Sherwin v Commens

[2008] NTSC 45

Sherwin and Sherwin v Commens and Commens [2008] NTSC 45

PARTIES:	SHERWIN, Peter
AND:
SHERWIN, Florence Fay
v
COMMENS, Craig Robert
AND:
COMMENS, Maria Jan
TITLE OF COURT:	SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:	SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:	44 of 2007 (20710748)
DELIVERED:	30 October 2008
HEARING DATES:	21, 22, 23 & 24 July 2008
JUDGMENT OF:	SOUTHWOOD J
CATCHWORDS:

CLAIM FOR RECOVERY OF DEBTS – Whether payments of monies were
advanced by way of loans or gifts – whether documents constitute
acknowledgment of loans – whether demand for repayment was made to
debtor – claim allowed
Elsinora Global Ltd v Deputy Commissioner of Taxation (2006) 155 FCR
413; Heydon v Perpetual Executors Trustees and Agency Co (WA) Ltd

(1930) 45 CLR 111; Hexiva Pty Limited and Ors v Lederer and Ors (2)

[2007] NSWSC 49; Kalls Enterprises Pty Ltd (In Liquidation) and Ors v
Baloglow and Anor (No 3) [2007] NSWCA 298, applied

Hungerford v Walker (1989) 171 CLR 125, referred to

REPRESENTATION:

Counsel:

Plaintiffs:	M Maurice QC
Defendants:	Self represented

Solicitors:

Plaintiffs:	Cridlands
Defendants:	Self represented

Judgment category classification: B

Judgment ID Number:	Sou0812
Number of pages:	27
IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA AT DARWIN

Sherwin and Sherwin v Commens and Commens [2008] NTSC 45

No 44 of 2007 (20710748)

BETWEEN:

PETER SHERWIN

First Plaintiff

AND:

FLORENCE FAY SHERWIN

Second Plaintiff

AND:

CRAIG ROBERT COMMENS

First Defendant

AND:

MARIA JAN COMMENS

Second Defendant

CORAM:  SOUTHWOOD J

REASONS FOR JUDGMENT

(Delivered 30 October 2008)

Introduction

1. This is a proceeding for the recovery of debts that are claimed by Mr and

   Mrs Sherwin to be due and payable to them by Mr and Mrs Commens. The

   proceeding was commenced by Writ filed on 19 April 2007. Mr Peter

   Sherwin and Mrs Florence Fay Sherwin claim the sum of $1,120,000 plus interest from their son-in-law, Mr Craig Robert Commens, and their

   daughter, Maria Jan Commens.

2. Mr Commens was unrepresented. He has defended the claim against him. On

   13 August 2007 judgment in default of appearance and defence was entered

   in favour of Mr and Mrs Sherwin against Mrs Commens for the sum of

   $1,120,000 plus interest in the amount of $31,588.60 and costs of $737.00.

3. In their Second Further Amended Statement of Claim, Mr and Mrs Sherwin

   plead as follows:

   1.         The plaintiffs are the parents of Maria Jan Commens and the parents-in-law of Craig Robert Commens.

   2.         On or about 23 December 1999 the plaintiffs lent to the defendants the sum of $500,000 and on or about 19 December 2001 the plaintiffs lent a further $500,000 to the defendants. On or about 28 December 2000 the plaintiffs lent to the defendants the sum of $50,000, and on or about 20 September 2002 the plaintiffs lent to the defendants the sum of $70,000 (“the loans”).

   3.         The moneys advanced by the loans were for the use of and to assist the defendants in the business partnership conducted by them in the name of CR & MJ Commens (“the business”).

   4.         It was an implied term of the loans that they would be repaid by the defendants to the plaintiffs within a reasonable time after request being made for payment.

3A.	Alternatively, the loans were repayable upon request being made for repayment.
5.	The sale of the defendants’ remaining two farming properties was completed on or about 15 June 2005, immediately following which the plaintiffs requested repayment of the loans.
6.	The defendants have failed to pay the plaintiffs any sum in respect of their indebtedness to the plaintiffs, and are indebted thereto in the sum of $1,120,000.
7.
The plaintiffs have lost the use of the amount of the loans from with the principles in Hungerford v Walker (1989) 171 CLR 125.
And the plaintiffs claim $1,120,000, interest and costs.

1. During the course of the hearing, Mr and Mrs Sherwin abandoned their

claim for damages in accordance with the principles in Hungerford v
Walker[1].

1. In his Further Amended Defence Mr Commens admitted that on or about

   23 December 1999, Mr and Mrs Sherwin paid to him and Mrs Commens the

amount of $500,000 and that on or about 19 December 2001 Mr and
Mrs Sherwin paid to him and Mrs Commens a further amount of $500,000.

Mr Commens denied that the monies were advanced by way of a loan. He

alleged that both payments were gifts from Mr and Mrs Sherwin to him and
Mrs Commens and are not repayable. Mr Commens did not admit that the

sums of $50,000 and $70,000 were paid to him and Mrs Commens by Mr and
Mrs Sherwin. In the alternative Mr Commens alleged that if the amounts of

$50,000 and $70,000 were paid to him and Mrs Commens then those

amounts were also gifts to assist him and Mrs Commens in their married life
together and are not repayable.

The issues

1. The principal issue in the proceeding is did Mr and Mrs Sherwin pay the

   four amounts totalling $1,120,000 to Mr and Mrs Commens by way of loan

   or was the money advanced as gifts?

2. The burden of proving that the four amounts totalling $1,120,000 were

advanced as loans is on Mr and Mrs Sherwin: Heydon v Perpetual Executors
Trustees and Agency Co. (WA) Ltd [2].

The evidence

1. The evidence that was led on behalf of Mr and Mrs Sherwin comprised an

affidavit of Mrs Sherwin that was sworn on 8 February 2008, the oral
evidence of Mrs Sherwin, an affidavit of Mr Sherwin that was sworn on
8 February 2008, the oral evidence of Mr Sherwin, a report and oral

evidence of Michelle Helena Novotny who is a handwriting expert, and a
report and oral evidence of Dr Venugopalan who is a psychiatrist. Both
Mr and Mrs Sherwin gave evidence about the circumstances in which they

came to advance the total amount of $1,120,000 to Mr and Mrs Commens. Ms Novotny gave evidence that in her opinion it was highly probable that

the second signature on Exhibit P1, which is a written Acknowledgement of

Loan of $500,000 from Mr and Mrs Sherwin, is that of Mr Commens.

Dr Venugopalan gave evidence that Mrs Commens suffers from a major depressive disorder that is in partial remission with active psychiatric

treatment. In his opinion, giving evidence in court and being subject to
cross-examination could be a major stress for Mrs Commens in her present
mental condition and it is likely that such stress would have a significant
adverse affect on her mental condition.

1. Mr and Mrs Sherwin did not call Mrs Commens to give evidence.

   Mrs Commens is in Mr and Mrs Sherwin’s camp. Mr and Mrs Commens

   have separated. They are in the process of going through a divorce and

   proceedings are on foot in the Family Court of Australia. Mrs Commens is

   living in a house that is owned by Mr and Mrs Sherwin and they are paying

   for some of her legal fees in the Family Court of Australia. However, no

adverse inference can be drawn against Mr and Mrs Sherwin for not calling
Mrs Commens to give evidence. They did not call her to give evidence

because they believed that she was psychiatrically unfit to give evidence.

Their decision is supported by the evidence of Dr Venugopalan. I accept the

evidence of Dr Venugopalan. In my opinion there was a significant risk that Mrs Commens’ mental condition may suffer adversely if she gave evidence.

The risk remained even if Mrs Commens gave evidence by way of video

conferencing.

1. Mr Commens gave oral evidence, and an affidavit that he swore on 15 May

   2008 was read. Mr Commens gave evidence that he was not privy to any

   discussions about the advancement of the four amounts totalling $1,120,000.

   All of the discussions about those amounts were between Mrs Sherwin and

   Mrs Commens. At all times he understood that each of the four amounts of

money was a gift. Mr Commens also gave evidence that at no stage before
he was served with a copy of the Writ did either Mrs Sherwin or Mr Sherwin

ask him to repay any of the four amounts of money totalling $1,120,000.

The first defendant’s credit

1. Before setting out my findings of fact it is necessary to state what is my

assessment of the evidence of Mr Commens. I found Mr Commens to be an
almost wholly unreliable witness. He was deliberately evasive, defensive
and dissembling. He feigned a lack of knowledge about his financial
position at the relevant times. I find that he lied to the Court when he said

that he did not sign Exhibit P1 which is a written acknowledgement that the

amount of $500,000 which was paid to Mr and Mrs Commens on
19 December 2001 was to be repaid to Mr and Mrs Sherwin. I also find that

Mr Commens lied when he said that he neither caused the various facsimiles

about the financial position of his and Mrs Commens’ farming business to
be sent to Mr and Mrs Sherwin nor did he have any knowledge of those

documents being sent to them. Having done so, I have found it difficult to

accept most of his evidence.

1. Mr Commens’ evidence that he did not sign Exhibit P1; the facsimile dates

   on the various statements of financial position that were sent to Mr and Mrs Sherwin were fabricated; and he had no involvement in sending the

   documents to Mr and Mrs Sherwin lacked the ring of truth and reality. He

admitted that, bar one document which was in Mrs Commens’ handwriting,
all of the statements of financial position which were sent to Mr and
Mrs Sherwin were in his handwriting and there was no evidence that the

facsimiles had been tampered with in any way.

1. I do not accept Mr Commens’ argument that each of the four sums of money

was a gift. Mr Commens’ argument is intrinsically implausible.
Mr Commens said that he had no dealings with Mrs Sherwin about financial

matters, Mrs Commens had all of the dealings with Mrs Sherwin about
financial matters, but he did not say that Mrs Commens told him at any stage

that Mr and Mrs Sherwin were giving them a gift of any money or that he

enquired about how the money came to be paid into his bank account. It
cannot be that money appeared in his bank account but he had no
conversation with Mrs Commens about how the money came to be paid into
his bank account. Mr Commens failed to provide any basis for his belief or

assertion that the four sums of money were paid as gifts. He failed to do so
in circumstances where, according to his own evidence, he had full use of all

four sums of money for the purposes of the farming business.

1. Mr Commens lied because of his antipathy towards Mr and Mrs Sherwin,

which has arisen because he believes that Mr and Mrs Sherwin have not duly
recognised his true worth or the contribution that he has made to their
family or the care that he says he has provided to Mrs Commens, and

because he does not want to repay the sum of $1,120, 000. Mr Commens’

antipathy towards Mr and Mrs Sherwin was glaring throughout the
proceeding.

1. On the other hand I accept the evidence of Mr and Mrs Sherwin. They were

unshaken in cross-examination, and their evidence was logical and internally
consistent. Their evidence was also supported by the Acknowledgment of
Loan dated 20 December 2001 that was signed by Mr and Mrs Commens and

the statements of financial position that were sent by Mr and Mrs Commens

to Mr and Mrs Sherwin before the two amounts of $500,000 were advanced
to them.

1. To the extent that there is a conflict between the evidence of Mr and

   Mrs Sherwin and Mr Commens I prefer the evidence of Mr and

   Mrs Sherwin.

   The facts

[17] I make the following findings of fact.

1. During 1989, Mr and Mrs Commens became interested in purchasing two

rural properties, “The Glen” and “Lonesome Dove”. The properties are
situated near Oakey which is a small country town in the Darling Downs in
South East Queensland.

1. In February 1990, Mr and Mrs Sherwin advanced an amount of

approximately $924,361 to Mr and Mrs Commens to purchase The Glen and
Lonesome Dove. In or about June 1990, Mr and Mrs Commens completed

the purchase of the two properties. The properties were purchased with

money provided by Mr and Mrs Sherwin. Mr Commens says that the money
which was advanced for the purchase of the properties was a gift. Mr and
Mrs Sherwin say that the money was advanced as a loan. It is not necessary

to decide this question nor is it necessary to decide, if the monies were a

loan, if the debt was forgiven. No claim is made by Mr and Mrs Sherwin for

the repayment of that money.

1. After Mr and Mrs Commens purchased The Glen and Lonesome Dove they

sold their home in Brisbane. The home was purchased for them by Mr and
Mrs Sherwin as a gift. Mr and Mrs Commens then made their home on

Lonesome Dove. Mr Commens made improvements to the two properties

and he conducted farming activities on the properties. Mrs Commens was his
partner in the farming business. In order to conduct the farming activities

Mr Commens acquired farm machinery, plant and equipment, the acquisition

of which he financed through institutional lenders. He also obtained an
overdraft facility at his bank which he used in part to meet the operational
expenses of the farming business, in part to pay for some improvements to
the properties and in part to obtain income for him and Mrs Commens.

1. In addition to obtaining finance from banks and other institutional lenders,

   Mr and Mrs Commens also received advances of money from Mr and

   Mrs Sherwin which were used to pay for improvements to the two properties

   including the construction of a large dam on The Glen, to purchase a tractor,

   to purchase cattle and for operational expenses. Apart from moneys which

were advanced to Mr and Mrs Commens to purchase a house in Carindale in
Brisbane, all of the money advanced by Mr and Mrs Sherwin to Mr and
Mrs Commens, in which Mr Commens had an interest in receiving, was

advanced in connection with Mr and Mrs Commens’ farming business.

1. The farming activities of Mr and Mrs Commens were not successful. They

   appear to have over capitalised on infrastructure and other improvements to the properties; Mrs Commens made very little contribution to the operation

of the properties; Mr Commens was not a very skilful farmer; he became
distracted by other matters; he devoted a lot of time to caring for his wife,

who became an alcoholic and who suffers from psychiatric problems, and to
caring for his children; and from time to time the properties were affected
by drought. In his affidavit sworn on 15 May 2008, Mr Commens states that

over the 15 years that they owned the rural properties they struggled
financially. They had few good seasons but the good seasons were

significantly outweighed by the bad seasons. They struggled to keep afloat. As a result Mr and Mrs Commens got into significant debt and from time to

time they were pressured by the banks and other financial institutions about

the payment of various outstanding amounts of money.

1. On or about 4 May 1999, Mr and Mrs Commens purchased a rural property

called “Success” for $600,000. Mr and Mrs Commens borrowed the whole of
the purchase price of $600,000 for the property from the National Australia
Bank Limited. The loan was an interest only loan with a floating interest

rate which was required to be repaid to the bank as soon as possible.

1. By the beginning of December 1999, Mr and Mrs Commens owed the banks

   and other financial institutions more than $1 million. They had an overdraft of about $500,000, the interest only loan of $600,000, and they owed money for the acquisition of various farm machinery, plant and equipment. In his

affidavit sworn on 15 May 2008, Mr Commens states that, although the bank
was not about to foreclose, they were struggling financially. The farm was
not productive and it was not producing anywhere near enough income to
support Mr and Mrs Commens and their children.

1. On or about 18 December 1999 Mr Commens telephoned Mrs Sherwin and

   they had a conversation to the following effect:

Mr Commens:	Granny, can you give us some finance to carry us through because the banks are up us and we need to pay our overdraft.
Mrs Sherwin:	We don’t really want to give you any more money because we have been putting in too much and not getting anything back.
Mr Commens:	You’ll get it back.

1. Mr Commens then handed the telephone to Mrs Commens and she and

   Mrs Sherwin had a conversation to the following effect:

Mrs Commens:	Mum, we’re desperate – the banks are after us for money and we need $500,000 to stay a float.
Mrs Sherwin:	I don’t really want to put any more in but I’ll speak to [Mr Sherwin] about it. We are not getting any interest on this money and we aren’t seeing any of it coming back. I’ll let you know.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

2. After she spoke to Mr and Mrs Commens on 18 December 1999,

   Mrs Sherwin spoke to Mr Sherwin about Mrs Commens asking Mrs Sherwin

   if they would advance her and Mr Commens the sum of $500,000.

   Mr Sherwin told Mrs Sherwin that he did not want to lend Mr and

   Mrs Commens any more money. He said that he would not stop Mrs Sherwin

   from lending them more money but she should ask Mr and Mrs Commens for

some documentation about their financial position so they could assess how
Mr and Mrs Commens were going.

1. On 20 December 1999, Mrs Sherwin telephoned Mrs Commens and told her

that she and Mr Sherwin might agree to lend them the amount of $500,000 if
Mrs Commens sent Mrs Sherwin some documentation setting out their

financial position. Mrs Commens agreed and at about 10.10 pm on

20 December 1999 either Mr Commens or Mrs Commens sent Mr and

Mrs Sherwin a facsimile which very roughly set out some details about the

financial position of Mr and Mrs Commens’ farming business. The facsimile

was handwritten by Mr Commens and it has the telephone number of Mr and
Mrs Commens on it and the header ‘CR & MJ Commens’. A copy of the

facsimile was tendered in evidence.

1. The details on the facsimile dated 20 December 1999 that were in

Mr Commens’ handwriting included the following: ‘overdraft $500,000’,
‘loan $110,000’, ‘machinery payment $18,000 twice yearly’, and ‘new farm

$600,000’. Mr Sherwin perused the facsimile dated 20 December 1999. He

was not satisfied with the limited information that it contained about Mr and
Mrs Commens’ financial position. As a result, he either faxed the facsimile

dated 20 December 1999 back to Mr and Mrs Commens or he requested

Mrs Sherwin to obtain more detailed information from them.

1. On 22 December 1999, Mr and Mrs Sherwin received a further facsimile

   from Mr and Mrs Commens. The facsimile has Mr and Mrs Commens’

   telephone number on it along with the header ‘CR & MJ Commens’. The

contents of the facsimile were handwritten by Mr Commens. The facsimile
was tendered in evidence as Exhibit P4. The facsimile contains more
detailed information about the financial position of Mr and Mrs Commens’

farming business. Not only did it contain a summary of the various amounts

owed by Mr and Mr Commens but it contained the interest rates applicable
to each amount owed and a rough statement of income and expenditure. The

document contains a statement that was handwritten by Mr Commens that,

“We can cope with all of the payments if we could reduce the overdraft and

cut expenditure.”

1. The facsimiles respectively dated 20 and 22 December 1999, were provided

   by Mr and Mrs Commens to Mr and Mrs Sherwin for the purpose of

   persuading Mr and Mrs Sherwin to lend them the amount of $500,000. The

   fact that Mr and Mrs Commens sent the facsimiles to Mr and Mrs Sherwin

   rebuts Mr Commens’ suggestion that the amount of $500,000 was a gift. I accept Mr Maurice’s submission that if the monies were intended as a gift there would be no need for Mr and Mrs Sherwin to scrutinise the financial

   position of Mr and Mrs Commens’ farming business. The only purpose for

   which the financial information was sought and given was so that Mr and Mrs Sherwin could assess if they had any prospect of getting their money

   back from the conduct of the farming operations.

1. Mr Sherwin reviewed the contents of the facsimile dated 22 December 1999.

   He did not think that the further information provided by Mr Commens was

reliable information and he did not want to lend the amount of $500,000 to
Mr and Mrs Commens. Nonetheless, Mr Sherwin told Mrs Sherwin that it

was up to her if she wanted to loan Mr and Mrs Commens the amount of
$500,000 and they reluctantly agreed to lend the money so that Mr and

Mrs Commens could clear their overdraft.

1. On 22 December 1999 Mrs Sherwin telephoned Mrs Commens and they had

   a conversation to the following effect:

Mrs Sherwin:	We will lend you the money but it must be paid back.
Mrs Commens:	Yes. Ok Mum.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

2. On 23 December 1999, Mr and Mrs Sherwin caused the sum of $500,000 to

be paid into Mr and Mrs Commens’ bank account. I find that on
23 December 1999 Mr and Mrs Sherwin lent Mr and Mrs Commens the sum

of $500,000 which was repayable on demand. While there was no discussion
between the parties about when the sum of $500,000 was to be repaid, the

law implies that in such circumstances the amount of $500,000 was

repayable on demand.

1. On or around 27 December 2000, Mrs Commens telephoned Mrs Sherwin

and she asked Mrs Sherwin for a further loan of $50,000 so that Mr and
Mrs Commens could pay wages and other operating expenses of their

farming business. The substance of their telephone conversation was as

follows: 

Mrs Commens:	Mum, we need another loan. We need to pay for fuel, stores and wages and the like. The banks look like cutting everything off.
Mrs Sherwin:	I know you are desperate but I still need to speak to dad because we are worried about the level of debt and still no repayment. If we lend you the
money you need to know that it needs to be repaid like everything else.
Mrs Commens:	Yes of course, we will repay it.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

2. On 28 December 2000 Mr Sherwin arranged for the sum of $50,000 to be

   transferred to Mr and Mrs Commens account with the National Australia

   Bank Limited. I find that on 28 December 2000 Mr and Mrs Sherwin lent

Mr and Mrs Commens the sum of $50,000 which was repayable on demand.
While there was no discussion between the parties about when the sum of

$50,000 was to be repaid, the law implies that in such circumstances the

amount of $50,000 was repayable on demand.

1. After the purchase of Success on 4 May 1999 and obtaining the two loans

   from Mr and Mrs Sherwin totalling $550,000, the financial position of

   Mr and Mrs Commens’ farming business did not improve. The properties

continued to be affected by drought and Mr Commens was spending a lot of
time caring for Mrs Commens instead of working on the land. They

remained in a difficult financial position.

1. In early December 2001, Mrs Commens telephoned Mrs Sherwin and asked

   her for a further loan of $500,000. The substance of the telephone

   conversation was as follows:

Mrs Commens:	Mum, we’re desperate again. The banks are up us again and they have been further up Craig. Can you lend us $500,000?
Mrs Sherwin:	Look, we don’t want to loan any more money. I will have to beg your dad for it.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

[43]   Following the above telephone conversation Mrs Sherwin spoke to

Mr Sherwin about Mrs Commens’ request for a further loan of $500,000.

Mr Sherwin told Mrs Sherwin that he was against lending Mr and

Mrs Commens more money but if she wanted to lend them more money he would reluctantly agree to do so. Mr Sherwin told Mrs Sherwin that before they agreed to any further loan they should obtain some further information

about Mr and Mrs Commens’ financial commitments.

1. On 9 December 2001 either Mr Commens or Mrs Commens sent a facsimile

   to Mr and Mrs Sherwin containing very rough details about the extent of

   Mr and Mrs Commens’ indebtedness in relation to their farming business,

   the amounts owing in relation to various farming machinery, plant and

equipment, an estimate of some of the costs of planting certain crops on the
rural properties and some income projections based on the production of
various crops. Mr Commens had handwritten the information contained in
the facsimile and the facsimile had Mr and Mrs Commens’ telephone

number on it and the header, “CR & MJ Commens”.

1. The facsimile dated 9 December 2001 reveals that Mr and Mrs Commens

were carrying a debt level in excess of $1.4 million and that Mr and
Mrs Commens had annual financial commitments for various machinery,

plant and equipment of about $140,000.

1. Mr Sherwin was unsatisfied with the detail of the financial information

contained in the facsimile dated 9 December 2001 and arrangements were
made to obtain further financial information from Mr and Mrs Commens. On
13 December 2001, Mrs Commens sent another facsimile to Mr and

Mrs Sherwin. The facsimile contained additional financial information about

Mr and Mrs Commens’ farming business. The facsimile dated 13 December 2001 reveals that Mr and Mrs Commens were carrying a total debt in excess

of $1.8 million, urgent and pressing bills totalled $670,000, Mr and Mrs Commens expected to incur costs of $115,000 in relation to the

production of crops, and they expected to earn an income in excess of

$800,000.

1. I find that in sending the facsimile dated 13 December 2001, Mrs Commens

was acting as Mr commens’ partner in the farming business. I find she was
so acting whenever she may have sent the statements of financial position to
Mr and Mrs Sherwin.

1. The facsimiles respectively dated 9 and 13 December 2001, were provided

   by Mr and Mrs Commens to Mr and Mrs Sherwin for the purpose of

   persuading Mr and Mrs Sherwin to lend them the further amount of

   $500,000. The fact that Mr and Mrs Commens sent the facsimiles to Mr and

   Mrs Sherwin rebuts Mr Commens’ suggestion that the amount of $500,000

   was a gift. I accept Mr Maurice’s submission that if the monies were intended as a gift there would be no need for Mr and Mrs Sherwin to

scrutinise the financial position of Mr and Mrs Commens’ farming business.
The only purpose for which the financial information was sought and given

was so that Mr and Mrs Sherwin could assess if they had any prospect of
getting their money back from the conduct of the farming operations.

1. After Mr and Mrs Sherwin received the facsimile from Mr and

   Mrs Commens dated 13 December, Mr Sherwin reviewed the financial information contained in the facsimiles. He was concerned that the estimated

   income of Mr and Mrs Commens’ farming business was inflated and that the

expenses of operating the farming business had been under estimated. His
overall impression was that the level of Mr and Mrs Commens’ debt was
disproportionate to the size of their rural properties and the financial

information that he had received reaffirmed his view that he did not want to

lend them any more money. As a result, Mr and Mrs Sherwin agreed that

they would only lend Mr and Mrs Commens the further sum of $500,000 if
they were prepared to sign a document acknowledging that the money was a

loan which was to be repaid.

1. On 19 December 2001 Mrs Sherwin spoke to Mrs Commens on the

   telephone. The substance of the telephone conversation was as follows:

Mrs Sherwin:	We will transfer the money to your account begrudgingly but we need you both to sign a letter saying that you will pay back the $500,000 and we want you to send us the original.
Mrs Commens:	Yes, we will send a letter signed by both of us.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

2. On 19 December 2001, after the Mrs Sherwin’s telephone conversation with

   Mrs Commens, Mr Sherwin sent instructions to the Commonwealth Bank to

transfer the amount of $500,000 to Mr and Mrs Commens’ bank account. On
20 December 2001 Mrs Commens prepared a handwritten acknowledgment
of the loan of $500,000. The acknowledgment is dated 20 December 2001. It
is signed by both Mr and Mrs Commens. It states as follows:

This is a letter to say that P & FF Sherwin gave a much appreciated loan to CR & MJ Commens for the amount of $500,000 (five hundred thousand dollars) to be repaid.

Thanking you very much.

1. Mrs Commens sent the written acknowledgment of loan to Mr and

   Mrs Sherwin. The original document was tendered in evidence as

   Exhibit P1. I find that on 19 December 2001 Mr and Mrs Sherwin lent

   Mr and Mrs Commens the amount of $500,000 which was repayable on

   demand. While there was no discussion between the parties about when the

sum of $500,000 was to be repaid, the law implies that in such
circumstances the amount of $500,000 would be repayable on demand.

1. Mr Commens denied that he signed the acknowledgement of loan dated

   20 December 2001. However, having looked at the various specimen

signatures that Mr Commens’ acknowledged were his signatures and having
considered the expert report of Ms Novotny and her oral evidence, I am
satisfied that Mr Commens did sign the Acknowledgement of Loan.
Mr Commens did not stand up well to the cross-examination of

Mr Maurice QC about this issue. At times, Mr Commens went very close to

conceding that it was his signature. When asked if the document could have
come into existence in 2001, Mr Commens stated that it could have come
into existence at any time. When asked, if the document was brought into
existence in 2001, it would have been highly probable that it would have
been put in front of him and he would have been asked to sign it,

Mr Commens answered it might have or it could have been but he did not

know. When asked by Mr Maurice QC to state his reasons as to why he

maintained that the acknowledgement of loan was a ‘dodgy’ document, Mr
Commens almost forgot to mention his allegation that the document did not

contain his signature.

1. In the middle of September 2002 Mrs Commens telephoned Mrs Sherwin to

ask for a further loan of $70,000. The substance of the telephone
conversation was as follows:

Mrs Commens:	Mum, we need another $70,000 to pay for planting crops, wages and other bits and pieces. We can’t pay ourselves.
Mrs Sherwin:	We can’t keep lending you both money, especially when you are not paying us back. I will have to check with Dad.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

2. After the above telephone conversation, Mrs Sherwin spoke to Mr Sherwin

and they agreed to lend Mr and Mrs Commens the further amount of
$70,000. On 20 September 2002 Mrs Sherwin telephoned Mrs Commens and

they had a conversation the substance of which was as follows:

Mrs Sherwin:	Dad has agreed to loan you both another $70,000 but the money has to be repaid.
Mrs Commens:	We will pay you back.

1. I find that in the course of the above conversation Mrs Commens was acting

   as Mr Commens’ partner in the farming business.

2. On 20 September 2002 Mr Sherwin arranged for $70,000 to be transferred

   from his Commonwealth Bank account to Mr and Mrs Commens’ bank

account. I find that on 20 September 2002 Mr and Mrs Sherwin lent Mr and
Mrs Commens the amount of $70,000 which was repayable on demand.

While there was no discussion between the parties about when the sum of

$70,000 was to be repaid, the law implies that in such circumstances the

amount of $70,000 was repayable on demand.

1. On 30 November 2002 Mr and Mrs Commens sold The Glen. On 15 June

   2005 Mr and Mrs Commens sold Lonesome Dove and Success. Following

   the sale of Lonesome Dove and Success and the payment of the debt which

was owed to the banks, Mr and Mrs Commens purchased three new
properties. The properties were situated at Corey Street, Speeds Road and

Sussex Drive. The Corey Street property was a town block with a dwelling

on it in which Mr and Mrs Commens lived for a period of time. The Speeds Road property is a 220 acre grazing block that was purchased for $300,000.

The Sussex Drive property is a one acre block. Mr Commens also made a

loan to Mark and Andrea Talbot of $140,000 and a separate loan to Mrs

Talbot of $20,000. Mr and Mrs Commens were also left with $750,000 from the proceeds of the sale of Lonesome Dove and Success which was placed in

their bank account.

1. In the middle of 2004, Mrs Sherwin had a conversation with Mr Commens at

   the Sheraton Hotel in Brisbane. During the conversation Mrs Sherwin told

   Mr Commens that he would have to start paying some of the borrowed

money back to Mr and Mrs Sherwin. After Mrs Sherwin made this statement
Mr Commens left the room in which they were sitting at the hotel.

1. After the sale of Lonesome Dove and Success, Mrs Sherwin spoke to

   Mrs Commens about the unpaid loans. The substance of the conversation

   was as follows:

Mrs Sherwin:	Rusty, you have money now. Go to the bank and get a cheque for $1 million and pay us back.
Mrs Commens:	Mum, if I do that, Craig has threatened me that he will not help me with the children – he said he won’t lift a finger to help me with the children. I can’t do it.

1. A few weeks after the above conversation, Mrs Sherwin again spoke to

   Mrs Commens about the unpaid loans. The substance of the conversation

   was as follows:

Mrs Sherwin:	Rusty can you get me a cheque for $500,000. You know I had to beg your father for that money to help you both out.
Mrs Commens:	Mum, Craig told me that we don’t owe you any fucking money. I can’t get you that cheque.

1. Mrs Sherwin made the demands of Mrs Commens for the repayment of the

   loans when she believed Mr and Mrs Commens were in a position to repay

   the outstanding amounts.

2. Despite the demands made by Mrs Sherwin, Mr and Mrs Commens have

refused to pay and have not repaid the loan amounts that are the subject of
this proceeding. As a result, on 19 April 2007 the Writ was filed in the

proceeding. I accept Mr Maurice’s submission that the reason for the delay

in the commencement of the proceeding was that Mr and Mrs Sherwin were

reluctant to commence a legal proceeding against their daughter and they
were concerned about the effect that any legal proceeding would have on the
relationship between Mr and Mrs Commens. However, in April 2007
Mrs Sherwin was told by Mrs Commens that her relationship with

Mr Commens had broken down and she was going to separate from

Mr Commens. Mr Commens has not suggested that the loans were forgiven

after the conversations referred to in pars [61], [62] and [63] above.

1. I find that amount of $1,120,000 is due and payable by Mr Commens to

   Mr and Mrs Sherwin.

   Interest

2. Mr and Mrs Sherwin have claimed interest since 1 July 2005, which date

   approximates to the date that Mrs Sherwin made the demand for repayment that is referred to in par [63] above, at the rate of 10.5 per cent per annum. The rate of interest of 10.5 per cent per annum is the rate of interest that is applicable on a judgment of the Court under the Supreme Court Rules. The Supreme Court Rules provide that the rate of interest payable on a judgment

of the Court is the rate of interest specified in the Federal Court Rules. Rule
35(8) of the Federal Court Rules specifies that a judgment debt carries

interest at a rate of 10.5 percent per year.

1. In support of the proposition that the rate of 10.5 percent per year should be

   the applicable rate of interest up to judgment, Mr Maurice QC relied on the following authorities: Kalls Enterprises Pty Ltd (In Liquidation) and Ors v

   Baloglow and Anor (No 3)[3]; Elsinora Global Ltd v Deputy Commissioner of

   Taxation[4]; Hexiva Pty Limited and Ors v Lederer and Ors (2)[5]. In

accordance with those authorities I accept that an interest rate of 10.5 per
cent is a fair and reasonable rate of interest. There was no evidence before
the Court to suggest that a rate of interest of 10.5 percent per year was penal

or non-commercial.

1. Applying a rate of interest of 10.5 per cent per annum from 1 July 2005,

   Mr Maurice QC calculated the amount of interest claimed by Mr and

   Mrs Sherwin up to 21 July 2008 as follows:

Date of	Date	Date of	Loan	FC	Total	Total
Loan	Interest	Award	Amount	Interest	Days	Interest

Runs Rate Unpaid

23/12/1999 1/07/2005 21/07/2008 $500,0000 10.50% 1116 $160,520.55

28/12/2000 1/07/2005 21/07/2008 $50,000	10.50%	1116	$16,052.05
19/12/2001 1/07/2005 21/07/2008 $500,000	10.50%	1116	$160,520.55
20/09/2002 1/07/2005 21/07/2005 $70,000	10.50%	1116	$22472.88
$359,566.03

1. The above calculations result in a daily amount of interest of $322.19 being

   payable on the total amount due and payable of $1,120,000.

2. In my opinion Mr Commens should not be required to pay interest for the

whole of the period from 1 July 2005 to 30 October 2008. The loans were
gratuitous loans and Mr and Mrs Sherwin deliberately decided not to

commence recovery proceedings until they were satisfied that the
relationship between Mr and Mrs Commens had irretrievably broken down
which was in or about April 2007. In my opinion interest should only run
from the date that the Writ was filed in the proceeding which was on 19

April 2007 and I exercise the Court’s discretion under s 84 of the Supreme

Court Act as to the awarding of interest accordingly.

1. I determine that Mr Commens should pay Mr and Mrs Sherwin an amount of

   interest of $180,104. I have calculated that amount by multiplying the daily

amount of interest of $322.19 by 559 days being the number of days
between 19 April 2007 and 30 October 2008.

Orders

[73]   I make the following order:

There shall be judgment for the plaintiffs against Mr Commens for the sum of $1,120,000 plus interest of $180,104 being a total amount of $1,300,104.

[74] I will hear the parties further as to costs.

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[1] (1989) 171 CLR 125

[2] (1930) 45 CLR 111

[3] [2007] NSWCA 298

[4] (2006) 155 FCR 413

[5] [2007] NSWSC 49