Macquarie Developments Pty Ltd v Forrester

[2005] NSWSC 674

CITATION:	Macquarie Developments Pty Ltd & Anor v Forrester & Anor [2005] NSWSC 674
HEARING DATE(S):	30 June and 1 July 2005
JUDGMENT DATE :	8 July 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Judgment for the Defendants.

CATCHWORDS:	VENDOR AND PURCHASER - ORAL AGREEMENT - NON-REFUNDABLE DEPOSIT - Proposed agreement for sale of shares - whether vendors and purchasers orally agreed that advance payment of part deposit would be non-refundable if sale agreement did not proceed - question of fact - no question of principle.
PARTIES:	Macquarie Developments Pty Ltd - First-named Plaintiff Activerain Pty Ltd - Second-named Plaintiff Bradley Keith Forrester - First-named Defendant Gregory Mark Forrester - Second-named Defendant
FILE NUMBER(S):	SC 4057/02
COUNSEL:	D.L. Warren - Plaintiffs G.A. Sirtes - Defendants
SOLICITORS:	Simone Legal - Plaintiffs Swaab Attorneys - Defendants

LOWER COURT JURISDICTION:

Introduction

1    The Plaintiffs sue the Defendants for repayment of the sum of $150,000 which they say was part payment of a deposit pursuant to an agreement for the purchase of shares which did not proceed because a condition of the agreement was not met. 2    The Defendants say that the payment of $150,000 was agreed to be non-refundable if the share sale agreement did not proceed and that it was made as an inducement to the Defendants to continue dealing with the Plaintiffs after a previous transaction had come to nothing. 3    The agreement for the purchase of the shares was not reduced to writing in final form and executed by the parties. The agreement as to part payment of the deposit was made in one or two meetings, depending upon whether one accepts the Plaintiffs’ version of events or the Defendants’ version. No contemporaneous note of the meeting or meetings was made. The Plaintiffs’ version of the critical discussions differs radically and irreconcilably from the Defendants’ version. The resolution of the case depends entirely on the parties’ credit and accuracy of recollection.


The non-contentious facts

4    The Plaintiffs are real estate developers. The controlling director of the First Plaintiff (“Macquarie”) is Mr Gary McGraw. The controlling director of the Second Plaintiff (“Activerain”) is Mr Lopko Neskovski. 5    The Defendants are the sole shareholders of Nessena Pty Ltd (“Nessena”). They hold their shares on trust for their father, Mr John Forrester. In the negotiations which are relevant in this case, the Defendants and Mr John Forrester were assisted by Mr John Forrester’s brother, Mr Keith Forrester. 6    Mr John Forrester took up residence on Norfolk Island in 1985 and since that time he has left his affairs in Sydney increasingly in the hands of his brother, Keith, and his sons, Gregory and Bradley. However, it is clear that Mr John Forrester has retained at all times the ultimate control of his affairs and has made the significant decisions. 7    In 1985, Nessena acquired two parcels of vacant land in Hickeys Road and Coombes Road, Penrith (“the Penrith Land”). The land had been purchased for an extension of factory premises owned by John Forrester’s companies. During the 1990s those extension plans were discontinued. 8    In late 1998 Nessena put the Penrith Land up for auction. The property was passed in and Nessena sought development approval for the land from Penrith City Council in order to assist the likelihood of sale. In the course of obtaining development consent John Forrester became aware that the parcel of land in Hickeys Road was subject to possible acquisition by the Roads and Traffic Authority (“RTA”) for a bus Transit Way. 9    During 1999 Nessena was approached by Macquarie to enter into an agreement to purchase or for an option to purchase the Penrith Land. Nothing came of these discussions. 10    On 31 May 2000, as a result of further discussions, Nessena and Macquarie entered into a Joint Venture Agreement. The object of the joint venture was that Macquarie would use its expertise to procure the RTA to purchase the whole of the Penrith Land. The purchase price was to be divided as to $1,275,000 to Nessena and the balance equally between Macquarie and Nessena. The term of the Joint Venture Agreement was twelve months. 11    By 31 May 2001, Macquarie had not procured the purchase of the Penrith Land. John Forrester says, and I accept, that he was dissatisfied with the lack of progress which had been made by Macquarie but at its request he reluctantly agreed to extend the joint venture period for another four months, expiring at the end of September 2001. A deed of variation embodying the extension was executed on 31 May 2001. 12    Macquarie encountered further difficulties in its endeavours to procure the RTA to acquire the whole of the Penrith Land. It is not necessary to go into the details. 13    According to Mr McGraw and Mr Neskovski, in June 2001 they decided that together, through their respective companies, the Plaintiffs, they should endeavour to purchase the Penrith Land outright.


The competing versions of the discussions

14    According to Mr McGraw’s affidavit evidence, there was a meeting in June 2001 at a coffee shop in Lindfield at which he, Mr Neskovski and Mr Keith Forrester attended. Mr McGraw says that at that meeting the idea was proposed that the Penrith Land should be purchased by Macquarie and Activerain outright rather than Macquarie continuing with the Joint Venture Agreement with Nessena. 15    Keith Forrester firmly denies that such a meeting took place. Mr Neskovski in his affidavit evidence says only:
“In or about May or June 2001 Mr McGraw discussed with the Forresters the prospect of purchasing the property owned by Nessena rather than continue with the joint venture, which up until that time had been in place. I was also present at that meeting but did not participate.”
16    According to the affidavit evidence of Mr McGraw and Mr Neskovski, the proposal for purchase of the Penrith Land was discussed at a meeting which occurred in mid-July 2001 at the Stamford Hotel in Ryde. Present at this meeting, they say, were John, Keith, Bradley, Gregory and themselves. 17    What is alleged to have been said in this meeting is set out in paragraphs 15 to 17 of Mr McGraw’s affidavit of 2 April 2004 and in paragraphs 25 to 27 of Mr Neskovski’s affidavit of the same date. The accounts there given are precisely the same, word for word, except for a very few inconsequential differences. How this critical evidence of Mr McGraw and Mr Neskovski came to be identical is an important matter, to which I will return shortly. 18    Messrs McGraw and Neskovski say that at this meeting in mid-July they raised the proposal of acquiring the Penrith Land directly. There was discussion about obtaining finance from Westpac for part of the purchase price and vendor finance for the balance. A purchase price of $2.75M was agreed, subject to the purchasers obtaining finance from Westpac. 19    The following critical exchange then took place, according to Mr McGraw’s affidavit:

“McG: ‘We’ll put $150,000 down to show that we are not going to jerk you around. I know the time is critical to you as I know the banks are leaning on you. We will expedite the application so that we don’t get the funds [sic] it will leave you with all your options open.’

JF: ‘Yeah, because they’re killing me with the interest and I think Mark Streater would be happy to try and help us as much as possible.’

McG: Let’s get it straight and we’ll obviously get back to you in writing. Step 1 we put $150,000 down as a sign of good faith. Step 2 the finance is applied for; if the finance is rejected and we can’t obtain funds the $150K will be refunded and you flog it again. Step 3 if the finance is made available the balance of the 10% deposit will be paid and the normal settlement will take place.’

JF: ‘Yeah, I agree.’ ”
20    This exchange appears in identical terms in Mr Neskovski’s affidavit, with only a few inconsequential word changes. 21    Messrs McGraw and Neskovski say that there was then a brief discussion about the purchase taking the form of an acquisition of shares in Nessena rather than an acquisition of the Penrith Land directly. 22    In their affidavit evidence, Messrs McGraw and Neskovski say that on 14 August 2001 a second meeting took place between themselves and Messrs John, Keith, Bradley and Gregory Forrester at the Stamford Hotel in Ryde. At this second meeting there was a further discussion about the acquisition of the Penrith Land by the means of purchasing the shares in Nessena. According to Messrs McGraw and Neskovski, there was no discussion at this meeting about the payment of $150,000. 23    All the members of the Forrester family resolutely deny that they attended two meetings with Messrs McGraw and Neskovski: they say that they attended only one meeting at the Stamford Hotel and that that meeting occurred on 14 August 2001. 24    In his affidavit evidence, John Forrester says that at the meeting of 14 August Mr McGraw proposed a “new deal” in that he and Mr Neskovski wanted to buy the Penrith Land outright instead of continuing with the Joint Venture Agreement. He says that Mr McGraw expressed strong confidence in being able to procure finance for the purchase from Westpac. 25    According to Mr Forrester, he responded:

“I said: ‘I am most reluctant to have any further involvement with you. You have said all along you could achieve a result under the joint venture agreement and you now request a new deal. I will only consider a new deal if you can provide me with some non-refundable inducement to reimburse me for the excess costs I have had to carry right through 14½ months to date of the joint venture agreement. These excess costs have all been because of Macquarie Development’s non performance.’

At this point I excused myself from the meeting for about 5 or 10 minutes as I had become quite upset.

On my return I had a conversation to the following effect:

I said: ‘In relation to the inducement that I raised before I left. This must be totally non-refundable as it is reimbursement for the costs I have had to pay since the joint venture commenced.’

Gary [McGraw] said: ‘What are you looking for to enable us to buy the properties outright, John?’

I said: ‘Well, I have been making monthly interest repayments to Westpac, Mrs Goldie being a second mortgagee and to Newtown Enmore Starr Bowkett in the sum of around $10,250.00 a month. For the last 14½ months that equates to around $150,000.00. I would expect a payment in about that amount within a few days if I was to agree to this. However, due to your track record, I want this payment on a no-strings attached basis.’

Lopco [Neskovski] said: ‘I take it you mean that you want a payment that is non-refundable with absolutely no strings attached, like an ex gratia payment.’

I said: ‘That’s exactly what I want before I will contemplate any new deal.’

Lopko said: ‘We accept your statement that we have caused you considerable costs and it is reasonable for you to request that payment. We would like to finish the development and benefit accordingly.’ …”
26    There was then a discussion as to how the purchase price of $2.75M was calculated. Mr John Forrester continued:

“… But I will only agree to any proposal on the following terms:

1. The $150,000.00 payment is non-refundable, no strings attached. This must be banked into an account nominated by me by next Monday, 24 August 2001;

2. Your solicitors are the [sic] prepare the contract and other documents;

3. The contracts must be exchanged and all other documents executed by 24 August 2001;

4. The settlement of the purchase must be by 10 December 2001;

5. We will provide vendor finance of $440,000.00. The details will have to be agreed over the next few days.’

Gary said: ‘Ok, I can see how that can work. I don’t have a problem with that.’

Gary then asked Lopco: ‘What do you think?’

Lopco then said to me: ‘I agreed. That sounds fair to me. I wonder if it's possible to sell us the shares of the company. We want the stamp duty benefits and to keep the sale price quiet from the RTA.’

I said: ‘I see no problem with that, but Greg would know better than I on that.’

Greg said: ‘That is no problem. The company has no other assets or liabilities.’

Gary said: ‘John, now that we have agreed and acknowledged that the payment of $150,000.00 be non-refundable as a recompense for your costs under the joint venture agreement, could I ask you consider the $150,000.00 as part of the 10 per cent deposit with the balance of the deposit being payable on exchange of contracts on 24 August?’

I said: ‘On the assumption that the $150,000.00 is banked into my nominated account by next Monday and also assuming that the contract is exchanged by 24 August, I will agree to your request. However, frankly this is a substantial gesture on my part because the payment relates to costs incurred by me going back to May 2000 and it does not relate in any way to the sale price agreed today. It is non-refundable.’ …”
27    The affidavit of Mr Keith Forrester as to this critical discussion is to the same effect but in his own words. The affidavit evidence of Bradley and Gregory as to this discussion was also to the same effect, but in identical words. How their words came to be identical is a matter to which I will return shortly. 28    All witnesses agree that at the conclusion of the meeting on 14 August it was arranged that Mr Keith Forrester and Mr Neskovski would meet separately to finalise the details so that the parties’ solicitors could prepare the requisite documentation. 29    The meeting between Mr Keith Forrester and Mr Neskovski took place in the afternoon of 16 August 2001 at Mr Forrester’s home. 30    According to Mr Neskovski’s affidavit evidence in chief, when he arrived at the meeting he sat down with Mr Forrester in Mr Forrester’s study while Mr Forrester wrote out the points which had been agreed in the earlier meetings, reading out to Mr Neskovski as he did so what he had written. When the document had been completed, Mr Forrester did not give Mr Neskovski a copy but said that he would send it by facsimile the following day. 31    On the following day, that is, 17 August 2001, according to Mr Neskovski, he received by facsimile a copy of the document which he had seen Mr Forrester write out on the previous day, together with a covering note. Those documents together are Annexure “B” to Mr Keith Forrester’s affidavit and it will be convenient to refer to them as Annexure “B”. 32    The covering letter commences:
“I believe the attached 3 pages cover all matters we finalised yesterday.”
33    The attached three pages of handwriting is headed “Information for Proposed Agreement” and is dated 17 August 2001. It identifies as vendors of the shares in Nessena, Gregory and Bradley Forrester as trustees for John Forrester, and Macquarie and Activerain as purchasers. 34    Under the heading “CONTRACT SUM” , the document states:

“The Parties have agreed that the Contract Sum will comprise:

– a ‘Primary Amount’ of Two Million Two Hundred & Seventy Five Thousand Dollars ($2.275 Million), and

– a ‘Secondary Amount’, payable monthly, between the period of the Contract Date and the Completion Date, of $10,244 per month (and pro-ratad for a partial month).

The Parties have further agreed that, on the Completion Date, Vendor Finance – supported by Second Mortgage over the Real Property – will be provided to the Purchasers on Terms & Conditions detailed below.

PAYMENT OF ‘PRIMARY AMOUNT’:–

$150,000	by way of Direct Deposit on 20th August 2001 into St George Bank, Gordon. BSB: 112-879 Account Name: EA & KD FORRESTER ” ” No: 149 541 438
$77,500	on the Contract Exchange Date
$1,600,000	on Completion Date, which shall be no later than 3 months after written Agreement in Principle is given to the Purchasers by Westpac Banking Corporation; or such later date as may be mutually agreed by the Parties
$1,827,500
447,500	by way of Vendor Second Mortgage”
$2,275,000

35    Under the heading “Basis of this Agreement” , the document states:
“The Parties have agreed that the continuance of this Agreement beyond 10th September 2001 is subject to the Purchasers receiving ‘in principle’ Agreement from Westpac Banking Corporation by that date.”
36    There is no reference in Annexure “B” to the sum of $150,000 being non-refundable by the vendors of the shares in Nessena. 37    In his affidavit evidence, Mr Keith Forrester denies that he wrote out the three page document dated 17 August in the presence of Mr Neskovski on the afternoon of 16 August. He says that he wrote out in Mr Neskovski’s presence on 16 August a much shorter note, which he attaches as Annexure “A” to his affidavit (“Annexure ‘A’ ”). He says that on the following day he prepared the much longer document, Annexure “B”, and sent it to Mr Neskovski by facsimile. 38    Annexure “A” is dated “16/8/01” . It is one and a half pages in length and contains in Mr Keith Forester’s handwriting the principal points of an agreement for sale of the Nessena shares, as follows:

“Property	Lots 54 and 52
Financial Facility:	of $1.6 million being sought through Westpac Bank
Purchase Price:	$2.275 million
– Deposit	$227,500 (10%?)
– Balance	$2,047,500 payable: $1,600,000 ex Westpac (1st Mtge) $447,500 second Mtge from Vendor
Second Mortgage:	– to be supported by Personal Guarantees from Lopco, Gary and _______
– to be reduced by Funds injection from Purchasers – or their Associates – of not less than $172,500, not later than 21st December 2001; and
– balance of Second Mtge to be repaid to Vendor, together with Interest, computed from Settlement Date at 8.0% p.a., not later than 31st October 2002
Settlement Date:	Not later than 3 months after written Agreement in Principle by Westpac Bank is advised to the Purchasers – or such later date as may be mutually agreed by Purchaser & Vendor
Agreement in Principle by Westpac:	If not received on or before 7th September 2001 this Agreement to be determined, and either:
– a new Agreement be executed based on approach by Purchasers to an alternate Finance Institution, or
– the Vendors Repay $________ to the Purchasers, but retain the $________ Option Fee.”

39    It is conceded by all witnesses that there was no discussion at the meeting of 14 August or at any other meeting of an “option fee”. It is an inescapable inference that the statement “the Vendors repay $_____ to the Purchasers but retain the $_____ option fee” refers to an agreement or proposition (depending upon which version of events one accepts) that if the share sale agreement did not proceed because the purchasers had not obtained finance by the required time, the vendors would repay to the purchasers a part of the deposit of $227,500 and retain the balance. 40    Mr Neskovski did not refer at all to Annexure “A” in his affidavit evidence in chief. In his affidavit in reply, he said that when he arrived at Mr Keith Forrester’s home on 16 August he found that Mr Forrester had already prepared Annexure “A”. He says that Mr Forrester gave him the document, which he read. He says that when he saw the last paragraph concerning retention from the deposit of a certain amount, he protested that that was not the agreement reached. He says that Annexure “A” was then “disregarded” and that Mr Forrester wrote out Annexure “B” in his presence. 41    On 20 August 2001, Mr Neskovski arranged for the payment of $150,000 into a bank account in the name of Mr Keith Forrester and his wife. This account had been specified in Annexure “B”. 42    A draft contract for sale of shares was prepared by Macquarie’s solicitors and forwarded to Nessena’s solicitors on 24 August 2001. The draft provided for a deposit to be paid but did not refer to retention by the vendors of the sum of $150,000 if the contract did not proceed to completion. 43    Mr Gregory Forrester, who was dealing with this aspect of the transaction on behalf of Mr John Forrester, referred the draft to Nessena’s solicitors, who had a number of comments. It does not seem that Mr Gregory Forrester or Nessena’s solicitors drew attention to the fact that the draft agreement did not provide for retention of the sum of $150,000 if the transaction did not proceed. 44    Contracts for the sale were not exchanged on 24 August 2001. Mr John Forrester says that he regarded the negotiations for the sale of the Penrith Land to Macquarie and Activerain as at an end, as a condition which he had imposed on the sale had not been met. 45    In any event, in mid-September 2001 Westpac advised Macquarie that it would not provide the necessary finance sought by the Plaintiffs for the purchase. If the evidence of Messrs McGraw and Neskovski is accepted, the Plaintiffs thereupon became entitled to immediate repayment of the sum of $150,000. 46    The Plaintiffs did not immediately seek return of the $150,000. Mr Neskovski says that he continued to have discussions with members of the Forrester family in an attempt to procure purchase of the Penrith Land by the RTA in accordance with the Joint Venture Agreement. He says that on 24 October 2002, in the course of a discussion with Mr Bradley Forrester in a coffee shop, he said: “When do you think we will receive the $150,000 back?” Mr Forrester replied: “Let’s talk about that after we finish with the negotiations with respect to the Transit Way.” Mr Neskovski says that although he did not get an answer to his question, he did not press the point “as I was still attempting to keep the original deal alive” . I take it that by “original deal” Mr Neskovski was referring to the Joint Venture Agreement. 47    According to Mr Bradley Forrester, Mr Neskovski rang him in mid-September 2001 to tell him that the finance from Westpac had not been approved. Mr Neskovski said that the $150,000 had been paid by him on behalf of Macquarie “and they aren’t paying me. I was thinking that we could arrange for it to be repaid to me when you sell the properties” . Mr Forrester said: “You are not in a position to ask for it. It was paid, no strings attached, as you know” . Mr Neskovski replied: “I know but I want to table my valuation of $3.86M to the RTA. If they accept it, maybe I could discuss it further” . There was another conversation between them to the same effect a few days later. Subsequently, the RTA rejected Mr Neskovski’s valuation of $3.86M for the Penrith Land, saying that its own valuation was $1.4M. 48    Mr Neskovski says that in late November 2001 he telephoned Mr Keith Forrester and asked for the return of the $150,000. Mr Keith Forrester said that the payment had been non-refundable. 49    A letter of demand seeking repayment of the $150,000 was sent by the Plaintiffs’ solicitors on 11 December 2001. The letter referred to the fact that a small part of the Penrith Land had recently been sold to the RTA and threatened proceedings for an injunction to restrain disbursement of the proceeds of sale if the $150,000 was not repaid. 50    These proceedings were commenced by Statement of Claim filed on 15 August 2002.

Resolution of the conflict in evidence

51    There are only two pieces of paper which shed any real light on the resolution of the conflict in the parties’ competing versions of their discussions in mid-2001: Annexure “A”, which was prepared by Mr Keith Forrester on 16 August 2001 and which refers to a non-refundable “option fee” but does not state what the amount is, although Mr Forrester says that that amount was known and agreed by 16 August; and Annexure “B”, prepared by Mr Forrester shortly thereafter, which contains a much fuller statement of the terms of the agreement for sale of shares but does not refer at all to the non-refundable payment. Annexure “A”, taken on its own, could lend some support to the Defendants’ case; Annexure “B”, taken on its own, could lend some support to the Plaintiffs’ case. If one simply looks at the terms of the documents, taken together, they are equivocal. 52    In my opinion, the resolution of the case depends essentially on the credit-worthiness of the parties’ evidence, as tested in cross examination. The terms of Annexures “A” and “B” themselves are plausible if either version is accepted. 53    I prefer the evidence of the Messrs Forrester to the evidence of Messrs McGraw and Neskovski. My reasons are as follows. 54    First, there was a serious discrepancy between the affidavit evidence and the oral evidence of Messrs McGraw and Neskovski as to when the deposit of $150,000 was first discussed. The time of the discussion was important: the Plaintiffs said there were two meetings at which purchase of the Penrith Land was discussed; the Defendants said that there was only one meeting. 55    In cross examination, both Messrs McGraw and Neskovski were, at first, firm in their recollection that the $150,000 deposit had been first discussed only at the second meeting with the Forrester family on 14 August 2001. However, their affidavit evidence was unequivocal that the discussion had taken place at the alleged first meeting in mid-July 2001. 56    When Mr McGraw was confronted with this inconsistency in his cross examination, he was unable to give an explanation. He said that he was feeling confused because he was suffering from the ’flu and was not “thinking straight” and that he could not concentrate. He asked for a few minutes to recover himself. When the hearing resumed I was informed that Mr McGraw felt unable to continue and had gone to the doctor. I was informed that Mr McGraw would resume his cross examination later. 57    While, to my observation, Mr McGraw was suffering from a cold or something similar, he gave his evidence fluently and confidently up to the point when he was confronted with a glaring and inescapable inconsistency between his affidavit evidence and his oral evidence. His sudden apparent inability to continue at that critical point caused me some disquiet. 58    Mr Neskovski was equally firm in his oral evidence that the $150,000 was first discussed at the 14 August meeting and that the mid-July meeting had discussed only the purchase of the Penrith Land directly. 59    Mr Neskovski was then confronted with his affidavit evidence that the $150,000 payment was first discussed in the meeting in mid-July. He was asked to explain the discrepancy. His answers were evasive and non-responsive. He said at one stage that both versions, although contradictory, were correct. His attempted explanation and his manner in giving it were most unsatisfactory. 60    Much later in his cross examination Mr Neskovski said that the $150,000 payment had been discussed at both the mid-July and the August meetings. This evidence, again, contradicted his affidavit evidence and his earlier oral evidence. 61    Second, it is an inescapable inference that Mr McGraw and Mr Neskovski have colluded in preparing their affidavit evidence as to the critical discussion about the $150,000. As I have noted, what is set out in paragraphs 15 to 17 of Mr McGraw’s affidavit of 2 April relating to the discussion is mirrored word for word in paragraphs 25 to 27 of Mr Neskovski’s affidavit of the same date, with a very few inconsequential differences. 62    In circumstances to which I will come shortly, the Plaintiffs’ solicitor gave evidence as to how the affidavit evidence came to be the same. He said that he separately taken instructions from Mr McGraw and Mr Neskovski as to what was said in the critical discussions with the Messrs Forrester, and he had inserted their accounts in their draft affidavits. He did not show Mr McGraw’s draft affidavit to Mr Neskovski nor did he show Mr Neskovski’s draft affidavit to Mr McGraw. He sent the draft affidavits to Messrs McGraw and Neskovski respectively. 63    Mr McGraw and Mr Neskovski then came to his office to make changes to the affidavits. He saw them separately and made the changes to their affidavits which they requested. After he had completed that exercise, he noted that the changes had resulted in the critical passages in the two affidavits becoming identical, save for a few minor changes. He expressed his concern to Messrs McGraw and Neskovski but his instructions in respect of the affidavits were confirmed. 64    As I have said, it is an inescapable inference from this evidence that the changes which Messrs McGraw and Neskovski made to their draft affidavits in the critical passages concerning the discussions with the Messrs Forrester were the result of collusion on their part between the time they received their draft affidavits from their solicitor and the time they attended their solicitor’s office to make changes. 65    The fact that Messrs McGraw and Neskovski colluded in the preparation of what was obviously the decisive evidence in their case casts a cloud over their credibility as a whole and over their evidence as to the discussion in particular. 66    Third, there was inconsistency in Mr Neskovski’s evidence that it was the Plaintiffs who had proposed to the Defendant to make the payment of $150,000 as a sign of good faith, whereas the Plaintiffs’ Statement of Claim alleges that it was the Defendants who made the proposition. When asked to explain the discrepancy, Mr Neskovski was unable to give any satisfactory answer. 67    Fourth, on the Plaintiffs’ case they were entitled to immediate repayment of the $150,000 in mid-September 2001 when Westpac refused the finance necessary for the purchase of the Nessena shares. Yet Mr Neskovski, whose company had provided the money, made no forthright request to the Defendants that the money should be repaid until late November, according to his evidence. The letter of demand was sent in December 2001 and proceedings were commenced in August 2002. 68    Mr Neskovski’s evidence explaining this apparent lack of interest on Activerain’s part in pursuing its rights to recover the money was to the effect that Activerain had no particular need for the money at that time. In the context of a real estate development business, which Activerain was carrying on, this is not a convincing explanation. Bearing in mind the fact that Mr Neskovski is, to my observation, an astute and shrewd businessman, the explanation is even less likely. 69    It is open to conclude that the Plaintiffs made no immediate demand for the $150,000 in September 2001 because they did not then believe that they were entitled to it and that they only decided to pursue a claim for its payment when they learned that the Penrith Land had been sold by Nessena to the RTA and another developer and sought to recover some of the loss which they had incurred in their involvement with the Forrester family. 70    Fifth, upon the resumption of Mr McGraw’s cross examination, he denied having discussed the content of his affidavit of 2 April 2004 with Mr Neskovski prior to swearing it. When asked to explain how the critical paragraphs of his affidavit were the same, word for word, as paragraphs of Mr Neskovski’s affidavit of 2 April, Mr McGraw could offer no explanation except that “if two people spend as much time together as we do, you probably pick up each other’s narrative speech patterns” . 71    In view of the evidence of the Plaintiffs’ solicitor to which I have referred above, and to the inescapable inference which flows therefrom, I conclude that Mr McGraw’s denial of discussion with Mr Neskovski concerning the draft affidavit was untrue. 72    Sixth, it is a fair summary to say that the manner in which Messrs McGraw and Neskovski gave their evidence was rambling and unfocussed, quite apart from the inconsistencies which I have noticed. It seemed to me that much of their evidence, particularly as to the alleged two meetings in July and August 2001, was an attempt at reconstruction. 73    Seventh, in stark contrast, the evidence of the Messrs Forrester was clear, careful and consistent and remained so despite a thorough cross examination. 74    Mr John Forrester was a highly impressive witness. Although now long retired, he is clearly an intelligent and experienced businessman with firm views. He was adamant that because of Macquarie’s failure to produce any results under the Joint Venture Agreement by August 2001 and because he and his companies had been incurring considerable holding charges in respect of the Penrith Land during that period, he would not contemplate entering into another proposal with the Plaintiffs for the acquisition of the Penrith Land unless they first paid a non-refundable sum of $150,000 as a demonstration of good faith. He said that he did not really trust the Plaintiffs. 75    Mr Forrester was clear and consistent in his evidence that there was only one meeting with Messrs McGraw and Neskovski and Keith, Bradley and Gregory Forrester, and that that meeting occurred on 14 August 2001. He was unshakeable in his account of what was discussed and agreed at that meeting. 76    Mr Forrester’s evidence as to his requirement for a non-refundable payment of $150,000 was probable in the light of his disappointment in Macquarie’s failure to perform under the Joint Venture Agreement. 77    Mr Keith Forrester was also a highly impressive witness. He is an accountant by training and has spent many years in senior executive positions. Like his brother, he is now long retired. His evidence was consistent, clear and careful, to the point of being punctilious. He confirmed the substance of his brother’s evidence of what was said in the 14 August meeting. 78    I find convincing Mr Keith Forrester’s evidence that at the meeting with Mr Neskovski on 16 August 2001 he wrote out only Annexure “A” and not Annexure “B”, as Mr Neskovski says. Mr Forrester is clearly not in good health and he gave his evidence from a wheelchair. I accept his evidence that he finds writing difficult. Mr Neskovski says that his meeting with Mr Forrester lasted only about thirty to forty minutes. Bearing in mind time for discussion and time for writing slowly and painfully, I find it difficult to accept that Mr Keith Forrester wrote out the three pages of Annexure “B” in the course of that meeting. 79    Further, Annexure “B” bears the date 17 August 2001, not 16 August 2001. It was not put to Mr Forrester that even though he wrote out Annexure “B” on 16 August he inserted the incorrect date. 80    It is strange that Mr Forrester left blank the two figures for the repayment and retention sums in the final paragraph of Annexure “A” when, he says, at the time he wrote the document he knew what those figures were. His explanation is that when he came to write the final few lines of the document, Mr Neskovski was already running late and was standing up, ready to leave, so that he just left the figures to be inserted later. 81    It is also strange that Annexure “B” makes no reference to the payment of $150,000 being non-refundable. Mr Forrester’s explanation is that he is not a lawyer and that he regarded the payment of $150,000 as a separate matter, already concluded and non-refundable in any circumstance, whereas Annexure “B” was designed to record the terms of a conditional share sale agreement to be incorporated in a formal document. 82    Human experience teaches that people do not always act with logical consistency on the spur of the moment and that their conduct, when examined minutely after the event through legal eyes, can seem anomalous – yet their evidence can be true. I have come to the conclusion that this the case with Mr Keith Forrester’s evidence. I reach that conclusion aided by the consistency of his evidence generally, its conformity with the evidence of Mr John Forrester which I regard as reliable, and the fact that the evidence is not inherently improbable. To reject Mr Forrester’s evidence as to what occurred on 16 August would mean acceptance of Mr Neskovski’s evidence in that regard. For the reasons which I have given, I prefer the evidence of Mr Keith Forrester. 83    Having accepted Mr Keith Forrester’s evidence, it follows that his reference in Annexure “A” to the non-refundable “option fee” supports the conclusion that there was an agreement made on 14 August that the sum of $150,000 would be paid by the Plaintiffs as a demonstration of good faith and that it would be non-refundable in any circumstance. 84    Gregory and Bradley Forrester gave affidavit evidence as to the critical discussions and they were also cross examined. The paragraphs in their affidavits dealing with the critical discussions about the $150,000 payment are in virtually identical terms. 85    When I expressed my concerns at the identity of affidavit evidence filed by both the Plaintiffs and the Defendants, observing that such identity could have been produced by collusion between witnesses or by some act of their solicitors, the solicitors for both parties were called to evidence as to the process by which they produced the relevant affidavits. I have already recounted above the evidence given by the Plaintiffs’ solicitor. 86    The Defendants’ solicitor said that he had interviewed each of Gregory and Bradley Forrester separately and had taken down their statements as to the critical discussions. He did not show the draft affidavit of Gregory to Bradley, nor did he show the draft affidavit of Bradley to Gregory. Both witnesses were sent their respective drafts and made some changes. Gregory swore his affidavit first. 87    The solicitor says that when he came to prepare Bradley’s affidavit for swearing, he noted that Bradley’s evidence about the critical discussions was very much to the same effect as Gregory’s evidence although not identical. He decided to ‘cut and paste’ the relevant passage from Gregory’s affidavit into Bradley’s affidavit. 88    The Defendants’ solicitor is young and relatively inexperienced. It appears that he was not preparing these affidavits under the direct supervision of a senior solicitor of his firm. Counsel for the Defendants frankly and properly acknowledges that, ultimately, it was his responsibility to ensure that the evidence adduced by the Defendants was proper and appropriate to be given. He says that he did not notice that the relevant paragraphs in the affidavits of Bradley and Gregory were in the same terms. 89    Clearly, the Defendants’ solicitor failed to appreciate that the evidence of each witness must be in the words of that witness and that it is totally destructive of the utility of evidence by affidavit if a solicitor or anyone else attempts to express a witness’ evidence in words that are not truly and literally his or her own. 90    Save in the case of proving formal or non-contentious matters, affidavit evidence of a witness which is in the same words as affidavit evidence of another witness is highly suggestive either of collusion between the witnesses or that the person drafting the affidavit has not used the actual words of one or both of the deponents. Both possibilities seriously prejudice the value of the evidence and Counsel usually attacks the credit of such witnesses, with good reason. 91    Where the identity of evidence is due to collusion, the devaluation of the evidence is justified but where, as in the present case, the identity of evidence is due entirely to a mistake on the part of a legal adviser, a witness’ credit and a party’s case may be unjustly damaged. 92    I accept the evidence of the Defendants’ solicitor as to how the identity of the affidavit evidence of Gregory and Bradley Forrester occurred, and that the mistake was an honest one on his part. The explanation entirely removes any suspicion that there has been collusion on the part of Gregory and Bradley Forrester in the preparation of their affidavit evidence. 93    I should add that it is clear to me that the mistake which the Defendants’ solicitor has made in the preparation of the affidavits of Bradley and Gregory Forrester has caused him acute distress. My experience of this solicitor in other matters before the Court convinces me that he is a competent and diligent solicitor and that this mistake was an uncharacteristic error of judgment which should not reflect on his career. 94    I turn now to an examination of the evidence which Gregory and Bradley Forrester have given in cross examination. 95    Gregory is an accountant in a commercial firm. He qualified in law but has never practised. He confirmed the substance of the evidence given by Mr John Forrester and Mr Keith Forrester as to the critical discussions on 14 August 2001 and did so in his own words. His evidence was clear, careful and consistent. I can see no reason not to accept it. 96    Bradley Forrester has a degree in economics and in law. He has not practised as a lawyer and is now a builder. He also confirmed, in his own words, the substance of the evidence given by Mr John Forrester and Mr Keith Forrester as to the critical discussions on 14 August. Like Gregory, he gave his evidence clearly and consistently. I can see no reason not to accept it. 97    For these reasons, I do not accept the evidence of Mr McGraw and Mr Neskovski as to the discussions which took place concerning the payment of the sum of $150,000. I find, in accordance with the evidence of the Messrs Forrester, that there was only one meeting in which the payment was discussed, namely, a meeting on 14 August 2001, and that at that meeting it was agreed that the payment by the Plaintiffs of the sum of $150,000 would be non-refundable in any event. It was in consideration of that agreement Mr John Forrester agreed that the sale of the shares in Nessena in which he had the beneficial interest could proceed upon the other terms discussed. 98    It follows that the Plaintiffs’ claim fails on the facts.


Orders

99    There will be judgment for the Defendants on the Plaintiffs’ Amended Statement of Claim. I will hear the parties as to costs.
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