Scenic Outlook Pty Ltd and Ors v Ocean Central Limited and Ors No. Scciv-99-467

SCENIC OUTLOOK PTY LTD AND ORS V OCEAN CENTRAL LIMITED AND ORS
[2002] SASC 378

JUDGE BURLEY. By application dated 8 March 2002 Mane Lion Pty Ltd, Flinders Management Pty Ltd, North East Management Pty Ltd and Mane Market Pty Ltd, which I shall refer to as the plaintiffs, seek immediate relief pursuant to SCR 25.02 against Southern Hotels Pty Ltd, which I shall refer to as the defendant. Within the action the plaintiffs and the defendants are respectively plaintiffs by counterclaim and defendants by counterclaim. There are numerous other parties to the action involving both claims and counterclaims, but all of those matters have been settled and the only remaining claims to be dealt with in the action are the claims presently pursued by the plaintiffs against the defendant.
It is common ground that each of the plaintiffs is a member of a group of companies known as the Ocean Central Group. Each plaintiff owned and operated a hotel, namely the Old Lion Hotel, the Newmarket Hotel, the Windsor Hotel and the Flinders Hotel. The defendant was the owner and operator of three hotels at Victor Harbor, namely the Hotel Crown, the Hotel Victor and the Grosvenor. The plaintiffs seek to recover monies paid to or on behalf of the defendant by twelve cheques drawn on the account of one or other of the plaintiffs during the period 11 March 1993 to 14 July 1995. The plaintiffs seek to recover these monies on the basis of monies had and received by the defendant or paid to the benefit of the defendant because, it is alleged, the defendant provided no consideration for the payments, the monies were paid by the plaintiffs without authority, the defendant is imputed with the knowledge of that lack of authority and the defendant has been unjustly enriched at the expense of the plaintiffs.
The defendant has opposed the plaintiffs’ application. Mr Ross-Smith, counsel for the defendant, argued that to the extent that there is a discretion in the Court whether or not to deal with the claims in a summary manner, the discretion should not be exercised in favour of the plaintiffs. He also argued that even if the claims should be dealt with in a summary way, there arose from the evidential material and the submissions in relation thereto a number of triable issues which could only be dealt with at a trial of the action.
Before turning to the facts it is necessary to set out the applicable legal principles relating to the provisions of SCR 25.02.
In Settlement Wine Co Pty Ltd v National and General Insurance Co Ltd (1988) 146 LSJS 150, a decision of the Full Court, King CJ, with whom von Doussa J agreed, said (at 152):
“Before dealing with this argument, it is necessary to consider what the respondent [the plaintiff] was required to establish in support of its Application for Immediate Relief in the nature of summary judgment. Rule 25.02 is the successor in the 1987 Supreme Court Rules to Order 10 in the 1947 Rules. It provides a procedure whereby in circumstances of urgency a judge can decide issues which are capable of speedy resolution without lengthy hearing and give judgment without trial, Wicklow Enterprises Pty Ltd v Doysal Pty Ltd and the Registrar General 1985 124 LSJS 225; Lawrence v Griffiths 1987 140 LSJS 134. Another purpose of the procedure is to operate as an alternative to an Application for Summary Judgment under Rule 25.01 where the Rule 25.01 endorsement has not been made but where the plaintiff considers that there is no serious issue to be tried, Bellas v Kipouros 1974 8 SASR 418 at 419. This latter purpose is emphasised by the language of the 1987 Rules which express the Rule 25.02 procedure as an alternative to the Rule 25.01 procedure.”
The plaintiffs relied upon this case in support of their application for immediate relief. In doing so, the plaintiffs did not rely upon urgency as a basis for their application. Rather, the plaintiffs confined the application to one where SCR 25.02 was used as an alternative to SCR 25.01. In so doing, the principles applicable to the granting or withholding of summary judgment under SCR 25.01 were rendered applicable.
In Settlement Wine Co King CJ, having referred to the question of urgency in relation to SCR 25.02, said (at 153):
“I do not think, however, that the existence or otherwise of circumstances of urgency has a bearing upon the case. Immediate Relief may be justified not only by circumstances of urgency requiring speedy decision of issues which are capable of resolution without lengthy trial, but also by the lack of any credible defence in the sense of real issue to be tried, irrespective of the existence of circumstances of urgency. If there were a triable issue in the present case, it would be incapable of resolution without trial. The respondent’s entitlement to immediate relief therefore depended upon the lack of a real issue to be tried. Whatever may be said in relation to onus in applications under Rule 25.01, as to which reference may be made to the remarks of von Doussa J in Lawrence v Griffiths supra, it is clear that in this application under Rule 25.02 the onus lay on the respondent to show that there was no serious issue to be tried.”
In Civil Procedure, South Australia, the learned author at para 25.01.5 refers to the difference between SCR 25.01 and SCR 25.02. He states:
“Under R 25.01 the court is only concerned to ascertain whether the defendant is shown to have a good defence on the merits whereas under R 25.02 the court has a discretion to dispose of the action summarily: Lawrence v Griffiths (1987) 47 SASR 455;”
I take that statement and the principles arising from the authority cited to mean that where an applicant under SCR 25.02 seeks a disposition of the action summarily based on grounds of urgency, SCR 25.02 enables the Court to do so. I do not understand Lawrence v Griffiths (supra) to be authority for the proposition that where an applicant invokes SCR 25.02 as an alternative to SCR 25.01, the applicant may ask the Court to dispose of the action summarily as opposed to determining whether or not the defendant is shown to have a good defence on the merits.
In those circumstances it is necessary for the defendant to have adduced evidence to support the defendant’s contention that triable issues arise on the material before the Court, unless the triable issues are discernible from the evidence adduced by the plaintiffs.
As with SCR 25.01 the affidavit or affidavits relied upon by the defendant must be sufficiently detailed to show that the defence is not spurious or illusory: Leasefin Corp Ltd v Clarke, unreported decision of the Full Court, Judgment No S3660 delivered on 16 October 1992.
Mr Ross-Smith submitted that the Court has a discretion as to whether or not to allow a matter to be disposed of summarily. I think he is correct in that view: Wicklow v Doysal (supra). I accept that the procedure should not be used where there are complex questions of law and fact which cannot be readily disposed of in chambers: Wicklow v Doysal (supra).
In some cases subsequent to Settlement Wine Co (supra) it has been suggested that recourse to SCR 25.02 should only be allowed where there are circumstances of urgency. This appears to be in conflict with what was said by King CJ, cited above, particularly where the Chief Justice referred to the use of SCR 25.02 as an alternative to SCR 25.01. It seems to me that the cases may be reconciled in relation to the question of urgency, if indeed there is a conflict, by drawing the distinction drawn by King CJ in Settlement Wine Co between resort to SCR 25.02 on the basis of urgency as distinct from resort to that rule on the basis that it is used as an alternative to SCR 25.01. In the latter case, the plaintiff does not have to rely upon grounds of urgency but in turn is restricted to the Court determining whether or not triable issues arise. That is the approach that I think I should take on this application given that the plaintiffs have limited their application to one where SCR 25.02 is used as an alternative to SCR 25.01.
It was submitted by the defendant that it would be inappropriate to deal with the plaintiffs’ claims in a summary way because, in order fully to determine the elements of the cause of action relied upon, the defendant should have the opportunity to cross-examine Mr Weeks, whose affidavit was relied upon by the plaintiffs in support of the application in which he deposed to the relationship between himself and Mr Russell Temple. A similar contention was dealt with by King CJ in Settlement Wine Co. His Honour said (at 155):
“Mr Sheller’s further contention as to the liability was based upon a statement in the affidavit of the appellant’s Claims Manager, Christopher Nowell Dodkin. Mr Dodkin deposed as follows:
‘The defendant has cause to dispute the credibility of the evidence of the Plaintiff and its officers. Because of the nature of the evidence the Defendant does not wish to divulge in advance of cross examination of the various officers of the Plaintiff details of all of the grounds upon which the Defendant has reached its decision to deny liability to the Plaintiff and to defend the claim now made by the Plaintiff.’
There may be circumstances in which a defendant, although not able to indicate on existing information a positive ground of defence, may be permitted to defend in consequence of showing enough in his affidavit to justify putting the plaintiff to proof. But a mere assertion that a party wishes to cross-examine the plaintiff or his witnesses is not enough, Rosser v Austral Wine and Spirit Co Pty Ltd 1980 VR 313 esp. at 319-20. To allow a party to defend merely on an assertion that it possesses material for cross-examination which is not divulged would be to render nugatory procedures in Rule 25 designed to prevent a party from taking advantage of the law’s delays. There are no circumstances in the present case which would justify refusal of summary judgment merely to permit cross-examination. The onus of proof on the issue of arson and fraud lies on the appellant. It has failed to produce or indicate material which is even arguably capable of discharging the onus. There is therefore a case for the exercise of the discretion to give summary judgment.”
It is clear from the above passage that even though the onus lies with the plaintiffs to demonstrate on the balance of probabilities that it is entitled to the relief which they seek, the Court looks to the cogency of the defences raised by the defendant’s affidavit: see also Leasefin Corp Ltd v Clarke (supra). The stated desire to cross-examine witnesses is not, by itself, sufficient to prevent the claims from being dealt with summarily.
The defendant also submitted that to the extent that the Court found itself in a position whereby it was satisfied that some but not all of the plaintiffs’ claims had been established to the required degree, the Court should not proceed to such a determination if that meant that only a small part of a larger claim was dealt with which necessitated a trial of the action in any event. The learned author in Civil Procedure, South Australia, stated such a principle at para 25.03.10 and cited Toldale Pty Ltd v Sloper (1989) 51 SASR 360 as authority for that proposition. In determining this aspect of the matter regard should be had to SCR 25.03 which provides that in relation to applications under SCR 25.01 or 25.02 “the Court may make an order that judgment be entered for the plaintiff for the whole or any part of the relief claimed in the action and may order that the proceedings continue in relation to any issue or part of the action not disposed of, or may treat any application as an application for directions in the action”.
I do not understand the decision in Toldale v Sloper (supra) to mean that if most of the plaintiff’s case on an application for immediate relief is unsuccessful, the balance should not be determined. That was a case where the plaintiff sought judgment for $6,300.00 odd out of a $500,000.00 claim. For reasons which I will later state, I do not think that this is a case which attracts the principle arising from Toldale v Sloper (supra).
In light of the above authorities and my analysis of them, I reject the defendant’s contention that the plaintiffs’ claim should not be dealt with summarily.
I turn to a consideration of the authorities relating to the quasi-contractual cause of action of money had and received. It is now accepted that the cause of action is based on the principle of unjust enrichment. In Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221, Deane J said (at 256-7):
“... It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case:”
In Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, the House of Lords recognised that the claim for money had and received is based on the principle of unjust enrichment. The plaintiffs relied upon this decision. The facts of the case are that one of the partners in a firm of solicitors who had authority to operate the firm’s client account at the bank withdrew cash from the firm’s account by making cheques out for cash and sending the firm’s cashier to cash them. The cashier did so and paid the proceeds of the cheques to the partner. He in turn used the cash to purchase chips at a gambling club. Inevitably he lost at the gambling tables. The solicitors sued the gambling club for the recovery of about 150,000 pounds for money had and received. The claim eventually went on appeal to the House of Lords where it was decided that stolen monies paid to a third party who is unaware of the fact that the monies were stolen may be recovered from that third party if no consideration was given for the payment.
The House of Lords also determined that if the recipient of the monies materially alters his position after receipt of the monies, that may constitute a defence to a claim for money had and received. Mr Ross-Smith contended that such defence was available to the defendant. In David Securities Pty Ltd and Others v Commonwealth Bank of Australia (1992) 175 CLR 353, the High Court recognised such a defence stating (at 385) that the “central element [of the defence] is that the defendant has acted to his or her detriment on the faith of the receipt”.
In Lipkin Gorman, the recipient of the cash was unaware that the monies had been stolen. If the plaintiffs are able to establish on this application that the defendant was aware that Mr Temple had no authority to draw the relevant cheques or cause those not signed by him to be drawn, it could be argued that there is all the more force behind the submission that it would be unjust for the defendant to retain the monies. Mr White QC, counsel for the plaintiffs, raised just such an argument. He submitted that Mr Temple was a director of both the relevant plaintiff and the defendant at the time of the payment, that he was aware that he had no authority to draw the cheques or cause cheques to be drawn on the relevant plaintiff’s account and that such knowledge should be imputed to the defendant. Mr Ross-Smith countered this argument by submitting that if at the time of the relevant payments Mr Temple was a director of both the relevant plaintiff and the defendant, Mr Temple was acting totally in fraud of the defendant company and as such came within the exception to the rule which otherwise imputes the knowledge of the director to the company: cf Beach Petroleum NL and Another v Johnson and Ors (1993) 43 FCR 1 at 24-25 per von Doussa J.
There is another difference which needs to be noted. The solicitor in Lipkin Gorman used the proceeds of the cheques to purchase gambling chips. There was therefore not a direct payment, as in this case, by the plaintiff to the defendant. This difference would not, in my view, detract from the plaintiffs’ case. On the contrary, because the payments in this case were made direct by the respective plaintiffs to, for the most part, the defendant, proof of the ownership of the funds the subject of the various cheques by the respective plaintiffs is more easily established.
The significance of lack of authority in relation to the impugned transactions has been dealt with by Peter Jaffey in The Nature and Scope of Restitution. Chapter 5 of that work is entitled “The Vitiating Factors”. The learned author has used that expression to cover those situations where a transaction may be vitiated because of lack of authority or incapacity or when mistakes have been made. The learned author said (at 160):
“Lack of authority, not always identified as such, is the most important and common vitiating factor. A transfer of value from the plaintiff is vitiated where it was made by someone other than the plaintiff without the plaintiff’s authority, or the authority of the law. It is beyond doubt that in such circumstances the plaintiff must have a claim to have the transfer reversed. There cannot be a clearer case of a transfer of the plaintiff’s wealth that subverts his right to determine how it is used. One can distinguish between two cases: first, where a stranger to the plaintiff effects the transfer by taking the plaintiff’s money or goods in his absence or by force, and secondly where someone empowered to act in relation to the plaintiff’s property or to make transfers from him - an agent - makes a transfer that was outside the authority given to him.”
In support of the latter proposition, the learned author cited AGIP (Africa) Ltd v Jackson and Others [1991] Ch 547.
Because, as appears from Lipkin Gorman, monies paid for no consideration may be recovered, it is possible for a claim to be made good even where the recipient of the funds is unaware that the payment has been made without authority. Consequently, it will be necessary to consider whether the plaintiffs’ respective claims or any of them may succeed even in circumstances where any knowledge of lack of authority that Temple may have possessed is not to be imputed to the defendant.
I turn to a consideration of the evidence. The plaintiffs relied upon the following affidavits:
David John Fuller sworn on 8 March 2002 and the exhibits thereto.
David John Fuller sworn on 7 June 2002 and the exhibits thereto.
Callum Apollo Little sworn on 17 September 2002 and the exhibits thereto.
Mark Peter Jappe sworn on 24 October 2002.
David John Weeks sworn on 30 January 1997 and 18 September 2002.
The affidavit of Mr Weeks was filed in Action No 2017 of 1996. By his affidavit sworn on 18 September 2002 Mr Weeks confirmed that the contents of his affidavit of 30 January 1997 remained true and correct. He said in addition that until approximately February 1995 the accounts and ledgers of the plaintiffs were prepared by Mr Mark Gray or under his supervision. The defendant relied upon two affidavits of Mr Gray to which I will refer later in these reasons.
In paragraph 4 of his affidavit of 18 September 2002, Mr Weeks said:
“During the course of these proceedings Russell Temple has had discussions with me on behalf of the Temple Group, including Southern Hotels. In late July 2002, he spoke to me in relation to the costs incurred by Southern Hotels in relation to this application and on behalf of Southern Hotels, sought an adjournment of this application.”
This paragraph relates to the fact that the defendant has not adduced any evidence from Mr Temple in defence of this application. It is apparent from one of Mr Gray’s affidavits that his co-operation was sought in relation to defending the application but Mr Temple declined to co-operate.

In essence, the two affidavits of Mr Fuller have exhibited to them the documentation available to the plaintiffs with regard to each of the twelve cheques. I make the following findings of fact based on Mr Fuller’s evidence. I shall refer to the cheques by reference to the item number contained in the 6th Appendix to the amended counterclaim. In the course of my findings it will be necessary also to refer to the affidavits of Mr Jappe and Mr Little.
The cheques drawn on the account of the plaintiff Mane Lion Pty Ltd are referred to as items 4, 6, 7 and 8. These cheques were signed by Mr Temple and, with the exception of item 6, were made out to the Hotel Crown. Item 6 was made out to Edge Computers which, the plaintiffs allege, was a creditor of the defendant. That cheque was in the sum of $3,103.89. Except for the cheque payable to Edge Computers, the cheques were paid into a bank account maintained by Southern Hotels, one of the hotels owned by the defendant. In the case of the three cheques made payable to the Hotel Crown, there was no evidence as to how the monies were applied by the defendant.
It is convenient to deal at this stage with item 6, the cheque made payable to Edge Computers. Whatever may be said about the other cheques drawn on the account of the plaintiff Mane Lion Pty Ltd, it does not seem to me that that plaintiff is able to recover the sum of $3,103.89, being the amount paid to Edge Computers. First, the cheque has been drawn on the account of Kellyvale (No 64) Pty Ltd as trustee for the Old Lion Trading Trust. Kellyvale (No 64) Pty Ltd is not a party to this application. In addition there is no evidence to link that company with Mane Lion Pty Ltd in a manner which makes it obvious that Mane Lion Pty Ltd may sue to recover the appropriate sum. It also seems to me that there is at least an arguable defence that the monies may not be recovered as monies had and received to the use of the defendant, because the defendant never received the monies. Thus there are several triable issues which arise in relation to this cheque.
Given that this application is used in substitution for SCR 25.01, it is not appropriate for the Court to proceed to determine the question of entitlement in relation to item 6. This aspect of the matter should be allowed to proceed to trial because a triable issue or serious question to be tried has arisen. There are no circumstances of urgency which make it appropriate for the Court to determine the question at this stage of the proceedings. The plaintiffs have not relied upon circumstances of urgency.
One cheque is the subject of a claim by the plaintiff Flinders Management Pty Ltd. This is item 10. It was a cheque in the sum of $52,500.00 drawn on the plaintiff. The payee is Southern Hotels and it was paid into the bank account maintained by the defendant and others. The person who signed the cheque has the initials JWK. The signature shown on the copy of the cheque admitted into evidence is otherwise illegible. It is accepted by the plaintiffs that it is not the signature of Mr Temple. However, it is shown in a schedule of a loan account maintained by the defendant in respect of Mr Temple that on 20 June 1995, the date when the cheque was drawn, amounts totalling $52,500.00 were credited in the books of account of the defendant against Mr Temple’s loan account, thereby reducing the indebtedness of Mr Temple to the defendant by that sum. The documentation evidencing the reduction of the loan account is contained in Exhibit DJF19 to the affidavit of Mr Fuller sworn on 7 June 2002.
It was submitted by Mr White that I should infer that the cheque in the sum of $52,500.00 was drawn at the instigation of Mr Temple, if not signed by him, and that as such it was an unauthorised cheque. In respect of this cheque I need to consider not only that submission but also whether or not the signatory to the cheque had authority to draw the cheque on the account of Flinders Management Pty Ltd.
One cheque was drawn on the account of North East Management Pty Ltd. This is referred to as item 11. The cheque is in the sum of $25,000.00 payable to the defendant and the signatory to the cheque was Mr Temple. It was paid into the bank account of the defendant. The documentation relating to this transaction is contained in Exhibits DJF4 and DJF15 respectively to the affidavits of Mr Fuller sworn in March 2002 and June 2002.
The cheques the subject of the claim by Mane Market Pty Ltd are items 1, 2, 3, 5, 9 and 12. Item 1 of the cheque for $20,000.00 was made payable to cash. Exhibit DJF5 discloses that the cheque was drawn on the account of Mane Market Pty Ltd. Exhibit DJF17 is a copy of the general ledger of the Newmarket Hotel Trading Trust which discloses that the proceeds of the cheque were paid as a deposit in respect of a Jimmy Barnes concert.
According to the plaintiffs, that concert was arranged by the defendant to take place at the Hotel Crown. The plaintiffs rely upon the affidavit of Mr Little sworn on 17 September 2002. Mane Market Pty Ltd contends on the basis of that evidence that the cheque was drawn by Mr Temple in order to pay the indebtedness of the defendant arising from the Jimmy Barnes concert.
Item 2 is a cheque in the sum of $6,000.00 payable to Boom Crash Opera. The cheque was signed by Mr Temple and the cheque butt refers to a loan to the Hotel Crown.
Items 1 and 2 are additional instances of a third party being paid, said to be a creditor of the defendant, where the funds were not actually received by the defendant.
Item 3 is a cheque in the sum of $50,000.00 signed by Mr Temple made payable to the Hotel Crown. A bank statement has not been discovered by the defendant in relation to this item but the receiving bank is endorsed on the cheque as the Commonwealth Bank, Victor Harbor branch. In the absence of evidence to the contrary, I am prepared to infer that the cheque was received by the defendant.
Item 5 is a cheque in the sum of $60,000.00 signed by Mr Temple and made payable to the Hotel Crown. This was paid into the bank account maintained by the Hotel Crown and appears in Exhibit DJF10. I note that that exhibit also refers to a company called Kellyvale (No 24) Pty Ltd. I am not aware of what, if any, relationship exists between Kellyvale (No 24) Pty Ltd and Kellyvale (No 64) Pty Ltd on whose account the cheque which is item 6 was drawn. However, the similarity in name serves to emphasise that a triable issue has arisen in relation to item 6.
The cheque butt in respect of item 5 records a loan to Scenic Outlook but the cheque was deposited into the bank account maintained by the Hotel Crown.
Item 9 is a cheque in the sum of $2,840.00 made payable to the Crown Hotel. The cheque has been signed, but the signature is illegible. The plaintiffs rely on Exhibit DJF12, which is a bank statement in the name of Hotel Crown. I can identify no reference to the payment into the defendant’s bank account the sum of $2,840.00 in that exhibit, although I note that on the cheque itself, which is part of Exhibit DJF5, the receiving bank is shown to be the Commonwealth Bank, Victor Harbor branch. On that basis, in the absence of evidence to the contrary, I am prepared to infer that the proceeds of the cheque were received by the defendant.
Item 12 is a cheque in the sum of $105,000.00 payable to Southern Hotels. The cheque’s signatory cannot be identified because the signature is illegible. Exhibit DJF19, part of which is a typewritten schedule of loan account movements in respect of Mr RJ Temple in relation to indebtedness by Mr Temple to the defendant, refers to a payment on 14 July 1995 in the sum of $105,000.00 in reduction of Mr Temple’s indebtedness to the defendant. The cheque bears the same date and on that basis the plaintiffs contend that the cheque was received by the defendant and the proceeds used to reduce Mr Temple’s indebtedness to it.
I make the following findings in relation to the cheques, dealing with them in the numerical order of the items in the appendix to the amended counterclaim.
Item 1 is a cheque in the sum of $20,000.00 made payable to cash drawn on the account of Mane Market Pty Ltd and signed by Mr Temple. The proceeds of the cheque were said to have been lent to the defendant but were used by the defendant to pay the deposit in respect of the Jimmy Barnes Concert. That concert was arranged by the defendant to be held at the Crown Hotel, Victor Harbor on 10 March 1993, as appears from the affidavit of Mr Little, whose evidence I accept.
Item 2 is a cheque in the sum of $6,000.00 which was paid to Boom Crash Opera. There is no evidence that this cheque was received by the defendant.
Item 3 is a cheque in the sum of $50,000.00 signed by Mr Temple and made payable to the Hotel Crown. The cheque was drawn on the account of Mane Market Pty Ltd and I find that the cheque was received by the defendant.
Item 4 is a cheque in the sum of $50,513.69 drawn on the account of Mane Lion Pty Ltd. It was signed by Mr Temple and made payable to the Hotel Crown. I find that the defendant received this cheque.
Item 5 is a cheque drawn on the account of Mane Market Pty Ltd in the sum of $60,000.00 made payable to the Hotel Crown. It was signed by Mr Temple. It was paid into the defendant’s bank account and was said to be a loan to Scenic Outlook.
Item 6 is the cheque payable to Edge Computers with which I have already dealt.
Item 7 is a cheque in the sum of $60,000.00 drawn on the account of Mane Lion Pty Ltd and made payable to the Hotel Crown. It was signed by Mr Temple and paid into the defendant’s bank account.
Item 8 is a cheque in the sum of $50,000.00 drawn on the account of Mane Lion Pty Ltd and made payable to the Hotel Crown. It was signed by Mr Temple and was paid into the defendant’s bank account.
Item 9 is a cheque in the sum of $2,840.00 drawn on the account of Mane Market Pty Ltd. The signatory to the cheque is unknown but the cheque butt indicates that the amount represented a loan to the Crown Hotel. It was paid into the defendant’s bank account. I find that the cheque was received by the defendant.
Item 10 is a cheque in the sum of $52,500.00 drawn on the account of Flinders Management Pty Ltd and made payable to Southern Hotels. The cheque was signed by a person whose initials are JWK. It was paid into the defendant’s bank account. It is shown in the records of the defendant that the amount of the cheque represented a repayment by Mr Temple of his loan account with that company.
Item 11 is a cheque in the sum of $25,000.00 signed by Mr Temple and made payable to the defendant. It was paid into the defendant’s bank account.
Item 12 is a cheque in the sum of $105,000.00 made payable to Southern Hotels. The signatory to the cheque is unknown but it was paid into the defendant’s bank account. It is shown in the defendant’s records as being a repayment by Mr Temple of his loan account with the defendant.
The twelve cheques may be divided into four categories as follows:
1Cheques signed by Mr Temple payable to the Hotel Crown or to the defendant. Using the item numbers in Appendix 6 to the amended counterclaim, items 4, 7 and 8 were drawn on the account of Mane Lion Pty Ltd, item 11 on the account of North East Management Pty Ltd and items 3 and 5 on the account of Mane Market Pty Ltd.
2A cheque signed by Mr Temple payable to a creditor of the defendant. Item 6 was drawn on the account of Kellyvale (No 64) Pty Ltd which is not a party to these proceedings and was payable to Edge Computers. Item 2 was drawn on the account of Mane Market Pty Ltd and made payable to Boom Crash Opera.
3A cheque signed by Mr Temple made payable to cash. Item 1 was drawn on the account of Mane Market Pty Ltd and was paid as a deposit for the Jimmy Barnes concert.
4Cheques not signed by Mr Temple. Item 10 was drawn on the account of Flinders Management Pty Ltd and is shown as a reduction in Mr Temple’s loan account with the defendant. Item 9 was drawn on the account of Mane Market Pty Ltd and was shown as a loan to the Crown Hotel. Item 12 was drawn on the account of Mane Market Pty Ltd and was applied in reduction of Mr Temple’s loan account with the defendant.
It is convenient to deal first with the cheques referred to in category 2 above. These are the cheques paid to a creditor. I have already indicated that I do not think that the cheque to Edge Computers (item 6) can be the subject of a successful claim. In addition, because I find that there is no proof that the defendant received the cheques or the proceeds thereof, the comment may be made in relation to both cheques (items 6 and 2) that a triable issue has arisen. Even if it is assumed that the cheques were received by creditors of the defendant, and thereby a liability of the defendant to that creditor may have been discharged, that does not mean that the plaintiffs must succeed. It is open to the defendant to argue that in those circumstances the claim based on money had and received by the defendant has not been established. For those reasons I do not think that the claims of Mane Lion Pty Ltd and Mane Market Pty Ltd, respectively based on items 6 and 2, can succeed on this application pursuant to SCR 25.02.
Before turning to the other three categories, it is necessary to record further findings of fact and conclusions of law. In his affidavit of 24 October 2002, Mr Jappe deposed to the fact that he is a legal practitioner and was employed by the plaintiffs’ solicitors. The effect of his affidavit is that he conducted an extensive search of the records of the plaintiff companies and other companies, all of which he has described as the Ocean Central Group. He also conducted interviews with a number of former employees and professional advisers of members of the Ocean Central Group. He said at paragraphs 15 and 16 of his affidavit:
“15In the course of my investigation and review of the records referred to above, I found no documents by way of account, invoice or receipt relating to the 12 cheques. I did not find any document indicating or apparently evidencing that any of the 12 cheques referred to in the sixth appendix:
15.1 related to the purchase of goods by or on behalf of the respective drawers of those cheques from Southern Hotels Pty Ltd
15.2 related to the provision of services by Southern Hotels to or on behalf of the respective drawers of those cheques.
16In particular, I did not find any invoice from Southern Hotels to any of the plaintiffs by counterclaim for any of the amounts of the cheques listed in the sixth schedule. I did not find any document in the nature of an agreement between Southern Hotels and the plaintiffs by counterclaim that would explain the transactions in question.”
That affidavit is relevant to the question of whether or not it could be said that the defendant gave consideration in respect of any of the cheques which it received. In addition, no evidence has been adduced by the defendant through Mr Gray or otherwise to indicate that the plaintiffs or any of them had received consideration from the defendant in respect of the cheques drawn on their respective accounts. In accepting Mr Jappe’s evidence and there being no evidence to the contrary, I find that none of the plaintiffs received any consideration in respect of any of the twelve cheques the subject of the plaintiffs’ claim.
The affidavit of Mr Weeks of 30 January 1997 deals with the history of the relationship between himself and Mr Temple and their respective associated companies. Arising from discussions between Mr Weeks and Mr Temple in late 1992, a joint venture was entered into whereby Mr Weeks would invest in the acquisition of hotels in South Australia with a view to a later sale at a profit. Mr Weeks or companies nominated by him were to provide loan funds of up to $2 million in respect of which interest was to be paid by the companies comprising the joint venture. Mr Temple was to be the chief executive of the joint venture. Mr Weeks was to have no day-to-day role in the joint venture. He described himself as a “passive investor”. Mr Temple was to be personally involved in the day-to-day executive management of the joint venture.
The required company structures were set up. Between October 1992 and November 1994 Mr Weeks caused nearly $3.9 million to be lent to the joint venture. Administrative, operational and financial management services were provided by Execucorp Pty Ltd, of which Mr Temple was the managing director.
In the latter part of 1994, Mr Weeks became dissatisfied with the operations of the joint venture.
By December 1995 Mr Weeks, through a company called Quantile Pty Ltd had made loans which totalled in excess of $6.3 million.
In paragraph 22 of his affidavit Mr Weeks stated that Mr Temple did not have authority to operate a debit loan account with any of the entities comprising the Ocean Central Group, which is a group of companies of which the plaintiffs formed part. In other words, Mr Temple had no authority to draw funds from any of those companies by way of loan from the company to Mr Temple.
In accepting Mr Weeks’ evidence, as confirmed by him in September of this year and in the absence of evidence to the contrary, I find that Mr Temple had no authority to draw the cheques which were signed by him and which were paid to the defendant. In addition, he had no authority to request or direct any employee or officer of any of the plaintiff companies to draw the cheques which were not signed by him. I find that he was aware of the lack of authority.
At the time of the drawing of the cheques Mr Temple was a director of the respective plaintiff companies and he was also a director of the defendant. I base this latter finding on the affidavit of Mr Fuller sworn on 18 July 2002 which exhibits to it the financial statements of the defendant for the year ending 30 June 1995 and the year ending 30 June 1996, which show that Mr Temple was a director of the defendant until at least 30 June 1996. In particular, Exhibit DJF6 sets out the historical company extracts in relation to the plaintiffs and the defendant and these disclose the common directorship of Mr Temple during the period March 1993 to July 1995 when the twelve cheques the subject of the respective claims of the plaintiffs were drawn and paid either to the defendant or, in two instances, to creditors of the defendant.
In relation to the cheques which are items 10 and 12, these were cheques used to reduce Mr Temple’s loan account with the defendant. They were not signed by him but it is nevertheless appropriate to infer that the cheques were drawn and paid without authority in light of Mr Weeks’ statement that Mr Temple had no authority to create a loan account with any of the companies forming part of the Ocean Central Group. If the drawing of such cheques was done at the instigation of Mr Temple, it was clearly without authority. Even if the two cheques were drawn and paid to the defendant other than at the instigation of Mr Temple, there was clearly no authority to draw and pay such cheques to the defendant.
There remains to be considered the cheque which is item 9 in the sum of $2,840.00 not signed by Mr Temple. That cheque was paid into the defendant’s bank account and was said in the cheque butt to be a loan to the Crown Hotel. Mr Jappe’s evidence indicates that there was no documentary evidence of any agreement on the part of Mane Market Pty Ltd to lend monies to the defendant. The defendant has not adduced any evidence to suggest that there was such a transaction entered into either recorded in writing or agreed to orally. In those circumstances I think it appropriate to infer that the monies the subject of the cheque were advanced to the defendant in circumstances where the person who drew the cheque had no authority to do so.

In arriving at the above findings I have taken into account the affidavit evidence of Mr Gray. In his affidavit of 12 July 2002 he said that he was a director of the defendant and had been the defendant’s accountant since 1991. None of the admissible evidence in that affidavit detracts from the plaintiffs’ claims.
The other affidavit of Mr Gray, sworn on 31 October 2002, related to the question of evidence being obtained by way of affidavit from Mr Temple. It is clear from that affidavit and the exhibits thereto that Mr Temple has declined to co-operate.
Three further matters remain to be considered: first, whether or not the defendant was aware of the lack of authority on the part of Mr Temple on the one hand and the other signatories to the cheques on the other hand; second, whether or not in respect of any of the transactions the defendant has acted to its detriment so as to constitute an arguable defence; and, third, whether, if any of the various claims must proceed to trial, the Court should decline to deal with the balance of the claims summarily.
As to the first question, as I previously indicated, von Doussa J in Beach Petroleum NL and Another v Johnson and Others (supra) dealt with the question of imputed knowledge. He said (at para 22.20):
“Counsel for SEJ rely on Re Hampshire Land Company [1896] 2 Ch 743 and J C Houghton & Co v Nothard, Lowe & Wills Ltd [1928] AC 1. In Re Hampshire Land Company Vaughan Williams J considered the question whether knowledge of a common officer of two corporations was to be imputed to both corporations. He said (at 748):
‘... that the knowledge which has been acquired by the officer of one company will not be imputed to the other company, unless the common officer had some duty imposed upon him to communicate that knowledge to the other company, and had some duty imposed on him by the company which is alleged to be affected by the notice to receive the notice.’ ”
Von Doussa J later said (at 25):
“... In ordinary circumstances, if a director knows information which is important to the affairs of the company, he is under a duty both to communicate that information to the company and to receive it.”
Later in his reasons (at para 22.22) his Honour said:
“The reasoning in Re Hampshire Land Company and Houghton is expressed in terms reflecting principles of agency. The officer or director whose knowledge was in question was considered as a representative of the company. By the time of those decisions it was well established that a principal was not imputed with the knowledge of facts known to the agent where the agent was committing a fraud upon the principal and the information known to the agent was relevant to the fraud: Cave v Cave (1880) 15 Ch D 639 and Re European Bank; Ex parte Oriental Commercial Bank (1870) 5 Ch App 358. The Belmont Finance cases provide a more recent example of the application of the principle: see in particular Belmont Finance Corporation Ltd v Williams Furniture Ltd (No 1) [1979] 1 Ch 250 at 261-262 where Buckley LJ said:
‘But in my view such knowledge should not be imputed to the company, for the essence of the arrangement was to deprive the company improperly of a large part of its assets. As I have said, the company was a victim of the conspiracy. I think it would be irrational to treat the directors, who were allegedly parties to the conspiracy, notionally as having transmitted this knowledge to the company; and indeed it is a well-recognised exception from the general rule that a principal is affected by notice received by his agent that, if the agent is acting in fraud of his principal and the matter of which he has notice is relevant to the fraud, that knowledge is not to be imputed to the principal. So in my opinion the plaintiff company should not be regarded as a party to the conspiracy, on the ground of lack of the necessary guilty knowledge.’
See also Southern Cross Commodities Pty Ltd (In liq) v Ewing (1988) 91 FLR 271.”
The defendant relied upon the principles stated above and argued that the knowledge of Mr Temple was not to be imputed to the defendant because Mr Temple was perpetrating a fraud upon the defendant. I cannot accept this submission. As it was explained by von Doussa J in the passages cited above, the question of the imputation of knowledge is expressed in terms of agency. It could not be said that any fraud was being perpetrated upon the defendant by Temple as agent for the defendant. If fraud was involved it was in respect of the plaintiffs by the drawing of cheques when there was no authority to do so and where Mr Temple was aware of that lack of authority. Consequently, I reject the defendant’s contention that in the circumstances of this case Mr Temple’s knowledge that he had no authority to draw the various cheques signed by him should not be imputed to the defendant.
I would add that even if I am wrong in that view, it seems to me that the plaintiffs do not have to demonstrate that such knowledge was to be imputed to the defendant through Mr Temple because, in Lipkin Gorman, the House of Lords held that the monies the subject of that action could be recovered from a recipient who had no knowledge of the wrongdoing of the solicitor. For this reason, it is not necessary for the plaintiffs to establish imputed knowledge in respect of the cheques not signed by Mr Temple.
The next question to be considered is whether or not, in respect of any of the transactions, the defendant has acted to its detriment. Mr Ross-Smith contended that it was at least arguable that the defendant had acted to its detriment in relation to the payments received by the defendant and that as such a triable issue arose. I reject this submission because there is not one jot of evidence which supports it. The question of detriment is a matter which is peculiarly within the knowledge of the defendant and no evidence has been adduced by it to suggest that it has in a material way acted to its detriment in relation to the receipt of the payments.
In light of the findings of fact and conclusions of law referred to above, I have come to the conclusion that the plaintiffs have established, except in the cases of items 2 and 6, that the payments were made by the plaintiffs to the defendant in circumstances where:
(a)no consideration was provided for the payments;
(b)the monies were paid by the plaintiffs without authority;
(c)the defendant is imputed with the knowledge of the relevant lack of authority; and
(d)that the defendant has been an unjustly enriched at the expense of the plaintiffs.
Because the plaintiffs have failed in respect of two items, I must consider whether or not, as was contended by the defendant, I should nevertheless decline to enter judgment because the claim in respect of two of the cheques must proceed to trial. As I have pointed out earlier in these reasons, the decision in Toldale v Sloper dealt with a very small proportion of the plaintiffs’ overall claim and in those circumstances the Court may decline to deal with a small proportion of the plaintiffs’ claim in a summary way. That is not the case here. The plaintiffs have been substantially successful in respect of their claims. They have established that there is no triable issue arising in relation to all of the cheques but the two previously referred to. In those circumstances I consider it appropriate to permit the plaintiffs to have their claims determined summarily with the exceptions of items 2 and 6.
In due course I propose to enter judgment in favour of the respective plaintiffs against the defendant as follows:
In respect of items 4, 7 and 8, judgment in favour of Mane Lion Pty Ltd against the defendant.
In respect of item 10, judgment in favour of Flinders Management Pty Ltd against the defendant.
In respect of item 11, judgment in favour of North East Management Pty Ltd against the defendant.
In respect of items 1, 3, 5, 9 and 12, judgment in favour of Mane Market Pty Ltd against the defendant.
However, before judgment may be entered, it will be necessary to consider the question of interest which has been claimed by the plaintiffs. A schedule setting out the calculation of the interest claimed and the rates of interest should be prepared by the plaintiffs’ solicitors.
It will also be necessary for me to hear counsel as to the costs of the application.

[2002] SASC 378

19 November 2002