Munro v Kelly (No 2)
[2025] SADC 8
•7 February 2025
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MUNRO v KELLY (No 2)
[2025] SADC 8
Judgment of his Honour Judge Slattery
7 February 2025
DEBT RECOVERY
TORTS - INTERFERENCE WITH PROPERTY - INTERFERENCE WITH GOODS - CONVERSION AND DETINUE
The first judgment in this action, Munro v Kelly [2024] SADC 147, required the parties, if so advised, to make further submission on the issue of damages, interest and costs.
Subsequent to the delivery of the first judgment, the applicant and the parties’ solicitors became aware for the first time that the respondent had purported to sell three pieces of farming plant and equipment in which the applicant claimed an unencumbered proprietary interest. This equipment was sold in 2021, 2022 (prior to trial) and in June 2024 after the completion of the evidence and during the reservation of the first judgment.
In the first judgment, there are arithmetic errors in the calculation of losses that are required to be corrected.
Notwithstanding that in her final statement of claim at trial (revision 6) the applicant did not plead a cause of action in detinue, the respondent now consents to the amendment of the statement of claim by the filing of a fresh statement of claim (revision 7) to plead a cause of action in detinue, the quantum of damages in conversion or alternatively damages in detinue, an amended calculation of the debt claim of the applicant against the respondent, a calculation of interest on each such claim and the quantum of costs.
The respondent consented to the filing of an amended statement of claim (being revision 7), the lodgement and reading into evidence of the applicant’s affidavit of 20 January 2025 (FDN 59) in support of the agreed calculation of damages and the calculation of interests and costs. The respondent further consented to the amendment of the courts first orders reflecting the applicant’s money losses and to include a sum reflecting the damage suffered by the applicant in conversion or alternatively detinue, for interest and for costs.
The applicant is entitled to a final judgment in debt for assessed damages, interest and costs. The respondent consents to these orders of the court. I gave leave to the applicant by consent to reopen her case and:-
.1 File a further statement of claim in the form of the document described as Statement of Claim (revision 7) and;
.2 To read into evidence her affidavit of 20 January 2025 (FDN 59) in support of her claim for damages, interest and costs.
Held:
The court makes the following orders:-
1. Judgment for the applicant on her debt claim in the sum of $747,361.96.
2. The respondent pay to the applicant the sum of $290,800 as damages for conversion.
3.In the alternative to sub paragraph 2, the respondent pay to the applicant the sum of $290,800 as damages in detinue in respect of the items of property retained by him and then disposed of him as described in 9C of the statement of claim (revision 7).
4.The respondent pay to the applicant the sum of $87,377 in respect of interest on the debt claim described in sub paragraph 1 hereof.
5.The respondent pay to the applicant the sum of $22,349 in respect of interest on the sum of $290,800 as damages for conversion of the property of the applicant by the respondent.
6.In the alternative to 5 hereof, the respondent pay to the applicant the sum of $22,349 for interest on the amount of $290,800 payable as damages in detinue as described in sub paragraph 3 hereof.
7. The respondent pay the applicant’s cost fixed in the sum of $164,800.
Uniform Civil Rules 2020 (SA), referred to.
Munro v Kelly [2024] SADC 147, considered.
MUNRO v KELLY (No 2)
[2025] SADC 8
In this action my first judgment was delivered on 14 November 2024 following a four day trial.[1] In that judgment, I found that Merradith Gai Munro, the applicant, had made a series of loans to the respondent, Ryan Kelly, while she was in a relationship with his father, Shane Kelly and that these loans were repayable upon demand. I also made determinations about the nature of the relationships between the parties, any rights arising under those relationships and any remedies that may be available to the applicant. In the course of making those findings it was necessary for me to decide whether, for example, amounts transferred from the applicant to Ryan Kelly were loans, whether particular items of plant and equipment were purchased by the applicant or were purchased by Ryan Kelly using funds provided by the applicant and whether and if so, what remedies arose between the parties as a result of those transactions.
[1] Munro v Kelly [2024] SADC 147.
In my first judgment, I have made orders which reflect my findings on the parties’ pleaded cases. Since the publication of that judgment there have been a number of developments between the parties which involve the resolution of all outstanding issues about amendment of pleadings post judgment, damages, interest and costs.
It is also necessary that, by consent of all parties, I correct a number of arithmetic errors in the first judgment. It is appropriate that I set out here the background of these matters, the amendments to the pleadings and the final matters that dispose of this action. I deal first with the first claim.
In my first judgment, I found that in the course of the dealings between them, the applicant purchased:-
.1A New Holland Header and rake up (viz paragraph 4C.2 and 4C.3 of the statement of claim revision 6 and 7) for $132,000 in March 2020; [2]
.2A Honey Bee Front (Comb) viz paragraph 4C.1 of the statement of claim revision 6 and 7). For $55,000 in March 2020; and
.3A Freight Master semi-trailer (viz paragraph 4D of the statement of claim revision 6 and 7) for $132, 382 in April 2020.
[2] I explain later that the plea in sub-paragraph 4C.3 is factually incorrect. It is intended to refer only to the ‘rake up’ and not the New Holland harvester which is identified in sub paragraph 4C.2
At [212] of my first judgment there is an arithmetic error in the calculation of the amount outlaid by the applicant in the purchase of this machinery. There is a ‘double up’ of the outlays made by the applicant in the purchase of this plant and equipment. The correct position is that the ‘rake up’ was purchased for $15,000 exclusive of GST. The parties are agreed on those facts.[3] The arithmetic error that I made and which has been corrected herein does not affect any of my findings in the first judgment on the legal merits of the causes of action pleaded by the applicant.
[3] Viz Exhibit A1, Tab 20, page 344.
These adjustments were initially controversial because, in my first judgment, I gave leave to the parties to make further submissions on the question of damages, including in relation to the allegations of the applicant that Ryan Kelly had converted these items of plant and equipment. It is accepted that a request was made by the applicant dated 13 September 2022 for this equipment to be returned to the applicant within 30 days. Ryan Kelly did not comply with this request. No evidence was led at trial by the applicant on the value of this plant and equipment at the time of breach (arising from Ryan Kelly’s refusal to return these items). It was at least implicit on the evidence that in the interim, Ryan Kelly had continued to use this plant and equipment in his contracting businesses (harvesting and hay).[4] He did not pay any interest on these loans, he did not repay the loans made to him, and he has never accounted to the applicant for the benefit he received from the use of the applicant’s plant and equipment.
[4] c.f [225], [226] and [227] of the first judgment.
I have also made an arithmetic error in the calculation of the amount of damages suffered by the applicant. This overcalculation was also not controversial because in my first judgment at [234] I made orders excluding some claims and allowing other claims by reference to the statement of claim (revisions 6 and 7).
The parties have now agreed that following my findings, Ryan Kelly is indebted to the applicant in an agreed amount which attracts an interest rate expense of 4 % per annum. The agreed amount of the applicant’s debt claim is in the sum of $747,361.96, the calculation of which is helpfully set out in the submissions of Ryan Kelly dated 21 January 2025 as follows:-
‘….the total amount of the Applicant’s debt claim is $747,361.96 comprising the following amounts:
.1 $367,647.00 in relation to the Paragraph 4 Claims, which is the amount of:
1.1 $537,759.00 (as recorded in the table in paragraph 4 of the Statement of Claim);
less
1.2 $74,852.00 (comprising the items referred to in paragraphs 195, 197, 198, 199 of the Judgment that were specifically rejected);
less
10.1.3 $95,260.00 (comprising the loan amounts referred to in paragraph 7 above, as they have been accounted for in paragraphs 10.5 and 10.6 below);
.2 $16,607.00 in relation to the Clipex Fencing Claim;
.3 $48,000.00 in relation to the Chaser Bin Claim;
.4 $46,000.00 in relation to the Field Bins Claim;
.5 $85,260.00 in relation to the Tip Trailer Claim;
.6 $10,000.00 in relation to the Land Roller Claim; and
.7 $173,847.96 in relation to the Paragraph 4I Claims.’
At the time that I delivered my first judgment on 14 November 2024, I gave the parties time to consider its contents, to seek instructions and where possible, to agree on a form of minutes of order. The issues about the status of the plant and equipment of the applicant and therefore the calculation of damages, and the issue of the final calculation of the applicant’s debt claims were some of the essential issues for discussion between the parties. The matter was adjourned for further consideration to 22 January 2025. The parties were asked to bring in draft minutes of order prior to that date.
On 21 January 2025, the applicant filed and delivered draft orders and an affidavit of Merradith Gai Munro dated 20 January 2025 (FDN 59). A summary of the contents of that affidavit is as follows:-
1. On or about 14 November 2024, and following delivery of my judgment on that day, the applicant obtained information that Ryan Kelly had sold the Honey Bee Front Comb and the New Holland Header.
2. On 18 December 2024, the applicant’s solicitors were informed by the respondents’ solicitors that the respondent was no longer in possession of the Honey Bee Header Comb, the New Holland Header machine, the rake up or the Freight Master drop deck trailer. All of these chattels had been disposed of by Ryan Kelly and the respondent’s solicitors said that supporting documentation could be provided upon request. The Honey Bee Header Comb and the New Holland header machine were sold in June 2024 for a combined price of $129,000. The rake up was sold in December 2021 for $11,000. The Freight Master drop deck trailer was sold in January 2022 for $150,000. The respondent’s solicitors then delivered documentation evidencing all of these transactions.
3. The respondent failed or refused to provide discovery of any document connected with the sale of the rake up or the Freight master drop deck trailer in December 2021 and January 2022 respectively prior to the date of trial.
On 19 December 2024, the respondent’s solicitors contended by letter of the same date, that such documents were not directly relevant. That contention is not correct. All of those documents are directly relevant and should have been discovered by the respondent.
On 16 January 2025, the respondent’s solicitors provided to the applicant’s solicitors the relevant tax invoices which reflected the sale of the of plant and equipment in 2021, 2022, and after judgment was reserved in April 2024.
One major issue at trial concerned the circumstances surrounding the purchase of the three pieces of plant and equipment (the header and comb, the rake up and the drop deck trailer). Ryan Kelly gave evidence about these and other issues and was cross-examined about them. At the time he was not cross-examined on the whereabouts of that plant and equipment as there had been no discovery of any documentation connected with their disposal. As I have made clear, from the outset Ryan Kelly challenged any right of the applicant to claim damages for conversion (upon a refusal of her demand to return this plant and equipment) because, on the case of the respondent, the applicant had failed to prove she held any proprietary right in that plant and equipment and had also failed to prove the value of the plant and equipment on a claim for conversion.
There are many issues that arise as a result of these developments but it is unnecessary for me to resolve all of them. This action proceeded on the basis that Ryan Kelly remained in possession of this and other plant and equipment. That was the foundation of my approach in my first judgement. That is the basis upon which I have expressed my conclusion that the documents connected with the sale of two of these items of plant and equipment some years before trial were discoverable.
The issue of the right of the applicant to possession of this equipment, or alternatively damages for their conversion, was vigorously joined at trial. These were very substantial and valuable pieces of equipment. Ryan Kelly could not have been in any doubt about the importance of these matters.
On 5 April 2024, I reserved my decision after the completion of the trial of the action. In June 2024, Ryan Kelly sold the Honey Bee Header Comb and the New Holland Header some two months after judgment had been reserved on whether the applicant was the owner of that equipment. That is a remarkable step for him to have taken.
I am satisfied that notwithstanding the content of some of the most recent correspondence passing between solicitors, in 2021, 2022 and 2024, the solicitors for Ryan Kelly were not informed by him of the sale of the items of plant and equipment above discussed. This information and these actions of Ryan Kelly were as much an epiphany to them as they were to the applicant and the court.
Following a further hearing before the court, the parties agreed final minutes of order which recorded a resolution of all outstanding issues. These were delivered to the court on 23 January 2025 and the final orders made by the court on 24 January 2025.
A portion of the orders agreed between the parties was that the applicant have leave to file a revised statement of claim (revision 7). This amended pleading included a new paragraph 9C, a new paragraph 10.4 and an amended paragraph 11 under part 4, Orders Sought. The new paragraph 9C provides:-
9C9C.1 In December 2021 the Respondent without notice to the Applicant sold the plant and equipment referred to in paragraph 4C.3 hereof for $11,000.
9C.2 In January 2022 the Respondent without notice to the Applicant sold the plant and equipment referred to in paragraph 4D hereof for $150,000.
9C.3In June 2024 the Respondent without notice to the Applicant sold the plant and equipment referred to in paragraphs 4C.1 and 4C.2 hereof for $129,800.
The new paragraph 10.4 provides:-
‘10.4 Damages in Detinue’.
The amended paragraph 11 under part 4 now provides:-
11.Judgment for the Applicant for $743,268.91 together with interest accrued thereon at 4% together with damages for conversion and detinue in respect of the plant and equipment listed in paragraphs 4B, 4C, 4D, 4F, 4G, and 4H hereof and a declaration that the said plant and equipment is the property of the Applicant.
The item of equipment referred to in paragraph 4C.3 was the ‘New Holland Combine Rake’. There remains an error in this pleading because of the reference in paragraph 4C.3 to the header machine. The header machine is described in paragraph 4C.2 of the Statement of Claim (revisions 6 and 7). The rake is an attachment to be used with the header machine. Its purchase price was not $132,000 and that is a pleading error. The item of equipment referred to in paragraph 4D was the Tri-Axle drop semi-trailer. The items of equipment referred to in paragraphs 4C.1 and 4C.2 was the Honey Bee Header Comb and the New Holland Header machine.
The respondent did not wish to be heard in connection with these amendments and consented to them. He did not seek any leave to file an amended defence. The respondent raised no objection to the applicant reading into evidence the affidavit of Merradith Gai Munro made on 20 January 2025 (FDN 59) as unchallenged proof of the amounts referred to in paragraph 9C of the amended claim (revision 7). For the sake of consistency, paragraph 9C.1 must then be read as reflecting my earlier comments about the proper reading of paragraph 4C.3 of the statement of claim (revisions 6 and 7). The reference in that sub paragraph is only to the ‘rake up’.
On 24 January 2025, the applicant consented to the following orders:-
1. That the Applicant have leave to file a revised Statement of Claim (Revision 7) in the terms of the proposed revised Statement of Claim attached hereto.
2. That the Applicant have leave to reopen her case to tender evidence in respect of the matters pleaded in paragraphs 9C.1 and 9C.2 and 9C.3 of the Statement of Claim (Revision 7) namely the invoices attached to exhibit “MGM5” to the affidavit of the Applicant sworn 20 January 2025 being FDN 59.
3. That the applicant have judgment for $1,147,888 comprising:
3.1 $747,361 in respect of monies lent;
3.2$290,800 in damages in respect of items of property converted and disposed of by the Respondent;
3.3 $87,377 in respect of interest on the amount in 3.1 hereof;
3.4 $22,349 in respect of interest in the amount in item 3.2 hereof.
4. Further, the Respondent pay the Applicant’s costs of the action fixed at $164,800.
I refer to paragraph [234] of my first judgment which stipulated the orders I granted in this matter. It is now necessary for the orders already made by me to be clarified in order to give a final judgment on the debt claim, interest and costs. The amendments also reflect the further pleaded cause of action in detinue and in the alternative, the agreed damages assessment in detinue. This amendment does not change the calculation of the amount of damages. The agreed damages claim in detinue or conversion is expressed in the alternative to better reflect the parties’ final pleadings. In the background of this second judgment, I make the following final orders in this matter:-
1.Judgment for the applicant on her debt claim in the sum of $747,361.96.
2.The respondent pay to the applicant the sum of $290,800 as damages for conversion.
3.In the alternative to sub paragraph 2, the respondent pay to the applicant the sum of $290,800 as damages in detinue in respect of the items of property retained by him and then disposed of him as described in 9C of the statement of claim (revision 7).
4.The respondent pay to the applicant the sum of $87,377 in respect of interest on the debt claim described in sub paragraph 1 hereof.
5.The respondent pay to the applicant the sum of $22,349 in respect of interest on the sum of $290,800 as damages for conversion of the property of the applicant by the respondent.
6.In the alternative to 5 hereof, the respondent pay to the applicant the sum of $22,349 for interest on the amount of $290,800 payable as damages in detinue as described in sub paragraph 3 hereof.
7.The respondent pay the applicant’s cost fixed in the sum of $164,800.
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