Plutonic Operations Ltd v Done
[2001] WASC 293
PLUTONIC OPERATIONS LTD -v- DONE [2001] WASC 293
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 293 | |
| 23/10/2001 | |||
| Case No: | CIV:1740/1998 | 24-28 SEPTEMBER 2001 | |
| Coram: | McKECHNIE J | 28/09/01 | |
| 21 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff's claim allowed | ||
| B | |||
| PDF Version |
| Parties: | PLUTONIC OPERATIONS LTD (ACN 004 680 997) WARREN ANDREW FRANK WALTER DONE |
Catchwords: | Contract of employment Duty to act honestly Gold room supervisor Missing quantities of gold Turns on own facts |
Legislation: | Nil |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
WARREN ANDREW FRANK WALTER DONE
Defendant
Catchwords:
Contract of employment - Duty to act honestly - Gold room supervisor - Missing quantities of gold - Turns on own facts
Legislation:
Nil
Result:
Plaintiff's claim allowed
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr P B O'Neal
Defendant : Mr P J Ward
Solicitors:
Plaintiff : Deacons
Defendant : Peter Ward
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 3)
- McKECHNIE J:
Introduction
1 This is a case about gold said to have been stolen from a gold mine and an employee who is said to have profited from either stealing the gold or turning a blind eye to the actions of others in return for a portion of the illegal proceeds.
The parties: The plaintiff
2 The plaintiff operates a profitable gold mining operation off the Great Northern Highway between Meekatharra and Mount Newman.
3 The system for winning gold was described by the current production supervisor at the Plutonic Gold Mine, Mr Hawgood. He had, in due course, replaced the defendant in that position. Mr Done agreed that Mr Hawgood's description was correct.
4 The construction of the mine commenced and recruitment took place during the construction period until the mine was operational from August 1990.
5 The mine is an open cut mine. Ore is taken from the pit to the mill where it is stockpiled on a crushed ore stockpile pad. It is crushed in the primary crusher and then milled in two stages, following which the material is reduced to dust particles no larger than 75 micron.
6 In the early days of the mine the ore was very rich in gold content, to sometimes 85 per cent or more.
7 After milling, the product is placed in leach tanks into which cyanide and lime are added, dissolving the gold to a cyanide gold solution. The solution is then put through absorption where it is absorbed onto carbon granules. This is the carbon in pulp method. The carbon is put into an elution column and the gold is eluted off by a hot caustic cyanide solution which is pumped to a storage tank and thence into the gold room and circulated through electrowinning cells. The tank is outside the gold room and the solution is pumped into the gold room.
8 The gold room is normally staffed by two persons, the gold room operator and the gold room foreman. The gold room is a secure facility consisting of a wire mesh cage clad with iron sheeting. There are two
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- entries. One is a roller door providing vehicular access into a cage which is also locked.
9 The second is through a personnel door secured by two deadlocks. The mine superintendent and the production supervisor have keys to the deadlocks and each are required to open the door at the commencement of the shift. The practice was, and is, that the superintendent's deadlock is rendered inoperative during the day and the supervisor's key is given to the gold room staff for ingress and egress.
10 The door is alarmed and must be disabled upon entry. During the relevant period there were four surveillance cameras in the gold room and a further camera outside the personnel door.
11 The cameras transmitted to a single screen with a switch in two places, the resident manager's office and the mill control room. The process was videotaped, but it appears not particularly well monitored and the videotapes were re-used.
12 The solution in the electrowinning cell is subject to an electric charge through a cathode and an anode. Steel wool is wrapped around the cathode and as the current passes through the gold adheres to the steel wool. The steel wool is taken out and layered onto tiered trays and drained before being placed in a calcining oven for 24 hours. The oxidised wool is then stored in the vault until such time as there is sufficient material to smelt.
13 On smelting days it is mixed with the flux of silica and borax which dissolves the iron oxide into slag. It is then smelted in a gas-fired crucible oven or furnace. The molten bullion is poured into bars weighing about 700 oz each. The bars are weighed and recorded. Drill samples from each bar are placed into an envelope and also recorded.
14 Throughout the process there are records made at all stages including the weights of significant products.
15 One record is made on the smelting log sheet and is known as the "Call" where either the mill supervisor or the gold room foreman makes an estimate of the weight of gold bullion which should be derived from a particular strip of steel wool using a calculation which determines the amount of loss of the weight of the impurities.
16 As long as the amount of bullion at the end of the process is within about 5 per cent to 10 per cent of the call, it is considered acceptable.
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17 At the end of each month, bullion information is reconciled with the sampling estimate. This is estimated using the sampling information at the very beginning of the process, before the ore is milled. From a sample of a particular load of ore, the percentage of bullion contained in the load is able to be approximated. An allowance is made for loss of material in tailings.
18 If the bullion weight is within plus or minus 5 per cent of the sampling estimate, there is no concern about missing gold. The procedure is not precise. In any given month between 800 to 1000 kg of gold might be won. If 10 to 20 kgs of gold could not be accounted for in any month, it would be neither noticed nor missed when reconciling the bullion information on the log sheets with the sampling estimate, because it would be within the 5 per cent range.
19 From time to time, in earlier stages of the process, flattened nuggets would occasionally be removed from machinery at times when the machinery was cleaned or other times. From time to time, pieces of gold would also fall to the floor of the gold room, especially around the milling area. Gold can also spill in the smelting process. The procedure was for such found gold to be handed in to the vault and recorded. Mr Done agreed with the general evidence about security. On the mezzanine level, the electrowinning cells were protected by an infra-red sensing system. The cells were locked.
20 From the whole of the evidence, I conclude that security in the mill, though good, was not watertight. There were opportunities for gold stealing. For example, it would be possible for a person to have his back to the camera while working on the electrolytic process on the mezzanine floor. The surveillance cameras in the gold room did not entirely cover that room and, in any event, did not appear to be monitored. Mr Hawgood said to his knowledge it was the duty of Jan Holmes, when she was on-site, to change the video tapes each day. Mrs Done denied this. It is unnecessary for me to resolve this conflict.
The Defendant
21 Mr Done is now aged 48.
22 He started in the mining industry as a youth and worked in that industry on and off for a good portion of his life. On occasions he also worked as a bobcat operator.
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23 In 1985 he and his then wife and he divorced. He then worked at Gabanintha gold mine and for Golconda Mining before joining Plutonic in the middle of 1990 as mill supervisor. Each of these mines used the carbon in pulp method for winning gold.
24 His present wife, Mrs Janet Done, was then Janet (Jan) Holmes. She had commenced work in May 1990 as administrative assistant to the resident manager at Plutonic Gold Mines, resigning on 1 April 1994. Mr and Mrs Done met through their work with Plutonic.
25 In October 1991, Mr Done purchased a 20 acre block of land at Lot 23 Frensham Place, Martin, a suburb in the hills near Perth.
26 During 1992 he improved the land, first by arranging for the construction of a large shed and then arranging for the construction of a house on the property.
The events leading to this action
27 On 16 August 1995, police officers from the Gold Squad, armed with a search warrant, searched 23 Frensham Place, Martin, and seized a quantity of documents, gold, and gold smelting equipment. Later that day, Mr Done participated in a video record of interview. He was arrested, charged, and in due course stood trial in the District Court and was acquitted of stealing.
The pleaded issues
28 The plaintiff's case as pleaded alleges a breach of the contract of employment and/or breach of fiduciary obligation by the defendant.
29 In particular it pleads:
"6. During the period of his employment by the plaintiff, the defendant, either acting alone or in concert with either Kevin Francis and or Murray Neale and or alternatively a person or persons unknown ('the Co-Conspirators'), unlawfully and without the consent of the plaintiff, took refined gold owned by the plaintiff from the plaintiff's premises at the Mine.
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- The gold was removed from the gold room at the Mine by either the defendant or the Co-Conspirators between June 1990 and April 1994."
- And further or alternatively it is pleaded:
"8. … during the period of his employment the defendant allowed or aided and abetted the Co-Conspirators, unlawfully and to the defendant's knowledge without the knowledge or consent of the plaintiff, to take refined gold the property of the plaintiff from the plaintiff's premises at the Mine."
31 In order to support its case, the plaintiff advances evidence in two main areas.
32 The plaintiff firstly relies upon the admissions made in the video record of interview, which admissions, if accepted, are that in return for turning a blind eye to the stealing activities of the then gold room foreman, Kevin Francis, the defendant received three different sums of money, $20,000, $24,000 and $26,000.
33 Furthermore, he took and sold a portion of gold material from Francis, selling it for $18,000.
34 He admitted assisting other employees to steal gold.
35 He admitted that a substantial proportion of the proceeds was put into the purchase of 23 Frensham Place and the subsequent construction on it.
36 This leads to the second limb of the plaintiff's case wherein it is asserted that during a relevant period he had an unexplained expenditure over income in the sum of $122,200.
37 Mr Done denies that the video record of interview represents the truth and asserts that police misconduct led him to make a false record. Furthermore, he did not make admissions to the police prior to the video.
38 He asserts that, when properly analysed, there is in fact no unaccounted excess of expenditure.
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The events leading to the video record of interview
39 In 1994 and 1995 the Gold Squad was headed by Detective Sergeant Kevin Riley. Working underneath him was Detective Sergeant Beaman. Three other members of the squad were Detective Alexander Ryan, Senior Constable Fintan Bullen, and Senior Constable Ray Johnston.
The start of the investigation
40 At some time in 1994, Sergeant Beaman, in company with Senior Constable Bullen, met an informant.
41 Following that initial contact, Constable Bullen was given the investigation. Inquiries were made in April 1994 in regard to the travel movements of a number of persons, including Mr Done.
42 By November 1994, Constable Bullen had received bank statements and other information.
43 In August 1995, it appears that Constable Bullen was imminently to be transferred to Bunbury uniformed branch.
44 According to Sergeant Beaman, Constable Bullen was showing a bit of a lack of interest because he was going somewhere else and did not seem to be in a hurry. This may be partly confirmed by Constable Bullen, who suggested that Sergeant Riley had told him it: "It's time to finish that inquiry". There is no evidence that any pressure was brought to bear on Constable Bullen from outside the police service.
The events of 15 August 1995
45 Detective Constable Ryan was generally aware of Constable Bullen's inquiry. Sergeant Beaman indicated that it was the practice of the Gold Squad to hold weekly meetings or briefings when everyone shared information. There may well have been a briefing in Kalgoorlie on 15 August 1995 concerning this matter.
46 The four officers, Beaman, Bullen, Johnston and Ryan travelled to Perth and stayed overnight at the Ascot Inn. There is a difference in recollection as to how they travelled. Detective Ryan was of the view that he drove his own car alone. Constable Bullen thought that he drove down with Ryan and told Ryan about the investigation in the course of the journey. Sergeant Beaman initially gave evidence that he travelled with
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- Bullen, but later indicated he could not be sure and he may have travelled with Johnston.
47 I find that Detective Ryan had some general knowledge of the investigation prior to 16 August.
The events of 16 August: the police arrive
48 In the early morning before dawn, or as dawn was breaking, the police drove to Frensham Place. Constable Ryan's recollection is that they met some short distance away and were briefed. Sergeant Beaman and Constable Bullen's recollection was that they travelled together and Ryan and Johnston travelled behind.
49 At all events, on the road, Beaman and Bullen passed Mr Done who was in his truck heading off to work. They telephoned or radioed the second car which stopped Mr Done and returned with him to Frensham Place.
50 At Frensham Place the police introduced themselves and showed Mr and Mrs Done the search warrant.
The search
51 Sergeant Beaman and Constable Johnston had responsibility for searching the house, gathering together a large quantity of documents. Mrs Done was generally in the vicinity and Sergeant Beaman saw her talking on the telephone. He presumed she was cancelling appointments.
52 Detective Ryan and Constable Bullen went with Mr Done to inspect the shed. Detective Ryan thought they entered through the personnel door in the shed, while Constable Bullen thought they entered through the sliding door. Mr Done's evidence was that they entered through the personnel door which he opened, following which they waited for the neon lights to fully activate. I regard the difference is immaterial. At all events, once inside the shed, they made their way to a work bench on which there was a kiln and, as it turned out, a crucible and other items, including a mould which may have a relevance to gold smelting.
53 The police conducted a search over a considerable period of time during the course of which Detective Ryan took a number of photographs. Constable Bullen says that he questioned Mr Done and noted the questions and answers in a notebook. During the course of those answers,
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- certain admissions were made by Mr Done. One of the photographs shows Constable Bullen with a notebook, apparently making notes.
54 The making of the notes and, in consequence, the making of any admissions by him are strenuously denied by Mr Done.
55 During the course of the search, and it would appear towards the end, the officers searched a stack of cardboard boxes. Within the stack was a Puma sports bag. Within the bag was a plastic bag. Within that plastic bag was a paper bag and, within that, a quantity of gold. Mr Done denied any knowledge of this gold and denied it again in the video record of interview and in evidence.
56 The gold generally matched the consistency of gold from Plutonic Gold Mine and I find on the balance of probabilities that at least 560 gms originally came from the plaintiff's mine. Mr Done gave evidence of suspicious behaviour by police, leading, I think, to an inference that they may have planted the gold. His counsel disavowed that inference in closing submissions, suggesting some other person planted the gold and smelting equipment to divert suspicion. Mr Done's evidence was that Constable Bullen had searched the area and found nothing. Detective Ryan had later gone over the area. He and Detective Ryan had gone outside the building for a time and they were called back when the bag had been discovered after Ryan had told Bullen to search the area more thoroughly.
57 Having seen and heard both Detective Ryan and Constable Bullen, in examination and cross-examination, I am satisfied that the notes were made in the shed. I have regard to the fact of the photograph and to the content of the notes which are substantially non-incriminating.
The transfer of the inquiry
58 Following the search, it was determined that Mr Done and Mrs Done would be taken back to Curtin House.
59 Before that occurred, there was a meeting between the four police officers. At that meeting, Detective Sergeant Beaman relieved Constable Bullen of the inquiry and gave it to Detective Ryan to continue. He had in mind Bullen's imminent departure and the fact that he would be unable to do further inquiries in Bunbury. Had nothing been found, then the inquiry would have ended that day. Something had been found and it was obvious that further inquiries needed to be pursued. He had it in mind to
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- give the investigation to Constable Johnston but he had told Beaman that morning he was due to take extended leave and so Beaman told Bullen to pass the inquiry to Ryan. Bullen was understandably upset. He placed the file on the bonnet of the car and walked away and had a cigarette. Ryan was unaware of Beaman's intention until it happened. Mr Done saw part of this exchange.
60 I am satisfied that this event did occur and that Ryan was not then prepared, in the sense of being cognisant of all details, to conduct a detailed record of interview with Mr Done.
The drive from Martin to Perth
61 During the course of the drive to Perth, Detective Ryan and Constable Bullen gave evidence that Bullen drove and Ryan sat in the front passenger seat while Mr Done sat in the rear. Detective Ryan gave evidence that he asked some questions relative to the matter and received answers, both of which he noted at the time, that Constable Bullen saw Detective Ryan with a file, not the file which he had placed on the bonnet of the car, during the course of the journey.
62 Mr Done denies any admissions were made by him. He points to the fact that the notes bear a curious date, 16 August 1996.
63 Beyond asserting that it was an error, Detective Ryan advances no satisfactory explanation for this mistake. The notes appear regularly spaced, even when regard is had to their being made in a moving car. They, like Bullen's notes, were never shown to Mr Done nor were they adopted by him. If these notes and the admissions they represent comprised the only evidence of admissions by Mr Done, I would not be satisfied on the balance of probabilities as to the occurrence of those admissions. However, they have to be seen in the context of other matters. I am satisfied that the search of the shed took place in the manner described by the police officers, not in the manner described by Mr Done. In particular, I am satisfied that the police officers did properly find the gold in the paper bag and were not party to planting it, nor did they have information regarding where it might be found. Their explanation is far more likely to be true and has the ring of truth about it. It must be remembered that other gold was found and there were also prills found in a pink ladle near a brush. The crucible had gold adhering to it. Although these were not scientifically examined, I regard that particular fact as of little moment. The gold was scientifically examined
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- and the items themselves were observed by police officers experienced in gold by their training and observations.
64 I also have regard to the video record of interview and my rejection of the defendant's evidence in that regard.
65 I turn to deal with the submissions advanced on behalf of the defendant. I suppose it is possible that some unknown person broke into the shed and planted a series of incriminating items in a way which suggested that Mr Done had been smelting gold. In this enterprise it would be fortuitous that Mr Done had at hand an electric furnace or kiln to give weight to the story. The property was, after all, deserted for long periods while Mr and Mrs Done were at work.
66 The unknown burglar could, I suppose, have also planted the gold later discovered in the bag and the prills in their various locations. However, having performed their task, for reasons which are not easy to understand on the evidence, especially as Mr Done had left the gold industry some time before, the unknown person presumably tipped off the police.
67 It is also possible that the police may have planted the bag of gold on Mr Done for some reason not readily apparent. Police plants of evidence are not unknown. However, the objective circumstances render these explanations, although possible, improbable to a high degree. The more probable explanation is that Mr Done had in fact, as he admitted on video, been smelting the gold in his shed. The items in the shed and their positioning all suggest they were part of Mr Done's usual operations. There seem, as I have said, to have been two prills and a plastic ladle. One such ladle with a brush is shown in the photograph. I find in fact on the balance of probabilities that Mr Done had smelted gold in his shed from time to time.
68 When all these things are taken into account, I am satisfied on the balance of probabilities that, notwithstanding the curiosity as to the date, the notes do reflect a true conversation with Mr Done and his admissions.
The events at Curtin House
69 The officers were unable to be precise about time of arrival at Curtin House which, on their evidence, was somewhere between 9.30 to 10 am. Mr Done had the time closer to 8.30 am as did Mrs Done.
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70 Detective Sergeant Beaman and Constable Johnston dealt with Mrs Done in respect of a small quantity of cannabis which had been found in her possession. She was summonsed. They then drove to Mandurah and pursued inquiries in respect of Mr Francis. He made no admissions and was never charged. Later that day, Detective Sergeant Beaman and Constable Bullen attended at an address in Perth and interviewed a further suspect, who also made no admissions and was not charged. Detective Sergeant Beaman really had little further to do with Mr Done after leaving the house.
71 Because the Gold Squad was based in Kalgoorlie, it had no premises in Perth. Initially, Ryan, Bullen and Mr Done went to the Armed Robbery Squad offices. However, before they interviewed Mr Done, that squad required its interview room and so they shifted to 79 Division.
72 What occurred in the police station is a matter of some controversy. Detective Ryan and Constable Bullen both gave evidence that much time was spent in Detective Ryan familiarising himself with the investigation and the relevance of the documents which had been seized and which were in several cardboard boxes. Detective Ryan's recollection was that Mr Done had been in a different room, but they went in from time to time and questioned him about certain documents. This was supported to a degree by Mr Done who was alone for much of the day. Constable Bullen's recollection is that the three of them were in the same room, but that there was a questioning process in relation to the documents.
73 Their recollection was that Mr Done was offered something to eat but declined. He was offered drinks during the course of the day.
74 Mr Done's recollection was quite different. He maintained that the officers intimidated him, threatened him, poked him, got angry with him, put their faces so close to him that their spit, from each of them, landed on his face. These matters, along with some details about the search, were never volunteered by Mr Done at his criminal trial, nor were they put in cross-examination by his counsel. While refraining from adducing evidence about the matters in the shed may have been a tactical decision, the probabilities are that counsel would have had to put the allegations of physical abuse, if they were known. There had been a voir dire.
75 Mr Done said that he was threatened that if he did not confess, they would close the house to him so he would be unable to access clothes or money. They mentioned a caveat and that he would be unable to work. He was told that if he made an apology, the Judge would make it easier on
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- him. As a result of all this, he says, he was worn down and made the video record of interview, a matter which he now very much regrets.
76 Mr Done was undoubtedly in police custody for some considerable time between his arrival at police headquarters and the interview which commenced at about 3.30 pm.
77 I have viewed the video record of interview on several occasions. During the course of it, Mr Done appears to display no outward signs of nervousness or apprehension. He volunteered answers to questions, supplying a range of details which was unlikely to have been known to police officers. An example is his description of going to check out the sample "stashed out in the road by Kevin where he pinched a little bit".
78 In the course of the video record of interview, he was again asked about the gold in the plastic bag and was able to emphatically deny knowledge of it, suggesting that it may have been planted. If he had been intimidated it is more likely he would have simply acknowledged the gold was his.
79 In fact there is much throughout the record of interview which is put to him and which he nevertheless denies without any apparent worry.
80 Another example of information which he provides is the story about Doug Singleton, and I note that he corrected the name from Detective Ryan's "Dave" Singleton, and the $18,000, including the detail about the extra $2000 which in the event did not come to pass.
81 I have had regard to his general demeanour and apparently relaxed attitude, exemplified at the time he returned from the break in the interview when the tape was not working for a time. At the conclusion of the video record of interview, Mr Done makes a general apology which seems sincere and in response to questions, both at the commencement and at the end of the interview, denies any ill-treatment by police.
82 I am quite satisfied that the video record of interview was voluntarily made. Mr Done is a mature man who does not give the impression in court of being easily cowed. I make allowance for the fact that a person in police custody for an extended time is, to an extent, without resources and may well have a lack of power against intimidatory behaviour. The circumstances themselves are to a degree intimidatory.
83 However, I am not satisfied that any intimidatory behaviour occurred on this occasion; on the contrary, I am satisfied that Mr Done spoke in the
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- full realisation of his right to remain silent and knew what he was saying represented serious admissions against him. Furthermore, I am satisfied, on the balance of probabilities, that the admissions made by him in the main are correct. They were made against interest. The security at the mine, though good, was not foolproof and the explanations as to how gold material had been taken from the mine had a ring of credibility and, having regard to the evidence of Mr Hawgood, are within the bounds of probability.
General comments as to the police evidence
84 The three police officers who were called gave evidence of an offence which had occurred six years ago. It was obvious that in some cases their memory of certain matters had been exhausted. There are some differences in their accounts. I have taken those into account.
85 However, it is my impression that each officer was honestly trying to recollect, as best they could, events which had occurred some time ago, some of which would not in the normal course be expected to be significant. I do not consider that the variations between them, in the main, affected their general reliability. Their evidence corroborates each other. There are further reasons to accept the plaintiff's evidence and reject that of the defendant.
The unexplained wealth
86 To support this limb of its case, the plaintiff called Ms Pauline Z Marcoux, a chartered accountant specialising in forensic examinations. I accept her qualifications. It appears she had originally been engaged by police to undertake a forensic analysis of the financial activity of Mr Done and subsequently reviewed and added to that work on behalf of the plaintiff. She had access to bank statements for Mr Done and Mrs Done, together with miscellaneous receipts and invoices, salary information and other material. Because the source documentation for disbursement was generally only applicable to a two year period ending 30 June 1993, this was the period upon which she reported.
87 As a result of her examination, she reported as follows:
"4.1 Comparison of bank account receipts to salary earnings (appendix 1)
It can be seen from the appendix that receipts to the bank accounts, excluding interest income, for the four year period were in excess of salary
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- information provided by Plutonic for Mr Done and Ms Holmes by $97,400. There was no indication in the documents provided of any loan monies deposited to the individual accounts or of any other salary related income, during employment with Plutonic.
For purposes of correlating with matters in 4.2 below, $82,700 of the $97,400 occurred in the two years ended 30 June 1993.
4.2 Analysis in excess expenditure over known source of funds (appendix 2)
The appendix indicates there was a shortfall of sources of funds for the two year period of approximately $122,200.
…
6. Conclusion
Based on the procedures performed, it would appear that expenditures by Mr Done and Ms Holmes for the two year period reviewed were substantially in excess of the funds available to them from known sources. The $122,200 shortfall in source of funds could have been partially met by the excess receipts over salaries which, for the same two year period, was $82,700. The source of these receipts is unknown, as is the source of funding for the remaining $39,500 shortfall.
I believe my analysis at appendix 2 is a conservative position for the following reasons: …”
- And they are then given.
88 It can be seen from the appendix that receipts to the bank accounts, excluding interest income for the four year period, were in excess of salary information provided by Plutonic for Mr Done and Mrs Done by $97,400. There was no indication in the documents provided of any loan moneys deposited to the individual accounts or of any other salary related income during the employment with Plutonic.
89 The appendix indicated there was a shortfall in sources of funds for the two year period of approximately $122,000. Ms Marcoux's conclusions were based on the procedures performed. It would appear that expenditures by Mr Done and Mrs Done for the two year period reviewed were substantially in excess of the funds available to them from known sources. The $122,200 shortfall in sources of funds could have been partially met by the excess receipts over salaries, which for the same two year period, was $82,700. The source of these receipts was unknown as was the source of the funding for the remaining $39,500 shortfall.
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- Ms Marcoux went on to add that she believed her analysis was a conservative position for reasons which she gave.
90 I was impressed by the apparent care with which Ms Marcoux approached her task. Of course there are some assumptions which might be challenged and in the end she could only give evidence of her examination of documents. As an example, the defence challenged an item in appendix 2a which she referred to as 3.20 on 5/5/93 an item for furniture, $2556. This related to an invoice on 18 March 1993 for furniture which showed a deposit paid of $1000. The balance of $2556 was not supported in the papers before the court by the receipt. However, Ms Marcoux explained that she had seen the documents when first preparing the report in 1997 and that she had given them back uncopied. Later documents were copied. I have no reason to reject her evidence that she sighted the documents at the time she prepared her initial report.
91 Mr Done's evidence is that in the period preceding Ms Marcoux's examination he withdrew $54,610 from his bank account, being the bank account which received his salary from Plutonic. It was withdrawn over a period of time for several years and held in cash so that by the commencement of the period he held at least that amount of cash. He also gave evidence that he had been repaid $20,000 by Mr McKay shortly after he had in fact loaned Mr McKay the $20,000. In the documents examined by Ms Marcoux it appeared there was a receipt for $20,000 given on behalf of Mr McKay.
92 Mr Done gave evidence that he sold the John Deere backhoe for $12,000 during the relevant period. He received that amount in cash, it being evidenced by a receipt. He explained how in order that his ex-wife should not know the amount of money available him he withdrew amounts from his bank account from time to time, commencing, it would appear, in 1996, keeping it cash wrapped in plastic and secreted in various parts of the premises where he was then living, they being a converted garage at the back of his former parents-in-law's house. He described this cash as his "stash". This behaviour had occurred since his separation in 1986, although I note there was a property settlement in 1990.
93 Mr Done gave an explanation that on one occasion he thought he had lost $10,000, but later found it. He was unable to satisfactorily explain how the scheme would have the desired effect. The bank statements continued to be sent to the address of his former wife throughout the period and he acknowledged that his evidence on this issue in the District Court was capable of supporting an inference that it was misleading.
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94 The explanation about the cash, even before examination of particular amounts, is improbable. At the time he had another account, the United account, whose bank statement was sent to a different address. There is no reason why he would chose to forego interest. If there was a need to maintain the stash, it is surprising that the need seems to have ceased about the time covered by the commencement of Ms Marcoux' examinations.
95 His explanation in court was that he had available some $54,000 which had at a point reached some $65,000. On examination of various amounts in cross-examination it is clear that the amount available to him seems in fact very much less. Mr Done, or more probably his wife, had estimated the amount of stash simply by adding up cash withdrawals during a period. I acknowledge again his evidence about the stash commencing at an earlier time.
96 However, during the period which he did produce a sheet of paper for, as he conceded, some of those withdrawals could be accounted for by the purchase of certain items such as a vehicle and travel expenses, so the total of his calculations was less than he had asserted. More particularly, even making full allowance for his calculations, there was a significant amount of cash used for the purchase of the land, the shed, the home which cannot be explained as either coming from the stash or from the bank. These included an amount of $45,000 which was deposited into trust at a settlement agent's and a further amount of $10,000 out of deposit.
97 The evidence of Mrs Done did not greatly advance the defendant's case, although she did give evidence of a dire financial position in 1993 which would perhaps lessen the inference that Mr Done would have left gold lying around unused. She acknowledged that if a cheque was necessary, Mr Done would give her cash. He was a person who used cash and always had quantities of cash. He did not have a chequebook or credit card.
98 Mrs Done confirmed that she had prepared a list of cash withdrawals from Mr Done's account, but had not attempted to match any withdrawals with any purchase. She knew little of her husband's source of cash and was not able to offer any explanation as to its source.
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Conclusion as to unexplained wealth
99 I reject Mr Done's account of his stash as improbable. His demeanour and answers during cross-examination struck me at times as evasive. The evidence of unexplained wealth from the report of Ms Marcoux is almost certainly conservative or underestimated.
Conclusion on the plaintiff's claim: Assessment of damages
100 I find the defendant did have gold and gold smelting equipment in his shed at the time of the police search and that he had used the equipment to smelt an unknown quantity of gold stolen from the plaintiff. He also shared in the proceeds of gold stolen by others. The unexplained cash in his possession was a result of these activities which constituted a breach of his employment contract and fiduciary obligations. I therefore find that the plaintiff succeeds in its claim for damages. I turn to the assessment of those damages.
101 The plaintiff provided a calculation of loss which has not been the subject of comment by the defence (which is not to be taken that it is accepted by the defence either). The plaintiff divides its calculation into known losses and unknown losses. I bear in mind that the purpose of this is to provide an estimate of the amount of damage which has been suffered by the plaintiff.
102 The general form of the calculation of known losses is to take the amount admitted by Mr Done in the video record of interview as having been received by him, multiply it by the number of partners whom he asserted were involved and then divide that number by what he asserted was the amount received for the gold which was $400 per ounce in relation to one matter. He admitted that the legitimate market price of gold at the time was $580 per ounce. The plaintiff has taken that figure as an appropriate measure of the actual loss. I adopt that figure also.
103 I am satisfied on the plaintiff's evidence that the known losses to it were in the sum of $301,600. The plaintiff also claims what it described as uncertain losses as follows:
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There must have been another deal with Kevin to account for the $30,000 shortfall…' (Transcript of Video Record of Interview p.62). |
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104 As to 1, this would increase the loss and I am satisfied that an amount of $10,000 should be allowed as conservative for that.
105 In relation to 2, the probabilities are - in Mr Done's own words it was probably - that Murray Neale may have received a share of the second transaction. I accept that and would allow a sum of $34,800.
106 As to 3, although I consider that was evidence of a loss, I am simply unable to quantify that loss at all. I do not consider there was sufficient evidence for me to do other than guess. I do not consider there was
- evidence of calculation and so I decline to make any allowance for that loss.
107 As to 4, I am prepared to allow that loss in the sum of $130,500.
108 I am therefore prepared to allow a loss on what the plaintiff has described as uncertain losses in the sum of $175,300.
109 I therefore find that the plaintiff has established its case against the defendant for damages in the sum of $476,900. I award judgment for the plaintiff against the defendant for damages for breach of contract in the sum of $476,900 and make consequential orders in respect of the money held in trust and the return of gold.
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