Specialty Fashion Group v Muirhead Nominees Pty Ltd

[2009] NSWSC 823

CITATION:

Specialty Fashion Group v Muirhead Nominees Pty Ltd [2009] NSWSC 823

HEARING DATE(S):

5 August 2009

 
JUDGMENT DATE : 

18 August 2009

JURISDICTION:

Equity

JUDGMENT OF:

Tamberlin AJ

DECISION:

(i) Order pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (UCPR) for summary judgment in favour of the plaintiff against the first defendant in the sum of $9,317,269.50 together with interest pursuant to section 100 of the Civil Procedure Act 2005 (NSW) (CPA).

(ii) Order pursuant to r 13.1 of the UCPR for summary judgment in favour of the plaintiff against the third defendant in the sum of $6,307,950.00 together with interest pursuant to section 100 of the CPA.

(iii) Order pursuant to r 13.1 of the UCPR for summary judgment in favour of the plaintiff against the fifth defendant in the sum of $1,051,527.20 together with interest pursuant to section 100 of the CPA.

(iv) Direction pursuant of section 50 of the Evidence Act 1995 (NSW) that the plaintiff may adduce evidence of the contents of the invoices referred to in Exhibit 'HH-2' of the affidavit of Howard Herman in the form of the summaries referred to in paragraphs 20, 21, 22, 25 and 26 of the affidavit of Howard Herman sworn 26 June 2009.

(v) Order that the first, third and fifth defendants pay the plaintiffs costs.

(vi) Liberty to apply.

CATCHWORDS:	PRACTICE AND PROCEDURE - summary judgment for money had and received - money paid under mistake as a consequence of fraud - whether payees aware of improper conduct - whether payees changed their position in good faith reliance on payments - EVIDENCE - affidavit verifying defence - whether there is any evidence to meet defence of change of position in good faith
LEGISLATION CITED:	Corporations Act 2001 (Cth) Legal Profession Act 2004 (NSW) Uniform Civil Procedure Rules
CATEGORY:	Principal judgment
CASES CITED:	Australia Steel Co. (Operations) Pty Ltd v Steel Foundations Ltd (2003) 58 IPR 69 Barclays Bank Ltd v W. J. Sims Son & Cook (Southern) Ltd [1980] QB 677 Cairns v Freeman [2008] NSWSC 792 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 Evans v Repco Transmission Co Pty Ltd [1975] VR 150 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21 King v Peters [2007] NSWSC 200 Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 126
PARTIES:	Specialty Fashion Group (Plaintiff) Muirhead Nominees Pty Ltd (First Defendant) Beautree Pty Ltd (Third Defendant) Willow Glade Pty Ltd (Fifth Defendant)
FILE NUMBER(S):	SC 2765/2009
COUNSEL:	R Beech-Jones SC / M Friedgut (Plaintiff) No appearance (First Defendant) R D Marshall / P K Bruckner (Third Defendant) No appearance (Fifth Defendant)
SOLICITORS:	Arnold Bloch Leibler Lawyers & Advisers (Plaintiff) No appearance (First Defendant) Whitehead Cooper Williams Solicitors (Third Defendant) Riley Gray-Spencer Lawyers (Fifth Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

ACTING JUSTICE TAMBERLIN

18 AUGUST 2009

2765/2009 Specialty Fashion Group v Muirhead Nominees Pty Limited & Ors

JUDGMENT

1 HIS HONOUR: This is an application under the Uniform Civil Procedure Rules Part 13 rule 13.1 by the plaintiff (“SFG”) for summary judgment against the first defendant (“Muirhead”), the third defendant (“Beautree”) and the fifth defendant (“Willow Glade”).

2 An order for summary judgment was made against the second defendant, Simon Feldman (“Feldman”) for over $16.676 million, by consent on 10 July 2009. Willow Glade has been placed into provisional liquidation but on 24 July 2004 leave was granted to SFG to proceed against it subject to an undertaking not to seek to enforce any judgment without the leave of the Court. On 31 July 2009, a final winding-up order was made against Willow Glade and the liquidators have indicated that they neither oppose nor consent to the orders sought. They did not attend on the hearing. Muirhead has not filed any notice of appearance and did not appear at the hearing of the motion for summary judgment.

3 On 10 July 2009, directions were made requiring the parties to put on points of claim and points of defence in respect of this motion. This has now been done. No evidence has been led on this application for Beautree, Willow Glade or Muirhead.

Points of Claim

4 The allegations in the points of claim are that SFG is a company which carries on the business of a ladies apparel retailer operating from approximately 840 outlet stores in leased premises throughout Australia and New Zealand. From 1994 until May 2009, Feldman was a senior employee of SFG and from who, from 1999 to May 2009, was the head of property and strategic projects of SFG. This position involved responsibilities for approval of invoices, rendered to SFG by third parties for services and goods supplied by contractors to SFG. Feldman was also a director of Willow Glade from 14 June 2001.

5 Mr Richard Bamford (“Bamford”) was from 4 December 1995 a director of Beautree and from 30 May 2001 a director of Willow Glade. At all relevant times, the ninth defendant Patricia Yonon (“Yonon”) who is the spouse of Bamford, was a cheque signatory for Muirhead’s bank account and she was authorised and operated that bank account and has conducted its financial affairs.

6 It is also alleged that she and her husband were agents of Beautree. It is common ground that at all material times Mr Bamford for all practical purposes had the control and was the governing mind of Beautree.

7 Between 2004 and 12 May 2009 the allegation is that Feldman caused a number of bogus invoices to be generated in the name of Willow Glade to SFG totalling $1,051,527.20 (Willow Glade invoices); a number of bogus invoices to be issued in the name of Muirhead to SFG totalling $9,317,269.50 (Muirhead invoices) and also caused bogus invoices to be issued in the name of Beautree sent to SFG totalling $6,307,950 (Beautree invoices). It is alleged that he authorised and procured SFG to pay the amounts stated in those invoices to those three companies respectively by signing or initialling the invoices and authorising payment by SFG. The moneys were duly paid by SFG to the three companies. In some instances he arranged for the payees to transfer some other funds to him.

8 It is alleged that each of the invoices, on its face falsely represented that goods and services referred to in the respective invoices had in fact been supplied and performed for SFG by the three defendants, whereas in fact no such goods or services were provided by any of the three companies to SFG and the payments were made by SFG in the mistaken belief the goods and services reflected on the invoices had in fact been supplied and performed for SFG by the invoicing companies. It is alleged that none of the three companies gave any consideration whatsoever to SFG for any of the payments made and that none of the payments have been refunded to SFG. Accordingly, it is claimed by SFG that each of the three defendant companies is liable to refund the payments received by them from SFG as money had and received to the use of SFG or, alternatively, on the basis that those three companies have been unjustly enriched.

9 Beautree is the only company to appear on this application for summary judgment and it opposes the summary judgment application.

10 The allegation is that from 4 January 2004 it received payments in respect of the Beautree invoices into its bank accounts and distributed the amounts in consultation with Feldman and that in so acting, Beautree, by its agents Mr and Mrs Bamford, was aware that Feldman was a senior employee of SFG who was arranging for false Beautree invoices in the name of Beautree to be issued to SFG. It is alleged, that it was also aware that Feldman was using his position as an employee of SFG to procure the payment of the Beautree invoices and that Beautree was not providing any goods or services to SFG which would justify the payments made by SFG to Beautree. Alternatively, it is alleged that Bamford and his wife Yonon were aware that Feldman was procuring payments from SFG to Beautree in circumstances where Beautree had no proper entitlement to receive the funds and when they were aware that Feldman had procured the payments by improperly using his position as an employee of SFG. On this basis it is alleged that Beautree was knowingly concerned in or was a party to Feldman’s improper use of his position as an employee of SFG and that this contravened s 182(2) of the Corporations Act 2001 (Cth). Similar allegations of bogus invoices and mistaken and fraudulently procured payments are made in relation to Willow Glade and Muirhead. By way of relief, SFG claims it is entitled to summary judgment to recover the amounts referred to earlier which were mistakenly and wrongly paid by SFG to the three companies.

Points of Defence

11 In its Points of Defence Beautree admits that the guiding mind and sole controller of Beautree was Bamford. The defence says that Beautree was aware that Feldman was a founding partner of a business called Millers (the predecessor company of SFG) and that he had an interest in the fashion retail business and was a key participant in the public listing of Millers. Millers subsequently changed its name to SFG, in 2006. It is also admitted that Mrs Bamford signed cheques on Muirhead’s bank account and performed internal banking for Muirhead and that she signed cheques on Beautree’s bank account and performed banking for it. It is admitted that any document purporting to be an invoice from Beautree to SFG was false but alleges that it was not rendered or issued by Beautree. It is also admitted that Beautree performed no service and supplied no goods to SFG.

12 Apart from denials and non-admissions an affirmative defence is raised that Beautree had received payments from SFG without notice that they were mistakenly or wrongly made and that it was believed that SFG was making the payments on Feldman’s direction from funds that were payable to Feldman pursuant to his arrangements with SFG. The terms of the “arrangement” are not specified. It is alleged that Beautree changed its position since receipt of each payment in that the funds received in its bank accounts were disbursed inter alia Mrs Bamford and Feldman. Beautree admits receiving funds into its bank account from SFG and says, that under Bamford’s direction, after paying some of the funds directly to Feldman, the balance of the moneys were distributed to related trading companies to cover the expenses of the companies.

13 The points of defence are accompanied by a brief standard form affidavit by Bamford in which he states that he is the sole director of Beautree and that he believes the allegations made in the points of claim admitted in the defence are true; that the allegations of fact made in the points of claim and denied in the defence are untrue, and that after reasonable inquiry that he does not know whether the allegations of fact, which are not admitted are true. There is a solicitor’s certificate annexed to the points of claim given, under s 347 of the Legal Profession Act 2004 (NSW), in which the solicitor certifies that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the defence against the claim for damages has reasonable prospects of success.

14 It is submitted by Beautree that this Affidavit verifying is evidence of the fact that Beautree has received the moneys unaware of Feldman’s impropriety changed its position in reliance in good faith as a consequence of the receipt. However, on its face the verifying affidavit by Bamford is merely a generalised assertion that a belief is held as to the allegations of fact. It is not expressed in terms which amount to proof of any fact. It is not evidence of the existence of any specific fact.

Legal Principles

15 Where money is paid under a mistake of law or fact the payer is prima facie entitled to recover the moneys paid where the moneys were paid in error or in the mistaken belief by the payer that he was under a legal obligation to pay them or that the payee was entitled to payment. It is not necessary to prove “unjustness” over and above the fact of mistake. It is a defence to a claim to recover money paid under a mistake that the payee has adversely changed his position in reliance on the payment: see David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353. The Court there decided that it was a defence to a claim for restitution of money paid under a mistake of law that the defendant honestly believed when he learned of the payment or transfer that he was entitled to receive and retain the money or property and that in reliance on that belief he acted to his detriment.

16 In David Securities the Bank submitted that the appellants must independently prove “unjustness” over and above the mistake. This argument was rejected by the Court at 379 where it said:

“The fact that the payment has been caused by mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution.”

17 Their Honours also said, in relation to a defence that in reliance upon receipt of the payments the respondent in good faith had changed its position to its detriment, the onus of establishing good faith is on the payee. See also Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 126 at [137]-[139].

18 In Cairns v Freeman [2008] NSWSC 792 Brereton J expressed the test in relation to summary judgment, as being whether it could be said that the case was “manifestly doomed to failure”. His honour pointed out that in some cases a respondent to a summary judgment application may be able to point to material other than in the evidence already filed in the proceeding to suggest, or point to the fact that by the time of trial evidence supportive of the defendant’s case might become available: see also Evans v Repco Transmission Co Pty Ltd [1975] VR 150 at 152 where Gowans J refers to circumstances where it appears that evidence exists although not produced in the application but which it was shown could be adduced to indicate that a plaintiff has a cause of action.

19 In Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21 Blackburn CJ referred to the question as being whether there was a “genuine possibility of defence” of fact or law to a claim pleaded which had been verified.

20 In Australia Steel Co. (Operations) Pty Ltd v Steel Foundations Ltd (2003) 58 IPR 69 at [70], Kenny J observed that the correctness of factual assertions in an affidavit in opposition to an application for a summary judgment are not to be decided on the application unless the assertions are shown to be manifestly false either because of their inherent implausibility or because of inconsistency with contemporaneous records. In this case there is no affidavit in opposition.

Evidence

21 Directions were made as to the filing of evidence by both parties and although evidence was filed by SFG none has been presented by any of the three defendants.

22 SFG in support of the motion for summary judgment has read eight affidavits and provided extensive records which show that Bamford is the sole director of Beautree and that large amounts of moneys were regularly moved into and out of its accounts by Mrs Bamford, in some cases with funds transfers back to Feldman at his request. The records relating to Muirhead show that the director and shareholder of the company is a Mr Marks who is the step-father of Feldman. His evidence is that he never knew he was a director of that company and knew nothing about the affairs of that company. Feldman and Bamford were at all material times directors of Willow Glade.

23 An affidavit of Mr Mitchell, solicitor acting for SFG, refers to bank records and a large volume of documentary evidence which shows that the authorised signatories to the Muirhead bank accounts, are Mr Marks, and Mrs Bamford. The authorised signatories for the accounts of Beautree are Mr and Mrs Bamford. The authorised signatories for the accounts of Willow Glade are Feldman, Bamford and Mrs Bamford.

24 Mr Herman, an accountant who is the chief financial officer of SFG, gave evidence that SFG was listed on the Australian Stock Exchange in May 1998. Up until December 2006 it was known as Millers Retail Ltd (“Millers”). Feldman was the head of property and strategic projects at SFG until his dismissal in May 2009. Feldman commenced work with SFG in 1994. His function was to negotiate with landlords regarding lease terms in relation to the premises for, retail outlets of SFG and to manage and authorise expenditure including payment for repairs, fit outs and maintenance of the numerous SFG outlets throughout Australia.

25 In order for payments to be made to a supplier for goods or services an invoice was necessary. Once an invoice was signed by Feldman it was presented to the accounts section for payment in accordance with its terms.

26 Towards the end of April 2009 Mr Herman became aware of anomalies relating to the payments authorised by Feldman including those to Beautree. In the first two weeks of May 2009, extensive investigations were carried out in respect of numerous payments made to the three present defendant companies which are the subject of this application. Spreadsheets of payments were drawn up in respect of the payments and in summary they show the following:

Company	FY05	FY06	FY07	FY08	FY09 YTD	Total
Willow Glade	$99,374.00	$323,448.20	$628,705.00	0	0	$1,051,527.20
Beautree	0	0	$2,246,805	$2,085,930	$1,975,215	$6,307,950
Muirhead	0	$229,306	$1,117,765	$3,807,567.50	$4,162,631	$9,317,269.50
Total	$99,374.00	$552,754.20	$3,993,275.00	$5,893,497.50	$6,137,846.00	$16,676,746.70

27 In respect of each payment by SFG to the three companies it is common ground that there were no services or consideration given by any of the companies for these payments and that none of the funds have been repaid. Mr Herman says he was unaware until late April or early May 2009 that Feldman had any connection with any of the three companies.

28 Mr Herman in spreadsheets exhibited in his affidavit refers to numerous examples of large payments made by SFG to the companies. He attaches and refers to payment records from banks in relation to the accounts of Mr and Mrs Bamford and to company searches. He states that having regard to the evidence known to him it is his belief that none of the defendants have a defence to the claim brought by SFG and he requests that summary judgment be entered against each of the companies.

29 There is no dispute that Feldman systematically defrauded SFG by arranging bogus invoices over several years addressed to SFG (Millers) and then authorised the payments for those false invoices to the three companies. The subpoenaed statements show numerous examples of money coming in from SFG to the accounts of the companies.

30 Mr Herman also annexes a series of emails which show that Feldman was creating false invoices and sending them to himself. These purported in many instances to be from Beautree. There are in the order of 170 of these fabricated Beautree invoices in evidence. It is important to be noted that all of them include additional charges for GST which in turn is said by SFG to be a false representation that goods or services were supplied by Beautree and it is common ground that there were no goods or services ever supplied to SFG by any of the three defendant companies. In these circumstances they are clearly false.

31 There is also in evidence series of emails between Feldman, Bamford and Mrs Bamford which refer directly to the transfer of large amounts of money being in many cases in the order of hundreds of thousands of dollars going into Muirhead, Willow Glade and Beautree from SFG. These emails show that from time to time an urgent need on the part of Beautree and the other companies for funds to meet their pressing commitments. In some instances the communications are with Mrs Bamford who regularly expressed concerns about Beautree’s GST needs and also referred to problems with respect to matters such as the need to pay wages and meet mortgage commitments.

32 These emails evidence transfers of funds from SFG into Muirhead to “shuffle and use” and also into Beautree. Mr Herman has given evidence that Mr Feldman’s initials and signatures appear on all the bogus invoices.

33 The solicitor for SFG, Mr Mitchell, has given evidence as to a lengthy conversation with Feldman on 12 May 2009 in the course of an interview after the fraud had been detected in which Feldman confessed in an open and frank way to the issuing of false invoices to SFG through the three companies. In the course of that interview, Feldman said:

“I won’t hide. For the record, other than myself, no-one else is involved. I don’t know how I am going to face my wife tonight. I stole money to support charities and to support a lifestyle and to keep up with my peers.”

34 Mr Mitchell attaches to this affidavit a lengthier and more detailed record of what Feldman said during that interview including statements to the effect that Bamford did not know of Feldmans wrongful conduct and that Feldman represented to him that the funds were as a result of “an agreement with SFG” and that it was best for Bamford not to know about it. Feldman is also recorded as saying that Mrs Bamford (Yonon) would not know anything about it either.

35 However, in an affidavit which he swore subsequently Feldman denies on oath making any statements to the above effect.

36 As one example of the emails to which he was a party Feldman has produced an email from himself to Mrs Bamford of 11 March 2008, which was copied to Mr Bamford, concerning Muirhead in which Feldman says:

“Trish-RB [Bamford] will need to populate this invoice as per the last (Batchcrete) (sic) invoice but with diff equip and serial numbers.

Merv needs invoice tmrw arvo so he can execute.”

By “populate” I understand that Mr Feldman meant “fill in” or “modify”.

37 There is another example of an email from Feldman to Mrs Bamford on 8 December 2008 asking her to falsify and “amend in your own special way” an invoice by changing the date, varying the addressee to make the addressee SFG, inserting Feldman’s address at SFG, and requesting her to change the reference so it referred to “Millers” / GOLO building at Mudgee. The invoice as varied provided for GST.

38 Another email to Mr and Mrs Bamford of 9 March 2009, with the subject given as “cash flow”, 6 weeks before the fraud was unveiled, stated that SFG was experiencing extremely serious financial hardship. Feldman states that there is not much time left:

“…that I can assist our business’s …maybe only four to five weeks.”

39 This email sets up a meeting with Mr and Mrs Bamford “to see what they can come up with” and it refers to the “economic tsunami” and states that he (Feldman) is currently “white and numb”.

40 In a fax to Mr and Mrs Bamford Feldman promises that he will get two cheques to them by week’s end for “$61k” and “$38k.” The fax also states that:

“I need either wg [Willow Glade] or ef or preferably themselves to Dummy up some invoices that read as follows …

Invoices to be made to Millers Retail Ltd”.

41 In addition to these examples of false invoices and amendments there is evidence from Mr Milner of SFG which annexes a tax return signed by Bamford for The Bamford Family Trust for the year ended 30 June 2007 showing an income of $2,793,460, which is described as “consulting fees” for that financial year. The trustee of the Bamford family trust is Beautree and the beneficiaries include Bamford and Willow Glade. A trial Balance for the Trust for the period to 30 June 2008 shows consulting fees in that year of $1,870,800. There is no indication where these large sums came from except for the bald reference to “consulting fees”.

42 Mr Cahalane who is the National Loss Prevention Manager of SFG has also filed an affidavit annexing a lengthy and extensive exchange of emails between Feldman and Mrs Bamford with, in some instances, copies to Bamford, which evidence the ongoing fabrication and modification of, and payment for, bogus invoices and which point to the awareness of Mr and Mrs Bamford of the activities being perpetrated by Feldman and also point to their complicity in the process to meet the urgent needs of other businesses in which they were involved including Beautree. Mr. Cahalane says that these emails records were extracted from the email account of Feldman while he was working for SFG.

Beautree’s Case

43 Beautree submits that no case has been made out for summary judgment against it because it has not been shown that Mr Bamford, who was the controlling mind of Beautree, did not act in good faith in changing his position in reliance on receipt of the funds. It refers to the authorities which emphasise that summary judgment on a summons will generally only be made in cases where the facts are simple and where a further pleading would not elaborate the claim. The present case it says is neither simple nor clear.

44 Beautree says that SFG has not discharged the initial onus of showing that the affirmative defence raised by the three companies and change of position in good faith is “manifestly groundless” or “obviously untenable” within the principles summarised in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129-130 per Barwick CJ.

45 Beautree’s case is that where, as in this case, there are conflicting factual assertions in pleadings, the matter should proceed to trial so that the defendants can have the benefit of interlocutory processes, including discovery and full documentation after issuing subpoenas, having the benefit of particulars, and of cross-examination and detailed submissions. Beautree says that the evidence against it clearly was established that it was aware of Feldman’s misconduct so as to meet the defence that it has changed its position in good faith: see Barclays Bank Ltd v W. J. Sims Son & Cook (Southern) Ltd [1980] QB 677 at 695 per Goff J which was applied by the High Court in David Securities.

46 Beautree refers to the unsworn statement of Feldman at the interview on 12 May 2009, which was later contradicted by him on oath, to the effect that Bamford and his wife were unaware of Feldman’s fraudulent conduct and it says that this raises an issue of contested fact and calls in question the credibility at Feldman on a critical aspect of the case and therefore the motion should be allowed to go to hearing.

47 Beautree also submits that the short affidavit of Bamford verifying the points of defence of Beautree constitutes evidence contrary to the voluminous and cogent evidentiary material adduced by SFG on this application and, that therefore the matter should go to trial.

48 In summary, Beautree’s case is that there is a conflict of fact on the evidence arising from the inconsistent statements of Feldman and the verification of the defence, which should be ventilated at trial.

49 Finally, it is submitted for Beautree that there has been no affidavit filed by SFG which complies with the Rules because there is no statement as to a belief that there is no real issue to go to trial. This submission has no substance because the affidavit of Mr Herman, Chief Financial Officer of SFG, expressly makes this assertion and his affidavit clearly complies with the rule.

Reasoning

50 In my view the evidence adduced by SFG taken together with the admissions and statements in the points of defence clearly demonstrates that Beautree received moneys as claimed by SFG as a result of a mistaken payment by SFG. Accordingly, that money can be recovered as a claim for money had and received.

51 The affirmative allegation in the points of defence which needs to be established, to the level of a possibly arguable case, by Beautree is that it had no awareness or notice that the moneys were paid to it from SFG as a result of fraud or misconduct on the part of Feldman and that it relied in good faith on the payment, to its detriment, by paying out the funds to other persons and companies including the three companies, Feldman and Mr and Mrs Bamford.

52 The uncontradicted and consistent body of evidence presented by SFG establishes clearly that Beautree through Mr and Mrs Bamford was aware of the fraudulent conduct of Feldman particularly having regard to the exchange and copying of emails between Mr and Mrs Bamford and Feldman. Nowhere do any of the companies point to any evidence or to any available source of evidence which could establish a case of lack of awareness.

53 Rather, the evidence of numerous emails, bank records, cheques, and invoices indicates that Feldman, acting in conjunction with Mr and Mrs Bamford, was deciding from time to time whether payments made by SFG, for services which were not provided, would go to Muirhead, Beautree or Willow Glade in order to meet the urgent periodic financial needs of those companies. There are instances in the evidence of amendments made to invoices at the suggestion of Feldman and of the fabrication of handwritten of invoices by Feldman to Beautree. There are other references to “dummying up” and “amendment” of invoices. It is evident from this material that Beautree by his agents Mr and Mrs Bamford knew that no services or other consideration was provided by any of the three companies to SFG in return for the large ongoing payments made at their request and that Feldman himself was receiving moneys back for his own account from some of these funds paid to Beautree. No plausible explanation has been proffered as to “any arrangement” Bamford believed existed between Feldman and SFG. The emails also demonstrate that regularly there was urgent need, for the companies operated by Bamford, from time to time for large amounts of money to meet their commitments and that they were being met by moneys from SFG. Also, the Bamford trust tax return of which Bamford was the Trustee shows very large sums were paid to its accounts in the order of several million dollars as “consulting fees” where there was clearly no evidence of consulting services having been provided to SFG.

54 This is a case where despite having full opportunity to do so no credible evidence has been presented by Mr and Mrs Bamford to meet the comprehensive and cogent evidence of SFG, and no attempt has been made to provide any evidentiary support or indication of the existence of any evidentiary support for their affirmative defence of change of position in good faith.

55 The affirmative assertion of good faith and lack of awareness or misconduct needs to be backed up by some, even slight, evidence, which might demonstrate that the defence is arguable on the facts or that there is some evidence that might be available to support the contention. No such evidence of any kind has been provided and Beautree has elected to contest this application on the basis of material said to emerge from the evidence presented by SFG.

56 The inconsistent statements of Feldman cannot be given any weight or relied on by Beautree having regard to the later sworn denial of the earlier statements by Feldman, to the effect that the Bamfords were unaware of his fraud. This was directly contradicted by Feldman. At best the earlier statement of Feldman is of no evidentiary value either way.

57 The generalized affidavit verifying the alleged facts in the defence which was sworn by Bamford cannot be treated as evidence for the purposes of this summary judgment application: see King v Peters [2007] NSWSC 200 at [20]-[23].

58 The Bamford Affidavit verifying Beautree’s defence states his belief that, the allegations of fact that are made in the points of claim and denied in the defence, are untrue. The relevant allegation in the points of claim is that:

15. In so acting… Beautree by either or both of Bamford and Yonon or the combination of their knowledge;
…
[f] in the premises was aware or reckless as to whether Feldman had procured those payments by improperly using his position as an employee of SFG.”

59 The verification of a general denial of this allegation cannot prove change of position in good faith or that Beautree or Bamford was in fact unaware or not reckless. It cannot be probative of the state of awareness of Mrs Bamford. Indeed it is not clear what is meant by a denial directed at the “combination of their knowledge”.

60 The purpose of an affidavit verifying is to ensure that the issues at trial are confined to what is really in dispute by preventing irresponsible use of denials or non-admissions of allegations with the consequential waste of time and expense in dealing with matters at trial which are not really in issue. The verification is not directed to provide evidence of facts underlying the allegations but rather to ensure that the pleadings serve their purpose which is to narrow the issues and define the real questions in dispute between the parties.

61 Whilst taking into account mind the strong reluctance of the courts to enter summary judgment and having regard to the extreme caution which must be exercised in making such a determination I am nevertheless satisfied on the evidence brought by SFG and the absence of any scintilla of evidence on the part of Beautree, that case advanced by Beautree is so manifestly doomed to failure as to warrant the grant of summary judgment in favour of SFG in the amount sought.

62 In relation to Muirhead and Willow Glade I am satisfied on the evidence that they have been served with notice of this hearing and they have not appeared. The evidence adduced in this matter is in my view equally applicable to the circumstances of those two companies and justifies summary judgment against each of them. There has been no dispute as to the quantum of the summary judgments. I therefore grant summary judgment for SFG against each of these defendant companies in the amount claimed.

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