Mayr v Peterson & Others No. DCCIV-96-671 Judgment No. D3741

[1997] SADC 3741

Mayr v Peterson & Others

Civil
Judge Allan

The plaintiff claims against the second and third defendants the sum of $57,000, interest and costs. The plaintiff has obtained judgment against the first defendant in the sum of $57,000 in default of appearance.

There are a number of grounds for the claim mentioned in the statement of claim, but I need only deal with one for the purpose of deciding the matter. I set out the relevant facts.

At all relevant times, the second defendant carried on business as accountants and the third defendant, an accountant, was, at all relevant times, a director and secretary of the second defendant.

At all relevant times, the first defendant was an undischarged bankrupt.

In about May 1994, the plaintiff and the first defendant entered into an agreement whereby the first defendant agreed to endeavour to procure for the plaintiff a certain aircraft from Russia. Some of the terms of that agreement are set out in a letter dated 18 May 1994 from the first defendant to the plaintiff sent by facsimile transmission from the first defendant to the plaintiff. The facsimile transmission was sent from the office of the second defendant. A copy of the letter is annexed hereto and marked “A”. The “Steve Tonkin” referred to in that letter is the third defendant.

On 6 June 1994, the plaintiff paid into the trust account of the second defendant the sum of $12,000.

On 7 June 1994, by facsimile transmission, the second defendant, under the hand of the third defendant, wrote to the plaintiff in the following terms:-

“We acknowledge receipt of your deposit of $12,000.00 into our Trust Account.

As you are aware Mr Peterson requires those funds for all ground costs in securing your aircraft.

Before we make a withdrawal to Mr Peterson we require your authority.

Would you please therefore fax back as a matter of urgency your approval for us to transfer funds from our Trust A/c to Mr Peterson. By return fax if possible”.

The authority to which that letter refers was prepared by the third defendant and is in the following terms:-

“I hereby authorise Tonkin Thompson and Associates Pty. Ltd. Of 23 Gulfview Road, Christies Beach to pay any funds received by them into their Trust Account on my behalf and thereafter, at the request of Mr. Peterson transfer those funds all or in part to Mr Peterson to deal with as necessary in the procurement of aircraft as instructed be me”.

The authority was signed by the plaintiff and forwarded to the second defendant by facsimile transmission on 7 June 1994.

The total sum of $12,000, in varying amounts, was paid to or for the benefit of the first defendant by, or on the instructions of, the third defendant within a matter of days of it being received into the trust account.

On 18 July 1994, the third defendant telephoned the plaintiff and asked that a further sum of $45,000 be paid into the trust account of the second defendant. There was a conflict between the evidence of the plaintiff and that of the third defendant on this topic. I prefer the evidence of the plaintiff.

The total sum of $45,000 was paid,  in one amount, to or for the benefit of the first defendant, who was then in Russia, by, or on the instructions of, the third defendant within a matter of days of it being received into the trust account. No authority or instructions were obtained or given by the plaintiff for the purpose of any of the sums paid into the trust account by him being paid to or for the benefit of the first defendant other than those contained in the authority dated 7 June 1994. It was only a matter of some two months or so ago that the plaintiff learnt, for the first time, that the money, the sum of $57,000 was not in the trust account; where he expected it to be; no plane apparently having been procured.

Mr Simpson, for the second and third defendants, submitted that, properly interpreted, the authority means that the money paid into trust by the plaintiff, or any part of it, may be paid to the first defendant by the trustee simply at the request of the first defendant; and that, in paying the money to the first defendant, the second and third defendants were acting in accordance with that authority. I do not accept that submission.

To interpret the document in that way requires the words thereof to be read down and to give no meaning to the words “......as instructed by me” where they appear at the end of the document. Those words provide real force to the document.

Mr Frayne, for the plaintiff, submitted that the meaning to be attached to the authority was that none of the monies paid into the trust account could be paid to the first defendant without the specific instructions of the plaintiff in relation to each payment. I think that that is one interpretation which is reasonably open. However, I think there is another interpretation which is reasonably open and that is that no payments were to be made to the first defendant unless those payments were “.....necessary in the procurement of aircraft as instructed by (the plaintiff)”; in which case it would mean that, prior to any payment being made to the first defendant, it was incumbent on the second and third defendants to ascertain from the plaintiff whether the request from the first defendant for payment met that requirement. I am inclined to the view that the latter interpretation is the correct interpretation; but, whatever the meaning to be given to the authority, it does not bear the meaning contended for by the second and third defendants; in which case the payments made to the first defendant were made in breach of the authority; and that means that the plaintiff’s claim must succeed: the money paid by him was held in trust to be dealt with according to his authority and instructions and it was paid out by the trustees otherwise than in accordance therewith. It is a short point, but it is decisive of the case. The plaintiff is entitled to the return of his money.

As I mentioned at the outset, there were other grounds put forward by the plaintiff in support of his claim, but it is unnecessary, and probably undesirable, that I move to a consideration of them.

The plaintiff is entitled to interest on the money. I think the appropriate rate is 8%; and I think such interest should commence to run from the date on which the plaintiff demanded the return of his money ; which date I find to be 19 January 1996. Doing the best I can with the arithmetic, I propose to round off the amount to which the plaintiff is entitled by way of interest to the sum of $9,700.

There will be judgment for the plaintiff in the sum of $66,700.

I see no reason why judgment should not be entered against both the second and third defendants and there will be judgment accordingly.

I shall hear counsel as to costs.