Stefanovski v Michaud
[2014] WADC 141
•10 OCTOBER 2014
| JURISDICTION | : | DISTRICT COURT OF WESTERN AUSTRALIA IN CIVIL |
| LOCATION | : PERTH | ||
| CITATION |
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| CORAM | : MCCANN DCJ | ||
| HEARD |
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| DELIVERED |
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| FILE NO/S |
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| BETWEEN | : DANNY DRAGI STEFANOVSKI |
Plaintiff
AND
ROGER MARCEL MICHAUD
Defendant
Catchwords:
Debt claim - Loan agreement - Dispute as to the amount and terms of loan -
Allegation of forgery of alleged agreement - Turns on own facts
Legislation:
Supreme Court Act 1935, s 32
Result:
Findings of fact made
Further submissions ordered
[2014] WADC 141
Representation:
Counsel:
| Plaintiff | : | Mr N Marsh |
| Defendant | : | Ms E C Hensler |
Solicitors:
| Plaintiff | : | Swan River Law |
| Defendant | : | Raphael & Associates |
Case(s) referred to in judgment(s):
Briginshaw v Briginshaw (1938) 60 CLR 336
Browne v Dunn (1894) 6 R 67
Browning v Bitupave Ltd t/as Boral Asphalt [2008] NSWSC 19
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Lazarevic v The State of Western Australia [2007] WASCA 156
Pettigrew v Wentworth Shire Council [2012] NSWSC 624
Pollock v Wellington (1996) 15 WAR 1
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
[2014] WADC 141
MCCANN DCJ:
Introduction
In this matter the plaintiff sues for a debt of $100,000 plus interest of $20,000 and $2,400 for debt recovery fees.
2 As pleaded, he alleges that the debt arises from a written loan
agreement or, alternatively, from an oral agreement in the same terms. He alleges that on 24 November 2010 he lent the defendant $100,000 for a maximum of 12 months at an interest rate of $20,000, being 20% per annum.
There is no claim for interest pursuant to s 32 of the Supreme Court
Act 1935.
4 Pursuant to an amended defence filed prior to the trial, the defendant
generally traversed the plaintiff's claim and pleaded that pursuant to a verbal agreement entered into on or about 24 November 2010 the plaintiff lent him 'approximately' $30,000. He pleaded that it was agreed that the loan would be repaid within one year and that such occurred 'within the one year period ending November 2011'.
5 That pleading concealed the case which the defendant advanced at
the trial in which he admitted that the plaintiff withdrew $110,000 from the bank on 24 November 2010 and disbursed it pursuant to his instructions as follows. First, $70,000 was paid to him, of which $30,000 was repayment of a debt, $30,000 was the loan referred to in the defence and $10,000 was a gift. Second, $40,000 was paid to his twin brother (Mr Robert Michaud), of which half was repayment of a debt and half was a loan from the plaintiff to Robert Michaud.
6 The defendant denies that he signed the loan agreement or ever had
anything to do with its existence. He contends that the plaintiff prepared
it and forged his signature (the defendant's loan agreement scenario).
Undisputed factual background
When the evidence closed the undisputed facts were as follows.
As at November 2010 the plaintiff, the defendant and Robert Michaud had been close friends for many years.
[2014] WADC 141
9 For some years prior the defendant had been the proprietor of a
business known as Master Building Brokers Pty Ltd (MBB). MBB
provided a range of services to clients relating to residential construction.10 The plaintiff had occasionally been employed in sales. However, by
2009 things were not going well. By virtue of their longstanding friendship, the defendant employed him in a promotional role (known as 'lead generation') for MBB. His duties included manning promotional stands in shopping centres and at trade exhibitions.
11 That employment ended during 2010 (and prior to November) when
the plaintiff joined the Summit Group. As at 11 October 2010 he was earning a wage of $812 per week. Afterwards he joined Residential Building and was paid on a commission basis.
12 The defendant was helpful to the plaintiff in other ways.
For example, he was generous with his time and advice when the plaintiff needed help with technical issues relating to his work.
13 On or about 10 March 2010 the defendant and his partner purchased
a property at 2A Eileen Street, Cottesloe. Settlement took place on 10 August 2010. Robert Michaud and his partner, Ms Janice McNamara, lent the defendant approximately $147,000 to assist with the purchase. On 26 October 2010 Ms McNamara lodged a caveat against the defendant's interest only, claiming an interest as equitable mortgagee pursuant to an acknowledgement of debt.
14 The plaintiff and his mother owned a property at 19 Cleveland Street
Marangaroo. They placed the property on the market in mid-2010, but were unable to sell it. The defendant offered to expedite the process for them. He spoke to the real estate agent twice and the property was sold within a few days.
15 Settlement of the sale of the Marangaroo property took place on
17 November 2010. According to the settlement statement (exhibit 1) the settlement receipts of $391,219.62 were disbursed as follows (emphasis added):
[2014] WADC 141
Real Estate Commission 10,920.00 Shire Rates for Year 2010/11 $1183.49 Purchaser's Proportion 225 days Shire Rates outstanding 2,109.35 Water Rates for Year 2010/11 $795.00 Purchaser'ro225 days Water Rates outstanding 1,743.15 Water consumed to 17.11.2010 103.84 Oceania fee prepare Application for Survivorship 195.00 Landgate registration fee Application for Survivorship 135.00 Oceania's settlement fee 909.20 reviewed to 730.00 Landgate title searches 47.50 Phone, faxing, photocopy, etc 55.00 Special answer on cheque CBA 15.00 Bank cheque fees 30.00 CBA collected 167,923.85 Paid Legal Aid 6,706.76 City Metro Pest Management spot Treatment for Termites 135.00 Paid Master Building Brokers 20,000.00 Paid Thornlie Just Commodore 37,000.00 Banked at CBA on your behalf 143,235.17 Refund due to you banked via internet 135.00 391,219.62
16 As can be seen, some of the proceeds were used to pay arrears of
statutory charges and to refund the Legal Aid Commission. $37,000 was paid to Thornlie Just Commodore for the purchase of two motor vehicles for the plaintiff and his brother. $20,000 was disbursed to MBB
[2014] WADC 141
(the reason for which is disputed). $143,235.17 was deposited in the
plaintiff's account with the Commonwealth Bank of Australia.17 On 24 November 2010 the plaintiff and defendant attended the
Booragoon branch of the Commonwealth Bank. The plaintiff withdrew $110,000 and split the proceeds into two bank cheques at the defendant's request. The first cheque (for $80,000) was payable to Ms McNamara. The second cheque (for $30,000) was payable to MBB.
Both cheques were immediately banked into the accounts of Ms McNamara and MBB by means facilitated at the bank.
19 By October 2011 the parties were in dispute as to how much the
defendant owed to the plaintiff (if anything). There was unpleasantness and the defendant applied for a Misconduct Restraining Order (MCO) to prevent the plaintiff from communicating with him. A final MCO for a period of 12 months was made in the Fremantle Magistrates Court on 2 May 2012 (exhibit 15).
Summary of the evidence
In evidence, the plaintiff denied ever being indebted to MBB or either of the Michauds as contended by the defendant.
21 He testified (ts 35 – 36, 114) that the $20,000 which was disbursed to
MBB from the proceeds of the sale of the Marangaroo property was a loan to enable the defendant to purchase, restore and re-sell a black VE Commodore motor vehicle. He denied the suggestion that the payment was actually re-imbursement of advances of commissions (ie, loans) which he never earnt. He asserted that he had been paid wages by MBB. MBB and the defendant have never repaid the $20,000 and there is no claim for it in these proceedings.
22 The plaintiff testified that the defendant regularly importuned him
for a loan in the weeks leading up to 24 November 2010. Initially the defendant wanted to borrow about $50,000, but later this increased to $100,000, $110,000 and $150,000. The plaintiff replied that he was not in a position to lend such amounts. But the defendant said the loan would only be for a short period and he would pay $20,000 interest for a loan of $100,000.
23 So the plaintiff agreed (ts 19) because he was not particularly
concerned about the defendant's ability to repay him. The defendant advertised his business in glossy magazines, lived well and showed him a
[2014] WADC 141
list of clients who owed him money. Unsolicited, he delivered a new
plasma television screen to his mother as a 'sweetener'.24 The plaintiff insisted that a loan agreement be drawn up in front of a
lawyer. The defendant agreed to this, but fobbed him off with excuses
and a lawyer was never present during their discussions.
At a meeting at the defendant's home in Cottesloe in November 2010 (it must have been the 24th on the plaintiff's evidence) the defendant produced a loan agreement for $100,000, but told him that his lawyer had been held up and could not come. The plaintiff agreed to proceed and they both signed the loan agreement. It was late in the day so they both hastened to the bank so he could withdraw the money.
The plaintiff testified as follows about the above events (ts 20 - 21; emphasis added):
Now, on a couple of occasions, Roger had invited me to his house. … I did stipulate to him on several occasions that with that sort of money, I would do it only if we could be in the presence of a lawyer. He said that wouldn't be a problem. He would introduce me to his lawyer that he uses for their company, Master Builder Brokers. First time the lawyer wasn't able to be there. The second time, Roger invited me so far as us to be seated in front of the lawyer to go through this process. Roger came up with the contract that the court has in its possession now [exhibit 3]. It had been all ready with my details, his details, everything ready to be signed. Now, he said the lawyer, he's running late, however, we can wait or we can sign this now and then basically go to the Commonwealth Bank for the next step. Now, it was towards the end of the day. Banks were obviously just about near closing time. He did have a sense of urgency and a bit of panic in his voice where it needed to be, like, now, now. Now, I had never seen Roger in this sort of state of mind. He's usually calm and very confident. He seemed very, very eager and agitated that it needed to be done now. He insisted that we – basically there was no problem. Now, I noticed that on the contract it said $100,000 where opposed to the money I lent him was $110,000.
… He told me that he basically had just come from his lawyer's office. His lawyer was just in with another client and would be at his home not long after. Now we did wait around for a little bit. He was looking at his watch and then expressing to me that the banks would be closing soon. He assured me that this is completely legal, done by a lawyer.
… I – with all the assurance I got from him over the duration of the weeks relating to this week, there was nothing in my mind or any hesitation to think anything else. So on that understanding, I was more than happy to sign it. He also signed it and we then basically went straight off to the
[2014] WADC 141
Commonwealth Bank where the next step went as far as transferring the money into Roger's account.
He accepted the defendant's assurances that the loan agreement would be amended to reflect the change in the loan amount from $100,000 to $110,000 (ts 27; emphasis added):
When Roger initially asked me to borrow money, his figures kept changing, wanting it to get larger and larger. We did agree on $110,000, however, Roger did have only $100,000 written on the document. When I asked him why there was $100,000, he assured me that it will be changed, not to worry about it, pretty much crossed it off. And once again I – in that state of mind – I was already confident to lending him such a large amount of money. So I had no other thoughts as to – he – that he would not change it to the correct figure that we agreed on and that it would reflect that – basically the two transactions being $80,000 and $30,000 which he assured me once again will be done and we will re-sign it. As - as a result obviously, it was never done.
28 The emphasized passages in the above evidence suggest that the
plaintiff and the defendant settled on a loan of $110,000 after the agreement was signed at Cottesloe. The plaintiff's evidence about this was not satisfactory. He variously testified that the amount was either agreed when they were still at the defendant's house, en route to Booragoon, or at Booragoon (ts 104).
To complicate matters, the plaintiff only sues on a loan of $100,000 and waives $10,000 (in his opening address Mr Marsh said that any oral loan agreement was for $110,000: ts 4).
30 The original of the alleged loan agreement was not tendered in
evidence. An alleged photocopy (exhibit 3) was received in evidence without objection (save for the contention that it was a forgery). It has been scanned and is attached to these reasons.
The plaintiff gave evidence about the making of the handwritten amendments on exhibit 3 (ts 27):
… I asked him to – for it to be paid as soon as possible. When he showed me the contract, he had 12 months in there. I said that there was no way I could wait 12 months, so he has crossed 12 months out and put 6 months on there. …
The plaintiff's evidence about this in cross-examination was ambiguous (ts 60; emphasis and intercalation added):
[2014] WADC 141
I obviously - I looked at the end result which himself stipulated saying 20,000 – how else can you make 20,000, you can't put that in a bank and just make 20,000 in six months [40% p.a.] or a year, [20% p.a.] that's 20,000 he kept going on about. Plus if I don't pay that, there's that 3% recurring interest after the contract ends and so forth. … always more or less expressing what the benefits were for me, I think he obviously wooed me and, you know, excited me in that fact, that is a sure thing, it couldn't be easier done, there was no other business or banking organisation that you could earn a huge great, you know, interest in such a short period of time.
33 The plaintiff testified about events at the Booragoon branch of the
Commonwealth Bank (ts 22 – 23). The defendant spoke to someone on his telephone and obtained the details of Ms McNamara's bank account. The plaintiff sensed that the defendant was under pressure to transfer the money into that account without delay, because he gave a number of assurances to that effect to whoever he was speaking to on the phone. The plaintiff was not then aware that the defendant owed money to Ms McNamara.
34 In cross-examination, the plaintiff denied that he forged the
defendant's signature on the loan agreement and (when questioned by myself) also denied that he had handwritten the parties' names underneath their signatures.
35 He was asked if he owed MBB and/or the plaintiff $50,000 in
November 2010 (ts 36), but Ms Hensler did not particularise how that sum was arrived at. It transpired that this was a most opaque way of putting to the plaintiff that he owed the defendant (or MBB) $30,000 in addition to the $20,000 he allegedly owed to MBB. He denied that he owed anything and denied that he repaid $20,000 and $30,000 on 17 and 24 November respectively.
36 He was briefly cross-examined about his financial dealings with
Robert Michaud, but the defendant's case about that was not properly put to him. He was merely asked (ts 55 – 56) whether Robert had ever lent him any money, which he denied. Later (ts 59) he was briefly asked (in passing) if he had ever lent Robert any money, which he also denied. He testified (ts 59 - 60):
I did have a phone call from his [ie. the defendant's] brother which was bizarre at the time but made sense to me now, his brother phoned me and said … a day or two before I actually gave him the money … [that] Roger has … borrowed a lot of money from his brother …
[2014] WADC 141
I think Roger had told his brother that he was waiting for me to have given him the money so in his end he was anxious to find out when it was coming. So I thought this is a bit bizarre … .
37 The plaintiff admitted (ts 107 - 108) that the defendant made some of
the payments and paid some bills for him subsequent to 24 November 2010 (possibly totalling $17,200) referred to at [67] below. It is therefore not to his credit that is he is still claiming the full $100,000.
38 Called by the plaintiff, Ms McNamara testified that at all material
times she was completely pre-occupied with family and domestic matters and that Robert Michaud handled all of their financial affairs. They shared all of their property and bank accounts and it was not unusual for Robert to just use her name for their financial dealings. So, she could shed no light on any of the disputed transactions. I accept her evidence.
39 Ms Hensler for the defendant filed a written opening and made a
brief opening address which was difficult to follow. It is helpful to set-out
excerpts of the latter (ts 129 – 133; emphasis added):In essence, the defendant's position is that there were financial dealings between the defendant and the plaintiff. Those financial dealings took place over some time and in 2010, when Mr Stefanovski sold his house, there was money owing to the defendant, Roger Michaud, but also money owed to his brother, Robert Michaud.
…
The defendant accepts that there were cheques drawn but the $30,000 cheque that was made payable to Master Building Brokers was not a loan to Mr Michaud but it was the payment of a debt, or payment of monies owed – monies that had been paid at Mr Stefanovski's request over some time.
…
With the $80,000 cheque, the defendant's case is that in part that was to pay monies owed to Robert Michaud.
…
In part, that was a much smaller loan of $30,000 to Roger Michaud and $10,000 of that was a payment made by the plaintiff to the defendant in gratitude of all of the assistance that the defendant had given to the plaintiff and, in particular, of helping him … to sell his home, his property of Marangaroo.
[2014] WADC 141
… And there was no loan for $100,000. … There was a loan for $30,000, but there was no interest payable on that loan and that has since been repaid.
40 Ms Hensler provided no particulars in respect of the alleged debts
that I have emphasized. Moreover, although she did briefly raise it in cross-examination of the plaintiff, she said nothing about the plaintiff lending any money to Robert Michaud.
41 I pointed out to Ms Hensler that it would have been helpful if the
defence reflected her opening and requested that another pleading be filed.
That occurred on 9 June 2014.
The new pleading deleted 'approximately' from the pleading of the $30,000 allegedly lent by the plaintiff to the defendant prior to 2010. So, what had once been pleaded in only approximate terms could now be pleaded with certainty. But, there was still no pleading in the nature of a confession (of the disbursement of $110,000) and avoidance (as to how it was disbursed).
43 Unusually, the defendant elected to call Robert Michaud before
himself. I queried this with Ms Hensler. She said 'that Mr Robert Michaud would like to get his evidence over and done with as quickly as possible'. Mr Marsh indicated that he did not consent to the witnesses 'being called out of order' and that he would be making comment on it (ts 135 – 136).
44 Robert Michaud testified (ts 136 – 137) that he lent the plaintiff
money 'about two or three years ago' in just 'dribs and drabs of $5,000 or $6,000 at a time'. The money was repaid 'within that year'. This evidence followed (ts 137, emphasis added):
How was it repaid? - - - Dribs and drabs, to be honest. Yes.
About how much money did you lend? - - - $20,000, he lent [sic borrowed]. … In total, yes.
Were you paid in cash? - - - Yes, I was. Yes.
Were you paid in any other way? - - - in any other way? What do you mean? No, in cash.
Was it all cash?---Yes, it was all cash. Yes
Do you recall receiving a cheque made out to Janice McNamara for $80,000? - - - No. I recall that it went – that it went into my – into my partner's account.
[2014] WADC 141
45 Mr Michaud said that he needed the $80,000 for renovations and a
sub-division that he was undertaking. He would not accept that he needed it urgently, but his evidence left me with the impression that he was impatient for it (ts 143 – 144).
46 He testified (ts 137 – 138) that at the time he and Ms McNamara
were owed approximately $147,000 by the defendant and that, by arrangement between he and his brother, $40,000 of the money which the plaintiff paid to the defendant on 24 November 2010 was deposited into Ms McNamara's account against that debt.
Next, Mr Michaud was asked (ts 139) if he had ever borrowed any money from the plaintiff. He said that he had:
When he repaid the 80. When he - when he put that cheque into my account, the 80,000.
When asked to clarify, he said:
$20,000 of that was loan … from Mr Stefanovski ...
…
[The balance of $20,000 was] the $20,000 that he – Danny owed me, that I
borrowed [sic: lent] him.
49 The second part of this evidence was completely inconsistent with
Mr Michaud's prior evidence in which he said that the plaintiff repaid him
$20,000 within the year in 'dribs and drabs' of cash.
So, I interrupted (ts 139):
McCANN DCJ: Earlier on you told me that Danny borrowed money off you in dribs and drabs and it came to $20,000 and he repaid you in the same year in dribs and drabs, $20,000, all in cash …?---No. No. He paid me in that lump sum of 20,000.
I still needed clarification and Mr Michaud said (ts 140):
I borrowed [sic] him the money in dribs and drabs. He repaid it back in a lump sum.
52 Later (ts 142) he said that he had been 'confused' in his original
evidence-in-chief because he had been thinking of other, earlier loans (which he had not previously mentioned) that he had made to the plaintiff that were repaid in cash. It seems that he was seeking to convey that he had lent the plaintiff exactly $20,000 in 'dribs and drabs' twice, and was
[2014] WADC 141
wrongly thinking of the first instance (when he had been repaid within the year in 'dribs and drabs') in his initial evidence ([44] above) instead of the second instance (when the circumstances of repayment were quite different) which he was supposed to be addressing in his evidence. Mr Michaud made a very poor impression on me when giving this evidence. I do not accept that he was confused. The original line of questioning (in-chief) was quite clear and could not have confused him.
In cross-examination he testified (ts 141; emphasis added):
So did you have a conversation with Ms Stefanovski about those loans?---Of course. Yes. I did, yes.
What was said and where?---To be honest, I don't remember. All I know is that - all that I - we - we agreed on that because I borrowed him the 20,000, he was going to borrow me the 20,000.
54 He went on to say (ts 142 and 144) that this occurred at his house
and no one else was present. He remembered 'having conversations with him in regards to money at my house' after he learnt that the plaintiff had sold the Marangaroo property.
He testified (ts 143) that he (or MBB) repaid the plaintiff within the
year 'in cash'.
56 At no stage did Mr Michaud give any particulars in his evidence of
any of the financial dealings between he and the plaintiff. No particulars
were put to the plaintiff in cross-examination either.
The defendant testified as follows.
In or around 2008 he lent the plaintiff $30,000 (ts 147, 161 - 162). He gave no particulars and adduced no documentary evidence in support.
59 MBB advanced the plaintiff another $20,000 over 10 months in
2009 - 2010 on account of commissions which he never ultimately earnt (ts 148, 161 - 162). No particulars, breakdown or corroborative documentary evidence was provided of this either. The plaintiff repaid the $20,000 from the proceeds of the sale of the Marangaroo property.
60 As an investment, he bought a VE Commodore from a friend of the
plaintiff prior to the sale of the Marangaroo property, but he did not
borrow any money to do so from the plaintiff (ts 170).
In the days prior to 24 November 2010 the plaintiff agreed to repay the original $30,000 loan and to lend him a further $30,000 (ts 148).
[2014] WADC 141
62 The plaintiff also offered him an additional $10,000 in recognition of
his past help, such as assisting with the sale of the Marangaroo property
and providing vocational training (ts 148, 171, 180).63 During November 2010 he regularly spoke to his brother Robert
about repaying him and Ms McNamara when he was put in funds by the plaintiff (ts 157). In the process he became aware that Robert would also be 'getting money from Danny' (ts 157). He had no discussion about this with Ms McNamara.
64 He 'remembered going to the bank with the plaintiff and discussing,
you know, the payment that he was to pay me was to also go to Rob and he obviously was aware that he owed Rob money with whatever dealings he had with Rob' (ts 157).
He denied (ts 174) that he was under any financial pressure or urgency at the time.
66 He denied that he signed the alleged loan agreement (ie, the original
of exhibit 3) and denied having ever seen it until about 2012 when he saw
exhibit 3 in his lawyer's office (ts 150).67 In 2010 – 2011 he was very concerned about the plaintiff's personal
affairs and his ability to manage his finances. He decided that the best way to repay him his $30,000 and to help him at the same time was to get a 'pile of his bills' and pay them, which he did as follows (ts 158 – 159, 181 - 182):
(i)
He paid sums of $6,000 and $2,000 to an institution known as First Mac to whom the plaintiff or his family owed money.
(ii)
He withdrew a cash sum of $7,500 from the Riverton Branch of the Commonwealth Bank on 8 August 2011 and gave it to the plaintiff.
(iii)
The plasma television referred to in the plaintiff's evidence was not a 'sweetener' and was accepted as payment in kind for $2,500.
(iv)
He paid $5,500 to the Fremantle Magistrates Court in satisfaction of the plaintiff's fines.
(v)
He paid the balance of the purchase price for a computer, which was $1,700 (plaintiff at ts 107).
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(vi) The 'the rest whatever it was' was paid in cash when the plaintiff came 'knocking … asking for money' (ts 182).
68 I turn now to some text messages between the parties (exhibits 9 - 14).
They are relevant to whether an agreement or loan was acknowledged by either party.
69 On 4 February 2011 the plaintiff sent his bank details to the
defendant (exhibit 11), ostensibly to facilitate an electronic payment of some kind. I attach no significance to this text. On either party's case the defendant owed the plaintiff money at the time and was entitled to repay the plaintiff whenever he wished. For instance, pursuant to clauses 1, 4, 6 and 8 of the loan agreement, the borrower was entitled to repay the principal at any time, provided that such occurred 'within' six months and interest was to be calculated accordingly.
70 The plaintiff sent texts (exhibits 12 and 13) to the defendant on
19 and 22 October 2011 complaining about being impecunious and asking if the defendant could 'borrow' (ie, lend) him money so that he (the plaintiff) could pay for his internet service. He asked for $80 and transmitted his bank account details (they were not the same as in February 2011). Asked about this in cross-examination (ts 87), he said he was only 'being facetious' and 'having a joke' because the reality was that the defendant owed him money.
71 As I understand that evidence, he was trying to ironically goad the
defendant into repaying him. I am not convinced by that explanation. I construe the request for a loan of $80 to have been genuine and not a facetious demonstration of hubris. That finding does not sit comfortably with the plaintiff then holding a belief that the defendant owed him money. Yet, within a matter of days things changed.
On 24 October 2011 the plaintiff sent the following text (exhibit 14) to the defendant (emphasis added; the intercalation is mine):
You waited 1 yr and [I] sorted you straight out. I've waited 1 yr and you've been over east, overseas got money for bond for rental a car. I got no car live at home. Can't afford petrol. My miss would of come back if i put that $300 into my daughters account for her birthday. Because i couldn't afford it She think I'm an asshole and went with someone else. Now i'm stressed and had to borrow of a couple of friend which i can't pay back I'm stressed and can't afford smokes. I don't know. Is that fair.
73 Ms Hensler submitted that this text amounted to an admission by the
plaintiff that he had been indebted to the defendant for a year and had
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repaid it in a timely fashion. I accept that construction, but there is nothing in the text to indicate how much was owed. (It is actually consistent with the defendant and MBB having only advanced money on account of commissions.)
74 The text also evidences the plaintiff's belief that the defendant had
borrowed money from him and had had a year to repay it, but had not done so. But, the defendant has never denied that he borrowed from the plaintiff and this text does not condescend to any particulars.
75 By 26 October 2011 the plaintiff and the defendant had fallen out
badly. The plaintiff believed that some of the defendant's behaviour was prejudicing his employment and there was a short confrontation at Homebase in Subiaco (ts 80).
Text messages (exhibit 9) were exchanged on the morning of 26 October 2011. The plaintiff said:
I'm not speaking to you. See you in court.
The defendant replied (in two separate texts):
What is the amount that you think I owe you.
What you can't answer that one is that because you don't know what to make up?
78 Later the defendant sent a text to the plaintiff which was not formally
tendered in evidence, to which the plaintiff replied (exhibit 9C) accusing
the defendant of defaming him and 'bullying for self-gratitude'.79 It is evident from these exchanges that the defendant was challenging
the plaintiff to state how much he claimed to be owed and that the plaintiff either would not, or could not, do so. The plaintiff explained in cross-examination (ts 76, 81) that he had been advised not to speak to the defendant about the matter and never wanted to speak to the defendant again. That is understandable up to a point, but I would have thought that he would at least tell the defendant how much he believed he owed him. But, there is the point. I am not satisfied that the plaintiff did know because the defendant had been repaying him in an ad hoc way and, as will be seen, the plaintiff's affairs were in 'disarray' ([96] below).
80 On 27 October 2011 the plaintiff sent the defendant a polite and
businesslike text (exhibit 9E) about some building plans which were being
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processed and which would generate commissions for them both.
Amongst other things, he said (emphasis added):That way you get you commission and i get mine. And you can pay balance like that. I'm happy with. So there's no stress on you and it keeps the peace. Forever how long it takes. Okay. That's faire. Cause I know your a good guy. I just needed time with all this stress to think. Okay.
81 This moratorium did not last long. On 30 October 2011 the plaintiff
sent messages (exhibits 10A and 10C) to the defendant complaining of the
latter's attitude:Mate i don't whats happened to you. You've changed. You were never like this. People always say good things about you. Why you doing this to me.
I train every day except today i can't work. I work 7 days a week. I don't and can't afford to go out. I got 2 sales last week because of all the effort i put in. You used to help me. And now you want me to loose my job I love. Great friend you are.
The defendant replied (exhibit 10D):
No more texting leave me alone.
83 Other text messages were referred to in evidence, but these were not
tendered. The defendant relied on them to justify his opinion that as at October 2011 the plaintiff was using drugs and susceptible to deranged thinking.
84 Overall, I am satisfied that throughout October 2011 the plaintiff
believed that the defendant owed him a lot of money but, to put it bluntly, he had no idea how much. And the defendant was not about to help him either, which is not to his credit. It appears that he was playing 'cat and mouse' with the plaintiff. After all, he only needed to apprise the defendant of the case that he maintained in evidence, but he did not do so.
85 So, there was an impasse. But, the plaintiff's texts are not consistent
with the straightforward case pleaded in the statement of claim (even allowing for the fact that he might have been unclear about how much the defendant had repaid). In particular, the texts are not consistent with the existence at the time of a written loan agreement.
Assessment of the evidence
The factual issues are as follows:
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(i) Was the plaintiff indebted to Robert Michaud for $20,000 on 24 November 2010?
(ii) Did the plaintiff repay, and then lend, Robert Michaud $20,000 on 24 November 2010?
(iii) What was the plaintiff's indebtedness, if any, to the defendant or MBB prior to 24 November 2010?
(iv) Was a contract (either oral or written) entered into by the plaintiff and the defendant on 24 November 2010 in the terms pleaded? Both oral and written permutations must be considered because a finding that the plaintiff forged the defendant's signature on the original of exhibit 3 would not preclude a finding that the defendant prepared the document and agreed to its terms by words and conduct (as pleaded in the alternative).
(v) If question (iv) is answered in the negative, how much was lent and has it been pleaded?
(vi) How much has the defendant repaid to the plaintiff?
The resolution of these issues turns on the credibility of the plaintiff, the defendant and Robert Michaud.
88 The assessment of credibility is a multi-factorial task. The appearance
and demeanour of witnesses are relevant factors, but there is a danger in too readily drawing conclusions about truthfulness and reliability solely or mainly from such considerations. Judges are encouraged to 'limit their reliance on the appearances of witnesses and reason to their conclusion, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events' (Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, Gleeson CJ, Gummow, Kirby JJ [30] - [31]).
It is also useful to take into account the cooperativeness and frankness of witnesses and their willingness to make concessions.
90 It is open to me, as I see fit, to accept all, part or none of the evidence
of a particular witness and, in particular, to accept part of a witness'
evidence and reject (or form no view) on other parts.91 The so-called rule in Browne v Dunn (1894) 6 R 67 and other rules of procedural fairness must also be borne in mind. The trial process predicates that the parties are aware of the rules and will bring forward
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pleadings and evidence in a timely and frank fashion, that evidence will be properly and fairly tested, if such is reasonably possible, and the court will be able to decide the issues properly joined between the parties. A party takes the risk of attracting unfavourable consideration of its case if these requirements are deliberately circumvented.
92 The rule in Browne v Dunn was often not complied with in this case, particularly by the defendant. On occasions during the evidence, I felt that I needed to intervene and ask questions which simply had to be asked if the evidence was to be properly considered and findings made. For the same reason, I also canvassed certain matters during final submissions. If I had not done so, I would now be in a completely embarrassing position. Neither party objected and I was even-handed since the fault was on both sides. To illustrate, both parties almost entirely focussed their attention in relation to exhibit 3 on whether the defendant's signature is a forgery and directed little or no consideration to the document as a whole and the other writings on it (compare my analysis below). To coin a phrase, they 'focused on the stripes and ignored the tiger'.
93 The defence was not fully disclosed to the plaintiff, or put to him,
until after he had closed his case. In all the circumstances, I am satisfied that these failures cannot be ignored. They imply that the defendant did not want his case fairly challenged and scrutinized, or that he did not fully comprehend his own case, or both. (See [114] – [115] below.)
94 The plaintiff, at least, put the fundamental proposition to the
defendant that he was totally lying. There can be no doubt that the defendant was made aware of the plaintiff's case and that his honesty was put in issue in all respects. (See Lazarevic v The State of Western Australia [2007] WASCA 156, McLure JA [16] – [20]).
95 The plaintiff testified that he was educated to Year 10 and it is clear
from his text messages that his spelling is poor. Making allowance for his nervousness, it was my impression that he had difficulty reading the witness oath and some of the exhibits. He spoke in a very slow and deliberate manner - sometimes in inappropriate and lengthy monologues. He used some words inappropriately. For instance he used the word 'borrowed' when he meant 'lent' (as did the defendant and Robert Michaud).
96 He said that he was in 'disarray' in 2011 (ts 109, 114). There is
evidence that he had problems with illicit drug abuse at all material times and had relationship problems as well. I accept the defendant's evidence (which was corroborated by Ms McNamara) which suggested that the
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plaintiff was dysfunctional at all material times and was very reliant on his friends to help him with ordinary tasks, including managing his finances.
97 He was unable (or unwilling) to explain his criminal convictions to
the court. I formed the impression that he was deliberately obfuscating about this. In a similar vein, he seemed to be unable to accept the proposition that he was heavily in debt in 2010, notwithstanding the obvious fact that the rates for the Marangaroo property were in arrears and he had many other financial liabilities.
98 Much of his evidence was either internally or externally
contradictory or vague and unconvincing. I have mentioned numerous
examples already. There were other occasions.99 For instance, in cross-examination (ts 55) he recollected that, in the
course of importuning him for a loan in November 2010, the defendant told him that he was renting out the Cottesloe house because he could not afford the mortgage payments. That cannot have been said at that time because the defendant was not then renting the house out. He had only just bought it and, according to the plaintiff, they met at that very house at the time. The plaintiff later accepted (ts 58 - 59) that he had discussions with the defendant in November 2010 about the latter's financial stress and how he did not want to lose his house. (This also sits uncomfortably with his evidence-in-chief about his favourable impression at the time about the defendant's finances). In my view, the plaintiff's evidence about the defendant saying he was renting out his house in October 2010 was undoubtedly a conflation of something that he was told (possibly by the defendant) in or about July or August 2011, by which stage it had become the fact (see exhibit 19).
100 The plaintiff's evidence that there was some urgency to get to the
bank on 24 November before closing time could not be correct. Exhibits 4A and C show that the banking business was done a little before 1.00 pm. So, if there was some urgency, it had nothing to do with closing time.
101 One must not look overlook the discrepancies between the plaintiff's
evidence and his case as pleaded and opened (see [29] above). For instance, he testified (ts 27) that the term of the loan was negotiated from 12 months to six months as set out in exhibit 3. Yet Mr Marsh pleaded and opened (ts 4) the plaintiff's case as if this had not occurred. I can only surmise that it was not then reflected in his instructions
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(which is curious in itself because the handwritten amendments on
exhibit 3 are plain enough).
Drawing these matters together, I have deep reservations about the reliability of the plaintiff's evidence.
103 The defendant gave his evidence in a confident and sometimes
dismissive manner. At times there was a tone to his voice which suggested that he could scarcely comprehend that anyone would believe the plaintiff. He stressed his own history of kindness to the plaintiff.
However, for a number of reasons I have not been convinced by much of his evidence either.
105 First, his evidence about the alleged loans or advances that he or
MBB made to the plaintiff in the years leading up to November 2010 was unsatisfactory. He simply asserted (an ipse dixit) that various advances were made which coincidentally totalled exactly $30,000 and exactly $20,000. No calculations, dates, amounts, bank statements or other documents of any kind were produced. At the very least, the defendant should have been able to produce MBB's records of the advances of commission so as to vouch for the total.
106 Second, in my opinion the defendant was not as altruistic towards the
plaintiff as he made himself out to be. This is important because he relied on it to support his assertion that $10,000 of the $110,000 was a gift in recognition of his kindnesses, including expediting the sale of the Marangaroo property. This does not sit comfortably with the notion that he was a generous and affectionate friend, especially assuming (on his case) that the plaintiff had agreed to repay all his debts to both Michauds and at the same time agreed to lend them both substantial sums of money interest-free. All favours were thereby amply returned without any justification for the plaintiff to offer a $10,000 gift, or for the defendant to accept it.
107 Also, I find it difficult to grasp what the defendant actually did to
deserve anything for helping with the sale of the Marangaroo property. At face value he did no more than have a couple of conversations with the real estate agent, which produced a contract within a few days. No evidence was given as to what, how or why his involvement galvanised both the agent and a potential buyer so quickly. In my view accepting the $10,000 (if it was a gift) would be indicative of a man who was willing to take advantage of his friend. And, so far as the evidence
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was concerned, the gift was barely discussed (the plaintiff 'offered it') and
the plaintiff's generosity was spontaneous. That is not believable.
So, I am not satisfied that the $10,000 payment was a gift or that the plaintiff offered it to the defendant.
109 Third, the defendant was wilfully obstructive when the process
server Mr Mackay (whose evidence was not challenged) attempted to serve him with the writ of summons. He falsely asserted that he did not even know the plaintiff (ts 118) and declined to accept service. Once or twice he contacted Mr Mackay to arrange an appointment to accept service, but he never followed through (ts 119).
110 Fourth, he took out a Misconduct Restraining Order restraining the
plaintiff from having any contact with him for little other reason (according to the evidence) than the fact that the plaintiff was pestering him for an unknown sum of money which he (the defendant) reckoned he didn't owe. And he was unhelpful and confrontational in text exchanges about it (see [77]). It seems to me that the defendant was very quick to sever ties with the plaintiff at the time. Having said that, he was not alone. There was evidence that two other people obtained restraining orders against the plaintiff in 2011, including someone else who owed the plaintiff money (ts 73 – 74, 97).
In the defendant's favour, it must be acknowledged that he made some concessions (see [145] below).
Robert Michaud's evidence was very unsatisfactory and contradictory. I have already mentioned my concerns about the alleged loan(s) of $20,000 to the plaintiff.
113 As with the defendant, his evidence about the financial dealing was
long on assertion and short on detail. He did not condescend to any particulars of his advances to the plaintiff which was presaged by similar omissions from the pleaded defence, the cross-examination of the plaintiff and Ms Hensler's opening address.
114 The defendant said in cross-examination (ts 183) that he had not
discussed his own evidence with his brother. The implication is that they had not discussed Robert's evidence either. He was visibly and unusually animated during Robert's evidence, and spoke to Ms Hensley frequently, as if he and Ms Hensler were dealing with it on the run. (I commented on this to Ms Hensler at ts 146). In all the circumstances, the implication is
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that Ms Hensler did not have instructions as to Robert Michaud's evidence
before he was called.115 There is no rule that a defendant must testify before his witnesses in
a civil case. But, failure to do so can have adverse implications in relation to the assessment of the credibility of that witness and others. Such is the case in this matter. I am concerned that the defendant's approach to the pleadings and the order of evidence was tactical and that he needed (and wanted) to keep his powder dry for as long as possible. I have a strong sense that he did not commit to his own evidence until he knew what his brother said in evidence.
116 I sense that Robert Michaud had not given much thought (if any) to
this either before he arrived and it may have only dawned on him during his evidence (after I queried him) that he would need to plausibly explain the make-up of the all-important sum of $40,000 that he said the plaintiff paid him on 24 November 2010.
117 I am also very troubled by the round totals which the defendant and
his brother said the plaintiff came to owe them over periods of time. I wonder how they calculated or memorized the running balances over time. Neither of them gave evidence about that and, in particular, I received no evidence from them as to whether, or how, they settled the balances with the plaintiff before settlement on 17 and 24 November 2010. No-one was cross-examined about it either. Having said that, I infer that something like that probably occurred when the plaintiff's $20,000 debt to MBB was re-paid on 17 November 2010 (as I find to be the case: see [153] below).
118 It is also significant that on 17 November 2010 the defendant
procured the repayment of $20,000 for MBB but did not procure the repayment of the $30,000 which he claims the plaintiff had owed him (or MBB) since 2008. It only required the plaintiff to give an instruction to his settlement agent and that debt would have been paid at the same time. The defendant could offer no explanation for this not happening (ts 172 -173).
119 Overall, I was not impressed with the defendant's strategically
obfuscated case or his evidence, and the same applies to his brother's evidence. I assess both Michauds to have been insincere and very self-serving to the point of complete unreliability on all matters relating to the composition of the sum of $110,000. This finding has wider
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implications in relation to the defendant's credibility and the factual
matrix in November 2010, including the provenance of exhibit 3.120 Having said that, I remain mindful that I have been critical of the
plaintiff insofar as his evidence departed from the case which his counsel pleaded and opened (see [101] above). Obviously, the problem reflects badly on both parties and it is difficult to fully consider the implications since neither was properly cross-examined. It suffices to say that it has contributed to my misgivings about the credibility and reliability of both parties.
121 Some mention was made in evidence of the parties' criminal records,
but I was provided with very little detail. The plaintiff has a history of drug-taking and traffic matters, whilst the defendant served a term of imprisonment in 2002 – 2003 for an offence committed in 2000 relating to the supply of drugs. He assertively testified (ts 183) that he has never used drugs. In the result, I place no importance on the criminal histories since the evidence was not particularly detailed. It is sufficient to say that neither party can lay claim to being of unblemished good character.
122 An assessment of the credibility of the parties and the evidence as a
whole would not be complete without a close analysis of exhibit 3
(the copy of the alleged loan agreement).123 I reiterate immediately that the original of exhibit 3 was not tendered
in evidence and exhibit 3 itself was adduced without objection from the defendant. As far as the plaintiff's evidence is concerned (and he is the only party who claims to have any knowledge of it), the last known whereabouts of the original was in the defendant's home on 24 November, and they were supposed to amend it to reflect the increase in the loan amount from $100,000 to $110,000. That begs two questions which were not addressed at all in the evidence. First, why did the plaintiff not get the defendant to amend it in November 2010? After all, he was insistent about having a proper written agreement. Second, how did he come into possession of a photocopy (exhibit 3)? The fact that no evidence-in-chief was given by the plaintiff about these issues supports a finding that the defendant's signature (if not the whole document) was forged.
124 Exhibit 3 bears the imprint of a facsimile header which indicates that
a copy was transmitted to someone from 'Prestige Tile and Gallery' to someone on 16 November 2011. So, it is not disputed that exhibit 3 existed no later than that date. Having regard to the evidence as a whole (especially the text messages referred to above), I incline to the view that
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the forgery (if such occurred) must have been done after 30 October 2011. Otherwise, the plaintiff would have alluded to the 'agreement' in one of the text messages. After all, that would be the point of the forgery.
125 The defendant called a qualified document examiner, Mr Clifford
Hobden, who opined that the signature which appeared to be that of the defendant on exhibit 3 did not match 18 genuine specimens and was written by someone else.
126 The impugned signature does slightly resemble that of the defendant,
but even to a layman it appears that someone has done a poor job of copying it. Mr Hobden explained his report to me (mostly under questioning by myself, because Ms Hensler merely tendered it as the evidence-in-chief). He drew my attention to numerous features of the impugned signature which did not correspond with the specimen signatures.
127 It was put to Mr Hobden in cross-examination that the glass surface
of the table on which the defendant was said to have signed the agreement might have affected the signature. It was also suggested that excitement or the ill-health of the signatory (ie, the defendant) could account for the unusual features of the signature. Mr Hobden did not rule out either possibility, but he was very dubious about them (and there was no evidence of ill-health on the defendant's part).
128 I accept the defendant's evidence (ts 185) that the table which the
plaintiff spoke of in his evidence was made of travertine rather than glass. I was given no evidence about the difference (if any) between the two surfaces. Having said that, I note that the plaintiff's signature on exhibit 3 has a fluency which is lacking from the impugned signature. I therefore discount the possibility that the nature of the surface on which the document was signed could explain the unusual features of the impugned signature.
129 I accept that, on the plaintiff's version of what occurred, the
defendant may have been excited and signed without his usual fluency. But, in my opinion, that could not account for the gross points of difference between it and the 18 genuine signatures.
130 An expert is entitled to give opinion evidence on an issue calling for
specialist, technical or esoteric expertise, provided that he is qualified by training or experience to proffer the opinion, and the assumptions upon which the opinion is based are made out in evidence, and the opinion is explained so that the trier of fact can understand it, or at least accept why
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it is reliable and defer to it. (See Pownall v Conlan Management Pty Ltd
(1995) 12 WAR 370 and Pollock v Wellington (1996) 15 WAR 1).131 Mr Hobden is an expert document examiner. His science is not
particularly esoteric. It might even be described as an art. In other words, an unqualified lay-person would be capable of understanding his opinion and/or the science or techniques involved and then applying them. This is also the case with respect to other forensic fields, such as the analysis of, or the comparison of, footprints or shoe prints. In short, the expert's role in such cases is to collate and present the evidence, and to point out what to look for and what to interpret, but ultimately the trier of fact is usually left in a position to form an opinion. Such is the case in this matter.
Having said this, I was most impressed with Mr Hobden's report and oral evidence and I accept it.
133 The defendant did not give evidence as to how the plaintiff could
have acquired knowledge (or a specimen) of his signature, which he would need to have if he was to forge it. Once again, and since it was raised in the plaintiff's evidence, I felt obliged to enquire. There was no objection. The defendant told me (ts 186) that the plaintiff had seen his signature on many occasions and on many documents over the years. That is an entirely believable proposition. The fact that the plaintiff said otherwise is not to his credit.
I turn now to consider other aspects of exhibit 3.
135 I note that the agreement states that it was 'made and effective on
19 November 2010', whereas on the plaintiff's case all relevant events occurred on 24 November 2010. Two hypotheses might explain this discrepancy.
First, the document was actually prepared not later than 19 November 2010 by one of the parties (it matters not who for present purposes) which supports the plaintiff's case. However, it was superseded by 24 November 2010 and not executed. As will be seen, I accept this hypothesis.
137 Alternatively, the document was concocted by the plaintiff after the
event and he got the date wrong. I strongly doubt this hypothesis, even allowing for the plaintiff's erratic recall and grasp of detail, because he kept and tendered records of the withdrawal and disbursal of the $110,000 on 24 November 2010 (exhibits 4A - D). In this respect it is helpful to remind myself of the defendant's loan agreement scenario. That scenario
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contends that the plaintiff concocted the document and signed for both (committing forgery in the process) with the necessary implication that he intended to utter the document and give perjured evidence if required about the events of 24 November. So, why make a blatant mistake with the date (19 November instead of the 24th)?
138 The defendant's loan agreement scenario also predicates that the
concoction included the insertion of the handwritten amendments to cl 1 and cl 3. In particular, the plaintiff would have first have typed a '12' before 'months' in cl 1 and then changed it by hand to a '6'. Similarly, as originally typed the borrower was to pay a liquidated sum by way of interest, namely $20,000, based on a loan period of 12 months. This was reflected in cl 3. But, it became necessary to amend cl 3 to make it clear that the interest rate was 20% per annum and not a lump sum of $20,000 when the term of the loan was shortened from 12 to 6 months. This begs the question: why bother if the whole thing was a forgery? The plaintiff could have typed in 6 months (at 20%) and simply asserted that such was always the agreement. So, on the defendant's loan agreement scenario the amendments seem to predicate that the plaintiff decided to formulate a back-story about negotiations and amendments to add some verisimilitude if he ever needed to give evidence.
This attributes a degree of perfidy or downright cunning of which the plaintiff was quite incapable in my opinion, especially in late 2011. He was just not functional enough, clever enough or subtle enough to conceive of it. On the other hand, the amendment in respect of the interest rate (from $20,000 to 20% per annum) was in the defendant's interests and it is the very thing that would have occurred to him when the proposed loan term changed from 12 to six months.
140 From another point of view, whilst brief, the original (unamended)
loan agreement was comprehensive from a legal viewpoint and I find it hard to believe that the plaintiff prepared it by himself, given how dysfunctional and how reliant on others he was. There is always the possibility that he enlisted help from someone else. However, there is no evidence that such actually occurred and, on the defendant's loan agreement scenario, doing so would either require the connivance of an accomplice in the forgery or gross incompetence by the draftsman, because the most probable version of the scenario predicates that the document was prepared in 2011 and back-dated to 19 November 2010. So, I discount the possibility of the plaintiff receiving any help.
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141 The document itself bears a footer which reads 'Consumer Loan
Agreement' and appears to be based on a precedent. It uses the word 'attorney' in cl 10, which suggests that it is of American origin. Either party could have obtained it, including over the internet. But they were not asked about that in evidence.
142 There is another relevant feature. The first person pronoun is used in
cl 2 ('we') and in cl 9 ('me') in reference to the Borrower, whereas the rest of the document simply refers to 'Borrower'. This suggests that the document emanated from a person who identified with the Borrower.
143 I also note that pursuant to cl 7 (which is entitled 'Security') the
Borrower gave 'security in the form of a caveat against his property, namely 2A Eileen Street, Cottesloe 6011'. This wording is attuned to West Australian conveyancing practice. There is no evidence that the plaintiff asked the defendant for security or wanted any and he did not include it in the 'back story'. He appeared to be genuinely nonplussed or disinterested about it when it was raised in cross-examination, as if it was never of any importance to him (ts 105). Therefore, I cannot accept that it was yet another circumstantial detail which he added to the forgery.
144 This aspect changes if one views cl 7 from the point of view of the
defendant, because his sister-in-law Ms McNamara lodged a caveat over his Cottesloe property on 26 October 2010 pursuant to a covenant in an acknowledgement of debt. The plaintiff knew nothing of this, but it is the very kind of provision which the defendant would have been mindful of, and willing to include in any agreement which he was proposing to the defendant and which would, if accepted, enable him to partially re-finance the funding for the Cottesloe property. (The acknowledgment of debt itself was not tendered evidence and I do not speculate about whether it resembled exhibit 3.)
145 The defendant conceded when I asked him without objection and
(again because of the dictates of procedural fairness and the wholly embarrassing position in which I would otherwise now be) that the numeral '6' in cl 1 and the initials 'PA' in cl 3 are similar to his own writing (ts 183 - 184). But he insisted he did not write on exhibit 3 (ts 184 and 187). Given the similarities, it is arguable that he did indeed make those writings, as the plaintiff testified. However, I cannot conclude that they are in his handwriting given the lack of expert evidence to assist me and the very small sample comprised in the letters and numerals. A court must be careful when placing weight on pictorial evidence and ought not attempt to construe it where it is contradictory or the matter is
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disputed and has not been adequately examined in evidence. (See Pettigrew v Wentworth Shire Council [2012] NSWSC 624 [172]; Browning v Bitupave Ltd t/as Boral Asphalt [2008] NSWSC 19 [115] - [121]). Nevertheless, I comment that if the defendant's loan agreement scenario is correct, the plaintiff seems to have been fortunate to have made a reasonable forgery of the 'amendments' whilst botching the defendant's signature.
146 I turn now to the bottom of page 2 of exhibit 3 and the hand-printed
names 'Danny Stefanovski' and 'Roger Michaud'. Whilst I cannot be fully confident, it appears to me that the same person wrote both names. When I enquired, the plaintiff denied that he was the author (ts 115). The defendant said that he never wrote in the lower-case and had had trouble doing so from childhood (ts 150). This contention is corroborated by the small sample of his handwriting that is to be found on the documents bearing his specimen signatures in exhibit 8. He used upper-case on all of them. Having said that, the printing on exhibit 3 is very poor and might be considered somewhat juvenile. Based on that alone I cannot rule out the possibility that the defendant did indeed write the names on the bottom of page 2 of exhibit 3, as the plaintiff contended.
147 In the light of my analysis of all the evidence and the credibility of
the parties, I make the following findings.
148 The plaintiff bears the onus of proof on the balance of probabilities,
but this is not an arithmetical exercise. I am required to be actually persuaded as to the probability of a disputed fact being true (Briginshaw v Briginshaw (1938) 60 CLR 336). I am required to determine whether the plaintiff's case is more probably true than not, but this necessarily involves an assessment of other probabilities, including the probability that the evidence of the defendant and/or Robert Michaud was truthful.
149 I commence with the most straightforward of findings. I accept that
the defendant did not sign the original of exhibit 3 and I find that his signature is a forgery perpetrated by the plaintiff. Cogent evidence is desirable in order to justify these findings (see Briginshaw, per Dixon J at 362 - 363). Mr Hobden's evidence and my assessment of the impugned signature amply support this conclusion. I am satisfied that the plaintiff was responsible for the forgery because he was the only person with the motive and the means to have done so. It follows that I also find that he lied about this in evidence.
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I cannot be satisfied as to who handwrote the parties' names under the signatures on exhibit 3 (ie, on the original) and make no finding.
151 Findings of forgery and perjury reflect a fundamental dishonesty on
the plaintiff's part and a willingness to pervert the course of justice.
But this does not, of itself, disprove his claim.
I therefore turn to make findings (to the extent that the same is possible based on the evidence) as to what actually happened.
I reject the plaintiff's evidence about lending the defendant $20,000 in 2010 to buy the VE Holden Commodore and accept the defendant's evidence about the purpose of the plaintiff's payment of $20,000 to MBB on 17 November 2010, ie, to repay advances of commission. I do so, partly, because the defendant so vehemently insisted that the date of the purchase of the vehicle (prior to 17 November 2010) could be verified by checking the relevant statutory records (ts 188). Other reasons are as follows. First, I accept that the plaintiff's employment was commission-based, but he was not successful and impecunious. Second, the plaintiff did not coherently explain the Holden Commodore deal (including what came of it over time) and why he has not been repaid or sued for repayment. Third, in October 2011 the plaintiff acknowledged that, as at a year prior, he had been indebted to the defendant for a year (see exhibit 14 and [73] above).
154 Moving on, I am not satisfied that the plaintiff was otherwise
indebted to MBB or the defendant. I accept the defendant's evidence that he occasionally lent the plaintiff money prior to 24 November 2010, but I can make no finding as to the quantum. He claims that it was $30,000, but (as I have said) that evidence was unsatisfactory and self-serving. The defendant testified that he (MBB) employed the plaintiff so that he could earn money and pay off the $30,000. But he then started lending him more money (the $20,000). That lacks believability. Consistently with the evidence of the text messages (exhibits 12 and 13), I find that it is probable that the amounts that were lent in or about 2008 were small and were for day to day incidental expenses of the plaintiff. It is therefore improbable that the plaintiff's indebtedness (if any) figured in the negotiations or discussions relating to the loan which the defendant was seeking in November 2010. I find that there has always been a segregation in the parties' minds between small and incidental 'loans for mates' and the larger transaction involved in this matter. (Compare exhibits 12 and 13 with exhibit 14).
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155 I am not satisfied that the plaintiff was ever indebted to
Robert Michaud in the sum of $20,000, or anything like it. Once again, at the most there may have occasionally been insignificant 'mates loans' which are not relevant to this matter and which were, I find, not discussed in November 2010. It follows, and I also find, that the plaintiff did not agree to lend Robert Michaud $20,000. The latter's evidence about all of these matters was completely vague, uncorroborated, down-right contradictory in places, self-serving (for his brother) and facilitated by the tactical unfairness of his brother.
156 I return now to exhibit 3. I am satisfied that the defendant was
responsible for the preparation of a document in terms of that exhibit on or about 19 November 2010, that he produced it to the plaintiff on or before 24 November 2010 at a meeting at his Cottesloe home, and that he made the handwritten amendments to cl 1 and cl 3. In other words, I substantially accept the plaintiff's evidence about that. My reasons are as follows.
157 It is most improbable that the plaintiff devised the elaborate scheme
that is predicated by the defendant's loan agreement scenario (as I have
explained).
The plaintiff was not indebted to the defendant (including MBB) or Robert Michaud after 17 November 2010. So, the payment of $110,000 had nothing to do with loans between the plaintiff and the Michaud brothers.
159 The defendant became personally involved in expediting the sale of
the Marangaroo property at a time when he was also indebted to Ms McNamara and Robert Michaud, and they wanted some repayment reasonably quickly (see [45] above). Also, within a short period the defendant had to rent out his Cottesloe home. In short, as at November 2010 he needed to re-finance quickly and the plaintiff was a ready source.
160 I accept the plaintiff's evidence that he wanted any large loan recorded in a legal document beforehand, and that the defendant agreed to do so. It made sense for him in order to show his bona fides. However, things were moving quickly and changing prior to 24 November 2010 and to this day the plaintiff cannot give a coherent account of what happened, except that he was very reluctant to lend a large sum to the defendant without an agreement. He still cannot make up his mind whether the loan was for $100,000 or $110,000 or whether the agreed term was 6 or 12 months. I find that the plaintiff just trusted the defendant and was
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confident that the defendant would do the right thing, so he proceeded
without a signed agreement.161 I have found that the plaintiff did not gift $10,000 to the defendant
on 24 November. It follows that the $10,000 represented an increase in the proposed loan from ($100,000 to $110,000) as the plaintiff said it did, and that it happened at the last moment. Until then nothing was agreed in a final sense – all was in a state of flux.
162 I have not overlooked the plaintiff's forgery and wilfully false
evidence, which are very weighty considerations. But they are not decisive. Apart from the forgery, this is a case in which there is very little about the evidence which lends itself to a straightforward conclusion or application. I have directed myself to treat the plaintiff's evidence with extreme caution before acting on any of it, and looked for corroboration or objective support. But, the defendant's evidence (including Robert Michaud's evidence) was not to his credit either and I have, in effect, found that he deliberately obfuscated and was not reliable on the ultimate issues (with the help of his brother Robert).
What were the contractual terms of the loan, if any?
164 First, I am not satisfied that the parties agreed on the term of the
loan. Periods of 6 or 12 months were certainly discussed, but nothing was settled and the draft loan agreement was not signed. I actually find that the defendant eventually and simply intended to repay the plaintiff as soon as possible. But this was never actually agreed in a contractually binding way. The issue of uncertainty has not been pleaded by the defendant, but it was anticipated in the plaintiff's written submissions filed before the trial (par 8).
165 Second, as for interest, it is apparent from the plaintiff's evidence that
all his discussions with the defendant revolved around the payment of a liquidated amount on a short, fixed term calculated at the rate of 20% after which a lesser rate (3%) would apply. But a fixed term was not agreed, so there can be no liquidated amount of interest.
166 In making these findings I have taken into account the nature of the
relationship between the parties as at November 2010. They were very intimate friends and on the best of personal terms. The defendant had given the plaintiff employment and kept him on and lent him $20,000 when he was not winning any business. In the end, the parties did not intend the $110,000 loan to go unpaid for any lengthy period of time. I am satisfied that they were not thinking beyond the immediate
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short-term and that is why the loan period was not agreed, a fortiori the fixed interest rate period was not agreed. So, liquidated interest and the loan agreement became superfluous.
167 To summarise, I find that on or about 24 November 2010 the
plaintiff lent the defendant the sum of $110,000, but no agreement was reached in relation to interest or repayment. There was an expectation that the defendant would repay the money as soon as possible. These findings do not correlate to the statement of claim. I shall hear from the parties as to the ramifications.
Quantum
168 I turn now to address the amount which the defendant has repaid to
the plaintiff. By October 2011 the plaintiff had no idea what the state of account was. He only had a belief that he had lent the defendant $110,000 and had not been repaid. On 27 October (exhibit 9E) he briefly hinted to this stance. So, I prefer the defendant's evidence about what was repaid where it differs from that of the plaintiff.
169 I am satisfied that the defendant has repaid $25,200, being the
amounts referred to above at [67] (i), (ii), (iii), (iv) and (v). I prefer his evidence about the plasma TV being repayment in kind during 2011 rather than a 'sweetener' in November 2010. I do not accept that he may have paid any other sums (par (vi)).
170 For completeness, there would be no entitlement to the late charge of
2% referred to in cl 10 of exhibit 3 even if it did comprise part of the loan agreement, since there is no evidence about the matter being 'placed' with a lawyer for collection other than by these proceedings. A costs order will suffice and in my view cl10 had that intention.
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ANNEXURE A
[2014] WADC 141
MCCANN DCJ
2
9
1