McMahon v Woodward - [2022] WADC 29

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   MCMAHON -v- WOODWARD [2022] WADC 29
CORAM:   RUSSELL DCJ
HEARD:   29-30 NOVEMBER & 1 & 6 DECEMBER 2021
DELIVERED          :   25 MARCH 2022
FILE NO/S:   CIV 3415 of 2019
BETWEEN:   JOHN DOUGLAS MCMAHON
Plaintiff
AND
GAVIN JOHN WOODWARD
Defendant

Catchwords:

Debt - Loan agreement - Dispute as to terms and amount of loan - Whether interest payable under terms of loan agreement - Whether defendant can rely on defences not pleaded - Purpose of pleadings - Whether agreement invalid and unenforceable because it is undated - Litigant in person - Turns on own facts

Legislation:

Supreme Court Act 1935 (WA), s 32

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff	:	Ms P A Honey
Defendant	:	In person (by video link)

Solicitors:

Plaintiff	:	Fletcher Law
Defendant	:	Not applicable

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

Agricultural and Rural Finance v Gardiner [2008] 238 CLR 570
Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Cardaci v Filippo Primo Cardaci as Executor of the Estate of Marco Antonio Cardaci, dec [No 4] [2020] WASC 159
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, (2009) 76 NSWLR 603
Glew v Frank Jasper Pty Ltd [2010] WASCA 87
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
L'Estrange v F Graucob Ltd [1934] 2 KB 394
Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
MTI v SUL [No 2] [2010] WASCA 58
Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197
Smart v Prisoner Review Board (WA) [2012] WASC 48
Srecko Juric-Kacunic v Stan Vaupotic [2013] NSWSC 41
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 51; (2004) 219 CLR 165
Warner Bros Feature Productions Pty Ltd v Kennedy Miller Mitchell Films Pty Ltd [2018] NSWCA 81
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534

RUSSELL DCJ:

Introduction

In 2012, the plaintiff, John Douglas McMahon, and the defendant, Gavin John Woodward, who had been friends for over 40 years, established two unit trusts, the Winthrop Unit Trust and the Bagot Road Unit Trust, through which they conducted three property development projects developing residential units in Nedlands, Subiaco and Shenton Park.
The dispute between the parties in this action arises out of a claim made by Mr McMahon against Mr Woodward for repayment of $98,708 plus interest in respect of a personal loan alleged to have been made by Mr McMahon to Mr Woodward to repay withdrawals made by Mr Woodward from the Winthrop Unit Trust in 2016 and 2017. The terms of the loan are set out in a written loan agreement entered into on about 16 March 2019 (Loan Agreement).
Mr McMahon claims payment from Mr Woodward of $98,708 plus interest at the rate of 5.45% per annum from 16 March 2019 until repayment under the terms of the Loan Agreement. Alternatively, he claims pre-judgment interest pursuant to s 32 of the Supreme Court Act 1935 (WA).
Mr McMahon also claims that he is entitled, under cl 8 of the Loan Agreement, to be indemnified by Mr Woodward against all costs and disbursements paid or incurred by him of or incidental to enforcing the Loan Agreement, calculated on a solicitor client basis. His counsel foreshadowed that, if Mr McMahon is successful in his claim, he would seek an order for costs against Mr Woodward on a solicitor client basis. It was accepted that the appropriate time to seek any such order would be after trial, depending on the outcome.
In his defence, as pleaded, Mr Woodward disputes the amount claimed in respect of both the loan amount and interest. In his written submissions filed before trial and in oral submissions at trial, Mr Woodward sought to advance further matters in defence of Mr McMahon's claim. In summary, he disputes the validity of the Loan Agreement, denies he is liable to pay any amount to Mr McMahon and says that, if any amount is payable by him, it is payable to the Winthrop Unit Trust and not to Mr McMahon.
For the reasons that follow, I find that:
1.Mr Woodward is indebted to Mr McMahon in the amount claimed of $98,708 and judgment should be entered for Mr McMahon in that amount;
2.Mr McMahon is not entitled to interest under the Loan Agreement, as claimed.
I will hear from the parties separately in relation to any claim by Mr McMahon for pre-judgment interest pursuant to s 32 of the Supreme Court Act and as to costs.

The issues

There are four overarching issues that I must determine. They are:
1.Is Mr Woodward liable to pay to Mr McMahon the amount of $98,708 under the Loan Agreement?
2.Is Mr McMahon entitled to payment of interest at the rate of 5.45% per annum calculated daily from 16 March 2019 under the Loan Agreement?
3.Can Mr Woodward rely on the further matters raised by him in defence of the claim that have not been pleaded?
4.Do any of the matters raised by Mr Woodward negate any liability he has in respect of the alleged loan and interest, namely:
(a)Is the Loan Agreement invalid because it is undated?
(b)Is the Loan Agreement invalid, void, or otherwise unenforceable because of the vitiating factors or other reasons alleged by Mr McMahon?
(c)Mr Woodward's contention that any debt is to the Winthrop Unit Trust, not Mr McMahon personally; and
(d)Mr Woodward's contention that he is owed money by the Winthrop Unit Trust rather than him owing any money.

The plaintiff's claim

Mr McMahon's case is, in essence, as follows:
1.The amount claimed of $98,708 together with interest at the rate of 5.45% per annum from 16 March 2019 is due and payable by Mr Woodward under the terms of the Loan Agreement, by which Mr Woodward has acknowledged the amount of the loan and agreed to repay the loan, and interest accrued at the rate claimed, within 30 days of a written request for payment.
2.Repayment of the loan and interest was (last) requested by letter from Fletcher Law on behalf of Mr McMahon to Mr Woodward dated 27 September 2019.
3.No payment has been made by Mr Woodward in respect of the loan or interest.
4.Mr Woodward is, therefore, liable to pay the amount claimed in respect of the loan of $98,708 plus interest at the rate of 5.45% per annum calculated daily.
Mr McMahon's claim, as pleaded is relatively straight forward in so far as the loan is concerned. The parties entered into a written loan agreement in which the amount of the loan is acknowledged by Mr Woodward as being payable to Mr McMahon. The terms for repayment and the time by which the loan is to be repaid are articulated. On the face of the Loan Agreement and the evidence adduced as to the demand for repayment of the outstanding amount of the loan and payment not having been made within the required time, that ought to be an end to the matter. The position is not so clear in relation to the interest claimed. This is addressed in further detail later in these reasons.
However, much time was spent during the trial on the background to the relationship between Mr McMahon and Mr Woodward and the background to the Loan Agreement. In particular, the submissions made by both parties and the evidence adduced focused to a significant degree on how the amount of the loan was calculated (as set out in Schedule 2 to the Loan Agreement) and whether the amount claimed, or any amount, is due and payable to Mr McMahon.
This was, in large part, because of the defences advanced by Mr Woodward, which I outline below, to the effect that the amount of the loan shown in the Loan Agreement is incorrect, Schedule 2 to the Loan Agreement is inaccurate and, if any money is owed by Mr Woodward it is to the Winthrop Unit Trust, not to Mr McMahon.

The defence to the claim

Mr Woodward's defence to the claim for repayment of the loan of $98,708 and the interest claimed, as pleaded in the amended defence filed on 12 February 2020, is as follows:
1.The amount claimed of $98,708 is 'inconsistent/incorrect with the amount shown in 'Schedule 2' of the Loan Agreement (ie: approx. $78,000)'.[1]
2.The Loan Agreement is undated and therefore not valid.[2]
3.The amount shown in the Loan Agreement is incorrect ($100,223.43). It should be approx. $78,000.[3]
4.The amount of interest claimed and stated as $12,473.18[4] is incorrect and calculated on an incorrect loan amount. The correct amount of interest is yet to be determined, but is significantly less.[5]
[1] Amended defence, par 2.
[2] Amended defence, par 3.
[3] Amended defence, par 4.
[4] As stated in par 12 of the original statement of claim indorsed on the writ of summons filed 6 September 2019.
[5] Amended defence, par 5.
In his written outline of submissions dated 3 November 2021,[6] Mr Woodward sought to expand his defence beyond his pleaded defence by raising the following additional bases for disputing the claim:
1.The Loan Agreement is invalid, void, or otherwise unenforceable on the basis of duress, undue influence, misrepresentation and unconscionable conduct, which together Mr Woodward refers to as 'vitiating factors'.[7]
2.Mr Woodward's debt is to the Winthrop Unit Trust, not Mr McMahon personally.[8]
3.Though Mr Woodward stated in his defence the amount claimed of $98,708 was incorrect and he suggested the correct amount was approximately $78,000, on further review of the figures and calculations, $17,639 was owed to him for the period outlined, rather than him owing any money.[9]
4.The Loan Agreement is void for uncertainty given the considerable uncertainty and dispute as to the amount claimed and the inaccuracies in Schedule 2.[10]
[6] Bundle of materials for the judge filed on 24 November 2021, pages 2 - 7 (Defendant's written outline of submissions).
[7] Defendant's written outline of submissions, pars 1, 2, 4 - 11, list of orders requested by the defendant, par 1.
[8] Defendant's written outline of submissions, par 3.
[9] Defendant's written outline of submissions, pars 12 - 16.
[10] Defendant's written outline of submissions list of orders requested by the defendant, par 1.
Mr Woodward raised the following additional matters in his oral opening submissions at trial, which are not pleaded and were not addressed in his written opening submissions:
1.The person who he alleges placed pressure on him to sign the Loan Agreement (giving rise to the alleged 'vitiating factors') was Ms Debra Whiting, the accountant for the Winthrop Unit Trust.[11]
2.The Loan Agreement and financial information and statements for the Winthrop Unit Trust were prepared by people with whom he says Mr McMahon had a personal relationship, and which Mr Woodward alleges placed him at a special disadvantage, giving rise to the alleged 'vitiating factors'.[12]
3.The Loan Agreement is void, invalid, or otherwise unenforceable on the basis that it attempts to validate potential breaches of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act).[13]
[11] Defendant's oral opening submissions, ts 315; Defendant's written outline of closing submissions, par 3; Defendant's oral closing submissions, ts 390.
[12] Defendant's oral opening submissions, ts 314; Defendant's written outline of closing submissions, par 3;
[13] Defendant's oral opening submissions, ts 316.
Mr McMahon objected to each of the matters set out in [14] and [15] above being considered and determined by the court on the basis they impermissibly exceed Mr Woodward's pleaded case and:
1.in respect of the matters set out in [14] above, were not expressed sufficiently clearly or precisely so as to enable Mr McMahon to have fair notice of the case to be made against him at trial; and
2.in respect of the matters set out in [15] above, they were first raised by Mr Woodward after Mr McMahon had closed his evidentiary case, Mr McMahon had no notice of them and was therefore denied the opportunity to put on evidence regarding those matters.[14]
[14] Plaintiff's objections to the defendant's case advanced at trial, filed 3 December 2021.
I address the issue of whether Mr Woodward can rely on the further matters raised by him in defence of the claim that have not been pleaded later in these reasons.
I note that Mr Woodward is a litigant in person. As such, he is entitled to some leniency in relation to compliance with the court rules: Glew v Frank Jasper Pty Ltd.[15] It is appropriate that I approach the documents in which he articulates his case with some flexibility: Wentworth v Rogers(No 5);[16] Smart v Prisoner Review Board (WA).[17] However, at the same time, I must ensure that any latitude given to Mr Woodward does not deprive Mr McMahon of his rights to procedural fairness and a fair hearing: Moleirinho v Talbot & Olivier Lawyers Pty Ltd;[18] MTI v SUL [No 2];[19] Glew v Frank Jasper Pty Ltd.[20]
[15] Glew v Frank Jasper Pty Ltd [2010] WASCA 87 [10].
[16] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 536 - 537 (Kirby P), 543 (Hope & Samuels JJA agreeing).
[17] Smart v Prisoner Review Board (WA) [2012] WASC 48 [10] (Pritchard J).
[18] Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65 [51].
[19] MTI v SUL [No 2] [2010] WASCA 58 [42] - [43] (Newnes JA, with whom Pullin & Buss JJA agreed).
[20] Glew v Frank Jasper Pty Ltd [10].

Evidence

The evidence adduced at trial

Mr McMahon gave oral evidence at trial and also relies on oral evidence given by Debra June Whiting, and the exhibits tendered on his behalf during the trial.
Mr Woodward elected not to give evidence at trial. He relies on evidence given by Mr McMahon and Ms Whiting, the exhibits tendered by him and some of those tendered by Mr McMahon.
I do not list all of the exhibits tendered. I will refer to them, as applicable, in these reasons.

Evidence of Debra Whiting

Ms Debra June Whiting is a chartered accountant, certified practising accountant (CPA), financial adviser and self‑managed super fund specialist. She practices under the name of Utopia Financial Partners and operates two practices, one in Subiaco and one in Rockingham. She has a Batchelor of Commerce and an MBA and is a fellow of the National Tax Association. She holds mortgage broking and property qualifications and has tax specialisations in general tax and superannuation. She established the predecessor to Utopia Financial Partners, Whitings Chartered Accountants, in 1986. Prior to that she worked at various large accounting firms since 1980.
The name of Ms Whiting's accountancy practice has changed over the years. It has also previously been known as Whitings Financial Services and Utopia Financial Services. I will refer to it as Utopia.
Ms Whiting gave evidence about her and Utopia's roles in relation to the Winthrop Unit Trust and the Bagot Road Unit Trust. This included the structure of the property development business and preparation of the financial statements for the unit trusts, particularly the Winthrop Road Unit Trust, her dealings and discussions with Mr McMahon and Mr Woodward in relation to the unit trusts, requirements relating to their self‑managed superannuation funds and the background to the Loan Agreement the subject of the proceedings.
I found Ms Whiting to be an honest and reliable witness. She had a good recollection of the events she gave evidence about. She was the principle of Utopia and the person who was ultimately responsible for and advised Mr McMahon and Mr Woodward about matters concerning the structure and operation of the Winthrop Unit Trust and the Bagot Road Unit Trust and compliance of their Superannuation Funds from a taxation perspective. She delegated day to day tasks regarding the preparation of the financial statements to her staff. She supervised their work and she checked and signed off on the final accounts and financial statements and discussed them with Mr McMahon and Mr Woodward.
I am satisfied that, to the extent Ms Whiting gave evidence of opinion relating to accounting, taxation and compliance with taxation and superannuation legislation, she had the special skill and knowledge from her training and experience in such matters to qualify her to give expert opinion evidence in respect of those matters.

Evidence of John McMahon

The plaintiff, Mr John Douglas McMahon, is retired. He retired in 2013 on medical advice. He has a degenerative eye condition called pseudoxanthoma elasticum. At that time, he was having extreme difficulty reading documents which made it almost impossible for him to continue in his role as general manager for the St Martins Property Group.
His sight has diminished significantly since 2012. He can read documents using a special magnification program on his computer and also relies to a large degree on other people to read documents to him.
Mr McMahon gave evidence about his relationship with Mr Woodward and the establishment by them of the Winthrop Unit Trust and Bagot Road Unit Trust in 2012 as the vehicles through which they subsequently undertook property development projects together. Those property development projects involved developing residential units in Nedlands, Subiaco and Shenton Park.
Mr McMahon also gave evidence about the background to the Loan Agreement and the circumstances in which the Loan Agreement was signed by him and Mr Woodward.
I found Mr McMahon to be an honest and reliable witness. His recollection of events and matters he gave evidence about was generally good.

The Loan Agreement

The parties to the Loan Agreement[21] are Mr McMahon, defined as Lender, and Mr Woodward, defined as Borrower.
[21] Exhibit 1.
It is not in issue that the Loan Agreement was signed by Mr McMahon and Mr Woodward. The Loan Agreement is undated, but I am satisfied on the evidence of Mr McMahon that it was signed by him and Mr Woodward and witnessed by Mr Woodward's brother, Greg Woodward, on about 16 March 2019, the day Mr Woodward left Perth to go back to Greece.[22] That is not disputed by Mr Woodward, though he contends that he signed the Loan Agreement under duress.[23]
[22] J McMahon ts 215; ts 286.
[23] J McMahon ts 286 - ts 287; Defendant's written outline of closing submissions, pars 9 - 13; Defendant's oral closing submissions ts 387 - ts 390, ts 393.
The relevant terms of the Loan Agreement are as follows:
1.INTERPRETATION
1.1Definitions
In this Agreement:
…
Advancement Dates means the dates upon which the Loan was made to the Borrower and which are specified in Schedule 2.
…
Loan means the principal amount specified in item I of Schedule 1.
Rate means the interest rate specified in Item 2 of Schedule 1.
Repayment Date means the date specified in item 3 of Schedule 1.
WUT means the Winthrop Unit Trust.
2.LOAN
2.1The Borrower acknowledges that on the Advancement Dates, the Borrower withdrew the amounts specified in Schedule 2 from the WUT account.
2.2The parties have agreed that the Loan represents moneys properly owing to the Lender and not to WUT.
2.2[sic]The Lender agrees to advance the Loan to the Borrower on the terms set out in this Agreement.
3.REPAYMENT
3.1The Borrower must repay and finally discharge the Loan on the Repayment Date.
3.2The Borrower may make repayments to the Lender of the Loan in whole or in part before the Repayment Date.
…
8.COSTS AND EXPENSES
8.1The Borrower must on demand by the Lender pay and indemnify the Lender against all costs, losses, charges, expenses, liabilities, damages, fees and disbursements including all reasonable legal costs on a solicitor and own client basis paid or incurred by the Lender of or incidental to:
(a)the exercise or attempted exercise of any right, power, privilege, authority or remedy of the Lender under this Agreement; and
…
9.NOTICES
9.1All notices given under this Agreement must be in writing or by email and may be delivered in person, by mail or by email to the address for each party set out in Item 4 of the First Schedule.
9.2A party may change its particulars for service of notices by giving written notice to the other party.
9.3A notice sent by post will be considered to be reached 4 business days after posting.
9.4A notice sent by email will be considered to be reached on the date and time of successful transmission.
10.GENERAL
…
10.2Entire Agreement
This Agreement represents the entire agreement between the parties and supersedes all prior representations, agreements, statements and understandings between the parties.
…
10.5Applicable Law
This Agreement is governed by the laws in force in the State of Western Australia. The parties irrevocably and unconditionally submit to the non‑exclusive jurisdiction of the courts of Western Australia.
…
10.7Waiver
The failure by a party to enforce a term or the granting by a party to the other of any time or indulgence will not be construed as a waiver of the term nor as a waiver of the party's right at a later time to enforce the term.
…

Schedule 1 to the Loan Agreement is in the following terms:
SCHEDULE 1
Item 1
Amount of Loan  $100,223.43
Item 2
Interest Rate  The daily interest charge at Australian Taxation Office benchmark which at the date of this Agreement is 5.45%.
Item 3
Repayment Date  Within 30 days of written request being made in writing by the Lender to the Borrower.
Item 4
NoticesJohn McMahon
[Postal address and email address]
Gavin Woodward
[Postal address and email address]
Schedule 2 to the Loan Agreement is headed 'Advancement Dates' and sets out a number of transactions stated to be for the period 1 July 2015 ‑ 30 June 2017. However, I accept Ms Whiting's evidence that the date recorded in Schedule 2 against 'Opening balance', which is stated as '1/07/2015' is stated in error and refers to the opening balance of Mr Woodward's loan account as at 1 July 2016,[24] and that Schedule 2 represents transactions for the period from 1 July 2016 ‑ 30 June 2017.[25] The total amount stated in Schedule 2 and described as 'Outstanding reimbursement required for 2017FY' is $100,233.43.
[24] D Whiting, ts 119 - ts 120, ts 122.
[25] Including the opening balance as at 1 July 2016.
It is Mr McMahon's case, in effect, that:
1.The Loan Agreement was entered into between him and Mr Woodward in respect of funds paid by Mr McMahon to cover withdrawals made by Mr Woodward from the Winthrop Unit Trust in excess of his entitlements, as set out in Schedule 2 to the Loan Agreement.
2.The payment was made by reducing the amount owed by the Winthrop Unit Trust to Mr McMahon in respect of capital contributions made by him by the amount owed to the Winthrop Unit Trust by Mr Woodward in respect of the amounts withdrawn by him (and interest), and applying that amount to clear Mr Woodward's debt to the Winthrop Unit Trust.
3.The Loan Agreement reflects agreement between Mr Woodward and Mr McMahon that Mr Woodward was to repay that amount to Mr McMahon personally to reimburse him.

Relevant background and circumstances in which the parties came to sign the Loan Agreement

I make the following factual findings as to the relevant background and the circumstances in which the parties came to sign the Loan Agreement. Where applicable, the evidence upon which my findings are based, is identified in the relevant footnotes.

Relationship between Mr McMahon and Mr Woodward

Mr McMahon and Mr Woodward met in 1968 when they were at school together and were close friends for many years.[26]
[26] J McMahon, ts 190.
During the period 1988 - 1990, Mr McMahon and Mr Woodward worked together in the property development division of Atlantic Ltd.[27]
[27] J McMahon, ts 190.
From 1990 until 2013, Mr McMahon worked in property management as general manager for St Martins Property Group.[28]
[28] J McMahon, ts 189.
Mr McMahon's sight had deteriorated significantly by 2012 and he was looking to retire from his position with St Martins Property Group. Mr McMahon and Mr Woodward had discussions about developing property together.[29]

The Winthrop Unit Trust and the Bagot Road Unit Trust

[29] J McMahon, ts 190.

In early 2012, Mr McMahon sought and received advice from Ms Whiting about how to structure and operate the property development business. She advised that the most effective way was to set up a unit trust. Following discussions between Mr McMahon, Mr Woodward and Ms Whiting the Winthrop Unit Trust and the Bagot Road Unit Trust were set up.[30]
[30] D Whiting, ts 75 - ts 76, ts 78 - ts 81; J McMahon, ts 190 - ts 192.
The Winthrop Unit Trust was established by deed dated 10 March 2012.[31] As is evidenced in that deed:
1.Gavin John Woodward and John Douglas McMahon were appointed as trustees of the Winthrop Unit Trust.
2.Ziva Holdings Pty Ltd as trustee for the GJW Superannuation Fund (Mr Woodward's superannuation fund) and JLB Investments (WA) Pty Ltd as trustee for the JD McMahon Superannuation Fund (Mr McMahon's superannuation fund) each initially held 10 units in the Winthrop Unit Trust at a unit price of $1.00.[32]
[31] Exhibit 2.
[32] See also J McMahon, ts 192.
The Bagot Road Unit Trust was established by deed dated 6 August 2012.[33] As is evidenced in that deed:
1.Jeveste Pty Ltd was appointed as trustee of the Bagot Road Unit Trust.
2.Mr Woodward and Mr McMahon as trustees for the Winthrop Unit Trust owned 100% of the units in the Bagot Road Unit Trust (being 100 units at a unit price of $1.00).
[33] Exhibit 3.
Jeveste Pty Ltd was a company owned by Mr McMahon and Mr Woodward.[34]
[34] J McMahon, ts 191.
Further units in the Winthrop Unit Trust were issued to Mr Woodward's superannuation fund and to Mr McMahon's superannuation fund. As at 17 July 2012, they each held 450,010 units in the Winthrop Unit Trust, being the initial 10 units and 450,000 additional units purchased by each to that date.[35]
[35] Exhibit 4, page 405; Exhibit 5, page 408.
Mr McMahon's superannuation fund paid cash for its units in the Winthrop Unit Trust.[36] Mr Woodward's superannuation fund did not have funds and its units were funded by loans from the Winthrop Unit Trust to Mr Woodward and recorded in the accounts as a non‑current asset (Loans - GJ Woodward).[37] The balance of Mr Woodward's loan debt to the Winthrop Unit Trust at the end of the 2013 financial year was $450,000.[38] It was reduced from $450,000 to nil in the 2014 financial year.[39]
[36] D Whiting, ts 83; J McMahon, ts 193; Exhibit 5; Exhibit 6.
[37] D Whiting, ts 83; ts 85 - ts 86, ts 89; J McMahon, ts 193; Exhibit 4; Exhibit 6, page 315; Exhibit 7, page 383.
[38] Exhibit 6, page 315; Exhibit 7, page 383.
[39] Exhibit 6, page 332; Exhibit 7, page 384.
Mr Woodward managed the day-to-day business of the Winthrop Unit Trust and the Bagot Road Unit Trust, including project managing the developments. He also set up and operated the business bank accounts. Mr McMahon was authorised to operate the business bank accounts, but he left it to Mr Woodward.[40]
[40] J McMahon, ts 194 - ts 195.
Mr Woodward arranged a bookkeeper for the business.[41] The accountant for the business was Utopia.[42] The books prepared by the bookkeeper, on Mr Woodward's instructions, were forwarded to Utopia for the end of financial year accounts to be prepared.[43] Utopia then undertook a reconciliation of the financial information and prepared the financial statements.[44]
[41] J McMahon, ts 195.
[42] J McMahon, ts 195.
[43] D Whiting, ts 85, ts 93; J McMahon, ts 195 - ts 196.
[44] D Whiting, ts 85, ts 93 - ts 94.
The developments undertaken by the Winthrop Unit Trust and the Bagot Road Unit Trust were funded by:
1.capital contributions made by Mr McMahon's superannuation fund;[45]
2.loans from Mr McMahon;[46] and
3.loans from banks and other third parties, which were arranged by Mr Woodward.[47]
[45] D Whiting, ts 83, J McMahon, ts 193; Exhibit 5; Exhibit 6.
[46] D Whiting, ts 90 - ts 91; J McMahon, ts 196- ts 197, ts 268; Exhibit 8; Exhibit 9.
[47] D Whiting, ts 90 - ts 91; J McMahon, ts 195; Exhibit 6, pages 347, 363, 397 - 398.
The loans by Mr McMahon to the Winthrop Unit Trust were recorded in the accounts under non-current liabilities (Loans - Secured - John McMahon).[48] When Mr Woodward's loan account balance was in credit, that was recorded in the accounts as a non‑current liability (Loans - GJ Woodward).[49]

Drawings by Mr Woodward from the Winthrop Road Unit Trust

[48] See Exhibit 6, pages 347, 363; Exhibit 9, pages 397 - 398.

[49] See Exhibit 6, page 347; Exhibit 7, page 386.

In the 2016 financial year, Mr Woodward made a number of personal drawings from the Winthrop Road Unit Trust bank accounts, which were treated in the accounts for the Winthrop Unit Trust as debits to his loan account. That is, a debt owed by Mr Woodward to the Winthrop Unit Trust.[50]
[50] D Whiting, ts 94 - ts 98; Exhibit 7, pages 388 - 389.
Ms Whiting had explained to Mr McMahon and Mr Woodward at about the time that the Winthrop Road Unit Trust was established that as the unit holders in the Winthrop Road Unit Trust were Mr McMahon's and Mr Woodward's superannuation funds, the unit trust needed to comply with the SIS Act.[51]
[51] D Whiting, ts 75 - ts 80.
Utopia raised the issue of Mr Woodward's personal drawings with Mr Woodward and Mr McMahon in various emails sent to them by Tehani Jayasekera, Senior Accountant of Utopia, and by Ms Whiting between 31 May 2017 - 21 June 2017.[52]
[52] D Whiting, ts 98 - ts 99; Exhibits 18, 28, 29 and 30.
In her email to Mr Woodward and Mr McMahon dated 31 May 2017, Ms Whiting advised that the Winthrop Unit Trust could not be used for personal drawings and about potential consequences of breaches of the SIS Act and potential tax consequences for Mr Woodward's and Mr McMahon superannuation funds.[53]
[53] Exhibit 18.
Shortly after sending her email of 31 May 2017, Ms Whiting met with Mr Woodward and Mr McMahon at Utopia's office in Subiaco to discuss these matters and how to address them. At that meeting, Ms Whiting explained to Mr Woodward and Mr McMahon that their superannuation funds were at risk of receiving a non-complying status because of the transactions. Mr Woodward said that he had tax to pay and would repay the money to the Winthrop Unit Trust when he settled on a property he was selling. Ms Whiting explained to Mr Woodward and Mr McMahon, in effect, that the amounts drawn by Mr Woodward from the Winthrop Unit Trust would need to be repaid, with interest, by the time the return was lodged. She explained to them that the interest had to be commercial interest and recommended using the ATO benchmark interest rate as an independent rate.[54]
[54] D Whiting, ts 98 - ts 101, ts 139.
After that meeting, the 2016 Financial Statements for the Winthrop Unit Trust were finalised by Utopia.[55] Mr McMahon and Mr Woodward signed the 2016 Financial Statements on 23 June 2017.[56]
[55] D Whiting, ts 103; Exhibit 6, pages 351 - 366.
[56] D Whiting, ts 104; Exhibit 6 page 365.
The 2016 Financial Statements and records for the Winthrop Unit Trust record that, at the end of the 2016 financial year:
1.Mr Woodward's loan debt owed by him to the Winthrop Unit Trust was $166,056;[57]
2.the Winthrop Unit Trust owed Mr McMahon $510,308 in respect of his loans to the trust.[58]
[57] D Whiting, ts 102 - ts 103; Exhibit 6, page 362; Exhibit 7, pages 387 - 389.
[58] Exhibit 6, page 363; Exhibit 9, page 398.
In the 2017 financial year, Mr Woodward made some payments to his loan account and he also made further drawings from the Winthrop Unit Trust bank accounts, which exceeded his entitlements.[59]
[59] D Whiting, ts 105; Exhibit 7, page 390.
On an unknown date or dates in 2017 or 2018, Ms Whiting, Mr McMahon and Mr Woodward discussed the need for Mr Woodward's loan account to be repaid and how to achieve that. Ms Whiting advised Mr McMahon and Mr Woodward that Mr Woodward's loan debt to the Winthrop Unit Trust be repaid by reducing the amount of the loan owed to Mr McMahon by the Winthrop Unit Trust by the amount of Mr Woodward's loan debt together with interest and applying that amount against Mr Woodward's loan account to repay Mr Woodward's loan. She said to them that Mr Woodward would then become personally indebted to Mr McMahon for that amount. Mr McMahon and Mr Woodward agreed to proceed on that basis.[60]
[60] D Whiting, ts 106 - ts 113; J McMahon, ts 199 - ts 200, ts 262 - ts 263, ts 279.
It is not clear exactly when these discussions took place. Ms Whiting's evidence was that she had discussions to this effect with Mr Woodward and Mr McMahon at her meeting with them in early June 2017 and in a further meeting sometime after September 2018.[61] Ms Whiting could not be certain as to whether Mr Woodward attended the 2018 meeting in person at her office or remotely. It was suggested to her by Mr Woodward in cross‑examination that he was living in Greece from March 2018 and he was not in Australia in September 2018. Ms Whiting was clear in her evidence that she had a discussion with Mr Woodward and Mr McMahon about what she described as the 'offset'. She said she thought it was in a meeting but, if he was not in the country then, he could have attended the later meeting remotely.[62]
[61] D Whiting, ts 111 - ts 112, ts 139 - ts 140.
[62] D Whiting, ts 141 - ts 142.
Mr McMahon's evidence was that he and Mr Woodward had a meeting with Ms Whiting in June 2017 and he also met with her in the second half of 2018 to sign the 2017 accounts.[63] When asked in cross‑examination by Mr Woodward if Mr Woodward was at the meeting with Ms Whiting in 2018, Mr McMahon said 'I don't think so'.[64] In re-examination, Mr McMahon was asked what happened at the meeting with Ms Whiting in 2018 that he had been asked about by Mr Woodward. He said he thinks the 'financial accounts for '16, '17 were signed off'.[65] The 2017 Financial Statements were signed by Mr McMahon on behalf of the Winthrop Unit Trust. Mr Woodward did not sign them.[66]
[63] J McMahon, ts 293 - ts 294, ts 296.
[64] J McMahon, ts 295.
[65] J McMahon, ts 296.
[66] D Whiting, ts 143; Exhibit 6, page 381.
Mr McMahon also gave evidence, which I accept, to the effect that after the meeting between him, Mr Woodward and Ms Whiting in June 2017 referred to in [63] above, he went to stay with Mr Woodward in Greece in mid-2018. Before he left, he said to Mr Woodward that they needed to finalise his loan account for the $100,000 and that when he got back, he would sort out the loan agreement.[67]
[67] J McMahon, ts 202 - ts 203.
Though there are some inconsistencies in the evidence of Ms Whiting and Mr McMahon as to when the discussions between Mr Woodward, Mr McMahon and Ms Whiting took place, I accept their evidence that there were discussions between them in which Ms Whiting suggested and Mr Woodward and Mr McMahon agreed that Mr Woodward's debt to the Winthrop Unit Trust (including interest) would be cleared by reducing the amount owed by the Winthrop Unit Trust to Mr McMahon. I also find that Mr Woodward and Mr McMahon agreed that Mr Woodward would repay Mr McMahon the amount applied to clear Mr Woodward's loan account under a personal agreement to be drawn up and signed by both of them.
Though Mr Woodward did not give evidence, he concedes in his submissions that he attended a meeting at Utopia's office and discussed the matters referred to in Ms Whiting's and Mr McMahon's evidence with them.[68] He disputes that any agreement was reached, but has given no evidence to contradict that of Mr McMahon or Ms Whiting from which I have reached my findings about what was discussed by Ms Whiting, Mr Woodward and Mr McMahon and what was agreed between Mr Woodward and Mr McMahon.
[68] Defendant's written outline of closing submissions, par 15; Defendant's oral closing submissions, ts 383.
During the period May 2017 to June 2018, emails were exchanged between Tehani Jayasekera of Utopia and Mr Woodward in relation to Mr Woodward's loan account with the Winthrop Unit Trust.[69]
[69] Exhibits 28, 29, 31 and 32.
At the end of the 2017 financial year (30 June 2017), Mr Woodward's loan account had a balance owing to the Winthrop Unit Trust of $100,233.43 (inclusive of interest at a rate of 5.45%).[70]
[70] D Whiting, ts 104 - ts 105; Exhibit 7, pages 390 - 391.
The 2017 Financial Statements for the Winthrop Unit Trust were prepared by Utopia in 2018 and copies of those and other financial information were provided to Mr Woodward and Mr McMahon for review. In an email from Mr Woodward to Tehani Jayasekera dated 20 June 2018,[71] Mr Woodward said:
…
I notice in the WUT accounts you are showing that I have borrowed $100,000 from WUT.
This is not correct.
When the project at 112 Onslow Rd, Shenton Park was completed, and the profit distributed to John and I (SMSF), WUT had minimal assets
The funds on deposit of approx.. $500k in the WUT Bank West interest bearing account were in reality Johns (ie. his original equity in the project)
So any borrowings that I have made are from John, not WUT. It was only for convenience purposes that the $500k remained in the WUT interest bearing account, once the Onslow Rd development was completed.
I therefore think that the accounts need to be amended accordingly.
…
[71] Exhibit 32, pages 86 - 87; Exhibit 33.
On 21 June 2018, Ms Jayasekera sent that email to Mr McMahon, copied to Mr Woodward,[72] stating:
Hi John
Please could you confirm that you are happy for me to make the changes in WUT as per Gavin below.
Essentially, Gavin's loan from WUT ($100,223.43) will be offset against your loan to WUT ($503,682.47). Your loan to WUT will then be $403,459.04.
Outside of WUT's accounts, you and Gavin will have a private arrangement whereby presumably he personally owes you $100,223.43 as at 30/06/2017.
[72] Exhibit 32, page 86.
In the same chain of emails, on 22 June 2018, Mr Woodward asked Ms Jayasekera to provide her reconciliation of the '$100k loan' and she sent him an email attaching a document, containing the information in Schedule 2 to the Loan Agreement,[73] interest calculation for the 2017 financial year,[74] and copies of bank statements for the Winthrop Unit Trust.[75]
[73] Exhibit 32, page 88.
[74] Exhibit 32, pages 89 - 96.
[75] Exhibit 20, pages 97 - 156.
In about mid-2018, during a visit to see Mr Woodward in Greece (as referred to in [64] above), Mr McMahon raised with Mr Woodward the need to formalise the personal loan created by the offset arrangement by way of a written loan agreement. Mr McMahon returned to Perth in September 2018. On his return, he arranged for Dorothy Collins to draft a loan agreement.[76]
[76] J McMahon, ts 202 - ts 203.
Ms Jayasekera sent an email to Mr McMahon and Dorothy Collins on 23 October 2018 advising 'the 30/06/2017 loan amount from Joh[n] to Gavin is $100,223.43'.[77]
[77] Exhibit 21, page 284 - 285; J McMahon, ts 205.
A draft loan agreement was prepared in November 2018 by Dorothy Collins and sent by her to Ms Jayasekera asking her to 'complete Item 2 of the Schedule by inserting the dates and the amounts shown on the statements when the moneys were withdrawn by Gavin'. Utopia prepared the schedule that became Schedule 2 to the Loan Agreement.[78]
[78] D Whiting, ts 119 - ts 121; J McMahon, ts 203 - ts 209; Exhibits 21, 22 and 23.
Schedule 2 to the Loan Agreement sets out the withdrawals made by Mr Woodward from the Winthrop Unit Trust in the 2017 financial year.[79] Each of those transactions are evidenced in the documents referred to in the aide memoire[80] produced at trial on behalf of Mr McMahon and which was marked for identification as MFI-A.
[79] Including the opening balance as at 1 July 2016 in respect of the balance of withdrawals from the 2016 financial year. D Whiting, ts 113 - ts 117, ts 119 - ts 122.
[80] Exhibits 6, 7, 10, 11, 12, 13, 14, 15, 20 and 32.
Mr McMahon collected a hard copy of the unsigned loan agreement with the schedule completed by Utopia from Utopia's office at the end of November 2018.[81] Mr McMahon provided the unsigned loan agreement to Mr Woodward in late November or early December 2018 while Mr Woodward was staying at his home during a visit to Perth from Greece.[82]
[81] J McMahon, ts 209 - ts 210.
[82] J McMahon, ts 210 - ts 211, ts 229 - ts 231, ts 278; ts 211 - ts 212; Exhibit 24.
In the period between Mr McMahon providing Mr Woodward with the unsigned Loan Agreement and them signing it in March 2019, Mr McMahon asked Mr Woodward two or three times when he was going to sign it. Mr Woodward said to him that he would get around to signing it and later said 'I will sign it'.[83]
[83] J McMahon, ts 213.
The Loan Agreement was signed by Mr McMahon and Mr Woodward at Mr McMahon's home on about 16 March 2019, before Mr Woodward left Perth to return to Greece.[84] Mr Woodward's brother, Greg Woodward, witnessed Mr Woodward and Mr McMahon sign the Loan Agreement.[85]
[84] J McMahon, ts 213- ts 215; Exhibit 1.
[85] J McMahon, ts 213, ts 215; Exhibit 1 page 172.
A written request for repayment of the outstanding amount of the loan of $98,708 together with interest was made of Mr Woodward by letter dated 27 September 2019 from Fletcher Law, on instructions from Mr McMahon.[86]
[86] J McMahon, ts 217; Exhibit 25.

Mr Woodward has not made any payment to Mr McMahon in respect of the loan or interest in response to that request, or at all.[87]

Amount claimed under the Loan Agreement

[87] J McMahon, ts 226.

The amount claimed by Mr McMahon from Mr Woodward under the Loan Agreement has been reduced from $100,233.43 (shown as the total loan amount in Schedule 2) to $98,708.11 to take account of an amount of $1,551.89, which Mr Woodward paid from the Winthrop Unit Trust bank account for a personal expense of Mr McMahon's in mid‑2019. The revised amount also takes into account an adjustment to the interest included in the loan amount.[88]
[88] D Whiting, ts 125 - ts 127; Exhibit 19 pages 210, 216 and 223; J McMahon, ts 226 - ts 227.

Is Mr Woodward liable to pay to Mr McMahon the amount of $98,708 under the Loan Agreement?

For the reasons that follow, I find that Mr Woodward is liable to pay Mr McMahon the amount of $98,708, repayment of which has been requested under the Loan Agreement and not paid by him.
The Loan Agreement, as for any contract of that nature, is to be construed objectively based on the understanding of a reasonable person in the position of the parties by reference to the contract as a whole, to its text, context and its purpose or objects: Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd;[89] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd;[90] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2].[91]
[89] Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
[90] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [53].
[91] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] - [72] and the authorities referred to.
Mr McMahon relies on the following emails in which it is submitted that Mr Woodward acknowledged the Loan Agreement and did not, at that time, raise any of the 'vitiating factors' he now seeks to rely on or dispute the loan or the validity of the Loan Agreement:[92]
[92] Plaintiff's oral closing submissions, ts 416 - ts 419.
1.An email from Mr Woodward to Mr McMahon dated 26 June 2019[93] (relating to finalising the accounts and the lodgment of documents relating to the Winthrop Unit Trust with the ATO) in which, amongst the other things stated, Mr Woodward said to Mr McMahon:
[93] Exhibit 26.
…
Also there is no reference in these documents to our Loan Agreement of approx. $100,000.
…
As previously advised in my earlier email to you, it is my intention and desire to repay the debt I have with you. I just need time!
…
I repeat … it is my desire and intention to repay the debt to you.
…
2.An email from Mr Woodward to Tehani Krestelica, copied to Mr McMahon dated 27 June 2019,[94] in which (amongst other matters), Mr Woodward said:
…
Also, your schedules do not acknowledge and therefore address the loan of approx. $100K between John and myself.
…
[94] Exhibit 27.
Consistent with the objective theory of contract, statements made or other conduct which post-dates a contract cannot be used to establish construction of a contract or its terms or what the parties intended at the time of the contract. A post‑contractual statement made acknowledging an agreement or a term of an agreement may be admissible as evidence probative of the surrounding circumstances at the time the agreement was made.[95]
[95] Agricultural and Rural Finance v Gardiner [2008] 238 CLR 570 [35] (Gummow, Hayne & Kiefel JJ). See also Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, (2009) 76 NSWLR 603 [6] - [13] (Allsop P); [314] - [327] (Campbell JA).
Any post‑contractual acknowledgment of a debt or statement by Mr Woodward of his intention to pay Mr McMahon is not evidence of the terms of the agreement and is not determinative of his liability to repay the loan.
In any event, the terms of the Loan Agreement are clear:
1.By cl 2.1, Mr Woodward has acknowledged that he withdrew the amounts specified in Schedule 2 on the dates specified.
2.By (the first) cl 2.2, Mr Woodward agreed that the loan, being the amount specified in Item 1 of Schedule 1 to the Loan Agreement (the Loan), represents moneys properly owing to Mr McMahon and not to the Winthrop Unit Trust.
3.By cl 3.1, Mr Woodward agreed to and is required to repay the Loan on the Repayment Date. That is, within 30 days of a written request for payment being made in writing by Mr McMahon to Mr Woodward.
Though, I do not consider there to be any ambiguity that requires recourse to matters external to the Loan Agreement to construe its terms, the terms of the Loan Agreement (as I have outlined) are consistent with the facts I have found as to the background and circumstances in which the contract was made and its purpose or objects.
I find that a written request for payment of the outstanding amount of the Loan of $98,708, was made of Mr Woodward by Fletcher Law on behalf of Mr McMahon by letter dated 27 September 2019.[96]
[96] Exhibit 25.
No payment has been made by Mr Woodward within 30 days of that request, or at all, and I find that the amount of $98,708 as requested, is due and payable by Mr Woodward to Mr McMahon in relation to the Loan.
I address the matters raised by Mr Woodward in defence to the claim separately later in these reasons. For the reasons set out there, those matters do not negate Mr Woodward's liability to pay the amount of $98,708 to Mr McMahon.

Is Mr McMahon entitled to payment of interest at the rate of 5.45% per annum calculated daily from 16 March 2019 under the Loan Agreement?

Mr McMahon claims interest on the Loan amount of $98,708 at the rate of 5.45% per annum calculated daily from the date of the Loan Agreement, being 16 March 2019.
This is claimed to have been agreed 'by the Loan Agreement'.[97]
[97] Amended Statement of Claim, par 10.1.
It is submitted on behalf of Mr McMahon that two matters of construction arise under the Loan Agreement with respect to interest. The first of those is that the interest rate referred to in Schedule 1 varied according to what the Australian Taxation Office benchmark was at the relevant date. The second being that the interest rate was fixed at 5.45%. It is submitted that the proper construction of 'the interest rate' is that it is fixed at flat rate of 5.45%, which rate was selected because, at the relevant time, that was the Australian Taxation Office benchmark.[98]
[98] Plaintiff's written outline of submissions, 18 October 2021, pars 34 - 35 and 39 - 43.; Plaintiff's oral closing submissions, ts 425 - ts 430.
There are difficulties with Mr McMahon's claim in relation to interest. The most fundamental is that there is no term of the Loan Agreement relating to the payment of interest. The only reference to interest is in Item 2 of Schedule 1, which provides, as follows:
SCHEDULE 1
…
Item 2
Interest Rate The daily interest charge at Australian Taxation Office benchmark which at the date of this Agreement is 5.45%.
…
There is no provision of the Loan Agreement which provides that interest is payable on the Loan or as to the date from which, or the basis upon which, any interest is to be calculated and paid.
The basis upon which it is contended on behalf of Mr McMahon that the interest rate should be fixed at 5.45% per annum is that is the rate applied to the loan owed by Mr Woodward to the Winthrop Unit Trust (even though, as outlined in Mr McMahon's submissions, that was not the ATO benchmark rate throughout the period of that loan or at the date of the Loan Agreement).[99]
[99] Defendant's written outline of submissions, pars 40 - 41; Defendant's oral closing submissions, ts 426 ‑ ts 427.
Ms Whiting explained in her evidence that it was necessary to apply interest to Mr Woodward's loan from the Winthrop Unit Trust at a commercial rate as it had to be an arm's length transaction to comply with the requirements for self‑managed superannuation funds. She recommended the ATO benchmark rate as an independent rate and that was the rate used and applied to Mr Woodward's loan account with the Winthrop Unit Trust.
However, there is no provision in the Loan Agreement, nor any evidence to support any agreement having been reached between Mr McMahon and Mr Woodward that interest would be payable under the terms of the personal loan from Mr McMahon to Mr Woodward from the date of the Loan Agreement, as now claimed.
I do not accept the submissions made on behalf of Mr McMahon to the effect that, on an objective reading of the Loan Agreement, the parties to it intended for interest to be payable and that Item 2 of Schedule 1 clearly provided for the payment of interest.[100] Item 2 of Schedule 1 refers to an interest rate, but there is no provision reflecting any agreement or imposing any obligation on Mr Woodward to pay interest, or articulating the basis upon which any interest is to be calculated and paid.
[100] Plaintiff's written outline of submissions, pars 48 - 49.
Nor do I accept the submissions made on behalf of Mr McMahon that an obligation for Mr Woodward to pay interest on the Loan ought to be inferred and that such a term may be implied into the Loan Agreement.[101] There is no plea that a term should be implied and the inclusion of a rate of interest in Schedule 1, without more, is insufficient to infer that agreement was reached by the parties in relation to the payment of interest or the terms upon which any interest was agreed to be calculated and paid.
[101] Plaintiff's written outline of submissions, par 50.
In the circumstances, the claim that Mr Woodward is liable to pay interest at the rate of 5.45% per annum from 16 March 2019 under the Loan Agreement is not made out.
Mr McMahon's counsel foreshadowed that if interest is not awarded pursuant to the Loan Agreement, as claimed, Mr McMahon alternatively seeks pre‑judgment interest pursuant to s 32 of the Supreme Court Act. I will hear from the parties in relation to any alternative claim by Mr McMahon for interest, whether the discretion to award pre‑judgment interest under s 32 is enlivened and ought be exercised and, if so, the quantum of such interest.

Is Mr McMahon entitled to costs on a solicitor client basis?

Clause 8 of the Loan Agreement requires Mr Woodward to pay and indemnify Mr McMahon against all costs, losses, charges, expenses, liabilities, damages, fees and disbursements 'on demand'. This includes all reasonable legal costs on a solicitor client basis paid or incurred by Mr McMahon of or incidental to, relevantly, recovery of the amount owed to him by Mr Woodward under the Loan Agreement.
This entitles Mr McMahon, if successful in this action, to recover his reasonable costs of and incidental to the proceedings on a solicitor client basis and of and incidental to enforcing any judgment awarded. The claim made by Mr McMahon in the prayer for relief in the amended statement of claim, together with any subsequent demand for payment of costs reasonably incurred on a solicitor client basis (once quantified), is sufficient to satisfy the requirement in cl 8 to demand payment of such costs.

Can Mr Woodward rely on the further matters raised by him in defence of the claim that have not been pleaded?

In his pleaded defence, Mr Woodward disputes the amount claimed. He says, in essence, the loan amount should be approximately $78,000 and the amount of interest claimed is incorrect. He also contends that the Loan Agreement is not valid because it is undated.
Mr Woodward sought to expand on his pleaded defence at trial as outlined in [14] and [15] above.
The District Court is a court of pleading. Pleadings occupy an integral role in litigation and serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against them: Banque Commerciale SA (in liq) v Akhil Holdings Ltd.[102]
[102] Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279, 286 - 287 (Mason CJ & Gaudron J).
Pleadings have two primary functions. The first is that already noted - to ensure a fair trial by putting the other party on notice of the case to be met, whether the claim or the defence to it. The second is to define the issues for decision so that the court can control the preparation of the case and the conduct of the trial, including providing
the basis for the determination of admissibility of evidence at trial: EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd;[103] Barclay Mowlem Construction Ltd v Dampier Port Authority.[104]
[103] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd[2010] WASCA 78; (2010) 41 WAR 23 [124].
[104] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [4] (Martin CJ).
A party is bound by their pleading and must generally proceed on and be bound by their pleaded case or defence, unless leave is sought and given to a party to amend their pleading: Cardaci v Filippo Primo Cardaci as Executor of the Estate of Marco Antonio Cardaci, dec [No 4].[105]
[105] Cardaci v Filippo Primo Cardaci as Executor of the Estate of Marco Antonio Cardaci, dec [No 4] [2020] WASC 159 [16], [47] (Le Miere J).
There are, of course, cases which are litigated at trial in a manner that is different from the issues as defined by the pleadings. If a trial proceeds and the parties meet each other fairly on issues that are not contained in the pleadings, then the parties cannot seek to retrospectively limit the issues by reference to the pleadings: Banque Commerciale SA (in liq) v Akhil Holdings Ltd;[106] Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd.[107] However, that is not this case. Counsel for Mr McMahon raised objection to Mr Woodward relying on matters not raised on the pleadings. No application was made by Mr Woodward for leave to amend the defence, he elected not to give any evidence and did not adduce evidence to support all of the further matters he sought to advance at trial.
[106] Banque Commerciale SA (in liq) v Akhil Holdings Ltd, 293.
[107] Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167 [38].
In any event, for the reasons set out in the following section of these reasons, the matters raised by Mr Woodward do not negate his liability to repay the amount of $98,708 payable under the Loan Agreement.

Do any of the matters raised by Mr Woodward negate his liability under the Loan Agreement?

Validity and enforceability of the Loan Agreement

Is the Loan Agreement invalid because it is undated?

Mr Woodward pleads in his defence that the Loan Agreement is invalid because it is undated.
It is trite that an agreement need not be dated to be valid.[108] In the plaintiff's written outline of opening submissions, Mr McMahon's lawyers referred to Juric-Kacunic v Vaupotic[109] as authority for that proposition. Though that case involved a deed and the authorities referred to relate to deeds, the same principles apply to a written agreement made other than by deed.
[108] Unless expressly required by the contract or by statute for particular types of contract or deed, which is not the case here.
[109] Srecko Juric-Kacunic v Stan Vaupotic [2013] NSWSC 41, [49] - [51] (Sackar J).
There is no need for a contract to be in writing at all. A contract may be wholly oral. In this case, there is a written agreement, but the absence of a date does not by itself invalidate a written agreement. The date, if included, is merely an evidentiary record of the date the agreement was signed.
In this case, acceptance of the terms of the agreement is evidenced by the signatures to it. It is not in dispute that the Loan Agreement was signed by Mr McMahon and Mr Woodward and witnessed by Mr Greg Woodward on about 16 March 2019.
The fact that the Loan Agreement is undated does not invalidate the agreement and is no defence to the claim.

Is the Loan Agreement invalid, void, or otherwise unenforceable because of the vitiating factors alleged?

Mr Woodward contends that the Loan Agreement is invalid, void, or otherwise unenforceable on the basis of duress, undue influence, misrepresentation, mistake and unconscionable conduct, which he refers to together as 'vitiating factors'.
Mr Woodward seeks to allege (though has not pleaded) that he was placed at a special disadvantage and that he signed the Loan Agreement under duress or was subject to undue influence because:
1.The Loan Agreement and financial information and statements for the Winthrop Unit Trust were prepared by people with whom Mr McMahon had a personal relationship. The Loan Agreement was prepared by Mr McMahon's former partner, Dorothy Collins. Ms Whiting, who was the accountant responsible for the accounts and who expressed concern about
compliance of the Winthrop Unit Trust accounts vis a vis Mr Woodward borrowing money from that trust, was Mr McMahon's cousin.[110]
2.He was presented with the Loan Agreement and asked to sign it by Mr McMahon in December 2018 when he was staying at Mr McMahon's house while visiting from Greece.[111]
3.He had not previously been provided with a draft of the Loan Agreement.[112]
4.He told Mr McMahon that he would need to have his lawyer review the document and check the calculation of the loan amount before he signed it.[113]
5.He was asked by Mr McMahon two or three times to sign the Loan Agreement in the period from mid-December 2018 to mid‑March 2019.[114]
6.He was asked by Mr McMahon to sign the Loan Agreement just before leaving Mr McMahon's house for the airport to return home to Greece, which he says was an unusual and inconvenient time.[115]
7.He signed the document then, though he had not, at that point, read the document, checked the calculations in Schedule 2 or had the opportunity to obtain legal advice.[116]
8.He was subject to undue influence in agreeing to the Loan Agreement because he was placed under pressure to agree and sign the Loan Agreement. The person he alleges applied such pressure was Ms Whiting, the accountant for the Winthrop Unit Trust.[117]
9.He had concerns about the need for a loan between himself and Mr McMahon and the legitimacy of establishing a loan with Mr McMahon to rectify a potential breach of the SIS Act and had not received legal advice about that.[118]
[110] Defendant's oral opening submissions, ts 314 ‑ 315; Defendant's written outline of closing submissions, par 2.
[111] Defendant's written outline of closing submissions, par 1.
[112] Defendant's oral opening submissions, ts 314; Defendant's written outline of closing submissions, par 5 ‑ 6.
[113] Defendant's written outline of closing submissions, par 7.
[114] Defendant's written outline of closing submissions, par 9.
[115] Defendant's written outline of closing submissions, par 13.
[116] Defendant's written outline of closing submissions, par 10.
[117] Defendant's oral opening submissions, ts 315.
[118] Defendant's written outline of closing submissions, par 11.
Mr Woodward also contends that the dispute relating to Schedule 2 gives rise to a misrepresentation and the Loan Agreement is void for mistake.[119] The mistake Mr Woodward seeks to rely on appears to be his contention that his loan was with the Winthrop Unit Trust and not with Mr McMahon personally.[120] Mr Woodward also seeks to rely on the fact that the 2017 Financial Statements are incorrect and invalid because they were not signed by him. He refers to s 127 of the Corporations Act2001 (Cth).[121]
[119] Defendant's oral opening submissions, ts 315 ‑ 316; Defendant's written outline of closing submissions, pars 15, 18.
[120] Defendant's oral opening submissions, ts 316.
[121] Defendant's oral opening submissions, ts 322; Defendant's written closing submissions, par 18.
Further, Mr Woodward contends, in effect that a further 'vitiating factor' is that the Loan Agreement did not exist as at 30 June 2017 or when the 2017 Financial Statements were signed.

The fact that the Loan Agreement was not signed until about 16 March 2019 does not affect its validity or give rise to any vitiating factors.
I accept the evidence of Mr McMahon that he provided Mr Woodward with an unsigned copy of the Loan Agreement when Mr Woodward arrived to stay with him in Perth in December 2018 and that he asked Mr Woodward to sign it two or three times between giving it to him and them both signing the Loan Agreement before Mr Woodward went to the airport on about 16 March 2019. There is also evidence to support Mr Woodward's contention that Ms Collins, who drafted the loan agreement was Mr McMahon's former partner and Ms Whiting was his cousin. However, the fact that the Loan Agreement and the financial information and statements were prepared by people who Mr McMahon had a personal relationship with is insufficient, by itself, to give rise to any of the vitiating factors alleged.
There is no evidence to support all of the matters asserted as set out in sub pars [4] and [6] - [9] of [116] above, or that Mr Woodward was placed at a special disadvantage, was subject to undue influence or signed the Loan Agreement under duress.
Mr Woodward asked Mr McMahon in cross‑examination whether he recalled Mr Woodward advising him that he would need to get his lawyer, Michael Hughes, vet the document and that he would need to double check the calculations in Schedule 2. Mr McMahon said; 'No, I don't'.[122]
[122] J McMahon, ts 278.
The unsigned Loan Agreement, including Schedule 2 was given to Mr Woodward by Mr McMahon when he arrived at Mr McMahon's home in about December 2018. The Loan Agreement was not signed by Mr Woodward until about 16 March 2019, more than three months later. Mr Woodward had also been provided with a copy of Utopia's reconciliation of the amounts withdrawn by him from the Winthrop Unit Trust, the interest calculation and bank statements of the Winthrop Unit Trust in June 2018.
There is no evidence that he was under pressure to sign the Loan Agreement or to support any mistake or misrepresentation as contended by Mr Woodward. Nor does the fact that the 2017 Financial Statements were only signed by Mr McMahon give rise to a defence to the claim.
It is well established and commonly referred to as the rule in L'Estrange v Graucob that, absent any vitiating factors such as undue influence, unconscionable conduct, mistake, misrepresentation, duress or circumstance supporting a plea of non est factum, where an action is brought on a written agreement signed by the defendant, the defendant is bound by the agreement and its terms.[123]
[123] See L'Estrange v F Graucob Ltd [1934] 2 KB 394.
It is immaterial whether or not the party signing a contractual document read the document before signing it, sought advice on it or knew the contents of the contract or understood its terms.[124]
[124] Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 228, approved in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 51; (2004) 219 CLR 165 [43], [44] - [46], [57] and the authorities referred to. See also Warner Bros Feature Productions Pty Ltd v Kennedy Miller Mitchell Films Pty Ltd [2018] NSWCA 81 [59].
The vitiating factors are not made out and do not negate Mr Woodward's liability to pay the amount I have found to be due and payable by him to Mr McMahon under the Loan Agreement.

Is the Loan Agreement void for uncertainty?

Mr Woodward also contends that the Loan Agreement is void for uncertainty because of what he describes as the considerable uncertainty and dispute as to the amount claimed and the inaccuracies in Schedule 2.[125]
[125] Defendant's written outline of submissions, par 1 of the list of orders requested by the defendant.
Though not pleaded, this defence is not made out in any event. Each of the transactions in Schedule 2 to the Loan Agreement, which make up the amount of the Loan are evidenced in the documents referred to in the aide memoire[126] produced at trial on behalf of Mr McMahon and which was marked for identification as MFI-A.
[126] Exhibits 6, 7, 10, 11, 12, 13, 14, 15, 20 and 32.
I am satisfied that the amount of the Loan correctly reflects the amounts withdrawn from the Winthrop Unit Trust by Mr Woodward in excess of his entitlements, together with interest, and allowing for the adjustments referred to in [81].

Is the Loan Agreement void, invalid, or otherwise unenforceable on the basis that it attempts to validate potential breaches of the SIS Act.

Mr Woodward also seeks to argue that the Loan Agreement is void, invalid, or otherwise unenforceable on the basis that it attempts to validate potential breaches of the SIS Act.[127]
[127] Defendant's oral opening submissions, ts 316.
He did not develop this argument beyond saying, in effect, that the Loan Agreement was established to try and establish compliance under an Act and that he thinks that needs more investigation as to the veracity and legality of the agreement.
This does not give rise to any defence to the claim or negate Mr Woodward's liability to pay the amount due to Mr McMahon under the Loan Agreement.

Mr Woodward's contention that any debt is to the Winthrop Unit Trust, not Mr McMahon personally.

Mr Woodward also contends that if he does owe any money, it is owed to the Winthrop Unit Trust and not to Mr McMahon personally.
I have found that Mr Woodward expressly agreed, by cl 2.2 of the Loan Agreement, that the amount stated in the Loan Agreement of $100,223.43 represented moneys properly owing to Mr McMahon and not to the Winthrop Unit Trust.
The defence now sought to be advanced is wholly inconsistent with the express terms of the Loan Agreement and the facts as found and cannot succeed.
As set out earlier in these reasons, I am satisfied that the amount claimed is payable by Mr Woodward to Mr McMahon and not to the Winthrop Unit Trust. Mr Woodward's liability to the Winthrop Unit Trust (his loan account) was discharged from funds owed by the Winthrop Unit Trust to Mr McMahon.
Further, despite seeking to argue the contrary, Mr Woodward's submissions are themselves consistent with funds having been advanced by Mr McMahon to clear Mr Woodward's debt to the Winthrop Unit Trust.[128] This was achieved by reducing the amount of the loans due from the Winthrop Unit Trust to Mr McMahon by $100,223.43. That amount was then applied to reduce the balance of Mr Woodward's loan account to nil.

Mr Woodward's contention that he is owed money by the Winthrop Unit Trust rather than him owing any money

[128]Defendant's written outline of submissions, pars 15, 17, 18 - 20; Defendant's written outline of closing submissions, pars 11, 14, 15.

Though Mr Woodward pleaded in his defence the amount claimed of $98,708 was incorrect and he suggested the correct amount was approximately $78,000, he sought to advance at trial that, on further review of the figures and calculations, $17,639 was owed to him for the period outlined, rather than him owing any money.[129]
[129]Defendant's written outline of submissions, pars 24 - 31.
I do not repeat in these reasons all of the matters referred to by Mr Woodward. I have carefully considered the matters outlined and the transactions referred to and identified in Mr Woodward's written closing submissions and in his oral submissions. I have also reviewed the documents Mr Woodward took me to during the trial.[130]
[130] Exhibits 34, 35, 36, 37, 38; MFI - C, MFI - D.
There is no basis for Mr Woodward's contention that he is owed money by the Winthrop Unit Trust in the amount asserted, or at all.[131] This does not negate his liability under the Loan Agreement in any event. Further, any such claim is outside the scope of this proceeding to which the Winthrop Unit Trust is not a party and in which no claim is made by Mr Woodward in relation to any monies alleged to be owed to him, whether by the Winthrop Unit Trust or otherwise.
[131] Mr Woodward's contentions misunderstand how the various transactions are treated in the accounts.

Conclusion and orders

For the reasons set out above:
1.I am satisfied that the amount of $98,708 is due and payable by Mr Woodward to Mr McMahon under the terms of the Loan Agreement.
2.The Loan Agreement does not provide for payment of interest by Mr Woodward to Mr McMahon at the rate of 5.45% per annum calculated daily from 16 March 2019. As such, Mr McMahon cannot recover interest as claimed under the Loan Agreement.
3.Mr Woodward cannot rely on the matters raised by him that are not part of his pleaded defence and, in any event, the alleged 'vitiating factors' and the matters raised by Mr Woodward are not made out and do not negate his liability under the Loan Agreement.
Having found in favour of Mr McMahon on his claim for repayment of the outstanding amount of the Loan, and that none of the matters raised by Mr Woodward negate his liability to repay the amount due and payable under the terms of the Loan Agreement, judgment will be entered for Mr McMahon in the amount of $98,708.
As indicated, I will hear from the parties in relation to any alternative claim by Mr McMahon for interest, whether the discretion to award pre‑judgment interest under s 32 of the Supreme Court Act is enlivened and ought be exercised and, if so, the quantum of such interest. I will also hear from the parties in relation to costs.
Subject to hearing from the parties, it seems to me that these matters will be most conveniently dealt with on the papers following filing of brief written submissions in relation to interest and costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AD
Associate to Judge Russell
25 MARCH 2022