Nesci v Knell

[2011] VCC 509

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

COMMERCIAL LIST - EXPEDITED CASES DIVISION

Case No. CI-10-02195

MICHELE NESCI	Plaintiff
v
WANITA KNELL	Defendant

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	2-3 May 2011
DATE OF JUDGMENT:	4 May 2011
CASE MAY BE CITED AS:	Nesci v Knell
MEDIUM NEUTRAL CITATION:	[2011] VCC 509

REASONS FOR JUDGMENT

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Catchwords:  Advance of monies – Whether as a loan or gift – Onus of proof upon
the plaintiff to establish loan – Heydon v Perpetual Executors Trustees
and Agency Co (WA) Limited (1930) 45 CLR 111 and Joaquin v Hall
[1976] VR 788 followed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W. Gillies	Vincent Verduci & Co
For the Defendant	Mr P. Montgomery	Spicer Lawyers
HIS HONOUR:

1           Michele Nesci is 76 years old. His wife of 40 years died in 2005. In about July 2006 he met Wanita Knell. She is aged 34. When their relationship commenced, Mr Nesci paid her for sex each Friday evening. Later, their contact became more frequent and Mr Nesci gave Ms Knell money and gifts. Mr Nesci lived in his own home in East

Keilor with two of his children. In June 2009 he took out a “reverse mortgage loan” of
$110,000 with the Commonwealth Bank secured over his own property. He
transferred $105,000 to a bank account of Ms Knell’s and a day or so later
transferred to her a further sum of approximately $3,000.

2           Mr Nesci claims that he loaned the money to Ms Knell and in the proceeding claims the outstanding amount with interest. He also claims an interest in a property at Melton by way of a resulting trust. He alleges that Ms Knell used the money he advanced her to purchase the property.

3           Ms Knell, by her amended defence, admitted that Mr Nesci had deposited $105,000 into her bank account but alleged the money was provided to her by way of gift. The critical issue in the proceeding is whether the money provided by Mr Nesci to Ms

Knell was a loan or a gift.

Onus of proof

4           It has long been settled law in Australia that where a plaintiff “sues for money lent

and money received by the defendant as trustee … the burden of proving the facts in

support of either one or other cause of action lies on the plaintiff” and the fact that

“the defendant denied these allegations and said the money was given to her as a
gift [does not mean] that the onus of proving there had been a gift lay on the

defendant” Heydon v Perpetual Executors Trustees and Agency Co. (WA) Limited defendant of proving that the money was given and not lent
(1930) 45 CLR 111 at 113 per Gavan Duffy CJ with whom Rich, Starke and Dixon JJ
agreed). A later decision to the contrary of the English Court of Appeal in Seldon v

(”, does not represent the law in Australia.

5           As Jenkinson J said in Joaquin v Hall [1976] VR 788 at 789, the decision in Seldon v

Davidson “is contradicted by the decision of the High Court in Heydon v Perpetual Executors Trustees and Agency Co. (WA) Limited (1930) 45 CLR 111; [1931] ALR 65. The authorities to which the Court of Appeal were referred had been considered

she had not given him any legal advice about the transaction. Soon after giving the money to Ms Knell, Mr Nesci asked for it back. Ms Knell ignored or refused the request. A short time later their relationship finished and Ms Knell told Mr Nesci she did not want to see him again.

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wish to purchase a property so that she might move with her young son from her Ministry of Housing accommodation. She said that Mr Nesci had previously spoken to her about obtaining a reverse mortgage or equity loan. He had offered to give her money to buy a property and she had accepted his offer. They went to the bank together. Mr Nesci told the bank officer, Mr Glen Anthony, that he wanted the money to give to his family. Mr Anthony explained the bank documents to Mr Nesci in English. Mr Anthony had asked Mr Nesci whether he needed an interpreter.

by the High Court but other authorities to which reference was made in the High
Court do not appear to have been cited in the Court of Appeal. Nor does it appear
that recourse was had in the Court of Appeal to the principles of pleading which the
High Court applied in resolution of another question of onus of proof in Young v

Queensland Trustees Limited (1956) 99 CLR 560; [1956] ALR 939”.

Evidence

6           Mr Nesci said in evidence that in 2009 Ms Knell asked him to give her $110,000. She told Mr Nesci that he had to get it for her because she had to build a house. Ms Knell repeated her request on a daily basis and Mr Nesci eventually gave her $110,000. He said that he told Ms Knell that he wanted the money back. Ms Knell

said that she had a legal case against a policeman and when she succeeded in the
case and obtained money she would pay back Mr Nesci.

7           Mr Nesci said that he signed bank documents at the request of Ms Knell. He said he was not able to read the documents and they were not explained to him. Although he had taken one of the documents to his Italian speaking solicitor, Ms Tina Basilone,

Ms Knell said in evidence that in 2008 or early 2009 she discussed with Mr Nesci her her that he had been to his solicitor, Ms Basilone, who had given him advice about the equity loan.

9           Ms Knell said that her relationship with Mr Nesci broke down about one month after he gave her the money. Mr Nesci told her that his daughter had become aware of the transaction and was unhappy. Mr Nesci asked for the money back and later complained to police that she had extorted the money from him.

10 daughter a few times. Mr Anthony, the bank officer, had told him that Mr Nesci was
providing $105,000 to his daughter by way of gift. After that conversation, Mr Knell
had taken Mr Nesci and his daughter to look at display homes near Werribee.

Mr Peter Knell, Ms Knell’s father, gave evidence that he had met Mr Nesci with his as a gift as she treated him very well and better than his own family.

Issues of credibility

11         Mr Nesci gave evidence through an interpreter. On certain occasions he answered defendant’s counsel’s questions without them being translated and for a brief period Mr Montgomery successfully questioned Mr Nesci without the intervention of the

interpreter.

12         Mr Nesci has been in Australia since 1967. He was in regular employment until 1992 and has continued to do some casual work. Ms Knell, Mr Knell and Mr Borg, another friend of Ms Knell who met Mr Nesci a number of times, all said that they

communicated with Mr Nesci solely in the English language.

13         Mr Nesci generally gave his evidence in what appeared to me to be a straightforward manner, although it is difficult to assess the effect of Mr Nesci’s evidence being given through an interpreter.

14         Ms Knell amended her defence on 15 April 2011. Before that, she relied on a defence signed by counsel and filed by her previous solicitors in July 2010. In the original pleading it was asserted that, “In or about July 2009, the plaintiff paid the

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defendant the sum of $105,000 in partial repayment of monies lent by the defendant

to the plaintiff between August 2006 and June 2009”. Nowhere in the pleading was it
stated that the sum was paid to her by way of gift. Ms Knell explained in evidence
that her previous solicitor had become sick. She had changed solicitors and her new
solicitor had advised her to “run it as a gift“ and not to proceed with her claim that the
money was to repay loans as she could not support it.

15         Ms Knell was cross-examined about a handwritten list of payments totalling $108,035 which payments she said she gave to Mr Nesci in cash between 7 April 2006 and 26 June 2009. Ms Knell said that the list was a copy of an earlier list she had prepared contemporaneously with the payments (or as she was able to check off payments

when she received bank statements). The original document had been defaced
when her son spilt a drink on it and, after the copy was made, the original was
destroyed. Many of the payments in the list can be related to cash withdrawals made
by Ms Knell on that day from her bank accounts. On some occasions, however, the
bank statements show that the exact sum withdrawn was deposited into her son’s
bank account on the same day.

16         It is difficult to give Ms Knell’s evidence about this list any credence for this and other reasons. It appears highly improbable that in the early period of their relationship, when Mr Nesci was paying her $50 to have sex on a Friday night, she would have been giving him sums of money in return; often hundreds of dollars. Later, the list records the payment of thousands of dollars by Ms Knell to Mr Nesci over periods of a few days into 2008 and 2009. For example, between 1 and 26 June 2009, in the weeks leading up to the transfer of $105,000 from Mr Nesci to Ms Knell, Ms Knell recorded on her list that she had given Mr Nesci sums totalling $11,900.

Ms Knell said that she had large amounts of cash in her home from her earnings as a herself and Mr Nesci as having a “co-dependent relationship”. She volunteered no explanation for the large amounts of cash she claimed to have given Mr Nesci. She was not asked by plaintiff’s counsel to provide an explanation.

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18         Ms Knell gave her evidence in a direct manner. On occasions, she volunteered information which was not responsive to the question asked and which generally was argumentative or gratuitously derogatory of Mr Nesci. An example was her evidence that she had telephoned Mr Nesci’s doctor after he told her he had contracted an ailment after having unprotected sex at a massage parlour.

19         Mr Knell and Mr Borg appeared as straightforward witnesses, although Mr Knell’s evidence had inconsistencies and was not led in a coherent narrative form which would have given me more confidence to accept it.

Bank documents

20 called him to give evidence. No evidence was led which might provide an

Mr Glen Anthony, the bank officer, did not give evidence. Either party could have documents from the Commonwealth Bank had only recently been provided under subpoena and he asserted that Mr Anthony no longer worked at the bank. I cannot speculate as to what Mr Anthony might have said if he had given evidence and I draw no inferences from his absence. I am, however, hesitant in the circumstances to accept evidence given by Ms Knell that a computer notation on 21 July 2009 in the bank records referring to a “gift letter” related to a document Ms Knell said she was asked by the bank to obtain from Mr Nesci.

The other documents tendered in evidence offer little assistance. Ms Basilone, declaration would state that the solicitor had given independent advice to the client about the loan and security documents and that the documents had been freely and voluntarily signed by the client. Ms Basilone stated in the declaration that she had not sighted any security documents, no advice had been provided and no documents had been produced for signature. It seemed surprising in these circumstances that the loan to Mr Nesci was allowed to proceed. There is no evidence of the circumstances in which the loan and security documents were signed.

Conclusions

22         The evidence that there was a loan by Mr Nesci to Ms Knell is very scant. Money was provided although the precise sum is not clear. There was apparently no discussion about interest, although Mr Nesci claims in the proceeding to recover the amount required to pay off the indebtedness to the bank, including interest charged by the bank. The terms for repayment were tied to the successful completion of Ms Knell’s legal claim against a policeman. This matter was not explored in cross- examination of Ms Knell by plaintiff’s counsel. In cross-examination of Mr Nesci by defendant’s counsel, Mr Nesci said he did not know if Ms Knell had made a claim. Mr Nesci appeared to concede that if Ms Knell did not succeed in the claim she would not be able to give him back the money. Mr Nesci said that, if there was no money from the police, “that was her business”.

23         In support of the assertion that the money was gifted to Ms Knell the following matters were relied on:

a.	Mr Nesci and Ms Knell were involved in a close personal relationship;
b.	Mr Nesci had previously demonstrated his generosity to Ms Knell with payments of money and substantial gifts of household items;
c.	Mr Nesci executed bank documents for a reverse mortgage;
d.	Mr Nesci had consulted his solicitor about the transaction. He would have had the opportunity to seek and receive advice about the nature of the transaction and how he might have protected his position;
e.	Ms Knell said that Mr Nesci offered to give her the money and she accepted his offer;
f.	Mr Knell said that Mr Nesci told him he was making a gift of money to his daughter;
g.	Mr Nesci’s request for the return of the money followed the discovery by his daughter that the family home had been mortgaged to secure the advance.

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I have serious reservations about the evidence of Ms Knell and would not accept central issue of whether the money was advanced as a gift and, as also with Mr Borg, support on the issue of Mr Nesci’s understanding of spoken English.

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On the other hand, I also would not accept everything said by Mr Nesci. He was dealings with the bank and matters which might have provided support for the assertion that the transaction was a loan (for example, the circumstances in which it was to be repaid) were extremely vague.

26         In the circumstances, I am not satisfied that Mr Nesci has discharged the burden of proof upon him to establish that he lent money to Ms Knell in circumstances which require her to repay the money.

27         The further claim based upon a resulting trust was dependant upon Mr Nesci proving that part of the money used by Ms Knell to purchase the Melton property was money she was obliged to repay to him.

Order
28	In the circumstances there will be judgment for the defendant that the plaintiff’s claim be dismissed.
29	After hearing argument about costs it was ordered that the plaintiff must pay the defendant the costs of the proceeding to be taxed on scale D, but only costs incurred after 15 April 2011, such costs not to include the filing and service of the defendant’s amended defence. Certify one refresher for counsel and brief to hear judgment.

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Certificate

I certify that these 7 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 4 May 2011.

Dated: 6 May 2011

Caroline Dawes

Associate to His Honour Judge Anderson