Simonovski v Bendigo Bank Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 5425 of 2001

KOLE SIMONOVSKI	Plaintiffs
BLAGICA SIMONOVSKA
v
BENDIGO BANK LTD (A.C.N. 068 049 178)	Defendant

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JUDGE:	Ashley J
WHERE HELD:	Melbourne
DATE OF HEARING:	9,10,11,12,13,16,17,18,19,20,23,24 and 25 September; 28,29,30 and 31 October; 6,7,8,11,12,13 and 14 November 2002
DATE OF JUDGMENT:	31 March 2003
CASE MAY BE CITED AS:	Simonovski and Anor v Bendigo Bank Ltd
MEDIUM NEUTRAL CITATION:	[2003] VSC 91

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Banker and customer – whether moneys deposited by customer or customer lent name to alias account controlled by another – misappropriation by corrupt bank officer – whether withdrawals made by authorised third party – whether withdrawals should go in reduction of defendant's indebtedness to plaintiffs – interest – nature of plaintiffs' claim as bearing upon entitlement to interest.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr G. Garde, QC and Mr A. Sandbach	Novatsis & Alexander
For the Defendant	Mr A. Howard, QC and Mr J. O'Bryan	Hall & Wilcox

TABLE OF CONTENTS

The substance of the proceeding.................................................................................................... 1

A late-raised basis of claim.............................................................................................................. 2

Interrelationship of issues................................................................................................................ 4

Language of Convenience................................................................................................................ 6

The Participants in the Meeting certainly held on 31 January 1989......................................... 7

The meeting on the morning of 31 January 1989....................................................................... 15

The Account 0801 passbook...................................................................................................... 15

The P. Krstic, P. Nastevski and R. Simonovic accounts............................................................. 22

P. Krstic......................................................................................................................................... 22
Pero Nastevski............................................................................................................................. 24
Role Simonovic............................................................................................................................ 26
Some conclusions........................................................................................................................ 29

Account 1089..................................................................................................................................... 68

The life of accounts 0801 and 2401: Jansen and Hilli............................................................. 78

The telegraphic transfer and funding of the Janevskis’ overseas trip.................................. 87

The telegraphic transfer............................................................................................................. 87
The overseas trip funds.............................................................................................................. 90

Account 2402..................................................................................................................................... 91

The 1994 withdrawals...................................................................................................................... 98

The 1997 withdrawals.................................................................................................................... 106

Interest.............................................................................................................................................. 125

Conclusion....................................................................................................................................... 132

HIS HONOUR:

The substance of the proceeding

The plaintiffs, Mr Kole and Mrs Blagica Simonovski, claim that in late January 1989 they deposited amounts equivalent to about $122,000 and $650,000 into what is now the Bendigo Bank Ltd.[1] They claim that they did so at its Sunshine Plaza premises. They say that each transaction was made with a bank employee, Mr Frank Panebianco (“Mr Panebianco”). On the occasion of the first deposit, they say, there was a fourth person present: Mr Milutin (Mick) Janevski, Mrs Simonovski’s brother. On each occasion, they say, they were issued with a passbook showing the amount of the deposit. They claim that they are entitled to recover from the Bank a substantial part of the $122,0000 and all of the amount of $650,000, in each case plus much interest. Passbooks were introduced into evidence as exhibits A1 and A2, the former in respect of the smaller amount and the latter in respect of the larger amount. Each was given a ledger number. The numbers were, respectively, 0801 and 1089. It is convenient to refer to matters in dispute simply as pertaining to “account 0801” and “account 1089”.
[1]In 1989, the institution was the Bendigo Building Society. It became the Bendigo Bank Ltd in 1995. It is not in debate that the defendant is liable to the plaintiffs, if liability there is. It is convenient to describe the party with whom the plaintiffs dealt as “the Bank” in these Reasons, except when dealing with a particular issue raised between the parties.

The Bank’s defence has gone through a number of versions[2]; sometimes in response to changes in the Statement of Claim. The defence as at trial denied that the defendant was ever in a banker and customer relationship with the plaintiffs. It denied that the plaintiffs established either of the alleged accounts with it. It pleaded that account 0801 was an account created by Mr Panebianco at the request of Mr Mick Janevski, to be operated by he and his wife “under the alias” of the plaintiffs. It asserted that funds to constitute account 0801 were transferred from accounts in the names of P. Kristic[3], P. Nastevski and R. Simonovic. It pleaded that if moneys were deposited by the plaintiffs so as to constitute account 0801 then amounts totalling $139.835.96 were paid to accounts styled Jansen and Hilli; and that moneys were paid "to the plaintiffs' agents Mr Milutin and Mrs Olivera Janevski” from a variety of sources including three branch suspense accounts and accounts in the names of T. Jovanovski[4] and T. Simic. The moneys so paid, it alleged, amounted to $169,267.72.[5]
[2]Compare the documents at CB218-222, 230-237, 283-286 and 21-24.
[3]Or Krstic
[4]Presumably an intended reference to an account in the name of P. Jovanovski.
[5]This sum included an amount of $50,239.44 allegedly paid into the Jansen account.

Concerning account 0801, the plaintiffs’ case, as I noted a few moments ago, is that they are entitled to receive most of the amount deposited, plus accrued interest. They accept that two amounts should go in reduction of the deposit: $25,000 and $29,630.28.

A late-raised basis of claim

Senior counsel for the plaintiffs submitted, in his closing address on the twenty-fourth and last day of the trial, that it would not matter if the plaintiffs had not given money to Mr Panebianco amounting to about $122,000 on 31 January 1989, nor if the sources of funds credited to account 0801 were accounts controlled by the Janevskis. For an account had been established in the plaintiffs’ names, the plaintiffs were the bank’s customers, and the defendant’s contractual obligations were as between it and the plaintiffs, whatever be the source or sources of the moneys credited.

The Statement of Claim, see relevantly paragraph 7, specifically alleged deposit of moneys by the plaintiffs. By its defence, as I have already noted, the Bank pertinently denied that it was in a banker/customer relationship with the plaintiffs. It denied that account 0801 was opened by the plaintiffs. It alleged[6] that the account was created by Mr Panebianco at the request of Mick Janevski, to be operated by he and his wife under the alias of the plaintiffs. It alleged[7] that the funds credited to the account were sourced from three other accounts then existing in the bank.
[6]In its final, as with earlier versions.
[7]Consistently with earlier versions.

The plaintiffs did not by their reply plead that, upon the matters alleged by the defendant[8], their claim must in any event succeed. They did not allege that they must be taken to be the customers of the bank notwithstanding the matters alleged by the defendant. They did not plead that the defendant owed them a contractual duty in the circumstances to honour the account, regardless of the source of the amounts credited to the account.
[8]Excepting the denial that a banker/customer relationship had been created.

When the case was opened for the plaintiffs, nothing was said about the submission now under discussion. The case was opened, consistently with the statement of claim, as one in which the plaintiffs had made two deposits on 31 January 1989. The plaintiffs case was laid out to show that they had the wherewithal to bring, and had in fact brought, a large amount of cash into Australia in December 1988, all or most of which money, in Deutschmarks (DM), they had given to Mr Panebianco on 31 January 1989.

I drew to counsel’s attention, after he had made the submission, the state of the pleadings and the way in which the case had been opened. His response was to contend that, as a matter of law, based upon the relationship of banker and customer, his clients were entitled to succeed. He made no application to amend either the statement of claim or the reply.

In my opinion the plaintiffs should not be permitted to rely upon this late-raised basis of claim. If they had wished to rely upon it they should have pleaded, after the defendant had pleaded paragraph 7 of the Defence in its present form, the substance of that claim - presumably specifying, inter alia, the terms or incidents of the contract which were alleged to yield a favourable outcome. If that was not done before trial, at the least their counsel should have raised the issue at the outset. Had he done so, a debate about the pleadings no doubt would have taken place. Had the plaintiffs then been permitted to amend, issue could have been properly joined. It may reasonably be conjectured that the course of evidence would not have been the same. Additional evidence might well have been called. I should have expected, also, debate in final addresses about the merits or otherwise of the issue joined. None of that happened.

Interrelationship of issues

As will be apparent from what I have already said, the case requires the resolution of relatively few questions: first, on a day in early 1989 did the plaintiffs establish one or both of the accounts and in any such case give Mr Panebianco the amounts alleged? Second, if the plaintiffs did establish account 0801, and if they gave Mr Panebianco the equivalent of about $122,000, what amounts were withdrawn against that deposit? Third, if a conclusion favourable to the plaintiffs was reached with respect to one or both accounts, on what basis should interest be calculated in each instance and what amount of interest has accrued, always allowing for withdrawals on account 0801? The plaintiffs carry the onus of proof in respect of the first question; and upon the third question if and insofar as it was a matter of evidence. The defendant carries the onus in respect of the second of them. About onus, the parties were agreed.

Whilst, however, relatively few questions require resolution, their resolution has been very difficult. The credit of the main witnesses for both sides was subjected to severe attack. Resolution of the issues was complicated by records provided from the custody of the defendant; and a variety of documents which emerged from what were described as "Mr Panebianco's files". Documents of both descriptions bore in many cases the imprint of Mr Panebianco. There was good reason to doubt their reliability.

Evidence concerting the meeting undoubtedly held on 31 January 1989 was given by each of the plaintiffs, Mr Janevski and Mr Panebianco. Evidence concerning the second alleged meeting was given by the plaintiffs and Mr Panebianco. The conflict was stark. That evidence aside, much evidence was adduced to show the probability or otherwise of the competing accounts.

Resolution adversely to the plaintiffs of some issues that were debated – for example, whether the plaintiffs had in fact traded in businesses so profitably as to acquire much of cash which they claimed to have brought to Australia – would decide the case. But an answer favourable to the plaintiffs upon such an issue would not necessarily mean that it should be accepted that they did hand moneys to Mr Panebianco on 31 January 1989.

Other matters that were debated bore both upon facts in issue and the credit of the leading witnesses. For example, if the plaintiffs had lied about there being a second meeting on 31 January 1989, their claim in respect of account 1089 must fail. The fact that they had lied would affect their credit. Should they then be believed when they said that they gave money to Mr Panebianco at the first meeting?

Along the same lines, Mr Janevski denied that he had made certain withdrawals on the Simonovski account – which he understood to be still extant – in 1997. If he had lied in that respect, it would effect his credit. Could his evidence that he was not the “owner", colloquially, of alias accounts which were the nominal sources of funds deposited into account 0801, and that he had seen Mr Simonovski hand money to Mr Panebianco on 31 January 1989, then be relied upon? Looked at in the obverse way, if I concluded that Mr Janevski lied in saying that he was not the owner of particular alias accounts, would the impact upon his credit be such that I should not accept his evidence that critical accounts were not his alias accounts; or that he had not made the 1997 withdrawals?

From the perspective of the defendant, it was conceded by senior counsel that the bank’s case substantially depended upon the evidence of a corrupt former bank officer, a self-confessed thief. What impact should that have, for example, upon Mr Panebianco’s evidence that there was no second meeting on 31 January 1989, that no moneys at all changed hands that day, that the funds channelled into account 0801 were derived from Janevski alias accounts, and that the Janevskis had drawn on the Simonovski funds in 1997?

Again, if I concluded that Mr Panebianco’s evidence about the 1997 withdrawals should be disbelieved, what impact should the further damage to his credit have on his evidence about the events of 31 January 1989, and concerning the alleged alias accounts?

To take another example from the defendant’s perspective, according to its case at trial – by contrast with its case as earlier pleaded – funds deposited into account 0801 on 31 January and 1 February 1989, having passed through account 2401, were misappropriated by Mr Panebianco on 30 November 1989. If I concluded that he had deliberately concealed that offence when his conduct was investigated in 1998 and 1999, what impact should it have upon his credit, and so upon the question whether I should accept his evidence on substantive issues? And what significance, if any, could and should I attach to the fact that on his account at trial he set up alias accounts in late 1989 to facilitate the misappropriation of moneys from account 2401?

There was, then, an interrelationship of issues which means that these Reasons could logically take any one of a number of entry points. That said, it must be constantly borne in mind that what occurred at the meeting which was certainly held on 31 January 1989 is of central importance; as is whether there was a second meeting that day. To those issues I shall turn after I have said something concerning language of convenience and after I have made some general observations about the circumstances of the principal witnesses, and as to their credit.

Language of Convenience

Evidence to which I must refer in detail concerns the circumstances in which accounts 0801 and 1089 were allegedly established, closure of account 0801, the establishment and closure of account 2401, the establishment of a fictitious account 2402, and the question what drawings, if any, there were upon what may compendiously be described as the account 0801 funds.

Whatever the source or sources of the credit entries in the account 0801 passbook, the passbook evidenced a debt in favour of the account holder. The defendant did not hold an identifiable bundle of cash referable to account 0801. When that account was closed and account 2401 was opened, no bundle of cash accompanied the transaction. Likewise when account 2401 was closed. Likewise when the fictional account 2402 was opened. Nonetheless, it is convenient to refer, and I will refer, in these Reasons to "the funds" or "the moneys" in particular accounts.

To somewhat similar effect, Mr Janevski believed[9] at all times until Mr Panebianco was unmasked that funds first represented by account 0801 remained in the defendant's hands; though not all those funds. One of the allegations made by the defendant and denied by the plaintiffs is that Mr and Mrs Janevski made a number of withdrawals against what they understood to be an extant Simonovski account. It would be repetitious and unnecessary to refer in each instance to "an assumed Simonovski account" in order to make the point that, after 30 November 1989, the Janevskis' understanding was not the fact. Insofar as it becomes necessary to deal with the alleged withdrawals, and to refer more generally to funds first represented by the account 0801 passbook, I will refer simply to "the Simonovski account" or "the Simonovski funds".
[9]As did his wife

The Participants in the Meeting certainly held on 31 January 1989

Mr Kole Simonovski is a man aged 56 who was born in that part of the old Yugoslavia which is now the Former Yugoslav Republic of Macedonia. He did his schooling there, and had a little post-secondary education. He migrated to Sweden in 1967, and has mainly lived in that country ever since. He undertook a period of national service in his home country in 1974. During that time he met and within a year married his wife. In about 1977 he opened a pizza restaurant in Stockholm. Since then, on his account, he has bought, operated and in some cases sold restaurants in Stockholm and its environs. Probably in about 1984 he acquired a restaurant at the Vardar Film Institute in Skopje in his native country. This he operated until 1986. Then he sold it. For much of the period between 1984 and 1986 he lived in Skopje whilst his wife and their three children – born in 1976, 1980 and 1982 – lived in Stockholm.

Mr Simonovski gave evidence that for a number of years he has owned property in his native country: a residence in Skopje, which he seems to have acquired from other members of his family; and a flat in that city. The former, he said, he demolished and then rebuilt over a period of years in the 1980s and 1990s. There was corroborative evidence that it has been leased to the United States government since 1995, and that it is used as an embassy or consulate.

The witness gave evidence that in 1986, on his return to Sweden, he and his wife discussed migrating to Australia. His parents were then living in his native country, and his brother in Sweden. But his wife’s parents, her brothers and their wives were living in Australia. She wished to migrate. He was not persuaded.

Clear it is that the family did apply to migrate to Australia and that the application was approved in or about September 1986.[10] Clear also it is that Mr Simonovski visited Australia for a period in 1987, not accompanied by his family. Clear again it is that he, his wife and three children arrived in Australia on 4 December 1988; and that they left this country on 1 February 1989.
[10]Exhibit M.

Many important aspects of Mr Simonovski’s evidence were challenged. The cross-examination was searching. The witness, to whose evidence I shall refer in detail later on, did not emerge with his credit entirely unscathed. That said, having heard him give evidence over a period of days, albeit through an interpreter, and having observed him whilst he gave his evidence, he created a most powerful impression. It is not an impression which sufficiently emerges from the hard copy text of his evidence. He was composed and confident when giving his evidence. He showed very obvious intelligence. He conveyed a strong impression of a man who had succeeded in business despite a lack of formal education. He showed a willingness to take a risk; as with bringing a large amount in US dollars into Australia in the period immediately preceding the trial in order to show that it could be done, and to show the physical size of a large bundle of currency. He created an impression that, having worked hard to make money, he would not be disposed to give any more of it than was necessary to tax authorities. I found it easy to accept that he would hoard hard currency, and that he would do so for one or more of three reasons: to defeat the tax man, because of cultural factors, and/or by reason of a distrust of financial institutions in his country of birth.

Mrs Blagica Simonovski, who also gave evidence through an interpreter, created a much less definite impression than did her husband. I did not take her to have his innate intelligence. I thought that she would readily demur to him. I took him to be the principal business-person in the family. I considered that her recollection of events on 31 January 1989 was less good than that of her husband, and that it was plainly inaccurate in some respects.

Mr Mick Janevskigave evidence, partly through an interpreter and in part directly. I noted difficulties in this hybrid form of evidence[11]. I am satisfied that the witness had a reasonable but imperfect grasp of English where simple questions were involved. I am also satisfied that his level of understanding of questions involving any complexity, absent an interpreter, was poor.
[11]At T379-380; T383-384.

The evidence showed that Mr Janevski and his wife migrated to Australia in the mid-1970s. So did Mr Janevski’s parents, Mr Janevski’s brother Vidmar, and his wife Mira.

In about 1980, the two Janevski families opened up a toy and gift shop at Broadmeadows. In about 1982 they opened a similar business at Sunshine Plaza, close to what became of the defendant’s Sunshine branch. A third business was opened in Gladstone Park in about 1985.

According to Mr Janevski the business banking pertaining to the toy shops was initially done with the then State Bank of Victoria, thereafter with the Commonwealth Bank. That evidence remained uncontroverted, and I see no reason not to accept it.

Mr Janevski said that he first Mr Panebianco in about 1983 or 1984. The latter came into his shop to buy toys for his children.[12] Mr Panebianco was then branch manager at Sunshine.
[12]T361.

Mr Janevski said that between 1983 and 1987 he saw Mr Panebianco quite often each week. In about 1985 or 1986 he deposited money with the defendant. He thought that there was one account, in the names of his wife and himself.[13] The defendant adduced no evidence as to the existence or otherwise of such an account. I see no reason not to accept Mr Janevski’s evidence that he and his wife did establish an account with the defendant some years before the disputed events of January 1989.
[13]T381.

I shall go no further with the chronology now. To do so would be to enter upon areas of hotly-disputed fact which must later be analysed. For present purposes the questions are: what overall impression did Mr Janevski convey; and how stood his credit at trial’s end?

The answer to the first question is that whilst it appears that the businesses prospered, at least in the 1980s, Mr Janevski did not convey the impression of being a particularly intelligent man; rather the contrary. If Mr Panebianco is to be believed, Mr Janevski devised a scheme of opening up multiple alias accounts to avoid interest and tax, gave names – some real and some fictitious - to the accounts, and directed the movement of funds from one alias account to another for unexplained reasons. There is certainly documentation which gives support for such a version of events. But other evidence satisfies me that Mr Panebianco readily duped Mr Janevski on a number of occasions; that the latter was ready to and did sign a variety of more or less incomplete documents at the behest of Mr Panebianco; and that such was the trust which Mr Janevski and his wife placed in Mr Panebianco that it was only years after their first concern about his activities with their moneys and those (allegedly) of the plaintiffs that they lodged formal complaint with the defendant.

As to the second question which I posed a moment ago, there was substantial challenge to the truthfulness of aspects of Mr Janevski’s evidence. In some respects, I consider, that challenge was made good. His credit was to an extent damaged. In other respects, to the contrary, the challenge rather revealed lack of understanding on Mr Janevski’s part.

Mr Frank Panebianco gave evidence that he is now a business consultant specialising in commercial lending. He also builds computers to order and supplies them to clients. He said that he joined the defendant in 1981 as branch manager at Sunshine.[14] He remained branch manager until May 1987. Then, until June 1988, he was liaison manager, stationed at Werribee but visiting a number of branches including Sunshine. Between July 1988 and February 1991 he was business development manager, stationed at Werribee but visiting those other branches. Sometimes, in that period, he worked as a relieving branch manager. Between February 1991 and June 1993 he was branch manager at Footscray. Then, until he was dismissed in May 1998, he was branch manager at Niddrie.
[14]It was not then operating at Sunshine Plaza.

Mr Panebianco's employment ended after he admitted many thefts from bank clients from about 1982 onwards. In 1999 he was charged with a number of offences arising out of those activities. He pleaded guilty and was sentenced on 10 September that year. According to the defendant’s case in this proceeding, he had “come clean”; and pertinent aspects of his evidence before me could be relied upon. According to the plaintiffs’ case he had continued a pattern of deception in the course of a very inadequate investigation of his criminal conduct, and had further continued it in this trial. He was animated, counsel for the plaintiffs submitted, by antagonism towards the Janevskis, whose complaint had initiated the investigation which led to him being unmasked.

Mr Panebianco described his role as business development manager between 1988 and 1991 this way:

“To support the branch network, branch managers that were coming in, to get loans on behalf of the bank. My specialty was lending at the particular time, and support [of] the branches.”[15]

[15]T1199.

Mr Panebianco said that as business development manager he visited branches such as Sunshine:

“Only when there was a need to… only when I was directed by head office to relieve at a branch I would go to a branch. If a branch manager had rung and asked for my assistance I would go and support the branch. It was pretty much on a need basis.”[16]

[16]T1281.

In late 1988 and early 1989, he said, he would have visited the Sunshine branch at least once a month. Having regard to all the evidence, I consider it probable that Mr Panebianco visited the Sunshine branch more often. Indeed, in later evidence he made a concession to that effect. But it is probably the fact that he visited, for the most part at least, because there was particular business to transact.

Again I stop short of analysing Mr Panebianco’s crucial evidence, and focus upon the impression which he generally created as a witness. It was, I regret to say, a very unfavourable one.

There are two elements in that assessment. First, I am satisfied that very often Mr Panebianco’s answers were based upon reconstruction. He gave many answers of the “would have” variety, then compounded the matter by converting them to answers of certainty when invited to do so by defendant’s counsel. Second, subject to what I have just said, I have the clearest impression that throughout his evidence he answered questions quickly and decisively when it suited him; and did not answer questions at all when it did not suit him. His technique in not answering questions was either to answer a question that he had not been asked; or else to say that he could not remember.

One thing Mr Panebianco could always remember: much – not all – of what he had done pertaining to the circumstances of this litigation had been done at the instance of Mr Janevski. This he said repeatedly, whether the question required it or not. By contrast, matters about which he professed no recollection were often glaringly obvious and the inevitable answers to questions which were asked would not have assisted his general thesis.

Mr Panebianco conceded that he had had an opportunity of reviewing documentation pertinent to the case before he gave his evidence. Many documents came from “his files”. Mr Panebianco, as it turned out, volunteered these documents to the Bank’s investigation team in 1998. Almost laughably, the investigators asked him to give them what he had. They, and the Court, have his word that what he produced is what there was. Further, the Court for the most part has his word as to what the documents show. Many of them, for example, were not dated.

It is the fact that at a number of points in his evidence Mr Panebianco admitted to criminal conduct which was not the subject of charges laid against him. He can be given credit for doing so. But there are two sides to the matter. Aspects of his evidence highlighted the untruthfulness of statements which he made to investigating police officers in 1998 concerning what he claimed were Janevski moneys, and what the plaintiffs claim were their moneys. He failed to reveal to the police what on his version was the misappropriation of over $139,000 from the Janevskis in November 1989. His evidence, also, makes not readily comprehensible his plea of guilty to stealing $67,760 from the Janevskis on 5 May 1992[17]. That plea might be said to have been an admission to theft of a much smaller amount than that which had actually occurred.
[17]Count 2 on the presentment, exhibit H.

I permitted the tender, for the defendant, of the plea and sentencing remarks. The tender was made, partly at least, on the basis that the material could go to restore Mr Panebianco’s credit, which had been attacked in cross-examination. It was argued that his genuineness in dealings with the bank and investigators had been attacked, but that the plea and sentence would show that he had been genuine.[18]
[18]T1475.

Having read the plea, which informed the remarks of the learned sentencing judge, having read also the transcript of interviews between Mr Panebianco and police officers, and between Mr Panebianco and officers and agents of the bank, and having considered the other evidence in this trial, I do not consider that the plea or the sentencing remarks do anything relevantly to restore Mr Panebianco’s credit. Before me, he was cross-examined to suggest that he had misled the investigators, that he had revealed only the tip of the iceberg. The evidence has satisfied me that his earlier revelations were far from complete. That stands in contradiction to the case presented for the Crown on the plea, no doubt on instructions.[19] Further, Mr Panebianco’s case on the plea took as its starting point his alleged reluctance to open alias accounts.[20] In some way that was said to have led to the thefts. The theme was repeated.[21] Yet according to the defendant’s case in this proceeding, enthusiastically adopted by Mr Panebianco, he had opened a considerable number of such accounts; and no reluctance on his part to doing so was disclosed. Indeed, he gave evidence in cross-examination, which he repeated in re-examination, that there was no inhibition upon opening alias accounts in the 1980s; and that the practice had been discussed between senior bank officers in the late 1980s.[22]
[19]See, eg, CB713, 714; as to the offence of stealing $67,760.57 see CB716-717.
[20]T727-278.
[21]See, eg., in Mr Healey’s evidence at T741.
[22]See T1349 and 1491.

It is apparent that the learned sentencing judge accepted the contention that Mr Panebianco’s offences were a consequence of robbing Peter to pay Paul, consequent on a reluctance to open alias accounts[23]. His Honour imposed a custodial sentence that was for the most part suspended. It is not my function to punish the defendant for the circumstance that Mr Panebianco’s plea was put in a way which consideration of all the evidence which I have heard and read would not justify; nor to punish the defendant for what might be thought to have been a sentence that, because the learned sentencing judge was only partly informed, was lenient. It is, on the other hand, permissible to conclude that there is nothing in the plea which should operate, pertinently, to restore Mr Panebianco’s credit.
[23]Exhibit 100, at CB 771.

The meeting on the morning of 31 January 1989

A conclusion as to what occurred at the meeting held on the morning of 31 January 1989 between the plaintiffs, Mr Janevski and Mr Panebianco, rests in the main upon:

(1) Consideration of the oral evidence of the participants.
(2)The answer to the question, when could the pass book label first have been created for account 0801?
(3)The answer to the question, when could the pass book produced to the Court as exhibit AI, and containing lines 2, 3 and 4, first have been printed?
(4)Elucidation of the sources, according to the defendant’s records, of the funds credited to account 0801 as recorded on lines 2, 3 and 4 of the pass book.
(5)The answer to the question, who effected the entries by which, according to the defendant’s records, the funds credited on lines 2, 3 4 of the pass book were debited to other accounts and flowed into account 0801?
(6)The answer to the question, whether the apparent sources of the funds referred to on lines 2, 3 and 4 of the pass book were accounts controlled by Mick Janevski?
(7)The answer to the questions, whether the plaintiffs had accumulated a large amount in cash as they claimed to have done, whether they brought much of that cash to Australia, and whether it is likely that they would have deposited most of it with the defendant?
(8)Consideration of the credit of each of the participants to the meeting.

I deal immediately with matters (2), (3), (4) and (5).

The Account 0801 passbook

The passbook for account 0801 is on any view genuine. It is a Bendigo 7 passbook in a December 1988 style or print run. The label on its rear side was undoubtedly printed on a dot matrix printer then in use by the defendant. The printer was probably an Olivetti PR2845. That type of printer was particularly equipped for use in a financial institution. It was not the kind of printer that could be bought off the shelf.

The printer, at the time when the label was printed, was certainly connected to the bank’s computerised retail finance system (RFS). In order that it be printed there must first have been recorded in that system a customer number and a ledger or account number.

The system recorded the plaintiffs as customers, and assigned them a customer number – 1575604 - at 12.08 pm on 31 January 1981. Changes were recorded at 12.18 and 12.19 pm.

The system established an account number – that is 0801 – at 12.21 pm on 31 January 1989. This was done though the terminal opened on that day by teller 382A, Mrs Maria Barber. But it cannot be said that it was she who conducted the particular dealing.

The figures 0801 represent the first account of the particular customer in ledger 8.

The passbook label could have been printed at any time after 12.21 pm on 31 January 1989. There is no document which shows when it was printed.

The entries on lines 2, 3 and 4 of the passbook were made at the same time. The great probability that this is so is established in two ways. First, the entries have a common transaction number – 0087. The transaction number shows the number of the transaction for a particular terminal opened up by a particular teller on the particular day. Theoretically, it could be the case that there was one transaction on 31 January 1989, and one, of two entries, on 1 February 1989; each transaction coincidentally being the eighty-seventh transaction for the day. That would be a remarkable coincidence, the more so in that the teller who entered lines 2, 3 and 4 into the passbook was the same person.[24]
[24]Or, at least, it was the terminal operated by the same teller that was used in each case.

Second, the evidence of Dr Found, the document examiner, shows an identity of ink type for the entries on line 2, 3 and 4; just as, to take another example, his evidence shows an identity of ink type for the entries on lines 5 and 6 and for lines 7 to 10. Considered independently, the more so if taken in conjunction with the transaction and teller numbers, it would strain coincidence to imagine that the entries on line 2, 3 and 4 were not made at the same time.

The bank maintained teller transaction registers in 1989. Many bank documents that went into evidence were subject to severe and deserved criticism. But the transaction register for terminal BHA 1 at the Sunshine Plaza branch for 31 January 1989 and 1 February 1989 can in certain respects be relied upon. It relevantly shows that three deposits were made into account 0801, as follows:

·     $56,000 at 4.33 pm on 31 January 89;
·     $20,226.15 at 2.05 pm on 1 February 89; and
·     $46,000 at 4.35 pm on 1 February 89.

The record shows that a passbook was not presented at the time of any of those deposits, each of which was purportedly made in cash. I accept the accuracy of the record in the former connection. But as to the latter, I am sure that the three deposits were not in cash; and that the transactions were entered by Mr Panebianco, who deliberately misdescribed them.

The working of the transaction register, as described in the evidence, has satisfied me that the entries on lines 2, 3 and 4 of the 0801 passbook were printed after 4.35 pm on 1 February 1989 – that is, the time of the last of the three deposits. Noting that the entries at lines 5 and 6 have a different transaction number – that is, 0091 – it can be concluded that the entries on lines 2, 3 and 4 must have been made no later than 31 March 1989. They could have been made at any time between 4.35 pm on 1 February 1989 and 31 March 1989.

According to the evidence of Dr Found, the four entries for 28 July 1989 represent a distinct ink source. That evidence, together with the identical transaction number and teller number referable to those entries shows convincingly that they were made at the same time. I do not doubt that the entry on line 10 is misleading insofar as it suggests that there was a cash withdrawal.

28 July 1989 is the date on which, according to Mr Panebianco, account 0801 was closed and moneys standing to its credit were invested in a term deposit numbered 2401 in the name of the plaintiffs, but on the instructions of Mr Janevski. About those interrelated transactions something must later be said.

Thus far I have dealt with the questions when the passbook was created and when and by whose act the entries on lines 2, 3 and 4 were made. Those entries invite a further question: according to the bank's records, what were the sources of the particular deposits?

I am satisfied, by reference to bank records which I consider can generally be relied upon, that the sources were withdrawals as follows:

·     $56226.15 on 31 January 1989 at 2.51 pm from account 1306513/0201 in the name of P. Krstic[25];
·     $20000 on 1 February 1989 at 11.20 am from account 1546548/0201 in the name of R. Simonovic;
·     $46005.84 on 1 February 1989 at 2.11 pm from account 1294560/0201 in the name of P. Nastevski.

[25]Sometimes spelt “Kristic”.

The records show that each of the withdrawals:

·     was made at the Sunshine Plaza branch;
·     was in cash;
·     was made with the relevant passbook present.

The records further show that the Krstic and Nastevski accounts were closed at the time of the withdrawals.

According to the defendant’s records the three withdrawals, and three deposits into account 0801 to which I have earlier referred, all very large by the defendant’s then standards, and all in cash, were effected at a teller terminal opened up by the same teller, the former Pasqualina di Ciero, within a 24 hour period.

No withdrawal or credit slips relating to the transactions were produced to the court. That is not to say that such slips were not created at the time.

Miss di Ciero, now Mrs Pascua, said that, because of the size of the three withdrawals, they were the kind of thing she would remember; but she had no recollection of them.[26] Nor did she have any recollection of the three large deposits. She agreed in cross-examination that transactions of that size were exceptional. She said also that if there was to be a large cash withdrawal arrangements had to be put in place with Armaguard, in advance, to have sufficient cash on hand.[27]
[26]T991-992.
[27]T999.

Mr Panebianco said that he had arranged the withdrawals and deposits to which I have referred. He denied effecting the entries. I reject his denial. I consider it very likely that, even with the elapse of years, Mrs Pascua would have recalled these large transactions had she effected them. She was even the more likely to have done so if two of the three accounts debited were closed at the time and if passbooks for the accounts on which these large transactions took place, accounts in different names, were produced by the same man. She was still more likely to have done so if, as the transaction register shows, all the transactions were in cash.

I consider it virtually certain that Mr Panebianco effected all the transactions; and that he had the three account passbooks in his possession at the time. I think it likely that he described the transactions as being in cash so as to make more difficult, despite their size, the task of ascertaining the apparent flow of funds. The same explanation applies in the cases of the withdrawal of $56,226.15 and deposit of $56,000, the withdrawal of $20,000 and deposit of $20,226.15, and the withdrawal of $46,005.84 and deposit of $46,000. There is no doubt, I add, that Mr Panebianco was able to use a teller terminal even when the regular teller was present. It was probably easier for him to do so out of normal business hours. I note that two of the deposits were effected after the close of normal business hours.

In all, what can be concluded from the passbook produced in court for account 0801, from the bank records and practices, and from the oral evidence to which I have referred is this:

·     Exhibit A1, containing the entries on lines 2, 3 and 4 could not have been handed to the first plaintiff on 31 January 1989, nor seen by either the second plaintiff or Mr Janevski on that day.
·     The passbook label for account 0801 appearing on Exhibit A1 could not have been printed before 12.21 pm on 31 January 1989. No passbook so labelled could have been produced before that time.
·     Lines 2, 3 and 4 reflect, on their face, a flow of funds, superficially concealed, from accounts in the names of P. Krstic, R. Simonovic and P. Nastevski into account 0801.
·     The transactions debiting the 3 accounts and crediting account 0801 were all effected by Mr Panebianco, who had the passbooks for the three accounts which were debited in his possession.
·     The various transactions were not, contrary to bank records, cash transactions. In these instances the misleading entries were the deliberate work of Mr Panebianco.

It is convenient here to say something more generally about bank records which were produced to the court.

Bank transactions records were intended, at all pertinent times, to show whether a particular transaction was made in cash, by cheque, or by journal transfer. Many transactions investigated in the course of the trial were, according to bank records, made in cash. In many of those instances it was improbable, sometimes grossly improbable, that the transaction was in fact made in cash.

Bank records would erroneously show that a non-cash transaction had been made in cash if the bank officer entering the transaction deliberately misstated the position.

Deliberate conduct apart, Mrs Barber gave evidence that:

“I could have withdrawn money from one account and had it as cash and deposited it into the other account and it still prints up as cash.”[28]

[28]T946.

She said, as I understood it, that she had entered journal transfers as cash transactions.[29] She did not say why she had done that. It was only a matter, on the evidence, of pressing one key rather than another.
[29]T947-948

Mr Panebianco gave this account:

“In the early days you could do any transaction you liked with the computer automatically defaulted to line 1 which was a cash entry, and a lot of times entries were put through as cash rather than being a cheque or transferred (sic). It automatically defaulted to line 1, which was a cash entry.”[30]

[30]T1215.

Neither of the computer experts called for the defendant gave evidence of such a default mechanism. Mr Kinsman gave a fragment of evidence about cash transactions;[31] but it did not take resolution of the present issue any distance.
[31]T1196.

Ms Dewhurst, head of the operations risk unit of the defendant, gave clear evidence that a cash transaction, as noted in the bank’s records, meant just that.[32]
[32]See, eg, T569, 570, 578-579.

Considering all the evidence, I can safely conclude that bank records would show a non-cash transaction as having been effected in cash if the cash transaction key was deliberately or carelessly used; but I do not conclude that a transaction would wrongly show up as a cash transaction if no key at all was pressed.

In the circumstances described I shall not say in these Reasons that a particular transaction was “according to the records”, or “apparently”, or “purportedly” a cash transaction unless I am satisfied that it was not in fact a cash transaction; and that the misdescription was deliberate.

The P. Krstic, P. Nastevski and R. Simonovic accounts

I turn to the sixth matter for consideration which I earlier identified – that is, whether the apparent sources of funds referred to on lines 2, 3 and 4 of the 0801 account passbook were accounts controlled by Mick Janevski.

P. Krstic

An account was opened in the name of “P. Krstic” on 30 December 1987, apparently through the Sunshine branch. The address of the customer on the signature card[33] was misleading in that, although the address existed, a P. Krstic did not live there. The signature card was not signed.
[33]Part of Exhibit 31.

On the same day a third party authority was signed by the customer. It authorized Pero Nastevski to operate the account.

The signature of the customer and Nastevski, on the face of the authority, were witnessed by Mr Panebianco. He gave evidence that he did in fact witness those signatures.

Neither the signature card nor the third party authority were held by the defendant as they should have been. They were held by Mr Panebianco and given up by him in 1998.

On the day that the account was opened a deposit of $60,000 was made at the Sunshine branch. According to the defendant’s records the deposit was made in cash.

On 30 March 1988 there was a cheque withdrawal of $60,000. This was effected at the Footscray branch. No evidence was adduced by the defendant as to the beneficiary of the cheque.

On 27 May 1988 a second deposit of $60,000 was made, this time at the Footscray branch. It was, according to the defendant’s records, in cash.

On 19 July 1988 $10,000 was withdrawn, according to the records again in cash.[34]
[34]See Exhibit 35 for the sequence of deposits and withdrawals.

No document relating to either deposit or to the withdrawal of 19 July 1988 was adduced in evidence. The elapse of time may explain it – although not all of the defendant’s old records have been destroyed, as became apparent at trial.

The account was closed by the withdrawal of the then balance, $56,226.15, on 31 January 1989.[35]
[35]See Exhibit 36.

Mick Janevski denied that he was the owner of the P. Krstic account, established in 1987.[36] The signature card was not specifically put to him.
[36]T388-389.

Mr Janevski acknowledged that Mr Pero Nasteski (not Nastevski) is his brother in law; his wife’s brother. He agreed that, in the 1990s, he had business dealings with Mr Nasteski, who was then a builder.[37]
[37]T389.

Mr Panebianco gave evidence that Mr Janevski “requested” him to open an account in the name P. Krstic. He could not remember who suggested the name.[38] He said that from his recollection Mr Janevski signed the third party authority as customer, and that Mr Nasteski signed as the person given authority.[39] He did not recall whether the deposit on 30 December 1987 was in cash.
[38]T1212.
[39]T1214.

He said that a passbook had been issued; but he had never had it. Whatever else may be said about his evidence concerning this account, I consider it virtually certain that this last evidence was false; that he had the passbook at least on 31 January 1989.

Mr Nasteski did not give evidence. Counsel for the defendant submitted that I should draw an inference adverse to the plaintiffs. Counsel for the plaintiffs responded that the provenance of the Krstic account was part of the defence; and that it was for the bank to call him. Its failure to do so should lead to an inference adverse to it.

The P. Krstic account was closed as I have earlier noted on 31 January 1989. The funds standing to its credit were deposited into account 0801 for the most part that day, and to a small extent on 1 February 1989.

Pero Nastevski

On 30 December 1987 an account was opened through the Sunshine branch in the name of “Pero Nastevski”. A signature card[40] was completed in part by Mr Panebianco and was signed “Pero Nastevski”. The customer’s signature was witnessed by the then Miss di Ciero. She had no recollection of the circumstances surrounding the completion of the form.
[40]Exhibit 9.

The customer’s address was given as 52 Goldsmith Avenue, Preston. There was evidence that in 1987 this was the address of Mr Nasteski’s parents. The signature card and a third party authority authorising “P. Krstic” to operate the account[41] were not held by the defendant, as should have been expected. They were given up by Mr Panebianco in 1998.[42]
[41]Exhibit 8.
[42]Evidence of Ms Dewhurst, T575.

On the day that the account was opened, a deposit of $60,000 was made, according to the defendant’s records in cash.

The account summary[43] shows that there were three transactions on the account in 1988: a $20,000 cash withdrawal in April, a $10,000 cheque withdrawal in May and a $10,000 cash deposit in June. The defendant produced no records relating to those transactions, or to the initial deposit. Again the defendant explained this by the elapse of time. The pertinent witness for the bank, Ms Dewhurst, could not recall whether an attempt had been made to trace the cheque through a branch suspense account.
[43]Exhibit 41.

As at 30 June 1988 the account was in credit in an amount of $41,774.19. Interest was running at, probably, 11.5%.[44]
[44]See Exhibit 41 at CB925.

The next and last transaction took place on 1 February 1989. The account was closed, on its face by cash withdrawal. This took place at the Sunshine branch. The balance, $46,005.84, for the most part found its way into account 0801.

The first plaintiff said that he knew Mr Nasteski; but he knew nothing about the deposit into account 0801 of funds sourced from accounts of which Mr Nasteski was either the customer or an authorised signatory.

It was put to the first plaintiff that at the (first, as he would have it) meeting on 31 January 1989 Mr Janevski had spoken with Mr Panebianco about accounts which could be the source of moneys for the account opened in his name. He denied it, just as he denied hearing mention of the names Krstic, Nastevski and Simonovic.[45] Remembering that his English was not at all good, even in 2002, the weight of his denial, save in respect of the names, might be doubted.
[45]T245.

Mr Janevski denied knowing anything about the Nastevski account. He said that the signature, “Pero Nastevski” appeared like the signature of his brother in law.[46] He denied signing “P. Krstic” on the third party authority.
[46]T397-398.

It was put to Mr Janevski that on 31 January 1989, “after the documentation was complete”, he had explained to Mr Panebianco that he wanted moneys put into what became account 0801 from three different sources. He denied it.[47]
[47]T403.

Mr Panebianco gave evidence that the customer’s signature on the customer signature card was that of Mr Nasteski, although he did not witness the affixing of the signature.[48] The account was opened, he said, when
[48]T1218.

“Pero Nastevski and Mick Janevski approached me to open up an account in Pero’s name where Mick had authority to transact on it as well.”[49]

He added that:
“The authority would have happened at the same time.”[50]

A good deal of his evidence, as I observed earlier, was of the “would have” variety.

[49]T1218.

[50]T1218.

Mr Panebianco said that the signature “P. Krstic” on the authority had been made by Mr Janevski.[51] He had witnessed that signature.
[51]T1219.

He said that a pass book had been issued for this account. But he had never held it. Mr Janevski had done so.[52] I reject Mr Panebianco’s evidence that he never held the passbook for the Nastevski account.
[52]T1219.

As with the P. Krstic account, Mr Nasteski’s not giving evidence was the subject of competing submissions that an inference adverse to one party or the other should be drawn.

Role Simonovic

An account was opened in the name of Role Simonovic at the Sunshine branch on 30 December 1988. A signature card[53] was completed. It was witnessed by Ms Michele Lang, then manager of the Sunshine branch. The card designated PO Box 370 as the customer’s postal address. It specified a residential address which existed as a place, but not as the residential address of a Mr Simonovic. The card noted that a Victorian driver’s licence had been produced in proof of the customer’s identity. The licence number did not in fact match the customer.
[53]Exhibit 7.

The customer card, as was the case with the cards referable to the P Krstic and Nastevski accounts, was in Mr Panebianco’s hands as at 1998.

A deposit of $80,000, purportedly in cash, was made on 30 December 1988.

Between 1 February 1989 and 1 March 1989 four withdrawals, all said to be in cash, were made from the account.[54] The first, for $20,000 matched the deposit shown on line 3 of the 0801 passbook.
[54]Exhibit 44.

On 11 November 1991 a telegraphic transfer for $25,000 in favour of the second plaintiff was funded by a manager’s cheque drawn on that account.

The account was closed by an apparent cash withdrawal of $3,463.37 on 6 May 1992. That amount was noted by Mr Panebianco in documents produced at trial[55] as going to establish the quantum of the Simonovski moneys at $67,760.57 as at early May 1992.
[55] For example, Exhibit 96.

The account was a passbook account.

The first plaintiff denied any knowledge of Role Simonovic, an account in that name, or a flow of funds from such an account into account 0801.

Mr Janevski said that he did know an R. Simonovic and had not requested that an account be opened in that name. He denied that he had signed the signature card as the customer. He denied that he had instructed Mr Panebianco to fund account 0801 in part from funds in the R. Simonovic account. He said that he had asked Mr Panebianco to draw the telegraphic transfer on the Simonovski account.

Ms Lang gave evidence that the entirety of the written material on the signature card was in her writing, other than the customer’s signature.[56] She could not say from where she had obtained the details, or why PO Box 370 was given as the customer’s address.[57] She could not say if she had seen the driver’s licence identification.[58] She said also that, if directed, she would have been prepared to “witness” a signature card on which there was no customer’s signature; but that she did not believe she would have filled in such a card from information supplied by another bank officer.[59] A little later she said that she would have been prepared to do so; but that she could recall no such occasion.[60]
[56]T797.
[57]T798.
[58]T809.
[59]T812.
[60]T813.

Neither Mrs Barber nor Mrs Pascua knew of Role Simonovic. Their evidence did not advance resolution of the question whether the R. Simonovic account was an alias account under Mr Janevski’s control.

Mr Panebianco gave evidence that:

“I had been requested to open up accounts I think one was Kristic and Simonovski, Simonovic and there were quite a few others as time went on.”[61]

[61]T1218.

He identified Simonovic as such an account.[62] He said that he thought there was only one.
[62]T1211.

He gave evidence that he had no memory of opening the R. Simonovic account referable to the signature card.[63] He then said that the Simonovic account which he opened was not physically opened by him:

“The account was given to me as one of the accounts that Mick would be in control of.”[64]
[63]Exhibit 7.
[64]T1219-1220.

Concerning the $20,000 withdrawal on 1 February 1989, he said that he gave directions to bank staff in accordance with directions given him by Mr Janevski.[65] Whether or not Mr Janevski gave him directions, I am certain, as I said earlier, that it was he who effected the transaction. Concerning the telegraphic transfer, Mr Panebianco said, as I have noted elsewhere, that Mr Janevski directed him to make the withdrawal on the R. Simonovic account.
[65]T1226.
Some conclusions

It may safely be concluded that the P. Krstic and R. Simonovic accounts were alias accounts. The same cannot be said with certainty about the Nastevski account, if allowance is made for the slight spelling change.

It may safely be concluded that the three accounts were administered by Mr Panebianco to greater or lesser degree. He witnessed documents pertaining to the Krstic account; and those documents were held by him, not the defendant. He completed part of the signature card pertaining to the Nastevski account. Documents pertaining to that account were also held by him, not the defendant. So also the customer card referable to the R. Simonovic account was held by him. Further, in respect of that account he witnessed the No Book Withdrawal Indemnity dated 6 June 1992 which led to the account being closed. Again, it seems that he instituted enquiries as to the state of one or more of the accounts from time to time. Finally, I am satisfied, as I have already said that it was he who effected the transactions on 31 January and 1 February 1989 by which those accounts were debited and amounts flowed into account 0801; and that he then held the relevant passbooks.

If Mr Janevski affixed false signatures to document adduced in evidence which were referable to those accounts, something which he denied, there would be some tangible support for Mr Panebianco’s assertion that they were accounts controlled by Mr Janevski. There was, of course, direct conflict in the oral evidence of Mr Janevski and Mr Panebianco upon this matter.

Ascertaining whether the accounts were controlled by Mr Janevski might be assisted by giving answers to four questions: first, were documents referable to the Krstic and Nastevski accounts signed by Mr Nasteski? Second, what, if anything, is the significance for present purposes of a later account in the name of Kristic; and its apparent fate? Third, what, if anything, should be made of the debiting of the three accounts on 31 January and 1 February 1989, with an apparent flow of funds into account 0801? Fourth, what, if anything, is to be made of the telegraphic transfer amount in favour of the second plaintiff being debited against the R. Simonovic account; likewise the use by Mr Panebianco of the remaining amount in that account in his May 1992 calculation of the remaining Simonovski moneys?

As to the first of those questions, I am satisfied that Mr Nasteski did sign the documents in question. The signatures affixed to Exhibits 9 and 31 may be compared with the signature on Mr Nasteski’s driver’s licence[66]. But where from there? The two men were related by marriage. Later they did business. But it seems to me that these matters of themselves would provide a slender foundation for concluding that Mr Janevski was P. Krstic.
[66]Exhibit 93.

Concerning the second question, a reviewable term deposit certificate in the name of “Mr R. Kristic”, of address “PO Box 370, Sunshine” was issued on 25 July 1990 in an amount of $7000.[67] According to a transaction enquiry report[68] the funds were deposited in cash. The certificate itself was given up by Mr Panebianco in 1998.
[67]Exhibit BC.
[68]Exhibit 38.

The account was closed according to the transaction enquiry by a cash withdrawal on 30 April 1992. An early release request bearing that date was introduced into evidence.[69] It is in Mr Panebianco’s handwriting. The customer is identified as “P. Kristic”, but the account number matches the R. Kristic account. The document is incomplete. The customer’s signature is apparently that of Mr Janevski. There was no suggestion that he had an authority to act on this account. According to that document, by contrast with the transaction enquiry report, most of the funds were to go into the Footscray branch suspense account, with the balance in cash. Where the funds went in fact is not known. Pertinent suspense account transactions were not put into evidence.
[69]Exhibit 6.

Mr Panebianco took the funds which were in the R. Kristic account before 30 April 1992 into consideration in calculating the amount - $67,760.87 – which he said represented the balance of the Simonovski moneys at early May 2002.

In evidence, Mr Janevski at first said that the signature on the early release request looked like his. But then he demurred. He said that he signed many documents;[70] and that he was many times asked by Mr Panebianco to sign documents in blank.[71]
[70]T390.
[71]T391.

Mrs Barber, one of the bank signatories on the term deposit certificate, had no recollection of the event.[72] She said she did not think she would question a customer’s address being shown as the postal address of the bank.
[72]T951.

Mr Panebianco, having said that he recalled being requested to open an account in the name Kristic, improved on that evidence as he went along. He said: “I think from memory there were two.”[73] His memory was likely aided by the fact that, as he made clear, he had been through documentation in the weeks preceding the trial.[74]
[73]T1211.
[74]See, for example, T1314 and 1361-1362.

When referred to the reviewable term deposit, Mr Panebianco said that he did not recall the actual opening of the account. But “there must have been, according to this documentation.”[75]
[75]T1354.

Concerning the flow of funds into account 0801 Mr Panebianco said he believed that there were four source accounts: “I know one was Kristic or there were two from Kristic.”[76]
[76]T1227.

Notwithstanding that he did not recall the opening of the R. Kristic account, Mr Panebianco denied, when referred to the early release request, that it had been signed by Mr Janevski in blank.[77] He agreed that, in the absence of third party authority, Mr Janevski’s signature was quite inappropriate. He did not suggest that any such authority existed.
[77]T1351.

In my opinion it can be said that Mr Janevski’s signature appears on one document referable to this account. It can also be said that Mr Panebianco took funds withdrawn from that account into consideration when calculating, in a bizarre way, the balance of the Simonovski moneys as at early May 1992. I attach very little weight to either of those matters in connection with the question whether Mr Janevski signed documents referable to the Krstic and Nastevski accounts in 1987. The document which he signed in 1992 was very incomplete. I cannot say what handwriting was on it when Mr Janevski signed it.

Having account of Mr Panebianco’s admitted practice of using funds from an alias account to sustain another account, I would draw no conclusion from the fact that the funds in the account were used in the calculation of the then–remaining Simonovski moneys.

The answer to the third question which I identified is in my opinion quite uncertain. If Mr Panebianco was handed cash by the plaintiffs on 31 January 1989, and decided to take it,[78] he had to balance the defendant’s books so that a passbook credit entry could be generated. Debiting one or more alias accounts could achieve that end. It would say nothing as to who controlled those accounts. It could not be safely concluded that the accounts in fact debited were controlled by Mr Janevski simply because no one complained to the defendant – so far as is known – that the accounts had been respectively closed or run down. It would be surprising, I think, if the owner of an alias account – whether it be Mr Janevski, Mr Nasteski or someone else – had been inclined to complain to the bank in such circumstances.
[78]It was not necessary that an irrevocable decision was made then and there.

I turn to the fourth question. Apart from documents referable to the telegraphic transfer, no documents were produced by the defendant relating to any transactions on R. Simonovic account other than in respect of the account closure. In that connection a No Book Withdrawal Indemnity was produced. It identified the customer’s surname as “Simonovski”. The initial preceding the surname, on close inspection, is “R.”. The document was signed, I think, by Mr Janevski. It was witnessed by Mr Panebianco. It was dated 6 June 1992, at which time Mr Janevski was overseas. But the Chase Manhattan Bank stamp shows the date as 6 May. The document was given up by Mr Panebianco in 1998, though it was evidently handled by the defendant in 1992.

This document to which I have just referred is the only document evidencing Mr Janevski’s signature in connection with the R. Simonovic account. Having regard to the customer name written in by Mr Panebianco, I think that the document assists the defendant very little. I think that Mr Janevski requested funds from the Simonovski account for his 1992 trip. The document could be seen to show that his request was being met. The rear of the document, it may be added, seems likely to be Mr Panebianco’s handiwork.

In the end, for reasons outlined, consideration of the four questions which I identified has not enabled me to conclude that Mr Janevski signed documents as P. Krstic; or that he controlled the P. Krstic, Nastevski and R. Simonovic accounts. Documents and circumstances exist which give some support for conclusions favourable to the defendant. But the documents are fragmentary, at times incomplete, and where evidently signed by Mr Janevski, well‑capable of explanation consistent with his denials.

It was, I think, contended for the defendant that links between the various accounts were discernible in the account names. It would follow that once a particular account was shown to be a Janevski – controlled account, the same to be said of some other account. Thus: Krstic and Kristic; R Simonovic and K and B Simonovski. So also, in a somewhat different category, Nasteski and Nastevski.

The difficulty with that contention, on analysis, was this: the evidence concerning the various accounts was incomplete, often ambiguous and contradictory. The defendant, in reality, sought to make good by combination what it could not establish with respect to any account discretely. That is, the linkage which was argued for could not in fact take as a starting point the circumstance that a particular account had been shown to be Janevski–controlled.

After all I have thus far said, the answer to the question whether Mr Janevski was the owner of the Krstic, Nastevski and Simonovic accounts remains quite uncertain. There remains the evidence on the one hand of a corrupt bank officer whose credit at the end of the trial was virtually non-existent, the evidence on the other hand of Mr Janevski, a man who I am satisfied was not in all respects otherwise truthful in his evidence; and the fact that Mr Nasteski did not give evidence.

Were the contest simply one between the evidence of Mr Panebianco and Mr Janevski I should unhesitatingly prefer the evidence of the latter. But there is presumptive evidence that Mr Nasteski and Mr Krstic were both present when some documents were signed[79]. What is to be made of this?
[79]See Exhibits 8 and 31.

As the case was conducted – until the submission made on the last day of trial by plaintiffs’ counsel to which I earlier referred – a key question was whether the moneys credited to account 0801 were the plaintiffs’ moneys or moneys derived from accounts controlled by Mr Janevski; the plaintiffs being simply a front for Mr Janevski in the latter situation. The defendant’s case was vigorously pursued in cross-examination of, particularly, the first plaintiff and Mr Janevski.

There were, as I have earlier noted, competing submissions as to the failure of one or other party to call Mr Nasteski. Arguments focussed, it seemed to me, on where the burden of proof lay with respect to the issue of the provenance of the funds deposited into account 0801.

What is often called the rule in Jones v Dunkel[80] does not depend upon whether the party not calling a particular witness carries the onus of proof upon the particular issue concerning which the witness could have spoken. In the case of a non-party witness the question is a practical one: would the Court expect the missing witness to have been called by one party rather than another? Various formulations of that question were collected by Glass JA in Payne v Parker[81]. They all amount, I think, to the same thing.
[80](1959) 101 CLR 298.
[81][1976] 1 NSWLR 191 at 201-202.

The evidence showed that Mr Nasteski is related by marriage to Mr Mick Janevski. He is Olivera Janevski’s brother. He is also related, by marriage, to the second plaintiff - Mick Janevski is her brother. Not only is there a family relationship between Mrs Janevski and Mr Nasteski, the latter was, I note, a signatory of the Jenski Nominees Pty Ltd account with the defendant, Jenski being a Janevski family company. Should it not be concluded that the plaintiffs could readily have had him proofed? Conversely, Mr Nasteski having apparently engaged in some dishonest dealings with the defendant – that is, the establishing of alias accounts – might not he have been unenthusiastic about speaking to the defendant and its lawyers about those transactions? Again, Mr Nasteski’s father having been defrauded by Mr Panebianco,[82] should not Mr Nasteski be considered to be in the plaintiffs’ camp? On the other hand, why would Mr Nasteski bear good will to Mr Janevski, and by proxy the plaintiffs, in circumstances where this litigation opened up the prospect of him becoming a witness and re-visiting events long past? Again, Mr Nasteski was himself a long-time customer of the defendant and its predecessor – establishing one account in 1987 and another account as late as 1997. Those circumstances suggest an amicable relationship.
[82]As the evidence at trial showed.

On balance, Mr Nasteski is a person whom I should have expected the plaintiffs rather than the defendant to call as a witness. He could have said whether he was present when P. Krstic signed the various documents. If he was, on his account, then present he could have cast light on the identity of Mr Krstic. He might, perhaps, have refused to answer certain questions concerning the Krstic and Nastevski accounts. But it would be speculation to conclude that he declined to give evidence for that reason.

In the circumstances it is open to me to draw an inference adverse to the plaintiffs – that is, that Mr Nasteski’s evidence would not have assisted their case. And were I to draw that inference, I could take it into account against the plaintiffs for the purposes described by Newton and Norris JJ in O’Donnell v Reichard[83].
[83][1975] VR 916 at 929.

I am prepared to draw the inference that Mr Nasteski’s evidence would not have assisted the plaintiffs. But even taking that inference into account against them, I am not prepared to accept evidence adduced for the defendant concerning the issue under discussion, or to draw inferences upon the evidence which was given. There are five reasons why I will not do so.

First, I regard Mr Panebianco’s evidence, not only generally but, specifically in the present connection, as having been very unreliable. I have already referred to aspects of its unreliability. I do not consider that it would be right to give it a credibility that it did not possess by resort to a Jones v Dunkel inference.

Second, the documents relied upon by the defendant were only a very few of the documents that must have been created in respect of the accounts under consideration. That is an objective fact. I should not speculate whose case was advanced by the fact that documents were missing. For the most part the documents put into evidence bore the hand of Mr Panebianco. Often they were given up by him in 1998. Mr Janevski’s signature on a document relating to the Simonovic account was readily explicable. I have already said why that is so. The same situation applies in the case of Mr Janevski’s signature on a document pertaining to the latter R or P Krstic account. The documents were such that it would be unsafe to use them as a basis for drawing an inference that Mr Janevski was the owner of the accounts. The inference could not in my opinion be safely drawn simply by factoring in the plaintiffs’ failure to call Mr Nasteski.

Third, Mr Panebianco admitted to using funds from alias accounts to prop up other accounts. The latter accounts were, by his version, other alias accounts. There is no reason in logic why the practice should have been so confined. Further, want of complaint to the defendant by an alias account “owner” should not be thought remarkable.

Fourth, Mr Panebianco’s calculations as to the 1992 balance of Simonovski moneys put account names to the sources and quantum of funds. But very little, if anything can be gleaned from that exercise, which ignored as a starting point the fact that, as will later be shown, Mr Panebianco had misappropriated all the funds in account 0801, via an account numbered 2401, by late November 1989. The exercise showed, perhaps, where Mr Panebianco sourced the funds to make up the alleged balance. But that far from leads to a conclusion that the sources were accounts of which Mr Janevski was the owner; a conclusion which might in a roundabout way assist a conclusion that the Krstic, Nastevski and R. Simonovic accounts were alias accounts controlled by him.

I have already referred to the R or P Kristic and R Simonovic accounts in connection with the 1992 exercise. It is convenient at this point to examine the other accounts – I use the word loosely – to which Mr Panebianco’s calculations adverted. For according to Mr Panebianco each of them was a Janevski-controlled account.

One of the “accounts” whose asserted balance was used to calculate the amount of $67,760.57 was in the name N. Simonovski. This account had a number: 1925351/2501. No such account was ever established with the defendant.

Only two items of documentation were produced with respect to this so-called account. Each was held by Mr Panebianco, and was given up in 1998. First, there is a statement of account, on the defendant’s letterhead.[84] It shows an initial deposit of $40,000 on 5 January 1990, accumulating at 5 January 1992 with interest and after deduction of bank charges, to $52,566.85. Second, there is an early release request[85]. It is largely incomplete. The customer’s signature is, I consider, that of Mick Janevski. The review date is expressed to be 5 July 1992. Mr Janevski was overseas at that time. That does not mean that he might not have signed the document either wholly in blank or in its incomplete state as appearing in the exhibit. It was a singular triumph, I add, for Mr Panebianco to secure Mr Janevski’s signature to a document closing an account with the defendant which did not exist.
[84]Exhibit 50.
[85]Exhibit 10.

Mick Janevski said that he did not know of this account.[86]
[86]T408.

Mr Panebianco gave evidence, somewhat confusingly, that “there should have been only one” Simonovski account, but that from seeing some of the documentation he had provided:

“It looked like there might have been two, one carried on from the other.”[87]

[87]T1211.

Referred to the early release request, Mr Panebianco said that the customer’s signature was that of Mr Janevski; but he had no recollection of being involved in the opening of such an account.[88]
[88]T1232.

The statement of account he said, would have been typed on his instructions; but he could not say who actually typed it. He had written “T/F to K. & B. Simonovski” on the foot of the document. That meant:

“That the funds were transferred to an account in the name of K & B Simonovski.”[89]

[89]T1232.

Cross examined, he denied that the statement of account had been produced on his own computer system. He said that he did not know if all of the details – interest and bank charges – were fictitious.[90]
[90]T1334.

Mira Janevski is a real person. She is the wife of Vidmar Janevski, Mick Janevski’s brother. According to Mr Panebianco’s calculation of the sum of $67,760.57[91], an account 1687086/2501 standing in the name of “M. Janevski” was brought to account in an amount of $21,977.81.
[91]See Exhibit 96.

Two early release requests were produced which pertained to accounts probably referable to Mira Janevski.[92] Mr Panebianco was the defendant’s signatory in each instance. Nothing on their face connects them with the account referred to in Exhibit 96. It was not suggested that either request was signed by Mick Janevski. One of the requests[93] was signed “M Janeski” in an unknown hand. Apparently the signatory did not know that his or her surname included a “v”. The name of the signatory on the other request[94] remained unknown at trial’s end.
[92]Exhibits 2 and AA.
[93]Exhibit AA.
[94]Exhibit Z.

In oral evidence Mr Panebianco said that the “M. Janevski” referred to in his calculations was Mira Janevski. He was referred to notes made by an investigator in May 1988 from information which he supplied. The notes show that his explanation then was that on 6 May 1992 an amount of $21,977.81 was transferred from a term deposit account into the Footscray branch suspense account.[95]
[95]See Exhibit 97.

In evidence in chief Mr Panebianco said that he did not remember the source of the funds[340]. But in the course of cross-examination he said, in substance, that this was another case where he paid money out of his own pocket[341]. This was another instance, also, encompassed by his recollection that he had later recouped moneys from a suspense account.
[340]T1279.
[341]T1430-1431.

Mr Janevski did not deny that the signature on the withdrawal slip was his. He denied receiving $1,000 from the Simonovski account.

This is another case in which, all other matters of dispute put aside, I am not satisfied that, if Mr Panebianco paid any money to Mr Janevski, there was ever a debit against bank funds.

I turn to a transaction identified by a withdrawal slip in an amount of $4,000 dated 11 October 1997[342]. The face of the document is in Mr Panebianco’s handwriting, save for a signature which I am satisfied is that of Mrs Janevski. The source of the withdrawal, as stated, is the Niddrie branch suspense account. The back of the slip is blank. The slip bears no bank stamp or teller's initials.
[342]Exhibit 21.

Mr Panebianco gave evidence that there was a request for $4,000 from the Simonovski account. The transaction took place at the Niddrie branch. He got $4,000 and gave it to Mrs Janevski, in cash. He did not remember the source of the funds[343]. In cross-examination, however, he said that he had processed the withdrawal out of the Niddrie branch suspense account[344].
[343]T1280-1281.
[344]T1434.

No documents were produced by the defendant to show that there had been any such debit in the Niddrie branch suspense account on 11 October 1997; or, if Mr Panebianco had rather paid cash to Mrs Janevski, that he had ever recouped it from the defendant.

Mr Janevski did not agree that $4,000 had been withdrawn from the Simonovski account and given in cash to his wife on 11 October 1997. He identified his wife’s signature on the document. Mrs Janevski said that the signature appeared to be hers; but that she had not signed the document. She explained, I think, that by that she meant that she had not signed the document as it then appeared. She denied that she had requested $4,000 from the Simonovski account; or that she had been paid such an amount.

The defendant has not satisfied me that, if any moneys were paid to Mrs Janevski on 11 October 1997, such amount was ever debited against its funds. Mr Panebianco’s evidence was not constant, and the defendant adduced no pertinent records.

I need not deal, in the circumstances, with any more of the matters in dispute concerning this transaction. I do note in passing that this was a case in which Mrs Janevski was the sole participant on the Janevski side, the withdrawal slip being signed by her. Consistent with what I said earlier, I would not conclude that, if she was paid $4,000 out of the defendant’s funds, such amount should reduce the defendant’s liability to the plaintiffs.

There is a withdrawal slip dated 11 December 1997 in an amount of $2,548[345]. It was signed, I am satisfied, by Mr and Mrs Janevski. The customer is not identified; nor any customer number. The back of the slip is blank. The slip does not bear a bank stamp or teller's initials.
[345]Exhibit 22.

Dated the same day, there is a conversion of foreign currency sheet, apparently completed at the Niddrie branch. The customer is identified as Mrs Janevski. The document apparently shows a conversion of $2,548 into 3,000 Deutschmarks. Save for the signatures, the document is in Mr Panebianco’s handwriting. The signatures, I consider, are those of Mr and Mrs Janevski. The document bears nothing to show that this was a bank transaction.

Also in evidence and dated the same day is a second withdrawal slip, this time in an amount of $2,500[346]. This document is very similar to the first of the withdrawal slips dated that day. It was signed, I am satisfied, by Mr and Mrs Janevski. No customer or customer number is identified. The back of the slip is blank. The slip bears no bank stamp or teller's initials.
[346]Exhibit 24.

The Niddrie branch suspense account record[347] for the pertinent period was put into evidence. It shows that on 16 December there were two succeeding cash withdrawals in amounts of $2,500 and $2,548. Those debits should be taken to relate to the amounts stated in the two withdrawal slips, notwithstanding the time elapse. But it does not follow that the withdrawal slips, themselves, were ever processed by the defendant.
[347]Exhibit 75.

Mr Panebianco gave evidence that Mr and Mrs Janevski requested him to provide them with 3,000 Deutschmarks, the source of the moneys to be the Simonovski account[348]. They gave no reason for wanting the German currency. They also asked him, the same day, to give them $2,500 cash. This he did. Thus the two withdrawal slips.
[348]T1280.

Cross-examined, Mr Panebianco said, concerning the slip for $2,548, that stamps “sometimes can go missing on vouchers”[349]. He agreed that, a stamp aside, there were no teller’s initials on the slip. He could not say why, if it had mattered on 11 October 1997 that Mrs Janevski’s signature was on a purported Simonovski withdrawal, it did not matter with respect to the withdrawal slip for $2,548.
[349]T1437.

Concerning the slip for $2,500 Mr Panebianco admitted in cross-examination that the document was not in a form that could be processed by the bank; and that on face value it was not processed[350].
[350]T1439.

Mr Janevski did not deny – he may have gone further – that it was his signature on the slip for $2,548 and on the currency conversion sheet. He said that he did not remember withdrawing any Deutschmarks. He denied making a withdrawal of $2,548. He did not deny that his signature was affixed to the slip for $2,500. He denied withdrawing the same from the “Simonovski pool of funds”.

Mrs Janevski said that the signature on the slip for $2,548 appeared to be her signature; likewise the signature on the currency conversion sheet. She denied receiving 3,000 Deutschmarks from the defendant. She did not dispute that it was her signature on the slip for $2,500. She denied that she and her husband had requested $2,500 from the Simonovski moneys, or that they had been paid such an amount.

The evidence concerning the two transactions on 11 December 1997 is, I consider, very confused. I accept that the two withdrawal slips were signed by the Janevskis. Nothing on the slips related any withdrawal to the assumed Simonovski account. It seems highly unlikely to me that either slip was ever processed by the defendant. It appears, however, that amounts corresponding with the amounts of the slips were debited to the Niddrie branch suspense account on 16 December 1997.

It is probable, I think, that the $2,548 was used to buy foreign currency. The amount fits the calculation on the currency conversion sheet. Whether the foreign currency was in fact supplied to the Janevskis is uncertain. In favour of such a conclusion is the currency conversion sheet which I accept they signed. There was, however, nothing to show that they travelled overseas in late 1997; or that someone else close to them did so. They denied receiving any money, let alone in Deutschmarks. Then there is the question whether, if they did obtain such an amount, they requested that it be debited to the assumed Simonovski account.

Concerning the slip for $2,500, there are the disputed issues whether the Janevskis requested such an amount to be debited to the assumed Simonovski account; and whether they received it.

There is enough concerning the slip for $2,548 to satisfy me, on balance, that the Janevskis received the Deutschmark equivalent of that amount. Though the matter is doubtful, I also consider, on balance, that the Janevskis requested this amount be debited to the Simonovski account. I am influenced to the latter conclusion by the fact that, once before, the Janevskis had used Simonovski moneys not simply for trip funds, but for foreign currency purchase in that connection.

I am not satisfied, to the contrary, assuming but not deciding that the Janevskis asked for and received cash amounting to $2,500 on or about 11 December 1997, that any such request pertained to the Simonovski moneys.

There is finally a withdrawal slip for $2,000, dated 13 December 1997, signed by Mr Janevski[351]. No customer name or account number is specified. The back of the slip is blank. The slip does not bear the defendant’s stamp or a teller's initials. Across its face is the word and figures “paid 23/12/97”.
[351]Exhibit BM.

The Niddrie branch suspense account record[352] shows a cash withdrawal for $2,000 on 13 December 1997. There is no withdrawal in that amount on 23 December 1997.
[352]Exhibit 75.

Mr Panebianco gave evidence that $2,000 in cash was requested by and given to Mr Janevski. He could not say on “what date the actual moneys were paid”[353]. He said that some of the handwriting on the slip was his; including the word and figures “paid 23/12/97”. Someone else, he said, had inserted the date and the amount in figures. He could not say whether the slip had been processed.
[353]T1282.

Mr Janevski gave evidence that he had requested that money be withdrawn from the Jenski account. Mr Panebianco had said he would lose a lot of interest and gave him $2,000. He did not know where it came from. He signed the slip. Later he returned the money and Mr Panebianco wrote “paid” on it, and the date of the refund[354]. That account of events was not put to Mr Panebianco, despite it having been very clearly articulated by Mr Janevski in cross-examination.
[354]T436-437.

I consider it clear that the withdrawal slip was never processed by the defendant; but that there was a debiting of the Niddrie branch suspense account on 13 December 1997 which probably related to the unprocessed withdrawal slip. It is likely that Mr Panebianco debited the suspense account, and that he did obtain $2,000 in cash. Acting on Mr Janevski’s evidence, I accept that Mr Panebianco gave him that amount. Having regard to the failure of plaintiffs' counsel to put Mr Janevski's version of events to Mr Panebianco, I do not positively conclude that Mr Janevski either specified that the moneys should be debited to Jenski, or that he returned them. But it does not follow, and I am not satisfied, that he requested the payment to be drawn against the Simonovski account.

In the event, the defendant has established that there were two withdrawals in 1997 that should go in reduction of the defendant's liability otherwise to the plaintiffs: a withdrawal of $3000 on 27 March and a withdrawal of $2548 on 11 December.

Interest

In final address, and in later written submissions, counsel for the plaintiffs submitted that the plaintiffs should have bank interest on the amount deposited into account 0801 until 28 November 1989, and thereafter interest in accordance with s. 58(1) of the Supreme Court Act 1986. Counsel contended that, for the purposes of that subsection, the debt became payable on the day when the term deposit in account 2401 matured – that is, just prior to its being misappropriated by Mr Panebianco. In calculating statutory interest, it was accepted, allowance must be made for reduction in the amount of the debt by reason of later admitted withdrawals against the Simonovski moneys.

Counsel for the defendant submitted that the plaintiffs, if entitled to judgment for any amount in connection with account 0801, should have bank interest only on that amount up to the date on which the writ was issued, it being conceded[355] that the issue of the writ constituted a demand for payment within s. 58(1) of the Act. Thereafter the plaintiffs should have statutory interest on two varying amounts until 22 February 2001; after which they should have bank interest only until trial.
[355]See paragraph 3 of the defendant’s written submissions concerning interest.

Supporting those submissions, counsel for the defendant contended that the plaintiffs had not pleaded that the debt represented by account 2401 became due and payable on 28 November 1989. Had that been pleaded, a limitation defence would have been available. In any event, counsel submitted, there was no written instrument that made any amount claimed to be payable to the plaintiffs payable on a date certain. Further, the plaintiffs had sued on account 0801. It was their case that they had authorised but two withdrawals – one in November 1991, one in May 1992. That was inconsistent with them claiming the amount due on the maturity of a term deposit account in November 1989.

So far as statutory interest is concerned, counsel submitted that whilst amendments to the Statement of Claim took effect from the date of commencement of the proceeding, good cause had been shown to the contrary why interest should not be allowed on a sum in excess of $67,760.57 from the date of commencement of the proceeding until the writ was amended in September 2000. It was then that the plaintiffs had taken as a starting point a debt of $139,835.96 – the amount to which the 0801 moneys had accumulated, via account 2401, by late November 1989.

As to the period commencing 22 February 2001 and continuing until trial, counsel submitted that statutory interest should be denied, and that only bank interest should be allowed, on any amount recovered in connection with account 0801. The trial pertaining to that account had been delayed beyond February 2001 because the plaintiffs had raised their claim on account 1089. In the circumstances, good cause had been shown why statutory interest should be denied.

Apart from the question when bank interest should end and statutory interest begin, a question arose as to the appropriate bank interest rate. According to the argument for the defendant, the plaintiffs denied that they had authorised the transmission of the account 0801 funds into account 2401. Therefore, the argument went, the plaintiff should have bank interest at the rate from time to time applicable to an account of the 0801 type.

Counsel for the plaintiffs met the arguments advanced for the defendant by submitting:

·     First, the term deposit advice showing a deposit due and payable on 28 November 1989[356] was an “instrument” for the purposes of s. 58(1)[357].
·     Second, upon the facts there was no difficulty in fixing the claim on account 0801 in an amount of $139,835.96, being the amount to which the funds deposited into that account had accumulated – partly in account 0801 and partly in account 2401 – by 28 November 1989. Further, the report by Mr Ensabella[358] which was admitted into evidence could not pre-empt determination by the Court that statutory rather than bank interest was payable.
·     Third, a propos the limitation issue, the plaintiffs’ right of action had been concealed by the fraud of the defendant or its agent; the plaintiffs had not discovered the fraud until, at least, early 1998; and they could not with reasonable diligence have discovered it earlier. A limitation defence would have been hopeless.
·     Fourth, calculations of bank interest made by Mr Ensabella were based on figures supplied by the defendant’s side and accepted by the plaintiffs. The defendant should not be permitted, after the plaintiffs had closed their case, to disavow those calculations.
·     Fifth, if the starting point of the plaintiffs’ right to statutory interest should be taken to be the time when demand for payment was made – that is, if the plaintiffs' claim to statutory interest from 28 November 1989 was rejected – then demand was made not later than April 1998[359].
·     Sixth, in all the circumstances of the case, and from whenever the right to statutory interest should run, it should run thereafter to judgment on the debt which the Court found was established. In this connection the conduct of the defendant in making unfounded allegations of fraud against the plaintiffs, and in ignoring the Janevskis’ acknowledgment that the bank's indebtedness was to the plaintiffs and not to them, was pertinent.

[356]Exhibit P.

[357]Citing Halsbury’s Laws of Australia, vol. 10 at paras.140-143, R v Philip Ng [2002] VSCA 108 at paragraph 48 and Mair v Bartholomew (1991) 104 ALR 537 at 542.

[358]Exhibit BP.

[359]See Exhibit 26 and T376, 454.

Before going on, I should refer briefly to Mr Ensabella’s report. The witness calculated notional compounding interest upon the amount standing in account 2401 as at 28 November 1989. His exercise covered the period up to 5 May 1999, making use of 90 day term deposit rates which, save in respect of a very short part of the overall period, were provided by the defendant. Commencing at 16.5%, the rate declined below 10% by November 1991. By November 1993 it stood at 4.75%. Rising to 6.75% by August 1995, it decreased to 3.75% by February 1999. Allowing for withdrawals of $25,000 on 11 November 1991 and $29,630.28 on 6 May 1992, and an unexplained withdrawal of $17,420.11 on the latter date, Mr Ensabella calculated interest at $105,551.50.

The dispute between the parties as to whether bank or statutory interest should be payable in respect of the period commencing 28 November 1989 and ending 15 February 1999 is not of merely academic interest. By s. 58(1) statutory interest shall be at a rate “not exceeding the rate for the time being fixed under s. 2 of the Penalty Interest Rates Act 1983”. Section 58(1) fixes, in terms, an upper limit to the applicable interest rate(s). That said, the rate fixed on 1 November 1989 was 23.5%. It remained above 15% until October 1991. Its lowest point thereafter until trial was 11.5%.

In my opinion the plaintiffs are entitled to compounding bank interest at term deposit rates between 28 November 1989 and 7 April 1998. Thereafter they should have statutory interest on the amount then ascertained until judgment at the penalty interest rate. There must be allowance, of course, for the two admitted withdrawals and for the two withdrawals in 1997 which I am satisfied that the defendant has established. If the parties cannot agree upon the amount of bank interest, I will determine it as best I can by reference to Mr Ensabella’s report. If the parties cannot agree upon the amount of statutory interest, I shall do so.

The reasons for my conclusions are as follows:

First, by their Statement of Claim current at trial the plaintiffs raised no case that their claim in respect of the debt constituted by the deposit which established account 0801 was a claim in respect of a debt which became payable by virtue of a written instrument on 28 November 1989. Paragraphs 7 – 10 and paragraph B of the prayer for relief of the Further Amended Statement of Claim dated 23 March 2001 make that abundantly clear. Paragraph 10, referring to “interest accrued from time to time” is explained by Particulars of Amount Due dated 19 September 2000[360]. Those particulars are[361] founded on Mr Ensabella’s calculations of bank interest at term deposit rates.
[360]Court Book 18-20.
[361]Save for the period 5 February 1999 – 5 May 1999, which is not included.

The plaintiffs could have pleaded their case as one in which the debt first represented by account 0801 became payable on 28 November 1989. Had that been done I would not foreclose the success of a submission – contrary to the defendant’s submission – that the investment advice dated 16 September 1989 constituted an instrument by virtue of which the debt to the plaintiffs became payable on 28 November 1989. Had the plaintiffs so pleaded their case, the fact that amounts had been paid by the defendant in reduction of the debt after 28 November 1989 would not have meant that the debt did not become payable on that day by virtue of a written instrument.

But that is not what happened. The plaintiffs rather took the course of pleading, in substance, entitlement to the amount of the debt plus interest, unpaid despite request[362]. Interest in that connection meant, as I have shown, bank interest – which must have been payable pursuant to the contract between banker and customer.
[362]By “request”, understand “demand”.

Second, Mr Ensabella’s report was tendered in the course of the trial. Senior counsel for the plaintiffs had said in opening that it was intended to call Mr Ensabella “for the purposes of proving up the interest”[363]. It must be assumed that the report was tendered for that purpose. So far as I can see, the submission that statutory interest should run from 28 November 1989 was first raised in closing address.
[363]T19; see also a reference to the intended witness at T20.

Third, the submission in counsel’s closing address was not accompanied by any application to amend the Statement of Claim. Had such an application been made, even very late in the piece, it might have succeeded. That was by no means certain. The defendant very probably would have raised not simply the lateness of the application but also possible evidentiary complications arising from a limitation defence that would be taken if leave to amend was granted.

As a corollary, I do not accept the submission of plaintiffs’ counsel that a limitation defence, if pleaded in answer to an amended Statement of Claim, necessarily would have been hopeless. Counsel adverted to s. 27(a) and (b) of the Limitation of Actions Act 1958. Counsel for the defendant might well have argued that the right of action deriving from the debt allegedly payable on 28 November 1989 had not been concealed from the plaintiffs. The investment advice had been sent to the plaintiffs at their postal address. There was no fraud in that connection. The plaintiffs might have sought to rely on s. 24(3) of the Act so as to avoid a possible s. 27 pitfall. The outcome of these potential arguments cannot be predicted with any confidence.

Fourth, having account of the matters thus far mentioned it was simply not open to the plaintiffs to recast their claim for interest in final address, as counsel sought to do.

Fifth, Mr Janevski was in substance given broad authority by the plaintiffs to deal with account 0801. I have considered it very doubtful that he instructed Mr Panebianco to close account 0801 and to open account 2401; but I have considered it probable that he was informed by Mr Panebianco what the latter had done, and that in substance he ratified the course taken. In my opinion it is proper, in the circumstances, that bank interest be calculated on the amount accumulated as at 28 November 1989 at term deposit rates. That conclusion does not involve acceptance of the submission of plaintiffs’ counsel that the defendant should be precluded from disavowing the relevance of interest rates which it provided to Mr Ensabella.

Sixth, contrary to the submission of defendant’s counsel, I consider that a demand for payment of the account 0801 moneys was made on 7 April 1998 – or, arguably, within a day or so thereafter. The solicitors’ letter to the bank[364], dated 7 April 1998 evidently raised a complaint that the Simonovski moneys first deposited into account 0801 had gone missing. The fact that the letter referred to and supplied a copy of the fictitious account 2402 certificate, and a Panebianco-created statement of account which built on that fiction, does not tell to the contrary. The statement of complaint[365], apparently made shortly thereafter, referred to a demand made by Mrs Janevski that moneys be withdrawn from the Simonovski term deposit account. That account was, as the Janevskis understood the situation because of Mr Panebianco’s dishonest dealings with them, the resting place of the original Simonovski deposit. The oral evidence of Mr and Mrs Janevski[366] supports a conclusion that demands were made both before and shortly after 7 April 1998 for the payment of the Simonovski moneys. I consider that there was nothing to the point, if it was made on behalf of the defendant, that the Janevskis did not specifically refer to account 0801 or to a precise amount.
[364]Exhibit AC.
[365]Exhibit 26.
[366]T376 and 454.

Seventh, in my opinion good cause has not been shown to the contrary why interest at the penalty interest rate should not be paid on the amount ascertained as at 7 April 1998 up to the date of judgment. A demand having been made not later than early April 1998 that the Simonovski moneys be paid out, the plaintiffs should not be disadvantaged because, by reason of Mr Panebianco’s dishonest dealings[367], the Janevskis believed at the outset that the starting point of the claim was $67,760.57. If, contrary to my conclusion, no demand was made for payment of the Simonovski moneys until the proceeding was commenced, there would equally be no reason to confine the claim for statutory interest to the amount then claimed in the period between commencement and amendment of the Statement of Claim in September 2000.
[367]In respect of which the defendant did not seek to legally dissociate itself.

In concluding that good cause has not been shown why the plaintiffs should not have statutory interest at the penalty interest rate between 7 April 1998 and the date of judgment, I have given discrete consideration to the question whether such interest should be denied in the period between amendment in early 2001 and trial – bank interest applying in that period. There was force, no doubt, in the contention that, had the trial proceeded in February 2001, the plaintiffs’ entitlement in respect of the account 0801 moneys could have been ascertained. It has been said that a plaintiff’s delay may provide ground for awarding interest at a lower rate than the penalty interest rate; or for a shorter period than the statutory period. But the fact that there was delay in bringing the matter to trial is not the only consideration. Against the background of the prima facie position created by s. 58(1) the plaintiffs continued to be kept out of their money by reason of the fraudulent conduct of a former bank officer for whose corrupt dealings the defendant accepted responsibility. The defendant continued to deny the plaintiffs' claim despite the position adopted by the Janevskis. Again, the defendant evidently took a number of steps to further prepare its case with respect to account 0801 in the period between February 2001 and trial. Its case at trial was clearly not the case which it pleaded or intended to pursue at the earlier time. The defendant is not to be punished for pursuit of its defence. But it seems to me relevant that, albeit it was to no positive effect, the defendant took advantage of the time made available both to work-up and to vary its defence to the claim founded on account 0801. All things considered, I am not satisfied that good cause has been shown why the plaintiffs should not have statutory interest at the penalty interest rate for the period to which I have been referring.

Conclusion

The plaintiffs should have judgment for an amount which:

· takes as its starting point, $139,835.96;

· provides for debt reduction by $25,000 on 11 November 1991, $29,630.28 on 6 May 1992, $3,000 on 27 March 1997 and $2,548 on 11 December 1997;

· allows compounding bank interest in the period 28 November 1989 – 7 April 1998 at the term deposit rates advised to or ascertained by Mr Ensabella;

· allows statutory interest from 7 April 1998 to date of judgment on the amount which the defendant was liable to pay the plaintiffs as at the earlier date, such interest to be calculated at the penalty interest rate.

I ask the parties to agree, if they can, the amount of the third and fourth components of the judgment sum. If they cannot do so, I will resolve those matters.

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[2003] VSC 91

31 March 2003