Prepaid Professional Administration Ltd v. Home Wilkinson Lowry

[2007] QSC 117

SUPREME COURT OF QUEENSLAND

CITATION:

Prepaid Professional Administration Ltd v. Home Wilkinson Lowry [2007] QSC 117

PARTIES:

PREPAID PROFESSIONAL ADMINISTRATION LIMITED (ABN 32 114 224 403)
(plaintiff)

v

HOME WILKINSON LOWRY (A FIRM)
(defendant)

FILE NO:

1737 of 2007

DIVISION:

Trial

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

21 May 2007

DELIVERED AT:

Brisbane

HEARING DATE:

14 May 2007

JUDGE:

Chesterman J

ORDER:

1. Judgement for the plaintiff against the defendant in the sum of $272,116
2. The defendant to pay interest on the sum of $785,000 from 28 November 2006 to 16 March 2007at the rate of 10 percent per annum and thereafter on the sum of $272,116 to the date of judgement.

CATCHWORDS:

RECOVERY OF MONEY PAID – MONEY PAID BY MISTAKE _ MISTAKE OF FACT – where the plaintiff intended to transfer an amount to the defendant – where an employee of the plaintiff effected the transfer by instructing the bank to transfer the balance of the account to the defendant – where plaintiff mistaken as to the balance of the account at the time of the transfer - where plaintiff intended to transfer lesser amount – whether mistake of the plaintiff or the employee is the relevant mistake – whether evidence shows that the plaintiff was so mistaken

DEFENCES - GOOD FAITH – CHANGE OF POSISTION – where defendant engaged by related company of the plaintiff – whether defendant received entire amount in good faith – whether defendant entitled to retain entire amount on grounds of change of position

Supreme Court Act 1985 (Qld), s 47

David Securites Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR, cited
Jones v Dunkel (1959) 101 CLR 298, cited

COUNSEL:

Mr A.J Morris, with him Mr A.C. Barlow for the plaintiff
Mr S Couper, with him Mr D Atkinson for the defendant

SOLICITORS:

WHD Lawyers for the plaintiff
Bruce Thomas Lawyers for the defendant

1. On 28 November 2006 the plaintiff paid $794,909.24 into the trust account of the defendant, a firm of solicitors.  The payment was effected by telegraphic transfer made by the Brisbane branch of HSBC Bank Australia Limited (‘HSBC’) which conducted an account for the plaintiff.  HSBC had been directed to transfer the balance standing to the credit of the account.  The amount I mentioned was the balance (less $1.00 which HSBC charged for making the transfer).  When the payment was made the account was closed.

1. The plaintiff commenced proceedings on 27 February 2007 to recover the sum of $785,000 from the defendant on the common money count on the basis that that part of the payment had been made pursuant to a mistake of fact.  The mistake was identified as the plaintiff’s belief that at the time HSBC was directed to make the transfer the balance of the plaintiff’s account was about $5,000.  The genesis of the mistake is that two weeks earlier, on 14 November, the plaintiff had instructed HSBC to pay the sum of $785,000 from its account to Bumiputra Commerce Bank Limited (‘BCB’) in Malaysia, thereby reducing the balance by that amount.

1. HSBC was unable to effect the payment and on 24 November credited the account with $785,000 which it had debited on 14 November.  The plaintiff’s case is that it did not know of the failed payment or that the money had been credited to its account.  It believed that the balance was only about $5,000 when it ordered the account closed and the balance transferred to the defendant.

1. The defendant considered that it had no claim to $512,884 of the money paid by the plaintiff and pursuant to an order made by Philippides J on 14 March 2007 that sum was paid into court on 16 March.  On 14 May 2007 the money was paid out to the plaintiff pursuant to a consent order made by the Deputy Registrar.

1. The plaintiff claims the balance of the sum, $272,116 together with interest pursuant to s 47 of the Supreme Court Act 1985.  The defendant resists the claim.

1. Both parties were reluctant to reveal what they knew about the transaction, its antecedents and what impelled it.  The trial was conducted on minimal evidence.  The only witnesses were called by the plaintiff:  a clerk who acted as a minor functionary for the plaintiff in New Zealand and a bank officer who described HSBC’s failed attempt to pay $785,000 to BCB.

1. The defendant’s defence was that the plaintiff had not proved that the payment was affected by any relevant mistake; or that it should be inferred that there was no such mistake.  It did however plead a positive case which should be noted because it takes on some significance, as will appear.

1. Part of the pleaded defence was that the payment, or part of it, followed an arrangement made between Mr Petroulias as agent for the plaintiff, and Mr Evans for the defendant, on or about 25 November 2006.  The arrangement was:

·    On 22 November 2006 Mr Petroulias telephoned Mr Evans and said that

(i)          The Australian Taxation Office (‘ATO’) had raided the premises of a company with which he was associated, Prescience Communications Limited (‘Prescience’);

(ii)        He was concerned that the ATO had taken material that might prove embarrassing;

(iii)        He, and the sole director of Prescience, Ms Wilkinson, considered that its lawyers engaged to oppose the ATO, should be replaced;

(iv)       The defendants should supplant those lawyers and represent Prescience in its dispute with the ATO.

·    On 25 November 2006 Mr Petroulias again telephoned Mr Evans.

(i)          Mr Petroulias said he was the agent for Prescience from which much information which might attract legal profession privileged had been seized and that the matter was complicated.

(ii)        Mr Evans said that the defendant would require a substantial payment into its trust account on account of its fees to be incurred in representing and advising Prescience and an associated company.

(iii)        Mr Petroulias said that he would arrange for Prescience to pay ‘an amount’ to the defendant’s trust account on behalf of those companies.

(iv)       Mr Evans said that the defendant would require at least $400,000 but the amount of costs ‘could be double that sum’ and that the defendant would do no work until ‘there was money in trust’.

·    On 28 November amounts totalling $841,980.66 were received into the defendant’s trust account for the benefit of Prescience.

·    Thereafter the defendant and Prescience entered into a client agreement and the defendant provided legal services and incurred liabilities so that it was entitled to render a bill for about $350,000.

1. These allegations were obviously intended to raise the defence of change of position: that the defendant received the money in good faith and would have acted to its detriment if it could not retain it, so that it would be unjust to require it to repay the money even if the plaintiff had paid mistakenly.  Of course if the allegations were true the evidence in support of them would demonstrate convincingly that the plaintiff had not made a mistake in paying the $785,000 to the defendant.  The payment would have been intended, deliberate and for an agreed purpose, payment for legal services.

1. Before turning to consider the brief evidence concerning the payment some additional facts should be mentioned.

1. It was agreed between the parties that the monies in questions are intended by the plaintiff to be applied in paying legal fees incurred and to be incurred by Mr Petroulias in defending serious criminal charges with which he is presently being prosecuted in Sydney.  It may be interpolated that Mr Petroulias is a man of some notoriety.

1. The plaintiff is a New Zealand company which has a registered office in Melbourne Street, West End, Brisbane.  Its only director is Gloriela Agraghl of Mt. Eden in New Zealand.  Its office in Brisbane is apparently unattended although on occasions mail left for it there is collected and redirected to the office of Avowal Administrative Attorneys Limited (‘Avowal’)  in Auckland, New Zealand.

1. Avowal is the sole shareholder of Prescience which conducted a business, in Brisbane, similar to that which Avowal conducted in New Zealand.  The sole director of Prescience, Ms Lyn Wilkinson, was appointed by Ms Chisnall who was directed to make the appointment by Ms Denise Clark.

1. Amanda Chisnall describes herself as the sole executive director of Avowal which ‘as part of its business (has) standing agreements with third parties relating to the management and investment of various fund deposits made to it or on its behalf from time to time.’  Avowal was ‘authorised to deal with funds deposited with it … in the name of the client …’.  She is also the only shareholder although she holds the shares on trust for Avowal Administrative Attorneys Holdings Limited.  She is ignorant of the identity of the directors of that company and similarly ignorant of its shareholders.  She came to her position ‘by way of agreement’ with someone whose name she can no longer recall but who spoke on behalf of ‘Avowal Hong Kong’.

1. Ms Chisnall was in fact a clerk or functionary who performed mechanical tasks for the companies with whom Avowal had ‘standing agreements’.  She did nothing without express instructions which came, with respect to the plaintiff, from Denise Clark whose precise position and source of authority was not identified but who was described as ‘the liaison to the shareholders’.  Ms Chisnall understood Mr Petroulias to be ‘a legal liaison to the shareholders’ though she never received any instructions from him. 

1. On command Ms Chisnall would type documents and secure meeting rooms or serviced office facilities when those companies had need of them.  She also was a bookkeeper, although the records she maintained appear to have been quite meagre.  She did receive and file bank statements issued by HSBC recording transactions in the plaintiff’s account.  The statements were posted by the bank to the plaintiff’s West End address and were sent on, days later, to Ms Chisnall in Auckland.  It does not seem to have been any of Ms Chisnall’s business to enquire into, or to be informed about, the nature of the plaintiff’s activities or those of the other companies for whom Avowal performed similar clerical activities.

1. Ms Chisnall’s most important duty seems to have been to give instructions to HSBC to make payments from monies standing to the credit of the plaintiff’s account.  It is a matter for conjecture why those instructions should have been given by Ms Chisnall rather than Ms Agraghl, the plaintiff’s director or from Ms Clark directly.  Nor is it immediately obvious why the plaintiff, a New Zealand company, should have its principal bank account in Brisbane, or why instructions for transactions on that account should come from Avowal, a New Zealand company.  These curiosities may find an explanation in Mr Petroulias’ present predicament, or may be a reason for it.  But no explanation was offered in evidence.

1. Ms Chisnall was in some respects a vague historian and her memory was deficient in parts.  Nevertheless I found no reason to disbelieve her on the matters which she was able to recount.  I thought that within the limits of her understanding and recollection she was quite frank.  Her office was raided by officers of the Inland Revenue Department of New Zealand in November last year and Ms Chisnall appeared to have been alarmed by the experience.  I suspect that her attention to the detail of the transaction with which I am concerned, which occurred at about the same time, was affected by her fright.

1. Very substantial amounts of money passed through the plaintiff’s account with HSBC.  For example, between 12 July and 12 September 2005 some $3.8million was disbursed from the  account, although Ms Chisnall could not recall anything about the disbursements.  I have no doubt she was simply told to direct the bank to make payments from the account, and she did as she was told.

1. On or about 14 November 2006 Ms Clark handed Ms Chisnall a deed dated 23 October 2006 and a handwritten note asking her to ‘take care of this T.T to BCTL for $785/c’, and to file the documents in the plaintiff’s folder.  The cryptic instruction was to have HSBC transfer $785,000 to Bimiputra Commerce Trust Limited from the plaintiff’s account.

1. The deed was between Pleroma Ltd, a Malaysian company, Pre-Paid Professionals LLC of Los Angles, and the plaintiff.  It recited:

·   that the plaintiff was the administration agent for Pre-Paid Professionals LLC and held on its account sums to the value of $785,000.

·    That Pre-Paid Professionals LLC was indebted to Pleroma Ltd for that amount and that the parties had agreed to discharge the debt by the plaintiff paying the amount to Pleroma’s account. 

The deed then proceeded (in part):-

‘THIS DEED WITNESSETH

1.          The recitals are true and correct in every particular

2.In discharge of its obligations to Pleroma Ltd, PPP hereby directs and PPPA hereby accepts the direction of the payment pursuant to clause 3 of this Deed.

3.PPPA will direct its treasury manager, Avowal Administrative Attorneys Ltd, to pay from PPPA’s account the sum of $785,000 to the following banking co-ordianates:

Intermediary Bank

Bank NameJP Morgan Chase Bank

Bank’s Address  New York

For Further Credit

Bank NameBumiputra-Commerce Bank (L) Limited

Bank’s Address  Level 14A, Main Office Tower, Financial Park Complex, 87000 F T Labuan, Malaysia

Account Number  40037726

For Ultimate Credit BCB Client

Account Number  05-805199-07

CurrencyAUD

Account Name  Bumiputra-Commerce Trust Limited

Beneficiary Address               Level 14A, Main Office Tower, Financial Park Complex, 87000 F T Labuan, Malaysia

4.Upon receipt of such payment, Pleroma Ltd accepts full and complete satisfaction of the obligations owing to it by PPP.’

1. In accordance with that direction Ms Chisnall prepared a document in HSBC’s standard form giving it instructions to make the telegraphic transfer and providing hand written details of the amount to be transferred and the bank account into which the transfer was to be made.  Ms Chisnall prepared a second document in typescript in which she repeated the detail found in Clause 3 of the deed ‘in case handwritten document is not clear’.

1. HSBC attempted to effect the transfer in accordance with Avowal’s mandate but did not succeed.  According to Mr Quirk, who investigated the transaction on behalf of the bank, the problem lay with JP Morgan Chase Bank in New York.  It did not have a relationship with BCB pursuant to which it could pay Australian dollars into the account of one of that bank’s customers in Malaysia.  After some inconclusive communications between HSBC and JP Morgan Chase Bank the latter, on 24 November 2006, remitted the sum of $785,000 which it had received from HSBC on 14 November 2006 back to HSBC.

1. The relevant bank statement issued by HSBC for that month shows the plaintiff’s account being debited by the payment of $785,000 to BCB for the benefit of Bumiputra-Commerce Trust, and the crediting of the same amount on 24 November.  The balance of the account between those dates were shown as $5,851.25.

1. The companies, in addition to the plaintiff, with whom the plaintiff had ‘standing arrangements’, were:

MCI Management Services Pty Ltd

GSC Limited

Professional Admin Service Centres Pty Ltd.

On 28 November 2006 Ms Clark directed Ms Chisnall to transfer the credit balances in the account of those four companies to the defendant. 

1. In the course of their conversation Ms Clark told Ms Chisnall that ‘$50,000 or thereabouts’ was to be sent, though she did not mention the particular balance in any one or more of the accounts.

1. Ms Chisnall prepared a separate telegraphic transfer application form for each of the companies.  The documents were in HSBC’s standard form into which Ms Chisnall supplied the details of the recipient of the transfer, its bank account and, as the monies were to be paid to a trust account, the beneficiary of the monies as well, of course, as the name of the account holder.  In each case Ms Chisnall wrote:

‘As this account will be closed please forward the balance as per the above instructions less any fees owed to HSBC.’

1. The beneficiary named in the instructions given on behalf of the plaintiff, Management Services Pty Ltd and Professional Admin Service Centres Pty Ltd was Netvince Holdings LLC.  The beneficiary of the monies paid from the account of GSC Limited was GSC International LLC.

1. The instructions were faxed to HSBC on 28 November 2006.  On that day the balance of each account was paid by telegraphic transfer to the defendant’s trust account.  As I mentioned earlier the amount standing to the credit of the plaintiff’s account was about $795,000.  Ms Chisnall did not know that on 24 November JP Morgan Chase Bank in New York had remitted the monies the subject of the earlier instructions to the account.  She thought the transfer had been effected and the sum of $785,000 had been paid to BCB.  She thought that the balance of the plaintiff’s account was about $5,000.  Ms Chisnall did not receive the November bank statement from HSBC until some time in January 2007.

1. By letter wrongly dated 12 December 2005 but sent by facsimile transmission on 21 January 2007 Ms Agraghl wrote to the defendants on behalf of the plaintiff:

‘You have incorrectly received an amount of $789,000 in your trust account.  The correct amount we instructed HSBC to pay … was approximately $5,000 being what we had believed to be the balance in the account after the immediate previous instruction had taken place.  The … prior instruction was to pay $789,000 to Bumiputra Commerce Trust in Malaysia being funds for settlement with Netvince Holdings LLC.

Unfortunately, whilst HSBC did send the money … it bounced back and they applied it (incorrectly) as adding to the ‘balance’ to be sent to you.  It missed the settlement and we are now incurring penalty interest, the amount must now be paid to their lawyers … in Sydney.

No doubt you are aware that we are not your clients and have no relationship with your firm ….  We were prepared to contribute the remaining balance of the account of approx $5,884.24 towards the litigation of Pressience Ltd.  We attach a list of the funds that Pressience expected to appear and you can see that $5,000 was expected from Pre-paid Professionals …’

1. These are the facts which the plaintiff contends entitle it to be repaid the sum of $785,000.  The law is clear and was not the subject of any debate at the trial.  There is an entitlement, subject to limited defences, to recover monies paid when a mistake has caused the payment.  See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376-8.

1. The defence submissions were admirably succinct.  They are that Ms Chisnall’s mistake as to the amount of the balance in the plaintiff’s account with HSBC when she directed that sum to be transferred to the defendant’s trust account is irrelevant because she was, by no stretch of the imagination, the controlling mind of the plaintiff or able to bind it in any respect.  Then it is said that there is no evidence that any one who might fulfil the description of the plaintiff’s controlling mind was mistaken as to the amount of the balance, and that the evidence supports an inference that there was no such mistake.

1. The defendant does not concede that Ms Chisnall was mistaken as she said, but no real attack was advanced against her credit and I am satisfied that she was mistaken, as she testified, as to the amount of credit funds in the plaintiff’s account.  She had given instructions to HSBC to transfer away $785,000 and she had no reason to believe the transfer had not been effected.  The bank did not inform her of the failure of the transfer and she did not receive the bank statement until after 28 November.  Although she did not keep a daily check on the balance in the account she had been aware of what it was prior to directing the transfer to BCB and she knew ‘roughly’ what the balance was.  She was mistaken about it, as I have explained.

1. Mr Couper QC submits that Ms Chisnall was not the relevant mind of the plaintiff.  She was neither a director nor employee of the plaintiff, and was clearly not authorised to make any decisions on its behalf.  She was a mechanical functionary acting at the behest of Ms Clark.  It was not her decision to transfer the balance of the account to the defendant but Ms Clark’s, and her mistake as to the quantum of the balance was not the plaintiff’s mistake.

1. There was a second way in which Mr Couper put his submission.  It was that Ms Chisnall simply did what she was told.  She was directed to effect the transfer of the balance of the plaintiff’s account to the defendant and she did that.  Her function was mechanical and her state of mind, her knowledge and belief, mistaken or otherwise, played no part in the mandate she gave HSBC to pay the money to the defendant.  Her mistake was not causative of the payment.  She would have given HSBC the instructions whatever her belief as to the balance of the account, because Ms Clark told her to.

1. This argument would be compelling but for the evidence that Ms Clark, who could speak for the plaintiff, shared the mistake.  When directing Ms Chisnall to close the four accounts and remit the proceeds to the defendant she observed that the total of the combined balances would be about $50,000.  In fact it was less, but the point is that Ms Clark clearly did not know that there was more than $785,000 in the plaintiff’s account.

1. Mr Couper QC argued that the evidence of what Ms Clark said, given by Ms Chisnall in re-examination, was hearsay and could not be used to prove Ms Clark’s belief.  There are two answers to the submission.  The first is that it was given without objection and in a civil case such evidence can be received and given what weight and relevance it deserves.  The second is that it was not hearsay, or is admissible as an exception to the prohibition against receiving hearsay.

1. The evidence in question amounts to this:  Ms Clark said to Ms Chisnall:

‘Transfer the moneys in the accounts of the companies to the defendant and then close the accounts.  Altogether the payment should be about $50,000.’

The first part of the statement is a command.  The words are operative and constitute a direction to Ms Chisnall.  As such Ms Chisnall’s account of what was said is not hearsay.  Her account of what Ms Clark said to her is not testimonial;  it is not meant to establish some fact narrated by the words.  It is direct evidence of the order given to her.  It is, I think, impossible to separate the second part of the statement from the first.  It forms part of the command which was, in effect, ‘transfer the amount of about $50,000 which is the aggregate of the credit balances of the companies with HSBC.’

1. Alternatively the statement can be regarded as original evidence relevant to a fact in issue.  The fact in issue is the plaintiff’s knowledge or belief about the state of its bank account.  Ms Clark (who spoke for the plaintiff) made a statement which is relevant to that fact.  Her assertion that the amount in the plaintiff’s account, when combined with the amounts in the other companies’ accounts, would be about $50,000 is distinctly relevant and probative of the plaintiff’s belief as to the state of its account.  It is original evidence tending to show what the belief was. 

1. There is also the letter dated 12 December 2005 which, despite his curiosities, does on its face attest to a mistake on the part of the plaintiff in making the payment.  The letter, in terms, asserts that the plaintiff intended to pay an amount of about $5,000 and believed that to be what was left in the account after the transfer of funds to BCB.  It went unanswered, so far as the evidence shows, though I was told the defendant had replied.  I was not told what it said.

1. Mr Couper QC points to a number of features of Ms Agraghl’s letter which he submits casts doubt upon the sincerity of its assertion.  The date is wrong, but presuming that error to be immaterial the letter was not transmitted until 21 January 2007.  Even if composed on 12 December 2006 the delay in transmission is odd, especially when it sought the return of a very substantial amount of money the lack of which was said to make the plaintiff liable for the payment of penalty interest.  There is also the point that the amount said to have been transferred to Malaysia is wrong by $4,000.  Of more significance is the fact that the monies were said to be required ‘for a settlement with Netvince Holdings LLC.’  The precise meaning of that phrase is unclear but it seems to be a claim that Netvince Holdings LLC required the money to complete the acquisition of some property.  This of course is completely inconsistent with the recitals in the Deed of Settlement pursuant to which Ms Chisnall arranged for the transfer of the funds.  That deed asserted that the money was to discharge a debt owned by Pre-Paid Professional LLC to Pleroma Ltd. 

1. It is submitted that the evidence is too slight to withstand the burden required of it: to prove that the plaintiff was mistaken as to the balance in its account.  It is pointed out that relevant witnesses who could speak on the plaintiff’s behalf as to its belief were not called.  They were Ms Clark herself, Mr Petroulias, Ms Agraghl the plaintiff’s only director and Mr Watkins who was identified by Ms Chisnall as being a signatory to the plaintiff’s bank account.  He was a former director of the plaintiff.  The plaintiff’s failure to call any of these witnesses is said to give rise to the inference that they could not advance the plaintiff’s case of mistake and their absence from the witness box is so telling as to preclude a finding in the plaintiff’s favour.

1. Mr Couper also argues that had the plaintiff been genuinely mistaken about the quantum of the payment it would have reacted much sooner than 21 January 2007.  Despite the fact that HSBC did not notify its customer of the failed transmission then intended recipient of the monies would have missed them and complained.  Pleroma Ltd or Netvince Holdings LLC would have clamoured loudly for its money and the plaintiff, in turn, would have made enquiries of Ms Chisnall and HSBC.  As it was Ms Chisnall was not asked to explore the reasons for the excessive payment to the defendant until January 2007.  Mr Couper argues that this inactivity indicates that those in charge of the plaintiff were aware of the facts and knew the truth about the state of the plaintiff’s account with HSBC.  The point made, shortly put, is that the plaintiff made no inquiry because it knew the facts.

1. I am concerned only with the claim between plaintiff and defendant to the sum of $785,000 and who has the best legal title to the money.  I must adjudicate on the claim on the scant evidence adduced at the trial.  The question is whether, on that evidence, the plaintiff has proved that it overpaid the defendant by $785,000 because of a mistaken belief as to the state of its bank account.

1. In my opinion it has.  The evidence Ms Chisnall gave of her conversation with Ms Clark about the quantum of the balances to be paid to the defendant tends to establish Ms Clark’s belief about the amount to be transferred.  Likewise Ms Agraghl’s, no doubt self-serving letter, does the same.

1. As well, Ms Chisnall’s evidence of what Ms Clark said when directing her to make the payments to the defendant does, I think, establish that Ms Chisnall’s mistake is relevant and was causative of the payment.  In other words the payment was made because of Ms Chisnall’s mistake.  But for this consideration I would have accepted Mr Couper’s submission that Ms Chisnall’s mistaken belief was immaterial and that she was no more than the mechanism by which the moneys were transferred.

1. The point is that the instruction given to Ms Chisnall was to transfer the balances in the accounts amounting to about $50,000.  Relevantly the instruction was to transfer ‘about $50,000’.  In fact Ms Chisnall transferred about $800,000.  She did so because of her mistake as to the amount of the credit balance in the plaintiff’s account.  Her mistake was, I think, an operative cause of the overpayment.

1. There is no doubt that the plaintiff’s proofs are sparse.  It is a matter of surprise that Ms Clark or Ms Agraghl were not called to testify to their belief as to the state of the plaintiff’s account.  There is force in Mr Couper’s criticisms of Ms Agraghl’s letter and of the inconsistent explanations advanced for the purpose of the failed transfer.  But what is significant is that there is some evidence of the plaintiff’s mistake and there is no evidence to contradict it.  The defendant relies only upon circumstances which discredit the plaintiff’s account but do not disprove it.  This is important because its pleaded defence indicates it had ready at hand the means to disprove the plaintiff’s assertion of a mistaken payment.  The defendant pleaded, as I have recounted, conversations between its Mr Evans and Mr Petroulias which, if established, would provide cogent proof that the payment was intended and was for an intended purpose: the payment of legal fees charged for advising and representing one of Mr Petroulias’ companies.  Mr Evans’ failure to give evidence in accordance with the defence which much have been prepared on his instructions is a substantial point against the defendant’s denial of the mistake.

1. Both parties relied upon the principle in Jones v Dunkel (1959) 101 CLR 298. The principle was explained by Menzies J (312):

“(i)that the absence of … a witness cannot be used to make up any deficiency of evidence;

(ii)that evidence which might have been contradicted by the defendant can be accepted more readily if the defendant fails to give evidence;

(iii)that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.”

1. Windeyer J (320-321) quoted with approval from Wigmore on Evidence:

‘The failure to bring before the tribunal some … witness when … the party … claims the facts would thereby be elucidated, serves to indicate as the most natural inference, that the party fears to do so, and this fear is some evidence that … the witness, if brought, would have exposed facts unfavourable to the party.’

1. Windeyer J regarded this as ‘plain commonsense’.  His Honour cited as authority the judgment of Abbott CJ in R v Burdett 106 ER 873:

‘No person is to be required to explain or contradict until enough has been proved to warrant a reasonable and just conclusion against him ….  But when such proof has been given, and the nature of the case is such as to admit of explanation or contradiction, if the conclusion to which the proof tends be untrue, and the accused offers no explanation or contradiction; can human reason do otherwise than adopt the conclusion to which the proof tends?’

1. The plaintiff had adduced some evidence of mistake.  Judging by its defence the defendant had within its power cogent proof that there was no mistake.  The failure to call that evidence means that the plaintiff’s evidence may be accepted “more readily”.

1. The circumstances proved by Ms Chisnall and Mr Quirk tend to support the premise that the overpayment was mistaken.  There is no doubt that $785,000 went out of the plaintiff’s account on 14 November 2006.  Ms Clark knew of that debit to the account because she had given instructions to effect it.  When the money was credited on 24 November the bank did not notify the plaintiff of the fact.  Only four days later Ms Clark gave instructions to close the account and transfer the balance to the defendant.  There is no basis for inferring that in those four days Ms Clark, or someone else on behalf of the plaintiff, inquired of HSBC and discovered the true state of the account.  HSBC’s documents were subpoenaed and inspected by the parties.  There was no tender of any record or communication between the plaintiff and HSBC indicative of an inquiry by the latter concerning the telegraphic transfer of the $785,000.

1. The circumstances suggest that a mistake as to the state of the account could easily have been made.  There is some evidence from the plaintiff that it was made.  There is no evidence from the defendant that it was not made although its defence professed that is possessed such proof.  Despite the deficiencies in the plaintiff’s proofs its claim, as against the defendant, has been sufficiently made out.

1. This is a case in which one should be cautious about drawing inferences.  There are two reasons.  One is the paltry nature of the evidence which the parties put forward and their evident reluctance to expose their witnesses to cross-examination.  The second is that the transactions and activities of the plaintiff and Mr Petroulias do not seem to have been ordinary commercial ones.  Inferences which might be drawn with respect to such transactions may be quite wrong if drawn with respect to the plaintiff’s dealings.  It is, for example, clear that the Deed of Settlement and the letter dated 12 December 2005 disguise rather than reveal the true nature of the transaction for which the transfer of $785,000 was required.

1. Accordingly I give judgment for the plaintiff against the defendant in the sum of $272,116.  The defendant should pay interest on the sum of $785,000 from 28 November 2006 to 16 March 2007 at the rate of 10 per cent per annum and thereafter on the sum of $272,116 to the date of judgment.