Olma v Amendola - [2004] SASC 274

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
OLMA v AMENDOLA & ANOR
Judgment of The Full Court
(The Honourable Justice Duggan, The Honourable Justice Besanko and The Honourable Justice Anderson)
7 September 2004
EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES
BAILMENTS - IN GENERAL - WHAT IS BAILMENT - GENERALLY
Appeal from a Judge of the District Court - where the respondents gave the appellant a cheque for $75,000 in 1985 - where the respondents sought the repayment of the $75,000 and interest from the appellant after a period of ten years - where there were a number of other payments and transactions between the parties during the relevant period - where the Judge found that the respondents gave the $75,000 to the appellant for the purpose of investment and that the intention of the parties was that the appellant hold the money for the benefit of the respondents - where the Judge held that the appellant held the money on trust for the respondents and that the appellant was liable to account for compound interest - where the Judge allowed a total credit to the appellant of $25,000 in respect of other payments and transactions between the parties - whether the Judge erred in finding that the $75,000 was given to the appellant for the purposes of investment and that the appellant held the money on trust for the respondents - whether the relationship between the parties should properly have been characterised as one of bailment or quasi-bailment - consideration of the principles relating to the relationship of mutuum - whether the Judge should have found that there was an express agreement between the parties that the appellant would not be liable to account for interest - whether the Judge erred in finding that the respondents provided a further $24,000 to the appellant and whether the appellant should have been given credit for certain bank drafts purchased on behalf of the respondents - whether the Judge erred in rejecting the appellant's defence of laches - cross-appeal as to whether the Judge erred in finding that the appellant made certain payments to or for the benefit of the respondents and as such was entitled to a credit of $25,000 - appeal and cross-appeal dismissed.
Trustee Act 1936 s 84C, referred to.
Parastatidis v Kotaridis [1978] VR 449; Comptroller-General of Customs v Woodlands Enterprises Pty Ltd (1995) 128 FLR 113; Brisbane South Regional Health Authority v Taylor (1996) 185 CLR 541; The Duke Group Ltd (in liq) v Alamain Investments Ltd (2003) 232 LSJS 58; Orr v Ford (1989) 167 CLR 316, discussed.
Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; Chapman Bros v Verco Bros & Co Ltd (1933) 49 CLR 306; Brambles Security Services Ltd v Bi-Lo Pty Ltd (1992) Aust Tort Rep 81-161, considered.

OLMA v AMENDOLA & ANOR
[2004] SASC 274
Full Court: Duggan, Besanko and Anderson JJ

DUGGAN J. I agree with the reasons for judgment given by Besanko J. In my view the appeal and cross-appeal should be dismissed.
BESANKO J: In a civil action in the District Court a Judge of that Court made an order that the defendant pay the plaintiffs the sum of $188,744.36. The defendant appeals to this Court against that order. She argues that on a proper accounting an order for the payment of monies to her by the plaintiffs should have been made. The plaintiffs have filed and served a notice of cross appeal and they argue that the Judge was in error in allowing certain credits to the defendant and that the amount awarded to them should have been greater.
It is convenient to refer to the appellant as the defendant and the respondents as the plaintiffs and to continue to use those descriptions when considering the cross appeal.
There are three issues on the appeal and one issue on the cross appeal.
The plaintiffs gave the defendant a cheque for the sum of $75,000.00 in August 1985 and the Judge found that the defendant held that sum on trust for the plaintiffs. The Judge found that the defendant had received interest on the monies which had compounded over the years. As a trustee the defendant was liable to account to the plaintiffs for compound interest on the trust monies. The defendant challenges the Judge’s conclusion that there was a trust relationship in relation to the monies. The defendant argues that the relationship was one of bailment (mandate or deposit) or quasi bailment (mutuum), and that although she was under an obligation to repay the sum of $75,000.00, she was under no obligation to pay interest.
The defendant argued at trial that she made various payments to purchase bank drafts for the forwarding of monies to Italy and that she did that on behalf of the plaintiffs. The defendant argued that between June 1984 and December 1987 she purchased nine separate bank drafts at a total cost of $39,737.00. The Judge found that the evidence did not establish three of the bank drafts alleged by the defendant. The Judge allowed the defendant a credit in relation to a fourth bank draft. As to the remaining five bank drafts, the Judge found that they had been purchased by the defendant by the use of a cash amount of $24,000.00 provided to the defendant by the plaintiffs. The defendant challenges the finding that the plaintiffs provided $24,000.00 in cash to the defendant, and argues that she should have been given credit for the five bank drafts purchased by her at a cost of $18,951.00.
The defendant argued at trial that the plaintiffs sought to enforce an obligation to account in relation to the sum of $75,000.00 and interest thereon and that that was an equitable obligation. The defendant raised the defence of laches and said that the plaintiffs’ claim should be dismissed on that ground. The Judge rejected the defence of laches and the defendant argues that he erred in doing so.
In their cross appeal the plaintiffs challenge the Judge’s decision to set off a sum of $25,000.00 against the amount he found that the defendant was liable to pay the plaintiffs. The payment of the monies to the plaintiffs was not in dispute at trial. The plaintiffs challenge the Judge’s finding that the payments were made from the defendant’s own monies, rather than monies she held on behalf of the plaintiffs.
The Important Findings made by the Judge
Before setting out the important facts found by the Judge, it is necessary to say something about the difficult task faced by the Judge.
The Judge heard oral evidence and received in evidence various documents. Oral evidence was given by each of the three parties. The Judge found that none of the parties were satisfactory witnesses. There is no challenge to that finding. The defendant’s son, Mr Thomas Olma, also gave evidence. The Judge accepted his evidence on a topic which I will identify in due course. The documentary evidence put before the Judge was incomplete. The Judge said that the entire body of evidence was confused and riddled with inconsistencies and that one thing which was clear was that the evidence before the court did not clearly explain any of the relevant transactions. The Judge’s task in making findings of fact in those circumstances was not an enviable one.
The plaintiffs are of Italian descent and are husband and wife. Neither plaintiff has been employed since the early 1980’s. Before that time they worked in various labouring positions. The male plaintiff suffered an injury at work, and in 1983 he received an award of workers compensation of $150,000.00. In some way never explained to the Judge the female plaintiff assumed an interest in the monies.
The defendant is also of Italian descent and she became friendly with the plaintiffs in the early 1980s. After a time the plaintiffs referred to her as “Zia”, which is Italian for aunt. At the time of trial, the defendant was over 81 years of age.
The plaintiffs alleged that the defendant told them she was a knowledgeable and well-travelled person with experience in business matters. The plaintiffs alleged that the defendant made a series of representations to them for the purpose of gaining their confidence. She represented to them that she had met and knew a number of important and prominent people. The plaintiffs said that it was for this reason that they placed confidence in the defendant. The Judge said that it was “inconsequential” whether the representations were made. The fact is, said the Judge, that the parties became close friends, stayed at each other’s homes and got to know each other well.
The Judge found that the plaintiffs gave the defendant a cheque for the sum of $75,000.00 and there is no challenge to that finding. The defendant accepted that she was liable to account to the plaintiffs for that sum but said that she had repaid that sum. The Judge did not set out in his reasons for judgment his calculations of the judgment sum, but it seems that most, if not all, of the sum of $75,000.00 had been repaid and that this aspect of the plaintiffs’ claim related to the recovery of compound interest on that sum. At trial there was a dispute between the parties as to when the cheque for the sum of $75,000.00 was given to the defendant. The plaintiffs said that they gave the defendant a cheque for $75,000.00 in early 1984. For reasons it is not necessary to state, the Judge found that the defendant was given the cheque in August 1985 and there is no challenge to that finding.
The Judge found that the arrangement between the parties was that the sum of $75,000.00 would be divided into a tranche of $50,000.00 which would be invested for 10 years and a tranche of $25,000.00 which would be invested at call. He based that finding on the evidence of the male plaintiff and an acknowledgment of the arrangement by the defendant “by providing the plaintiffs with the numbers of the two bank accounts into which the separate tranches had been paid”.
The Judge considered the plaintiffs’ claim for the payment of interest on the sum of $75,000.00. The Judge said that the evidence fell short of an express agreement as to the payment of interest. He referred to the evidence of the male plaintiff to the effect that a range of interest rates was mentioned in his conversations with the defendant. The Judge said:
“The evidence does not enable me to make any finding as to whether there was an express arrangement as to interest. The defendant denies that there was an arrangement. The plaintiffs’ evidence was confused and internally inconsistent as to the percentage rate. It fell short of establishing an express agreement. There was no reason why the defendant should have guaranteed a minimum rate of return. There was nothing in the transaction for her.”
On the other hand, the Judge rejected the defendant’s suggestion that the plaintiffs were prepared to forego any claim to interest. He rejected her evidence that the male plaintiff said he did not want interest on the money and that all he wanted to do was hide the money. The Judge said that the male plaintiff might have wanted to hide the money, but that that did not mean he was prepared to forego the right to interest. The Judge said that it defied commonsense that the plaintiffs would have gratuitously foregone an annual entitlement to interest of the amount likely to be earned. The Judge found that at least during 1986 the defendant was receiving interest at a rate of 17% per annum on the plaintiffs’ monies. The Judge said that although he was not able to make a finding that there was an express agreement between the parties that the defendant would invest at a particular rate of interest, that was not the end of the matter.
The Judge found that the sum of $75,000.00 was given to the defendant for the purpose of investment and that the intention of the parties was that she hold the sum for the benefit of the plaintiffs. The Judge held that the defendant held the sum of $75,000.00 on trust for the plaintiffs. The Judge said that if there was no express trust, an implied trust would arise in circumstances where the settlor transferred money to the trustee without disposing of the beneficial interest in the property. The Judge said that there was no suggestion that the plaintiffs did not retain the beneficial interest in the property. The Judge referred to the creation of a trust and the incurring of a debt and said the question of which of these relationships arose depended on the intention of the parties. If the intention of the parties was that the payee hold the monies for the benefit of the other, then a trust was created. The Judge said that the categories of debt and trust are not mutually exclusive and he referred to Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567.
The Judge held that the defendant had had the benefit of $75,000.00 less the amounts she must be credited with and that she had received interest which had compounded over the years. She was liable to account for the interest which she had received or, for those periods where he could not determine the amount the defendant received, compound interest at the rate the Court considered appropriate.
The Judge found that the defendant had received compound interest on the plaintiffs’ monies and he said, “compound interest is required to make restitution to the plaintiffs”. He held that the defendant was under an obligation to the plaintiffs to pay compound interest calculated at half yearly rests on the monies she held for the benefit of the plaintiffs.
The Judge discussed the question of the rate of interest which should apply where he could not determine the precise interest the defendant received, but as there is no challenge to his reasoning on that aspect of the matter, there is no need for me to consider that aspect any further.
The Judge found that the defendant had never explained what happened to the $75,000.00. He found that the defendant had not properly accounted for the sum of $75,000.00 as she was required to do. As I understand it, he meant by this that she had not explained how the money had been used and what interest had been earned, nor had she accounted for interest.
Before leaving the transaction involving the sum of $75,000.00, I must mention another transaction involving the plaintiffs. The Judge found that in March 1984 the plaintiffs lent the sum of $70,000.00 to the defendant’s son, Mr Thomas Olma. At that time Mr Thomas Olma and his wife lived in Sydney. The Judge said that he accepted Mr Thomas Olma’s evidence on the topic of the loan of $70,000.00. The loan was unsolicited. The defendant handed her son a cheque for $70,000.00. The cheque came “totally out of the blue”. Mr Thomas Olma said that he was concerned and he contacted the male plaintiff by telephone. The male plaintiff said to Mr Thomas Olma that he could have the money for ten years and just had to give the money back. Mr Thomas Olma felt that he could not accept the offer and that it was too good to be true. His mother persuaded him to take the cheque. The male plaintiff told Mr Thomas Olma on the telephone that, “he wanted to get rid of the money and that he could not trust anybody down to Adelaide to have the money”. The male plaintiff pleaded with him to help him because the male plaintiff did not want people in Adelaide to know his business and that he had got money from a compensation payout. There was no question of interest, the male plaintiff just wanted the money back. Mr Thomas Olma was uneasy about the matter and had an agreement prepared by his brother-in-law who was a solicitor. The written agreement provided for an advance of $70,000.00 to be repaid by monthly instalments of $750.00 over a period of ten years, but restricted to repayments totalling the sum of $90,000.00. There was therefore a fixed interest component of $20,000.00.
Mr Thomas Olma and his wife, who was also a party to the written agreement, have satisfied their obligations by payment of all of the monthly repayments of $750.00, and the loan of $70,000.00 formed no part of the plaintiffs’ claim.
These are the Judge’s findings in relation to the first issue raised by the defendant on the appeal. I turn now to the Judge’s findings in relation to the second issue.
The defendant assisted the plaintiffs to send money to Italy. Bank drafts were purchased. There was a dispute at trial as to who provided the funds for the purchase of the bank drafts.
The defendant said that between June 1984 and December 1987 she provided the funds for the purchase of nine bank drafts to send money to Italy totalling $39,737.00, and that that amount should be offset against any amount she might be found liable to pay the plaintiffs. The plaintiffs claimed that in late 1984 and early 1985 they gave three sums of cash totalling $24,000.00 to the defendant and that some of the bank drafts were purchased with those funds. The plaintiffs denied that the defendant purchased three of the nine bank drafts.
The Judge found that the defendant purchased the following bank drafts:

1. 18^th December 1984 $3,171.00

2. 7^th March 1985 $3,480.00

3. 18^th September 1985 $3,883.00

4. 31^st October 1985 $4,085.00

5. 31^st December 1985 $4,033.00

6.
4^th November 1987
$5,986.00

The Judge found that the plaintiffs had given the defendant the sum of $24,000.00 in cash and that from those funds the defendant purchased the first five bank drafts and therefore the defendant was not entitled to a credit in relation to those drafts as against the amount she was liable to pay the plaintiffs. The reasoning of the Judge was that the funds for the first two drafts and for an earlier alleged draft said to have been purchased by the defendant in June 1984 could not have come from the sum of $75,000.00 which on the defendant’s case and on the Judge’s finding was not given to her by the plaintiffs until August 1985. The documents showed, and other findings made by the Judge, which I will discuss later, were such that he found that the funds for the drafts purchased after August 1985 did not come from the sum of $75,000.00. The defendant had not explained where the money for the purchase of the drafts had come from.
In relation to the plaintiffs’ case that they had provided the sum of $24,000.00 in cash to the defendant, the Judge noted that there was no reason why the plaintiffs should have made any of the three payments of cash totalling $24,000.00 at the times they said they did, and that there was no objective evidence which corroborated the evidence of the plaintiffs that they made the payments of cash. On the other hand, the Judge noted that it was unlikely that the defendant would have purchased bank drafts out of her own money. The Judge said that not without some hesitation he found on the balance of probabilities that the male plaintiff did give cash totalling $24,000.00 to the defendant.
The finding that the plaintiffs gave the defendant the sum of $24,000.00 in cash is challenged by the defendant.
The Judge found that the defendant was entitled to a credit for the sixth draft.
In relation to the three other alleged bank drafts ie.,

7 June 1984 $3,000.00

8. October 1987 $5,900.00

9.
December 1987
$5,900.00
the Judge found that the evidence did not establish that the defendant had purchased the bank drafts. There was no documentation to support the purchase of these bank drafts and the Judge said the onus was on the defendant to show that she had repaid the monies entrusted to her.

The effect of the Judge’s findings in relation to the alleged nine bank drafts was that he gave the defendant credit only for the bank draft purchased in November 1987.

The Judge made the following findings in relation to the defendant’s argument that the plaintiffs had so delayed in bringing their claim that it should be dismissed having regard to the doctrine of laches. The action was commenced by the plaintiffs on 25^th May 2001. The Judge found that the relevant starting point for the purpose of calculating any delay was the time at which the sum of $75,000.00 should have been repaid, which was August 1995. The money was not repayable until August 1995 and the plaintiffs could not have sued for its recovery until that time. The Judge found that the plaintiffs began making requests for the return of their monies shortly after August 1995. The Judge went on to find that even if the defendant did not know before, she knew by reason of a letter to her from the plaintiffs within two years of August 1985 that she would have to repay the money. The Judge said that the defendant had not identified any specific facts which could not now be proved because of the unavailability of evidence in a way which prejudices the defence, although he did accept that the defendant may have been deprived of bank and other records. The Judge found that the defendant had not established that she had been prejudiced by any delay which occurred after August 1995 and that the defence of laches was not made out. The defendant challenges that conclusion.
I turn now to the Judge’s findings which are relevant to the cross appeal.
The Judge found that the defendant had made five payments to or for the benefit of the plaintiffs for which the defendant was entitled to receive credit. The details of the amounts are as follows:

1. 12^th December 1985 $6,000.00

2. 18^th February 1988 cash $4,000.00

3. 5^th November 1988 cash $4,000.00

4. 27^th June 1989 cash $7,000.00

5. 6^th October 1989 cash $4,000.00

The Judge’s finding as to the first payment of $6,000.00 is based on the bank records which were put before him. The Judge found that the sum of $6,000.00 had come from one of the defendant’s bank accounts and that she was entitled to a credit in relation to that amount. As far as the four payments in cash were concerned, the Judge referred to the admission by the plaintiffs in their defence to counterclaim that they had received those amounts and noted the plaintiffs’ plea that the cash had come from what the Judge referred to as the plaintiffs’ State Bank account.
A bank account was opened by the defendant in New South Wales at the State Bank of New South Wales in the names of the plaintiffs. The address given for the account was that of the defendant. The plaintiffs did not have direct access to the account and when they needed money the defendant would withdraw money from the account and bring it to Adelaide. The account was controlled by the defendant. I will call this account the State Bank account. The number of the State Bank account was 110850-81, and after October 1989, 110850-82. A number of bank statements for the State Bank were put before the Judge. The statements show that regular payments of $750.00 were made into the State Bank account, and it was clear that those payments were the monthly amounts due by Mr Thomas Olma and his wife under their written agreement with the plaintiffs. The Judge found that in the main it was not the defendant who made payments into the State Bank account, but her son, Mr Thomas Olma. The Judge said that the evidence did not establish the fact that the monies came from the State Bank account and therefore the defendant was entitled to a credit in relation to the cash amounts totalling $19,000.00.
The Judge allowed a total credit to the defendant of $25,000.00.
On the cross appeal, the plaintiffs challenge the Judge’s finding that the defendant is to be credited with the payment of those amounts.
Issues on the Appeal
1. Interest on the sum of $75,000.00
The Judge found that the cheque for $75,000.00 was given to the defendant in August 1985 for the purpose of investment and that the arrangement was that the $75,000.00 would be divided into a tranche of $50,000.00 which would be invested for ten years and a tranche of $25,000.00 which would be invested at call.
The male plaintiff’s evidence was to the effect that there were representations by the defendant as to the interest rate which she could earn on the money, whereas the defendant’s evidence was to the effect that the male plaintiff said that he did not want interest, that all he wanted to do was hide the money and have it returned after ten years. As I have said, the Judge found that the evidence fell short of establishing an express agreement as to interest and in reaching that conclusion the Judge took into account, as he was entitled to do, the fact that there was no reason why the defendant would have guaranteed a minimum rate of return as there was nothing in the transaction for her. On the other hand, the Judge found that the plaintiffs did not forego a right to interest as asserted by the defendant and in reaching that conclusion the Judge took into account the likelihood that the plaintiffs would have gratuitously abandoned an annual entitlement to interest of more than $8,000.00. The Judge said it defied commonsense that they would have done so. The defendant launched a strong attack on this observation of the Judge. She submitted that the Judge did not act by reference to the evidence, but rather by reference to his own notions of what commonsense demanded. Not only was that wrong as a matter of principle said the defendant, but it was certain to lead to error in the circumstances of this case having regard to the following matters:
1.The male plaintiff was accustomed to keeping large sums of cash in his house.
2.The male plaintiff wanted to hide the money either because he did not want it to affect the pension he collected, or because he was concerned that if others knew he had the money his daughter might be subjected to threats.
3.The male plaintiff’s attitude in relation to the sum of $70,000.00 lent to Mr Thomas Olma was striking evidence in support of the assertion that the plaintiffs did not want interest on the sum of $75,000.00 which they gave to the defendant in August 1985.
The defendant submitted that the Judge should have found either that there was an express agreement between the parties that the defendant would not be liable to account for interest, or that there was no agreement about interest and in the circumstances the relationship between the parties was properly characterised as one of bailment or quasi bailment (mutuum) rather than trust.
I pause to say something about the submission that the relationship between the parties was one of bailment or quasi bailment.
Two obvious points may be noted at the outset. First, neither party submitted that the defendant was to be rewarded for the obligations she undertook. Secondly, neither party submitted that the goods in this case, that is, the cheque for $75,000.00 was to be returned to the plaintiffs in specie. In her written outline on appeal, the defendant submitted that the relationship was properly characterised as a gratuitous bailment of the mutuum category, alternatively it was properly characterised as mandate or deposit. The submission that the relationship was one of mandate or deposit was not pressed during oral submissions on the appeal and it was said that the relationship was one of mutuum. In any event in my opinion, the relationship was clearly not one of mandate or deposit. In the case of mandate and deposit, property in the goods does not pass (RP Meagher and WMC Gummow, Jacobs’ Law of Trusts in Australia 6^th ed (1997) at [209]). In the circumstances of this case, it is clear that the legal title in the funds was to pass.
Mutuum may be described as a loan of goods for consumption whereby the borrower incurs an obligation to return not the goods that he was given, but the equivalent in quality and quantity. If I borrow a cup of sugar from my neighbour I am obliged to return not the same sugar but rather the equivalent amount in quality and quantity. Goods which may be the subject of a mutuum are referred to as fungibles, that is, goods of such a nature that one unit or portion can be replaced by another. Mutuum is to be distinguished from a commodatum which is a gratuitous loan of goods which are to be returned to the lender. In other words, property in the goods does not pass in the case of a commodatum whereas property in the goods does pass in the case of a mutuum. Mutuum is said to be a form of quasi-bailment. It is not a relationship of bailment (Chapman Bros v Verco Bros & Co Ltd (1933) 49 CLR 306; Halsbury’s Laws of England Vol 2 at [1534]).
There are only a few cases dealing with the relationship of mutuum. There is a discussion of the distinction between commodatum and mutuum and the effect of a promise unsupported by consideration by the bailor or quasi-bailor to leave the goods with the bailee or quasi-bailee for a certain period of time in Parastatidis v Kotaridis [1978] VR 449. There is a discussion of the question whether the relationship of mutuum, which was recognised in Roman law, is recognised in English Law in Comptroller-General of Customs v Woodlands Enterprises Pty Ltd (1995) 128 FLR 113. I also refer to the illuminating discussion of the effect of the Roman law on the English law of bailment by Emmett J in “Roman Traces in Australian Law” (2001) 20 Australian Bar Review 205.
I am prepared to assume, without deciding, that a relationship of mutuum is recognised in English law. Where the goods are money, contracts of bailment are rare (Palmer on Bailment (1979) at 105 - 109). A relationship of mutuum is likely to be very rare (Brambles Security Services Ltd v Bi-Lo Pty Ltd (1992) Aust Tort Rep 81-161). The circumstances surrounding the handing over of money to be replaced later by an equivalent sum of money will often give rise to a loan or a trust, rarely I would think, a relationship of mutuum.
I return now to the criticisms of the Judge’s reasoning. To approach the matter by ignoring the evidence and finding an obligation to account for interest by reference to what the notion of commonsense suggests would be an error, but that is not how the Judge approached the matter. The Judge was able to find on the evidence that the money was given to the defendant for her to invest and that the sum of $50,000.00 was to be invested for ten years and the sum of $25,000.00 was to be invested at call. The Judge was unable to make a finding that the defendant said that she would obtain and pay a particular rate of interest. In assessing whether he should accept the defendant’s evidence that the male plaintiff said he did not want interest, the Judge was entitled to consider whether that was likely as a matter of common experience or commonsense bearing in mind the following matters established by the evidence:
1.The sum of $75,000.00 had been invested by the plaintiffs between 6^th February 1984 and 6^th February 1985 and interest of more than $8,000.00 had been earned.
2.Notwithstanding the male plaintiff’s attitude at the time the sum of $70,000.00 was offered to Mr Thomas Olma, by August 1985 the plaintiffs were receiving interest on the sum of $70,000.00 loaned to Mr Thomas Olma and his wife.
I do not think that there is any error in such an approach.
It is true that a good deal of evidence given by the parties was unsatisfactory and that the onus was on the plaintiffs to prove their case. However, it was open to the Judge on the evidence to find that the money was given to the defendant for the purpose of investment, and that of the sum of $75,000.00, the sum of $50,000.00 was to be invested for ten years and the sum of $25,000.00 at call. The fund was to remain the plaintiffs’ property. I think the conclusion of the Judge that in those circumstances there was a trust was correct. On occasions there will be difficulty in distinguishing between a trust relationship and other forms of relationship, but I do not think that this is such a case. The defendant was given the sum of $75,000.00 for the purpose of investing the money on behalf of the plaintiffs.
The Judge found that the money was in fact invested by the defendant and earned compound interest, although the evidence was not sufficiently clear for him to determine the precise amount earned over the years. The Judge correctly held that the defendant was liable to account for the compound interest earned on the trust monies at the rate obtained by the defendant and/or at a rate fixed by the Court.
2. The Finding that the Plaintiffs paid $24,000.00 in cash to the Defendant
It is important to explain in a little more detail how this issue arose. The Judge found that the defendant was entitled to a credit in relation to the bank draft she purchased in November 1987 and there is no challenge to that finding by the plaintiffs. The Judge found that the defendant’s allegation that she purchased drafts in June 1984, October 1987 and December 1987 was not established on the evidence and the defendant does not challenge that finding. The Judge found that bank drafts purchased in December 1984, March 1985, September 1985, October 1985 and December 1985 respectively were purchased by the defendant. The defendant’s case was that the monies used were in fact repayments of part of the sum of $75,000.00 or were made from her own monies and that she should be given credit for the payments.
The plaintiffs’ answer to these assertions was that the five bank drafts were purchased from the monies provided by the plaintiffs to the defendant in cash and had nothing to do with the sum of $75,000.00. The plaintiffs’ case was that they made three payments of cash totalling $24,000.00 to the defendant in late 1984 and early 1985.
The Judge considered the evidence supporting the rival contentions, and he said that not without some hesitation he reached the conclusion on the balance of probabilities that the male plaintiff did give cash totalling $24,000.00 to the defendant.
The Judge identified the matters tending against the conclusion he reached. They were the following:
1.The evidence of the plaintiffs as to when and in what amounts they gave the cash to the defendant was not consistent.
2.The plaintiffs’ evidence as to when they gave the cash to the defendant did not coincide with the purchase of the drafts. On their evidence they had given the defendant cash of $24,000.00 by March 1985, and yet on the plaintiffs’ case only two drafts totalling $6,651.00 (or three drafts on the defendant’s case totalling $9,651.00) had been purchased by that date. Furthermore, the plaintiffs’ plea as to the monies left over in December 1984 added to the confusion in the plaintiffs’ case and cast doubt on their reliability.
3.The plaintiffs carried the onus of establishing that they made the payments of cash. There was no reason why the plaintiffs should have made any of the three payments of cash at the times they said they did, and there was no objective evidence which corroborated the evidence of the plaintiffs that they made the payments of cash.
4.The plaintiffs’ evidence was riddled with inconsistencies, although the inconsistencies may be explained by the passage of time and a lack of business acumen.
The matters which the Judge identified as supporting the conclusion he reached were the following:
1.On the defendant’s case she purchased three bank drafts (June 1984, December 1984 and March 1985) before she received the sum of $75,000.00 in August 1985.
2.Of the sum of $75,000.00 given to the defendant in August 1985, it is unlikely any bank draft was purchased out of the tranche of $50,000.00 that was to be invested for ten years. By reference to the records, the five bank drafts purchased between December 1984 and December 1985 were not purchased out of the tranche of $25,000.00.
3.The defendant had not explained the source of the monies that were used to purchase the drafts.
4.It is unlikely the defendant would have purchased the drafts out of her own money.
5.The plaintiffs’ case that they made the payments of cash is supported by letters they wrote in 1999.
6.The cost of the first six bank drafts including the draft the defendant said she purchased in June 1984 (but which the Judge found was not established) roughly approximated the amount of cash the plaintiffs said that they gave to the defendant and this amounted to some “corroboration” of the plaintiffs’ case.
7.By way of conclusion, the monies to purchase the bank drafts did not come from the sum of $75,000.00 and it was unlikely the defendant would have used her own funds to purchase the drafts. Cash provided by the plaintiffs was the only other source.
The defendant attacked the Judge’s finding that the plaintiffs provided $24,000.00 in cash to the defendant on two grounds. First, she said that the Judge did not put enough weight on the fact that he found that the plaintiffs’ evidence was riddled with inconsistencies. There is a short answer to this suggestion. The Judge did take this matter into account and furthermore he qualified his observation by saying it may be explained by the passage of time and lack of business acumen. Secondly, the defendant submitted that the Judge erred in finding that the plaintiffs’ case was “corroborated” by the approximation between the cost of the first six bank drafts including the “disputed” draft in June 1984 and the amount of cash the plaintiffs said they gave to the defendant in circumstances where he found that there was no transfer of funds in June 1984. The Judge did find that there was no transfer of funds in June 1984 and his reliance on the approximation he identified as corroboration is an error. However, it seems to me that the Judge did not treat this factor as being of particular significance and it was certainly not decisive of the point. I accept that the point was a difficult one and I note that the Judge said he reached the conclusion he did with some hesitation. However, having regard to the evidence which the Judge identified, I am not satisfied that he erred in reaching the conclusion which he did even if the evidence of the approximation is put to one side.
I reject the defendant’s challenge to the Judge’s finding that the plaintiffs paid $24,000.00 in cash to the defendant.
3. The Defence of Laches
The defendant argued before the Judge that the plaintiffs were seeking to enforce an equitable obligation, that they had delayed unreasonably in issuing proceedings and that the defendant had been prejudiced by the passage of time in that bank records were no longer in the possession of the parties.
Dr Spry in his book, Equitable Remedies, 6^th ed (2001) at 431 refers to the two conditions a defendant must establish to make out a defence of laches. He said:
“The defence of laches arises if two conditions are satisfied: first, there must be unreasonable delay on the part of the plaintiff in the commencement or prosecution of proceedings, and secondly, in view of the nature and consequences of that delay it must be unjust in all the circumstances to grant the specific relief that is in question, whether absolutely or on appropriate terms or conditions.”
The Judge rejected the defence of laches and, although it is not entirely clear, I think he did so because he found that neither condition was met.
The Judge said that proceedings could not have been commenced until August 1995 and the defendant was aware that she would be required to account for the $75,000.00 shortly after that date, or in the alternative, within two years of that date. The proceedings were commenced on 25^th May 2001. If those findings stand, I do not think it could be said that the plaintiffs were guilty of unreasonable delay. The defendant submitted that the plaintiffs could have brought proceedings before August 1995. The proceedings she identified were not proceedings for the recovery of the sum of $75,000.00, nor as I understood it were they proceedings for the recovery of interest on that sum. I did not understand the defendant to suggest that the interest was to be repaid before August 1995. The proceedings the defendant identified were an action for an account and/or an action pursuant to s 84C of the Trustee Act 1936, for the appointment of an inspector to investigate the affairs of the trust. I reject the defendant’s submission for a number of reasons. First, laches is relevant where the plaintiff has unreasonably delayed in bringing the proceedings, not some other proceedings, although I accept that there are some common features between the present action and an action for an account. Secondly, even if the first point is not correct, the defendant did not identify evidence which would clearly lead to the conclusion that the plaintiffs acted unreasonably in failing to bring an action for an account at some stage during the period from 1985 to 1995. Thirdly, the defendant as a trustee was obliged to account for the sum of $75,000.00 in August 1995 leaving aside any question of interest. On the facts of this case the records relevant to that obligation were the same records which relate to the obligation to account for interest. I say that because there is no suggestion the interest was to be invested separately from the sum of $75,000.00. The defendant’s obligation to account and to keep appropriate records to enable that to be done continued to August 1995 and, on the facts, included the records relating to the investment of interest.

That is sufficient to dispose of the defence of laches. For the sake of completeness, I will also consider the second condition, namely, prejudice to the defendant.
The defendant referred to certain observations of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 185 CLR 541. The Chief Justice of this Court referred to those observations in The Duke Group Ltd (in liq) v Alamain Investments Ltd and Ors [2003] SASC 415; (2003) 232 LSJS 58. The Chief Justice said (at [157] – [158]):
“I accept that in relation to the second issue it is not simply a question of considering the impact of the passage of time after the time at which the liquidator, acting reasonably, could have commenced proceedings. I agree with the observations by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 555, that in a case like this the court should not confine its attention to the “marginal prejudice” created by the delay beyond the point at which the proceedings should have been commenced. The court should consider the impact on the defendants of the proceedings as things stand, and should make an assessment of the prejudice that the defendants will now suffer. It is not merely a question of identifying the additional prejudice attributable to delay beyond the time at which proceedings should have been instituted.
I add that in considering the question of prejudice, I agree that one should take into account the matters identified by McHugh J in that decision including, in particular, the inherent desirability of justice being administered promptly, because of the way in which delay can be oppressive and “cruel” to a defendant, because of the need to allow persons to arrange their affairs on the basis that claims will no longer be made against them, and because of the inevitable deterioration of memory and loss of evidence with the passage of time. All of these matters are to be considered.”
The observations of the majority of the High Court in Orr v Ford (1989) 167 CLR 316 must also be considered. Wilson, Toohey and Gaudron JJ said (at 330):
“The issue is not whether evidence may have been lost but whether evidence which may have cast a different complexion on the matter has been lost. Thus in Crago v McIntyre a defence of laches was successful because a different conclusion may have been reached ‘if all of the witnesses, including the doctors, who could have given first-hand accounts of the plaintiff’s behaviour, and of other relevant circumstances, had been available to be called as witnesses.”
The Judge in this case found that although the defendant may have been deprived of bank and other records, she had not identified any particular fact which she could no longer establish. That approach might be putting the test too high, but even applying a lesser test of whether there is real reason to think that evidence that may have assisted the defendant in presenting her case has become more difficult to procure, leads in my opinion to the same conclusion as that reached by the Judge. I do not think it can be said that evidence which may have cast a different complexion on the matter has been lost.
The Judge did not err in rejecting the defence of laches.
Issue on the Cross Appeal
There is one issue on the cross appeal and that is whether the Judge erred in finding that the defendant made certain payments to or for the benefit of the plaintiffs between December 1986 and October 1989 and that she was entitled to credit in relation to those payments. The details of the payments as found by the Judge are as follows:

Date Amount
$ Method of Payment

12^th December 1986 6,000.00 Cheque

18^th February 1988 4,000.00 Cash

5^th November 1988 4,000.00 Cash

27^th June 1989 7,000.00 Cash

6^th October 1989 4,000.00 Cash

Total

25,000.00

The plaintiffs admitted receiving the cheque for $6,000.00, but argued at trial that the defendant repaid herself from the plaintiffs’ monies in the State Bank account. The plaintiffs admitted receiving the four separate payments of cash, but argued at trial that they were monies taken from the State Bank account and that the money which was deposited in that account was money paid by Mr Thomas Olma and his wife in repayment of the loan of $70,000.00 made to them by the plaintiffs.
In other words, the plaintiffs admitted receiving the sum of $25,000.00, but said that they appropriated this sum to the repayment of the loan made to Mr Thomas Olma and his wife. The plaintiffs said that the Judge erred because he did no more than consider whether the cheque for $6,000.00 came from one of the defendant’s bank accounts and whether the cash totalling $19,000.00 had come directly from the State Bank account. Once he decided those issues in favour of the defendant he gave her a credit of $25,000.00. The plaintiffs said that the Judge should have gone on to consider whether, even accepting the findings as to the immediate source of the funds, the sum of $25,000.00 had been appropriated to the repayment of the loan made to Mr Thomas Olma and his wife. The plaintiffs argued that the cheque for $6,000.00 and the cash totalling $19,000.00 may have come from the defendant’s monies, but their ultimate source was the monies repaid by Mr Thomas Olma and his wife. Alternatively, the loan to Mr Thomas Olma and his wife has not been fully repaid.
The Judge did not err in finding that the cheque for $6,000.00 came from one of the defendant’s bank accounts, and he did not err in finding that the immediate source of the cash totalling $19,000.00 was not the State Bank account. In the circumstances of this case where the evidence of the parties was so unsatisfactory, I think that the Judge was entitled to rely on the plaintiffs’ pleading that the cash totalling $19,000.00 had come from the State Bank account and that once he rejected that assertion, he was entitled to find that the defendant should be given credit for that amount. The Judge must be taken to have rejected the suggestion that the source of the sum of $25,000.00 was Mr Thomas Olma and his wife or that that sum was appropriated by the plaintiffs to the repayment of the loan made to Mr Thomas Olma and his wife. Alternatively, in view of the unsatisfactory nature of the evidence, I do not think that this Court can or should substitute a different finding to that made by the Judge.
The Judge did not err in allowing the defendant a credit of $25,000.00.
Conclusion
In my opinion, both the appeal and the cross appeal should be dismissed.
ANDERSON J: I agree that the appeal and the cross appeal should be dismissed for the reasons given by Besanko J.

1.	18^th December 1984	$3,171.00
2.	7^th March 1985	$3,480.00
3.	18^th September 1985	$3,883.00
4.	31^st October 1985	$4,085.00
5.	31^st December 1985	$4,033.00
6.	4^th November 1987	$5,986.00

7	June 1984	$3,000.00
8.	October 1987	$5,900.00
9.	December 1987	$5,900.00

1.	12^th December 1985	$6,000.00
2.	18^th February 1988 cash	$4,000.00
3.	5^th November 1988 cash	$4,000.00
4.	27^th June 1989 cash	$7,000.00
5.	6^th October 1989 cash	$4,000.00

Date	Amount $	Method of Payment
12^th December 1986	6,000.00	Cheque
18^th February 1988	4,000.00	Cash
5^th November 1988	4,000.00	Cash
27^th June 1989	7,000.00	Cash
6^th October 1989	4,000.00	Cash
Total	25,000.00