Thompson v Marks
[2022] VMC 25
•28 September 2022
IN THE MAGISTRATES’ COURT OF VICTORIA
AT MELBOURNE
Case No. M11266997
| NIALL ROBERT THOMPSON | First Plaintiff |
| and MARIE JOSEPHINE THOMPSON | Second Plaintiff |
| v | |
| STEVE MARKS (also known as STEPHEN MARK O’NEILL) | Defendant |
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MAGISTRATE: | Magistrate T. W. Greenway |
WHERE HELD: | Melbourne Magistrates’ Court (online) |
DATE OF HEARING: | 24, 26 August 2022, 1, 6 and 8 September 2022. |
DATE OF DECISION: | 28 September 2022 |
CASE MAY BE CITED AS: | Thompson v Marks |
MEDIUM NEUTRAL CITATION: | [2022] VMC 25 |
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MORTGAGE – What is secured by mortgage – Identification of parties to agreement – Terms of agreement.
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APPEARANCES: | COUNSEL | SOLICITORS |
| For the Plaintiff | Ms T. Saville | Pointon Partners |
| For the Defendant | Mr M. Black | Kingsford Lawyers |
HIS HONOUR:
Introduction
This proceeding concerns a dispute surrounding the creation of a mortgage in favour of Mr Steve Marks (Marks) over Mr and Mrs Thompson’s (the Thompsons) residential home in Golden Square, Victoria (Mortgage). [1]
[1]Exhibit D1, 77. (dated 15 August 2009 and registered on 26 October 2011).
The Thompsons seek a discharge of the Mortgage on the basis that no monies are owed under it. Marks seeks to enforce the Mortgage.
The Mortgage is said to arise out of an agreement between Marks and the Thompsons in 2009. The terms of that agreement are disputed and are a central issue in the proceeding.
Marks contends that the Thompsons retained him, under the business name SME’s R US, to provide business and financial assistance in or around June or July 2009. Marks’ claim is that the Thompsons agreed to pay him a fixed fee of $50,000 (Fee) and to secure payment by granting the Mortgage.
Under the terms of the Mortgage, payment of the Fee (as a Principal Sum) was due on 15 August 2014. Interest at 15% per annum was to be paid, monthly in arrears. The Fee was not paid, and Marks now claims the sum of $299,126.30[2] and an order for possession under the Mortgage.
[2]Principal of $50,000 and Interest (to 15 August 2021) of $249,126.30.
The Thompsons deny there was any agreement with Marks. They maintain the relevant agreement was with an entity known as SME’s R US and that the agreed fee for the services was $20,000. [3] Further, the fees to SME’s R US were not to be secured by way of mortgage but by a caveat.
[3]At the relevant time, SME’s R Us was a business name.
The Thompsons agree they signed the Mortgage. However, they acknowledge they did not read the documents they executed. They deny that Marks lent them the sum of $50,000 and submit that the wording of the Mortgage does not provide for the arrangement claimed by Marks. [4]
[4]Plaintiffs’ Final Submissions, 19 - 21.
Finally, even if Marks’ version of events is accepted, the Thompsons submit that any debt owed to him is statute barred by operation of section 5(1)(a) of the Limitations of Actions Act 1958 (Vic) (LAA). In my view, Marks’ claim is not statute barred as the relevant limitation period is 15 years pursuant to s 20 of the LAA.
Accordingly, the key issue in the proceeding is which entity carried on business under the business name SME’s R US.
Jones v Dunkel
Mr Thompson gave evidence for the plaintiffs and Marks as the defendant. Mrs Thompson did not give evidence, neither did employees[5] associated with Marks and various directors of companies to which the SME’s R US business name was registered. In the circumstances, both parties have submitted that a Jones v Dunkel inference should be drawn against the other. [6]
[5]Mevanthi Batepola.
[6]Jones v Dunkel (1959) 101 CLR 298.
The prerequisites for drawing such an inference are as follows:
(a) the missing witness would be expected to be called by one party rather than the other;
(b) the missing witness’ evidence would elucidate a particular matter; and
(c) missing witness absence is unexplained. [7]
Mrs Thompson
[7] Payne v Parker [1976] 1 NSWLR 191, 201.
It was common ground that Mrs Thompson was at the initial meeting and was the person responsible for the Thompsons’ paperwork. In those circumstances, it was submitted that her evidence of that initial meeting, including the disputed fee and the existence of Marks’ business partner (as set out below), would be important evidence.
There was no evidence tendered as to why Mrs Thompson did not give evidence. The Court was informed by counsel that Mrs Thompson had a medical condition and was unfit to attend.
I accept Marks’ submission that there was an unexplained failure as to Mrs Thompsons’ absence and her evidence would elucidate the initial meeting. Plainly, as a party to the proceeding, she falls within the plaintiffs’ camp. In those circumstances, I am prepared to infer that her evidence would not have assisted the Thompson’s case.
However, a Jones v Dunkel inference does not enable the trier of fact to infer that the evidence of the absent witness would have been positively adverse to that party. Nor does the rule enable the absence of a witness to make up any deficiency of evidence.
Company Directors
The Thompsons asked the Court to draw adverse inferences regarding the unexplained failure to call Ms Jolanta Simone Boyd and Ms Daniela Broneslawa Olszewski, directors of People R US Pty Ltd. The Australian Company Number (ACN) of this company appears on letters containing the SME’s R US business name (as set out below).
Similarly, the Thompsons seek an adverse inference regarding the unexplained failure to call Mr Grant Thorsby Ross, director of MultiMedia Marketing Pty Ltd. The SME’s R US business name was registered to this company and various letters using the business name also contain the company’s ACN (as set out below).
Marks submits that no Jones v Dunkel inference should be drawn in circumstances where he was not on notice that the Thompsons would seek to assert that either MultiMedia Marketing Pty Ltd or People R US Pty Ltd were the true contracting party with the Thompsons.
In the circumstances, I am not satisfied that Marks would be expected to call the various directors as witnesses. The directors did not form part of Marks’ case, namely, that he was trading under the SME’s R US business name in 2009. Nor is there any evidence that they were present at various meetings between the parties or prepared any correspondence.
Accordingly, I decline to draw any adverse inference.
Mevanthi Batepola
The Thompsons submitted that Mevanthi Batepola (Batepola) was employed in some manner by SME’s R US or SME’s R US Pty Ltd. She also prepared correspondence and documents for Marks.
Marks submitted that Batepola’s absence had been adequately explained. In evidence, Mr Brett Thompson accepted that he contacted Batepola by visiting her house after obtaining her address in somewhat unexplained circumstances.
It was also submitted that Batepola was not present at any relevant meeting between the parties and had simply prepared documents that were clear on their face. Her evidence related to events that transpired after the agreement, and there was other objective evidence of those matters.
I accept there was sufficient evidence to explain Batepola’s absence. This evidence was set out in two SMS messages sent by Batepola to Marks and his solicitors and explained her reluctance to give evidence. Further, I consider the documents prepared by Batepola speak for themselves.
Accordingly, I decline to draw any adverse inference.
Factual background leading up to execution of the Mortgage
At the time of the Mortgage, Marks had worked in the finance industry for many years. He provided general business advice to clients, but his particular experience related to restructuring businesses. From 2007 to 2010, Marks’ evidence was that he operated as a sole trader. His evidence was that in 2009 he operated under the business name SME’s R US.
Mr Thompson first became aware of SME’s R US when he read an advertisement in a newspaper in around July 2009. It advertised SME’s R US’s services and said something like “manage your debt”. Mr Thompson rang the telephone number and spoke to Marks. A meeting was arranged shortly thereafter at 375 Howe Parade, Port Melbourne (Howe Parade Address). [8] In cross-examination, Marks did not recall any advertisement by SME’s R US, but conceded it was possible.
[8]Exhibit D5, 6.
From 28 April 2009 to 9 February 2010, the Howe Parade Address was the principal place of business of a company known as MultiMedia Marketing Pty Ltd (MultiMedia Marketing). The business name SME’s R US was registered to MultiMedia Marketing from 15 May 2009 to 21 May 2010, then it was cancelled. [9] Its sole director and shareholder was Mr Ross Thorsby Grant. Marks evidence was that he had no involvement with that company.
[9]Exhibit P8.
Marks first met the Thompsons in or around July 2009 at the Howe Parade Address. The Thompsons claim that there was another person present at the meeting, whom Marks introduced as his business partner. Marks disputed this stating he had no business partner at that time therefore there was no partner that could have attended that meeting. [10]
[10]Exhibit D5, 5
To resolve this conflict of evidence, I am assisted by a contemporaneous facsimile sent by Mr Thompsons to SME’s R US and headed ‘details requested’. That document read:
Att David/Steve
Please find reg + vin for vehicles & equipment as requested.[11]
[11]Exhibit P2, 322.
In my view, that document corroborates Mr Thompson’s evidence. It refers to a request having been made by David/Marks. Accordingly, taking into account the absence of evidence by Mrs Thompson, I nevertheless find there was another person at the meeting assisting Marks named David.
After the initial meeting in June 2009. Marks’ evidence is that the Thompsons agreed to Marks carrying out the following Scope of Works:
(a) dealing with their ATO tax debt and compliance issues such as BAS Lodgements;
(b) dealing with trade creditors of the Partnership;[12]
[12] The Thompsons operated a concreting business in partnership.
(c) dealing with secured equipment creditors of which there were approximately 10 equipment leases that were in default;
(d) attending to collection of delinquent debtors (these are discussed later under VCAT);
(e) assessing the Partnership Cashflow and budgetary needs;
(f) identifying new potential opportunities, threats and weaknesses of the business;
(g) review of the business’s terms and conditions to see if they could be strengthened;
(h) working out the exact cost of goods sold, so that they could ascertain if what the Business was charging to perform its work was sufficient enough to meet its debt and make a profit;
(i) preparing advice regarding all of the above matters; and
(j) consulting with the Thompsons as and when required.
Mr Thompson claims that the arrangement with SME’s R US was confined to matters related to bankruptcy, not business and personal financial affairs. To a large extent, I do not consider there was much difference between the two versions. Plainly, the Thompsons’ partnership and financial affairs were interlinked with potential bankruptcy. The objective documentation records that:
(a) the address for the Thompson partnership ATO correspondence changed to C/- SME’s R US at the Howe Parade Address from approximately August 2009;
(b) a new ABN for Mr Thompson was registered in or around 23 February 2010;
(c) some assistance was provided in relation to a dispute between the Thompsons and A&I Coatings and Mrs Thompson and the Australian Taxation Office; and
(d) creditor, debtor, asset and liability details were compiled.
There was a further conversation at the initial meeting about fees. Marks did not give evidence that the Thompsons agreed to Marks’ hourly rate. His evidence was that as a professional turnaround specialist, his hourly rate was $400 plus GST. Also, Marks provided no written quotation or retainer agreement setting out the hourly rate of his staff.
Marks’ evidence was that:
I based my quotation for performing the Initial Scope of Work, on my past experience in handling such matters. I therefore came up with a fee proposal of $25,000 (plus GST) (Original Fee). I spoke to Niall Thompson and told him my fees would be $25,000 plus GST based on the scope of works we had discussed. He said to me that he agreed to the Original Fee, however he and his wife did not have the funds to pay that up front in a lump sum due to liquidity issues. I was mindful of the Thompson’s situation and therefore, I gave the Thompsons the option for me to provide the services and I would take security for the $27,500, being a mortgage over their property. Mr Thompson said to me that was fair, and he and his wife agreed to grant the mortgage. I told Mr Thompson that he would have to pay the $27,500 plus interest in two years’ time, which is how long I expected it would take the Thompsons to get over their financial difficulties. I also told him that they could pay monthly instalments if they wished, in order to reduce the principal and, therefore, total interest. [13]
[13]Exhibit D5, 13.
Mr Thompson disagreed that the price discussed was $27,500. He gave evidence as follows:
I asked [Marks] how much this was going to cost. Steve told me that the fees were $20,000. I told Steve that I could not pay that amount straight away. Steve said, that was ok, and he would just put a caveat on our property until the fees were paid. He also said that would make it look good for us if someone tried to seize our house. Marie and I both signed a document that we believe allowed Steve to put the caveat on our property. I specifically recall only signing one document at the meeting and it was not a mortgage document. [14]
[14]Exhibit P3, 16.
As set out further below, the contemporaneous documents from July to October 2009 contained discrepancies as to the agreed fee.
On 14 July 2009, a title search of the Thompsons’ property was obtained.[15]
[15]Exhibit P2, 88.
On or around 14 July 2009, Marks’ evidence was that the Thompsons attended the office at 36 Park Street, South Melbourne. The Thompsons signed a document entitled “Disbursement Authority”. This document read:
DISBURSEMENT AUTHORITY
We Niall Robert Thompson and Marie Josephine Thompson hereby authorise Steve Marks to disburse the amount of $27,500 (inc GST) as per out instructions below.
1. SME’s R Us $27,500. [16]
[16]Exhibit P2, 89.
On the same date, the Thompsons signed a document headed “Business Purpose Declaration”. That document provided:
We declare that the credit to be provided to us by the credit provider is to be applied wholly, or predominantly for business purposes...
IMPORTANT
You should not sign this declaration unless this loan is wholly or predominantly for business purposes. By signing this declaration you may lose protection under the Consumer Credit Code. [17]
[17]Exhibit P2, B90.
There were also two undated mortgages signed by the Thompsons (July Mortgages).[18] Marks evidence was that the documents were prepared by an employee of SME’s R US, Ms Mevanthi Batepola (Batepola). The principal sum recorded on each was $27,500. The principal sum was to be repaid 2 years from the date of the mortgage. Ultimately, the July Mortgages were not registered.
[18]Exhibit P2, 107 - 110.
Marks’ evidence was that after the Thompsons signed the July Mortgages, his office wrote to them setting out the agreed terms of the mortgage.[19] Marks produced two letters on SME’s R US letterhead, dated 1 and 10 September 2009 respectively. Both letters bore the Australian Company Number (ACN) and business address of MultiMedia Marketing. Marks believed that only the letter of 10 September 2009 was sent. That letter read:
Dear Sir,
[19]Exhibit D5, 17.
MONTHLY PAYMENTS
We write with reference to the above.
Please see details below in relation to your payments.
Pursuant to the mortgage you are required to pay $343.75 per month starting from 15/09/2009.
Accordingly, please find below our bank details.
Name of Bank: Westpac
Name of Account: SME’s R US
BSB: 033-018
Account No: 24 – 0556. [20]
(emphasis added)
[20]Exhibit P2, 93, 95.
The letters advised Mr Thompson that he was required to pay $343.75 per month starting from 15 September 2009. Mr Thompson made payments of $343.75 to SME’s R US on 15 September 2009, 15 October 2009, 15 November 2009 and 16 December 2009.
Marks’ evidence was that the figure of $343.75 was the 15% annual interest payment on $27,500. Why the interest was not calculated on $50,000, given the Mortgage was executed on 15 August 2009 was unclear. Marks’ evidence was that these monies were received into his personal bank account. In cross-examination, Marks disagreed that MultiMedia Marketing used the business name SME’s R US.
Approximately 8 weeks after the initial meeting, Marks said he provided the Thompsons with an updated fee and scope of works. Marks stated in his evidence:
After I commenced the Initial Scope of Works, it became apparent that the sheer amount of work that was required to be done on the Thompson matters far exceeded that of the Initial Scope of Works…
Accordingly, I was required to provide the Thompsons with an updated scope of works which included:
a) dealing with a higher-than-expected number of creditors that totalled about 50 creditors in all;
b) dealing with faulty workmanship claims against the Business;
c) dealing with Business employee issues;
d) dealing with Mrs Thompson’s personal credit card debts;
e) trying to remove various credit defaults;
f) refinancing and trying to obtain capital injection from a lender; and
g) assess the risk of personal guarantees and the threat of bankruptcy.
Marks’ evidence was that:
My quote for the Final Scope of Works was an additional $25,000, as it contained approximately the same amount of work as the Initial Scope of Works. I explained this to the Thompsons about 8 weeks after they first engaged my Services, in about early-August 2009, and they agreed to the additional fee, totalling a further $25,000. The total they agreed to pay in fees was then $50,000 (Revised Fee) which included the Original Fee. They further agreed to increase the total of my security to $50,000. This $50,000 is inclusive of GST as I did not tell the Thompsons that I would charge GST on top of the $25,000. [21]
[21]Exhibit D5, 39, 41.
On 15 August 2009, the Thompsons executed the Mortgage. It was witnessed by Mr Brett Thompson, their son. Having signed the Mortgage, the Thompsons are bound by it. [22]
[22] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.
Marks’ evidence was that his office wrote to the Thompsons by letter dated 31 August 2009 summarising the details of the Mortgage. The 31 August 2009 letter provided:
Dear Niall & Maree
MORTGAGE ADVANCE FROM STEVE MARKS TO NIALL ROBERT AND MAREE JOSEPHINE THOMPSON
We write for and on behalf of Steve Marks in relation to his mortgage over 25 Thistle Street, Bendigo Vic 3550 (Vol9415/Fol045).
The terms of your new mortgage are as follows:
Principal Sum: $50,000
Rate of Interest: 15% per annum paid monthly in arrears.
This mortgage replaces the prior Mortgage of $27,500 as agreed due to the revised fee on account of the amount of work required. [23]
[23]Exhibit P2, 92.
This letter was on SME’s R Us letterhead. It also included the following:
Sent By: Fax/Mail
SME’s R Us P/L
A.C.N 141 480 499
ABN 33 764 231 750
36 Park Street South Melbourne. [24]
[24]Ibid.
Marks incorporated SME’s R US Pty Ltd on 14 January 2020. He was its director, secretary and sole shareholder on its creation.[25] In cross-examination, Marks was unable to provide responsive answer as to how the ACN for SME’s R US Pty Ltd came to be on the 31 August 2009 letter at a time when that company was not incorporated.
[25]Exhibit P8.
On 2 September 2009, Marks sent a letter to the Land Registry. It provided:
Dear Sir/Madam,
CAVEATS DATED 02/09/2009
We write with reference to the Caveats made by Steve Marks and enclose herewith the document for registration.
We have also enclosed herewith a cheque for $145.80 payable to the Land Registry Office being the payment for such registrations.
Accordingly, we would be grateful if you could register the above mentioned Caveats at your earliest. [26]
[26]Exhibit P2, 94.
The letter was sent on SME’s R US letter head and bore the ACN 121 366 738, a number referable to company known as People R US Pty Ltd.[27] Marks was not a director, shareholder or secretary of this company.
[27]Exhibit P8.
On 11 September 2009, SME’s R US lodged a caveat in favour of Marks as a mortgagee.[28] The date of the interest was 15 August 2009. The Caveat was lodged by SME’s R US at the Howe Parade Address.
[28]Exhibit P1, 59.
On 2 October 2009, a Mr David Ross wrote Marks an email headed ‘plant registry for Thompson’. It enclosed a spread sheet entitled “PLANT register.xlsx”. That email provided:
This is the best I can do with info provided to date. Next move? Have Doctor at 11.15? In after that. [29]
[29]Exhibit D1, 77.
The footer of that email was MultiMedia Marketing Pty Ltd. Marks forwarded the email on to ‘Mev [Batepola]’. On the footer of Marks’ email was “Steve Marks SME’s R US, 375 Howe Pde Port Melbourne”.
On 7 October 2009, Marks wrote to the Manager at Bendigo Bank Limited, the first mortgagee on the Thompsons’ property. He wrote:
Dear Sir,
MORTGAGE ADVANCE FROM STEVE MARKS TO NIALL ROBERT AND MARIE JOSEPHINE THOMPSON
We write for an on behalf of Steve Marks in relation to his mortgage over 25 Thistle Street Golden Square VIC 3555 (Vol 9415/Fol045)
The terms of the mortgage are as follows.
Principal sum: $27,500
Rate of Interest: 15% per annum paid monthly in arrears.
Can you please confirm that you will consent to the second Mortgage and endorse it with an ‘order to register’?
Can you also please confirm your fee consenting to our client’s mortgage and the cost for producing the Certificate off Title at the LTO for registration of our client’s mortgage?
We await your early reply. [30]
[30]Exhibit P2, 96.
This letter was on SME’s R US letterhead. It bore the ACN 121 366 738, a number registered to People R US Pty Ltd.[31] Why the letter referred to a principal sum of $27,500, when the Mortgage had been executed was unclear.
[31]Exhibit P8.
On 14 January 2010, Marks incorporated his business into SME’s R US Pty Ltd.[32] His evidence was that he continued to conduct similar types of services through that entity to other clients. Notwithstanding this incorporation, Marks maintains that he continued to carry out the works for the Thompsons as a sole trader, under the business name SME’s R US.
[32]Exhibit D5, 5.
The SME’s R US business name remained in MultiMedia Marketing until 21 May 2010, then it was cancelled.[33] MultiMedia Marketing was deregistered on 6 September 2010.
[33]Exhibit P1, 58.
On 15 April 2010, Mr Thompson wrote an email to Batepola confirming he wished to proceed with bankruptcy. [34] Marks explained the assistance his office provided to Mr Thompson in relation to Mr Thompson’s bankruptcy:
Mr Thompson provided my office with all information required for his statement of affairs (“SOA”). One or two of my staff members collated the information to hand over to the trustee. Mr Thompson signed the SOA it was lodged with ITSA. His initial SOA was rejected by ITSA because it lacked some details. ITSA wrote directly to Mr Thompson on 21 June 2010, who returned his SOA advising him that it had to be resubmitted. [35]
[34]Exhibit P2, 112.
[35]Exhibit D5, 69.
On 28 May 2010, Marks’ evidence was that he issued a cheque drawn from his own funds to the Bankrupt Estate of Niall Thompson. [36] The cheque was in evidence. The drawer of the cheque was, in fact, SME’s R US Pty Ltd atf SME’s R US Trust.
[36]Ibid, 70.
Ultimately, Mr Thompson entered bankruptcy on 12 July 2010. His first trustee was Mr Robert Cole, who passed away shortly after his appointment. The second trustee appointed was Mr Norman Jones (Jones). Jones gave evidence for the Thompsons. I did not consider his evidence was relevant to the issues in dispute between the parties.
Numerous documents were prepared as part of Mr Thompson’s bankruptcy and produced as evidence in this proceeding. The Statement of Affairs, signed by Mr Thompson on 9 July 2010, provided as Secured Creditor No.2:
Steve Marks, 36 Park Street, South Melbourne $42,500. [37]
[37]Exhibit P1, 39.
SME’s R US was recorded as unsecured creditor no 5, at $36,500. [38] The nature of the debt was described as ‘Guarantee’.
[38]Exhibit P1, 41.
In cross-examination, Marks agreed the amounts of $36,500 and $42,500 were inconsistent with the Disbursement Authority, the July Mortgages and the Mortgage.
An earlier draft of the Statement of Affairs described Marks as a secured creditor no.2, being owed $27,500 pursuant to a mortgage in 2009. [39]
[39]Exhibit P2, 286-305.
A list of creditors was prepared by Robert M H Cole & Co as at 4 November 2010. It records:
Steve Marks 36 Park Street, South Melbourne VIC 3205 $42,500
Security Given: House Mortgage
Date Given: 30/12/1899
Steve Marks SME’s R US
36 Park Street, South Melbourne, VIC, 3205 $36,500. [40]
[40]Exhibit P1, 32.
In cross-examination, Marks was taken to a spreadsheet relating to the Thompsons (Spreadsheet). [41] Marks’ evidence was that it had been prepared by him or one or his staff. The spreadsheet recorded 4 columns: Amount, Date Advanced, Interest Rate, and Monthly Payment.
[41]Exhibit P2, 217.
The Spreadsheet recorded that an amount of $50,000 was advanced on 7 October 2009 with an interest rate of 15% per annum. The monthly repayment was $625.
Marks’ evidence was that no such advance was ever made. He agreed that the original date of the Mortgage was 7 October 2009, but that it had been crossed out and replaced with 15 August 2009.
On 10 February 2011, Batepola wrote to the Manager at the Bendigo Bank. That letter was on SME’s R US letterhead and bore the ACN of SME’s R US Pty Ltd. It provided:
MORTGAGE ADVANCE FROM STEVE MARKS TO NIALL ROBERT AND MARIE JOSEPHINE THOMPSON
We write for and on behalf of Steve Marks in relation to his mortgage over 25 Thistle Street Golden Square VIC 3555 (Vol 9415/Fol 045)
The terms of the mortgage are as follows:
Principal sum: $50,000.00
Rate of interest: 15% per annum paid monthly in arrears
Can you please confirm that you will consent to the second Mortgage and endorse it with an ‘order to register”?
Can you also please confirm your fee consenting to our client’s mortgage and the cost for producing the Certificate of Title at the LTO for registration of our client’s mortgage?
We have enclosed herewith a copy of your mortgage for your reference. [42]
[42]Exhibit P2, 97.
By letter dated 21 March 2011, the Bendigo Bank advised that it was unable to consent to the Mortgage. [43]
[43]Exhibit P2, 100.
On 6 April 2011, Marks wrote an email entitled ‘Various mortgages’ to Clare Jordan, lawyer at JBT Lawyers and others. It read:
Hi Clare,
We have a number of mortgages we are trying to get registered, all don’t have consent from the first mortgagee, but they are happy to make the title available!
These include:
CLA to Thompson
Barnes (could be under another name, MeV to check) to Filip
Mojo to Sarton Holdings
I think there may be one or two more, MeV will confirm.
We really need to get these registered, do we have a solution yet?
They are becoming increasingly urgent. [44]
[44]Exhibit P2, 106
On 13 April 2011, Ms Clare Jordan wrote an email to Batepola entitled “10058: CLA to Thompson” which stated:
Hi Mev,
We don’t have any instructions in relation to the Thompson mortgage. Please provide a copy of the mortgage and the title details. [45]
[45]Exhibit P2, 105.
Batepola responded as follows:
Hi Clare,
I have attached herewith a copy of the mortgage, the latest title search and the letter we received from Bendigo Bank for your perusal.
Please note that Steve hasn’t signed the mortgage document. I will forward you a signed copy as soon as possible.
Let me know if you need any other details from us. [46]
[46]Ibid.
There was no evidence as to what “CLA” referred to.
On 19 October 2011, the Bendigo Bank advised that the certificate of title would be made available. [47] The Mortgage was registered on title on 28 October 2011. [48]
[47]Exhibit P2, 104.
[48]Exhibit P1, 64.
Mrs Thompson entered bankruptcy on 18 November 2011. Her bankruptcy trustee was Mr Phillip Aggs of Robson Cotter Insolvency Group (Robson Cotter). Mrs Thompson signed her Debtor’s Petition[49] and Statement of Affairs[50] on 16 November 2011. Her Statement of Affairs records Marks as secured creditor no.2 in the sum of $50,000.
[49]Exhibit P2, 152-153.
[50]Exhibit P2, 154-173.
A document entitled ‘THOMAR – Bankrupt Estate of Maree Josephine Thompson Annexure A’ records SME’s R US as a secured creditor for $50,000. [51]
[51]Exhibit P2, 189.
On or around 27 March 2013, Mr Bill Cotter (Cotter) of Robson Cotter wrote to Ms Samantha Toffoletti (Toffoletti) of SME’s R US Pty Ltd regarding a potential purchase of Mrs Thompson’s equity in the property. He wrote:
Sam, see Thompson calculations as discussed. Offer really needs to be at $15K minimum. The value is based on 2 recognised local agent appraisals. Instalments our remaining period of bankruptcy can be considered.
As discussed also need to see evidence of the original 2009 loan by Steve. [52]
[52]Exhibit P2, 218.
The calculations performed by Cotter referred to a ‘Steve Marks Mortgage’ in the sum of $70,000. Mrs Thompson’s equity was calculated at $14,933.81.
On 1 August 2013, Toffoletti instructed Countrywide Valuers to prepare a valuation of the property. The Thompsons paid the fee of $550 as requested.
On 12 August 2014, Cotter wrote to Toffoletti following up a potential purchase of Mrs Thompson’s equity. After some further follow-up emails, Toffoletti reverted to Cotter as follows:
Hi Bill,
Sorry it’s taken a while to get back to you on this. Maree Thomas [sic] can make an offer of $3,000 to the bankrupt estate. She will need to borrow this from her son and, this is the maximum she would be able to offer. Please let me know if this is acceptable. [53]
[53]Exhibit P2, 222.
Toffoletti increased the offer to $3,500 on 13 October 2014.
Cotter responded on 22 October 2014. He said:
Sam, I note the offer, thank you. As previously discussed and requested in order for us to consider and accept the offer we require some evidence of why it should be acceptable when or analysts (which was originally prepared some time ago) reveals the equity may be in the range of $13K to $16.5K. Our analysis is attached for your assistance.
I.e. do you have a different appraisal or valuation figure you can provide us with evidence of? Or, do you have updated Mortgage payout figures for either the Bendigo or Steve Marks mortgages? If you can provide evidence of these we may then be able to adjust our original equity model and conclude that the offer of $3,500 is in fact reasonable and accept same and be done with this. [54]
[54]Exhibit P2, 219 – 224.
On 4 December 2014, Robson Cotter wrote to Mr Thompson advising that he accepted Mr Thompson’s offer to purchase Mrs Thompson’s equity in the property for $5,000. Such sum was ultimately paid.
The Thompsons were automatically discharged from bankruptcy. In 2019, the Thompsons learned about the Mortgage while seeking to refinance. On 22 January 2021, Marks sent a Letter of Demand and Notice to Pay seeking the sum of $274,378.38. Thereafter, in 2021 these proceedings were commenced.
The Mortgage
The Mortgage was in the following terms:
The mortgagor mortgages to the mortgagee the estate and interest specified in the land described subject to the encumbrances affecting the land including any created by dealings lodged for registration before the lodging of this mortgage. This mortgage is given in consideration of and to better secure the principal sum lent or agreed to be lent to the mortgagor by the mortgagee.
Land: (volume and folio reference) VOL 9415 FOL 045
Estate and Interest being mortgage: All my estate in fee simple
Mortgagor: NIALL ROBERT THOMPSON AND MARIE JOSPHINE THOMPSON
Mortgagee: STEVE MARKS of 1 Orion Mews, Port Melbourne VIC 3207
Principal sum: $50,000
How and when principal sum is to be repaid:
In one lump sum repayable five years from the date of this mortgage
Rate of Interest and how payable:
The rate of 15% per annum to be paid monthly in arrears.
Date of this Mortgage:
7th October 200915th August 2009
The provisions contained in the Memorandum of Common Provisions retained by the Registrar of Titles in Number AA689 are incorporated in this mortgage.
Covenants
The mortgagor covenants with the mortgagee as follows:-
1. To pay the principal sum in the manner and at the time specified.
2. To pay the mortgagee so long as the principal sum or any part shall remain unpaid interest on the sum or on so much as for the time being remains unpaid at the rate and in the manner and at the specified time.
However, where no interest is payable on the moneys secured the covenants relating to interest implied by Section 75(a) of the Transfer of Land Act 1958 are expressly excluded. [55]
[55]Exhibit P1, 64 -65.
The memorandum was not annexed to the mortgage. It was lodged with the Registrar of Tiles pursuant to s 91A of the Transfer of Land Act 1958 (Vic) and was incorporated in the mortgage by s 91B.
Relevant provisions of the Memorandum of Common Provisions (MCP) are as follows:
(a) the Mortgagor shall pay to the Mortgagee at the time or times agreed upon… the moneys hereby secured (which expression is defined in Clause 31)
(b) the Mortgagor shall pay to the Mortgagee on the due date described in the Schedule the amount outstanding of the principal moneys secured (which expression is defined in Clause 31)
(c) “moneys hereby secured” means the principal moneys secured and each and all sums of money in which the Mortgagor may now or hereafter be indebted or liable or contingently indebted or liable to the Mortgagee in any manner or on any account whatever including interest, whether capitalised as provided in Clause 6(2) or not, except such moneys (if any) as the parties in writing agree do not form part of the moneys hereby secured;
(d) “principal moneys secured” means
(i) the Advance
(ii) any further advances made by the Mortgagee to the Mortgagor (in the discretion of the Mortgagee) as part of the principal moneys secured;
(iii) all other moneys payable by the Mortgagor to the Mortgagee which pursuant to the terms of this Mortgage are to be part of the principal moneys secured.
(e) “Advance” means the amount of the advance set out in the Schedule. [56]
[56]Exhibit D3.
What is secured by the Mortgage?
A mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given.[57]
[57]Bevham Investments Pty Ltd v Belgot Pty Ltd (1982) 149 CLR 494, 499.
The features necessary to constitute a mortgage are threefold:
first, there must be a promise by the alleged mortgagor to repay money to the alleged mortgagee or to perform some other obligation; secondly, as security for repayment of such moneys or performance of such obligation, the alleged mortgagor must transfer or assign his estate and interest in property, real or personal, to the mortgagee absolutely; thirdly, to distinguish between an absolute transfer of title and a mortgage, the transfer or assignment must, in order to constitute a mortgage, the be subject to a proviso that if and when the alleged mortgagor makes repayment or performs the obligation imposed upon him, the alleged mortgagee will retransfer or reassign the property to the alleged mortgagor. [58]
[58]Waldron v Bird [1974] VR 497, 501.
The determination of what is secured by a mortgage will depend on a proper construction of its specific covenants.
The starting point for the construction is to look at the language used, not just to the particular words in question but at the whole of the instrument, to gather the intention of the parties. The words actually used must also be construed in light of the surrounding circumstances, such circumstances being proved by recitals (if any), or by extrinsic evidence.[59]
[59]McVeigh v National Australia Bank Ltd (2000) 278 ALR 429, 29 (Finkelstein J).
The Mortgage was given in consideration of and to better secure the ‘principal sum lent or agreed to be lent’ to Thompsons by Marks. The principal sum was $50,000 to be repaid in one lump sum five years from the date of the Mortgage. Interest charged was at a rate of 15% per annum, payable in monthly arrears.
The consideration clause in the Mortgage is relevant but not determinative in construing a mortgagor’s obligation under a mortgage.[60]
[60]Ibid, 65 (Kenny J).
Further, as a commercial contract, the Court should give the Mortgage a commercial interpretation. Put another way, a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.
Ordinarily, a mortgage would be accompanied by a loan agreement, or some other document evidencing a mortgagor’s indebtedness. Here, Marks relies upon the following matters:
(a) the Thompsons agreed to pay a fixed fee of $50,000 for Mark’s services in relation to the Thompsons’ business and personal affairs, which fee was to be secured by Mortgage;
(b) the services were provided in the period from June 2009 to at least August 2012;
(c) the Thompsons executed a mortgage to secure payment of the agreed $50,000 and pay interest at 15% per annum; and
(d) the Thompsons have failed to pay the $50,000 principal or any interest thereon. [61]
(Marks Agreement)
[61]Defendant’s Outline of Closing Submissions, 3.
On a first reading, the terms of the Mortgage do not sit easily alongside the Marks Agreement. The terms of the Mortgage provide for a principal sum, not an indebtedness created by works being performed. In its ordinary meaning, a principal sum means an amount of money lent, upon which interest may be payable. The consideration recital also suggests that Marks lent or agreed to lend the Thompsons $50,000.
However, Marks’ evidence was that he did not lend a principal sum to the Thompsons. Further, there was no evidence that the Thompsons owed Marks a debt of $50,000 as at 15 August 2009 or any other amount. No invoices recording the Thompson’s indebtedness at any time were produced by Marks. Notwithstanding this, the terms of the Mortgage included interest payable on $50,000 from 15 August 2009.
For those reasons, I am not satisfied that the alleged indebtedness said to be created by the Marks Agreement is secured by repayment of the ‘principal sum’ as set out in the Mortgage.
However, the MCP contained further terms, namely, an obligation for the Thompsons to pay to Marks the ‘moneys hereby secured’. That definition includes the ‘principal moneys secured’ as well as:
‘each and all sums of money in which the [Thompsons] may now or hereafter be indebted or liable, or contingently indebted or liable to [Marks] in any manner, or on any account whatever’.[62]
[62]Exhibit D3.
Even though there was no actual principal sum provided, in my view, the potential indebtedness under the Marks Agreement falls within the definition of ‘moneys hereby secured’ under the MCP. This definition is broad enough to secure payment of debts incurred by the Thompsons for any services or future services carried out by Marks.
Contracting Parties
The next question is whether there is a debt owed to Marks which is secured by the Mortgage. In this regard, Marks submits the Mortgage is evidence of the agreement for the Thompsons to pay him $50,000 for services carried out by him.
On this point, the Thompsons submit that they entered an agreement with whichever entity was SME’s R US. Marks submits he was trading as SME’s R US.
Accordingly, the Court must determine the identity of the contracting parties for the purposes of ascertaining whether there are any ‘moneys hereby secured’ under the Mortgage.
In Lederberger v Mediterranean Olives Financial Pty Ltd, the Court of Appeal set out the following applicable legal principles to identifying the parties to a contract:
Identification of the parties to a contract must be made in accordance with the objective theory of contract. That is the intention that a reasonable person, with knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of surrounding circumstances, would conclude that the parties had.
The process of construction requires consideration not only of the text of the documents, but also the surrounding circumstances known to the parties and the purpose and object of the transaction. This in turn presupposes knowledge of the genesis of the transaction, the background, and the context in which the parties are operating. [63]
[63](2012) 38 VR 509, 52 - 53.
Marks’ Counterclaim particularises the agreement with the Thompsons as written, evidenced by the Mortgage. In his further and better particulars of defence, the agreement is characterised as partly written and partly oral. It provides the following particulars:
It was agreed that [Marks], Samantha [Toffoletti] and SME’s R US P/L would take on their job for an agreed lump sum fee of $50,000, but as they did not have the funds, that they would grant [Marks] (who was the owner of SME’s R US) a mortgage over their property to secure their fees. [Marks] explained that he could only do this a few times a year as he needed paying clients to pay the bills and pay for the staff, but that [Marks] treated these mortgages as his superannuation for later on in life, and they understood this. [64]
[64]Exhibit P1, 15 at 3(b).
I consider the Marks Agreement was partly oral and partly in writing. As I have set out earlier, Marks relies on conversations with Thompsons and oral evidence to establish the Marks Agreement.
Parties Submissions on Contracting Parties
Marks’ submitted that he was carrying on business using the name SME’s R US in June or July 2009 when he met the Thompsons and was engaged by them to carry out work. Further, Marks submits that there is no evidence before the Court that:
(a) the Thompsons were aware that SME’s R US was registered to MultiMedia Marketing in 2009; or
(b) MultiMedia Marketing was carrying on the business under the name SME’s R US.
Reliance was placed upon Dennis Pethybridge v Stedikas Holdings Pty Ltd, where the New South Wales Court of Appeal said:
In Aikman v Brown (Trading as Capital Travel Service) (1973) 1 ACTR 121 the plaintiff had attended a travel agency business conducted under the name of Capital Travel Service, and paid for some air tickets. That business was in fact conducted by a company that, by the time of the trial, had gone into liquidation. The registered proprietor of the business name was the defendant who was an employee of that company, but did not carry on the business in his own right. The defendant was one of the employees with whom the plaintiff had dealt, and to whom she had paid part of the price of the air tickets. The plaintiff did not receive any air tickets, and sued the defendant to recover the money she had paid. The plaintiff gave no evidence of knowing about, or relying upon, the registration of the defendant as proprietor of the business name. Fox J following Press v Mathers and Re Johnson & Anor held, that the action failed. He said, at 123:
There is no provision which says that the person in whose name a business name is registered shall be deemed to be carrying on the business registered under that name or may be sued in respect of dealings of the business. Doubtless his application for registration will be strong evidence against him that he was an owner of the business at the time of the application, and the Certificate of Registration is prima facie evidence against him, but proof may be given that the fact was otherwise.
These cases establish that, in circumstances where the registered proprietor of a business name is not in fact carrying on the business that is carried on under that name, and has not conferred an actual or ostensible authority on the person who is actually conducting the business to act on his behalf, a person who enters a contract with whoever it might be that is carrying on business under the business name does not contract with the registered proprietor of the business name.[65]
[65]Dennis Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154, 38 – 39.
As to the September and October 2009 correspondence, Marks was unable to provide an explanation in relation to the discrepancies noted therein. However, he submitted that the correspondence was of little evidentiary value.
The Thompsons submitted that the circumstances showed that the contracting parties were Multimedia Marketing and the Thompsons:
(a) there was no evidence at the relevant time the Registrar of the Australian Business Register recorded SME’s R US as an unregistered name used by Marks for business purposes;
(b) on 28 April 2009, the principal place of business of MultiMedia Marketing was registered as the Howe Parade Address;
(c) on 15 May 2009, SME’s R US was registered to MultiMedia Marketing;
(d) the initial conference in June or July 2009 between Marks and the Thompsons took place at MultiMedia Marketing’s principal place of business;
(e) Marks did not provide the Thompsons with a written quotation of fees, a written description of the work to be performed or a written description of the terms of engagement;
(f) the initial correspondence from SME’s R US to the Thompsons was by letter dated 10 September 2009 which bore the ACN of MultiMedia Marketing and was written by Marks.
Determination – Contracting Parties
To determine this issue, it is relevant to establish who was carrying on business under the name SME’s R US. The Court must objectively consider all the circumstances, including both the oral and documentary evidence.
As the party alleging the agreement creating the indebtedness, Marks has the legal onus of proving that he and the Thompsons were the parties to the Marks Agreement and/or he was trading under SME’s R US. [66]
Events before 15 August 2009
[66]Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, 26.
The background and surrounding circumstances to the Marks Agreement were as follows. Mr Thompson spoke to Marks after seeing an advertisement for SME’s R US’s services. At that time, SME’s R US was a business name registered to Multimedia Marketing. The initial meeting in June 2009 was conducted at the Howe Parade Address, the principal place of business of Multimedia Marketing.
At the initial meeting, the Thompsons spoke with Marks and another person, David, introduced by Marks as his business partner.
On or around 27 July 2009, Mr Thompson also sent a facsimile addressed to SME’s R US, attention David/Steve. This is objective evidence that any agreement was between the Thompsons and SME’s R US.
On or around 14 July 2009, the Thompsons signed the Disbursement Authority. On its face, the Disbursement Authority, authorised Marks to pay SME’s R US $27,500. At that time, SME’s R US was registered to Multimedia Marketing. There is no evidence that Marks ever paid $27,500 on behalf of the Thompsons or lent them that sum. Adopting a commercial reading, that document tends to suggest that Marks and SME’s R US were distinct entities. The Business Purpose Declaration also referred to a ‘loan’, not an agreement for work.
Against that, Marks’ evidence was that he was a sole trader using the SME’s R US business name. Marks’ oral evidence was that the Thompsons agreed to retain his services, pay him $27,500 and grant him a mortgage. This amount was an estimate based on Marks’ prior experience. It was not evidenced in any invoice or retainer whereby the Thompsons agreed to pay for work being performed at specified hourly rates.
The July 2009 Mortgages and Marks’ oral evidence suggest an agreement between the Thompsons and Marks.
Marks’ further oral evidence was that in or around August 2009 the Thompsons agreed to an additional fee of $25,000 and a total fee of $50,000. His evidence was that the Thompsons further agreed to increase the security to $50,000. The Thompsons executed the Mortgage on 15 August 2009 which recorded a principal sum of $50,000. Plainly, that is evidence that suggests an agreement between Marks and the Thompsons.
Conduct Post 15 August 2009
There are also numerous relevant documents that post-date the Mortgage. As to the admissibility of post-contractual conduct, Leeming JA said the following in BH Australian Constructions Pty Ltd v Kapeller:
The non-written components of a contract which is not wholly in writing give rise to questions of primary fact, which are capable of being proven in the usual way, including by conduct after the event which bears on those matters. An admission after the event may be powerful evidence supportive of a particular aspect of a contract. Indeed Stephenson LJ said for the Court of Appeal in Mears v Safecar Security Ltd [1983] QB 54 at 77 that:
“Common sense suggests that [the parties] subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, thought it is not evidence of what any written terms mean…”. [67]
[67](2019) 100 NSWLR 367, 69. Approved in Fazio v Fazio [2012] WASCA 72, 192 - 195; IMO Centura Global Holdings Pty Ltd (2016) 111 ACSR 184, 64.
The correspondence after the Mortgage contained some irregularities. These irregularities were largely unexplained by Marks, despite him being recorded as the author of the correspondence. The height of Marks’ evidence was that some of the letters had been sent out of sequence.
On 31 August 2009, Marks wrote to the Thompsons about the Mortgage on SME’s R US letterhead. The letter also contained the ACN for SME’s R US Pty Ltd, a company not yet incorporated. In those circumstances, I do not place any weight on the letter’s contents as accurately recording the events that had taken place.
On 2 September 2009, Marks wrote a letter on SME’s R US letterhead to the Land Registry about the Marks’ Caveat. That letter bore the ACN of People R US Pty Ltd and the Howe Parade Address. Marks’ Caveat recorded an interest as mortgagee dated 15 August 2009. The Caveat was lodged by SME’s R US with notices to the Howe Parade address. Why the People R US Pty Ltd’s ACN was on SME’s R US letterhead was not explained by Marks.
On 10 September 2009, Marks wrote a letter to the Thompsons setting out the agreed terms of the July Mortgages. That letter bore the ACN of Multimedia Marketing and was on SME’s R US letterhead, suggesting that MultiMedia Marketing also traded under that name. Reference was made to ‘monthly payments’ pursuant to the mortgage of $343.75 starting from 15/09/2009. This was the interest repayment on $27,500, even though the Mortgage was for $50,000. Further, the letter provided ‘our’ (MultiMedia Marketing’s) bank details and the Howe Parade Address. In fact, it was Marks personal bank account.
As this letter was the first correspondence after the alleged Mortgage and Marks Agreement, I consider it is important evidence. It did not refer to Marks trading as SME’s R US. Instead, the correspondence was on SME’s R US letterhead, bore the ACN and business address of MultiMedia Marketing, referred to interest payments on a $27,500 and purportedly set out MultiMedia Marketing’s bank account. Further, the letter does not refer to any agreement with, or mortgage to, Marks. In the circumstances, I do not consider this letter supports a conclusion that Marks traded under the business name SME’s R US. Rather, it suggests that MultiMedia Marketing was using the business name.
On 2 October 2009, a Mr David Ross wrote an email to Marks regarding work he had carried out in relation to the Thompsons’ plant registry. [68] Mr Ross’s email signature was MultiMedia Marketing. That email indicated that Mr Ross would be ‘in after [11.15]’. At that time, MultiMedia Marketing’s principal place of business was the Howe Parade Address.
[68]Exhibit D1, 77.
Marks’ email of 2 October 2009 contained the SME’s R US business name, also located at the Howe Parade Address. I consider the 2 October 2009 email chain to be evidence that MultiMedia Marketing was also trading under the SME’s R US business name shortly thereafter the Mortgage.
On 7 October 2009, Marks wrote to the Manager at the Bendigo Bank. The subject line of the letter referred to a “Mortgage advance from Steve Marks to Niall Robert and Marie Josephine Thompson”. As set out above, there was no such mortgage advance. The letter does refer to “Steve Marks’ mortgage“. However, the principal sum recorded was $27,500 and not $50,000. This letter was on SME’s R US letterhead and bore the ACN of People R US Pty Ltd.
On 10 February 2011, Batepola wrote to the Manger of the Bendigo Bank regarding Marks’ Mortgage. This letter was consistent with the Marks Agreement.
In my view, the above correspondence shows that shortly after the date when the Thompsons engaged ‘SME’s R US’, that business name was being utilised by at least two companies.[69] The only letter to refer to Marks Mortgage in the sum of $50,000 was in February 2011. Given this letter was approximately 18 months later, I consider it has less weight than the earlier correspondence.
[69]People R US Pty Ltd and MultiMedia Marketing Pty Ltd.
The 2 October 2009 email shows that Marks was using the SME’s R US business name. However, that email also recorded that Mr David Ross of MultiMedia Marketing had worked on the Thompsons’ matter and suggests SME’s R US worked out of the Howe Parade Address. These matters support the conclusion that MultiMedia Marketing was carrying on business under SME’s R US.
The fact that the Thompsons were unaware that the business name was registered to MultiMedia Marketing, does not, in my view, materially undermine that conclusion. I consider the contemporaneous documents written by Marks are the most probative evidence.
Marks placed further reliance upon the Thompsons Defence to Counterclaim which pleaded that ‘Mr Thompson now knows that this organisation was controlled and run by the defendant’. I do not consider such a pleading is particularly persuasive. The Court’s task remains to objectively assess the evidence as a whole.
Discrepancies continued in Mr Thompson’s bankruptcy documents (prepared by Marks’ office). Mr Thompson’s Statement of Affairs recorded Marks as Secured Creditor No. 2 in the sum of $42,500, not $50,000. Marks did not provide a reason for this discrepancy.
SME’s R US was recorded as unsecured creditor no. 5 for $36,500 in Mr Thompson’s Statement of Affairs. The nature of the debt was a ‘guarantee’. It remains unclear how Mr Thompson incurred a separate unsecured debt to SME’s R US at the time when Marks was purportedly providing services under that business name and only one agreement for services was contemplated by the parties.
Alternatively, this may be a reference to SME’s R US Pty Ltd, given the address provided was 35 Park Street South Melbourne. However, that would be evidence that the Thompsons were indebted to SME’s R US Pty Ltd for services it had provided from January 2010 to July 2010.
On 14 January 2010, Marks incorporated his business into SME’s R US Pty Ltd. The SME’s R US business name was not registered to that company, despite Marks incorporating his business into that entity. Marks submits that the incorporation of SME’s R US Pty Ltd was not material. It was Marks’ case that he contracted with the Thompsons, and he had an obligation to continue to provide the services even though the company was incorporated. Whether he arranged for those services to be provided by employees of SME’s R US Pty Ltd was a matter between him and that company. That did not change the contractual position as the obligation remained with Marks.
There is evidence that employees of SME’s R US Pty Ltd carried out work for the Thompsons. On 28 May 2010, SME’s R US Pty Ltd paid the bankrupt estate of Mr Thompson the sum of $2,000. Further evidence of work carried out by SME’s R US Pty Ltd included:
(a) collating and preparing the documents related to the Thompsons’ bankruptcy; and
(b) Toffoletti arranging a valuation of the Thompsons’ property and negotiating with Robert Cotter over the buyout of Mrs Thompson’s equity.
In my view there is insufficient evidence for the Court to conclude that the work carried out by employees of SME’s R US Pty Ltd was done in their capacity as agents of Marks trading as SME’s R US. Accordingly, I do not consider it is conduct evidencing an agreement between Marks and the Thompsons.
For the foregoing reasons, I do not consider that Marks has satisfied his onus of proving that he was trading under the SME’s R US business name in 2009. The oral evidence of Marks that he was using that business name together with the signed mortgages and Caveat provide some support for Marks’ conclusion. However, that evidence is equally contradicted by the correspondence and bankruptcy documents set out above.
After considering the totality of the evidence, the Court cannot be satisfied, on the balance of probabilities, that Marks was trading under the SME’s R US business name.
Agreed Fee
Given my finding as to the contracting parties, it is not strictly necessary to determine what fee was agreed. For the sake of completeness, my determination on is as follows.
Marks’ evidence was that there was an initial agreement that the fee would be $27,500, but after assessing the scope of work he informed the Thompsons that the fee would be $50,000, and they agreed to that.
Mr Thompson’s evidence was that only discussion of a fee was in the amount of $20,000 and that Marks would lodge a caveat on the Thompsons house until the fees were paid.
It was submitted that the documents conform to Marks’ case, and not the Thompsons’. Reference was made to the mortgage documents executed by the Thompsons, one for the amount of $27,500, and one for $50,000. It was also consistent with the Thompsons’ evidence that they agreed to provide security for the fees they could not pay. Further, in the absence of Mrs Thompson’s evidence, the Court should prefer Marks’ evidence.
I do not consider that the documents read in conjunction with the oral evidence support an agreed fee of $50,000. This is notwithstanding a principal sum of $50,000 being provided in the Mortgage. Such a conclusion is based on the following matters:
(a) the 10 September 2009 email to Mr Thompson included repayments calculated on $27,500 not $50,000;
(b) the 7 October 2009 email to the Manager of the Bendigo Bank requested consent to register a mortgage of $27,500 not $50,000;
(c) the Spreadsheet recorded the sum of $50,000 as advanced on 7 October 2009;
(d) the Mortgage originally bore the date 7 October 2009, which was replaced with 15 August 2009;
(e) an earlier draft of Mr Thompson’s Statement of Affairs recorded Marks as a secured creditor no.2 being owed $27,500; and
(f) Mr Thompson’s Statement of Affairs dated 9 July 2010 recorded Marks as a secured creditor for $42,500.
Given the effluxion of approximately 13 years from the events in question, I consider the contemporaneous documents are the most probative evidence. The one contemporaneous document (other than the Mortgage itself) recording the $50,000 loan was the letter of 31 August 2009. As stated above, I do not accept its contents. In respect of the 10 February 2011 letter and Mrs Thompson’s Statement of Affairs, I place more weight on the documents contemporaneous to the alleged agreement in 2009.
Conclusion
It follows that I consider there are no monies owing under the Mortgage. Accordingly, I will make orders on the Thompson’s Complaint and dismiss the Marks’ Counterclaim.
I will hear the parties on the questions of costs and any consequential orders.
MAGISTRATE GREENWAY
28 September 2022
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