassed all potential claims available to the plaintiffs against the defendant. No doubt that was an inference which was open and one which the learned trial Judge was justified in making on the evidence before her. Yet, it does not exclude the possibility that the four payments found to have been made totalling $46,322.31, or some of them, may have been made in discharge of other debts then due by the respondent to the appellants and which, having been treated as satisfied by those payments, had long since disappeared from notice or contention.
Undoubtedly, the learned trial Judge was rightly concerned to avoid the possibility that there may, unwittingly, be a double payment to the appellants if credit against the $64,000 deposit was not allowed in respect of these four payments. Another possibility, by no means insignificant, is that by allowing credit for these four payments in partial discharge of the deposit of $64,000 the respondent may be receiving the benefit of a double credit if those payments had previously been treated as satisfying other debts. In that event, those other debts would no longer have been regarded as outstanding and for that reason would not constitute other "potential claims available to the plaintiffs against the defendant". Having regard to the long history of other financial transactions between the appellants, the defendant and LKJA which were not the subject of examination in the action, this possibility cannot, in my view, be regarded as remote or insignificant.
All this only serves to emphasize the need for the respondent to have proved that these particular payments were made and accepted in pro tanto satisfaction of the established indebtedness of the respondent in the amount of $64,000 on this deposit. This possibility that the payments may have been treated as discharging other obligations by the respondent to the appellants, which were not examined in the proceedings, is a possibility quite separate from, and independent of, the potential existence of any restitutionary claim by the respondent for the recovery of some or all of those payments. Further, in this respect, the learned trial Judge's finding that the respondent intended to transfer title in the moneys to the appellants when making these repayments is also consistent with an intention to discharge other liabilities to the appellants which may have existed at the time, having regard to their history of mutual financial dealings. It leaves outstanding the question of whether or not these payments were intended to, and accepted as, discharging pro tanto this particular liability.

The Item 11 claim

Turning to the appellants' claim for the recovery with interest of the deposit of $10,500 of 3 December 1992 which was Item 11, the issue again was whether or not the respondent had repaid this admitted indebtedness in full. The evidence revealed that the proceeds of this deposit had been withdrawn from the respondent's account by Jamieson and deposited with LKJA to the credit of the appellants who, however, denied that they had ever authorised or ratified that. This aspect of the appellants' claim was dealt with at [275] to [293] and by [313] of the reasons for decision. This deposit of $10,500 (Item 11) had been designated as deposit No 1027. Her Honour concluded [288] that she was not satisfied that the respondent had discharged its onus of proving that the appellants authorised the withdrawal or that the deposit was repaid in 1994 or at all. This only left the respondent's limitation defence and her Honour concluded that the deposit which had been left with the respondent after maturity remained payable on demand and that no demand for repayment was made until later within the limitation period. Consequently, her Honour's findings at [293] and [313] were:
(a)the redemption of deposit 1027 of $10,500 in April 1994 by transfer of those funds to LKJA was not authorised by or for Mrs MacKenzie and did not constitute a repayment of that deposit;
(b)the principal and interest on that deposit from 31 March 1994 has not been paid by the respondent to Mrs MacKenzie;
(c)interest is payable on the deposit quarterly on the last days of March, June, September and December and on maturity;
(d)interest not paid directly to Mrs MacKenzie on the due date for payment should be compounded and added to the deposit and carry interest at the applicable rate of 8.25 per cent until judgment;
(e)this claim is not statute barred.
These findings are the subject of the cross‑appeal by the respondent but only on the basis that the limitation defence should have been upheld. It will be convenient to return to that issue later in these reasons.

The Item 13 claim

Item 13 was the claim for $8,000 allegedly deposited with the respondent on 29 January 1998 when Mr MacKenzie delivered to the respondent's office the cheque for $8,000 drawn on the joint account of himself and his wife, payable to the respondent or bearer and crossed "not negotiable". This was the cheque later indorsed by Jamieson for the respondent to LKJA as previously described. The learned trial Judge dealt with this aspect of the claim at [294] to [307]. The material findings are at [305] to [307] which, with some abbreviation, are as follows:
"[305]... The unchallenged evidence is that Mr Jamieson was the only person authorised to receive a deposit and agree terms on behalf of the defendant. If Mr Jamieson did not personally accept receipt of the cheque from Mr MacKenzie on behalf of the defendant (from which a deposit with the defendant could be inferred) that is the end of the matter as far as the plaintiffs' claim is concerned.
[306]I am not satisfied that the plaintiffs had discharged the onus of proving a deposit of $8,000 with the defendant. Mr MacKenzie had no actual recollection of the relevant events. The plaintiffs received no written communications from the defendant concerning this alleged deposit. Mr MacKenzie did not raise any concern about this deposit until 2000. I do not accept Mrs MacKenzie's evidence that enquiry was made about this deposit because there was something funny about it. It conflicts with Mr MacKenzie's evidence and is at odds with their subsequent conduct in continuing to deal with the defendant and LKJA.
[307]The plaintiffs' denial of the defendant's case rests in large measure on their evidence that they did not know LKJA was a separate business and that he did not have funds with LKJA. I do not accept that evidence for the reasons already given. By 1998 Mr MacKenzie had had many financial dealings with LKJA in its capacity as finance broker and as the holder of the plaintiffs' money described to the plaintiffs as 'deposits' with LKJA. Mr MacKenzie trusted Mr Jamieson. On two subsequent occasions the plaintiff drew cheques payable to LKJA. Mr Jamieson's evidence, in context, is not inherently incredible. It is not contradicted or impugned by any contemporaneous document. This case is not concerned with whether Mr Jamieson improperly secured the plaintiffs' authority. In these circumstances I am not satisfied that the plaintiffs deposited the sum of $8,000 with the defendant or that Mr Jamieson acted without authority in endorsing the cheque. Accordingly the plaintiffs' claim fails."
As previously noted, the learned trial Judge found that Jamieson did not have the express authority of the respondent to indorse this cheque as he did and that his action in doing so was contrary to the respondent's standing instructions and described by its auditor as "inappropriate conduct". Nevertheless, I consider that the respondent must be regarded as vicariously liable for any consequences, including liability to the appellants, which might follow from this indorsement of the $8,000 cheque. There are only two possibilities: either Jamieson was authorised by the respondent to indorse the cheque in the manner which he did or he was not so authorised. If he was so authorised then clearly he was acting as the agent of the respondent and the respondent will be answerable for the consequences of his conduct. If he was not authorised to make that indorsement then, even if his actions were dishonest and fraudulent, the indorsement was made expressly in the name of the respondent by its officer in the apparent performance of duties customarily performed by him in the scope of his employment and within the range of his ostensible authority. In such circumstances the respondent will be liable, in my view, for Jamieson's actions notwithstanding that he acted contrary to instructions or even dishonestly - Lloyd v Grace‑Smith & Co [1912] 1 AC 716; Scott v Davis (2000) 204 CLR 333 especially per McHugh J at 347 ‑ 355. In the latter case McHugh J said at 353:
" ... To make the principal liable, proof of the authority of the agent to commit the wrongful act is needed only when he or she has acted outside the scope or course of his or her agency."
See also Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 40 [42] and 47 [66] and New South Wales v Lepore (2003) 212 CLR 511 per Gleeson CJ at 536 ‑ 537 and per Gaudron J at 555.
This indorsement of the appellants' cheque was expressly made by Jamieson in the name of the respondent and in respect of a cheque made payable to the respondent left at its business address so that if the indorsement or subsequent handling of the cheque was tortious the respondent was clearly vicariously liable. Furthermore, it was not the indorsement of this cheque which effected a transfer of the property in the cheque and of the right to collect its proceeds to LKJA. As a bearer cheque, transfer of the property in the instrument itself and of the right to collect the proceeds, was effected by delivery - Cheques Act (1986) (Clth), s 22, s 25, s 26 and s 29. The cheque was originally delivered by Mr MacKenzie to the office of the respondent in circumstances where it was made payable to the respondent or bearer. In the absence of evidence to the contrary, I consider that that can only mean that the cheque was delivered by Mr MacKenzie to the respondent, a conclusion which is reinforced, rather than refuted, by the indorsement of the cheque on behalf of the respondent. This conclusion is not diminished by the fact that because it was a bearer cheque the indorsement was unnecessary. The presentation of the cheque for collection to the credit of LKJA must necessarily have involved a further delivery, or notional delivery of the cheque from the respondent to LKJA, an act which must, in the circumstances, be attributed to Jamieson. It was this notional delivery and the subsequent presentation of the cheque for collection which operated as a transfer of the proceeds to LKJA - see Parsons v The Queen (1999) 195 CLR 619 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ at 630, [27].
This series of events compels the following conclusions. The cheque was delivered by Mr MacKenzie to the respondent. The respondent obtained ownership of the cheque upon that delivery and confirmed this by the indorsement, whether authorised or unauthorised. The presentation of the cheque for collection to the credit of LKJA implied a further delivery of the cheque from the respondent to LKJA involving a transfer of possession of the cheque and the right to collect the proceeds to that firm. In taking delivery of the cheque, indorsing it and delivering it on to LKJA, the respondent exercised ownership over the cheque and disposed of the property in it in favour of LKJA.
This disposition of the cheque and the entitlement to collect the proceeds would constitute a conversion of the cheque unless that part of the transaction had been authorised or ratified by the appellants. This is on the assumption that the receipt of the cheque, even if only fleetingly by the respondent, did not give rise to a relationship of debtor and creditor between the respondent and the appellants in the amount of the cheque as would occur if the cheque had been delivered to the respondent and accepted for investment with the respondent. In that case the debtor/creditor relationship between the respondent and the appellants would continue, notwithstanding that the respondent then transferred the property in the cheque by delivery to LKJA or to any other third person. If the cheque had been delivered by Mr MacKenzie to the respondent for investment with the respondent but, for any reason, the respondent was not willing to accept that investment then the cheque should have been returned to the appellants or their authority obtained to transfer it to some third party, such as LKJA. Without that authority the transfer of the cheque to LKJA in circumstances where there was no acceptance of its proceeds by the respondent, and without the appellants' authority, would be a conversion of the cheque and of the right to collect its proceeds.
In these circumstances, where there was no documentary evidence to establish that the cheque delivered by Mr MacKenzie to the respondent was ever accepted by the respondent to hold the proceeds on deposit as the appellants alleged, I consider that the learned trial Judge's finding that the appellants had not discharged the onus of proving a deposit of $8,000 with the respondent must be upheld. Nevertheless, I consider that the evidence points unequivocally to the conclusion that the cheque was received by the respondent and became the respondent's property, if only for a short time, before it was delivered to LKJA for presentation. The question must therefore be whether the delivery of the property in the cheque by the respondent to LKJA was authorised and, if not, whether it constituted a conversion of the cheque by the respondent.
As stated, her Honour found, at [307], that she was not satisfied that the appellants had deposited the sum of $8,000 with the respondent or that Mr Jamieson acted without authority in indorsing the cheque. The finding that the appellants had not demonstrated that Jamieson acted without authority in indorsing the cheque is, in some respects, ambiguous because it does not expressly identify whether the alleged absence of authority was authority from the respondent or from the appellants. However, in the light of her Honour's findings at [301] that the indorsement of the cheque had been done in contravention of the respondent's standing instructions, it is distinctly unlikely that her Honour would have intended to have expressed doubts about the establishment of want of authority by Jamieson to indorse the cheque. Instead, it is far more likely that the meaning intended by the passage is that her Honour was not satisfied that the indorsement and delivery of the cheque by Jamieson to LKJA was done without the authority of the appellants, claimed by Jamieson to have been conferred by Mr MacKenzie in his earlier discussions with Jamieson which the latter construed as meaning that the $8,000 was to be invested with LKJA and not with the respondent.
The evidence was that the initial discussion about the MacKenzies depositing $8,000 did not identify whether it was the respondent or LKJA that was to be the recipient of the investment and that there had been a course of the earlier dealings when the appellants had deposited money with Jamieson for investment by LKJA. Although, in such circumstances, it may be possible to draw a conclusion that a cheque payable to the respondent or bearer was intended to be invested only with the respondent, I consider that it is also open to conclude that, if for any reason the respondent did not wish to accept the moneys on deposit, then the MacKenzies were content for it to be invested via LKJA and for whatever formalities that were needed to achieve that to be undertaken. I consider, with respect, that her Honour's conclusions should be understood as meaning that the respondent was not willing to accept this $8,000 for investment on deposit and, in the circumstances, dealt with the cheque so as to transfer it to LKJA in a manner which was within the express or implicit authority granted by the appellants when the cheque was delivered to its office.
There is certainly no justification to conclude that the learned trial Judge's findings that the respondent was unwilling to accept this $8,000 for investment with it on deposit was wrong. That being so, the most that the appellants could hope to establish from the facts as proved was that the subsequent indorsement and delivery of the cheque by the respondent to LKJA was a conversion of the appellants' property in the cheque and the right to its proceeds. Exhibit 16A shows that the cheque was presented for collection on 29 January 1998. The cause of action in conversion would have accrued on that date rather than at some later date when demand was made for the repayment of the alleged deposit. This is not significant in this instance because the writ was issued well within the six year limitation period after the date of the putative conversion.
The onus of proof in relation to the authority of the respondent to deliver this cheque to LKJA for collection rested on the respondent. Her Honour's finding was that she was not satisfied that Jamieson had acted without authority in dealing with the cheque which suggests that the onus of proof of the absence of authority was treated as resting upon the appellants. I do not consider that that could be so if this had been an "order" cheque and crossed. Had that been the case, the evidence showing its delivery to the officers of the respondent could only mean that the cheque was delivered with the intention that the proceeds were to be paid to the respondent. The fact that it was a bearer cheque changes the position in this regard because of the ability to transfer the property in such a cheque simply by delivery. In this case the cheque was handed over on behalf of the appellants in circumstances where it was payable to the respondent or to bearer and under conditions where it was asserted by Jamieson that the appellants were willing for the proceeds to be invested with LKJA. I consider this is open to a positive finding that Jamieson and the respondent had the authority of the appellants to deal with the cheque as they did. Her Honour found that Jamieson, in effect, had the appellants' authority to deal with the cheques as he did, which amounts to the same thing. While, with respect, I differ from the learned trial Judge in concluding that the onus of proving the existence of such authority rested on the respondent rather than upon the appellants, I consider that the findings, taken in context, should be treated as an acceptance that this onus had been discharged. Accordingly, I would dismiss the appellants' appeal against the dismissal of their claim in respect of item 13 - the alleged deposit of $8,000 of 29 January 1998.

The appeal in relation to Item 9 - the deposit of $64,000 of 21 June 1989

As already explained, the issues arising in relation to this aspect of the appeal solely concern whether or not all or any of the three payments and a credit totalling $46,322.31 found to have been made by the respondent to the appellants should have been treated as discharging, pro tanto, the respondent's liability to repay this deposit of $64,000 to the appellants on demand.

The $24,744.08 "repayment"

There is a preliminary sub‑issue arising in this respect from ground 2 of the notice of appeal which asserts that the learned trial Judge was wrong in concluding that a payment of $24,744.08, being the last in time of the four components totalling $46,322.31 found to have been made, was ever paid to the appellants. The appellants contend that the records purporting to evidence such a payment had been altered at some time after March 2000, that the transactions recorded in the records of LKJA and of the respondent leading up to that payment were fictitious, and that a finding of such a payment could not be based upon them.
At the hearing of this appeal, the issue of whether or not such payment of $24,744.08 to the appellants occurred was examined in quite some detail. One of the unauthorised dealings by Jamieson with the proceeds of the deposit of $64,000 was to re‑transfer $24,744.08 from LKJA Trust Account to the credit of the appellants' in an account with Albany Finance. This occurred on 30 August 1990 and the appellants' ensuing account with the respondent was known as deposit 615 (see reasons at [143]). Jamieson said in evidence that a cheque for $24,744.08 drawn by the respondent on its account was paid to the appellants for that amount and should be taken to be a partial repayment of the liability for the larger original deposit. No issue about such a payment arose upon the original pleadings or on the pleadings as they stood throughout the trial. At that stage the appellants' allegation was that a deposit of $64,000 had been made and was repayable with interest. The respondent's position, by its defence, was that the $64,000 deposit had been paid in full without any particulars being given of the date or dates or amounts of repayments alleged. Only after the completion of the trial, and the publication of reasons for decision, was the respondent permitted to amend its defence, against objection from the appellants, and plead (among other things) that a payment of $24,744.08 had been made to the appellant on 31 August 1990 towards satisfaction of its liability on that deposit. Clearly the onus of proving repayment of the whole or any part of the deposit lay on the respondent throughout.
The learned trial Judge dealt with the issue under the heading "Deposit No 615" at [164] to [165], [175] and [273] as follows:
"[164]In relation to deposit No 615 there is a Details of Deposit sheet, an office copy of a letter dated 31 August ('first August letter') and an office copy of deposit certificate No 615. The typed date of the 1st August letter shows 1991, however it has been altered in pen to read 1990. The letter in terms acknowledges the deposit application and says it encloses receipt No 20565 re 'Certificate No 615 dated 31 August 1991'. Based on the Details of Deposit sheet and the LKJA trust account records for the plaintiffs, Mr Jamieson says that there was a withdrawal from the LKJA trust account of $24,744.08 on 30 August 1990 which appears to have been deposited with the defendant for the plaintiffs' account, being the subject of Deposit Certificate No 615. The Deposit Certificate bears the date 19 August 1990.
[165]There is also an office copy of a second letter dated 31 August 1990 ('second August letter') from the defendant to the plaintiffs which Mr Jamieson says confirms the instructions he received from Mr MacKenzie on or about 31 August 1990 to withdraw Deposit No 615 and pay it to the plaintiffs. There is also a cheque requisition form dated 31 August 1990 initialled by Mr Jamieson for the sum of $24,744.08. Mr Jamieson believes that a cheque for that amount was sent to the plaintiffs under cover of the defendant's second August letter. He was unable to say why Deposit No 615 was withdrawn from the plaintiffs' account with the defendant on the same day it was received from LKJA."
and, then, later:
"[175]The LKJA trust account ledger records that the sum of $24,744.08 transferred from the LKJA trust account to deposit number 615 was deposited with the defendant on 30 or 31 August 1990. However, prior to 30 August 1990 the balance standing to the plaintiffs' credit in the LKJA trust account was nil. The trust account ledgers record that on 30 August 1990 the plaintiffs borrowed $24,234.31 from the TW Investment Trust. That amount, together with the sum of $509.77 redeemed from the plaintiffs' deposit number 578 and put with LKJA on 30 or 31 August 1990 was the source of the funds deposited in deposit number 615. Thus, deposit number 578 was redeemed from the defendant and deposited with LKJA and then on the same day re‑deposited with the defendant as part of deposit number 615. The loan from the TW Investment Trust to the plaintiffs was recorded as repaid on 14 April 1992 from funds provided by Ziverts for repayment of their 1989 loan from the plaintiffs."
And then, after dealing with other issues relating to alleged repayments of other amounts, her Honour said at:
"[253]The same is true of the redemption of deposit 615 and the payment of $24,744.08 to the plaintiffs on 31 August 1990. The payment is consistent with the defendant's cheque requisition and cash payments ledger. Mr Jamieson went to significant lengths in connection with deposits 578 and 615 for the monies to be available to the plaintiffs. I am satisfied that the amount was paid to the plaintiffs."

In the light of the evidence at the trial and the findings by the learned trial Judge, I consider that the only conclusion which can be drawn in this regard is that there was no specific appropriation made by the respondent at the time of these three payments and credit in March, July and August 1990 to apply them in reduction of the $64,000 deposit or interest due upon it. Insofar as the contemporary records of the respondent indicated, if there was any appropriation intended by the respondent, it was towards the satisfaction of false deposits which had been improperly raised by Jamieson but, even then, there is no evidence to suggest that such a designated appropriation was communicated by the respondent to the appellants. Consequently, it could not be binding upon the appellants.
That left the appellants free to appropriate the payments received at their own discretion to any one or more of the debts then due to them by the respondent and to do so at any time. There is no finding or evidence to show that the appellants ever appropriated any of these payments towards the satisfaction of the deposit account for $64,000 plus interest. Indeed, the institution of this action, including the claim for the recovery of Item 9 plus interest, is an indication that, as far as they were aware, the appellants had not appropriated any payments towards the satisfaction of that particular debt. As previously noted, one of the advantages for a plaintiff suing in debt, is that the establishment of the debt then casts the onus upon the defendant of proving repayment. This means that, in a situation where there are several debts outstanding by the respondents to the appellants at the time of these payments, the onus requires the respondent to show not only that the payments have been made but that they have, or could only have, been appropriated towards the discharge of this particular obligation sued upon.
There was no evidence directly dealing with any such express choice or appropriation and this suggests that no such specific appropriation occurred. However, at [261] to [265] of the reasons of the learned trial Judge, her Honour seems to have inferred that, in effect, the payments were appropriated towards the discharge of the $64,000 deposit account. His Honour did so, on the basis that the appellants had not sued for or suggested the existence of any other outstanding obligations by the respondent in these proceedings and that, therefore, these payments must be taken to have been intended to satisfy, at least in part, the obligation under the $64,000 deposit account. However, this does not follow because, if there had been other debts due by the respondent to the appellants at the time these payments were made and if the payments had been appropriated towards the satisfaction of those other debts then, naturally, the appellants would not seek to recover those other debts because they would be regarded as having been paid. This could happen because the payments were appropriated by the respondent towards those other debts or, in the absence of any appropriation by the respondent, the appellants themselves could have appropriated them towards those other obligations. Either way those obligations would have been discharged and there would have been no occasion to examine them, nor the method of their discharge, in the course of the current action.
To the extent that the learned trial Judge drew an inference that the payments were intended by the respondent, had the true circumstances been known, to be applied in reduction of the $64,000 deposit plus interest, it must follow, ex hypothesis, that such a specified appropriation was never communicated by the respondent to the appellants and was not accepted by the appellants. Equally it must follow from the appellants' pursuit of the recovery of this deposit by these proceedings and, in the absence of evidence to the contrary, that the appellants never treated those payments as being appropriated towards this particular account.
In my respectful view, this can only lead to the conclusion that the evidence at the trial does not justify a finding that any of these payments was appropriated towards the satisfaction, in whole or in part, of the respondent's indebtedness on the deposit account for $64,000 plus interest. No such appropriation was made by the respondent in any manner communicated to the appellants, and no such appropriation was made by the appellants. In that case the respondent has failed to prove that the $64,000 deposit account plus interest was partially discharged by any of such payments because the onus of doing so rested upon it.
That does leave the question of what these payments were for and whether or not, perhaps, the appellants may have derived an undeserved windfall from these payments. While that is a possibility, it is no more than a possibility. If it has occurred it is due entirely to the failure of the respondent to discharge the onus of proof resting upon it.
In my view the appellants are entitled to recover in these proceedings the whole of the undischarged debt of $64,000 plus interest and to do so on the footing that the particular payments that were made were never appropriated towards that liability. If it should subsequently be established that there were no other obligations which the respondent owed to the appellants at the time to which these payments were appropriated, then the result will be that these were payments which have been made by the respondent to the appellants for no consideration, or that they were payments made by mistake, in the belief that they would be appropriated towards the partial discharge of one particular obligation, in circumstances where there was no duty for them to be so applied, and where they were not so applied. That would leave open an action by the respondent for the recovery of those payments by way of restitution. Indeed, such a claim might have been advanced by a counterclaim in the present proceedings, but that was not done. That there may be a successful limitation defence to any such restitutionary action contemplated by the respondent is no reason to treat the payments which had been made as being appropriated towards this particular obligation when the evidence in the case does not prove that this was so.
It is now necessary to return to the appellants' submission that tender of part payment of a debt need not be accepted by the creditor even in partial satisfaction of the debt: Young v Queensland Trustees Ltd (supra). This is a rule which must be applied with care. Where a creditor retains the money tendered without specifying to the debtor a refusal to appropriate it towards the partial discharge of the debt in respect of which it was tendered, there must be a very strong inference that it has been accepted in partial discharge of that obligation because, otherwise, the retention of the money plus the assertion that the whole of the debt remains payable would give rise to an unjustifiable benefit for the creditor. If that were the situation in the present case, I consider that any appeal court would be reluctant to interfere with an implicit finding by a trial Judge that the payment was appropriated by the creditor, or accepted by the creditor, as having been appropriated towards the partial discharge of that particular obligation. However, this process of reasoning depends very greatly upon the assumption that the particular debt, in this case the $64,000 deposit plus interest, was the only debt owed by the respondent to the appellants at the time the payments were made. If there were other debts owing, particularly debts which were not examined in these proceedings, then the possibility of the appropriation of the payments to those other obligations cannot be ignored, especially, as in this case, where there is no evidence of the appropriation of the particular payments towards the particular account on either side. To make a finding against the appellants as creditors in this situation that, in the absence of evidence upon which an inference of appropriation can satisfactorily be made, the payments must have been appropriated towards partial discharge of this liability is, in my respectful opinion, to reverse the burden of proof on the issue. Accordingly, I consider that the findings by the learned trial Judge that the amounts totalling $46,322.31 referred to in [265] of the reasons must be brought to the credit of the respondent and cannot stand. I would allow the appeal in this respect.
This means that the principal sum outstanding in August 1990 was $46,322.31 greater than recognized by the judgment after trial. Compound interest must be calculated upon that at quarterly rests at the rates prevailing from then until judgment. I consider that the parties should be given an opportunity to bring in an agreed minute to establish the component of interest to be added as a result of this finding and, failing agreement, for the matter to be determined by a Master upon an inquiry.
This conclusion also means that the question whether or not the finding that $24,744.08 was repaid on 31 August 1990 was correct or not is of much diminished significance (ground 2 in notice of appeal). If, as I have concluded, the respondent failed to show that it had been repaid then that is simply another reason to refuse credit for that amount. If, however, it is concluded that it was paid then, for the reasons which I have described, it should not be credited as having been made in reduction of the liability of the respondent in respect of the deposit Item 9.

Findings on cross appeal and notice of contention

It is now necessary to return to the respondent's notice of contention and cross‑appeal and its submission that the repayments of $46,322.31 can be treated, in this appeal, as a set‑off against the respondent's liability under Item 9, or that the learned trial Judge was in error in refusing the respondent's application to reamend its defence to plead, in the alternative proposed in par 3B of the minute of amended defence, that they could be set‑off against any liability otherwise established against the respondent. Those submissions must be examined on the basis of the conclusion that the respondent has, by this point, failed to prove that the payments were accepted by the appellants in partial reduction of the debt arising from deposit Item 9 or that the payments have been appropriated, either by the respondent or by the appellants to effect a reduction of that liability.
To allow such an alleged set‑off in such circumstances would be to force an appropriation on the creditors which was never made at the time and the submission must, for that reason alone, be rejected. Equally, if the repayments made had been, or might have been, appropriated towards the satisfaction of other debts due by the respondent to the appellants there would be no basis to recognize any right of set‑off against the respondent's liability under Item 9. One simply does not reach the position where any set‑off could be considered or allowed when:
•the respondent has failed to prove that the payments were accepted or appropriated towards the reduction of its liability under Item 9; or
•the respondent has failed to prove that it had no other liability or liabilities to the appellants at the time of these payments to which they could have been appropriated, except its liability in respect of Item 9; or
•there is no equity to require that the payment should be treated as a set‑off rather than a payment made by mistake in respect of which a restitutionary claim could have been made, if made in time.
Furthermore, I consider that the learned trial Judge was correct in concluding that these payments did not meet the requirements of a set‑off in law or equity "in the technical sense": see per Kennedy J in Hazcor Pty Ltd v Kirwanon Pty Ltd (supra). If the payments have not been shown to have been accepted or appropriated in reduction of the respondent's liability to the appellants in respect of the deposit Item 9, that, of itself, reveals that the payments do not impeach the title of the appellants to recover that deposit. The position is only strengthened in this regard where there is a possibility that the payments which were made have been treated as discharging other separate liabilities of the respondent to the appellants which were not in any way scrutinized at the trial. There was simply no basis for a set‑off in the circumstances alleged and the respondent's contentions in this regard must be rejected.

Limitation defence

In my opinion the learned trial Judge was correct, for the reasons which she gave, in treating the relationship between the respondent and the appellants as akin to that between banker and customer and therefore implying a term into the contracts of deposit that the principal and accrued interest was only repayable upon demand. That being the case, no cause of action in favour of the appellants accrued before demand was made and, as the latter was within six years of the commencement of the proceedings, the Limitation Act defence was correctly rejected. That conclusion also disposes of the respondent's cross appeal which, in my view, must be dismissed.

Amendment to defence after trial

It follows from these conclusions that I consider that the learned trial Judge erred in the exercise of her discretion to permit the respondent to amend its defence, after the completion of the evidence and the delivery of reasons for decision so as to introduce a new defence in the form of par 3A pleading that the deposit of $64,000 (Item 9) had been repaid in part by the four alleged payments totalling $46,322.31. While it was open to her Honour to make a finding that such payments had been made, having regard to the way the trial was conducted, I do not consider that it was open at that stage of the proceedings to allow a plea that such payments had resulted in part repayment of the deposit Item 9. The reason for this is because, to constitute such a partial repayment, it would be necessary for the respondent to have proved that the payments were made and accepted by the appellants in reduction of that particular liability, or that, otherwise, they had been appropriated by the appellants towards the reduction of that liability. No attention to the question of such appropriation was given at the trial nor, having regard to the lateness of the amendment, were the appellants given an opportunity to plead by way of reply that any such payments, even if established, would not constitute a satisfaction of that liability. Neither did they have an opportunity in the course of the trial to address any such issue or to adduce evidence on the question of whether or not there had been such an acceptance or an appropriation of the alleged payments. At such a late stage of a long and complicated case an amendment which would require the appellants to be given an opportunity to replead and adduce further evidence on an issue upon which the respondent bore the onus of proof could not be justified. However, even on the basis that the amendment was correctly permitted, it remains the case that the respondent has not proved that any of the three payments or credit was accepted or appropriated in reduction of this particular liability and, accordingly, the amendment should not have been allowed.

Costs

As I consider that the appellants should succeed in this appeal in relation to Item 9 of their original claim, I consider that they should have also been entitled to their costs of pursuing those aspects of their claim at trial. The learned trial Judge dealt with the issue of costs on the basis that the appellants had recovered only $28,177.69 principal out of a claim for the recovery of principal totalling $161,344.89 (disregarding interest), the effect of my conclusions is that the principal recovered has increased from $28,177.69 to $74,500. While this is still less than half of the amount originally sued for it is apparent that a substantial portion of the trial was occupied with the issues arising from the claim made for the recovery of the deposit of $64,000 (Item 9) and the respondent's contentions that this had been in part repaid upon which the appellants now emerge successful. In these circumstances it is necessary to reconsider the claim for costs afresh, having regard to the greater overall success achieved by the appellants in the action.
Consistently with the principles in Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 I consider it is appropriate to recognize that the appellants failed, in significant respects, in the other claims which they advanced but that, nevertheless, they achieved a substantial success in circumstances where the claims upon which they were ultimately successful always remained in issue and where, having regard to the unfortunate history of the respondent due to the conduct of Jamieson, it was unusually difficult to establish how their accounts had been treated.
By ground 9 of their notice of appeal the appellants seek an order for the payment of 80 per cent of their taxed costs of the action from the respondent and, in all the circumstances, I consider that this would be appropriate and that an order in that regard should be made. However, I see no reason to reconsider or vary the decision of the learned trial Judge (supplementary reasons [15] and [19] that there should not be any special costs orders) and, therefore, I would decline to make any special orders or allowances for costs without, in any way, detracting from the ability of the taxing officer to allow all reasonable costs considered appropriate in the circumstances, including the powers available to the taxing officer under RSC O 66 r 18. It also follows from this conclusion that I consider that the cross appeal with regard to costs should be dismissed.
In view of my conclusion that the appeal should be allowed and the consequent need to reconsider the appellants' entitlement to the costs of the trial in the manner just outlined, it is unnecessary to address the issue of the competency of the appeal against the costs order on the basis that the appeal is from an order for costs alone.

Summary

For these reasons I consider that the appellants' appeal should be allowed and that the judgment entered on 29 July 2003 should be set aside. In lieu thereof I consider that the Court should order, declare and adjudge that:
(a)the order granting the respondent leave to amend its defence as proposed by its minute of further amended defence dated 23 June 2003 should be set aside and the application for leave to amend the defence should be dismissed;
(b)the appellants are entitled to recover against the respondent:
•the sum of $64,000 being the deposit made by them with the respondent on 21 June 1989 referred to as "Item 9" in the action, together with compound interest thereon calculated from 21 June 1989 until the date of judgment 29 July 2003 at the rates prevailing on like deposits for the respondent from time to time during that period but compounded quarterly;
•the appellants are entitled to the sum of $10,500 being the deposit made by them with the respondent on 3 December 1992 referred to as "Item 11" in the action, together with compound interest thereon calculated from 3 December 1992 until the date of judgment 29 July 2003 at the rates prevailing on like deposits for the respondent from time to time during that period but compounded quarterly;
(c)the parties have liberty to bring in an agreed minute of the interest accruing on the above two components of the appellants' claims until the date of judgment within 28 days from today in which case a single Judge of this Court

may fix the aggregate amount of the judgment to be entered in favour of the appellants, for principal and interest, as at 29 July 2003. In the absence of agreement as to the amount of interest accruing on the two components mentioned until the date of judgment being recorded within 28 days, the issue of the calculation of the interest payable shall be referred to a Master of this Court for inquiry and the result of the inquiry shall be reported to a single Judge of this Court to allow such a final determination to be made;

(d)the respondent do pay to the appellants 80 per cent of their costs of the action to be taxed;
(e)the respondent's cross‑appeal be dismissed.

LE MIERE J: I have had the advantage of reading in draft the reasons for judgment of E M Heenan J. I agree that the appeal should be allowed and the cross‑appeal dismissed for the reasons stated by his Honour. I agree with the orders proposed by his Honour.

Item Number	Date	Amount	Appellants' Claim	Respondent's Response
9	21.6.89	$64,000	All	Repaid in full
11	3.12.92	$10,500	All	Repaid in full
13	29.1.98	$8,000	All	No deposit made