Stewart v Wilson - [2020] WADC 66

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   STEWART -v- WILSON [2020] WADC 66
CORAM:   STAUDE DCJ
HEARD:   30 APRIL, 1-2 MAY, 29-31 MAY, 15 OCTOBER 2019
DELIVERED          :   19 MAY 2020
FILE NO/S:   CIV 4819 of 2016
BETWEEN:   RUSSELL DAVID STEWART
Plaintiff

AND

MICHAEL JOHN WILSON
Defendant

MICHAEL JOHN WILSON
Plaintiff by counterclaim

RUSSELL DAVID STEWART
Defendant by counterclaim

Catchwords:

Contract - Restitution - Claim and counterclaim for monies owed from one party to the other over a period of time - Taking of account - Turns on own facts

Legislation:

Nil

Result:

Judgment for the plaintiff
Counterclaim dismissed

Representation:

Counsel:

Plaintiff	:	Mr S C England
Defendant	:	Mr P Lafferty
Plaintiff by counterclaim	:	Mr P Lafferty
Defendant by counterclaim	:	Mr S C England

Solicitors:

Plaintiff	:	Lawton Gillon
Defendant	:	Armeli & Molony Lawyers
Plaintiff by counterclaim	:	Armeli & Molony Lawyers
Defendant by counterclaim	:	Lawton Gillon

Case(s) referred to in decision(s):

STAUDE DCJ:

Mr Stewart is a builder who traded as Oceanside Homes. Mr Wilson is a carpenter. In 2005 Mr Stewart engaged Mr Wilson as a subcontractor. They became good friends. From time to time they advanced monies to each other. They also assisted each other financially in other ways. In 2014 the two men fell out.
Mr Stewart believes Mr Wilson owes him money. Mr Wilson denies that he owes any money to Mr Stewart and believes that Mr Stewart is indebted to him. The financial dealings between the two men were very untidy and have made a lot of work for their lawyers. The trial occupied seven sitting days. The trial book had 1370 pages. The transcript runs to 862 pages. The court has to decide who owes what to whom.

The claim and counterclaim

The amended statement of claim pleads an agreement made in 2006, referred to as the Financial Arrangements Agreement, in terms that they agreed to advance money to each other and otherwise make financial accommodation available to each other, and would repay each other when they were able to do so or in a reasonable time. It is pleaded that the agreement can be inferred from the parties' conduct over a period of time. This basis for the claims is inventive, but does not reflect the reality of the relationship. Mr Stewart's case is a series of contractual and restitutionary claims. To characterise all of the parties' dealings over a number of years as subject to an overriding contract made in 2006 is misleading and unhelpful.
The amended statement of claim pleads a number of financial transactions that are tabulated in annexure A which is effectively a ledger. It is headed 'Running Balance of Financial Arrangements Agreement'. Annexure A sets out various sums of money that were paid by the parties to each other, or said to be owed. Many of these payments are not in issue. Mr Stewart's counsel invited the court to view the payments made by the parties over the relevant period of time as forming a running account, the balance demonstrating an amount owing to Mr Stewart of $118,102.68. Annexure A (as amended at trial) is reproduced at the end of these reasons.
The financial transactions form five categories, as follows:
1.Original advances and building supervision fees (annexure A, items 1- 4 and 36)
Mr Wilson advanced $18,000 to Mr Stewart on 24 November 2006 and $3,000 on 29 November 2006. By 22 February 2010, when Mr Stewart advanced $155,000 to Mr Wilson, these amounts had not been repaid. On 5 March 2010 Mr Wilson repaid $10,000 to Mr Stewart. These payments are not controversial. In March 2010, therefore, Mr Wilson owed Mr Stewart $124,000.
Mr Wilson pleaded that Mr Stewart agreed to pay him interest on the advance of $3,000 which was made from a credit card account. This was the subject of a counterclaim for interest at 20%, but that claim was ultimately not pressed. Mr Wilson gave no evidence of any agreement to pay interest.
Mr Wilson's defence characterises Mr Stewart's payment of $155,000 as being a repayment of his advances of $21,000, payment of supervision fees of $40,000, pre-payment of supervision fees of $30,000, and an advance of $64,000. Mr Stewart disputes that characterisation as a matter of fact, but acknowledges that he owes Mr Wilson $10,000 for each of seven completed home construction projects that Mr Wilson supervised, i.e. $70,000. There is no controversy in relation to this amount.
2.Trade account payments and GST (annexure A, items 5, 7, 10, 11, 14, 22, and 38)
In 2010 Mr Wilson built a residence for himself at 30 The Cutting, North Fremantle. For bank finance, insurance and local authority purposes, Oceanside Homes was the registered builder, but, effectively, Mr Wilson built the house. Mr Stewart allowed Mr Wilson to use the trade accounts of Oceanside Homes on the basis that its expenses would be reimbursed, and gave him other assistance in the form of advice, labour and use of his tools and equipment.
Mr Stewart says he has not been reimbursed by Mr Wilson for expenses totalling $137,755.12 (see annexures B and C of the amended statement of claim). Mr Stewart claims a further sum of $54,398, being the GST on invoices that were reimbursed by Mr Wilson in amounts net of GST. Mr Wilson says that he reimbursed all the invoices in full.
3.Loan agreement (annexure A, items 6, 7, 8 and 15-20)
These payments are a series of advances by Mr Wilson to Mr Stewart in September 2010 being $200,000 on 9 September 2010, $50,000 on 17 September 2010, and $20,000 on 22 September 2010. Mr Wilson advanced further sums of $20,000 and $10,000 on 24 December 2012. Accordingly, the advances total $300,000. The advances are brought to account in annexure A.
Against those advances Mr Stewart puts Mr Wilson's remaining liability for Mr Stewart's loan of $155,000, his repayments, and the money he says Mr Wilson owes him for unpaid invoices for The Cutting expenses and GST on the invoices paid by Oceanside Homes.
Mr Wilson says that the advances were made pursuant to a written loan agreement whereby Mr Stewart agreed to pay interest of 30% per annum on the money owed. Taking into account his own indebtedness at the time of the loan agreement and the subsequent payments made by Mr Stewart, Mr Wilson counterclaims an account balance of $121,300 and interest at 30% per annum on the balance outstanding on the loan from time to time since September 2010.
4.Share purchase agreement (annexure A, item 12)
Mr Stewart says that at Mr Wilson's request, he procured the transfer to Mr Wilson from his family trust of a parcel of shares valued at $25,000 in a company called Uglii Limited in February 2011. Mr Stewart says Mr Wilson owes him this amount. Mr Wilson admits that on 1 March 2013, 138,888 shares in Uglii Limited were transferred to him from the Stewart Family Trust, but says the shares were a gift.
5.Mrs Wardrope's bookkeeping fees (annexure A, items 39 and 40)
Mr Wilson engaged Mr Stewart's bookkeeper, Mrs Caroline Wardrope, to provide bookkeeping, secretarial and administration services while he was building the house at The Cutting. Mrs Wardrope expected that Mr Wilson would provide carpentry services to her in exchange for her services. When he failed to do so, Mrs Wardrope, who made a record of her time, invoiced Mr Stewart for her fees in the amount of $3,300. Mr Stewart paid the invoice. He claims that Mr Wilson is obliged to reimburse him. Mr Wilson denies that he is liable to do so.
The amended statement of claim pleaded a claim for $16,000 for Mr Wilson's use of a Nissan Navara motor vehicle leased by Mr Stewart. Mr Stewart asserted that, in the mistaken belief that he owed money to Mr Wilson, he allowed him to retain possession of a Nissan Navara motor vehicle for a period of two years from 2012 to 2014. The vehicle was in fact leased by Baycorp Homes Pty Ltd, a related but separate entity. No reasonable cause of action was disclosed and this part of Mr Stewart's claim was properly abandoned.
It is convenient to address the remaining issues by reference to the five categories above.

Original advances and supervision fees

As noted, it is not in dispute that Mr Wilson advanced $21,000 to Mr Stewart in 2006, that Mr Stewart advanced $155,000 to Mr Wilson in February 2010 (to assist Mr Wilson to purchase land at 30 The Cutting, North Fremantle) and that Mr Wilson repaid $10,000 to Mr Stewart in March 2010 (annexure A, items 1, 2, 3 and 4).
It is not in dispute that Mr Stewart agreed to pay Mr Wilson an amount of $10,000 for each residential construction project that he supervised, and over a period of time, Mr Stewart became indebted to Mr Wilson in the sum of $70,000 (annexure A, item 36). There was no precise evidence as to when each amount fell due as no invoices were rendered, yet Mr Wilson maintained that this work started in 2006 - 2007. He said that by February 2010 he was owed for four projects and that three others were nearing completion. Although his evidence was disputed, there was no evidence to the contrary. The date of accrual of the liability I will fix at 22 February 2010, the date of Mr Stewart's advance to Mr Wilson.

Trade account payments

The Cutting

Mr Wilson needed bank finance to construct his home at The Cutting. It was an expensive project. Mr Wilson gave evidence that he borrowed a total of $1,000,000 from the National Australia Bank (NAB). He nominated Oceanside Homes as the builder. Mr Wilson entered into a standard form building contract with Oceanside Homes on 13 December 2009. Exhibit P1 is the specification referred to in the building contract. The schedule of particulars specified a contract price of $924,000, inclusive of GST, and provided for progress payments to be made at various stages during the build.
Mr Wilson was able to draw down on his NAB loan facility by lodging progress claim certificates. The progress claims were prepared by Mrs Wardrope.
The effect of the parties' arrangement was that the residence (I will refer to it as The Cutting) would be built 'at cost' by Oceanside Homes with Mr Wilson acting, in effect, as the project manager, on his own time. This arrangement was entered into by Mr Stewart as a favour to Mr Wilson who was by 2010 a trusted friend.
The arrangement necessarily involved Mrs Wardrope providing all of the services that she would have provided on any other building project undertaken by Oceanside Homes, as all of the subcontractors and suppliers, as well as the structural engineers and other professionals involved, were engaged by Oceanside Homes as the builder. Invoices would be rendered to Oceanside accordingly. This is clear from the documentation tendered in the trial.
From a bookkeeping point of view, The Cutting was treated no differently from any other project, save in a few respects: there was no profit margin, there was no cost to Oceanside Homes for Mr Wilson's work or Mrs Wardrope's services, and Mr Wilson was able to deal directly with subcontractors and suppliers.
Mrs Wardrope prepared progress claims by Oceanside Homes that were certified and submitted to NAB to enable Mr Wilson to draw down upon his loan facility. Two progress claim payments were made by NAB to Oceanside Homes. The other nine were paid to the account of Mr Wilson. The costings submitted with the progress claims to NAB (exhibit P28) indicated nil profit margin.
Mr Stewart's evidence in relation to his arrangement with Mr Wilson was simply that Mr Wilson asked whether he could use Mr Stewart's (Oceanside Homes') trade accounts. He agreed, on the proviso that there would be no cost to him. Mr Stewart professed little knowledge of Mrs Wardrope's dealings with Mr Wilson, except that invoices relating to The Cutting would be paid for by Oceanside Homes and reimbursed by Mr Wilson. Mr Stewart's evidence in this regard, particularly as to having little interest in the project, initially impressed me as unlikely, yet on reflection, and as other evidence unfolded, it became apparent that he reposed complete trust in both Mr Wilson and Mrs Wardrope to manage The Cutting without cost to him. It is clear on the evidence that Mr Stewart treated Mr Wilson as his protégé.
Mr Wilson's evidence was that when he commenced building The Cutting, Mr Stewart was indebted to him. He said:
The arrangement was that invoices would be rendered to Oceanside and then the moneys that I lent him would be paying for the invoices until he had paid me back; unless he had paid me back, then I would be paying for them.
I would call up whoever I would need to do the work … and then they would do the work and then most of the time they would invoice Oceanside, sometimes they wouldn't, sometimes to me but … the majority would go to Oceanside.
And then either I would pay direct or I would transfer money into their account to pay or money would be used from the 270 that I had lent to pay them off. So there was sort of three ways of payments.
It is not true that Mr Stewart was indebted to Mr Wilson when The Cutting started. By his own admission he was still indebted to Mr Stewart for $54,000. Invoices were paid by Oceanside Homes from July 2010. It was not until September 2010 that Mr Wilson and his father lent money to Mr Stewart, putting him in debt to them.

MYOB accounting and reports

Mrs Wardrope impressed me as a competent and professional administrator and bookkeeper, trusted by Mr Wilson and Mr Stewart. While she did not inform Mr Stewart that Mr Wilson did not pay the GST on invoices that he reimbursed, and dealt with the two NAB progress payments to Oceanside Homes at Mr Wilson's direction without consulting Mr Stewart, she has retained Mr Stewart's confidence. As the bookkeeper for Oceanside Homes over a long period she was very well acquainted with the firm's financial affairs and its accounting procedures. Similarly, in her capacity as Mr Wilson's bookkeeper during the building of The Cutting, and for the purpose of preparing his reconciliations, she was in a good position to observe his financial management of that project. Over a period of time from July 2010 when she started accounting for The Cutting, Mrs Wardrope necessarily acquired a good deal of knowledge of the parties' financial relationship. I found her to be an honest and reliable witness.
Mrs Wardrope recorded all invoices addressed to Oceanside Homes that related to The Cutting using MYOB software. She also recorded payments. The MYOB software enabled her to prepare various reports that were relied on by Mr Stewart to show who paid what for The Cutting. The challenges made to the reliability of the various MYOB reports were met satisfactorily in my view. While attention was drawn in cross-examination to some anomalies (for example, as to whether an item was inclusive or exclusive of GST), having seen the source documents, including bank statements, and compared the reports with Mr Wilson's reconciliations, and considered Mrs Wardrope's evidence, I am satisfied that the reports document the extent to which invoices relating to The Cutting were paid by Oceanside Homes and reimbursed by Mr Wilson with sufficient accuracy to enable findings to be made as to quantum. I deal with the anomalies below.
Exhibit P2, a MYOB report headed 'Job Activity [detail] 1/7/2010 to 31/12/2012', lists all invoices received by Oceanside homes for The Cutting, except those from Harvey Norman ($12,345.30) and Stuart's House of Bedding ($3,048.10) respectively (exhibit 30). The source documents for this report are exhibit P29. Mr Wilson admitted that all the invoices in this report related to The Cutting.
Exhibit P3 is a summary of exhibit P2. According to Mrs Wardrope, this report indicates total expenses, exclusive of GST, of $614,783.73, of which Mr Wilson paid $120,709.58 directly. The balance paid by Oceanside Homes was $494,074.15. Again, it did not include the Harvey Norman invoices or the Stuart's House of Bedding invoice. If those invoices are added, the total expenditure by Mr Stewart is $509,467.55. The invoices were paid by Mrs Wardrope or Mr Stewart by Visa card or internet transfers from Oceanside Homes' NAB account, and companies related to Mr Stewart. MYOB recorded the manner of payment. She reconciled the MYOB figures with NAB statements two or three times per month. MYOB treated an unpaid invoice as open; a paid invoice as closed.
Mrs Wardrope identified an Excel spreadsheet created with data from MYOB headed 'Invoices paid by Oceanside not reimbursed by Mike' (exhibit P5). Using MYOB she was able to identify and track reimbursable expenses relating to The Cutting. When such expenses were reimbursed the invoice would be closed. According to exhibit P5, $134,055.34 was paid by Oceanside Homes on invoices relating to The Cutting that were not reimbursed by Mr Wilson. The source documents relating to exhibit P5 are exhibit P36. Expenses for which there were no invoices retained were identified as HIA (residential builders' warranty insurance), Town of Fremantle (sic), Don Mok Glass, and Cable Air.
Mrs Wardrope said that the amounts itemised in exhibit P5 were GST exclusive, but conceded in cross-examination that those relating to Belpile, Harvey Norman and Stuart's House of Bedding included GST. It was apparent from her evidence that the Harvey Norman and Stuart's House of Bedding invoices had been treated as loans. The Belpile item was atypical because Mr Wilson had paid part of the invoice ($16,000) directly, Mr Stewart paying the balance ($16,409, after allowance for a credit of $500). Having checked the all the source invoices, I am satisfied that these are the only exceptions. The suggestion that these exceptions invalidated the report generally was unhelpful.
Another MYOB report headed 'Account Transactions [Accrual] 1/07/2000 [sic] - 19/09/2014' (exhibit D2) was produced by Mrs Wardrope that showed, in the credit column, gross payments to Oceanside Homes by Mr Wilson between 23 September 2010 and 3 October 2011 of $417,710.95. The debit column shows $41,777.62 that on Mrs Wardrope's evidence represented, in the case of an amount of $13,917, a part payments by Mr Stewart, in the case of an amount of $19,256.46, a reversal of an incorrect entry, and in other cases supplier credit notes. Mr Stewart's position was that this report shows that Mr Wilson paid $375,933.33 net.
Mr Wilson has submitted that the debit column total should not be deducted and that he should get credit for the total of $417,710.95. Mr Wilson contends that the debit entries were inadequately explained. I am satisfied by Mrs Wardrope's evidence that the report is accurate and that the debit column entries do reflect amounts for which Mr Wilson is liable to reimburse Mr Stewart.
The defence, while disputing the reliability of exhibit D2, submits that, if anything, it shows Mr Wilson paid a total of $496,642.58 for The Cutting, being $375,933.33 (as shown in the report) plus $120,709.58 (as shown in exhibit P3).
Exhibit P4 is a MYOB report headed 'Purchase Register [Closed Bills] July 2010 through December 2012' that lists purchase orders that were coded 'cutting' or 'Cutting'. The total of the purchase orders in that report is $619, 888.57, inclusive of GST. Mrs Wardrope explained that it did not represent total expenditure. Purchase orders were sometimes made in respect of more than one job at a time. A purchase order coded 'Cutting' or 'cutting' could include supplies for other jobs as well. Mrs Wardrope demonstrated with reference to the codes used in exhibit P2 how she was required to allocate expenditure between jobs for the purpose of showing actual expenditure on The Cutting.
The defence, while disputing the reliability of exhibit P4, has submitted that it should be found to be a more accurate record of total expenditure on The Cutting than exhibit P2. The effect of such a finding would be to displace the basis of Mr Stewart's calculation of the sum of invoices not reimbursed by Mr Wilson. Deducting $496.642.58 from the total shown in exhibit P4 ($619,888.57) leaves $123,245.99 (not $134,005.34 as claimed). It was also submitted that the calculation of any sum owed by Mr Wilson for unpaid invoices by reference to exhibits D2 and P4 would effectively extinguish the claim for reimbursement of unpaid GST. I do not accept these submissions for reasons that will be demonstrated in my findings.

As to the reliability of exhibit P4 generally, counsel observed that the report contradicts Mrs Wardrope's evidence (ts 425) that the Harvey Norman and Stuart's House of Bedding invoices were paid after period of the report. In fact, the latter invoice was paid in January 2013 and the former in May 2012, as Mrs Wardrope had earlier acknowledged (ts 422). Mrs Wardrope's apparent mistakenness in this regard is not material in my view and does not discredit her evidence or the reliability of her report.
Exhibit P2 is not inconsistent with exhibit P4. Mrs Wardrope gave detailed evidence in re-examination as to how the two reports may be reconciled. I accept that evidence. Exhibit P4 is not evidence of total actual expenditure on The Cutting.
As mentioned, there are anomalies in the various MYOB reports that demonstrate, in Mr Wilson's submission, the unreliability of the bookkeeping of Mrs Wardrope. It is difficult to reconcile the claimed shortfall of $134,005.34 with exhibit D2 and exhibit P3. For example, exhibit P3 shows a total expenditure of $614,783.70, of which $494,074.15 was paid by Mr Stewart. Exhibit D2 shows that Mr Wilson paid to Mr Stewart's bank account a total of $375,933.33. The difference is $118,140.82. If one adds back the Harvey Norman invoices and Stuart's House of Bedding invoice, the sum of unpaid invoices is $133,534.25. Although the difference is only a few hundred dollars, the anomaly has not been explained. There is bound to be an explanation for it, though it has eluded me.
The question is whether it is material, such that it brings into question Mrs Wardrope's evidence generally. I think not. Mrs Wardrope identified and aggregated the invoices for The Cutting that were not paid by Mr Wilson, presenting this information in exhibit P5. I observed her cross-examined at length on this aspect of her evidence. In my view, she calculated the sum of the unpaid invoices honestly and carefully. The anomaly to which I have referred, and others suggested by Mr Wilson's counsel, are artefacts resulting from a reliance on a combination of manual processing of the invoices for The Cutting and the use of MYOB software to produce reports that serve various purposes. In an ideal world, the court would have been assisted by a forensic accountant, rather than have to trawl through bundles of invoices, bank statements, and bookkeeping reports, as it has done.
The evidence is what it is. Mr Wilson's approach has been to resile from the admissions in his reconciliations and put Mr Stewart to proof. In doing so he has certainly muddied the waters, but he has not displaced credible and persuasive evidence that he left his erstwhile friend significantly out-of-pocket.

Mr Wilson's reconciliations

Mrs Wardrope said that she prepared a number of reconciliation statements at the request of Mr Wilson.
The first one was sent to him by email on 7 May 2012 (exhibit P38). This statement showed a total amount paid or owing to Mr Wilson by Mr Stewart of $457,871.21, and monies paid or owing to Mr Stewart by Mr Wilson totalling $323,376.09, resulting in a net indebtedness on the part of Mr Stewart of $134,495.12. It also recorded an amount of $35,650 in interest paid by Mr Stewart on Mr Wilson's loan debt. The statement made no reference to interest payable at 30% per annum. It acknowledged a debt to Mr Stewart of $25,000 for 'shares'. It also acknowledged various amounts owed to Mr Stewart relating to The Cutting.
Mrs Wardrope said that this statement was prepared on the basis of information provided by Mr Wilson. It included unpaid wages due to Mr Wilson of $46,675 that Mrs Wardrope understood to be for work done, but not invoiced. An amount of $21,000 credited to Mr Stewart represented a prepayment of wages to Mr Wilson. This reconciliation statement was sent by email to Mr Wilson together with a MYOB report headed 'Invoices paid by Oceanside not reimbursed by Mike' that indicated an amount of $96,808.92 (as at April 2012). The amount did not include unpaid invoices totalling $10,173.77. It did not include the Harvey Norman invoices or the Stuart's House of Bedding invoice that she said were linked to a loan account.
Mrs Wardrope said that Mr Wilson took no issue with the reconciliation statement and did not raise any question in respect of the amounts said to have been paid by Oceanside Homes for The Cutting, the unpaid bills, or the Harvey Norman and Stuart's House of Bedding invoices.
This reconciliation statement was later revised and updated on Mr Wilson's instructions. Exhibit P39 is an email from Mrs Wardrope to Mr Wilson dated 5 August 2012. It attached a reconciliation statement dated 3 August 2012 indicating that Mr Wilson was owed $57,865.65. Reference was made to Uglii shares. The statement attached a MYOB report that indicated invoices paid by Oceanside Homes, but not reimbursed, of $130,527.24, unpaid invoices (charged to Oceanside Homes) of $480,000, and a further amount outstanding of $3,048.10 (Stuart's House of Bedding). The report did not refer to the Harvey Norman invoices.
At Mr Wilson's direction, Mrs Wardrope prepared a further reconciliation statement in January 2013 (exhibit P40). Her email to Mr Wilson of 23 January 2013 attached a reconciliation statement dated 17 January 2012 (sic - 2013). This showed an indebtedness to Mr Wilson from Mr Stewart of $32,880.65. This statement had notations relating to interest on an outstanding loan amount of $106,095. The interest was calculated at $50,255.90 and there was also a notation 'John Wilson - charge for use of money $15,000'. Again, there is reference to Uglii shares.
On 6 February 2013, again at Mr Wilson's direction, Mrs Wardrope made a further reconciliation statement (exhibit P41). This indicated that Mr Stewart had paid to or owed Mr Wilson $470,261.46, inclusive of Bank of Queensland interest and the $15,000 referrable to John Wilson. The interest item was annotated 'only charged BOQ interest, not 30% as per contract'. The sum for wages ($26,690) was annotated 'not yet invoiced'. The statement also showed money paid to or owed Mr Stewart by Mr Wilson of $411,925.12 which included $25,000 for Uglii shares, $130,527.24 for accounts paid by Oceanside Homes for The Cutting, $3,048.10 being the Stuart's House of Bedding account, $3,699.78 for overpayment of subcontractor invoices, and $35,650 for interest paid by Mr Stewart in respect of Mr Wilson's Bank of Queensland loan. The shares item had two annotations, 'Mike didn't invoice $25,000 in lieu of shares' and '18 cents equals $138,888 shares'. Mrs Wardrope sent this reconciliation statement to Mr Wilson by email. Mr Wilson responded 'all good'.
Mrs Wardrope said she was not working for Mr Wilson at the time she prepared the reconciliation statements. She said that she did them for him as a favour. I find that Mr Wilson's reconciliations were prepared on Mr Wilson's instructions and approved by him. They were not 'without prejudice'. Although they are self-serving as assertions of what Mr Wilson thought he was owed, to the extent that they concede liabilities to Mr Stewart, they are telling admissions.
Exhibit P13 is an email from Mr Wilson to Mr Stewart dated 18 September 2014 setting out his position in relation to their financial dealings. In it he admitted liability to pay GST provided that it had been paid by Mr Stewart. He attached a statement in which he claimed interest at 8% per annum on money owed by Mr Stewart after September 2010 calculated monthly. He referred to 'bills of $134,055.34'.
The sum of $134,055.34 was also brought to account by Mr Wilson in his reconciliations (exhibits P39, P40 and P41) as noted above, and implicitly in his email of 18 November 2014, and letter of that date attaching a version of exhibit P5 (exhibits P 21 and p 22).

Acquittal of NAB progress payments

By reference to Oceanside Homes' NAB trading account statements, Mrs Wardrope explained that the sums of $75,414.81 credited on 30 March 2011 and $103,371.17 on 3 February 2011 were progress claim payments by NAB on behalf of Mr Wilson to Oceanside Homes. These were the only progress payments that were made to Oceanside Homes, the rest being paid to Mr Wilson's account.
The payment of $75,414.81 was paid in full to Mr Wilson. From the second progress payment of $103,371.17 she transferred two amounts of $20,000 to Mr Wilson on 7 February 2017, and amounts of $5,072.98 and $9,749.31 on 11 February 2011. The balance, shown in exhibit D2 as PiDi2 ($49,212.89) was credited to Mr Wilson. That sum was allocated to invoices paid by Oceanside Homes in relation to The Cutting. Exhibit P31 is a series of three MYOB transaction history records that show how the progress payment of $103,371.15 was acquitted. Exhibit P32 is a bundle of tax invoices relating to The Cutting that were paid by Oceanside Homes from that progress claim payment.
Mrs Wardrope said that the transfers made to Mr Wilson from that progress claim payment were made at his request. She regarded the payment as belonging to him. Mrs Wardrope explained that the progress claim had been made on the basis of invoices that had been received by Oceanside Homes, irrespective of whether they had been paid. Mrs Wardrope did not discuss these payments to Mr Wilson with Mr Stewart on whose authority she operated the NAB account.
Mrs Wardrope was not challenged in relation to her evidence as to how the progress claim payments received by Oceanside Homes were treated. It had been suggested in the course of cross-examination of Mr Stewart and Mrs Wardrope that these payments had not been brought to account. The contention was baseless and ultimately not maintained.

Payments by other entities on Mr Stewart's behalf

It was argued on behalf of Mr Wilson that Mr Stewart was not entitled to bring to account expenses that had been paid by Bayside Homes Pty Ltd, Yallrise Enterprises Pty Ltd and Western Hardwoods Pty Ltd.
Mrs Wardrope said that payments of invoices by other entities related to Mr Stewart were recorded in loan accounts. Exhibit P37 is a bundle of loan account reports relating to monies paid by Baycorp Homes Pty Ltd, Western Hardwoods Pty Ltd and Yallrise Enterprises Pty Ltd. On Mrs Wardrope's evidence those loan accounts reflect the payment of expenses on behalf of Oceanside Homes. This evidence was not challenged.
It was clear from Mrs Wardrope's evidence, and I accept, that these payments were treated as loans to Oceanside Homes and were not voluntary third party payments. Mrs Wardrope admitted using her own Visa card to pay some invoices. It may be inferred that such payments were by way of loan to Mr Stewart and that those invoices were paid on his behalf. That Mr Stewart borrowed from other entities to pay Mr Wilson's bills does not alter Mr Wilson's obligation to reimburse him. There is no substance in the defence argument that proof of repayment is a precondition to recovery and no merit whatsoever in Mr Wilson's attempt to avoid liability to reimburse Mr Stewart by suggesting that his liability is to those other entities.

Overpayments to Mr Wilson

Mrs Wardrope explained that an annotation of exhibit P5 indicating an overpayment to Mr Wilson of $3,699.78 referred to two payments to Mr Wilson of $2,000 and $1,699.78 respectively. They are treated as debits in exhibit D4, a MYOB report showing subcontractor payments to Mr Wilson from 24 July 2010 to 26 December 2010. The debits were entered on 30 June 2011 and 31 December 2011 respectively.
I am satisfied on the basis of Mrs Wardrope's evidence that overpayments totalling $3,699.78 were made to Mr Wilson in respect of his subcontract invoices. Mrs Wardrope explained that this resulted from Mr Wilson receiving an advance against his invoices. This sum is admitted in Mr Wilson's reconciliations as a credit to Mr Stewart. The sum is recoverable as money had and received.
In cross-examination, Mr Wilson denied any knowledge of this item and deferred to Mrs Wardrope (ts 688). His answer was disingenuous. He simply wanted to avoid making an admission. It was submitted in closing on his behalf that he was still owed 'wages' (apart from his supervision fees). No unpaid wages or subcontractor invoices are pleaded by Mr Wilson and none is reflected in his Scott schedule.

Findings

Mr Stewart has proved on the balance of probabilities that Mr Wilson failed to reimburse him for invoices relating to The Cutting totalling $134,055.34 as shown in exhibit P5. The invoices listed in that report, except those from Harvey Norman, Stuart's House of Bedding, and Belpile, are GST exclusive, so the allowance of that sum in favour of Mr Stewart does not reduce Mr Wilson's liability to reimburse Mr Stewart for unpaid GST, as those items were not included in that claim.
I am also satisfied that Mr Wilson was in credit to Mr Stewart in an amount of $3,699.78, being the sum of two overpayments of subcontracting costs. That sum is allowed in favour of Mr Stewart.
Those amounts come to $137,755.12, as claimed.
For the purpose of calculating interest Mr Wilson's liability for the amount of the overpayments of subcontractor invoices should be taken to have accrued at the dates shown in exhibit D4.
For interest calculation purposes, Mr Wilson's liability for unpaid invoices as being due on the dates of payment that are shown in exhibit P5, rather than the dates of the invoices as reflected in annexure A.

GST reimbursement

Mrs Wardrope gave evidence that when Mr Wilson made payments to Oceanside Homes in reimbursement of invoices paid by Oceanside Homes in respect of The Cutting, he deducted an amount representing the goods and services tax (GST) charged in the invoice. She did not query Mr Wilson in this regard. Mr Wilson told her that his accountant had said that he did not need to pay GST.
Mrs Wardrope would prepare business activity statements quarterly for Oceanside Homes. She would enter Oceanside Homes' income and the expenses on which it had paid GST. She did not enter any income in relation to The Cutting, but she treated The Cutting expenses the same as Oceanside Homes' other expenses. She said that Oceanside Homes received a refund of the GST it paid on its expenses, by which I understand that it received an input tax credit.
According to Mrs Wardrope, Mr Stewart was unaware that Mr Wilson was not paying GST on invoices for The Cutting. Clearly, Mr Wilson had reason to think he could do so on the basis that Oceanside Homes would be entitled to GST credits. He was wrong. This is because under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) a business cannot claim an input tax credit (GST credit) on private expenditure.
By way of explanation, GST is payable at the rate of 10% on a taxable supply. Relevantly, a taxable supply is a supply of goods or services by a business. GST credits can be set off against GST payable on a taxable supply. Put simply, Oceanside Homes made no taxable supply to Mr Wilson in respect of The Cutting against which the GST credits could be set off, but having claimed credits, it became liable to pay GST on a deemed taxable supply. This legal fact was not in dispute.
Mrs Wardrobe's evidence was that Mr Wilson underpaid invoices for which he reimbursed Mr Stewart by the amount of GST. As Mr Wilson conceded that he deducted GST from up to 98% of the invoices he reimbursed (ts 650), the issue with GST came down to proof of quantum.
Mrs Wardrope identified a MYOB Excel spreadsheet headed 'Job Activity Detail' that was annotated to show the GST paid on The Cutting invoices (exhibit P35). (This report corresponded to exhibit P2.) Exhibit P35 is highlighted in yellow to show those payments that were made to persons who are not registered for GST and on whose invoices GST did not have to be paid. These payments were for the labour of Simon Jasas and Aaron Sanford. The Town of Fremantle (sic) and Water Corporation expenses were also GST free.
On the basis of this report, Mrs Wardrope calculated that Oceanside Homes had paid GST of $48,449.91 on invoices relating to The Cutting for which it claimed GST credits. The report (verified by source documents) showed that Mr Stewart had paid invoices for The Cutting totalling $494,074.15. After deduction of $10,817 for invoices on which no GST was payable, the expenditure net of GST was $484,499.06.
Mr Stewart was audited by the Australian Taxation Office in 2013. Exhibit P43 consists of a letter dated 19 December 2013 advising interim findings, and a further letter dated 13 February 2014 advising completion of the audit. The result of the audit was that Mr Stewart was required to pay GST on an imputed taxable supply in respect of The Cutting.
Exhibit D9 is a GST reconciliation that was, on Mr Stewart's evidence, prepared by his accountants for audit purposes. The sum of $494,524 is given as the total expenditure (cost of sales) on The Cutting. The document was tendered by the defence pursuant to s 79C of the Evidence Act 1906 (WA). The person who prepared the document did not give evidence. Exhibit D9 purports to show the GST payable on a deemed taxable supply. According to that reconciliation, the GST for expenses (paid by Mr Stewart) for The Cutting would have been $49,452, a figure somewhat higher than the amount of the claim. The difference is in Mr Wilson's favour. It is unnecessary to reach any findings as to the inconsistency.
Ironically, as a result of the treatment of the invoices related to The Cutting, Mr Stewart also had to pay GST on a contractual profit margin of 10%, a profit he never made.
I find on the basis of Mrs Wardrope's evidence that, either by way of contractual obligation, or by way of restitution, Mr Wilson is liable to pay the amount of the GST paid on invoices relating to The Cutting in the amount of $48,450 (rounded to the dollar). I fix the date of accrual of the liability at 13 February 2014, the date on which the audit was completed, the audit resulting from Mr Stewart improperly claiming GST credits for The Cutting.

Loan agreement

While there is no dispute that the sum of $270,000 (in total) was advanced by Mr Wilson to Mr Stewart in September 2010, and that it served in part to repay Mr Wilson's indebtedness to Mr Stewart following the $155,000 advance in February 2010, the parties disagree as to the terms on which the advance was made.
It is common cause that Mr Wilson also advanced amounts of $10,000 and $30,000 on 2 October 2012 and 7 October 2012 (annexure A, items 32 and 33).
Mr Wilson conceded that Mr Stewart made payments to him totalling $137,650 (annexure A, items 13, 15 - 21, 23 - 31, 34 and 35).
Mr Wilson said that he and his father borrowed $350,000 as a line of credit from the Bank of Queensland using his father's house as security. He advanced a total of $270,000 to Mr Stewart. The rest was intended to fund the building of The Cutting. Mr Wilson said he recalled a conversation with Mr Stewart where he said that he would pay Bank of Queensland interest.
According to Mr Stewart, because the money was coming from a secured line of credit obtained by Mr Wilson's father, he felt obliged to offer Mr Wilson and his father a written loan agreement that provided for interest at 30% per annum and security against his home in City Beach.
In previous dealings, Mr Stewart and Mr Wilson never documented any agreement with respect to moneys that they advanced to one another. No formal agreement was made orally or in writing in 2006 when Mr Wilson advanced $21,000 or in February 2010 when Mr Stewart advanced $155,000. To my observation, the salient differences between those advances and the advances that were made in September 2010 were that the latter were paid from a line of credit that Mr Wilson's father had obtained on the security of his home, that the amount of the advances was much higher, and that, as Mr Stewart admitted, in September 2010 he had cash flow problems.

These factors, however, appear only to have concerned Mr Stewart. There was no evidence of any discussion with Mr Wilson's father as to the terms of his son's advance to Mr Stewart, and indeed no formal agreement was sought by Mr Wilson. Rather, as Mr Wilson admitted, Mr Stewart proffered the proposed loan agreement, saying that he wanted to afford his father some protection. I accept that Mr Stewart offered the loan agreement out of a concern for the position of Mr Wilson's father, but believing that he would be able to pay off the debt quickly.
Given that there was no issue that the loan agreement document was given to Mr Wilson, it is rather perplexing that the parties have very different accounts of when, where and how that occurred.
Mr Stewart said that the document was prepared by Mrs Wardrope using a form that had been used on a prior occasion when he had obtained short term finance. The document was dated 10 September 2010. He handed it to Mr Wilson at Gypsie Road in Eagle Bay where they were working. This occurred about one week after the first advance of $200,000 had been made (9 September 2010). Previously, no agreement had been made as to the terms of the loan. Mr Stewart said that when he gave Mr Wilson the document Mr Wilson rebuffed him, telling him it was not necessary. Although he had signed it himself, Mr Stewart did not see Mr Wilson sign it and assumed that he had 'binned' it. It was not copied and not returned to him.
Mr Wilson's evidence was as follows:
I needed to get a loan to pay for the start of my build at The Cutting and Russell also needed to borrow money, so Russell came up with the idea that we would be able to use my dad's house because he owned it, which I was happy to do, and then he drafted this letter for security's sake and he was happy to pay the 30% and he said it would be paid back within three months again because I knew I needed the money for the build but I gave a large chunk of that money straight to him.
Contrary to Mr Stewart's evidence, Mr Wilson said that the document was given to him before he had advanced any money to Mr Stewart, ie before 9 or 10 September 2010. He said that he went to Mr Stewart's home in City Beach where he had an office. Mr Wilson said that they both signed it. Mr Wilson could not remember the time of day when he went to Mr Stewart's home. Nor could he remember what he did after the document had been signed. He said:
I got a copy and I was pretty sure he got a copy as well and I left, we stayed and talked, we probably could've even had beer. Who knows, it was so long time ago.
Mr Wilson said that he did not think it was necessary for his father to sign the document because he and Mr Stewart trusted each other. He did not give too much thought as to what was in the document because he thought that the money would be repaid within three months regardless. He did not calculate interest on the money owed by Mr Stewart at the rate shown in the document. He said that the document was signed three or four days before 10 September 2010. At the time they were working at a project called 'Banool' in City Beach.
Mr Wilson did not claim interest at the rate stipulated in the agreement in his reconciliation statements of 30 April 2012, 5 August 2012 and 17 January 2013. Each of these reconciliation statements makes reference to interest paid by Mr Wilson to Bank of Queensland.
In his reconciliation statement dated 6 February 2013, Mr Wilson again referred to Bank of Queensland interest, but noted, 'only charged BOQ interest not 30% as per contract'.
In a letter dated 18 November 2014, however, in response to a demand by Mr Stewart for $122,106.66, Mr Wilson stated:
As you recall, we entered into a loan agreement on 10/9/2010. Pursuant to this agreement, I lent you money two times and both times you promised to pay me back within three months. Under this agreement, you agreed to pay interest on the moneys I lent you at an interest rate of 30%. The attached spreadsheet takes into account this correct rate of interest and not the interest rate of 8% as you calculated in the spreadsheet you sent to me on 28/9/14. I have had to cover the loan repayments on this amount for four years (instead of the three months as promised by you), which has put a lot of pressure on me.
The spreadsheet indicated a debt to Mr Wilson of $140,696.57 (exhibit P21).
When cross-examined by Mr Wilson's counsel, Mr Stewart said the terms of the loan agreement document were not discussed with Mr Wilson or his father before it was prepared. He said the loan amount of $300,000 in the document was a figure that he and Mr Wilson had discussed originally. He maintained that the document was given to Mr Wilson at Eagle Bay. He rejected the suggestion that the document was signed by both parties at Mr Stewart's home in City Beach. He denied making a copy of the signed document.
Mr Stewart was shown exhibit D4, a MYOB report headed 'Purchase Register [all purchases]' which set out Mr Wilson's invoices to Oceanside Homes from 23 July 2010 to 10 January 2013. The report included an invoice dated 10 September 2010 referenced to Banool, a project that Mr Stewart admitted was in City Beach. He did not accept the proposition that this invoice indicated that Mr Wilson was in fact working at City Beach at the time when the loan document was prepared. I observe in this regard that the report indicates the date of Mr Wilson's invoices, not the dates that he worked. The invoices themselves (exhibit P42) do not prove where Mr Wilson was working on particular days, but do show that in September 2010 there was work being done at both the Banool and Gypsy locations. Mr Wilson's diary entries do not show his work locations in the relevant period (exhibit P25).
I prefer Mr Stewart's account of how he came to present the loan document to Mr Wilson. It was he who was concerned to formalise the agreement. The loan document was his idea. He arranged the preparation of the document by Mrs Wardrope. In the circumstances he is likely to have retained a better memory of the circumstances in which he gave the document to Mr Wilson. He had no reason to be untruthful about when and where it was.
Mr Wilson, on the other hand, by his own admission, had little interest in the loan document. He had not asked for it. His recollection of the occasion that he received the document was vague. He did not consult his father about it. He did not get his father to sign it as a party. Furthermore, Mr Wilson's conduct after the loan document was given to him is not consistent with an agreement on interest of 30% per annum. He did not calculate interest at that rate at any time prior to the dispute arising between him and Mr Stewart as to what each owed the other. It is likely that Mr Wilson retained the loan document that had been signed by Mr Stewart and applied his signature on a later occasion. Significantly, it was not witnessed.
The loan document does not satisfy the statutory requirements of a deed (Property Law Act 1969 (WA), s 9). Nor does it constitute, in itself, an agreement in writing, as it lacks the signature of a party. Moreover, it does not prove the terms of an agreement made between the parties with respect to Mr Wilson's advance of $270,000 (remembering that part of the advance was a repayment of Mr Stewart's earlier loan of $155,000). On the evidence there was no oral agreement of which the loan document could serve as a memorandum. Mr Stewart certainly offered the loan agreement, but it was not accepted, either orally or in writing. I am satisfied that Mr Wilson was shown the loan document a few days after 10 September 2010 at Eagle Bay, and that he told Mr Stewart that it was unnecessary, a response that I find was wholly consistent with the history and nature of their relationship and the expectation of each party that the debt would be repaid in a short time.
I find that it was only when Mr Stewart and Mr Wilson's respective positions became entrenched, and litigation loomed, that Mr Wilson sought to rely on the terms of the loan document. He did so disingenuously. That Mr Wilson's position in relation to the loan document was untenable was conspicuously revealed in his evidence as to why he stipulated bank interest in his reconciliations, insisting that Mr Stewart had promised to pay bank interest as well as 30% pursuant to the alleged written loan agreement.
An agreement can be implied from the conduct of the parties, at least, that Mr Stewart would reimburse interest at the rate charged by the Bank of Queensland on the amount of the advance that from time to time exceeded Mr Wilson's indebtedness. The only objective evidence of the rate is a letter from Bank of Queensland dated 6 September 2010 that indicates a rate of 7.01% (exhibit D8).
Given that Mr Stewart conceded an obligation to pay interest at the bank rate, I reject his counsel's submission that the court should make no finding in relation to interest. The best evidence of the interest rate from time to time is the Bank of Queensland letter, so that rate (7.01%) will be applied on the amount of Mr Stewart's indebtedness to Mr Wilson from the date of the first loan advance (9 September 2010).
On the other hand, I find that Mr Stewart's promise to pay Mr Wilson's father an amount of $10,000 (not $15,000, as Mr Wilson contended) was non-contractual. It was made in the form of a gratuity, as an expression of appreciation, not to Mr Wilson, but his father. It is not capable of enforcement by the court in these proceedings and should be disregarded in the final account. It is a debt of honour.

Share purchase agreement

Mr Stewart said there was an occasion in February 2011 when he was building two houses in Eagle Bay that he and Mr Wilson met socially with two others, Andrew Hopkins and Gary Chilcott. There was discussion about a company called Uglii in which he and the others held shares. Within a day or two Mr Wilson asked him whether it was possible for him to acquire some shares also. He said he could afford $25,000 worth of shares. Mr Stewart said that he told Mr Wilson that he would be happy to sell some of his shares to him at the amount that he paid for them.
Mr Wilson agreed in his evidence that there was talk about shares in 2011, but he said he was not in the conversation that Mr Stewart described. Mr Wilson said he wanted to get $5000 worth of shares, but ended up not buying any. He denied the suggestion that the cost of the shares was to come off money Mr Stewart owed him. He said the shares were a gift. His explanation for his bringing the value of the shares into account in his own reconciliations, particularly in his answer to a direct question by the court, made no sense.
It is clear from the reconciliation statements prepared by Mrs Wardrope on Mr Wilson's behalf in 2012 and 2013 that Mr Wilson acknowledged a liability to Mr Stewart of $25,000 for Uglii shares (at 18 cents $25,000 would buy 138,888 shares). This objective fact makes it difficult to accept Mr Wilson's vague and unsatisfactory evidence around this subject. He said he could not recall Mr Stewart offering to get shares for him, yet in March 2013 he presented a share transfer form to Mr Stewart for 138,888 shares in SISS Business Systems Ltd, an unlisted public company (it was not in issue at trial that this company was identified with Uglii, Mr Wilson in his letter to Mr Stewart of 18 Novemebr 2014 referring to 'SISS Business Systems Ltd (Uglii) shares').
The share transfer form, as originally prepared by Mr Wilson, named the transferor as Mr Stewart. On Mr Wilson's evidence, the shares could not be transferred because they were in fact held by Baycorp Homes Pty Ltd as trustee for the Stewart Family Trust. Mr Wilson amended the transfer accordingly and the shares were duly transferred to him.
The transfer (exhibit P17) indicates the date of purchase as 7 March 2013. The consideration is stated as 'gifted'. Mr Stewart said that he did not notice this entry at the time that he signed the document. There was no discussion about the shares being a gift.
According to Mr Wilson, Mr Stewart told him to state the consideration as 'gifted'. Mr Stewart said he would not have given away the shares for nothing. He said he sold them for exactly what he paid for them. He denied the suggestion that the shares were worthless. He rejected the suggestion that he gifted the shares to Mr Wilson because he felt bad about owing him money and wanted to help him out.
Mrs Wardrope's evidence was that Mr Wilson told her to include the Uglii shares in a reconciliation statement dated 7 May 2012 (exhibit P38). She did not know why the shares item was annotated 'Mike didn't invoice $25,000 in lieu of shares' in the February 2013 reconciliation. She was then asked about an email that she sent with a reconciliation statement on 19 November 2014 in which she stated:
Attached is a summary that Mike was happy with on 6 February 2013. Summary indicates Uglii shares were paid in lieu of invoices for labour.
Mrs Wardrope said that Mr Wilson told her that the shares were exchanged for labour. That admission is wholly consistent with the treatment of the shares in Mr Wilson's reconciliations. I accept Mrs Wardrope's evidence and reject Mr Wilson's evidence to the contrary.
The defence position is that the claim for the value of the shares cannot be enforced by Mr Stewart as he was not the transferor, and that Mr Stewart was not entitled to claim the value of the shares on the basis that he procured the transfer from Baycorp Homes Pty Ltd. Furthermore, it is argued that the shares were transferred for no consideration; that they were expressly gifted to Mr Wilson.
Mr Stewart's claim in relation to the shares, as amended at trial, is based on an agreement that he would procure the transfer to Mr Wilson of shares in Uglii to the value of $25,000 and that that sum would be brought to account in their dealings.
I accept Mr Stewart's evidence that this agreement was made in or about February 2011. Although no share transfer was effected at that time it is clear from Mr Wilson's reconciliation statements that he acknowledged a liability to Mr Stewart in the amount of $25,000 for the shares. I accept on the basis of Mr Stewart's evidence and the reconciliation statements that the cost of the shares was to be set off against money owed to Mr Wilson. It is immaterial that the shares that were eventually transferred to Mr Wilson on 7 March 2013 were shares in SISS Business Systems Ltd. The value of the shares at the time of transfer is immaterial, as the transfer merely gave effect to an agreement made in 2011.
It is also immaterial that the shares were transferred by the trustee of the Stewart Family Trust. This is not a case where the privity principle precludes Mr Stewart from bringing the value of the shares into account. While Baycorp Homes Pty Ltd is a separate entity from Mr Stewart, it was not a party to the agreement. Mr Stewart promised to procure the transfer of the shares in consideration of a reduction of his liability to Mr Wilson.
I do not find that Mr Stewart made a gift of the shares to Mr Wilson on behalf of his family trust, or personally. That proposition is inconsistent with Mr Wilson's admissions of liability. The fact that the word 'gifted' appears on the share transfer is not conclusive evidence that there was no consideration for the shares. On the other hand, it is consistent with there being no payment due to the transferor. By the time the transfer was effected, the agreed value of the shares was an item in the account between Mr Stewart and Mr Wilson. Based on a share price of 18 cents, the number of shares transferred (138,888) corresponds with the sum in issue ($25,000). It is unnecessary for me to decide whether the word 'gifted' was inserted by Mr Wilson at Mr Stewart's direction.
For these reasons I find in favour of Mr Stewart on the issue of the share transfer agreement and fix the date of the accrual of Mr Wilson's liability at 24 February 2011 as pleaded, which corresponds with the time when, I accept on Mr Stewart's evidence, the agreement was made.

Mrs Wardrope's bookkeeping fees

Mrs Wardrope's evidence was that in mid-2010, Mr Wilson asked her to get some quotes in relation to The Cutting. She checked with Mr Stewart who told her it was fine. She then proposed to Mr Wilson that as she and her husband were planning to build a house in Pinjarra, he could do some building work in return for the time she spent on The Cutting. She said her work for Mr Wilson involved getting quotes, receiving invoices, paying suppliers, processing invoices and preparing progress claims certificates. She kept a record of the time that she spent doing this work. Her records showed she spent 73.5 hours doing this work.
Mr Wilson said that he never made an arrangement with Mrs Wardrope to provide carpentry services in exchange for bookkeeping. He said:
Caroline was doing the work and she called Russell and asked if it was OK and Russell gave her the OK to do it because obviously at that stage I was still owed quite a lot of money, and so, Russell, there was never nothing spoken about me doing any free labour on her house, especially as it doesn't make sense that 2010 when she built in 2014 … and not once beforehand did I ever have a call or anything from Caroline saying this and she never sent me an invoice or asked me.
Mr Wilson admitted that Mrs Wardrope did a lot of work for him, but he denied making any 'contra' agreement, and said he never received an invoice from Mrs Wardrope. He appeared quite unperturbed by the fact that he had benefited from Mrs Wardrope's travails on his behalf without cost.
Mr Stewart professed little knowledge of the arrangement:
Mike asked me if he would mind if he used Caroline to do that particular work for him, and then shortly after that, Caroline gave me a call to confirm whether it would be all right if she did Mike's work, and I said to both as long as it didn't impact on the work she was doing for Oceanside, and that they'd ran it as a separate thing, and she kept all the records and it had no impact on me, I didn't have a problem with it.
Okay. And did you get involved with whatever she did with ‑ for Mr Wilson? ‑‑‑ Not one – not one bit.
Mr Stewart said that when he found out from Mrs Wardrope in 2014 that Mr Wilson had not provided any building services in exchange for her help with The Cutting, he asked Mrs Wardrope to invoice him for the work she did for him. Mr Stewart paid her invoice of $3,300 (exhibit P19).
I have previously observed that Mrs Wardrope did the same work on The Cutting that she did for Mr Stewart on other Oceanside Homes projects. Mr Stewart had contracted to be the builder of The Cutting. As invoices for trades and supplies were rendered to Oceanside, it was unavoidable that Mrs Wardrope's administration and bookkeeping services would be required. She would also have to prepare the costings and raise the progress claims so that Mr Wilson could draw down no his loan facility. It is not alleged and there is no evidence that there was any agreement between Mr Stewart and Mr Wilson for payment for these services, although it would be consistent with the arrangement between them that Mr Wilson would cover the cost of the extra work. However, the claim is not put on this basis.
As pleaded, the claim is based on a tripartite agreement to the effect that Mr Stewart would make Mrs Wardrope's services available to Mr Wilson, and that Mr Wilson would provide building services to Mrs Wardrope in lieu of payment. Clearly, any obligation owed by Mr Wilson's obligation under such an agreement was to Mrs Wardrope. It is not able to be enforced by Mr Stewart on the basis that he paid an invoice that Mrs Wardrope addressed to him when Mr Wilson defaulted. The evidence does not afford any basis for implying an obligation on Mr Stewart to pay Mrs Wardrope, or on Mr Wilson to indemnify Mr Stewart if he did so.

Only in his closing submissions did Mr Stewart's counsel, recognising the lack of any contractual foundation for the claim, raise a claim based on unjust enrichment. It was not developed. It has no merit. Mr Stewart's payment of Mrs Wardrope's invoice was entirely voluntary. It does, however, reflect on Mr Wilson that he took advantage of the services of Mrs Wardrope in order to complete The Cutting without recognising any obligation to compensate her, or, when he became aware that Mr Stewart had paid for them, to compensate Mr Stewart or bring the cost into account. I accept Mrs Wardrope's evidence that she had a 'contra' arrangement with Mr Wilson, but it is doubtful on the evidence that it amounted to an enforceable contract. If it did, a claim for a quantum meruit may have been open to her, but Mr Stewart has no remedy.

Summary of conclusions

My findings on the matters in issue may be summarised as follows:
1.Mr Wilson owes Mr Stewart $134,055.34 for unpaid invoices.
2.Mr Wilson owes Mr Stewart $3,699.78 for overpayment of subcontractor invoices.
3.Mr Wilson owes Mr Stewart $48,450 for unpaid GST.
4.No loan agreement was made in the terms of the loan document, but Mr Stewart owes Mr Wilson interest at the rate charged by Bank of Queensland on the facility obtained by Mr Wilson and his father.
5.A gratuity of $10,000 was promised by Mr Stewart to Mr Wilson's father, but the obligation is not contractual and is to a third party. It is not enforceable in these proceedings.
6.Mr Wilson owes Mr Stewart $25,000 for procuring a parcel of shares in SISS Business Systems Ltd (Uglii) at his request.
7.The fees paid by Mr Stewart to Mrs Wardrope for work done for Mr Wilson are not recoverable by Mr Stewart against Mr Wilson.
With reference to annexure A, the items not in dispute are 1 - 3, 4, 6, 8, 9, 13 - 21, and 23 - 36.
Interest should be allowed at 7.01% (Bank of Queensland rate) on the balance of money owed from time to time by Mr Stewart to Mr Wilson from 9 September 2010, being the date of Mr Wilson's advance of $200,000 to 15 May 2012 when Mr Stewart’s liability was discharged. From that date Mr Wilson should pay interest at the rate of 6% pursuant to s 32 of the Supreme Court Act 1935 (WA) on moneys owed to Mr Stewart.
For the purpose of calculating interest I have fixed the date of the GST liability at 13 February 2014, the date of the liability for the Uglii shares at 24 February 2011, and the dates of the accrual of Mr Wilson's liability for overpaid invoices at 30 June 2011 and 31 December 2011 respectively.
The following table summarises the transactions. It corresponds to annexure A, but for the purpose of interest calculations, I have changed it to show the dates on which certain liabilities accrued and have aggregated payments of invoices for The Cutting differently. The invoice payments as pleaded in annexure A are grouped according to the date of the invoices. I have grouped the invoices according to the date of payment.
I have calculated interest on a daily basis. Where invoices have been aggregated, I have calculated interest to the last day of the payment period. The number of days on which each calculation is based is shown in the table. The interest due to Mr Wilson from 9 September 2010 to 15 May 2012 is $12,997.46. The interest due to Mr Stewart from 15 May 2012 to 13 April 2014, the date of the last transaction (accrual of GST liability) is $3,742.86.
The difference is $9,254.60 in Mr Wilson’s favour. That amount is shown in the table as a credit.
In the result I find that, as at 13 February 2014, Mr Wilson owed Mr Stewart $83,600.48. I have calculated interest on that amount at 6% from that date to 20 May 2020 (326 weeks) to be $31,446.64.

Item	Date	Description	Wilson	Stewart	Balance	Interest
1.	24.11.2006	W advance to S	$18,000.00	-$18,000.00
2.	29.11.2006	W advance to S	$3,000.00	-$21,000.00
3.	22.02.2010	S advance to W	$155,000.00	$134,000.00
3A	22.02.2010	S debt: supervision services	$70,000.00	$64,000.00
4.	05.03.2010	W payment to S	$10,000.00	$54,000.00
5.	26.05.10 - 09.09.10	S payment of invoices	$3,824.76	$57,824.76
6.	09.09.2010	W advance to S	$200,000.00	-$142,175.24
7.	09.09.10 -17.09.10	S payment of invoices	$16,529.00	-$125,646.24	8d $221.25
8.	17.09.2010	W payment to S	$50,000.00	-$175,646.24
9.	22.09.2010	W payment to S	$20,000.00	-$195,646.24	5d $122.20
10.	23.09.10 -24.12.10	S payment of invoices	$53,399.70	-$142,246.54	93d $3,539.32
11.	20.01.11 -12.02.11	S payment of invoices	$1,008.75	-$141,237.79	50d $1,383.49
12.	24.02.2011	W debt: procurement of shares	$25,000.00	-$116,237.79	12d $329.70
13.	28.02.2011	S payment to W	$10,000.00	-$106,237.79	4d $90.44
13A.	13.04.11 -16.06.11	S payment of invoices	$1,992.07	-$104,245.72	107d$2,211.20
13B.	30.06.11	S overpayment of subcontract invoice	$2,000.00	-$102,245.72	14d $283.89
14.	12.08.11 -04.09.11	S payment of invoices	$1,580.00	-$100,665.72	66d $1,312.67
15.	09.09.2011	S payment to W	$1,000.00	-$99,665.72	5d $97.91
16.	09.09.2011	S payment to W	$1,000.00	-$98,665.72	5d $96.94
17.	12.09.2011	S payment to W	$10,000.00	-$88,665.72	3d $57.58
18.	13.09.2011	S payment to W	$5,000.00	-$83,665.72	1d $17.25
19.	20.09.2011	S payment to W	$950.00	-$82,715.72	7d $113.92
20.	29.09.2011	S payment to W	$2,000.00	-$80,715.72	9d $144.81
21.	17.10.2011	S payment to W	$3,000.00	-$77,715.72	18d $282.62
22.	20.09.11 -25.11.11	S payment of invoices	$8,600.02	-$69,115.70	39d $589.57
23.	01.12.2011	S payment to W	$2,700.00	-$66,415.70	6d $80.67
24.	01.12.2011	S payment to W	$2,000.00	-$64,415.70
24A.	04.12.11 -30.12.11	S payment of invoices	$1,114.96	-$63,300.74	30d $387.58
24B.	31.12.11	S overpayment of subcontract invoice	$1,699.78	-$61,600.96	1d $12.31
24C.	15.02.12 -14.05.12	S payment of invoices	$38,555.56	-$23,045.40	135d $1,617.66
25.	15.05.2012	S payment to W	$10,000.00	-$13,045.40	1d $4.48
26.	15.05.2012	S payment to W	$20,000.00	$6,954.90
26A.	17.05.12 -03.08.12	S payment of invoices	$4,402.38	$11,356.98	94d $107.46
27.	07.08.2012	S payment to W	$5,000.00	$16,356.98	4d $7.47
28.	16.08.2012	S payment to W	$5,000.00	$21,356.98	9d $24.20
29.	20.08.2012	S payment to W	$5,000.00	$26,356.98	4d $14.04
30.	23.08.2012	S payment to W	$10,000.00	$36,356.98	3d $13.00
31.	27.09.2012	S payment to W	$15,000.00	$51,356.98	33d $197.22
32.	02.10.2012	W advance to S	$10,000.00	$41,356.98	5d $42.21
33.	07.10.2012	W advance to S	$30,000.00	$11,356.98	5d $33.99
34.	24.12.2012	S payment to W	$20,000.00	$31,356.98	78d $145.62
35.	24.12.2012	S payment to W	$10,000.00	$41,356.98
5A.	25.01.2013	S payment of invoices	$3,048.10	$44,404.08	32d $164.94
36.	13.02.2014	W: reimbursement of GST	$48,450.00	$92,855.08	410d $2,992.71
38.	13.04.2014	W; interest	$9,254.60	$83,600.48

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
RR
Associate to Judge Staude
18 MAY 2020