Mackenzie v Albany Finance Ltd

[2003] WASC 100

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   MACKENZIE & ANOR -v- ALBANY FINANCE LTD [2003] WASC 100

CORAM:   McLURE J

HEARD:   5-7 & 10 JUNE, 8, 9, 12, 13, 15 & 16 AUGUST, 2 & 3 OCTOBER 2002

DELIVERED          :   30 MAY 2003

FILE NO/S:   CIV 2657 of 2000

BETWEEN:   JAMES MACKENZIE

JOAN EDNA MACKENZIE
Plaintiffs

AND

ALBANY FINANCE LTD
Defendant

Catchwords:

Debtor and creditor - Whether deposits made - Whether debts repaid - When cause of action accrued - Whether claims statute barred - Whether defendant breached Unclaimed Money Act 1990 (WA) - Whether conduct in pleading limitation defence unconscionable - Whether to grant certificate under s 11 of Evidence Act 1906 (WA) - Turns on own facts

Legislation:

Bankruptcy Act 1966 (Cth)

Cheques Act 1986 (WA), s 3(1), s 25, s 27, s 28
Credit (Administration) Act 1984 (WA)
Evidence Act 1906 (WA), s 11, s 79C
Limitation Act 1935 (WA), s 38(1)(c)
Rules of the Supreme Court 1971 (WA), O 29 r 9
Trade Practices Act 1974 (Cth)

Unclaimed Money Act 1990 (WA), s 4(5)(a), s 6

Result:

Application partially successful

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr D H Solomon

Defendant:     Mr M D Howard

Solicitors:

Plaintiffs:     Solomon Brothers

Defendant:     Greenland Brooksby

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

Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation (1983) 1 NSWLR 1

Atkinson v Bradford Third Equitable Benefit Building Society (1890) 25 QBD 377

Attorney General (WA) v Cockram (1990) 2 WAR 477

Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 8

Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677

Browne v Dunn (1893) 6 R 67

Byrne v Australian Airlines Ltd (1995) 185 CLR 410

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337

Connor v Blacktown District Hospital [1971] 1 NSWLR 713

Coyne v Citizen Finance Ltd (1991) 4 WAR 213

Croton v R (1967) 117 CLR 326

Ebber v Isager [1995] 1 Qd R 150

Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed) (in liq) (1993) 43 FCR 510

Ex parte Amalgamated Engineering Union (Australian Section); Re Jackson (1937) 38 SR (NSW) 13

In re Brookers (Aust) Ltd (in liq); Brooker v Pridham (1986) 41 SASR 380

Jackson v Goldsmith (1950) 81 CLR 446

Joachimson v Swiss Bank Corporation (1921) 3 KB 110

Laws Holdings Pty Ltd v Short (1972) 46 ALJR 563

Muirhead v Commonwealth Bank of Australia [1997] 1 Qd R 567

National Bank of Commerce v National Westminster Bank [1990] 2 Lloyd's Rep 514

Ogilvie v Adams [1981] VR 1041

R v Golightly, unreported; SCt of WA; Library No 970040; 14 February 1997

Re Australia and New Zealand Savings Bank Ltd; Mellas v Evriniadis [1972] VR 690

Re Global Finance Group Pty Ltd (in liq) [2002] WASC 63

Robinson v Midland Bank Ltd (1925) 41 TLR 402

Stoney Stanton Supplies Ltd v Midland Bank Ltd [1966] 2 Lloyd's Rep 373

Young v Queensland Trustees Ltd (1956) 99 CLR 560

Case(s) also cited:

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2000] FCA 1376

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2000] FCA 2; (2000) 96 FCR 491

Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd [2000] FCA 1365; (2000) 104 FCR 253

Bank of America Canada v Mutual Trust Co (2002) SCC 43

Bank of New South Wales Savings Bank Ltd v Fremantle Auto Centre Pty Ltd [1973] WAR 161

Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247

Beach Petroleum NL v Johnson (1993) 115 ALR 411

Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464

Breen v Williams (1996) 186 CLR 71

Cameron v Qantas Airways Ltd (1995) 55 FCR 147

Charles v Blackwell (1877) 2 CPD 157

Cigna Insurance Asia Pacific Ltd v Packer (2000) 23 WAR 159

Foley v Hill (1848) 2 HLC 28

Garrett v Nicholson (1999) 21 WAR 226

Hart v Mossensons (a firm) [2002] WASCA 110

Honey v McLennan (1997) 18 WAR 384

Hurley v McDonald's Australia Ltd (2000) ATPR 41-741

Ingram v Mohren (1993) 10 WAR 497

Lloyd v Grace Smith & Co [1912] AC 716

Mann v Hulme (1961) 106 CLR 136

Murphy v Lawrence [1960] NZLR 772

National Commercial Banking Corp of Australia Ltd v Batty (1986) 160 CLR 251

Nelson v Nelson (1995) 184 CLR 538

Parsons v The Queen (1999) 195 CLR 619

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Qantas Airways Ltd v Cameron (1996) 66 FCR 246

Re Loteka Pty Ltd (in liq) [1990] 1 Qd R 322

Re Malley SM; Ex parte Gardner [2001] WASCA 29

Robinson v Midland Bank Ltd (1925) 41 TLR 402

Smith v Commercial Banking Co of Sydney Ltd (1910) 11 CLR 667

Thomson v Eastwood (1877) 2 App Cas 215

Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410

TABLE OF CONTENTS

Introduction
The Defendant – Its Business and Systems
Leon K Jamieson & Associates
The Plaintiffs' Conduct
Evidence at Trial
General Observations
Item 6

Evidence

Issues

Findings

Item 7

Evidence

Issues

Findings

Items 2 and 16
Item 5

Evidence

Issues

Findings

Item 9

Evidence
(a) Deposit Number 524
(b) Deposit Number 525
(c) Deposit Number 540
(d) Deposit Number 568
(e) Deposit Number 571
(f) Deposit Number 615
(g) Shares

Issues
The Trust Account Transactions
Communications with the Department of Veterans' Affairs
Income Tax Returns
Audit Letters
The District Court Action
Plaintiffs' Knowledge of Dealings with LKJA

Findings

Whether transactions authorised (Issues (a) & (b))
The terms of the contract/whether statute barred (Issues (c) & (d))
Whether payments made (Issues (e), (f) & (g))
Whether payments reduce indebtedness (Issue (h))
Unconscionability – The Unclaimed Money Act 1990 (WA)
Issue estoppel – Application to amend

Item 11

Evidence

Issues

Findings

Item 13

Evidence

Issues

Findings

The s 11 Certificate

Conclusion

McLURE J: 

Introduction

1. The plaintiffs are an elderly couple.  They live in Albany.  The defendant is a finance company.  It has carried on business in Albany for many years.

2. At all material times the manager of the defendant was Mr Leon K Jamieson.  Mr Jamieson was also a licensed finance broker trading under the name of Leon K Jamieson & Associates ("LKJA").  In mid‑2000, Mr Jamieson was the subject of adverse publicity in relation to his finance broking business.  He was subsequently charged with stealing and fraud offences, none of which relate to the money the subject of the plaintiffs' claims.  The plaintiffs commenced this action in December 2000.

3. The plaintiffs claim that between 1987 and 1998 they deposited money with the defendant which has not been repaid.  In particular, they claim in relation to eight deposits (two of which are related) totalling $161,344.89 and interest thereon.  It is proposed that the rate and amount of interest be the subject of inquiry by a Master in the event the plaintiffs are successful.

4. The defendant denies that the plaintiffs made three of the deposits the subject of the action.  In relation to the balance of the deposits the subject of the action, the defendant says the plaintiffs have been repaid all moneys owing to them.

5. The positions of the parties can be seen at a glance from the following table:

Item Number	Date	Amount	Plaintiffs' Claim	Defendant's Response
2	19.11.87	$9,500.00	Nil, but rolled over to become Item 16	Not in issue
5	3.6.88	$50,000.00	$9,759.98	Repaid in full
6	8.6.88	$40,000.00	All	No deposit made
7	23.6.88	$20,000.00	All	No deposit made
9	21.6.89	$64,000.00	All	Repaid in full
11	3.12.92	$10,500.00	All	Repaid in full
13	29.1.98	$8,000.00	All	No deposit made
16	17.12.88	$9,084.91	All	Repaid in full

1. The non‑consecutive numbering of the items in the table resulted from the plaintiffs amending their claim prior to trial to delete a number of claimed items.

2. It was accepted by the parties that the plaintiffs bear the onus of proving that they made the three deposits denied by the defendant and the defendant bears the onus of proving that the admitted deposits were repaid: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 562‑570; Muirhead v Commonwealth Bank of Australia [1997] 1 Qd R 567 at 577.

3. The defendant pleads the Limitation Act 1935 (WA) in the event the deposits were not repaid as alleged.  In particular, the defendant says that the plaintiffs' claims in respect of the principal and so much of the interest said to be owing at or before 31 May 1994 are statute barred.  In reply to the limitation defence the plaintiffs say:

   (a)the limitation period has not expired because the cause of action did not accrue until they made demand for the moneys by letter dated 29 November 2000;

   (b)if the limitation period has expired, it would be unconscionable in equity and pursuant to the Trade Practices Act 1974 (Cth) ("TPA") for the defendant to rely on the defence because of the defendant's failure to comply with its obligations under s 8 of the Unclaimed Money Act 1990 (WA).

4. One consequence of the delay in commencing this action is that many relevant documents, including the plaintiffs' bank and building society records, are no longer in existence.

The Defendant – Its Business and Systems

1. At all material times, the defendant was a licensed credit provider under the Credit (Administration) Act 1984 (WA).  It was in the business of borrowing and lending money.  It obtained its funds from deposits from its customers and from a standby credit facility with its bank.  The relationship between the defendant and its depositors was that of debtor and creditor.

2. Mr Jamieson was involved in the formation of the defendant in around 1983.  At all material times he was its manager and the only person in the office authorised to receive a deposit and to agree terms with depositors.

3. The defendant and LKJA carried on business from the same premises and shared the same telephone number.  The telephones was always answered "Leon K Jamieson & Associates".  Although the staff were employed by LKJA they were primarily engaged in work for the defendant.  In return for services, the defendant paid a twice monthly administration fee to LKJA.

4. However, the businesses were kept separate to the extent that each business had separate records, stationery, filing cabinets, accountants, auditors and postal addresses.

5. Mr Jamieson gave evidence of the systems in place at the material times for taking deposits and paying interest and principal on behalf of the defendant.  When the defendant received a new deposit the following steps would be taken.  Mr Jamieson would complete part of a "Details of Deposit" sheet by hand on the day the deposit was received.  He would give the deposit the certificate number of the next numbered blank deposit certificate held by the defendant.  The blank certificates were kept in the defendant's office.  The Details of Deposit sheet recorded the terms on which the deposit had been accepted.  Such terms were discussed and agreed by Mr Jamieson and the relevant depositor.

6. The defendant calculated interest on a quarterly basis.  The depositor could choose to have interest accrued or compounded quarterly, in which case Mr Jamieson usually wrote the word "compound" on the Details of Deposit sheet.  If the depositor wanted to receive interest payments quarterly that was usually recorded by Mr Jamieson on the Details of Deposit sheet.

7. Mr Jamieson would then hand the Details of Deposit sheet to an employee who would type in the details of the deposit onto the next numbered certificate.  The employee who prepared the certificate would also prepare at that time a standard letter on the defendant's letterhead addressed to the depositor enclosing a receipt for the deposit and original deposit certificate.  The documents would then be given to Mr Jamieson who would check the original deposit certificate and letter to the depositor against the Details of Deposit sheet.  If the certificate and the letter agreed with the details on the Details of Deposit sheet Mr Jamieson would sign the original letter and the original deposit certificate.  Those documents would then be sent to the depositor and an office copy of the letter and certificate would be retained by the defendant.

8. It was the defendant's practice to staple together the Details of Deposit sheet with the office copy of the deposit certificate.  Those two documents were kept in a lever arch file which contained all current deposits which the defendant arranged in alphabetical order by depositors.

9. The office copy of the letter to the depositor was kept, as was all office copies of correspondence to the depositor, on a separate file in the name of each depositor.

10. Before the end of each quarter, Mr Jamieson would take the lever arch file of the current deposits and work his way through each Details of Deposit sheet and complete  by hand or using a date stamp, the relevant details under the headings of "interest due" and "amount due".  He would write or stamp the date that interest was due and calculate the number of days in that quarter for which the deposit had been made.  He would then calculate the amount of interest due and write that onto the Details of Deposit sheet.  He would do that for each of the Details of Deposit sheets for current deposits in the lever arch file of current deposits.

11. Once he had done that for each current deposit, he would hand the lever arch file to one of his employees.  If interest was to be paid on an account, as opposed to being accrued, the employee would generally fill in a defendant cheque.  Generally, if interest was payable to a depositor at the end of a quarter on more than one deposit, one cheque would be prepared in respect of all interest to be paid to that depositor.  At the same time, the employee would prepare a letter in standard form on the defendant's letterhead to the depositor which either enclosed a cheque for interest or which informed the depositor as to the amount of interest that had accrued on that deposit.

12. Mr Jamieson would then receive back from the employee (if interest was to be paid) a cheque requisition form, a cheque and a letter on the defendant's letterhead to go to the depositor.  Usually there was also an office copy of the letter which was generally not on the defendant's letterhead.

13. For each deposit Mr Jamieson would then compare the Details of Deposit sheet with the cheque if there was one, and the covering letter.  If the details were correct, Mr Jamieson would sign the cheque and the covering letter.  He would also initial the relevant cheque requisition form.  Those documents would then be sent to a director of the defendant who was authorised to sign cheques.  The defendant's accounts were set up so that two signatures were required on a cheque.  The second person would also initial the cheque requisition form.

14. Once the cheque had been countersigned, the original covering letter signed by Mr Jamieson and the cheque, if interest was being paid, would be sent by an employee by post to the depositor or would be deposited to the depositor's nominated account.

15. In July 1989 the defendant adopted the Triset system to record payments made.  That system was used until June 1995.

16. When a deposit was redeemed, it was Mr Jamieson's practice to put a line through the Details of Deposit sheet and the office copy of the deposit certificate which had been held in the lever arch file of current deposits.  The two documents would then be removed from the lever arch file and, after completing all other paper work associated with the redemption, would be placed on the depositor's file which, as described, also contained office copies of correspondence sent to them.

17. When a deposit was redeemed, it was also the defendant's practice to send a letter to the depositor at about the date those instructions were received confirming those instructions.  All instructions from a depositor to redeem a deposit would have been notified to Mr Jamieson by his staff if it was not him who took the instructions.

18. Mr Jamieson would prepare the letter by hand which confirmed the depositor's instructions to redeem the deposit.  An employee would then type the letter and write a cheque requisition and a cheque in the same way described above.  The original letter would go to Mr Jamieson with the cheque requisition form, the cheque, the Details of Deposit sheet and office copy of the deposit certificate.  If Mr Jamieson was satisfied that the letter, the cheque and requisition form were correct, he would initial the cheque requisition form and sign the cheque.  The documents would then go to another cheque signatory for countersigning.

19. However, on a number of occasions letters were addressed to the plaintiffs stating that cheques were enclosed when they were not.  On each occasion, the cheque was deposited in the LKJA trust account in the plaintiffs' names.

20. It was the defendant's practice to create a new deposit if a depositor wished to redeem part only of a current deposit.  It was also the defendant's practice to create a new deposit if a depositor wished to add further sums to an existing deposit.  In each of those cases, the steps outlined above would be followed.

21. It is to be noted from Mr Jamieson's description of the defendant's systems, that it was not part of the system that deposits and withdrawals be preceded as a matter of course (or at all in relation to withdrawals) by a request in writing from or on behalf of depositors.

Leon K Jamieson & Associates

1. Mr Jamieson carried on the finance broking business of LKJA in partnership with his wife from about 1979.  The business ceased operating on 7 August 2000 and he entered into a Pt X arrangement under the Bankruptcy Act1966 (Cth) on that date.  His trustee in bankruptcy took possession of all the LKJA records.

2. LKJA arranged unsecured loans, loans secured by mortgage, loans from other finance companies and placed client moneys on deposit with other finance companies.  LKJA did not hold a credit provider's licence under the Credit (Administration) Act 1984 (WA) and, to Mr Jamieson's knowledge, was not entitled to and did not take money on deposit or make loans as a principal.

The Plaintiffs' Conduct

1. It was not in dispute that all dealings between the plaintiffs and the defendant relating to deposits and redemptions or withdrawals of funds were conducted by Mr MacKenzie on behalf of himself and his wife.  No issue was taken as to Mr MacKenzie's authority to act for Mrs MacKenzie.

2. The unchallenged evidence was that Mr MacKenzie would personally attend the defendant's offices to hand over a cheque to be invested. Mr MacKenzie would usually discuss the proposed investment with Mrs MacKenzie beforehand and she would write out a cheque for Mr MacKenzie to take and record it in her cashbooks.  Mr MacKenzie's practice was to telephone Mr Jamieson to request withdrawals.

3. Sometime prior to the commencement of the action the plaintiffs disposed of some of their documentary records relating to their financial transactions.  There is no evidence of the quantity or identity of the documents disposed of.  Accordingly, it is not open to draw an inference that a document had not been sent by the defendant or received by the plaintiffs simply from the fact that the plaintiffs were not in possession of the document at the time of the trial.  The incompleteness of relevant records from financial institutions is also an impediment in the resolution of some of the factual issues.

Evidence at Trial

1. In accordance with pre‑trial directions, the parties exchanged witness statements, including responsive witness statements, prior to trial.  In particular, written statements of each of the plaintiffs and Mr Jamieson were exchanged.  The written statements became the evidence‑in‑chief of the witnesses.

General Observations

1. Before going in detail to the evidence and my findings on the issues for determination I propose to record my general assessment of the evidence of the primary witnesses, Mr and Mrs MacKenzie and Mr Jamieson for the defence.

1. In relation to Mr and Mrs MacKenzie, I came to the view that they had no actual recollection of the relevant events all of which occurred over the 11-year period from 1987 to 1998.  My acceptance or rejection of their evidence is in large measure determined by reference to contemporaneous documentary evidence and inherent probabilities.

2. As with the plaintiffs, my acceptance or rejection of Mr Jamieson's evidence was in large measure determined by the documents and probabilities.  There are some significant areas where I do not accept his evidence.  However, I did not find him to be a generally evasive or incredible witness such as to warrant the rejection of his evidence at large or where it conflicts with that of other witnesses.

Item 6

Evidence

1. Mr MacKenzie gave evidence that on 8 June 1988 the plaintiffs deposited a sum of $40,000 with the defendant.  The basis for his evidence was a record in the plaintiffs' cashbooks on that date of a cheque in favour of "Albany Finance".  The cheque was not in evidence.  Mr MacKenzie acknowledged that he did not have in his possession a deposit certificate or receipt for that amount and concluded that the receipt and certificate must have been lost or destroyed when he cleared out the plaintiffs' records.  It was also his evidence that the plaintiffs had not received any interest on the deposit or repayment of any capital.

2. Not surprisingly Mr MacKenzie had no actual recollection of the circumstances surrounding the making, or the terms and conditions, of the deposit.  He also confirmed that he had no recollection of receiving any communication from the defendant concerning the deposit and that he had not made any enquiries with the defendant or attempted to get the money back until the year 2000.

3. Mr Jamieson's evidence was that Mr MacKenzie instructed Mr Jamieson in his capacity as a finance broker (not as manager of the defendant) to deposit the sum of $40,000.00 with Broadlands Ltd.  Mr Jamieson earned commission on deposits made by LKJA with Broadlands Ltd.  No commission was paid by the defendant for deposits.  In a letter dated 15 June 1988 from LKJA signed by Mr Jamieson and addressed to the plaintiffs it is stated that a lodgement advice from Broadlands Ltd concerning the plaintiffs' deposit of $40,000 was enclosed. The letter continues:

   "On the 8th June 1988 our staff incorrectly issued you with an Albany Finance Ltd Receipt No. 0898 and we would be grateful if you could return the receipt to our office.

   We understand from discussions with Steve Douglas you are interested in a Mortgage Investment.  Details of a proposed Mortgage Investment will be forwarded to you for your consideration within the next few days."

4. Steve Douglas was the plaintiffs' then accountant and sometime son‑in‑law.  Mr Jamieson's evidence was that the receipt was retrieved from the plaintiffs.  Further, it was Mr Jamieson's evidence that the $40,000.00 was deposited with LKJA and he put it with Broadlands Ltd at call temporarily because the money was to be invested in a mortgage investment through LKJA which mortgage investment was with a company called Earl of Spencer Pty Ltd.   According to Mr Jamieson, interest on that investment was paid periodically, the principal was repaid to LKJA in February 1990 and, on Mr MacKenzie's instructions, deposited with AGC before being paid to the plaintiffs by cheque for  $40,000.00.  

5. The LKJA trust account ledger for the plaintiffs records the receipt of $40,000 on 2 February 1990 from the discharge of the Earl of Spencer mortgage, the deposit of $40,000 with AGC on 6 February 1990 and the payment of $40,000 to the plaintiffs on 10 February 1990.  Mr Jamieson's evidence of the money trail from Broadlands, AGC and to the plaintiffs on account of the Earl of Spencer investment is supported by documents from Broadlands, AGC and the LKJA trust account records for February 1990. 

6. Mr MacKenzie's responsive evidence was that at no material time until 2000 was he aware that Mr Jamieson ran a business that was separate from the defendant and that he had never heard of Broadlands.  However, in the plaintiffs' cashbooks in his wife's handwriting there is an entry "Broadland (sic) $40,000 at call 13%".  The entry is at the back of one of the books and is not recorded in sequence with other investments.  After the entry in the cashbooks was put to Mr MacKenzie in cross‑examination he accepted that he gave Mr Jamieson instructions to put $40,000.00 on deposit with Broadlands.

7. Further, Mr MacKenzie's recollection was that the investment with Earl of Spencer started in the late 1970s or early 1980s.  However, Mr MacKenzie agreed that the plaintiffs' investment with the Earl of Spencer was $40,000.00 as part of a group of six investors.

8. As a result of war caused injuries, Mr MacKenzie was at all material times in receipt of financial benefits from the Commonwealth Department of Veterans' Affairs ("DVA") .  Periodically Mr and Mrs MacKenzie were required to supply information concerning their assets and income to DVA.  Mr MacKenzie emphasised that he understood his obligation to provide complete and accurate financial information to DVA and that at no stage did he have any intention to mislead it.  In a Department Service Pension Claim Investment form signed by each of the plaintiffs, they verified that as at 17 December 1990 they only had $30,000 on deposit with the defendant ("1990 DVA form").  Mr MacKenzie was unable to explain why there was no reference to the alleged deposit of $40,000 made in June 1988.

9. Mrs MacKenzie also had no recollection of the making, or terms and conditions, of the deposit.  Further, she had no recollection of any discussion with her husband about the deposit.  Like her husband, Mrs MacKenzie said she was unaware until 2000 that Mr Jamieson was conducting a separate business to that of the defendant.  As to her entry in the cashbooks concerning Broadlands, her evidence was to the effect that some years before the commencement of the action she became aware of the Broadlands deposit from the person who prepared her taxation returns.  Her evidence was that although she knew the Broadlands deposit was unauthorised, she took no action in relation to the misapplication of the funds, not even telling Mr MacKenzie, and continued to make investments with the defendant.

10. Mrs MacKenzie's explanation for signing the 1990 DVA form, which on its face is inconsistent with this claim, was that somebody else prepared the information in the document and she signed it without personally verifying the information although thinking it was true at the time.

Issues

1. The issues in the case as it was conducted are:

   (a)whether the plaintiffs deposited the money with the defendant.  If the answer is no, the plaintiffs fail;

   (b)if the answer to (a) is yes, whether the plaintiffs authorised or directed Mr Jamieson to deposit the money with Broadlands and/or the Earl of Spencer mortgage investment.  If the answer is yes, the plaintiffs fail;

   (c)if the answer to (b) is no, whether LKJA repaid the money to the plaintiffs and if so whether that effected a discharge of the defendant's debt or otherwise bars the plaintiffs' claim;

   (d)if the answer to (c) is no, what are the terms and conditions of the contract of deposit and is the claim statute barred.

2. The only pleaded issues are (a) and (d).  However, I will address all of the issues that arise on the case as it was conducted and hear from the parties on any application to amend the pleadings.

Findings

1. It is not in dispute that the plaintiffs have no actual recollection of the circumstances surrounding the making, or terms and conditions, of the alleged deposit.  The evidence in support of the claim includes Mrs MacKenzie's entry in her cashbooks, the issue of a receipt by the defendant and the plaintiffs' evidence that they had not heard of or had any dealings with LKJA.

2. In relation to the cashbooks, the defendant submitted that the statement in the cashbooks was not admissible to prove the truth of its contents as it was nothing more than a self‑serving statement or a prior consistent statement which did not constitute evidence against the defendant that the deposit was made. I disagree. The tender was made and the cashbooks admitted under s 79C of the Evidence Act 1906 (WA). That section makes a statement in a document admissible (as evidence of the truth thereof) notwithstanding that the person who made it is a witness in the proceedings and whether or not the witness gives evidence consistent or inconsistent with the statement or is in such a form that it would not be admissible if given as oral evidence: s 79C(3)(c) and (d).

3. Mr Jamieson's evidence of the error in issuing the receipt and its subsequent recovery were not put to the plaintiffs in cross‑examination.  The plaintiffs in closing submitted that the rule in Browne v Dunn (1893) 6 R 67 precludes acceptance of Mr Jamieson's evidence that the receipt was issued in error and subsequently retrieved from the plaintiffs. In my view it does not. The plaintiffs, through their advisers, were put on notice of the evidence in Mr Jamieson's responsive witness statement. The plaintiffs rely on the letter to establish that the defendant issued a receipt. Further, the plaintiffs have no independent recollection of events at around the time the deposit was allegedly made. There is no unfairness which necessitates the exclusion or rejection of the evidence: Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation (1983) 1 NSWLR 1 at 16.

4. Having regard to the entry in the cashbooks and the plaintiffs' unchallenged evidence that the cheque would have been made out in anticipation of Mr MacKenzie attending at the defendant's offices the inferences arise, and I find, that the plaintiffs' initial intention was to deposit funds with the defendant and that Mrs MacKenzie made the cheque payable to the defendant.  These inferences are also supported by Mr Jamieson's acknowledgement in the LKJA letter that LKJA staff issued a receipt on behalf of the defendant, albeit erroneously.

5. However, even if the plaintiffs' cheque was made payable to the defendant and was delivered into its possession (as to which, it is necessary to consider whether the person receiving the cheque was acting within the scope of his or her authority to do so and see ss 3(1), 25, 27 and 28 of the Cheques Act 1986 (Cth)) that does not establish a deposit with the defendant.  The relationship between a person who applies to a financial institution to make a deposit which deposit is accepted by the financial institution is contractual.  If the financial institution accepts the deposit, the customer becomes the unsecured creditor of the financial institution:  Croton v R (1967) 117 CLR 326.

6. The fact that the plaintiffs may have effected delivery of a cheque to the defendant is not determinative because receipt or possession of the cheque does not in this case connote acceptance by the defendant of a deposit.  Mr Jamieson's unchallenged evidence was that he was the only person authorised to receive a deposit on behalf of the defendant and to agree terms with depositors.  Mr MacKenzie could not recall the events surrounding the deposit.  There is no evidence from him as to who received the cheque.  It can be inferred from the LKJA letter of 15 June 1988 that it was or may have been someone other than Mr Jamieson.  If a deposit had been made it is to be expected that there would be a Details of Deposit sheet, a deposit certificate and a confirmatory letter from the defendant to the plaintiffs.  There is no evidence that any of those documents were generated.

7. The contemporaneous documents are consistent with Mr Jamieson's evidence that Mr MacKenzie, on behalf of the plaintiffs, authorised Mr Jamieson to deposit the funds firstly with Broadlands and then in the Earl of Spencer mortgage investment, the principal of which was repaid by LKJA to the plaintiffs on 10 February 1990.

8. However, the LKJA trust account ledgers for the plaintiffs for the period prior to 22 March 1989 and for the mortgagor, the Earl of Spencer, were not produced.  The plaintiffs submitted that in the absence of an explanation for the failure to produce all relevant trust account records it should be assumed that they do not support the defendant's case.  Mr Jamieson did give an explanation for the failure to produce the documents which was that they were not in his possession.  His trustee in bankruptcy took possession of all of the LKJA records in 2000, which records were thereafter seized by the police.  In those circumstances I am not prepared to make the assumption that they do not support the defendant's case.

9. Mr MacKenzie's evidence was equivocal.  At one stage he accepted that he must have given Mr Jamieson instructions to deposit the funds with Broadlands.  Mrs MacKenzie's evidence on the Broadlands' entry in her cashbooks is not convincing or credible.   She was a businesswoman and she kept the books.  Mr Wroth, the plaintiffs' accountant from 1994 described her as astute, albeit trusting.  If, to her knowledge, the Broadlands investment was unauthorised the strong probability is that she would have taken steps to address the misconduct, the least of which would have been to tell her husband.  She did not, and continued investing with the defendant.

10. Further, I reject the plaintiffs' evidence that they did not know until 2000 that Mr Jamieson was conducting a business separate from that of the defendant.  The LKJA letter of 15 June 1988 (which I have no reason to conclude was not sent) is the first of a series of documents that are inconsistent with the plaintiffs' evidence on this matter.  I address this issue in detail in my reasons in relation to Item 9.  Other aspects of the plaintiffs' conduct undermine their claim, in particular, the plaintiffs' failure to raise any matter relating to the alleged deposit with the defendant over some 12 years and the inconsistent information in the 1990 DVA form.

11. In summary, Mr Jamieson's evidence is supported by the contemporaneous documentary evidence and the inherent probabilities.  For these reasons I accept Mr Jamieson's evidence concerning Item 6, including where it conflicts with that of the plaintiffs.  Accordingly, I find that the plaintiffs authorised Mr Jamieson to deposit the funds with Broadlands and then the Earl of Spencer mortgage investment the principal of which was repaid to the plaintiffs in February 1990. Further, I am not persuaded that the moneys were at any time on deposit with the defendant.  Accordingly, the plaintiffs' Item 6 claim fails.  In view of my findings it is unnecessary to address issues (c) and (d).  

Item 7

Evidence

1. Mr MacKenzie's evidence was that on 23 June 1988 the plaintiffs deposited $20,000 with the defendant.  He based that evidence on an entry in the plaintiffs' cashbooks on that date concerning a cheque for $20,000 in favour of "Albany Finance".  The plaintiffs did not have in their possession a deposit certificate or receipt for that sum and Mr MacKenzie said the receipt and certificate must have been lost or destroyed when he cleared out the plaintiffs' records.  It was also his evidence that the plaintiffs had not received any interest on the deposit and that the capital had not been repaid.

2. Mr MacKenzie admitted that he had no actual recollection of the making, or the terms and conditions, of the deposit.

3. Mr Jamieson's evidence was that Mr MacKenzie instructed him to put the sum of $20,000 on deposit (via LKJA) with Australian National Finance Ltd ("ANF").  Mr MacKenzie denied being aware that Mr Jamieson was involved in a business apart from the defendant or of ANF or of the transaction in question.  Mrs MacKenzie said she had not heard of ANF.

4. The independent documentary evidence establishes that there was secured debenture stock in ANF to the value of $20,000 in the plaintiffs' names accepted by ANF on 27 June 1988.  It was for a term of six months then at call at an interest rate of 13.3 per cent per annum.  Mr Jamieson was cross‑examined as to why the plaintiffs would authorise an investment at 13.3 per cent when some three weeks earlier they had deposited $50,000 with the defendant for 12 months at 14.5 per cent (Item 5).  His explanation was that the defendant was not at that time taking short term deposits or deposits at call.  According to Mr Jamieson, if the defendant did not require funds for day to day use he was to avoid taking deposits if possible because of the cost to the defendant.

5. In evidence by consent was a letter dated 16 March 1989 signed by Mr MacKenzie on behalf of himself and his wife on the letterhead of LKJA addressed to ANF in the following terms:

   "RE: DEBENTURE D11552

   J & J E MACKENZIE

   Please withdraw deposit and forward cheque for principal of $20000.00 plus interest to:‑

   L K JAMIESON & ASSOCIATES

   P O Box 1033

   ALBANY."

6. The plaintiffs' counsel informed the Court that the letter went into evidence by consent because the plaintiffs did not dispute the signature.  Mr MacKenzie said in his witness statement that he had no recollection of signing the letter.  However, in cross‑examination Mr MacKenzie suggested for the first time that the letter was falsified.

7. Mr Jamieson's evidence was that Mr MacKenzie instructed Mr Jamieson to put the moneys returned from ANF on deposit with the defendant.  Mr MacKenzie denied ever giving that instruction.

8. The independent documentary evidence establishes that ANF paid the sum of $22,000.33 by cheque in favour of the plaintiffs delivered to LKJA on or about 20 March 1989.  The LKJA trust account ledger records that amount was paid into the LKJA trust account in the name of the plaintiffs on 22 March 1989 and on the same date, the sum of $22,000.33 was paid out of the LKJA trust account to the defendant who combined that money with the moneys redeemed from plaintiffs' deposit number 292 to became plaintiffs' deposit number 294 with a principal of $31,781.97.  The events surrounding deposit number 294 are dealt with in the context of Item 5.

Issues

1. The issues in the case as it was conducted are:

   (a)whether the plaintiffs deposited the money with the defendant.  If the answer is no, the plaintiffs fail;

   (b)if the answer to (a) is yes, whether the plaintiffs authorised or directed Mr Jamieson to deposit the money with ANF;

   (c)if the answer to (b) is yes, whether the plaintiffs authorised ANF to pay the funds to LKJA;

   (d)if the answer to (c) is yes, whether the plaintiffs authorised LKJA to pay the moneys to the plaintiffs' account with the defendant;

   (e)if the answer to any of (b) to (d) is no, whether the payment by LKJA to the defendant effected a repayment of the deposit;

   (f)if the answer to (e) is no, what are the terms and conditions of the contract of deposit and is the claim statute barred.

Findings

1. Again, it is not in dispute that the plaintiffs have no recollection of the circumstances surrounding the making, or the terms and conditions, of the alleged deposit.  The evidence in support of their claim is Mrs MacKenzie's entry in her cashbooks and their evidence that they were unaware that Mr Jamieson was involved in a business apart from the defendant or of ANF.

2. Having regard to the entry in the cashbooks and the plaintiffs' evidence of their general approach in their dealings with the defendant, in particular that the plaintiffs would discuss the proposed investment and Mrs MacKenzie would make out a cheque in anticipation of Mr MacKenzie attending at the defendant's offices, the inferences arise, and I find, that the plaintiffs' initial intention was to deposit funds with the defendant and that Mrs MacKenzie made the cheque payable to the defendant.

3. However, as I have concluded earlier in relation to Item 6, that evidence does not establish a deposit with the defendant.  Mr Jamieson's unchallenged evidence was that he was the only person authorised to receive a deposit and to agree terms with depositors.  Mr MacKenzie could not recall the events surrounding the deposit.  Further, if a deposit had been made it is to be expected that there would be a Details of Deposit sheet, a deposit certificate and a confirmatory letter from the defendant to the plaintiffs.  There is no evidence that any of those documents were generated in relation to this deposit.

1. Questions of motive and commerciality do not persuade me that the money was deposited with the defendant.  Even if the defendant was in fact taking short-term deposits or deposits at call and Mr Jamieson was motivated by securing a commission, it does not inevitably follow that the ANF deposit via LKJA was unauthorised.  This case is not concerned with whether Mr Jamieson acted improperly in securing the plaintiffs' authority.  In any event, Mr Jamieson's evidence that the defendant was not taking such deposits is uncontradicted and is not inherently implausible.

2. I reject Mr MacKenzie's evidence that the letter of 16 March 1989 on LKJA letterhead addressed to ANF was falsified or otherwise not genuine.  His evidence was not based on actual recollection but was an unsubstantiated allegation in response to an item of evidence clearly inconsistent with the plaintiffs' case.  The inferences I draw from this letter are that it was signed by Mr MacKenzie who was aware of its contents, that he was aware the plaintiffs had funds deposited with ANF, that he directed ANF to forward the funds to LKJA and that he was aware of the existence of LKJA separately from the defendant.  Further, I am not persuaded that he first became aware of the ANF investment at about the time he signed the letter in March 1989.  It is to be expected that if Mr Jamieson had made an unauthorised investment, Mr MacKenzie would have voiced a protest or otherwise marked his displeasure in some way.  There is no such evidence and the relationship continued for the next 12 years.

3. As the contemporaneous documents are consistent with Mr Jamieson's evidence on these matters I accept it, including where it is inconsistent with that of the plaintiffs.  Accordingly, I find that Mr MacKenzie authorised Mr Jamieson to deposit the funds with ANF and then with LKJA.  Further, I am not persuaded that the moneys were at any time on deposit with the defendant.  Accordingly, the plaintiffs' claim fails.

4. Issue (d) concerning whether Mr MacKenzie authorised the transfer of funds from LKJA to the plaintiffs' account with the defendant overlaps with the issues that arise in relation to Item 5.  I deal with it in that context.  In view of my findings it is unnecessary to address issues (e) and (f).

Items 2 and 16

1. It is not in dispute that the plaintiffs deposited the sum of $9,500 with the defendant on 19 November 1987.  It is supported by the documentary evidence including an entry in the plaintiffs' cashbooks, deposit certificate numbered 310 and a letter dated 19 November 1987 from the defendant to the plaintiffs acknowledging the deposit and enclosing, inter alia, the deposit certificate.  Deposit certificate 310 states the interest rate (14 per cent), the term of the deposit (12 months), the maturity date (18 November 1988) and that interest is payable quarterly on the last days of March, June, September and December and on maturity.

2. The documentary evidence also establishes that on 3 December 1987, on the plaintiffs' instructions, the defendant paid to the plaintiffs a portion of the deposit, being $1,500 of the principal and interest of $54.66.  The balance of the principal of $8,000 was reinvested for 12 months at the defendant's then current interest rate of 14 per cent and was the subject of deposit certificate 320.  That deposit was to mature on 2 December 1988.

3. The finance business was carried on by a unit trust until about February or March 1988 when the business was transferred to the defendant.  The plaintiffs' deposit numbered 320 was transferred to the defendant on the same terms and conditions as the original deposit and was allocated a new deposit certificate numbered 76.

4. In the period 30 March 1988 to 2 December 1988 interest on the deposit was capitalised quarterly and the defendant advised the plaintiffs in writing accordingly.

5. On 2 December 1988 the deposit matured.  On that date the principal and interest totalled $9,084.91.  By letter dated 7 December 1988 from the defendant to the plaintiffs, the defendant referred to the plaintiffs' request that the total amount be transferred to a new deposit and advised that had occurred with the new deposit number being 245.  That deposit was for a term of 12 months at the defendant's then current interest rate of 14.25 per cent per annum.

6. The defendant capitalised the interest on that deposit at the end of December 1988 and March, June, September and December 1989.  The defendant advised the plaintiffs in writing on each occasion that interest was capitalised.  The plaintiffs did not have, and Mr MacKenzie did not recall receiving, the letters from the defendant advising of the capitalisation of interest in the period 30 March 1989 to 31 December 1989.

7. The plaintiffs claim that they have received no interest on deposit number 245 since 31 December 1989 and that the principal has not been repaid.

8. Mr MacKenzie confirmed that he had made no enquiries or taken any other steps in the period between December 1989 and the year 2000 to find out why he had received no communication from the defendant about the deposit and no payments of interest on that deposit.

9. It was Mr Jamieson's evidence that on or about 2 February 1990 he received instructions from Mr MacKenzie to redeem the sum of $45,000 from the plaintiffs' deposits numbered 196, 245 and 294 with the defendant.  He said that under cover of a letter dated 2 February 1990 from the defendant to the plaintiffs he confirmed the plaintiffs' instructions and enclosed a cheque for $45,000.  The letter materially provides:

   "We confirm your instructions to withdraw $45000.00 from the above deposits.

DEPOSIT NO.	PRINCIPAL	INTEREST	TOTAL
196	$  2898.38	$ 36.85	$  2935.23
245	10568.67	132.04	10700.71
294	31781.97	431.89	32213.86
$45249.02	$600.78	$45849.80

From the total of $45849.80 we enclose our cheque for $45000.00.  The balance of $849.80 has been transferred to a new deposit number 501 and a certificate is enclosed."

1. Mr and Mrs MacKenzie denied giving such instructions or receiving the sum of $45,000.  However, Mrs MacKenzie said in cross‑examination that they may have received the payment but that she had no recollection of it.

2. It is stated in the letter that the balance of $849.80 had been transferred to a new deposit number 501.  The resolution of the relevant issues, namely whether the defendant paid to the plaintiffs the sum of $45,000 in February 1990 and what happened to the balance also arise for determination in relation to Item 5.  I deal with them in that context.

Item 5

Evidence

1. It is not in dispute that the plaintiffs deposited the sum of $50,000 with the defendant on 3 June 1988.  It is supported by the documentary evidence, including an entry in the plaintiffs' cashbooks, a deposit certificate (number 152) and a letter dated 3 June 1988 from the defendant to the plaintiffs acknowledging the deposit and enclosing, inter alia, the deposit certificate.  Deposit certificate 152 identifies the date of the deposit (3 June 1988), the interest rate (14.5 per cent), the term of the deposit (12 months), the maturity date (2 June 1989) and that interest is payable quarterly on the last days of March, June, September and December and on maturity.

2. When the action commenced in December 2000 the plaintiffs alleged that they had not received any repayment of principal or interest on the deposit of $50,000.  Just prior to trial the claim was reduced to $9,759.98 and interest from 16 March 1989.

3. The documentary evidence establishes that the defendant paid the plaintiffs' interest on deposit number 152 in the sum of $576.03 under cover of letter dated 30 June 1988.  The cheque for interest included interest which had accrued up to and including 30 June 1988 on another deposit (128) and the total interest cheque was for $662.33.  The receipt of this interest is not recorded in the plaintiffs' cashbooks.

4. Further, the documentary evidence establishes that the defendant paid to the plaintiffs, by cheque, interest for the quarter ending 30 September 1988 in the sum of $1,827.40.  The cheque was for $2,306.58 and included interest paid on other deposits (196 and 128).  The receipt of that cheque for interest is not recorded in the plaintiffs' cashbooks.

5. The documentary evidence also establishes that the defendant paid the plaintiffs interest in the sum of $1,827.40 for the quarter ending 30 December 1988.  The cheque was for a total sum of $2,482.74, which included interest which had accrued on deposit 196 as well as 152.  The receipt of the interest was not recorded in the plaintiffs' cashbooks.  Although the plaintiffs now make no claim for interest before 16 March 1989, Mr MacKenzie's evidence was that he was positive he had never received interest prior to 16 March 1989 because it was not recorded in the plaintiffs' cashbooks.

6. By the time of the trial it was not in dispute that on or around 16 March 1989 the defendant withdrew from deposit 152 and paid to the plaintiffs the sum of $41,709.88.  The transaction was confirmed under cover of letter dated 16 March 1989 from the defendant to the plaintiffs, which is in the following terms:

   "RE:        DEPOSIT NO. 152

   We acknowledge your instructions to withdraw a portion of the above Deposit on the 16th March 1989.

   Our cheque for $41709.88 representing principal of $40240.02 and interest totalling $1469.86 for the period 31st December 1988 to 15th March 1989 is enclosed.

   The remaining principal of $9759.98 has been deposited to mature at call at our current interest rate of 13.50% per annum.

   Certificate number 292 is enclosed for your records."

7. Thus, the balance of the deposit in the sum of $9,759.98 was the subject of a new deposit account and deposit certificate numbered 292.  The deposit certificate confirms that the deposit was at call and that interest was payable quarterly on the last days of March, June, September and December and on maturity.

8. Mr MacKenzie gave evidence that he did not recall instructing the defendant to withdraw the sum of $41,709.88 but that he purchased a property in Bohemia Street, Albany at about the time.  Although he was unable to locate any records which identified the source of the funds used to purchase that property he accepted that moneys withdrawn from deposit 152 together with the sum of $20,527.12 from deposit 196, (being Item 8 of the original claim abandoned before trial) totalling $62,237.00 were used for that purpose.

9. The sum of $41,709.88 comprised principal and interest.  There is no record in the plaintiffs' cashbooks of the receipt of the principal, interest or total of $41,709.88.  Further, there is no record of the receipt of the total sum of $62,237.00.

10. Notwithstanding Mr MacKenzie's understanding which until just prior to trial was that he had not received any interest payments on moneys in deposit account number 292 and had not received any repayment of principal, he confirmed he did not raise that matter with the defendant at any stage between 1989 and 2000.  Mr MacKenzie said that he assumed it would have been on call and interest would have accumulated.  Mr MacKenzie at no stage asked Mr Jamieson how much he had earned on the deposit in that period.

11. The evidence establishes that on 22 March 1989, the sum of $22,000.33 was paid out of the trust account of LKJA to the defendant for and on behalf of the plaintiffs.  The money in the trust account was received from ANF addressed to the plaintiffs care of LKJA.  This transaction is the subject of the plaintiffs' Item 7 claim.

12. It was Mr Jamieson's evidence that the money in deposit number 292 was combined with the sum of $22,000.33 and became deposit number 294 with a principal of $31,781.97.  There is in evidence a letter dated 22 March 1989 from the defendant to the plaintiffs about these matters.  It is in the following terms:

    "RE:  DEPOSIT NUMBER 292

    As requested by you the above Deposits were redeemed on the 21st March 1989 and, together with the additional principal of $22000.33 have been transferred to a new deposit.  See summary below.

    DEPOSIT NO.    PRINCIPAL     INTEREST            TOTAL

    292  $9759.98            $   21.60            $    9781.64

    Receipt No. 7581  22000.33  -                   22000.33

    _ _ _ _ _ _

    TOTAL:      $31781.97
      _ _ _ _ _ _

    The new principal of $31781.97 has been transferred to a new Deposit Number 294 for 12 months at our current interest rate of 15.50% per annum.

    Enclosed are the following:

    1.   Certificate No. 294 for your records.

    2.   Receipt No. 7581 for $22000.33"

13. Mr MacKenzie's evidence was that he and his wife had no record of depositing $22,000.33 with the defendant on 22 March 1989 or at all and that if he had that money available for investment at that time he was sure he would have applied it towards the purchase of the Bohemia Street property.  However, he did concede in cross‑examination that he may have had that amount available for investment at that time.

14. The defendant's evidence was that it paid to the plaintiffs by cheque, interest on deposit 294 in the sum of $1,228.18 under cover of letter dated 30 June 1989.  The cheque was for a total of $1,543.80 which included interest on deposit 346.

15. As the plaintiffs did not have the original of the letter of 30 June 1989 and as there is no record in the plaintiffs' cashbooks of having received the cheque for $1,543.80, Mr MacKenzie concluded that the money had not been received.

16. In cross‑examination, Mr MacKenzie was taken to the plaintiffs' Home Building Society microfiche statements for the relevant period which record that on 4 July 1989 the sum of $1,543.80 was deposited into their account.  On the basis of that evidence, Mr MacKenzie accepted that the plaintiffs had indeed received the cheque for $1,543.80 which included interest on deposit 294 for the quarter ending 30 June 1989.

17. Further, it is the defendant's evidence that by letter dated 30 September 1989 the defendant provided to the plaintiffs a cheque for $1,241.67 representing interest on deposit 294 for the quarter ending 30 September 1989.  This evidence is supported by an entry in the plaintiffs' Home Building Society records for 6 October 1989 which record a deposit of $1,741.67.  That amount is $500 more than the interest payment.  However, a regular deposit of $500 was made to the account in August, September and November 1989.

18. There is also in evidence a file copy of a letter from the defendant to the plaintiffs dated 31 December 1989 recording that the defendant paid to the plaintiffs interest for the quarter ending 31 December 1989 on deposit number 294.  It appears that there are no Home Building Society records showing transactions (if any) to the account in the period from the end of November 1989 to March 1990.

19. As stated earlier, Mr Jamieson's evidence was that on or about 2 February 1990 he received instructions from Mr MacKenzie to redeem the sum of $45,000.00 from the plaintiffs' deposits numbered 196, 245 and 294.  As appears from the defendant's letter dated 2 February 1990 to the plaintiffs (the terms of which are set out earlier), the total of principal and interest in deposit number 294 was $32,213.86, which together with the moneys in the other deposits totalled $45,849.80.

20. Mr Jamieson said that the sum of $45,000.00 was paid to the plaintiffs and the balance of $849.80 was transferred to a new deposit number 501.  There is other documentary evidence in the defendant's possession to support that evidence.  In particular, a cheque requisition form dated 2 February 1990 written and initialled by Mr Jamieson for cheque number 002701 for the plaintiffs in the sum of $45,000.00, the defendant's bank statement confirming the withdrawal, a Details of Deposit sheet for deposit number 501 and an office copy of deposit account certificate number 501.

21. Deposit certificate 501 records that a deposit of $849.80 was made on 2 February 1990 which was at call at an interest rate of 16 per cent per annum with interest to be accrued or compounded quarterly.

22. There is in evidence a file copy of a letter dated 31 March 1990 from the defendant to the plaintiffs advising the plaintiffs of the interest that had accrued on, inter alia, deposit 501 in the period 1 January 1990 to 31 March 1990.

23. There is also a file copy of a letter dated 19 April 1990 from the defendant to the plaintiffs referring to a request from Mr MacKenzie and confirming that deposit number 501 together with a further sum of $1,523.33 had become a new deposit numbered 540 which was at call at the defendant's current interest rate.  Certificate number 540 and a receipt for the new deposit were said to be enclosed with the letter.  There is a Details of Deposit sheet for new deposit number 540 prepared by Mr Jamieson and an office copy of deposit certificate number 540.  The LKJA trust account ledger for the plaintiffs records that the sum of $1,523.33 was withdrawn from the LKJA trust account on 19 April 1990 (reducing the funds standing to the plaintiffs' credit to nil) and paid to the defendant for the plaintiffs' deposit account 540.

24. Also in evidence is an office copy of a letter dated 30 June 1990 from the defendant to the plaintiffs advising that interest had accrued on, inter alia, deposit number 540 for the period 1 April 1990 to 30 June 1990.

25. Mr Jamieson's evidence was that on or about 9 July 1990 he received instructions from Mr MacKenzie to redeem part of deposit number 540 and to deposit the balance of it in a separate deposit with the defendant.  He said that there was no letter from the defendant to the plaintiffs confirming these instructions, but that there was a notation to that effect on the Details of Deposit sheet for deposit number 540 from which he concluded that the sum of $1,990.95 was paid to the plaintiffs on about 9 July 1990 and that the balance of $497.30 was deposited into new deposit number 578 with the defendant.

26. Mr Jamieson said his instructions were to redeem part of deposit 540 together with deposits 527 and 571 (the latter is part of Item 9) and pay the plaintiffs $68,493.73.  The payment of that sum by the defendant is supported by the defendant's cheque requisition form and cash payment ledger.  Further, by the time of trial the plaintiffs accepted that they had received that amount from the defendant.  However, there is a letter in evidence, the date of which is obscured by the copy of a cheque requisition, confirming the plaintiffs' instructions to withdraw deposits 527, 501 and a portion of deposit 346 and enclosing a cheque for $68,493.73.  Mr Jamieson was not questioned about this letter.  Although the cheque requisition form refers to deposits 527, 540 and 571, no mention is made in the letter of deposit 540 (a combination of 501 and $1,523.23 from LKJA) or deposit 571.

27. The defendant's documentary records contain a Details of Deposit sheet for deposit number 578 and an office copy of deposit certificate number 578.  The deposit certificate records that the deposit was made on 10 July 1990 for the sum of $497.30 and was at call with an interest rate of 15 per cent per annum to be paid quarterly.

28. It was Mr Jamieson's evidence that on or about 31 August 1990 he received instructions from Mr MacKenzie to withdraw the moneys in deposit number 578 and to deposit it with LKJA.  An office copy of a letter dated 31 August 1990 from the defendant to the plaintiffs is in the following terms:

    "We acknowledge your instructions to withdraw the above deposit on the 31st August 1990.

    Our cheque for $509.77 representing the principal sum of $497.30 together with interest of $12.47 for the period 10 July 1991 to 31 July 1991 is enclosed."

29. However, it was accepted that the cheque was not enclosed with the letter.  An Albany Finance cheque requisition shows that the cheque was made payable to "L K Jamieson & Assoc Trust Acc J & J E Mckenzie (sic)".  The receipt of that sum is recorded in LKJA's trust account ledger for the plaintiffs.  It is recorded as having been paid in on 30 August 1990 however it appears the "0" is formed from what was initially recorded as  "1" (ie 31).  Further, the LKJA trust account ledger records that on the same day on which the receipt of the funds is noted they are withdrawn and redeposited with the defendant, together with other funds the subject of Item 9, as deposit number 615.

Issues

1. The issues in the case as it was conducted are:

   (a)whether the defendant paid to the plaintiffs the sum of $45,000.00 in February 1990 in part satisfaction of deposits 245 (Item 2/16) and 294 (Items 5 and 7);

   (b)as to the alleged balance of $849.80 whether;

   (i)the plaintiffs authorised the creation of deposit 501;

   (ii)in April 1990, the plaintiffs authorised the redemption of the funds in deposit 501 and the transfer of $1,523.33 from the LKJA trust account to the defendant to be combined to become deposit 540;

   (iii)the plaintiffs authorised the redemption of deposit 540 and received the sum of $1,990.95 from deposit number 540 as part of the sum of $68,493.73 with the balance of that sum coming from the redemption of deposits 527 and 571;

   (iv)on or about 30 or 31 August 1990 the plaintiffs authorised the transfer of the balance of the funds in deposit 540, which became deposit 578 to be;

   -transferred to LKJA; and

   -re-transferred on the same day,

   together with other moneys together

   totalling $24,744.08 to become

   deposit 615.

   (c)if any part of the debt remains payable what terms and conditions govern the deposit and is the claim statute barred.

2. The issues in (b)(ii), (iii) and (iv) overlap with issues to be determined in Item 9 and they are dealt with in that context.

Findings

1. The first issue is whether the defendant paid to the plaintiffs the sum of $45,000.00 on or about 2 February 1990 in substantial repayment of deposits 245, 294 and 196.

2. The plaintiffs challenged the veracity of the defendant's letter of 2 February 1990 on two grounds.  Firstly, on the basis that the $45,000.00 was said to have been realised from, inter alia, deposit number 196.   The defendant's records show that deposit number 196 had been repaid to the plaintiffs on 16 March 1989, a fact conceded by Mr Jamieson.  Mr Jamieson's explanation was that in late December 1988 the defendant had provided to the plaintiffs a cheque for interest on deposits 196, 152 and a cheque for interest on deposit 249 and that Mr MacKenzie had returned the cheques to the defendant for deposit with it.  Mr Jamieson's evidence is supported in part by documentary evidence.  By letter dated 30 December 1989, (said to be an error in that it should have referred to 1988) from the defendant to the plaintiffs the defendant enclosed a cheque for $2,482.74 for interest accrued on deposits 196 and 152 for the period 1 October 1988 to 30 December 1988.  Under cover of another letter dated 30 December 1988 from the defendant to the plaintiffs, the defendant enclosed a cheque for $32.80 for interest due on deposit 249 for the period 1 October 1988 to 30 December 1988.  The two cheques totalled $2,515.54.

3. In what appears to be a contemporaneous document prepared by Mr Jamieson referring to capital invested in the defendant for the plaintiffs as at 30 June 1989 there is the following entry:

DEPOSIT NO.	PRINCIPAL	ACCRUED INTEREST	TOTAL DEPOSIT
5700	2515.54	182.06	2697.60

1. Mr Jamieson confirmed that the number "5700" was not a deposit number but may have been a receipt number.  Further, there are letters dated 30 June 1989, 30 September 1989 and 31 December 1989 from the defendant to the plaintiffs advising of interest that had accrued on deposit number "196/152/249".  By 31 December 1989 the total of the principal and interest in deposit number "196/152/249" is said to be $2,898.38.  That figure is the principal for the deposit described as "196" in the defendant's letter of 2 February 1990.  Mr Jamieson's evidence is that the reference to deposit number 196 in that letter is intended to be a reference to deposit "196/152/249".  Based on Mr Jamieson's evidence of the defendant's systems it is to be expected that a new deposit with a new number would have been created.  There is no evidence that occurred.

2. The second basis of the plaintiffs' challenge to the veracity of the letter of 2 February 1990 is the plaintiffs' evidence that they had no knowledge of deposit number 294 which was created by adding $22,033.00 transferred from the LKJA trust account with the funds redeemed from deposit number 292.  For the reasons already set out, I have found that Mr MacKenzie (and thus the plaintiffs) did have knowledge of the moneys transferred to the LKJA trust account from ANF.  I infer from Mr MacKenzie's direction to ANF to forward funds to LKJA that there would have been discussions between Mr Jamieson and Mr MacKenzie as to why the funds were being redeemed from ANF and where to place them after their return to LKJA.

3. Further, the evidence establishes and the plaintiffs accepted that they received the letter dated 30 June 1989 enclosing a cheque for interest for deposit 294.  Based on the Home Building Society records, I accept that the defendant also sent the letter of 30 September 1989 and interest on deposit 294 for the quarter ending 30 September 1989.

4. The plaintiffs' claimed of lack of knowledge of deposit 294 is also inconsistent with receipt of the letter of 22 March 1989 which explicitly refers to the redemption of deposit 292, its combination with the sum of $22,000.33 to become deposit 294 and encloses a receipt for the sum received from LKJA. 

5. Indeed the defendant's case is supported by a paper trail of apparently contemporaneous correspondence from the defendant to the plaintiffs.  To prove that an act has been done, it is admissible to prove any general course of business or office according to which it would ordinarily have been done, there being a probability that the general course will be followed in a particular case:  Connor v Blacktown District Hospital [1971] 1 NSWLR 713 at 721. Mr Jamieson's evidence of the defendant's office systems in place at the material times is confirmed by the documentary evidence and prima facie supports the inference of the preparation and despatch of the correspondence in evidence by the defendant to, and its receipt by, the plaintiffs. 

6. There is very little evidence to displace or undermine the reliability of the system-based inferences concerning correspondence relating to Item 5 up to the letter of 2 February 1990.  The plaintiffs did not retain all of their financial records or correspondence from the defendant and did not keep a reliable record of receipts.  Further, in addition to the letter of 2 February 1990, there is a defendant cheque requisition form for cheque number 002701 for $45,000.00 payable to the plaintiffs and the defendant's bank statement confirms withdrawal of $45,000.00 on 5 February 1990.

7. I am not satisfied that the defendant's correspondence in general was part of an elaborate web of deception conceived and implemented by Mr Jamieson.  Each item of correspondence is to be considered in the context and circumstances of each particular transaction.  I am satisfied that the letters of 22 March 1989 and 2 February 1990 were sent by the defendant and received by the plaintiffs on or about the date of the letters.

8. Further, the plaintiffs' denials of receipt of payments from the defendant are not based on actual recollections.  Mr MacKenzie repeated on many occasions in his evidence that if the receipt of a payment was not noted in the cashbooks, the plaintiffs had not received it.  His evidence was based on the premise that the cashbooks were substantially complete and accurate.  This evidence coincides with Mrs MacKenzie's evidence‑in‑chief.  She describes her book system whereby she maintained a separate page for each category of income and expenditure and recorded the date of each payment or receipt, the name of the person it was paid to or received from and the amount.  She said that she was unaware of any payments or receipts that had been omitted from the ledgers or books, but accepted the possibility that occasionally she may have omitted to record a receipt or payment.

9. In fact, reliance on the cashbooks was fundamentally misconceived.  Mrs MacKenzie admitted in cross‑examination that the cashbooks are incomplete and do not fully or accurately record the plaintiffs' financial dealings with the defendant or indeed other persons from whom the plaintiffs received moneys.  In particular, the cashbooks do not record interest received on the plaintiffs' joint investments and do not record other receipts such as repayment of deposits.  Mrs MacKenzie relied on bank statements as evidence of what had been received.  By the time of the trial most of the bank statements were not available.

10. For these reasons, I accept Mr Jamieson's evidence that Mr MacKenzie instructed him to transfer the funds of $22,000.33 to the plaintiffs' account with the defendant and that the plaintiffs received the sum of $45,000.00 in February 1990.  Accordingly, I also accept that the balance of the moneys became deposit 501 with the plaintiffs' knowledge and implicit approval.

Item 9

Evidence

1. It is not in dispute that the plaintiffs deposited the sum of $64,000.00 with the defendant on 21 June 1989.  That figure is recorded in the plaintiffs' cashbooks although they were no longer in possession of the receipt or deposit certificate for that amount.  The defendants Details of Deposit sheet refers to the deposit on 21 June 1989 for a period of two months maturing on 20 August 1989.  However, the office copy of the relevant deposit account certificate which is numbered 346 shows the term of the deposit as six months rather than two months at an interest rate of 18 per cent per annum.

2. Mr MacKenzie said that the plaintiffs had not received any interest on the deposit and that the capital had not been repaid. 

3. As stated in relation to Item 5, the evidence establishes that the defendant paid to the plaintiffs, by cheque, interest on deposits 294 and 346 (of $315.62) under cover of letter dated 30 June 1989 which cheque was deposited in the plaintiffs' Home Building Society account.

4. Mr MacKenzie accepted that he did not make any inquiry of the defendant concerning expected payments of interest on that deposit until the year 2000.  He was unable to give any explanation as to why he did not make any inquiry in that period.

5. According to Mr Jamieson, Mr MacKenzie told him on about 6 September 1989 that he wished to withdraw deposit number 346 and place it with LKJA because he wished to use the money for a mortgage investment through Mr Jamieson's business.  It is admitted that the money was not used for that purpose, although LKJA was broking mortgage investment deals for the plaintiffs from time to time.

6. There is in evidence an office copy of a letter dated 6 September 1989 from the defendant to the plaintiffs in the following terms:

   "RE: DEPOSIT NO. 346

   We acknowledge your instructions to withdraw the above deposit on 6 September 1989.

   Our cheque for $66114.63 representing the principal sum of $64000.00 together with interest of $2114.63 for the period of 1st July 1989 to 6th September 1989 is enclosed."

7. There is also a cheque requisition form initialled by Mr Jamieson for cheque number 001798 for that amount.  However, it was admitted by Mr Jamieson that the cheque was not enclosed with the letter.

8. According to Mr Jamieson the defendant's cheque in favour of the plaintiffs for $66,114.63 was deposited into the LKJA trust account in the name of the plaintiffs.  The receipt of that sum is confirmed in the LKJA trust account ledger.  The LKJA trust account ledger records that the sum of $66,114.63 was loaned to various LKJA clients.  I detail the trust account transactions below.

9. Mr Jamieson said that after Mr MacKenzie had given him instructions to put the $64,000 (and interest) into the LKJA trust account, Mr MacKenzie then gave him a series of instructions to take the money out of the trust account and redeposit it with the defendant.

10. The trust account ledger records that the following sums were withdrawn from the LKJA trust account and deposited with the defendant for the plaintiffs on the following dates in accordance with instructions Mr Jamieson said he received from Mr MacKenzie at about the date of each of the deposits:

Date	Amount	Deposit Number
23 March 1990	$ 9,000.00	524
23 March 1990	$ 9,000.00	525
19 April 1990	$ 1,523.33	Part of deposit 540
12 June 1990	$12,000.00	568
13 June 1990	$13,837.16	571
30 August 1990	$24,744.08	615

1. Mr MacKenzie denied having given any of the instructions referred to by Mr Jamieson concerning the plaintiffs' $64,000.00 deposit with the defendant.  Both plaintiffs rejected the proposition that the instructions were given on the basis that they did not know until 2000 that LKJA was a separate business from the defendant and that they did not have any deposits with LKJA.  I deal with those matters in detail below.

2. Neither plaintiff made any inquiry of the defendant before 2000 concerning its failure to pay interest on the deposit or its failure to report to them about the deposit.  Mr MacKenzie was unable to give an explanation as to why he made no inquiry.  Mrs MacKenzie said they made no inquiry because they thought everything was in order at the defendant.  This evidence is difficult to reconcile with Mrs MacKenzie's evidence that she was aware of the unauthorised Broadlands investment.

3. In addition to those deposits with the defendant, $6,000.00 was withdrawn from the LKJA trust account and paid to the defendant for shares in the defendant for which the plaintiffs had subscribed.  It is not in dispute that the plaintiffs purchased shares in the defendant for $6,000.00 in the first half of 1990 as evidenced by a letter of 13 June 1990 from the defendant to the plaintiffs care of their then accountant.

4. Mr Jamieson's evidence was that the total of the amounts referred to above represent the initial deposit of $66,114.63 plus interest and other minor sundry deposits.

(a) Deposit Number 524

1. The documentary evidence supports the creation of deposit number 524.  There is an office copy of a letter dated 23 March 1990 from the defendant to the plaintiffs which acknowledges the plaintiffs' application for a deposit account and encloses a receipt for $9,000.00 and certificate number 524 dated 23 March 1990, a Details of Deposit sheet and an office copy of deposit certificate number 524.  However, there is also in evidence a letter dated 17 August 1990 from the defendant to the plaintiffs, care of their accountant, in the following terms:

   "RE: RIGHTS ISSUE

   Further to our letter dated 13th of June 1990 in which we enclosed share certificate number 043 for the issue of 5455 shares, we now enclose the following: ‑

   1.Deposit certificate number 524 for $9000.00 maturing 22.03.92.

   2.Deposit certificate number 525 for $9000.00 maturing 22.03.93.

   3.Deposit certificate number 568 for $12000.00 maturing 22.03.94.

   4.Statement of interest accrued on the deposits up to and including 30th of June 1990.

   In respect to interest on the deposits, interest of $985.03 up to 30th of June 1990 will be paid to you together with interest for the next quarter ending 30th of September 1990."

2. Mr Jamieson was not questioned about this letter which on its face is inconsistent with the defendant's letter of 23 March 1990 which also says it encloses deposit certificate 524.

3. According to Mr Jamieson, deposit number 524 of $9,000.00 was deposited on 23 March 1990 for a term of two years (maturing on 22 March 1992) at an interest rate of 18 per cent.  There are letters in evidence from the defendant to the plaintiffs for each quarter from 31 March 1990 to 31 March 1992 relating to the accrual of interest on deposit 524.  Mr Jamieson's evidence was that Mr MacKenzie instructed him to withdraw the funds in deposit number 524 on 3 June 1992 and deposit them in LKJA.  That is supported by a signed copy of a letter dated 3 June 1992 from the defendant to the plaintiffs said to enclose a cheque for $13,096.95 together with a cheque requisition form initialled by Mr Jamieson.  Once again, it is common cause that the cheque was not enclosed with the letter.  Indeed it was paid into the LKJA trust account on 3 June 1992 as shown in the trust account records.  Further, the letter refers to the plaintiffs' instructions to redeem the funds but not to their destination.

4. Mr Jamieson admits that sum together with interest remains owing to the plaintiffs by LKJA and says it was claimed by the plaintiffs in District Court proceedings against Mr and Mrs Jamieson ("the District Court action").

(b) Deposit Number 525

1. The documentary evidence establishes that on 23 March 1990 the sum of $9,000.00 was deposited with the defendant in the name of the plaintiffs for a term of three years (maturing on 22 March 1993) at an interest rate of 17.5 per cent per annum with interest payable quarterly.  That evidence includes an office copy of deposit certificate number 525, a Details of Deposit sheet and an office copy of a letter dated 23 March 1990 from the defendant to the plaintiffs purportedly enclosing the deposit certificate and receipt.  However, deposit certificate 525 was also purportedly enclosed with the defendant's letter of 17 August 1990.

2. Further, there are office copies of letters from the defendant to the plaintiffs for each quarter from 31 March 1990 to 30 September 1993 relating to accrual of interest on deposit number 525.

3. According to Mr Jamieson, Mr MacKenzie informed Mr Jamieson on or about 5 November 1993 that Mr MacKenzie wished to withdraw deposit 525 and place it with LKJA.  There is in evidence an office copy of a letter dated 5 November 1993 from the defendant to the plaintiffs confirming the withdrawal instructions and stating that a cheque for $15,814.63 was enclosed.  However, the cheque was not enclosed with the letter and there is no reference to the destination of the funds.  As the trust account records show, it was paid into the LKJA trust account on 5 November 1993.

4. Mr Jamieson says that the sum together with interest remains owing by LKJA and is also the subject of the District Court action.

(c) Deposit Number 540

1. The history of deposit number 540 is described in the section dealing with Item 5.

(d) Deposit Number 568

1. According to Mr Jamieson the amount of $12,000.00 was deposited with the defendant on 12 June 1990 for a term of 4 years at an interest rate of 17 per cent per annum with interest to accrue or to be compounded quarterly.  The documents relating to this deposit which is numbered 568 include an office copy of a letter dated 12 June 1990 from the defendant to the plaintiffs, enclosing a receipt and deposit certificate 568, a Details of Deposit sheet and an office copy of deposit certificate number 568.  Deposit certificate 568 was also purportedly enclosed with the defendant's letter of 17 August 1990.

2. Further, there are office copies of letters from the defendant to the plaintiffs at the end of each quarter from 31 March 1990 to 31 December 1993 relating to the accrual of interest on deposit number 568.

3. Mr Jamieson's evidence is that Mr MacKenzie told him on about 8 March 1994 that he wished to withdraw deposit number 568 from the defendant and place it with LKJA.  There is an office copy of a letter dated 8 March 1994 from the defendant to the plaintiffs confirming the withdrawal instructions and stating that a cheque for $22,372.09 was enclosed.  There is also a cheque requisition form initialled by Mr Jamieson for cheque number 003798 for $22,372.09.  However, the cheque was not enclosed with the letter and there is no reference to the destination of the funds.  After the cheque for $22,372.09 was signed by the defendant it was paid into the LKJA trust account on 8 March 1994.  That is confirmed in the trust account records.

4. According to Mr Jamieson that sum and interest thereon is still owed to the plaintiffs by LKJA and was also claimed by the plaintiffs in the District Court action.

(e) Deposit Number 571

1. According to Mr Jamieson, deposit number 571 was for $13,837.16 which was deposited with the defendant on 14 June 1990 at call.  The interest rate was 16.5 per cent per annum with interest to accrue or compound quarterly.  The transaction is reflected in deposit certificate number 571, a Details of Deposit sheet and an office copy of a letter dated 13 June 1990 from the defendant to the plaintiffs enclosing a receipt and deposit certificate 571.

The s 11 Certificate

1. During the course of giving evidence, Mr Jamieson periodically declined to answer a question on the ground that his answer would incriminate or tend to incriminate him.  In those circumstances, a trial Judge is required to conduct an enquiry to ascertain whether there is some substance to the claim of incrimination:  Attorney General (WA) v Cockram (1990) 2 WAR 477; R v Golightly, unreported; SCt of WA; Library No 970040; 14 February 1997.

2. On each relevant occasion I conducted an inquiry and was satisfied that Mr Jamieson could give material evidence and that it appeared to me expedient for the ends of justice that he be compelled to answer the question. Accordingly, I informed Mr Jamieson that if he answered the questions that he declined to answer and other questions that may be put to him in a satisfactory manner, I would grant him a certificate under s 11(2) of the Evidence Act 1906 (WA). A section 11 certificate means that a statement made in answer to a question put under the protection of a certificate is inadmissible in later criminal proceedings other than for perjury: s 11(2a) of the Evidence Act1906 (WA).

3. Having regard to the width of material which would or may incriminate Mr Jamieson, being all material facts (which out of context may appear to be entirely innocuous) of any pending or potential charge, all of Mr Jamieson's evidence after he took the first objection would potentially be covered by a certificate under the Evidence Act 1906 (WA). I compelled him to give the evidence which in many respects I have accepted. I did not find him to be a generally evasive or untruthful witness. Mr Jamieson answered the questions put to him and other questions in a satisfactory manner and to my satisfaction. The ends of justice have been served. Accordingly, I shall give Mr Jamieson a certificate under s 11(2) of the Evidence Act 1906 (WA) to the effect that Mr Jamieson:

   (a)was called as a witness in these proceedings;

   (b)his evidence was required for the ends of justice;

   (c)his evidence was given to my satisfaction.

Conclusion

1. For the reasons given, I dismiss the plaintiffs' claims the subject of Item Numbers 6, 7, 2/16, 5 and 13.  I find for the plaintiffs in relation to Item 9 and for Mrs MacKenzie in relation to Item 11.

2. In relation to Item 9 my findings are as follows:

   (a)the plaintiffs deposited the sum of $64,000.00 with the defendant on 21 June 1989 for a term of six months maturing on 21 December 1989;

   (b)at the expiry of the term the moneys in the 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 defendant to depositors from time to time on at call deposits on the amount that should have been standing to the plaintiffs' credit from time to time;

   (d)interest would be paid quarterly on the last day of March, June, September and December and interest not paid directly to the plaintiffs 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 defendant paid to the plaintiffs interest on deposit 346 for the quarter ending June 1989 but paid no other interest to the plaintiffs;

   (f)the following amounts should be deducted from the amount owing as at the stated dates:

   (i)$14,000.23 – 9 July 1990

   (ii)$ 1,578.00 – 9 July 1990

   (ii)$24,744.08 – 31 August 1990

   (iii) $ 6,000.00 – 21 March 1990

   (g)the redemption of deposit 346 and the subsequent transactions (in and out) were not authorised by the plaintiffs;

   (h)the claim is not statute barred.

   (i)the defendant owes to the plaintiffs 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 (f).

3. In relation to Item 11, I find that:

   (a)the redemption of deposit 1027 in April 1994 was not authorised by or for Mrs MacKenzie and did not constitute a repayment of that deposit;

   (b)the principal, and interest from 31 March 1994, has not been paid by the defendant 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.

4. Having regard to the evidence and my findings, it may not be necessary to order an inquiry before a Master to ascertain the rates of interest payable on Item number 9 from the date of deposit to the present.  That is a matter to be considered by the parties before I make orders in the action. 

5. In the circumstances, I propose to stand this matter over to a date to be fixed for the purpose of making orders giving effect to these reasons.  The parties are to provide at least two days before the adjourned hearing an agreed minute of the orders to be made which give effect to these reasons.  If agreement has not been reached the parties are to file a minute of proposed orders for which they will contend.

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION: MACKENZIE & ANOR -v- ALBANY FINANCE LTD [2003] WASC 100 (S)

CORAM:   McLURE J

HEARD:   5-7 & 10 JUNE, 8, 9, 12, 13, 15 & 16 AUGUST,

2 & 3 OCTOBER 2002, 11 JUNE & 15 JULY 2003

DELIVERED          :   30 MAY 2003

SUPPLEMENTARY

DECISION              :29 JULY 2003

FILE NO/S:   CIV 2657 of 2000

BETWEEN:   JAMES MACKENZIE

JOAN EDNA MACKENZIE
Plaintiffs

AND

ALBANY FINANCE LTD
Defendant

Catchwords:

Application to amend defence after trial - Whether the prima facie position under O 66 r 2(a) of the Rules of the Supreme Court should apply - Costs of subpoenaed witness - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 66 r 2(a)

Result:

Application to amend successful

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr D H Solomon

Defendant:     Mr M D Howard

Solicitors:

Plaintiffs:     Solomon Brothers

Defendant:     Greenland Brooksby

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

Gould & Birbeck & Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490

Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569

Case(s) also cited:

Aries Tanker Corporation v Total Transport Ltd [1977] 1 WLR 185

Brandsma & Crockett Pty Ltd v Heindal Pty Ltd (2002) 26 WAR 323

Collins v Westralian Sands Ltd (1993) 9 WAR 56

Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400

Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20

Gordon v MacGregor (1909) 8 CLR 316

Guinness Plc v Saunders [1988] 1 WLR 863

Hawthorn Cuppaidge & Badgery v Channell [1992] 2 Qd R 488

Hazcor Pty Ltd v Kirwanon Pty Ltd (1995) 12 WAR 62

Henderson v Amadio Pty Ltd, unreported; Fed Ct of Aust (Heerey J); 22 March 1996

Hill v Ziymack (1908) 7 CLR 352

Jewel Walk Pty Ltd & Anor v Kondinin Group Inc [2001] WASC 197

John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503

Latoudis v Casey (1990) 170 CLR 534

Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81

Morgan v Banning (1999) 20 WAR 474

Rawson v Samuel (1841) 41 ER 451

Re Madden as Official Liquidator of Aquanaut Constructions Pty ltd (in liq) [2001] NSWSC 1051

Sanders v Snell (No 2) (2000) 174 ALR 53

Sanders v Snell [2003] FCAFC 150

Schmidt v Gilmour [1988] WAR 219

Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323

Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S)

Waters v PC Henderson (Australia) Pty Ltd, unreported; CA of NSW; Library No 256098; 6 July 1994

Westgold Resources NL v St George Bank Ltd; unreported; SCt of WA (Anderson J); Library No 980717; 9 December 1998

McLURE J:

Introduction

1. On 30 May 2003 I published my reasons in this matter in which I identified the findings of fact I had made.  On that day, I stood the matter over to a date to be fixed for the purpose of making orders giving effect to the reasons.  Upon consideration of my reasons, the defendant applied for leave to amend its defence in terms of a minute filed with the application.  The application was heard on 15 July 2003.  At that hearing the parties also made submissions concerning costs.  Further, the parties had productively used the time since the publication of my reasons to agree the interest payable on the amounts I found to be owing.  I deal firstly with the amendment application.

Amendment Application

1. The plaintiffs' claim related to seven items or deposits allegedly made by the plaintiffs with the defendant on different dates in the period between 19 November 1987 and 29 January 1998.  The approach I took in my reasons was to identify and deal with the issues in the case as it was conducted by the parties which differed in some respects from the case as it was pleaded.  In relation to Item 9, I identified the case as it was conducted to include the following issues:

   -whether the plaintiffs' account 571 was redeemed and the funds paid to the plaintiffs in combination with deposit accounts 527 and part of 540 together totalling $68,493.73;

   -whether deposit 615 was redeemed and the moneys paid to the plaintiffs on or about 31 August 1990;

   -whether the sum of $6,000 was paid by LKJA to the defendant on behalf of the plaintiffs for the purchase of shares in the defendant;

   -if the [said] payments were made whether they effected a part repayment of the defendant's indebtedness to the plaintiffs in connection with the deposit 346.

   The application to amend the defence relates to these issues.

2. In its defence as it stood at the trial the defendant pleaded in relation to Item 9 that it had repaid in full deposit 346.  The defendant seeks to include new paragraphs 3A, 3B and 12A in its defence.  Those paragraphs are in the following terms:

   "3A.Alternatively, the defendant in part repaid the deposit identified as Item 9 and pleaded in paragraph 2 of the statement of claim by paying the following sums on or about the following dates:

9 July 1990	$14,000.23
9 July 1990	$1,578.00
31 August 1990	$24,744.08
21 March 1990	$6,000.00

3B.Further, or alternatively, the defendant is entitled to set off the following sums it paid on or about the following dates against the plaintiffs' claim in respect of the deposit identified as Item 9 and pleaded in paragraph 2 of the statement of claim:

9 July 1990	$14,000.23
9 July 1990	$1,578.00
31 August 1990	$24,744.08
21 March 1990	$6,000.00

…

12A.Further, or alternatively, in response to paragraph 8.1 of the statement of claim concerning the deposit identified as Item 9:

(a)the defendant repeats here the matters set out in paragraphs 3A and 3B above; and

(b)says that it paid to the plaintiffs interest in the sum of $315.62 on or about 30 June 1989."

1. The proposed amendments in par 3A and 12A(a) reflect the factual and legal issues that I identified in my reasons as arising at trial.

2. The plaintiffs oppose the application to amend.  Their opposition to proposed par 3A is in essence based on their disagreement with my characterisation of the relevant issues as arising from the way the parties conducted the case and my analysis and conclusion that the payments effected a part repayment of the defendant's indebtedness in connection with the deposit 346 (see pars 169 and 256‑265).  As appears from the context, the reference to "set off" in par 262 is not to the term in its technical sense, whether by way of common law or equitable set off, both of which depend on a claim of right.  Indeed, I rejected the plaintiffs' submissions in closing that the defendant had a claim of right to the moneys paid to the plaintiffs.

3. I do not intend to revisit my conclusions relating to these issues save to note that I reject the plaintiffs' submission on the amendment application that the evidence on the issues went solely to the question whether repayment was effected on the first transfer of the deposit to LKJA.  That submission is inconsistent with the plaintiffs' closing submissions on Item 9 at trial.

4. I regard the principle stated by the High Court in Gould & Birbeck & Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 as apt in the circumstances of this case. The Court said (at page 517):

   "Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting a case against him, pleadings should state with sufficient clearness the case of the party whose averments they are.  That is their function.  Their function is discharged when the case is presented with reasonable clearness.  Any want of clearness can be cured by amendment or particulars.  But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest."

5. I am satisfied that is what occurred in this case and that there is no relevant prejudice to the plaintiffs to allow the defendant to amend in accordance with proposed par 3A and 12A(a) of the minute.  I propose to give leave to amend accordingly.  I refuse leave to amend in accordance with par 3B because it is inconsistent with my reasons and sub‑paragraph 12A(b) because it goes beyond my findings.

Final Orders

1. I can now make final orders in the proceedings.  There will be orders that:

   (1)the defendant pay to the plaintiffs the sum of $78,556.12 and interest thereon at the daily rate of $9.65 from 2 July 2003 until the date of these orders;

   (2)the defendant pay to the second‑named plaintiff the sum of $22,423.37 and interest thereon at the daily rate of $2.76 from 16 July 2003 until the date of these orders;

   (3)the plaintiffs' claims otherwise be dismissed.

2. There remains the question of costs.

Costs

1. It is common cause that the plaintiffs' claims in relation to each item involved separate causes of action. That being the case, O 66 r 2(a) applies. That provides:

   "2.In the absence of any special order –

   (a)where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought;"

2. This Court's approach to that rule was considered by Anderson J in Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569. He said (at 574‑575):

   "In my opinion the approach required by the rules of this Court is that, once it is seen that separate causes of action are involved, and that the plaintiff has succeeded on only one or some, the defendant is prima facie entitled to his costs on the other or others.  However, in my experience, this Court will not make such an order as of course.  The court will always look at the realities of the case and attempt to do substantial justice.  Thus it may be that, although it is strictly correct to say that different causes of action are involved, there may have been only one contest in substance.  This will often be so when all causes of action arise out of the one course of dealings, the one transaction or the same facts."

3. The Judge in that case said that was not a case in which "it would be fair to take the easy course of awarding costs to the plaintiff on the issue on which it was successful and costs for the second and fourth defendants on the other issues". It might be the easy course for the trial Judge but in this case it would involve many judgment calls for the taxing officer who has not had the benefit of sitting through the 12 days of hearing. In recognition of the additional time and cost involved in a taxation in accordance with O 66 r 2(a), both parties submitted that I should award costs to the overall winning party reduced by a percentage to reflect the areas of loss. I am prepared to take that approach.

4. The plaintiffs submit that to award them 80 per cent of their costs would be a generous reduction on account of the matters on which they did not succeed.  The plaintiffs also seek special costs orders in respect of:

   (a)Items 9(b) and 9(c) – discovery and inspection;

   (b)Item 13 – getting up case for trial; and

   (c)Items 14(a) and 14(b) – fee on brief, first day of trial and preparation, and second and each successive day of hearing.

5. The plaintiffs relied on the affidavit of its solicitor, Mr Bellamy in support of the application for special costs orders.  In relation to discovery he refers to the 12 volume trial bundle of 3,062 pages which contain most of the parties discovered documents.  He also refers to further and better and continuing discovery.  In relation to trial preparation he refers to the factual and legal complexity of the matters in issue.  As to counsel fees, he notes that the applicable determination of the legal costs committee does not make provision for refreshers on counsel fees.  The trial was part heard on two occasions and on each occasion it was necessary for counsel and Mr Bellamy to spend a considerable amount of time refreshing their memories on the detailed transactions.  I was informed that at the time of entry of the action for trial the plaintiffs' estimated it would take four days.  The trial lasted 12 days - four in June 2002, six in August 2002 and two in October 2002.  Mr Bellamy also deposes that the plaintiffs have incurred legal costs of $167,000 and if special costs orders are not made, the plaintiffs will not recover more than $90,000 on taxation.

6. On the other hand the defendant points out that of the seven items claimed at trial, the plaintiffs were wholly unsuccessful in respect of five (Items 6, 7, 2/16, 5 and 13) successful in respect of one (Item 11) and partially successful on one (Item 9).  The defendant also refers to items abandoned close to trial (Items 8, 12, 17 and 18).  However, I have already dealt with the costs in relation to those matters.  Those items were abandoned as a result of the plaintiffs' application made in May 2002 to amend the statement of claim.  I granted leave to amend and ordered that the plaintiffs pay the costs of the application and the costs thrown away by the amendments.

7. The defendant also points out that of the principal claimed as owing at trial of $161,344.89 the plaintiffs have only been successful in respect of $28,177.69.  If interest is included, the plaintiffs have been successful to the extent of just over $100,000.

8. It is incorrect to describe all of the causes of action in this case as being in substance one contest.  The individual items were largely separate and discreet although there was evidence that was common to all or nearly all items, in particular, the statements made by the plaintiffs in their income tax returns, veteran affairs forms, audit letters and the District Court action and the defendant's systems.  In my view, the appropriate yardstick to use in a general sense is the time taken at trial in respect of the items on which the plaintiffs were successful.  Based on the nature and extent of the facts and issues directly and indirectly involved in the determination of Items 9 and 11, I am persuaded that the plaintiffs should be placed in a net positive costs position vis-à-vis the defendant.  It would do justice to the parties if the plaintiffs are awarded 40 per cent of their taxed costs and disbursements.

9. I am not persuaded that this is an appropriate case for special costs orders.  Such orders would be inconsistent with my assessment of the appropriate costs allocation.  In any event, it was not a case of unusual complexity or importance.  Further, I am not satisfied that there is anything of significance relating to the discovery or the getting up that qualifies as a good or sufficient reason to make the orders.  The staleness of most of the transactions may have increased costs, however I am not satisfied that the defendant should be visited with those cost consequences.

1. As to the claim for refreshers, I am not satisfied that the plaintiffs' estimate of the length of the trial was reasonable in circumstances involving elderly plaintiffs in relation to transactions, most of which took place many years ago.

2. A further issue was raised concerning the payment of Mr Wroth's witness fees.  The position as I understand it is that the defendant subpoenaed Mr Wroth to produce documents and attend at trial to give evidence.  Mr Wroth produced the documents pursuant to the subpoena.  The defendant then decided not to call Mr Wroth to give oral evidence at trial and advised him accordingly.  Thereafter, the plaintiffs decided to call Mr Wroth and asked the defendant not to discharge Mr Wroth from its subpoena so that they did not have to issue a fresh subpoena.  The defendant paid Mr Wroth his expenses up to the time its solicitors informed Mr Wroth they no longer required him to give evidence on its behalf.  It appears the plaintiffs have not paid Mr Wroth in relation to his attendance at court on their behalf.  So much is not in dispute.  Mr Wroth has complained to the Law Society about the conduct of the plaintiffs' lawyers.  It is unnecessary for the resolution of the matters before me to determine who is legally obliged to pay Mr Wroth's expenses, the party who issued the subpoena or the party who, with the issuing party's co‑operation, took advantage of the subpoena.  Having regard to the undisputed facts, I propose in the exercise of my discretion to order that the plaintiffs pay to Mr Wroth any outstanding sum to which he is entitled under the fourth schedule which they can then include in their bill for taxation as a disbursement necessarily or reasonably incurred under Item 30 of the scale of costs.

3. Accordingly, I propose to order that:

   (1)the defendant pay 40 per cent of the plaintiffs' costs and disbursements of the action to be taxed;

   (2)the plaintiffs pay to Mr Wroth the balance of the sum to which he is entitled as a witness subpoenaed to give evidence at trial.