Proprac Nominees Pty Ltd v Anderson
[2023] VCC 403
•23 March 2023
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-21-03802
| Proprac Nominees Pty Ltd (ACN 006 170 903) | First plaintiff |
| and | |
| Douglas Eric Scotcher | Second plaintiff |
| v | |
| Ian Anderson & Ors (according to the Schedule attached) | Defendants |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15-16 February 2023 | |
DATE OF JUDGMENT | 23 March 2023 | |
CASE MAY BE CITED AS: | Proprac Nominees Pty Ltd & Anor v Anderson & Ors | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 403 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT – LOAN AGREEMENT
Catchwords: Whether funds paid by the first plaintiff to the third defendant were the subject of a loan agreement or repayment of monies owed by the second plaintiff to the first defendant for earthmoving works
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited:3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd [2023] VSC 21, Jones v Dunkel (1959) 101 CLR 298
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P H Caillard with Mr C Fitzgerald | Nevetts Lawyers |
| For the First and Third Defendants | Mr M J Campbell | Heinz Law |
SCHEDULE OF PARTIES
BETWEEN
| Proprac Nominees Pty Ltd (ACN 006 170 903) | First plaintiff |
| and | |
| Douglas Eric Scotcher | Second plaintiff |
| v | |
| Ian Anderson | First defendant |
| and | |
| | |
| and | |
| Ian Anderson Earthmoving Pty Ltd (ACN 132 138 160) | Third defendant |
HER HONOUR:
1In March 2021, the first plaintiff (“Proprac”) paid the sums of $600,000 and $250,000 into the bank account of the third defendant, Ian Anderson Earthmoving Pty Ltd (“the Company”).
2By this proceeding, the plainitffs seek to recover the sum of $850,000 advanced, together with a fixed amount of interest said to be agreed, bringing the total debt sought to $991,675.
3The plainitffs’ case is that the funds were advanced pursuant to an oral loan agreement. There were terms of the loan agreement that the principal debt, together with an amount of fixed interest would be repaid by 30 April 2021. In the alternative, Proprac makes a claim for monies had and received against the Company.
4The defendants accept the sum of $850,000 was advanced but deny there was any loan agreement.[1] The defendants’ case is that the funds paid were repayment of monies owed by the second plaintiff (“Mr Scotcher”) to the first defendant (“Mr Anderson”), for earthmovings works done by Mr Anderson for Mr Scotcher in the 1980s.
[1]By the orders of Judicial Registrar Muller dated 9 February 2022, the plaintiffs’ claim against the second defendant was dismissed
5The parties helpfully provided an agreed statement of issues for determination, namely:
(a) Was the transfer of $850,000 by Proprac to the Company a loan or repayment of monies owed?
(b) If the transfers were for a loan, then was it agreed that Mr Anderson or the Company would pay the sum of $991,675 by 30 April 2021?
6For the following reasons, I find the transfer of $850,000 was a loan from Proprac to Mr Anderson. I also find there were terms of the loan agreement that he would repay the sum of $991,675 which comprised the principal sum and interest by 30 April 2021. The sum claimed remains due and payable. Accordingly, I will order that there be judgment for Proprac against Mr Anderson in the amount of $991,675, together with interest to be fixed.
Factual Narrative
7Mr Scotcher is the sole director and secretary of Proprac. He was formerly engaged in the business of property development.
8Around 1976, Mr Scotcher first engaged Mr Anderson to perform gardening works at a property owned by Mr Scotcher. He later engaged Mr Anderson to undertake earthworks at various properties Proprac was developing in the greater Ballarat area during the 1970’s to the 1990s. During this time, Mr Anderson conducted his business through a company called Ian R Anderson Pty Ltd. He ceased using this company in about 2008.
9Mr Anderson periodically performed earthmoving works for Mr Scotcher until 1996, when Mr Scotcher moved to Queensland and the two men’s business relationship ceased. Mr Scotcher and Mr Anderson maintained a cordial relationship thereafter with occasional phone calls and meeting for lunch when Mr Scotcher visited Ballarat.
10The defendants plead in further and better particulars dated 31 January 2023 that in or around 1986, Mr Scotcher purchased land he intended to develop known to the parties as the “Barry James Development”, which was situated on the corner of Wiltshire Lane and Whitelaw Avenue, Delacombe. The development was a subdivision of approximately 300 blocks of land. The defendants claim that Mr Scotcher approached Mr Anderson requesting that he perform earth works at the Barry James Development in preparation for the remainder of the civil works being performed by Linton Council because it would be more cost effective for Mr Scotcher. The defendants plead that during the course of that conversation, Mr Scotcher made the following offer to Mr Anderson:
(a) If Mr Anderson performed the earth and civil works as part of the Barry James Development then Mr Scotcher would pay the Mr Anderson the sum of the average net profit made by him in respect of 10 blocks of land of the Barry James Development;
(b) The amount would be payable once Mr Scotcher sold all of the blocks of the Barry James Development.
(“the alleged offer”)
11The defendants plead that Mr Anderson accepted the alleged offer and performed the works between 1986 and 1987, but that Mr Scotcher did not make payment.
12Both Mr Scotcher and Mr Anderson were taken to the defendants’ further and better particulars during their evidence. Mr Scotcher categorically denied that he ever made the alleged offer. He gave evidence that the Barry James Development was unconnected with him. He was developing a site which was adjacent. Mr Scotcher said he had engaged Mr Anderson’s service for that site and that he had paid him for all the work he had done. The work on that site was started in 1983 and completed in 1984, well before the date claimed by the defendants. Mr Scotcher also rejected the proposition put to him in cross examination that he had agreed to in effect roll over the payment the subject of the alleged offer pending the completion of a development he was undertaking in the Hawkesbury region.
13Mr Anderson gave evidence about the alleged offer and deferment of payment until the Hawkesbury development was finished. He was cross examined about the fact that the Barry James Development was a separate development conducted by Mr Scotcher. He said he regarded all three blocks in question as being part of the so-called Barry James Development. When queried about the dates of 1986 – 1987 which he relied upon in the defendants’ further and better particulars, he resiled from this and said that it could have been earlier. By this stage, Mr Anderson had heard the evidence of Mr Scotcher.
14On 27 February 1992, Mr Anderson was declared bankrupt.
15On 9 July 2008, the Company was registered with ASIC.
April 2017 phone call
16The defendants claim that Mr Anderson and Mr Scotcher had a telephone conversation in or around April 2017. Mr and Mrs Anderson were in Swan Hill at the time and wanted to visit a motel Mr Scotcher had purchased in the area.
17Mr Anderson gave the following evidence as to that discussion:
“… he came back to the amount of money that they were getting for blocks of land in Delacombe, particularly and the price that they were getting now – I’m talking about in ’17 – which was about 240,000, wish we were doing it now. …
… because of the profit margin was far more than what – dollar-wise than what we were pulling back in the ‘80s. …
He said to me, ‘I wish we were doing it now because of those margins and, you know, the profit margin would be 110,000 on 10 blocks of land. ”
18Mr Anderson claims that Mr Scotcher said something to Mr Anderson to the effect of: “If we were doing it today, I’d owe you $1.2 million. How about we make it a million?” Mr Anderson says that he replied: “Thank you very much. Very generous.” Mr Anderson confirmed in cross examination he did not follow up this phone call with Mr Scotcher asking for payment. He accepted that he never made any demand for payment from 1986 onwards and never rendered an invoice regarding the monies he claimed were owing for unpaid earthmoving works. Mr Anderson described the arrangement as being “hearsay” or a promise. Mr Anderson gave evidence that in their oral discussions, Mr Scotcher always said he would eventually repay him.
19Mr Scotcher emphatically denied that he ever said he owed money to Mr Anderson and had agreed to pay him a million. In cross-examination, Mr Scotcher said he might have had a conversation with Mr Anderson reminiscing about their previous developments, and wishing they were doing it now. However, Mr Scotcher repeatedly denied ever promising Mr Anderson $1 million and gave evidence that he has never received a written or oral demand for moneys owing from Mr Anderson.
20 February 2021 phone call
20The defendants allege that on or about 20 February 2021, Mr Scotcher called Mr Anderson again. Mr Anderson’s evidence is that:
“[Mr Scotcher] said, ‘I’ve been diagnosed with bone cancer. I’ve got nine months to live and that I’m wanting to get my affairs in order. I’ve been told to get my affairs in order and I want to square up.’”
21Mr Anderson confirmed that no amount of money was discussed in the February 2021 phone call as it was “a bit sensitive to mention the amount”.
22Mr Scotcher denied this conversation took place. He said he did not tell Mr Anderson about his cancer diagnosis until a telephone call on 9 March 2021.
9 March 2021 phone call
23The parties agree that Mr Scotcher and Mr Anderson spoke on the phone on 9 March 2021.
24Mr Scotcher gave the following evidence about the 9 March 2021 phone call:
“Ian Anderson phoned me and after talking pleasantries about what had been happening, he said he had the opportunity to purchase another business and put it with his business and make a substantial profit, and he asked me to lend him $600,000. At the time I trusted him and I said, “I will do that.” Because he – he offered me an interest which I don’t remember at the time, but it was substantial and good. He said that he would repay me at the end of April…”
25Mr Scotcher also gave evidence that:
“I said I would deposit 600,000 in his bank. I asked him to forward me his bank details, and Mrs Anderson forwarded these to me.”
26When asked by Counsel for the plaintiffs if there were any discussion about security or a lien, Mr Scotcher said “Ian offered me a lien over the machinery he had, but I trusted him and said, ‘Don’t bother’”.
27Mr Anderson’s version of the phone call is different. He said Mr Scotcher called him as he “wanted our bank details so he could pay us some money.” Mr Anderson says that there was no mention of how much was to be transferred at that time.
28Mr Anderson gave evidence that, following this phone call, he arranged for Mrs Anderson to send Mr Scotcher an email with the “relevant details on it.” Mr Anderson’s evidence is that he has never sent an email in his life, and that Mrs Anderson sent all emails from their shared email address.
9 and 10 March 2021 email exchange
29At 8.43am on 9 March 2021, Mrs Anderson sent the following email to Mr Scotcher on Mr Anderson’s instructions from their joint email account:
“Morning Doug,
Ian has asked me to send details of bank account.
[the third defendant’s bank details]
Kind regards,
Pam Anderson”
30Mr Scotcher says this email is in response to his phone call with Mr Anderson on 9 March where:
“I asked him to forward me his bank details and Mrs Anderson forwarded those to me.”
31Mrs Anderson gave evidence that when Mr Anderson asked her to write this email, “he just said he owed him money and I didn’t query that he did, because I knew he had worked for him before I was with him.”
32At 11.41am that morning, Mr Scotcher responded as follows:
“hi Pam., these funds were deposited at Chevron iIsland [sic] QldBendigo bank at 9.58.
The receipt states the funds will be available on 12/3/2021 and their reference seems to be AFSL No [redacted]
To return in due course my Bank is
[the first plaintiff’s bank details]
Good Luck…”
[emphasis added]
33Mrs Anderson replied: “I will let you know when these turn up. Thanks so much.”
34Mrs Anderson gave evidence that she wondered why Mr Scotcher had sent his bank account details. Mr Anderson explained to her that Mr Scotcher was unwell and she should not worry about it. Mr Anderson was asked about the bank details supplied by Mr Scotcher and the apparent inconsistency with his case. His answer was that he had read the email at the time and thought Mr Scotcher had included his bank details so that “[m]aybe if [the payment] bounces or goes haywire- that it goes back to that account.” There was no evidence given by either Mr Anderson or Mrs Anderson that they ever queried with Mr Scotcher why he included his bank details or the statement he wrote “to return in due course.”
35At 2.10pm on 9 March, Mr Scotcher replied to Mrs Anderson’s email:
“All good Pam. I am happy if we are all making a dollar. Reminds me of the good old days…”
36At 8.45am on 10 March 2021, Mrs Anderson replied, confirming that the funds turned up on that day.
37The third defendant’s bank statement records a cheque deposit of $600,000 on 9 March 2021 with the description “PROPRAC DOUG #Chq:1”.
38On 12 March 2021, the third defendant’s bank statement records an EFT transfer withdrawal from the account of $600,000. Mr Anderson’s evidence is that this was a payment to a Mr Mal Azzopardi, as part payment of moneys owed for machinery he had bought from him about nine years earlier.
22 March 2021 phone call
39The parties agree that Mr Scotcher and Mr Anderson had a further phone call conversation on 22 March 2021.
40Mr Scotcher’s evidence was that Mr Anderson called asking for an additional sum of $250,000 to purchase the business because there had been a “hiccup” in the transaction. Mr Scotcher agreed to lend him this further amount. Mr Scotcher said that Mr Anderson also asked to borrow a further $200,000 at the same time to “buy a machine to work in the North Ballarat gold mines”, but that he declined to lend Mr Anderson this amount.
41In contrast, Mr Anderson gave evidence that he rang Mr Scotcher “to see where the rest of the money was” and “when he was going to pay.” He alleges Mr Scotcher said he would repay a further $250,000.
42Mr Anderson’s evidence was that Mr Scotcher said during this telephone call that he needed something “to get [the payments] past [his] accountant” and asked Mr Anderson to email him as “justification to his accountant for the amount of money that was going to be sent.” Mr Scotcher dictated a message to Mr Anderson for Mr Anderson to send by email to Mr Scotcher, confirming that Mr Anderson: “will be returning 991,675 by the end of April”. Mr Anderson says he replied to the dictation by saying “Doug, that’s a bit bland” and adding the words “Thanks again for your assistance.” He said he was “flowering it up for [Mr Scotcher’s] accountant.”
22 and 23 March 2021 email exchange
43At 3.12pm on 22 March 2021, Mr Scotcher sent a further email to Mr Anderson. It reads:
“Ian. Just to confirm I will pay in a further $250k on wed . [sic]
For my records and my accountant please send me an email confirming our arrangement including anticipated re imbursement [sic] date and total amount to be repaid. Thanks Doug.”
[emphasis added]
44A response was sent from Mr and Mrs Anderson’s shared email address at 10.21am on 23 March 2021:
“HI [sic] Doug,
Thanks again for your assistance we will be returning $991,675 by the end of next April.
Regards,
Ian”
[emphasis added]
(“the 23 March email”)
45The defendants say the 23 March email contained the message dictated to Mr Anderson by Mr Scotcher during their phone call the previous day.
46The third defendant’s bank statement records a cheque deposit of $250,000 on 24 March 2021 with the description “PROPRAC DOUG #Chq:1”.
47On 24 March 2021, the third defendant’s bank statement records an EFT transfer withdrawal from the account of $250,000. Mr Anderson gave evidence that this payment was also made to Mr Mal Azzopardi as further moneys owed for farm equipment.
Subsequent Communications
48Mr Anderson claims to have had two further telephone calls with Mr Scotcher on 17 and 30 April 2021. He says that in each of these calls he discussed the “moneys owed” by Mr Scotcher and the “arrangement” that they had made regarding repayment. Mr Anderson gave evidence that during these telephone calls Mr Scotcher was “unhappy” and “trying to convert the arrangement [they] had into a loan”, but that Mr Anderson had clarified with Mr Scotcher that the payments were for “work done way back.” Mr Anderson claims that Mr Scotcher apologised, saying “he was confused and the medication – or treatment he was having at the time didn’t help in that matter.”
49During their telephone conversation on 30 April, Mr Anderson says he became “fairly short” with Mr Scotcher, telling him:
“Stop ringing me. The deal was done. You know, you’ve owed me the money for a long period of time, you’ve paid it, as you said – always said you would, and stop pursuing me.”
50Mr Scotcher sent a series of unanswered emails to the Andersons’ email address:
(a) On 18 May 2021, he sent: “ian [sic]. Is this set to go on Thursday 20th as advised? Doug.”
(b) On 8 June he sent: “Ian Please let me know where this is going. I just don’t like open ended arrangements particularly with the end of financial year looming. doug [sic].”
(c) On 24 June, he sent: “Ian Please call me Doug.”
(d) On 27 June, he sent:
“Ian and Pam. Our agreement on this was very clear and concise and that is the funds I provided would be re - paid by end April or sooner. Since then the only advice i have received is to 'be patient'.
I am unable to make telephone contact with you and receive no email responses and enough is enough .
Not withstanding [sic] our association in the past at 10 am tomorrow Monday the 28th June I will issue instruction to commence legal process forthwith to seek to recover my funds.
I consider this action extremely unfortunate but it is important for me to resolve this situation.
Doug.”
[emphasis added]
(e) On 3 July, he sent: “Ian . [sic] As agreed please provide written advice detailing current and anticipated situation . Thank you . Doug.”
(f) On 6 July he sent: “Ian please supply the information agreed . [sic] without that my accountant is advising me to revert to a recovery process .”
(g) On 7 July he sent:
“Ian. On 27th June it was agreed by telephone that I would be supplied with written advice as to the current position of this and foreseen conclusion details . Ii [sic] was also advised that I would receive telephone advice weekly of status .
tThe [sic] original agreement was for conclusion on or before the 30th April. None of this has occurred .
I find it very difficult to believe that you are able to operate business without telephone or email availability for weeks on end .
I entered this arrangement on good faith and have continued in that manner to date .
It is in our mutual interest for you to contact me forthwith . Doug.”
(h) On 10 July he sent:
“Ian. Tomorrow 11 July two weeks since your agreement to email full details of status of this . Since then no email no phone and I can't contact you .
Not acceptable to me and even more particularly so EOFY I have advised you of my health issues and I am getting my affairs in order
Regrettable as may be without further acceptable advice before 10am Monday 12th July . I will instruct lawyers to attend to this as it is just not possible for me to continue on the present basis . Doug.”
(i) On 11 July he sent:
“Ian and Pam . Just n case [sic] my positioning this is not 100% clear to you.
I have stage 4 metastatic terminal cancer and my Doctors' estimate l have around six months with loss of capacity in that time possible .
I entered this agreement on the basis it would be completed within last April.
Since the best advice I have is to 'be patient 'I don [sic] to have details of the arrangement you have to complete whatever you are doing but have asked for those two weeks ago (27th June) without response.
You did advise in our tel conversation on 27th June ' 'they can't get out of it ' whatever it being your agreement is .
In my experience people who don't have money don't pay.
I have no idea how the people you are doing business with can do so without your access to email or phone on a constant basis .
l do not intend to leave this hanging in limbo with my executors unable to contact you and you not contacting them and no defined resolution .
Thus I will instruct my Lawyers to determine a positive and formal outcome forthwith .
I have absolutely no animosity in relation to this matter but it is business transaction that needs a business solution and conditions for me to continue on the present basis just do not exist . Doug.”
51Mr Anderson said he ignored these emails because he had already gone over the arrangements with Mr Scotcher. He told his wife to ignore the emails. Mrs Anderson gave evidence that she did not read these emails until asked to provide them to their solicitor.
52Mr Anderson denies having the telephone conversation with Mr Scotcher on or around 27 June 2021 referred to in the 11 July email above. Mr Scotcher gave evidence that he spoke to Mr Anderson “around the end of the financial year” and that he “had a conversation with [Mr Anderson] asking where my money was.”
53This proceeding was commenced on 7 September 2021.
Witnesses
54The plaintiffs relied upon the evidence of Mr Scotcher. The defendants relied on the evidence of Mr and Mrs Anderson.
55Mr Scotcher and Mr Anderson’s recollections of the nature of the advances and the surrounding events were conflicting and unreconcilable. In the circumstances, resolution of the issues in dispute turns on whose evidence I find to be more credible, particularly in light of inferences that can be drawn from the contemporaneous documents put before the Court.
56In the recent judgment of 3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd, M Osborne J made the following useful observations as to how the Court is to evaluate competing evidence (citations omitted):[2]
[2][2023] VSC 21 at [144]-[145]
“The more appropriate course in evaluating competing evidence is ‘to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence’, and make ‘inferences drawn from the documentary evidence and known or probable facts.’ Such a preference in approach has been stated on many occasions in various judgments of a weighty nature among them that of Lord Goff in Grace Shipping Inc v C F Sharp & Co (Malaya) Pte Ltd, where in delivering the judgment of the Privy Council, His Lordship endorsed an earlier passage from the House of Lords in Armagas Ltd v Mundogas SA (the Ocean Frost):
Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witness’s motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth …
That observation is, in their Lordships’ opinion, equally apposite in a case where the evidence of the witnesses is likely to be unreliable; and it is to be remembered that in commercial cases, such as the present, there is usually a substantial body of contemporary documentary evidence.
Closer to home in Fox v Percy, the High Court of Australia cautioned against the dangers of drawing conclusions about truthfulness or reliability solely by reference to the appearance of witnesses, reciting an observation of Atkin LJ:
… I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.”
57I found Mr Scotcher to be an impressive and credible witness. Despite Mr Anderson’s evidence that Mr Scotcher’s diagnosis may have affected his mental capacity, Mr Scotcher confirmed in cross-examination that his doctors had indicated there was “no problem with [his] cognitive ability.” He answered all questions put to him by counsel with no apparent difficulty or confusion. Mr Scotcher’s recollection of events was strong and consistent with contemporaneous documents.
58Mr Scotcher was willing to make concessions when appropriate to do so. He conceded during examination-in-chief that he does not recall the exact amount of the interest agreed to be paid on the first $600,000 loan amount, instead simply confirming his recollection “that it was substantial and good”. Mr Scotcher made this concession in examination-in-chief but was not pressed on the subject in cross-examination. Counsel for the defendants submitted that Mr Scotcher’s failure to cite the exact rate evinces an inability to remember a “fundamental and important part of [the] initial conversation at the heart of this case,” and that the Court should therefore consider his evidence “mistaken.” Mr Scotcher was describing a conversation with Mr Anderson that had taken place two years ago. I do not consider his concession that he could not remember the exact rate of interest means that I should reject his evidence as mistaken. I consider his concession bore all the hallmarks of a truthful witness.
59I formed the view that Mr Anderson was an unreliable witness who did not tell the truth. In coming to this conclusion, I took into account the following:
(a) Mr Anderson identified the works as having taken place at “the Barry James Estate,” identifying that property as existing “on the corner of Wiltshire Lane and Whitelaw Avenue.” He gave evidence that the subdivision in question was completed “by 1988” after “two or three years” of works and that he expected payment. When confronted with Mr Scotcher’s evidence that he was not involved with that development site and that the development he had been involved in was completed by 1984, Mr Anderson backtracked on his evidence to say that it was earlier than 1988.
(b) Mr Anderson said that on two occasions after the funds were transferred, Mr Scotcher had called him seeking repayment of a loan. On both of those occasions, upon being reminded by Mr Anderson that the transfer had been payment in line with their alleged arrangement, Mr Scotcher had apologised and replied that he “gets confused… and the medication – or treatment he was having at the time didn’t help.” This does not align with contemporaneous emails sent by Mr Scotcher, which repeatedly and clearly seek return of the funds. The fact that Mr Anderson did not reply to any of these emails to correct Mr Scotcher’s characterisation of the payments as a loan further undermines his position in this regard.
(c) Mr Anderson offered no explanation for why he did not follow up Mr Scotcher either in writing or on the telephone for the additional $150,000 owed to him under the alleged agreement to be repaid $1 million, other than to say he “never made demands for money” from Mr Scotcher. This seems unlikely if, on his own case, Mr Scotcher legitimately owed him money and had of his own accord offered to repay him that money.
(d) Similarly, Mr Anderson proffered little explanation as to why he failed to follow up the alleged debt for work conducted some 35 years ago. He agreed that he had made no demand or request for payment for the earthmoving works purportedly performed during the intervening decades. Given that he and Mr Scotcher maintained contact during that period and both agreed their relationship was cordial, there was no apparent reason for Mr Anderson to avoid requesting payment. Counsel for the plaintiffs referred several times to a written reference Mr Anderson had written for Mr Scotcher in 2011, in which Mr Anderson describes his previous business dealings with Mr Scotcher as follows:
At any time I could get a phone call - I'm coming to Ballarat next Tuesday I've bought a paddock, where he'd hand over the preliminary plans of a subdivision saying its quite like the last one "how much" to which. I'd reply give me two days I' ll ring you. A week or two later he'd ring, what I need from you is a schedule of payments, start as soon as you can - he'd turn up on the day nominated with a bank cheque.
As counsel for the plaintiffs submitted, this description does not accord with Mr Anderson’s claim that Mr Scotcher withheld payment for a lengthy period with no explanation as to why.
(e) Mr Anderson was declared bankrupt in 1992. He did not disclose the alleged debt owed by Mr Scotcher to his trustee in bankruptcy. He could not explain this omission beyond the fact that he thought Mr Scotcher was in financial difficulty, and unlikely to be able to repay him. Mr Scotcher gave evidence, which I accept, that he had not been in financial difficulty at that period and could have paid a legitimate debt if it had been owed.
(f) Mr Anderson claimed repeatedly that he did not speak to Mr Scotcher again after their telephone call on 30 April 2021. This evidence does not accord with the emails sent by Mr Scotcher, particularly the 27 June and 7 July emails where Mr Scotcher refers to a telephone conversation with Mr Anderson on 27 June 2021. Mr Anderson could not explain these references, instead denying that the conversation had ever taken place.
(g) Mr Anderson was at times argumentative and evasive during cross-examination.
(h) Mr Anderson was confronted with Westpac bank statements in cross-examination which showed the funds advanced by Proprac were not on paid to Mr Azzopardi, contrary to his earlier evidence. The bank statements show that the funds of $850,000 were transferred from the third defendant’s bank account into the bank account of someone called Mr Maroun Mansour (“Mansour”). Mr Anderson denied that he knew Mansour in cross examination but then later suggested it was an alias for Mr Azzorpardi and they were the same person. The answers that he gave during this part of the cross-examination were particularly unconvincing.
(i) Mr Anderson acknowledged the amount of the debt and that the debt would be repaid by the end of April in the 23 March email. He agreed in evidence that its contents were inconsistent with his case. It is not disputed that Mr Scotcher asked him to make the note so that he could provide it to his accountant as evidence of the loan for his BAS statement. There is no evidentiary basis for any inference to be drawn that Mr Scotcher was seeking to mislead his accountant or that the email was a sham. The email speaks for itself and, in my view, it accurately records what the two men had agreed.
(j) Mr Anderson’s answer about why he thought Mr Scotcher had included his bank details for return in his email dated 9 March 2021 because the cheque could “go haywire or bounce” was glib and simply unbelievable.
60I found Mrs Anderson to be a credible witness. The plainitffs accepted this was the case and made no criticism of her evidence. Her evidence however was of limited relevance as she had no direct involvement in the dealings between her husband and Mr Scotcher. Mr Scotcher confirmed in his evidence that he had never spoken to her.
Consideration
61Given my earlier findings about the credit of the two principal witnesses, I prefer the evidence of Mr Scotcher and accept his version of the substance of the telephone calls made in March 2021 regarding the loan agreement. I am fortified in this view by the existence of contemporaneous emails in evidence which support Mr Scotcher’s account that the arrangement was that of a loan. It makes no sense that Mr Scotcher would forward his bank account details for the monies to be repaid if the arrangement struck was not a loan. Even Mrs Anderson thought this was odd and questioned her husband about this, who replied that Mr Scotcher was confused.
62Mr Anderson’s repeated attempts to explain away damaging emails were unconvincing. Not once did he respond in writing to Mr Scotcher’s emails pointing out that the funds were not the subject of a loan, and that Mr Scotcher was mistaken. His lack of challenge at the time in response to these emails is revealing. I do not accept his oral evidence that he told Mr Scotcher that he was mistaken.
63It is highly implausible that the funds transferred were repayment for works done some 35 years ago when Mr Anderson never made a request for repayment in the intervening period. It is telling that Mr Anderson did not ask for the balance of funds said to be owing when he only received $850,000, as opposed to a million dollars on his version of events. In all the circumstances, I am not persuaded that the funds advanced by Proprac were for payment for works supposedly done by Mr Anderson in the 1980s. This defence fails.
64The defendant argues that the Court should draw an adverse inference in accordance with Jones v Dunkel[3] because Mr Scotcher’s accountant was not called to give evidence by the plaintiffs. The defendants say despite Mr Scotcher’s explanation that he wanted something from Mr Anderson in writing to show his accountant why the payment was made when he submitted his BAS statement that quarter, there are no contemporaneous records discovered or oral evidence from the accountant regarding how the payments were to be treated. Without such evidence, counsel for the defendants suggested that the plaintiffs had failed to prove which parties were parties to the loan agreement alleged, and that adverse inferences ought be drawn by the failure to produce these documents and even the failure to produce or to lead evidence from the accountant.
[3] (1959) 101 CLR 298 (“Jones v Dunkel”)
65The plaintiffs argue that no adverse inference should be made because they did not call the accountant. They say they were taken by surprise by the defendants’ argument, pointing out that the defendants did not file written opening submissions in this proceeding,[4] and that their defence does not mention a conversation whereby Mr Anderson says Mr Scotcher directed him to send the 23 March email to “get [the payment] past” his accountant. As a consequence, counsel for the plaintiff said he had not anticipated a line of questioning regarding the exchange of contemporaneous emails confirming a sham to fool the accountant. Counsel for the defendants reiterated that it was the plaintiffs’ obligation to call evidence from the accountant or contemporaneous business records to confirm or corroborate Mr Scotcher evidence.
[4] Contrary to the orders of Judicial Registrar Bennett dated 31 January 2023
66The rule in Jones v Dunkel only applies where the party accused of not calling the relevant witness was required to explain or contradict something. I am not persuaded that it can be inferred that the reason the accountant was not called was because Mr Scotcher feared to do so or that he was required to explain or contradict something. Mr Scotcher’s evidence was that he needed something in writing to show his accountant amount to be included in his BAS statement for the period ending 30 June 2021. He did not say his accountant asked him to do it, though he did confirm that his accountant “wanted to know where the 850 went” when he submitted his BAS statement at the end of the June quarter that year. Mr Anderson’s evidence is that he wrote the words on the 23 March email at Mr Scotcher’s request. I fail to see how the accuracy or otherwise of that evidence could be resolved by the accountant giving evidence. I am not persuaded that a Jones v Dunkel inference should be made because the accountant was not called, contrary to the defendants’ submission.
67I am also not persuaded that an adverse inference should be drawn because the plaintiff did not produce financial records to show how the loan was treated in Proprac’s accounts. It is clear the monies were advanced by Proprac - it was the lender. There is no dispute that Proprac advanced the funds. But had the defendants wished to challenge the allegation that Proprac was the lender as opposed to Mr Scotcher, then there was no reason why they could not have sought production of the relevant financial statements which they did not do or indeed they could have called Proprac’s accountant. Again, I am not satisfied that an adverse inference should be drawn because the plainitffs did not produce financial records relating to the treatment of the loan in Proprac’s financial statements as contended for by the defendants. In any event, even if an inference could be drawn it would simply be to the effect that such evidence would not have assisted the plainitffs’ cause rather than a positive finding that an adverse inference should be drawn.
Parties to the loan agreement
68Whilst denying there was a loan, the defendants submit any loan was not to the Company, as Mrs Anderson the Company’s sole director did not have any dealings with Mr Scotcher. The mere fact that the monies were paid into the Company’s bank account did not prove that a loan was made with the Company. All that occurred was that Mr Anderson directed that this was the bank account into which the funds should be paid. The defendants claim that the loan agreement entered into, if extant, was between Mr Scotcher and Mr Anderson in their personal capacities.
69The plaintiffs say that the agreement bound both the men in their individual capacities as well as the companies, with Mr Anderson acting with actual or ostensible authority to bind the company, or alternatively that he was the de facto director of the company.
70The plaintiffs’ position by final address was that the lender was Proprac with the borrower being the Company or failing that, Mr Anderson.
71Mr Anderson was not a director of the Company. Consequently, the defendants argue he was not able to enter into any binding agreements on behalf of the Company as he had no authority to do so. The defendants contend that any loan arrangement was between the two men.
72In turn, the plainitffs argued that Mr Anderson had ostensible authority to bind the Company. In his closing submissions, counsel for the defendants also referred the definition of a director in s 9 of the Corporations Act 2001 (Cth), which includes, inter alia, a person who:
“…unless the contrary intention appears… is not validly appointed as a director if:
(i) they act in the position of a director; or
(ii) the directors of the company or body are accustomed to act in accordance with the person’s instructions or wishes.”
73Counsel for the plaintiff submitted that Mr Anderson had actual or ostensible authority to bind the company based on:
(a) Mrs Anderson’s evidence that Mr Anderson is still “involved in the earthmoving business… through a corporate entity, Ian Anderson Earthmoving Pty Ltd of which I am a director, although my husband is in effective control”;
(b) Mrs Anderson’s evidence she only does “basic bookkeeping… on [Mr Anderson’s] direction” for the company, despite being its sole director;
(c) The fact that, despite claiming he could not offer a lien over the company’s assets, Mr Anderson was able to direct Mrs Anderson to transfer $850,000 to pay Mr Azzopardi;
(d) The fact that Mrs Anderson sent the company’s bank details to receive funds with “no suggestion that she was acting in a personal capacity… she was doing it in her capacity as a director of the borrower.”;
(e) The fact that Mr Anderson directed Mrs Anderson to acknowledge receipt of the funds transferred in March 2021; and
(f) Mrs Anderson’s evidence that she simply accepted what Mr Anderson told her about the transfers and did not respond to emails without direction.
74The plaintiff further submitted that the Court should accept that Mr Anderson was acting on behalf of the Company when agreeing to borrow the money based on:
(a) Mr Scotcher’s evidence that Mr Anderson offered to provide a lien over the equipment owned by the company, on behalf of the company;
(b) Mrs Anderson’s provision of the company bank account for receipt of funds; and
(c) Mrs Anderson emailed confirmation that “we will be returning” the funds (emphasis added), suggesting a reimbursement from the company rather than Mr Anderson in his individual capacity.
75Counsel for the defendants said that although the moneys were put through a company account this is not determinative, but merely indicative of a contractual relationship with the person who supplied the money. The evidence from Mr Scotcher was that Mr Anderson offered a lien over his own farm equipment, not equipment owned by the Company, therefore the question of the offer of a lien as suggestive of a contractual relationship between Mr Scotcher and the Company was misconceived.
76I am not satisfied on the state of the evidence that it was proved the borrower under the loan agreement was the Company. Mr Scotcher’s evidence was that Mr Anderson asked him to lend him money. There was no mention in the conversations in March 2021 nor in any of the contemporaneous emails about the Company being the borrower. Mr Scotcher asked for the relevant bank details in a subsequent email, but no mention was made of a request for the Company’s bank details – the request was open ended. I accept the defendants’ submission that the mere direction that funds go into a particular bank account does not prove the account holder is a party to the transaction. The director of the Company, Mrs Anderson, did not agree to borrow funds on behalf of the Company. She understood the funds were repayment of moneys owed to her husband. Both she and Mr Scotcher gave evidence that they had never had any direct dealings with each other.
77I find that the lender was Proprac, being the entity which advanced the monies, and the borrower was Mr Anderson. I also find that there was an agreement to pay interest which was included in the total sum set out in the 23 March email and that the parties agreed that repayment would occur by the end of April 2021. In breach of the loan agreement, Mr Anderson has failed to repay the moneys owed which remain due and payable. Consequently, Proprac is entitled to judgment in its favour against Mr Anderson.
78Given my finding that the borrower was Mr Anderson, it is not necessary to decide whether he could bind the Company under s9 of the Corporations Act or otherwise as the Company was not a contracting party.
79Having succeeded on the loan agreement claim, it is unnecessary to determine the plaintiffs’ alternative claim for moneys had and received. But if I am wrong on the loan agreement claim, then it is clear that the moneys had and received claim would have succeeded in circumstances where I have rejected the defence raised that the funds were repayment of monies owed to Mr Anderson by Mr Scotcher.
Conclusion
80I will order that there be judgment for Proprac against Mr Anderson in the sum of $991,675 together with interest to be assessed from the date of the writ.[5]
[5] Counsel for the plainitffs confirmed that interest was claimed from the date of the writ
81Subject to hearing from the parties, I propose ordering that the defendants pay the plainitffs’ costs of the proceeding, including any reserved costs, on the standard basis to be taxed in default of agreement.
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Certificate
I certify that these 23 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 23 March 2023.
Dated: 23 March 2023
Associate to Her Honour Judge A Ryan