Wang v Consortium Land Pty Ltd
[2000] WASC 265
•2 NOVEMBER 2000
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA |
| CITATION | : | WANG -v- CONSORTIUM LAND PTY LTD [2000] WASC 265 |
| CORAM | : ANDERSON J | ||
| HEARD | : 11-13 OCTOBER 2000 | ||
| DELIVERED | : 2 NOVEMBER 2000 | ||
| FILE NO/S |
| ||
| BETWEEN | : TEE HIAM WANG |
Plaintiff
AND
CONSORTIUM LAND PTY LTD
Defendant
Catchwords:
Money counts - Money lent - Claim for repayment - Proof of agreement for loan
- Sufficiency of evidence
Practice and procedure - Witness statements - Form - Statements to be in admissible form - Purpose of rules relating to use of written statements - Need to comply with basic rules of evidence
Legislation:
Nil
Result:
Claim dismissed
[2000] WASC 265
Representation:
Counsel:
| Plaintiff | : | Mr G M Abbott |
| Defendant | : | Mr M D Evans |
Solicitors:
| Plaintiff | : | MacKinlay & Co |
| Defendant | : | Corsers |
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Grant v John Grant & Sons Proprietary Limited (1954) 91 CLR 112
[2000] WASC 265
ANDERSON J
ANDERSON J: This is an action by a former director of the defendant for recovery of moneys said to have been loaned by him to the defendant in 1992. Before the plaintiff became involved with the defendant, it was a company which was wholly owned by Mr S J Hwang and his wife. They held the 1,000 issued shares. The company's main asset was a block of land in Malcolm Street, West Perth, suitable for development of a multistorey block of home units. Mr Hwang was interested in obtaining an equity partner and in late 1991 or early 1992, through intermediaries, he met and commenced discussion with the plaintiff. Both Mr Hwang and the plaintiff are Singaporean businessmen with interests in Western Australia. I am satisfied that discussions were held on the basis that the land in Malcolm Street should be valued at $1.5 million and that the company had no, or no significant, liabilities except for a debit balance in Mr Hwang's loan account. I am satisfied that an agreement was reached between the parties that the plaintiff would acquire a half-interest in the development project for the sum of $750,000 and that the plaintiff and Mr Hwang would arrange to provide the necessary finance to enable the development of the land by the construction of residential units, with the understanding that, on completion, the units would be sold at a profit. There was also an understanding between the two men that they would each, either personally or through corporate entities, obtain ownership of a penthouse unit in the development.
The arrangement was settled on 20 May 1992 in the offices of the defendants' solicitors Mallal & Co in Mount Lawley, Western Australia. The plaintiff gave two bank drafts to the company secretary, Mr Arrigoni, each made payable to the company, one for $500,000 and the other for $250,000.
There is a dispute as to how this manner of payment came about. I find that it was Mr Hwang's idea to split the payment into two. It was his idea, no doubt after taking accounting advice, that the ingoing of $750,000 agreed to be paid by the plaintiff should be split between the company and himself. $500,000 would be allocated to the subscription for new shares in the company to be issued to the plaintiff so as to equalise their respective shareholdings and $250,000 was to be paid to Mr Hwang personally. I am satisfied that it was initially agreed between them that the plaintiff would pay the $250,000 to Mr Hwang in Singapore and would pay the $500,000 to the company in Western Australia in return for the issue of shares. I am satisfied that the parties never intended that any part of the $750,000 was to be paid by way of a loan to the company, repayable on demand. There is no evidence that they ever discussed such an arrangement. The plaintiff frankly admitted in evidence
[2000] WASC 265
ANDERSON J
that he at all times understood that he was to make a capital payment totalling $750,000 for a half-share of "the project, the development" (t/s 76).
Pursuant to this arrangement, whilst the bank draft for $500,000 was correctly made payable to the company, the other draft referred to above - the draft for $250,000 - should have been made payable to Mr Hwang personally and not to the company. I accept the evidence of the company secretary, Mr Arrigoni, that, when the plaintiff handed over the drafts, Mr Arrigoni asked the plaintiff why both drafts were made payable to the company. I accept his evidence that the explanation given by the plaintiff was to the effect that that was how he had "structured" the payments and that he could not now cancel the $250,000 bank draft. The plaintiff did not say anything to the effect that the $250,000 was a loan or that there was any agreement to that effect. Mr Arrigoni took both bank drafts and arranged for the company to issue receipts.
How the company treated the payment of $250,000 and how the plaintiff reacted to the company's treatment of the payment supports the finding that it was intended to be a payment to Mr Hwang, not a loan to the company by the plaintiff. Mr Arrigoni drew up a receipt in the form of a letter of acknowledgment addressed to the plaintiff which was in the following terms:
"I hereby acknowledge receipt of a bank cheque drawn on the Overseas Union Bank Limited Singapore for $A250,000 being a directors advance to be credited to the loan account of Mr S J Hwang in the accounts of Consortium Land Pty Ltd.
Signed: R A Arrigoni Company Secretary."
The plaintiff must have appreciated that this receipt recorded the payment as a loan ("director's advance") by Mr Hwang to the company, not as a loan by the plaintiff to the company. On behalf of the plaintiff, it was submitted at trial that the express acknowledgment in the receipt that the payment was a "director's advance" means that it was a loan by the plaintiff to the company, but that is not what the receipt says when all of it is read. It is manifestly a receipt issued by the company for a payment by the plaintiff to the credit of Mr Hwang's loan account in the accounts of the company. That the payment was actually received from the plaintiff is neither here nor there. A payment by the plaintiff to the credit of
[2000] WASC 265
ANDERSON J
Mr Hwang's loan account is really a payment by the plaintiff to
Mr Hwang.
At no stage did the company treat the payment in its books as a loan by the plaintiff to the company. The uncontested evidence of Mr Arrigoni is that the $250,000 was, in fact, credited to Mr Hwang's loan account and ultimately paid by the company to Mr Hwang in discharge, or partial discharge, of the loan account. This is confirmed by the relevant entries in the books of account. See exhibit 47.
As to the conduct of the plaintiff, he did not dispute the correctness of the receipt and at no stage until early 1998 did the plaintiff make any claim to the effect that the $250,000 was a loan by him to the company. In the time between May 1992 and in early 1998 the plaintiff, in his capacity as a director of the company, saw and signed off company accounts which did not include the $250,000 as a liability to him. The plaintiff acknowledged in evidence that he always knew that the company's accounts did not at any time record that the $250,000 was a borrowing by the company repayable to him. The plaintiff admitted that at no stage until he made his demand in 1998 did he dispute the accuracy of the accounts of the company in this respect.
Therefore, not only is there no evidence of any arrangement to the effect that the $250,000 would be paid by the plaintiff to the company as a loan, the conduct of the parties thereafter is quite inconsistent with any such arrangement.
I have not overlooked the plaintiff's evidence in his written statement that when he asked Mr Hwang why he was to pay only $500,000 for the half-interest in the company, Mr Hwang:
"18 … explained that for its own internal accounting purposes, the defendant would require me to purchase the shares for $500,000.00 and that the remaining $250,000.00 would be a 'director's advance'. SJ said that this was to do with the accounts of the company and the way the defendant valued 69 Malcolm Street."
This evidence, even if accepted at face value, falls far short of establishing an agreement for a loan. In its terms, it is evidence of a vague and rather incomprehensible explanation by Mr Hwang of internal accounting arrangements proposed to be adopted by the company.
[2000] WASC 265
ANDERSON J
In my opinion, the plaintiff has failed to prove that he made a loan of $250,000 to the company as pleaded in the statement of claim and the action must be dismissed.
I cannot leave the case without expressing my concern regarding the written statements of evidence which were presented. They were not properly prepared. Much of the material in them was inadmissible or objectionable on one ground or another. No attempt was made to obtain rulings on the objections prior to trial, notwithstanding directions that this be done. So, a great deal of time was spent at trial dealing with objections and, in large measure, the objections were successful. In the case of the statement of the defendant's witness, Mr Lim, 22 of the 35 paragraphs were struck out, mostly on the grounds of relevance and hearsay. What was left of the statement was not probative of any contested fact. Mr Lim was sent away, do doubt wondering why he had been put to the trouble of making a statement and attending at trial. Twenty-six paragraphs were struck out of Mr Hwang's statement. Thirty paragraphs were struck out of Mr Arrigoni's statement. In both cases, portions of paragraphs were also struck out. Thirteen paragraphs in the plaintiff's statement were wholly or partially struck out.
I do not think it is an exaggeration to say that nearly as much time was spent in this trial hearing objections to the witness statements as was spent dealing with the rest of the case. Of course, this would not have been necessary if the objection process had taken place in accordance with the directions; that is, prior to trial. But also it would not have been necessary if the statements had been prepared with an appreciation of the basic rules of evidence. For example, it is trite that when a witness is called to give evidence of conversations said to have contractual effect, the witness should testify as to what was actually said. The distinction between evidence of what each of the parties said and evidence of the witness' conclusion as to the overall effect of the discussion is a distinction which it is just as important to appreciate in the compilation of written statements as it is in leading oral evidence. In a contract case, a statement which says "We agreed that … " could rarely survive challenge. Six important paragraphs of Mr Hwang's statement were struck out because they were in that fundamentally defective form.
The purpose of directing an exchange of witness statements and having the statements stand as the evidence-in-chief of the witness, is to facilitate the trial of the action. The objective is to improve the efficiency of trials, to reduce the cost of trials and to facilitate the adjudication of disputes. These objectives cannot be achieved unless solicitors bring a
[2000] WASC 265
ANDERSON J
reasonable degree of skill and diligence to the task of preparing witness
statements.
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