Westpac Banking Corporation v Hilliard

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 2127 of 2000

WESTPAC BANKING CORPORATION	Plaintiff
v
ROY CHARLES HILLIARD & ANOR	Defendants

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JUDGE:	HANSEN J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 August, 1, 4-8, 11-14, 18, 26-28 September 2006
DATE OF JUDGMENT:	6 December 2006
CASE MAY BE CITED AS:	Westpac Banking Corporation v Hilliard
MEDIUM NEUTRAL CITATION:	[2006] VSC 470

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Restitution – Money paid under a mistake – Bank paid cheques in ignorance of fact that proceeds were not for the benefit of account holders – Account holders’ bookkeeper received benefit of moneys - Bank subsequently compensated account holders pursuant to deed of settlement – Bank sued bookkeeper to recover money paid to account holders pursuant to deed of settlement – Right to recover – Unjust enrichment.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M A Dreyfus QC and Mr R D Strong	Mallesons Stephen Jaques
For the First Defendant	Mr P R Hayes QC and Mr D Masel	Rudstein Kron

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Deed of Settlement............................................................................................................................. 3

The pleadings..................................................................................................................................... 9

Statement of Claim..................................................................................................................... 9
Defence..................................................................................................................................... 16
Reply........................................................................................................................................ 19

Evidence............................................................................................................................................. 19

Some background matters - Mr Hilliard’s criminal proceedings and Mr Vizard’s

insider trading................................................................................................................................... 33

The trial.............................................................................................................................................. 37

Refusal of Mr Vizard to answer questions on the ground of self incrimination........................ 37
Mr Hilliard’s application for a permanent stay of the proceeding............................................. 39

The facts............................................................................................................................................. 40

Banking arrangements for the PAS Group.............................................................................. 53
Cheques signed by Mr Hilliard................................................................................................. 65
The acquisition and false recording of art in the Vizard Foundation........................................ 73
The loan account...................................................................................................................... 81
The facts, continued................................................................................................................. 86

Mr Hilliard’s evidence as to his arrangements with Mr Vizard.............................................. 88

How the case was put.................................................................................................................... 101

Mr Vizard......................................................................................................................................... 109

Mr Hilliard....................................................................................................................................... 117

Decision............................................................................................................................................ 118

HIS HONOUR:

Introduction

The plaintiff, Westpac Banking Corporation (“Westpac”) had two customers in its Private Bank section, Stephen William Vizard and his wife and their companies (collectively referred to as the “PAS Group”), and Roy Charles Hilliard (“the first defendant”) who worked as a bookkeeper for Mr Vizard and his companies between 29 July 1991 and about 12 October 2000. Following the cessation of his employment apparent financial irregularities were discovered in PAS Group companies which ultimately led Westpac to accept a claim by Mr Vizard and the PAS Group that it had met PAS Group cheques drawn by Mr Hilliard for amounts in excess of its relevant customer mandate and which were for the benefit of Mr Hilliard rather than for the benefit of the relevant PAS Group customer. In the result, on 19 December 2000 Westpac entered into a settlement agreement with the PAS Group pursuant to which, following investigation, it compensated the PAS Group amounts which including interest totalled $3,067,274.92. Westpac claims that sum from Mr Hilliard on the basis of money had and received, unjust enrichment, or damages. Mr Hilliard denies liability. As I refer below, the amount of $3,067,274.92 was calculated on a basis that differs from the basis of the claim as presented in this proceeding; the effect is to somewhat overstate the amount. I refer to the true basis of calculation of the claim at [38]-[42].

Initially there was a second defendant, Information Age Travel Pty Ltd which is referred to as “IAT”. The involvement of IAT arose in this way. Mr Hilliard and Christopher Graham Wood were the directors and shareholders of IAT which conducted a specialised travel agency business. In 1991, due to declining fortunes of the business as the result of the first Gulf War, it was necessary for Mr Hilliard to find other employment, which he did with Mr Vizard and the PAS Group. However he continued his bookkeeping, banking and financial statement functions for IAT. He thus retained a cheque book and controlled IAT’s bank account. Westpac’s case is that a number of the cheques drawn by Mr Hilliard on PAS Group accounts were payable to IAT and cleared to its bank account with the Australia and New Zealand Banking Group Limited (“ANZ”), but that the proceeds were not paid for, or applied to, the purposes of the PAS Group, or in the interest of the PAS Group account holder. The case is, in short, that Mr Hilliard turned the money paid to IAT to his benefit.

The case is that in the period of his employment Mr Hilliard stole just over $3M from the PAS Group, as to just over $2.5M by way of payments to IAT and the balance by payments to other parties for the benefit of Mr Hilliard. As mentioned below, the claim is confined to 61 cheques of a lesser aggregate amount.

On 14 August 2001 it was ordered by consent that IAT pay Westpac $1,686,036.29, and that there be no order as to costs. These orders were made pursuant to a Deed of Settlement dated 1 June 2001 between Westpac, Mr and Mrs Vizard and PAS Group companies, IAT, Mr Wood, and Dennis Turner who was an investigating accountant appointed by Westpac[1]. In consequence of the Deed and these orders IAT took no further part in the proceeding.
[1]Court Book 2470-2503.

The case turns on the application of the facts to established principles of law. A large amount of oral and documentary evidence was given, much of it not being contested. There were, however, significant issues of fact between Mr Vizard and Mr Hilliard each of whom was variously described by counsel as a liar and a thief and much other besides. Neither was a satisfactory witness, as I discuss below. Among the issues of fact arising are the following central issues, namely:

(a)Whether Mr Vizard authorised Westpac to pay cheques drawn by Mr Hilliard on PAS Group accounts for amounts greater than the relevant mandate held by Westpac?
(b)Whether an authority forwarded to Westpac on 2 February 1996 to pay cheques drawn by Mr Hilliard on PAS Group accounts for amounts greater than $50,000 was signed by Mr Vizard and thus authentic?
(c)Whether in 1992 Mr Vizard and Mr Hilliard made an arrangement, continued until June 2000, whereby Mr Hilliard would withdraw cash from IAT’s bank account and give it to Mr Vizard, and draw cheques on PAS Group accounts payable to IAT to reimburse the cash withdrawn?
(d)Whether in late 1993 Mr Vizard and Mr Hilliard made an arrangement, continued until June 2000, under which Mr Hilliard was rewarded for his services under the arrangement in (c) by payment of his Diners Club accounts and other personal expenses, by cheques drawn on PAS Group accounts?

Deed of Settlement

It is convenient to refer at this stage to the agreement by which Westpac settled the claim made upon it by Mr Vizard and the PAS Group as it identifies why it is that Westpac, as distinct from Mr Vizard and the PAS Group, sues to recover loss suffered as a result of Mr Hilliard’s alleged theft.

As I refer at [167] below, following Mr Hilliard’s departure Mr Stevens (who replaced Mr Hilliard as Mr Vizard’s bookkeeper) made inquiries as to the acquisition of six paintings recorded in the asset register of The Vizard Foundation Pty Ltd (“the Vizard Foundation”). These inquiries led Mr Stevens to request from Westpac copies of sample cheques following which he reported to Mr Vizard on what he had learned. That led Mr Vizard, on 22 November 2000, to instruct a firm of accountants, Carson & McLellan, to investigate the matter.

In December 2000 the investigating accountants reported to Mr Vizard that amounts had been paid to IAT from PAS Group accounts and that the amounts had been recorded in the PAS Group accounts as intragroup transfers. Mr Vizard, with his advisors, then claimed of Westpac that it was liable to compensate Mr and Mrs Vizard and the PAS Group. In a short time, and without seeking explanation from Mr Hilliard or Steven Oliver New, the Westpac employee with responsibility for the relevant accounts, Westpac on the one hand and Mr and Mrs Vizard and certain entities in the PAS Group on the other hand, entered into a Deed of Settlement dated 19 December 2000[2] whereby Westpac agreed to compensate the PAS Group on the basis stipulated in the Deed. The Deed provided the following: Westpac admitted liability to compensate the relevant PAS Group account holders and established a mechanism by which to calculate the compensation. More investigation was required to identify the payments that were relevant for the purpose of the Deed and thus to calculate the compensation payable.
[2]Court Book 2128-2152.

It is appropriate to refer to some provisions of the Deed. The Deed commenced with recitals which in summary stated that:

(a)Mr Hilliard had without the authority of “the current Performing Arts Group” (which comprised Mr and Mrs Vizard and named PAS Group entities who were parties to the Deed and who I collectively refer to in this part of the judgment as “the Group”) withdrawn funds from the Group bank accounts maintained by Westpac and applied those funds for the benefit of persons other than the Group (referred to as “the Unauthorised Drawings”), and
(b)Westpac admitted liability in relation to the Unauthorised Drawings and the Group had agreed to compromise any present or future claim against Westpac in relation thereto on the terms of the Deed.

Referring to the operative provisions, by cl 2.1 Westpac agreed to bear responsibility to the Group for losses arising from the Unauthorised Drawings in accordance with the formula in Schedule A and agreed to pay the Group by way of restitution as set out in the Deed. Interest was to be included in the calculation of the losses arising from the Unauthorised Drawings (cl 2.2), but Westpac was not liable for any consequential losses suffered by the Group (cl 2.3).

It is convenient to interpolate that under the formula in Schedule A Westpac’s liability was defined as a percentage of the face value of drawings (plus interest) as follows:

Category A

Performing Arts Group withdrawals in one transaction (including cheques) 0 < $9,999

15%

Category B

Performing Arts Group withdrawals in any one transaction (including cheques) of $10,000 or more

75%

Clause 3 established a regime in case Westpac or the Group brought proceedings against Mr Hilliard. The clause is important. It provides:

“3. Claims Against Hilliard
3.1In the event that Westpac in its absolute discretion decides to bring proceedings against Hilliard the following provisions shall apply:
(a)the Performing Arts Group must co-operate fully with Westpac including, without limitation, providing relevant documents to Westpac;
(b)Westpac will pay the Performing Arts Group’s reasonable costs and expenses (including legal costs) in providing the co-operation contemplated by Clause 3.1(a) and indemnify the Performing Arts Group accordingly;
(c)any recoveries (including by way of settlement of any proceedings) shall be applied as follows:
(i)first in reimbursement of the amounts paid by Westpac to the Performing Arts Group pursuant to Clause 2, and in payment of Westpac’s costs in relation to any such proceedings (including, without limitation, any sums expended pursuant to Clause 3.1(b) hereof); and
(ii)the balance, if any, to the Performing Arts Group; and

(d)Westpac’s solicitors shall use reasonable endeavours to keep the Performing Arts Group’s solicitors generally informed and provide copies of all court documents in relation to such proceedings to the Performing Arts Group’s solicitors on a timely basis.

3.2If the Performing Arts Group commences proceedings against Hilliard (which it will only be entitled to do in relation to Performing Arts Group losses in respect of which Westpac is not seeking compensation from Hilliard) the following provisions shall apply:
(a)Westpac must co-operate fully with the Performing Arts Group including, without limitation, providing relevant documents to the Performing Arts Group;
(b)the Performing Arts Group will pay Westpac’s reasonable costs and expenses (including legal costs) in providing the co-operation contemplated by Clause 3.2(a) and indemnify Westpac accordingly;
(c)any recoveries (including by way of settlement of any proceedings) shall be applied as follows:
(i)first, in payment of the Performing Arts Group’s costs in relation to any such proceedings (including, without limitation, any sums expended pursuant to Clause 3.2(b) hereof);
(ii)secondly, in the proportion of the respective losses of Westpac on the one hand as a result of the Unauthorised Drawings and the Performing Arts Group on the other hand as a result of misappropriation by Hilliard of funds or property of the Performing Arts Group generally (whether in relation to the Unauthorised Drawings or otherwise); and

(d)the Performing Arts Group’s solicitors shall use reasonable endeavours to keep Westpac’s solicitors generally informed and provide copies of all court documents in relation to such proceedings to Westpac’s solicitors on a timely basis.

3.3The provisions of Clause 3.2(c) shall apply in relation to any other recoveries in relation to the Unauthorised Drawings made by the Performing Arts Group from Hilliard.”

Clause 4 provided for the claims procedure as follows:

“4. Claims procedure
4.1Provided always that the Performing Arts Group has by the 15^th day of each calendar month provided Westpac with sufficient details of a particular claim or claims in respect of Unauthorised Drawings, Westpac must on the last business day of each month commencing on 31 January 2001:
(a)make payment to the Current Performing Arts Group in respect of such claims; and/or
(b)provide to the Performing Arts Group details in writing of any dispute in respect of any such claims and pay the sum or sums in dispute into an interest bearing 30 day cash management account with Westpac.

4.2 … .”

Clause 5 provided for the resolution of disputes by expert determination. Clause 6 contained mutual releases. Clause 7 stipulated confidentiality. Clause 8 provided that the Deed did not prejudice or affect any right that the Group or Westpac may have against any other person in relation to the Unauthorised Drawings. Finally, clause 9 dealt with costs; Westpac agreed to pay certain costs of the Group but otherwise the parties agreed to bear their own costs. The costs that Westpac agreed to pay were of:

(a)the Group’s counsel in connection with an application to the Federal Court on 14 December 2000 in connection with the Unauthorised Drawings[3],
(b)Kroll & Associates incurred by the Group to date, and
(c)Carson and McLellan’s reasonable professional fees and disbursements incurred after the date of the Deed in relation to the ongoing investigation of the Unauthorised Drawings.
It is not necessary to refer to any other provisions of the Deed.

[3]I was informed by counsel (transcript 1120) that an application for an Anton Piller order was made to Gray J and refused on 14 December 2000. None of the papers concerning the application are in the Court Book. Mr Vizard said in evidence (transcript 183) that the proceeding was brought by the PAS Group.

On the following day, 20 December 2000, Westpac filed the writ in the present proceeding and obtained from Beach J, ex parte, Mareva injunctions and related orders in relation to the property of the defendants and Margaret McCready, who was Mr Hilliard’s de facto partner at the time. Pursuant to these orders and later orders, affidavits as to assets were filed by deponents including Mr Hilliard and Ms McCready. The initial orders were subsequently amended and replaced with further orders which were themselves varied by later orders.

On 1 June 2001 Westpac entered into the Deed of Settlement with IAT and Wood, and the other parties thereto, by which IAT agreed to pay Westpac $1,686,036.29 and pursuant to which Westpac obtained a consent judgment for that amount on 14 August 2001.

In the meantime and pursuant to the scheme in the Deed of Settlement dated 19 December 2000 investigations continued and from time to time Westpac made payments of compensation to Group companies. As referred to below[4] payments of compensation were made progressively between January and October 2001 inclusive followed by the negotiated payments in December 2001 and September 2002. They produced the amount claimed of $3,067,274.92.
[4]At [40].

As mentioned earlier, Westpac compensated the PAS Group in respect of each cheque listed in Schedule A to the writ.

The process of investigation being thus completed Westpac entered into a Deed of Release with Mr and Mrs Vizard and the Group companies on 20 September 2002[5]. The Deed was entered into before the final payment of $250,000 was made but following agreement on the amount. It is necessary to refer only to clause 2 of the Deed of Release. It provided as follows:

“2 Further Settlement
2.1Within 14 days of the date of this Deed, Westpac will pay $250,000 to the Current Performing Arts Group, in accordance with the reasonable directions of the Current Performing Arts Group.
2.2Effective from the date of receipt of the payment referred to in clause 2.1, the Current Performing Arts Group hereby releases and forever discharges Westpac from Claims.
2.3Other than as varied, expressly or by implication by this Deed, the Deed of Settlement remains in full force and effect.

2.4For the avoidance of doubt, clauses 3.1(a) and (b) of the Deed of Settlement are fully operative to the extent of any relevant co-operation sought by Westpac after the date of this Deed.”
[5]Court Book 2865-2877.

The pleadings
Statement of Claim

The statement of claim was amended several times, the last being pursuant to an order made on the first day of the trial. Pursuant to that order, on 5 September 2006 Westpac filed a second further amended statement of claim which for convenience I will refer to as “the statement of claim”. The amendments made changes to the details of the cheques listed in Schedules A and B to the statement of claim. The significance of the schedules is that they limit the case to the cheques listed therein. That saves to exclude numerous other cheques drawn by Mr Hilliard on accounts of the PAS Group.

The statement of claim commences (in para 2) with the fact that Mr and Mrs Vizard and corporate entities of which they were directors and/or shareholders had accounts with Westpac at all material times. The corporate entities are:

(a)Performing Arts Investments Pty Ltd
(b)Performing Arts Services Pty Ltd
(c)United Film Completion Pty Ltd
(d)Performing Arts Holdings Pty Ltd
(e)The Vizard Foundation Pty Ltd
(f)Performing Arts Services Nominees Pty Ltd
(g)Performing Arts Holdings Investments Pty Ltd
(h)Roxby Park Primary Products Pty Ltd[6]
(i)Brigham Pty Ltd
(j)Consolidated Motion Pictures Pty Ltd
(k)Performing Employees Fund Pty Ltd
(l)Multimedia Australia Research Institute Pty Ltd
(m)Australian Advanced Learning Fund Pty Ltd.

In the statement of claim Mr and Mrs Vizard and these entities are referred as “the PAS Group” and “the relevant account holders”. Performing Arts Services Pty Ltd is referred to as “PAS”. It is convenient to also use these definitions in this judgment.

[6]This company is actually called Roxby Park Primary Producers Pty Ltd and it is so named in para 5 of the statement of claim.

The next allegation (in para 3) is that from July 1991 until about 17 October 2000 Mr Hilliard was employed by PAS as a bookkeeper. Terms of the employment are alleged in para 4. In short Mr Hilliard’s duties were to perform the accounting function of the PAS Group to the point of preparation of financial statements for review and completion by external advisors, contribute to financial planning and implementation of investment strategies, and other management and administration support as required such as handling correspondence and filing. The accounting function included payment of invoices, banking and reconciliation of income, maintenance of cash books and asset registers, maintenance of insurance, and property and asset management.

The statement of claim then proceeded to allegations concerning Mr Hilliard’s authority to draw cheques, to his having drawn cheques in excess of such authority and to Westpac having honoured such cheques (paras 5-9).

As to Mr Hilliard’s authority, it is first alleged in para 5 (to summarise the pleading and particulars) that his authority was to sign cheques (excluding cheques for cash or travellers’ cheques) up to a limit of $10,000 (save for effecting transfers between companies in the PAS Group, signing cheques and for the purchase of shares from J B Were and Ord Minnett for the benefit of the PAS Group, where the authority was unlimited) pursuant to authorities set out in a table. The table indicates that in respect of each of the named corporate entities, and various trusts and accounts in the PAS Group, an authority in these terms was granted on a date between 31 July 1991 and 18 May 2000.

I interpolate an important point. The pleading of the authority in para 5 is misleading in that the particulars conflate two separate authorities. On the one hand there were several authorities in like terms which authorised Mr Hilliard to sign cheques up to $10,000 while on the other hand there was a single unlimited authority dated 17 November 1992 which authorised Mr Hilliard to sign cheques for the purchase of shares from J B Were and Ord Minnett. This is an important distinction which para 5 ignores. Indeed, the table in para 5 does not include this latter authority. I refer to this later authority at [129], in the chronology of facts and later in the judgment.

It is then alleged, in para 6, that between 1 July 1993 and 31 January 1996 Westpac paid 11 cheques listed in Part 1 of Schedule A to the statement of claim which were drawn by Mr Hilliard for more than $10,000 on an account of the PAS Group. The cheques were paid to CS First Boston, Potter Warburg and IAT. It is alleged in para 7 that the relevant account holder had not authorised Westpac to pay the cheques, and that the proceeds of the cheques were not paid to or at the direction of or applied for the benefit of the relevant account holder.

The statement of claim then (in para 8) moved to a second authority alleged to have been sent by Mr Hilliard by facsimile to Westpac on or about 2 February 1996 without the consent of the PAS Group. This authority, purportedly signed by Mr Vizard, authorised Westpac to pay cheques up to $50,000 drawn on accounts of the relevant account holders and signed by Mr Hilliard. It is then alleged, in para 9, that between 2 February 1996 and 17 October 2000 Westpac, relying on the authority, paid 50 cheques listed in Part 2 of Schedule A drawn by Mr Hilliard on the account of a relevant account holder for an amount between $10,000 and $50,000 and debited the accounts with the relevant amount. The cheques were payable to ASA (Australians Studying Abroad), IAT, British Airways, Diners and Cunard Line. It is alleged in para 10 that the authority was a forgery and, in addition, that the relevant account holder had not authorised Westpac to pay the cheques and that the proceeds thereof were not paid to or at the direction of or applied for the benefit of the relevant account holder.

The next allegation (in para 11) is that “the proceeds” of each of the above cheques were received by Mr Hilliard or applied for his benefit. Particulars to this plea refer to Schedule B to the statement of claim which lists cheques as follows:
v In Part 2, 50 cheques paid to IAT and one cheque paid to ASA.
v In Part 3, four cheques paid to Diners Club.
v In Part 4, one cheque paid to British Airways.
v In Part 6, one cheque paid to CS First Boston.
v In Part 7, two cheques paid to Potter Warburg.
v In Part 9, one cheque paid to Cunard Line.
No cheque is listed in Parts 1, 5 and 8.

I was told by Westpac’s counsel, and it was not disputed, that the cheques in Schedule A are the same cheques referred to in Schedule B. The difference between the schedules is this: whereas Schedule A divides the cheques by reference to pre (Part 1) and post (Part 2) the $50,000 mandate, Schedule B divides the cheques by reference to the payee. Thus, the aggregate amount of the cheques in Schedule A and B is the same. However, my analysis of the Schedules shows that whereas Schedule A lists 61 cheques, Schedule B lists 60 and the aggregate amount of the cheques in Schedule B is shown as $300 less than the aggregate amount of $2,060,652.05 in Schedule A. Doubtless these small differences are due to oversight and may readily be explained and corrected if necessary.

In these circumstances it is alleged (in paras 12 and 13) that Westpac paid each cheque referred to under a mistake, namely:

(a)As to the cheques signed prior to the $50,000 authority, it overlooked that its authority to pay cheques signed by Mr Hilliard was limited to cheques of $10,000 or less.
(b)As to the cheques signed after receipt of the $50,000 authority, it believed it was authorised to pay cheques up to $50,000.
(c)As to all of the cheques, it paid the cheques being ignorant -
(i)that the proceeds were not being paid to or at the direction of or applied for the benefit of the relevant account holder;
(ii)that the proceeds were being received by Mr Hilliard or applied for his benefit without the knowledge or consent of the relevant account holder,

and would not have done so if it had known either or both of those facts.

In these premises (para 14) Mr Hilliard was liable to pay Westpac the amount of the proceeds of the cheques as monies had and received to the use of Westpac. Further or alternatively (para 15), Mr Hilliard was liable on the basis that he had been unjustly enriched by the amount of the proceeds which it would be unconscionable for him to retain. In final address Westpac’s counsel said that paras 14 and 15 were two ways of saying the same thing, namely that recovery was sought on the basis of unjust enrichment.

Then follow, in paras 16 and 17, pleas concerning the allegedly forged authority for cheques up to $50,000.

Paragraph 16 alleged that in sending the authority to Westpac Mr Hilliard falsely represented to Westpac that it was authorised to pay cheques of $50,000 or less drawn on the account of a relevant account holder and signed by Mr Hilliard, and induced Westpac to mistakenly pay cheques in reliance on the authority. In these circumstances, Mr Hilliard engaged in conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and/or s 9 of the Fair Trading Act 1999 (Vic). As the claim is made against an individual it is to be taken as made under the Fair Trading Act, as I mentioned during final address and Westpac’s counsel did not suggest otherwise.

Paragraph 17 alleged that Mr Hilliard sent the authority to Westpac knowing it to be a forgery and that he was not so authorised, and intending that Westpac pay cheques in reliance on the authority. This, counsel said, was a plea in deceit. Then followed two pleas as part of that claim. In para 18 it was alleged that by reason of the facts in paras 6, 7, 9, 10 and 17 Westpac had come under a liability to repay the respective account holders the amounts which Westpac had paid without their authority, and (in para 19) that as it had been reasonably entitled to do Westpac had admitted liability to the PAS Group. Extensive particulars were provided to para 19.

The statement of claim concluded in para 20 with the statement that as a result of the matters in paras 14-17 and 19 Westpac had suffered loss and damage, namely that it had paid the PAS Group $3,067,274.92 in satisfaction of the liability referred to in para 19 including interest.

In the prayer for relief Westpac claimed the sum of $3,067,274.92, damages and interest.

It is convenient to make some observations concerning the statement of claim.

The first point to note concerns para 19 in which Westpac alleged that it acted reasonably in admitting liability to the PAS Group. In its place in the statement of claim it seemed that this should be read as part of the plea in deceit commencing at para 17. Westpac’s counsel said that paras 18 and 19 were not part of the plea of unjust enrichment. Indeed, counsel said, none of the pleaded causes of action had an element of reasonable acting. Hence para 19 was to be understood merely as a statement of what Westpac did. Perhaps for this reason Westpac did not call evidence on all areas of the particulars to para 19.

The second point concerns the amount of the claim. Paragraph 20 is an umbrella plea applying to each cause of action. While the amount of $3,067,274.92 is sought on the unjust enrichment claim, being the amount of compensation paid by Westpac to the relevant account holders, no other amount was sought to be quantified as damages payable in respect of any of the other causes of action. The following further points arise concerning the amount claimed.

First, the amount of $3,067,274.92 was calculated on a formula agreed by Westpac and the PAS Group in a Deed of Settlement dated 19 December 2000 (referred to above) and under which those parties agreed on compensation as follows: in respect of cheques under $10,000, 15 per cent, and in respect of cheques between $10,000 and $50,000, 75 per cent, plus interest. The amount of $3,067,274.92 was thus produced but it included compensation in respect of cheques under $10,000. On my calculation, the component of compensation referable to cheques under $10,000 (excluding any interest) was $139,762.76[7]. The inclusion of that amount is inconsistent with the schedules to the statement of claim which by amendment exclude from the claim all cheques under $10,000. It was self‑evidently an advised decision to so limit the case. The reason may have been because of the undisputed authority to Mr Hilliard to sign cheques for amounts up to $10,000. I cannot otherwise speculate as to the reasons.
[7]See Court Book, vol 7, 2577, 2579-2582, 2569, 2589/90, 2617 and 2619 and counsel’s explanation at transcript 1138-1141.

Secondly, it is not clear to me what amount was paid to the PAS Group on account of interest. Interest was not paid with the progressive payments which were made between January and October 2001 inclusive. Two further payments were made, $731,350.79 on 6 December 2001 and $250,000 on 25 September 2002. The former payment represented interest and was negotiated following the preparation of a calculation by Westpac in October 2001 which showed interest at $945,971.24[8]. The latter payment was said by counsel[9] to be a negotiated amount to finalise the settlement of the compensation. I do not know how these two amounts were calculated. More particularly, I do not know the extent to which if at all the final amount of $250,000 includes interest or compensation in respect of cheques under $10,000.
[8]Court Book 2592-2593.
[9]At transcript 1141.

Thirdly, I was informed, and understand, that Westpac compensated the PAS Group in respect of the 61 cheques in the Schedules to the statement of claim.

Fourthly, and in consequence of Westpac’s loss being measured by and in accordance with the Deed of Settlement, that which Westpac is entitled to recover if it succeeds is the amount being 75 per cent of the face value of the 61 cheques. That is because all of those cheques were for amounts between $10,000 and $50,000.

Accordingly, if Westpac succeeds the amount to be recovered must be recalculated.

Defence

An amended defence was not filed to the final amended statement of claim. That was because the amendment to the statement of claim only changed details of cheques listed in Schedules A and B. The extant defence had been filed in September 2005 in relation to the statement of claim as amended on 22 October 2001. It was accepted that notwithstanding the statement of claim had subsequently been amended twice it was not necessary to amend the defence.

The following pleas are to be noted:

(a)It is admitted that from time to time banking accounts with the plaintiff were conducted by and in the name of Mr and Mrs Vizard and the entities in the PAS Group of which they or one of them were directors and/or shareholders.
(b)The allegations as to Mr Hilliard’s employment in para 3 were admitted. It was said further that Mr Hilliard was the company secretary, financial controller and business manager for Mr and Mrs Vizard and entities of which Mr Vizard was a director and/or shareholder including the PAS Group.
(c)As to para 4 of the statement of claim, it was said, among other things, that a term or understanding of Mr Hilliard’s employment was that he act in accordance with instructions and directions of Mr Vizard.
(d)As to the plea of authority in para 5 of the statement of claim:
(i)It was admitted that as an employee of PAS Mr Hilliard was for a time authorised in writing to sign cheques up to $10,000 on accounts maintained by Westpac on behalf of entities in the PAS Group but otherwise the allegations in para 5 were denied. The effect of this denial was to put in issue an allegation in para 5 of the statement of claim that the alleged authority to sign cheques was granted by the relevant account holders “on or about 31 July 1991”. Reference to the table in the particulars in the statement of claim showed that in fact only the authority of The Vizard Foundation Pty Ltd was given on that date. Of the 24 other authorities, one (Performing Arts Investments Pty Ltd Cash Management A/C) was given on 9 August 1991, 11 were given on 3 December 1991, one was given on a date “uncertain”, and the remainder were given on dates subsequent to 1991.
(ii)It was admitted that as an employee of PAS Mr Hilliard signed cheques in excess of the limit of $10,000 on accounts maintained by Westpac on behalf of entities in the PAS Group.
(iii)It was alleged that such cheques were signed with the consent, knowledge, or acquiescence of –
vMr Vizard
vThe PAS Group
vWestpac.

Then the allegation in para 6 of the statement of claim that Westpac had paid cheques was admitted. However, the allegations in para 7 of the statement of claim were denied.

Moving to the matter of the $50,000 authority, it was admitted that on or about 2 February 1996 with the consent of Mr Vizard and the PAS Group, Mr Hilliard forwarded the authority by facsimile to Westpac. It was then admitted that Mr Hilliard had signed cheques which Westpac had paid as alleged in para 9 of the statement of claim, but as to such cheques it was alleged that they were signed with the consent, knowledge or acquiescence of –
v Mr Vizard
v The PAS Group
v Westpac.
The defence then denied the allegations in para 10 of the statement of claim, namely that the $50,000 authority was a forgery, and that the cheques were neither authorised by nor for the benefit of the relevant account holder.

It is then important to note the plea in relation to para 11 of the statement of claim which alleged that the proceeds of the cheques were received by Mr Hilliard or applied for his benefit. To this the defence (in para 11):

(a)Repeats that all of the cheques were drawn and signed with the authority, knowledge and consent of Mr Vizard and the PAS Group.
(b)Alleges that some of the cheques were applied to repayment to IAT of sums paid by it to Mr Vizard, and that further sums were, with the knowledge, authority and consent of Mr Vizard and the PAS Group applied to Mr Hilliard’s benefit. All such cheques were drawn, signed and applied with the authority, knowledge and consent of Mr Vizard and the PAS Group.

The defence proceeded to deny the remaining allegations in the statement of claim. All that need be referred to is the response to the plaintiff’s allegation that it was reasonably entitled to admit liability to the PAS Group. The defence (in para 19) alleged that in fact Westpac acted unreasonably in admitting liability. This was because Westpac accepted the say so of Mr Vizard, failed to make any proper inquiries of its own, and failed to make any or any proper inquiry of Mr Hilliard.

It remains to note that in 2001 particulars of the defence were provided. That was by a document (not filed) dated 6 April and a subsequent document filed on 22 June 2001.

Reply

Westpac did not file a reply to the defence.

Evidence

By the conclusion of the trial evidence had been given by 16 witnesses. In addition, summaries of the evidence of five people were tendered without the need to call the witness. There was also a 10 volume Court Book and some other documentary exhibits.

The evidence may be regarded as falling into categories. It ranged from the formal and undisputed to the highly contentious. In the former description was evidence that established documents in the records of a party including in particular documents which pertained to a transaction or transactions to which a subject cheque related. Some, but not all, of the evidence in this area was of Mr Hilliard’s accounts with Diners Club, Stanley Gibbons Pty Ltd (purchase of stamps), C S First Boston and Potter Warburg (share dealings) and a Commonwealth Bank of Australia Visa card statement; other such evidence was included in the Court Book without the need to call the relevant third party such as British Airways and Cunard Line. In the area of IAT relevant documents were produced, and established, by its banker ANZ (cheques) and by a partner of the firm Turville Reeve & Associates which was the auditor of IAT at relevant times. In this area also was evidence of a Westpac employee, Desmond Gerald Curtis, whose evidence established relevant entries in the records of Westpac and that certain documents in the Court Book were copies of documents in the records of Westpac.

A second category of evidence concerned Mr Hilliard’s charges of theft of moneys from the PAS Group. Following a committal hearing in 2003, at which Mr Vizard gave evidence for the prosecution and was cross-examined, and Mr Hilliard gave evidence in his own defence, Mr Hilliard was committed for trial in the County Court on all charges. A presentment was filed containing 78 charges of theft. In circumstances referred to below, when the matter came on for hearing in the County Court on 26 July 2005 another presentment[10] was filed over the original presentment which was permanently stayed[11]. The new presentment charged 14 rolled up counts of false accounting to which Mr Hilliard pleaded guilty. Counsel for Mr Hilliard then made a plea in mitigation. On 12 August 2005 the judge sentenced Mr Hilliard to a total effective term of two years’ imprisonment, wholly suspended[12]. This category of evidence included certain pages from the transcript of Mr Hilliard’s evidence at the committal, tendered as containing admissions[13]; the transcript of evidence of Mr Vizard at the committal[14], tendered for identification for the purpose of ensuring accuracy of reference to certain questions and answers in Mr Vizard’s evidence at the committal which were put to him in cross-examination in the present proceeding; two exhibits tendered by the prosecution at the committal[15]; para 9 of the statement of an accountant David John Warner who also gave evidence at the committal[16]; and the transcript of the Crown prosecutor’s opening and submissions at the hearing in the County Court on 26 July[17], which was received on the limited basis of indicating context of a background nature.
[10]Court Book 275-277.
[11]See the transcript of the Crown opening in the County Court; Exhibit 3.
[12]Return of conviction Court Book 3078.
[13]Exhibit R.
[14]Exhibit 18.
[15]Exhibit L.
[16]Exhibit P.
[17]Exhibit 3.

A third category of evidence was that given by former employees of Westpac concerning their involvement in the Private Bank in relation to the accounts of Mr Vizard and the PAS Group, namely:

(a)John Frederick Fyfe, who was an executive manager in the Private Bank from its establishment in January 1990 until May 1994 when he transferred to Brisbane. In that time he was responsible for the accounts of Mr Vizard and companies associated with him. He is no longer employed by Westpac.
(b)Michael Francis Birthisel, who commenced employment with Westpac in December 1985 as a trainee banker. In the second half of 1994 he was assigned as assistant manager to Brian Antony an executive manager in the Private Bank whose portfolio of clients included Mr Vizard and companies associated with him. Mr Antony was not well and was frequently away from work. He went on sick leave in August 1995 and did not return. After Mr Antony left on sick leave, there was no executive manager assigned to PAS Group accounts until Steven Oliver New joined the Private Bank in around November 1995, and from which point Mr Birthisel had no further involvement with the accounts as Mr New had his own assistant manager. Mr Birthisel remained at the Private Bank until April 1996.
(c)Steven Oliver New, who from November 1995 to August 2002 was an executive manager of Westpac’s Private Bank. Throughout that time he was responsible for the accounts of Mr and Mrs Vizard and the companies in the PAS Group. He was off work for medical reasons from November 2000 until late January 2001.

I note that there was no evidence, or explanation, as to why Mr Antony was not called.

A fourth category of evidence was that given by two forensic document examiners. They were Christopher Ian Anderson and Neil William Holland. It is convenient to now deal with their evidence, which related to the following matters.

Mr Anderson’s evidence was contained in a report to Westpac’s solicitors dated 4 August 2006 which was tendered by Westpac without the need to call him[18]. His report was directed to the issue whether the signature of Mr Vizard on the $50,000 authority received by Westpac on 2 February 1996 was forged. He concluded that without the original of the authority it was not possible to exclude the possibility that the questioned signature of Mr Vizard was a genuine signature. Having examined sample signatures and the questioned signature, he was of the opinion that on the material available it was inconclusive whether the questioned signature on the authority was written by Mr Vizard. Further, without the original authority the possibility could not be excluded that the questioned signature was a genuine signature of Mr Vizard but had been cut and pasted on the original document, although the likelihood of that was remote if the questioned signature was signed by a person other than Mr Vizard. He further thought that the introduction of a flourish under the signature, which seemed outside Mr Vizard’s normal writing habits, suggested that the questioned signature was not placed by a “cut and paste” method.
[18]Exhibit F.

It is important to note that in forming his opinion as to the authenticity of Mr Vizard’s signature, Mr Anderson was instructed to exclude from consideration as a specimen signature the signature “S.W. Vizard” on a facsimile document on PAS letterhead dated 17 November 1992. A copy of this letter became exhibit 6. It is a letter to Mr Fyfe which stated:

“We are in the process of assembling a portfolio of various stocks, and to this end I would like to amend our cheque signing authority to allow Roy Hilliard to sign cheques in excess of $10,000.00 for these purchases. As we will only be using JB Were & Sons and Ord Minnett, the authority will only extend to these brokers.”

Written on the letter in hand was “John. I will forward the original to you. Thanks Roy”.

In his report Mr Anderson noted that the signature of Mr Vizard on the letter dated 17 November 1992 exhibited “similarity to the questioned signature particularly in relation to its apparent poor line quality which was observed to be inconsistent with the line quality exhibited by the specimen signatures”. Mr Anderson said that the signature was excluded from his examination for the following reasons:

(a)He was instructed to assume that Mr Vizard did not recall signing the original of the document.
(b)The poor quality of the reproduction. The signature had the appearance of being more slowly and deliberately written, similar to the questioned signature. But that could have been an artefact of the reproduction process.
(c)Other reproductions were of higher quality where he considered the speed and fluency could be more readily assessed and linked to the form present on the originally written signatures.
(d)In other words, he could not be satisfied whether this observation was in fact due to the original being written slowly and deliberately or it was simply an artefact of the faxing process.

I agree with Mr Anderson that the questioned signature on the $50,000 authority is similar to that on the 17 November 1992 authority. That is one point, but the more immediate point is that in fact Mr Vizard did sign the 17 November 1992 authority. He readily agreed that he did so in cross-examination. The concession was not surprising as the fact is that cheques were signed by Mr Hilliard bona fide in payment of share purchases as contemplated by the authority. Moreover, the statement of claim (para 5) acknowledges that Mr Hilliard’s authority to sign cheques for the purchase of shares from J B Were and Ord Minnett for the benefit of the PAS Group was unlimited. Such shares were purchased under and by the authority of Mr Vizard. No element of alleged wrongful conduct of Mr Hilliard arose in this area. I found it incomprehensible that Mr Anderson was instructed to assume that Mr Vizard did not recall signing the original of the 17 November 1992 authority. It is reasonable to infer, and I do infer, that the instruction to Mr Anderson was given on the instructions of Mr Vizard. In evidence before me in September 2006 Mr Vizard knew that he had signed the original authority. I do not accept that given serious consideration to the matter he could not have recalled signing the letter. It is apparent that the instruction to assume that Mr Vizard did not recall signing the letter was significant to Mr Anderson’s reasoning. The instruction is to be regretted. In short, it excluded from consideration a relevant signature that bore evident similarity to the questioned signature. I do not accept that Mr Vizard had a temporary loss of memory as to signing the letter. Having given careful consideration to the matter I am of the view that at best the instruction (by Mr Vizard) was given carelessly and at worst was designed to deflect a genuine signature from consideration. Whichever it be, and I consider the latter the correct inference, it reflects adversely on the character and integrity of Mr Vizard and the reliability of his evidence.

Mr Holland had examined the $50,000 authority at the request of Mr Hilliard’s solicitors in November 2002. He described it as an original thermal fax. Counsel for Mr Hilliard called him following and because of an issue raised in the cross‑examination of Mr Hilliard. What was put to Mr Hilliard was why the $50,000 authority received by Westpac, which is Exhibit Q, did not bear the date and time of sending or other information. When he gave evidence Mr Holland explained the operation of facsimile machines including that a line of such information appearing at the top (or bottom) of a facsimile is called a “header”. The header (and what it contains) is directed by the sending machine. The header mechanism in the sending machine can be turned off. In this case there was one header. Hence the question was, bearing in mind that Mr Hilliard said that he had received the authority by facsimile, why was there not a second header? That is, a header produced when he received it and a header produced when Westpac received it. Mr Holland’s opinion was that scan errors in the letters or characters in the letter meant that the letter had been scanned at least twice, and that the top header line had not been scanned at all[19]. The header included the date of receipt at Westpac, 2 February 1996, and was produced at the time of sending to the receiving machine. But the body of the document had been scanned a second time. Mr Holland said that a copy could have been produced prior to sending the fax; when a machine produces a copy it does not print a header as the facsimile function is not used. If such a copy was then sent it would produce a document similar to Exhibit Q. Another scenario might be that the original letter was sent with the header mechanism turned off in the sending machine, and that that document was sent on again from a machine with the header mechanism operating.
[19]Mr Holland explained what he meant by “scan errors” and made a diagrammatical representation which became Exhibit 16.

Finally, Mr Holland said that no definitive opinion could be given as to the genuineness of the signature of Mr Vizard on the $50,000 authority. It had the appearance of being genuine but it was a facsimile and a number of scenarios could have occurred.

In cross-examination, to all of which I have regard, Mr Holland was firm in his opinion based on his examination of the facsimile that the body of the document had been scanned twice. He was unable to say if the document had been faxed three or more times, but he could say that it had been faxed twice. He had not seen the original (nor had Mr Anderson and it was not in evidence), but he did not need the original to determine whether it was a one-off fax or had been rescanned. He concluded by saying that he could not tell if a line under the signature was part of the signature or part of the edge of a cut and paste job. As to that, in re-examination he said that there was no forensic evidence “to establish that this was a cut and paste”.

In summary, having only the facsimile to examine the experts were unable to form an opinion whether or not the signature of Mr Vizard was genuine. Their evidence was inconclusive on the matter. Mr Anderson may have been assisted by knowing that Mr Vizard had signed the 17 November 1992 authority. For one thing he might then have regarded the “flourish under” the signature as within Mr Vizard’s normal writing habits and more readily considered the similarity in that signature and the questioned signature.

I accept Mr Holland’s evidence in particular on the matter of the header and that the body of the facsimile had been copied twice. In the result it falls to me to determine whether Mr Vizard signed the $50,000 authority and that Mr Hilliard, having thus received it, sent it on to Westpac. Those issues fall to be determined on the balance of probabilities in light of all of the evidence and the facts as I find them to be bearing in mind the seriousness of Westpac’s contention that Mr Hilliard forged Mr Vizard’s signature and intentionally misled Westpac.

A fifth category of evidence was that given by the officers of IAT, namely:

(a)Christopher Graham Wood, who is the sole director and shareholder of IAT. He described IAT’s history and Mr Hilliard’s role in the company, the course of events from late December 2000 when irregularities in IAT’s bank account with ANZ were discovered and of learning in January 2001 that deposits had been made to IAT’s account by entities owned or controlled by Mr Vizard, and that at his request Mr Hilliard ceased to be a director of IAT and transferred his shares to him in March 2000. He said that Mr Hilliard was not authorised to draw cheques on IAT’s account for his (Mr Hilliard’s) benefit. He also identified a number of documents in the Court Book as coming from the records of IAT.
(b)Kristen Jane Hellstrom, who is the general manager of IAT and has been in the employ of IAT since 1989. Since January 2001 she has taken on the additional functions of accounting and bookkeeping for IAT. She described Mr Hilliard’s role in the business and the state of the records when he left at the end of 2000. In 2001 she learned that deposits had been made into IAT’s bank account by entities controlled by Mr Vizard.

A sixth category was Mr Vizard and Mr Hilliard who gave evidence concerning Mr Hilliard’s employment, Mr Vizard’s business operations and their conduct, and the matters more particularly in question. There were many disputed matters of fact and much cross-examination on matters of credit. I defer consideration of their evidence.

Finally, there were three other witnesses, namely:

(a)Gregory Robert Lay, a chartered accountant and principal of the firm Clarke & Co (now Clarke Bentleys) who was called by Mr Hilliard. The firm, and Mr Lay in particular, has provided accountancy services for Mr Vizard and his companies. Essentially that involved receiving from the client books and records as prepared and completing them and preparing the annual accounts and financial statements. It has also included tax advice and advice on a range of issues. The firm was also appointed auditor of some of the entities. His evidence covered a range of matters.
(b)Janine Marie Doney, who was employed by PAS as Mr Vizard’s senior executive assistant between mid 1998 and late March/April 2001. She also was called by Mr Hilliard. She described the working arrangements at the office including that all contact with Mr Vizard was through her. Basically everything came across her desk. She described the frequency of contact between Mr Vizard and Mr Lay and communication between Mr Vizard and Mr Hilliard and in the ordinary course what accounts went to Mr Vizard. She referred to a time when Mr Vizard was absent from the office and he asked her to sign his name on an important document which needed to be sent that day, and that she refused his request. She observed that in his dealings with others in business Mr Vizard was extremely driven and focussed. He was demanding in the office. I note and take account of the fact that her evidence of being asked to sign Mr Vizard’s name on a document, and other evidence as to a backdated document, was not put to Mr Vizard in cross-examination. Nevertheless, her evidence accorded with the impression of Mr Vizard that I had otherwise formed from observing him give evidence.
(c)Barry Thomas Stevens, a retired accountant who was called by the plaintiff. He took over from Mr Hilliard as the internal accountant for Mr Vizard’s companies. He commenced in October 2000 a day or so before Mr Hilliard ceased employment, and remained until 2003. Soon after commencing, in the course of checking the location of assets at Mr Vizard’s request, he identified six art works in the list of art owned which Mr Vizard said were not owned. He then made inquiries by checking bank records and could not find cheques that matched the cost of the art work. His experience led him to call for five cheques from Westpac three of which turned out to be payable to IAT. That led to the investigation that resulted in this case.

Putting aside for a moment the differences between Mr Vizard and Mr Hilliard, for the most part there was little contention concerning the evidence of the other witnesses and the raft of documents in the Court Book. There was, for instance, no contention as to the fact of the cheques signed by Mr Hilliard both as to those the subject of the claim and other cheques and as to the documents. The issues agitated were essentially those referred to at [5], and some other matters of fact, and these largely turned on the evidence of Mr Vizard and Mr Hilliard considered in light of the relevant circumstances. In this consideration the assessment of Mr Vizard and Mr Hilliard as honest and reliable witnesses was critical. As I explain below, I found each to be unsatisfactory. For the moment however I confine further observations to other witnesses.

No question arises as to the acceptability of the evidence in the first category referred to above. Evidence in the second category is a matter of record and provides context. I found the former bank officers in the third category were honest witnesses who gave evidence to their best recollection. Evidence in the fourth category was given by the forensic document examiners and I have made findings as to their evidence and noted that the question whether Mr Vizard signed the $50,000 authority falls to be determined on the facts.

The fifth category of evidence was that given by the officers of IAT. This was largely uncontroversial. There was, however, one difference that should be mentioned. It is convenient to do so at this stage. This concerned evidence in para 33 of Mr Wood’s witness summary[20] that he did not agree with, or authorise, Mr Hilliard to draw cheques on IAT’s bank account to pay for goods or services purchased by Mr Hilliard or to pay his (Mr Hilliard’s) debts. In particular, Mr Wood said, there was no agreement or arrangement whereby Mr Hilliard could draw cheques on IAT’s bank account to:

(a)purchase shares in his name,
(b)purchase stamps in his name for the purpose of collecting stamps,
(c)pay Mr Hilliard’s Diners Club account, or
(d)pay Mr Hilliard’s Visa card account.

[20]Exhibit A.

As to this evidence of Mr Wood the course of events at the trial was this. When Mr Wood was about to give evidence counsel for Mr Hilliard objected to the admissibility of paras 33 and 34 of his witness summary on the ground of relevance. I note that counsel also objected to para 35. However, counsel suggested that I receive the evidence subject to objection, and I did so. The particular objection to paras 33 and 34 was said to be that they apparently related to whether Mr Hilliard deceived Mr Wood whereas the issue in the case was whether Mr Hilliard was authorised by Mr Vizard to draw money on the Vizard accounts. At best the evidence of Mr Wood could be similar fact evidence. But in truth it could only be relevant to credit. Hence, counsel submitted, it should not be led. The objection may have seemed to have substance on counsel’s identification of the issue but the inquiry on the pleadings was broader than that in that it alleged that Mr Hilliard had had the benefit of monies passed to IAT under cheques drawn by Mr Hilliard. The evidence went to the issue of unjust enrichment and to an understanding of the relevant circumstances. Nevertheless, the evidence having been received, counsel did not cross-examine Mr Wood upon it.

Notwithstanding that Mr Wood was not cross-examined on para 33, Westpac’s counsel asked Mr Hilliard in cross-examination whether Mr Wood’s statement in para 33 as to there being no agreement or arrangement was correct, and Mr Hilliard said it was not. He said that Mr Wood “knew and approved of my purchases … right from the beginning”. He denied that he was trying to accuse Mr Wood “of participation in [his] crimes”. He denied a suggestion that his evidence was a fabrication, an attempt to blame his victim. The cross-examiner then turned to other matters.

Mr Hilliard was not re-examined on this aspect of his evidence.

It is not to be overlooked that this aspect may go to other matters not the subject of the present proceeding and it may have been for that reason and also to seek to limit cross-examination that counsel for Mr Hilliard took objection to paras 33 and 34. And it may be too that having taken the objection there was provided a basis upon which counsel for Mr Hilliard could say that he did not in consequence cross-examine Mr Wood on the matter. I note too that Mr Hilliard did not seek to refuse to answer a question on the ground that to do so may tend to incriminate him. As the defendant, and in all of the circumstances, he was in a difficult position in regard to relying on that privilege.

In these circumstances, and taking into consideration the various factors referred to below concerning Mr Hilliard’s evidence and the reliability thereof, I accept the evidence of Mr Wood. Yet the evidence should not be taken so far as to preclude the propriety of Mr Hilliard drawing a cheque on IAT’s account to reimburse himself in an expenditure truly undertaken on behalf of IAT. But Mr Hilliard’s denial of para 33 went further than allowing that possibility as an explanation particularly when the substance of Mr Wood’s concern was unauthorised dealings. Further, the denial is to be assessed in light of the absence of elaboration by Mr Hilliard and of cross-examination of Mr Wood on the point. I take account of the point in assessing Mr Hilliard’s credit and reliability.

I add only this. It was suggested by counsel for Mr Hilliard that Westpac could have sought Mr Wood to return to Court when he could have been further examined in chief on Mr Hilliard’s evidence, and cross-examined. In that way the failure of Mr Hilliard’s counsel to put his case to Mr Wood could have been rectified. As Westpac did not take that course it was not open to it to rely on the failure of Mr Hilliard’s counsel to put his case to Mr Wood. I consider that this submission lacked force and reality in the circumstances. The trial had commenced several days early to accommodate Mr Wood and Ms Hellstrom who were shortly to travel overseas. When Mr Wood gave his evidence counsel had every opportunity to cross‑examine and paras 33 and 34 were clearly seen as an area of concern but were not cross-examined on. There has to be reasonableness in the conduct of litigation and in the application of rules of practice. A long and tiring trial was had in which witnesses were examined at varying lengths on the points respectively considered appropriate. In the circumstances I do not consider that Westpac acted inappropriately in not seeking to prolong the trial for the purpose of recalling Mr Wood to enable him to answer Mr Hilliard’s evidence or, more accurately, to enable Mr Hilliard’s counsel to engage in a cross-examination deliberately not undertaken at the appropriate time.

That brings me to the final category of Mr Lay, Ms Doney and Mr Stevens. I can say at once that Ms Doney impressed me as an intelligent principled person and as an honest and reliable witness. I accept her evidence. I also found Mr Stevens an honest witness.

Mr Lay gave evidence in a guarded manner that was yet responsive to the terms of the questions. He was not comfortable. He had his own representative in Court who at no stage sought leave to appear. Mr Lay had been involved professionally for Mr Vizard in the Telstra matter referred to below into which, as I explain later, Mr Hilliard’s counsel wanted to delve in cross-examining Mr Vizard on matters of credit.

At this stage I mention only one particular aspect of Mr Lay’s evidence. That concerned his evidence that he recalled that Mr Hilliard made “some complaint” to him about a member of staff who had been looking at movements in the loan accounts being overly persistent. Mr Lay said that Mr Hilliard asked if he (Mr Lay) could speak to her and get her to be a little bit less enthusiastic or words to that effect. The effect of what Mr Hilliard said was that he (Mr Hilliard) was becoming a little bit irritated with the persistence of the staff member. Mr Lay believed that counsel’s suggestion was correct that Mr Hilliard was saying, in effect, that the staff member should not take such an interest in the loan account. He said that there may have been other queries as well.

I do not accept that this evidence of things said by Mr Hilliard constituted a reflection by him, expressly or inferentially, of guilt over wrongful conduct, or an attempt to deflect inquiry so as to avoid discovery of improper activity. Indeed, I was concerned with the evidence when it was given. Not only was it vague and, I find, suffered from reconstruction, but in its giving, distinct from other parts of his evidence, it had the air of contrivance. It is important to bear in mind that the employee concerned was not called to give evidence of her actual inquiries to Mr Hilliard, and that Mr Lay’s interest lay with or in the area of his client Mr Vizard. Further, Mr Hilliard’s counsel could not cross-examine Mr Lay. He was cross‑examined by Westpac’s counsel. Moreover, statements of the type attributed to Mr Hilliard could be made, and understood, in more than one way. Listening to and observing Mr Lay I was quite unpersuaded by the evidence when it was given, and on reflection I remain of that disposition. I do not accept it as reflecting adversely on Mr Hilliard.

Some background matters - Mr Hilliard’s criminal proceedings and Mr Vizard’s insider trading

I now refer to some matters that are central to an understanding of much of the cross-examination and the submissions concerning the honesty of Mr Vizard and Mr Hilliard and the reliability of their evidence.

It is logical to commence with the criminal proceedings against Mr Hilliard. For present purposes it is necessary to refer only to certain aspects of the proceedings, commencing with the committal hearing in 2003 before a Magistrate in Melbourne.

Mr Vizard gave evidence at the committal on 11 March 2003, the fourth day of the hearing. As mentioned earlier the transcript of his evidence was tendered on the limited basis of ensuring accuracy in reference to certain questions and answers he gave in cross-examination at the committal, as to which before me he was cross-examined as to the truth of those answers. In the course of the cross-examination before me Mr Vizard was asked questions which relevantly concerned the signing of cheques by Mr Hilliard including his authority to do so, about artwork owned by the Vizard Foundation, and about share transactions that he had engaged in which included an allegation of insider trading in respect of dealing in shares using information acquired by him as a director of Telstra Corporation Limited (“Telstra”). In the latter regard there were questions as to the involvement of a company called Creative Technology Investments (“CTI”) in making investments in shares. Essentially, at the committal Mr Vizard denied the several allegations.

As mentioned earlier Mr Hilliard was committed for trial in the County Court on the theft charges.

Subsequently the Australian Securities and Investments Commission (“ASIC”) brought a civil penalty proceeding against Mr Vizard in the Federal Court of Australia alleging contravention of s 183(1) and s 232(5) of the Corporations Law. The case was that in purchasing shares in Sausage Software Pty Ltd and Keycorp Ltd and selling shares in Computershare Ltd in 2000 by medium of CTI Mr Vizard used confidential information obtained by him in his capacity as a director of Telstra to the board of which he had been appointed in 1996. This was said to contravene s 232(5) which provided that an officer of a corporation must not make improper use of information acquired by virtue of his position as such an officer to gain, directly or indirectly, an advantage for himself or for any other person. Section 183(1) was to the same effect. Both sections were relevant because s 232(5) was in force when the Sausage Software transactions occurred, whereas s 183(1), which replaced s 232(5), was in force when the other transactions occurred. Mr Vizard did not contest the case which was heard by Finkelstein J on 21 July 2005. The case was conducted on the basis of a statement of agreed facts signed by ASIC and Mr Vizard and other documents provided to the Court. I interpolate that the statement of agreed facts is in the Court Book in the present proceeding[21]. In the Federal Court Mr Vizard did not give evidence deposing to the facts set out in the statement of agreed facts.
[21]Court Book 3166-3193.

Finkelstein J published reasons for judgment on 28 July 2005[22]. The judgment records (at [7]), in summary, steps that Mr Vizard took “to avoid publicity surrounding his trading activities”. He established CTI as the investment vehicle with Mr Lay as the sole director and shareholder, thus avoiding any observable connection between himself and CTI. Then Brigham Pty Ltd (“Brigham”), a trustee company the shares in which were beneficially owned by Mr Vizard, his wife and their children, they also being beneficiaries of the trust, entered into a loan agreement with CTI. (I interpolate that the loan agreement, dated 10 December 1999, is Exhibit 9 in the present proceeding.) As Finkelstein J further described it, Brigham would make loans to CTI from funds provided by Mr Vizard or related entities for the purpose of purchasing shares. Of the share trading that took place after entry into the loan agreement, the proceeding brought by ASIC concerned only the three transactions referred to. In discussing the matter of punishment for the contraventions Finkelstein J observed (at [43]) that:

“The defendant was a director of Telstra, one of Australia’s largest companies. He owed his position to the belief that he was honest and capable. Highly confidential information came his way in his capacity as a director. He used that information for the purposes of benefiting himself and his family. This was both dishonest and a gross breach of trust. Not only that, the defendant well knew that what he was doing was wrong. His breach of trust was carefully concealed and was only discovered by chance. Everything was done for personal gain. There was no element of need on the defendant’s part. By all accounts the defendant is a very wealthy man.”

[22]Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57.

In the result his Honour, declaring that the Corporations Law had been contravened, imposed a pecuniary penalty of $130,000 for each contravention, a total of $390,000, disqualified Mr Vizard from managing a corporation for 10 years and ordered him to pay the costs of the application and ASIC’s investigation.

The next matter to refer to is the hearing of the criminal proceeding against Mr Hilliard before Judge Duggan in the County Court at Melbourne on 26 July 2005. That was after the time when Finkelstein J heard ASIC’s application but before he gave judgment. It is necessary to say something about the hearing before Judge Duggan to understand the course and context of events against the background of which the trial in the present proceeding was conducted. The following is taken from the transcript of the hearing before Judge Duggan that I received as Exhibit 3; the transcript so received comprises only the first several pages down to the point (following the Crown prosecutor’s address) where counsel for Mr Hilliard commenced a plea in mitigation. As mentioned, I received the transcript on the basis that it provided context.

At the outset the Crown prosecutor filed a new presentment over the previously filed presentment which was ordered to be permanently stayed. Mr Hilliard pleaded guilty to each of the 14 counts of false accounting constituted by false entries in the cash books of entities in the PAS Group[23]. The prosecutor then opened the matter. He noted that at a mention on 19 June 2005 it had been announced on behalf of Mr Vizard that he would not refuse to answer questions on the ground that the answers would tend to incriminate him. Since then he had agreed to the imposition of a civil penalty by the Federal Court in relation to the conduct which was largely that about which the questions of self incrimination arose. However, since then Mr Vizard’s solicitors had notified the Office of Public Prosecutions that he will claim the privilege “in relation to many matters relating to the proceedings”. The breadth of the claim was set out in letters from the solicitors, Arnold Bloch Leibler, that were tendered. In those circumstances the Crown took the view that Mr Vizard could not be advanced as a sufficiently credible witness; I interpolate that the receipt of the transcript does not go to establish that that “view” of Mr Vizard was or is a correct view for the purpose of the present proceeding. It is no more than part of the record of what was said by the prosecutor to aid in understanding the course of events in Court on the day.
[23]The presentment is at Court Book 275-290.

Then, for completeness, the prosecutor said that those acting for Mr Lay, another Crown witness, had indicated that he also would claim privilege against self incrimination in relation to all matters touching upon CTI transactions.

Consequently, the prosecutor said, the matter had been settled on the basis that Mr Hilliard would plead guilty to the presentment charging 14 rolled up counts of false accounting. The prosecutor then proceeded to a summary of the matters. In the course of that he said that the total amount involved in the false accounting was $3,020,072.44 and that Mr Hilliard received identifiable benefits of $438,183.32. As the Crown was not prepared to call Mr Vizard it was submitted that it was not open to conclude that Mr Hilliard had the benefit of the balance. With one exception that balance all went to IAT.

The trial

It is appropriate to mention some matters that occurred during the trial.

Refusal of Mr Vizard to answer questions on the ground of self incrimination

By leave senior counsel (initially Mr J G Judd QC then he with Mr R Richter QC) appeared for Mr Vizard in respect of questions he may decline to answer in cross-examination on the ground of self incrimination[24]. In fact, Mr Vizard did object to answer some questions relying on the privilege against self incrimination. At several times I heard argument, made rulings, and directed Mr Vizard as I considered appropriate. The questions to which objection was taken were in two areas of concern to Mr Vizard. First, in respect of certain of his evidence at the committal, the truthfulness of which was questioned in cross-examination before me, there was a risk of exposing himself to a charge of perjury in that evidence. This covered a range of matters including evidence relating to the insider trading matter and matters set out in the statement of agreed facts, and artwork of the Vizard Foundation. Secondly, as to questions concerning the matter of insider trading, there was the risk of exposing himself to punishment for a criminal offence pertaining to such insider trading. On this aspect Mr Vizard was also concerned not to give evidence as to the facts stated in the statement of agreed facts. The point here was that the statement was provided to the Federal Court under the protection of s 1317Q of the Corporations Act the effect of which is that the statement would not be admissible in a criminal proceeding where the conduct alleged to constitute the offence was substantially the same as the conduct that constituted the contravention established before Finkelstein J. It is important to note however that the protection is excluded where the criminal proceeding is in respect of the falsity of the evidence so given, that is in the proceeding heard by Finkelstein J. In this case that evidence was relevantly that contained in the statement of agreed facts.
[24]Evidence Act 1958 (Vic) s 29; and see Cross on Evidence, Chapter 13, Section 2.

Counsel further relied on the proposition that facts admitted in a statement of agreed facts are not of the same character as facts found by a Court on evidence led at a hearing in the normal way, and, as to that, the statement of Finkelstein J in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 2)[25] that “The general rule is that formal admissions are only binding for the purpose of the particular case in which they are made: Dawson v Great Central Railway (1919) 88 LJKB 1177 at 1181-2”, was apposite. See also the discussion in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3)[26].
[25](2002) 190 ALR 169 at 183-184, [51].
[26](2005) 215 ALR 301 at 323, [115]-[118].

Counsel for Mr Vizard submitted that the statement of agreed facts had the status of admissions akin to a pleading and were provided for the purpose only of the ASIC proceeding. Mr Vizard had not deposed to the agreed facts in the way of formal evidence given from the witness box. Furthermore, the statement was provided under the protection afforded by s 1317Q. If, in these circumstances, Mr Vizard was required to answer questions as to the facts in the statement, the evidence thus given, as to which findings could be made, would give to the facts an evidentiary value which the statement of agreed facts did not possess. Moreover, the evidence thus given would not have the protection of s 1317Q. There was thus the risk that the evidence would tend to expose Mr Vizard to a proceeding for the imposition of criminal penalties in respect of the same conduct dealt with by Finkelstein J. There was also the risk of exposing Mr Vizard to punishment for perjury in relation to his evidence at the committal hearing.

It remains to mention only that I also had to consider arguments as to whether the privilege had been waived by the provision of the statement of agreed facts and by the giving of evidence at the committal where Mr Vizard had been warned of the risk of perjury. It is not necessary to develop that aspect.

Finally, I was provided with materials to substantiate the existence of a real basis for Mr Vizard’s apprehension of a risk of a charge in perjury in relation to his evidence at the committal hearing and of ASIC or the Commonwealth Director of Public Prosecutions bringing a criminal proceeding concerning the matters in the statement of agreed facts. As to this it is sufficient to refer to Exhibit AA.

Mr Hilliard’s application for a permanent stay of the proceeding

At the conclusion of Westpac’s case counsel for Mr Hilliard opened his case briefly and then made an oral application for an order that the proceeding be permanently stayed. The following observations are concerned only with the stay application.

The basis on which the stay was sought was that the effect of Mr Vizard’s refusal to answer questions on the ground of a tendency to self incrimination was to deny Mr Hilliard a fair trial. So much was this so that to permit the trial to continue would bring the administration of justice into disrepute. This was because the taking of the privilege had precluded important areas of questioning on matters of Mr Hilliard’s authority to sign cheques and Mr Vizard’s credit. This included questions on the issue whether Mr Vizard had given false evidence at the committal, and questions as to his conduct in the insider trading affair. The privilege had erected a barrier which prevented Mr Hilliard’s counsel from being able to properly test Mr Vizard as to matters of probative relevance and credit. It was recognised that “it is not permissible to draw any inference adverse to a witness from the reliance of the witness on a claim of privilege against self-incrimination”[27]. For, if such an inference could be drawn, it would destroy the privilege. Further, no inference can be drawn adverse to the party calling the witness. But unfairness in the trial resulting from the taking of the privilege was another matter, and it was unfair of Westpac to proceed with a credit against credit case where one party had his arms tied firmly behind his back. Mr Hilliard was not on an even playing field.
[27]R v Roberts (2004) 9 VR 295 at 328, [83] per Batt JA, Buchanan and Chernov JJA agreeing.

(c)I reject as false Mr Vizard’s evidence that he had no memory of the meeting with Mr Fyfe, of the arrangement made with Mr Fyfe or of any subsequent approval to pay cheques drawn by Mr Hilliard in excess of his authority. It is relevant in this context that Mr Vizard had few meetings with a bank officer and that one of the reasons for the meeting with Mr Fyfe was to address the situation of Mr Hilliard signing cheques outside his authority. I find that, possessed as he is of an astute and alert mind, the fact that his bookkeeper had drawn cheques in excess of his authority would have impressed itself on Mr Vizard’s mind, and that he would have remembered the incident. The same is true in my view if the meeting arranged that Mr Hilliard was to be given authority to sign such cheques subject to Mr Vizard himself confirming those cheques subsequently.
(d)Further, it is to be noted that of the 141 cheques listed in Exhibit 2, 126 are for amounts between $10,000 and $50,000 while the remaining 15 are for amounts greater than $50,000 and range from a cheque for $50,275.30 for Minter Ellison (solicitors acting for Mr Vizard) dated 22 May 2000 to a cheque for $500,000 for CTI dated 17 December 1999. Further as to these 15 cheques, it is to be noted that they include a cheque for $58,602 payable to Mr Vizard’s mother or sister; a cheque for $100,192 payable to Intersuisse and drawn on the account of Mr and Mrs Vizard; and a cheque payable to Sotheby’s Australia Pty Ltd for $68,100 drawn on the account of the Vizard Foundation which, I find, was properly for an expense of the Vizard Foundation. They also include 12 cheques for amounts between $100,000 and $500,000 and aggregating $2,457,153.25 all of which were drawn and signed by Mr Hilliard at Mr Vizard’s request in connection with the acquisition of shares and which included cheques in respect of transactions that were the subject of the insider trading matter. All of the Exhibit 2 cheques were evidently for the purposes of the Vizards and PAS Group entities and, as I find to be the fact, they were all drawn under and with the authority of Mr Vizard and for the purposes of himself and his family and those entities, as doubtless were other cheques. Yet if possible Mr Vizard would have had it in his evidence that Mr Hilliard did not have his authority to sign any cheques over $10,000, the falsity of which evidence became increasingly apparent as his cross-examination on Exhibit 2 proceeded. For the cross-examiner the process of having Mr Vizard face up to this was like drawing teeth. The net result was, as I find, that Mr Hilliard was telling the truth when he said that the cheques in Exhibit 2 were written under the direction or with the authority of Mr Vizard.
(e)Mr Vizard’s evidence describing his working relationship with Mr Hilliard was misleading. The tenor and effect of it was to minimise the contact between them, and maximise the impression that Mr Hilliard was much left to his own devices. I have referred to this evidence earlier, and do not repeat my findings and observations concerning the working relationship. I find however that Mr Vizard fashioned his evidence to suit his line of not being aware that Mr Hilliard was signing cheques over $10,000 and to deflect Mr Hilliard’s case of regular meetings with Mr Vizard. In other words it was to cut factual ground from Mr Hilliard. But the evidence did not reflect the fact of the working relationship, as I have found. It was misleading.
(f)The next point is the insider trading matter. Counsel for Westpac referred to this in opening the case pointing out that the three subject transactions were separate from the transactions the subject of Westpac’s proceeding. That is true although, as observed above, cheques in Exhibit 2 were drawn for the purpose of Mr Vizard’s secret share acquisitions and were for amounts over $50,000 and in that sense were relevant to Mr Hilliard’s role and his authority to sign cheques which are issues in this litigation. As to the enterprise of secret share transactions I have the benefit of the judgment of Finkelstein J to which Westpac’s counsel referred me (as did Mr Hilliard’s counsel), a deal of evidence which bears on the essence of the matter and the manner of its execution, and the statement of agreed facts. It included secrecy to hide what was to be and was done. Mr Lay politely referred to Mr Vizard wanting “a suitable structure to invest in the share market that provided confidentiality” meaning, he believed, from being “publicly revealed”. The detail of what was done is set out in his Honour’s judgment and otherwise the substance sufficiently appears from the evidence before me. As Finkelstein J held, Mr Vizard’s conduct, he having knowingly engaged in wrongdoing for personal gain, was dishonest and a gross breach of trust. In their written closing address counsel for Westpac stated that they did not say that the conduct for which Mr Vizard was dealt with in the Federal Court was not seriously wrong. It was however submitted that such conduct occurred at the end of the eight year period of Mr Hilliard’s employment, and that no other wrongdoing by Mr Vizard had been established in the present case. The former proposition is correct, while the latter proposition depends upon the findings I make. As to that, the matters discussed in my above findings reflect adversely on Mr Vizard’s character. The consistent strand is a lack of candour.

[146]This relates to the payment to Vizard J in Exhibit 2.

Counsel for Mr Hilliard referred to other matters as bearing on the credit of Mr Vizard. It was submitted that he had given knowingly false evidence at the committal in relation to CTI, that in the memorandum to Mr Lay dated 5 February 2001 he had attempted to have Mr Lay give a false account of matters relating to CTI and share purchases, that in relation to art and the Vizard Foundation he had offended the tax laws, and that the monies he wrongfully obtained from the PAS Group had been concealed in his loan account. As to the first two matters I have had regard to all that counsel submitted in relation to them. I consider however that bearing in mind the number and nature of the matters on which I have concluded adversely to the credit of Mr Vizard, and that the two matters mentioned go only to credit, it is not necessary to consider those matters and express conclusions upon them. Even if I concluded on them as counsel for Mr Hilliard contend, my overall findings and conclusions would remain the same. As to the art and loan account matters, I have dealt with them above and have taken what I have said into account in expressing conclusions on the matter of credit.

In my view, considering all of these matters, I found Mr Vizard to be an unreliable witness. I do not accept his evidence on contentious matters unless it be supported by cogent independent evidence which I accept or as to which I am otherwise satisfied on the balance of probabilities.

Mr Hilliard

Mr Hilliard impressed me as an intelligent, articulate and thoughtful person of serious disposition. He attended to questions and answered carefully, maintaining concentration although under very considerable personal stress. He was of course seeking to meet a case that he had engaged in the theft of monies from the PAS Group over a period of years. It was not practically open to him to object to answer questions on the ground of self-incrimination.

It is to be noted that acceptance of Mr Hilliard’s case that money was removed under an arrangement with Mr Vizard rests on acceptance of Mr Hilliard’s account of the matter given at trial. He produced no contemporaneous records that supported his case. It all rested on his oral say-so. Hence, perhaps not surprisingly, at times in cross-examination when he was pressed on a matter he simply answered to the effect that that is how it was or that is what happened.

Mr Hilliard suffered the further difficulty of having significant marks against his character. As mentioned earlier, in obtaining employment with PAS he relied on a curriculum vitae which wrongly represented the holding of tertiary qualifications. Then, putting aside his case as to cheques being written under and for the purpose of the arrangements he alleges, he pleaded guilty to the charges of false accounting and was sentenced to two years’ imprisonment, wholly suspended. It was conceded by his counsel that Mr Hilliard had misled Mr Wood. Further, he acted contrary to his duties as a director, secretary and public officer. On his own case he “laundered” money, as counsel put it, through IAT for Mr Vizard. And he directed money out of IAT to himself for his benefit, as to which I refer to the discussion concerning evidence of Mr Hilliard and Mr Wood at [71]-[77] above. Further, on his case he drew money out of IAT’s account under the alleged scheme for the benefit of Mr Vizard, and directed PAS Group money to IAT in the absence of any genuine commercial relationship. In the undertaking of these events there was also false accounting in the records of IAT from 1992. To put it shortly, on his own case Mr Hilliard participated in activity that constituted a fraud upon the PAS Group and IAT. Further, in cross-examination Mr Hilliard agreed that in the period of his employment with the PAS Group he had been dishonest with the Commissioner of Taxation in that he had not declared income. He also took records of the PAS Group at the completion of his employment.

Regarding matters overall I concluded that Mr Hilliard was an unreliable witness whose evidence should not be accepted unless it was supported by evidence of a cogent nature which I accept or which I otherwise consider is established on the balance of probabilities.

Decision

The first matter to consider is Mr Hilliard’s authority to sign cheques.

It is convenient to consider this matter in two stages, first, as to the cheques signed before the time at which Mr New received the $50,000 authority, and, secondly, as to the cheques signed after that time.

As to the first stage, I have concluded that, notwithstanding the fact that Mr Hilliard’s written authority was limited to $10,000 (with the stated exceptions, irrelevant to the 11 cheques in Schedule A sued upon), there was an overriding authority from Mr Vizard to Westpac to pay cheques drawn by Mr Hilliard in excess of his authority on the PAS Group accounts. Although this was an oral arrangement reached with Mr Fyfe, in my view the bank’s authority to pay such cheques did not come to an end upon Mr Fyfe’s departure. Nor was it a condition of that authority that the bank in fact confirm each relevant cheque with Mr Vizard. That was so because even if Mr Vizard had disapproved of a payment, the cheque may well have been paid already. The authority given by Mr Vizard effectively put any given cheque beyond the bank’s recall. The fact that Mr Vizard was supposed to be kept abreast of the cheques being signed by Mr Hilliard ostensibly outside authority would enable Mr Vizard to monitor the cheque drawing, but did not affect the authority from Mr Vizard, on behalf of himself and the relevant account holders, to the bank. It follows that regardless of any negligence of the bank in not confirming with Mr Vizard his approval of the 11 cheques sued upon in Schedule A, Mr Vizard had previously given an oral authority to the bank to pay those cheques.

As to the second stage, and given that (as I conclude below) the bank has not established that the $50,000 authority was a forgery, each of the 50 cheques was signed by Mr Hilliard within the written authority. I note, however, that while they were not sued upon Mr Hilliard signed many cheques in this period, ostensibly in excess of his authority but for legitimate expenses of the account holders. In 1999 and 2000, Mr Hilliard signed cheques for amounts of up to $500,000. There was no evidence that Mr New or anybody else at the bank sought from Mr Vizard confirmation of any cheques signed by Mr Hilliard in excess of his authority, and Mr Vizard denied that he had authorised Mr Hilliard to pay such cheques. Notwithstanding these matters, having regard to the number and dollar amount of the cheques, the overwhelming inference, and the inference which I draw, is that Mr Vizard did confirm with the bank that he approved of many of the payments made by the cheques in Exhibit 2.

That leaves for determination the question whether Mr Vizard signed the $50,000 authority. I now deal with that question. Counsel for the plaintiff opened this aspect of the case somewhat cautiously, stating that “Mr Vizard will give evidence that he gave no such authority to Mr Hilliard or to Westpac and that he does not believe he signed the letter dated 2 February 1996”[147]. In his evidence in chief, Mr Vizard was asked whether he had authorised Westpac to pay cheques signed by Mr Hilliard or to make payments he (Mr Hilliard) had ordered in terms of the authority” to which Mr Vizard said “No, I did not”. He had no recollection of a discussion with Mr Hilliard regarding an increase in Mr Hilliard’s authority on the PAS Group accounts. When asked what he could say about the signature on the authority, Mr Vizard said “It appears similar to my signature but there appear to be – it appears to be a slightly more staccato, jerky version of my signature. It resembles my signature but there appear to be some differences”. Mr Vizard said that he did not write the text in the facsimile, that it was not in his style, and finally that he did not sign the document. In cross-examination, Mr Vizard reiterated that the signature appeared to be his signature, then gave the following evidence[148]:
[147]Transcript 16.
[148]Transcript 292.

“Are you saying, Mr Vizard, that it is your signature that's been wrongly applied to the document or the signature has been forged?---I am not saying any of those things. I am saying it appears to be my signature.
Are you in a position to dispute Mr Hilliard's evidence that it's your signature?---I say it appears to be my signature but in many respects it looks faulty or constructed.
Your signature varies quite a lot from time to time, doesn't it?---It's evolved over the years.
There would be many documents that you have signed from time to time which you would not have any recollection about many years after the event?---That's possible.
So it's distinctly possible, is it not, that you signed this document but have forgotten about it?---I don't believe so.
Mr Vizard, so I can put this to you directly, Mr Hilliard says you signed that document. What do you say?---I say I didn't.”

Although Mr Vizard denied signing the authority, his answers were yet ambiguous, guarded and bordered on the disingenuous. For instance, while the case was conducted on the express basis that Mr Vizard accused Mr Hilliard of forging his signature or otherwise improperly applying it to the facsimile, Mr Vizard said that he was “not suggesting any of those things”. As I have said earlier, the plaintiff’s own document examiner could not reach any conclusion on the matter and further, Mr Vizard’s instructions meant that the document examiner was denied the opportunity of comparing the alleged forgery with an original (genuine) signature similar to the alleged forgery.

Mr Hilliard’s evidence as to the alleged forgery was unambiguous. He did not type or sign the letter setting out the $50,000 authority. He received the letter by facsimile and on-faxed it to Mr New. He did not forge Mr Vizard’s signature on it.

There is also the evidence of the document examiners which I have dealt with above.

Westpac’s case is that the $50,000 authority was not authentic, that Mr Hilliard forged Mr Vizard’s signature and passed the document on to Westpac without informing Mr Vizard thus (and for the purpose of) avoiding further scrutiny of cheques and enabling him to continue stealing money from the PAS Group by way of cheques drawn for amounts up to $50,000. It is a most serious allegation of forgery as to which there is the rival evidence of Mr Vizard and Mr Hilliard, and the fact (supported by Mr Anderson) that the signature resembled Mr Vizard’s genuine signature. Having considered the evidence carefully both in the sense of that particular evidence and in the context of the evidence overall, I conclude that Westpac has not established, on the balance of probabilities, that the $50,000 authority was not authentic. For the sake of clarity, the evidence of Mr Vizard is not to be acted on.

For these reasons Westpac’s case of unjust enrichment must fail insofar as it is based on a mistake as to the authority of Mr Hilliard to sign cheques. No such mistake as alleged is established.

It is a further consequence of my conclusion concerning the $50,000 authority that the claims in paras 16 and 17 of the statement of claim must fail.

However there remains for consideration the question whether Westpac has established its claim in unjust enrichment on the basis that it paid the subject cheques under a mistake that they were for the purpose or benefit of the relevant account holder and given with its authority. This involves whether Westpac has established:

(a)that in paying the subject 61 cheques it acted under a mistaken belief that the proceeds were paid for the benefit, and with the authority, of the account holder.
(b)Mr Hilliard received the benefit of the 61 cheques and whether, not having given consideration for the payments, he was unjustly enriched thereby.

In seeking to sustain that case Westpac’s counsel submitted that Mr Hilliard drew and signed the cheques in perpetration of a fraud upon the relevant account holder, and that Westpac’s ignorance of that fraud caused it to pay the cheques. Mr Hilliard’s answer to the allegation of fraud was that he drew and signed the 61 cheques (and other cheques) under the arrangements made with Mr Vizard. That is, what he did was done with the actual or ostensible authority of Mr Vizard. Mr Hilliard’s counsel submitted that if Mr Hilliard had authority to sign cheques over $10,000 by reason of the written authorities and practice, and that the $50,000 authority was authentic, then, so far as the issue of authority to sign cheques was concerned, that was the end of the case. (As to the other part of the case concerning the purpose or benefit of the cheques, the bank should fail for want of inquiry, as mentioned earlier in referring to the submissions.)

In substance I have found that Mr Hilliard’s authority was to the effect contended for. But that alone cannot avail Mr Hilliard for the simple reason that what he seeks to establish as justification is the carrying out of a scheme for the secret removal of funds from the relevant account holders, with no consideration or benefit for those account holders and for the improper purpose of secretly enriching Mr Vizard and Mr Hilliard. It is to be noted that three of the 61 cheques, for an aggregate amount of $144,756.45, were drawn on the joint account of Mr and Mrs Vizard. In the case of the other 58 cheques the account holder was a company in the PAS Group. While doubtless Mr Vizard could do with his own funds what he would, although his wife was a joint holder of their account and there is no evidence that she authorised the withdrawals under and for the purpose of the alleged arrangements or received any consideration therefor, the position is different with the corporate account holders. For, being entities in their own right separate from Mr Vizard, Mr Hilliard’s case must meet the difficulty that the arrangement involved the secret removal of the funds of the corporate entity for the personal advantage of Mr Vizard and himself and not for the purpose of the account holder which received no consideration. Mr Hilliard’s counsel’s submission did not grapple with these difficulties. It seemed to be assumed that it was sufficient to establish that the cheques were drawn under the arrangements with Mr Vizard and to rely on Mr Vizard having an actual or ostensible authority in that regard. Even if Mr Vizard was a director of each company, and the position as to directors is not clear as noted by Westpac’s counsel in a supplementary written submission, that is not sufficient to have the consequence in law that each corporate account holder was bound by and to the arrangement alleged by Mr Hilliard for Mr Vizard’s (and Mr Hilliard’s) private purposes.

The preceding paragraph of course presupposes that Mr Hilliard’s evidence as to his arrangement with Mr Vizard is accepted. But, as I have said, I regard Mr Hilliard’s evidence as unreliable. I have regard to all that Mr Hilliard’s counsel said as to why Mr Hilliard’s version of events was plausible and should be accepted (and I note that Mr Hilliard’s counsel advanced the case with the utmost vigour throughout and said all that could be said on Mr Hilliard’s behalf), but ultimately I am not persuaded that arrangements were made as he contends. There being no other evidence upon which it might be concluded that such arrangements were made, it is not established that he and Mr Vizard made the alleged arrangements. As I concluded in relation to Mr Hilliard, and Mr Vizard, I do not accept their contentious evidence unless it is supported by other cogent evidence which I accept or which I may otherwise find established on the balance of probabilities having regard to the evidence as a whole. As the relevant contentious evidence pertains to matters that did or did not pass between them, none of the other witnesses being present, the question as to what is established by the parties must be determined on the balance of probabilities on a consideration of the whole of the evidence. Thus approaching the matter it seems to me to be clear that Westpac paid the 61 cheques in the belief that they were payments for the benefit, and under the authority, of the relevant account holder. Further, I do not accept that on the evidence Westpac was on notice of such matters that acting reasonably it should have inquired of the PAS Group as to the purpose of the cheques or as to whether the cheques were for the benefit of and authorised by the relevant account holder. As I have mentioned, such a case was neither pleaded nor run by Mr Hilliard. The question is whether that belief of Westpac in paying the cheques was mistaken and whether Mr Hilliard received the benefit of the payments. It will be recalled that I have already concluded that he received the benefit of the nine cheques that were paid to entities other than IAT (and ASA), as they paid liabilities of his.

It is to a consideration and determination of those issues that I now turn. The following matters are relevant in this regard.

There was no commercial or other relationship between the PAS Group and the relevant account holders on the one hand, and IAT on the other hand. The only link was Mr Hilliard as an employee of PAS and a director of IAT, but that was coincidental and was not and did not constitute a commercial or other relationship in which PAS or a member of the PAS Group might have made payments by cheque to IAT. Notwithstanding that, over a period of years the PAS Group made numerous payments by cheque to IAT. While in relation to the 61 cheques sued upon it is readily seen that nine were applied for the benefit of Mr Hilliard, the position with the other 52 cheques is not so apparent. They fall into the area, or “pool” so to speak, of the approximately $2.5M that went to IAT and which Mr Hilliard said he did not receive and does not have, and which Mr Vizard denies having received. Mr Hilliard says that apart from approximately $440,000 (as he agreed at the committal hearing, or $438,183.32 according to the prosecutor in the County Court) which he received as his consideration, he paid the balance to Mr Vizard. Mr Vizard denies any such consideration, the receipt of any money and the existence of the arrangements alleged by Mr Hilliard.

There is no evidence, other than Mr Hilliard’s say-so, that would support his having given Mr Vizard quantities of cash. For reasons discussed I do not accept the contention that movements in Mr Vizard’s loan account were occasioned by and reflect the movement of money under the arrangements alleged by Mr Hilliard. Nor, for reasons discussed, do I accept that such movements were part of a means of building an amount of cash overseas whether or not as a way of avoiding tax. The allegations are not established.

The situation is then that the payments by the PAS Group, but in particular the 61 cheques sued upon, cannot be explained on any basis other than that advanced by Mr Hilliard. That is, his position is, and it is the fact, that he wrote and signed cheques which included the 61 cheques which were duly paid. So Westpac paid the cheques according to their tenor and did so, I find, on the basis and in the belief that the cheques were the duly and properly authorised instruments of the account holders for their purposes. The only way in which Mr Hilliard contended that the cheques were authorised by and were for the benefit of the account holders was by submitting in effect that that was the consequence of the arrangements made with Mr Vizard. Even were I to accept Mr Hilliard’s evidence in this respect that consequence would not follow. That is because, as already mentioned, the arrangements were for the secret removal of funds from the subject bank accounts not for the purposes of the account holders but for the private purposes of Mr Vizard and Mr Hilliard.

The cheques having been paid, I return to the issue of the disposition of the proceeds. There is no evidence to support, and I do not accept, the uncorroborated evidence of Mr Hilliard as to giving Mr Vizard quantities of cash drawn from IAT’s account and which withdrawals were covered by subsequent payments to IAT from the PAS Group. Apart from that evidence of Mr Hilliard there is no evidence on which it could be concluded on the balance of probabilities that Mr Vizard received amounts withdrawn from the IAT account or the PAS Group accounts by means of cheques signed by Mr Hilliard. Nor is there evidence from which an inference to that effect could reasonably be drawn.

Mr Hilliard said that in executing the alleged arrangement he first withdrew cash from IAT’s account, which he gave to Mr Vizard, and then reimbursed IAT’s account with cheques drawn on the PAS Group. That was the order in which he implemented the arrangements as agreed with Mr Vizard. In cross‑examination Mr Wood agreed that Mr Hilliard drew a lot of cheques on IAT for various purposes. That evidence was non‑specific but doubtless correct. So also may his next answer be accepted that he believed that, as counsel put it, a lot of money came back to IAT from companies within the Vizard network. But what is to be understood by his next answer is not clear. The question and answer was:

“To your knowledge all of the moneys that Mr Hilliard drew down in respect of payments for or in respect of Mr Vizard came back into IAT from a Vizard company?---I believe so.”

The cross-examiner then moved to a different matter and Mr Wood was not re‑examined. Hence the subject was not developed. There is some difficulty in the evidence being useful. The premise to the question was Mr Wood’s “knowledge” but that was not established, indeed Mr Wood had not been aware of Mr Hilliard’s cheque drawing activity, such knowledge as he had acquired was acquired after the event. Secondly, the question contained an unsubstantiated premise that Mr Wood knew that Mr Hilliard had drawn payments for Mr Vizard, a matter surely within the knowledge of Mr Hilliard and not Mr Wood who had not been aware of these matters. At best Mr Wood’s beliefs must have been based on supposition or belief based on matters of which he had become aware after the event. In consequence I do not accept that Mr Wood could have known, in a sense reliable enough to be acted on, that all moneys Mr Hilliard drew from IAT “for or in respect of Mr Vizard” came back from a Vizard company. It may be noted that Ms Hellstrom was also unaware of Mr Hilliard’s cheque drawing activity and of payments being received from the PAS Group.

A further difficulty in finding that the payments from the PAS Group reimbursed the IAT account is that the records maintained by Mr Hilliard did not truly and accurately reflect the transactions. The records did not disclose the nature and purpose of the relevant matter and the parties involved. In addition, Mr Hilliard withdrew money from IAT’s account for his own purposes; I referred earlier to Mr Wood’s evidence that Mr Hilliard did this without authority. Having regard to these matters it is not established and I do not find that there was a correspondence between the amounts withdrawn from IAT’s account and the amount received into that account under cheques of the PAS Group. I note that Mr Hilliard said there was never a direct equivalence, as there could not have been under the arrangements, but nor, in my view, is it established that there was an equivalence when the last PAS Group payment had been made.

To clarify this aspect further, I did not understand counsel in final address to demonstrate by analysis that there was or was not such a correspondence.

It is relevant to consider whether the funds received into the IAT account under cheques received from the PAS Group were applied for the benefit of IAT. Without overlooking that the funds were paid into IAT’s business account, the evidence does not indicate, let alone establish, that the funds were so applied. In addition, of course, it is Mr Hilliard’s case that they were not so applied. But I am presently more concerned with what the evidence may establish than Mr Hilliard’s statements in evidence.

Separately from that consideration is the evidence of Mr Hilliard, which I accept as correct regarding all of the circumstances, that he applied funds he drew from IAT’s account for his personal purposes. The further fact, as I find it to be, is that IAT’s business prosperity was not at a level that, generally speaking at least, could have enabled such expenditure.

Finally, there is the matter of the financial position of Mr Hilliard and Ms McCready. I referred to this earlier. Exhibit O being a personal financial plan prepared for them by Westpac indicates their position at 9 May 2000. It is no understatement to say that the financial position Mr Hilliard had attained by that time represented a remarkable achievement given his employment and income history. I have earlier referred to Mr Hilliard’s evidence as to his sources of income apart from his employment with PAS and to assets held prior to commencement of that employment. Even if there was no element of over‑statement in the level of his income from IAT or any source other than PAS, Mr Hilliard’s evidence did not satisfactorily establish how in the period of his employment with PAS his resources, whether considered alone or in conjunction with those of Ms McCready, enabled the acquisition of assets to the level disclosed in the evidence. I might add that a similar observation might be made as to the lifestyle he enjoyed exemplified by the overseas travel.

These seem to me to be factors properly to be taken into account in the context of the evidence generally in deciding whether Mr Hilliard received the benefit of the balance of 52 cheques. That is to be determined on the balance of probabilities assessed in light of the underlying seriousness of the issue. Yet I am concerned only with a conclusion on the balance of probabilities and not with the establishment of a criminal offence.

In my view, regarding the matter overall, the likelihood or probability is that Mr Hilliard received the benefit of the cheques in question via the medium of IAT, and I am satisfied and find that that was the case. I conclude that it is established on the balance of probabilities that Mr Hilliard received the benefit of the 61 cheques, none of which were written or paid for the benefit of the relevant account holder, and that in the terms of the case law to which I have referred Mr Hilliard was unjustly enriched thereby.

The consequence is that Westpac has established its case that it paid the 61 cheques under a mistake that they were for the benefit of or paid with the authority of the relevant account holder and that Mr Hilliard has received and unjustly had the benefit of the payments.

There will accordingly be judgment for Westpac and an order for the amount due. The amount to which Westpac is entitled is the amount being 75% of the face value of the cheques, plus interest. I will hear counsel as to the orders to be made and as to costs.

[2006] VSC 470

6 December 2006