WILLIAMS v Andrews - [2021] WADC 25

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   WILLIAMS -v- ANDREWS [2021] WADC 25
CORAM:   LEMONIS DCJ
HEARD:   22-26 JULY, 29-31 JULY, 8 AUGUST,
25-26 NOVEMBER & 16 DECEMBER 2019

DELIVERED          :   25 MARCH 2021
FILE NO/S:   CIV 1281 of 2018
BETWEEN:   DAVID JOHN WILLIAMS
Plaintiff
AND
KIM ANDREWS
First Defendant
LEONIE HENDERSON
Second Defendant
MEI LEHOCZKY
Third Defendant
KIMMELIEE8 PTY LTD
Fourth Defendant

Catchwords:

Plaintiff and first defendant were long time friends - Agreed to co-venture in a new business using a corporate vehicle (KMA) - Did not document terms of their arrangement - Plaintiff funded business - Plaintiff asserts oral agreement with first defendant to the effect that he lent to her one half of the moneys he advanced for the purposes of the business - Consideration of evidence relating to the existence of such an agreement - Difficulties where no contemporaneous record of conversations alleged to have taken place - Further business then acquired, which is operated by KMA - Uncertainty as to whether the plaintiff or KMA own that business - Further business ultimately sold to the fourth defendant - All parties accept written terms by which the business was sold do not accord with their understanding of the moneys to be paid upon settlement - Issues as to who owned the further business at the time of sale - Two written agreements in existence for that sale, the first of which identifies the plaintiff as a co-seller of the business, together with KMA - Second agreement has KMA as sole seller - First to third defendants guarantors of fourth defendant's obligations - Plaintiff seeks to enforce first written agreement in which he is described as a co-seller - Defendants assert an estoppel to restrain payment of full purchase price - Plaintiff asserts further personal loan with first defendant pursuant to which he paid for certain of her personal expenses - First defendant denies existence of such agreement

Legislation:

Corporations Act 2001 (Cth)

Result:

Plaintiff's claim against first defendant allowed in part
Plaintiff's claim otherwise dismissed

Representation:

Counsel:

Plaintiff	:	In person
First Defendant	:	Mr M Curwood
Second Defendant	:	Mr M Curwood
Third Defendant	:	Mr M Curwood
Fourth Defendant	:	Mr M Curwood

Solicitors:

Plaintiff	:	Not applicable
First Defendant	:	Smart Legal WA
Second Defendant	:	Smart Legal WA
Third Defendant	:	Smart Legal WA
Fourth Defendant	:	Smart Legal WA

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

Australia and New Zealand Banking Group Ltd v Manasseh [2016] WASCA 41
Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560
Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191
Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287
Crawley Investments Pty Ltd v Elman [2014] WASC 233
Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658
Delaforce v Simpson‑Cook [2010] NSWCA 84; (2010) 78 NSWLR 483
Fazio v Fazio [2012] WASCA 72
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1
Girgis v Poliwka [No 6] [2019] WASC 230
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23
Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313
Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505
Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466
Stone v Braun [2015] WASCA 103
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 2
Watson v Foxman (1995) 49 NSWLR 315
Woodley v Woodley [2018] WASCA 149

LEMONIS DCJ:

These proceedings demonstrate the difficulties which arise when parties do not adequately document their business arrangements, thus requiring those arrangements, if possible, to be discerned from their conversations, conduct and written communications, as well as other documents pertaining to the business. In this case, those difficulties are exacerbated because the parties did not fully appreciate the consequences of a business being owned through a corporate structure.
The dispute here concerns two business operations - the business of KMA Distributors Pty Ltd (KMA) and the business known as Carine Health.
KMA was initially an entity wholly owned by the first defendant (Ms Andrews). Ms Andrews and the plaintiff (Mr Williams) agreed to co‑venture in a new health food style business and did so through KMA. Mr Williams and Ms Andrews became equal shareholders in KMA and both were directors of it.
It is not in dispute that Mr Williams effectively funded KMA by utilising many credit cards that were held in his name. At the heart of the dispute is the terms upon which Mr Williams made that funding available. Mr Williams contends that on or shortly before 24 August 2015, he made an oral agreement with Ms Andrews which was to the effect that he provided debt funding to KMA on terms that:
1.The monies were paid on his behalf and on Ms Andrews' behalf in equal proportions consistent with them each being a 50% shareholder.
2.The proportion which he contributed on Ms Andrews' behalf constituted a loan from Mr Williams to Ms Andrews, which attracted interest at the rate of 5% per annum.[1]
[1] Paragraph 6 of the statement of claim.
It is not in dispute between Mr Williams and Ms Andrews that the funding he provided was constituted by transferring money to KMA and paying KMA's expenses. If the arrangements were as Mr Williams contends, then a further issue arises as to what monies actually were advanced by him the subject of that arrangement. The alleged monies involved are substantial, the statement of claim alleging total advances of $724,329.50.[2]
[2] Paragraph 7(b) of the statement of claim.
Ms Andrews denies any such agreement was made. Instead, Ms Andrews says that Mr Williams' provision of funds for the benefit of KMA constituted a loan from him to KMA for which she is not personally responsible. The dispute regarding the terms upon which Mr Williams made available funding to KMA only concerns Mr Williams and Ms Andrews; it does not concern the remaining defendants. There is an additional dispute between Mr Williams and Ms Andrews as to whether a further loan agreement was made between them pursuant to which Mr Williams paid certain of Ms Andrews' personal expenses.
Before touching on the dispute regarding Carine Health, I need to specifically address KMA's position in respect of the proceedings. KMA was deregistered as a company on 26 April 2019 pursuant to s 601AB of the Corporations Act 2001 (Cth). Pursuant to s 601AD of the Corporations Act, KMA's assets vest in the Australian Securities and Investments Commission (ASIC).
These proceedings were commenced on 10 April 2018. KMA has never been a party to the proceedings. ASIC is not a party to the proceedings. I indicated to the parties that I would grant Mr Williams leave to continue with the proceedings pursuant to O 18 r 4 of the Rules of the Supreme Court 1971 (WA) without the joinder of ASIC on the understanding that he and Ms Andrews could not then seek to dispute the findings in any future proceedings to which KMA is a party.[3]
[3] ts 933.
Carine Health is a business name under which a health food business was conducted. At varying times, Mr Williams owned the business which operated under that name and other similar names. Mr Williams initially owned and operated that business up until 14 September 2015, when he sold it to Ms Leanne Brown. Pursuant to a deed made 27 September 2016 between Mr Williams and Ms Brown, Mr Williams bought back the business from Ms Brown with effect from 27 September 2016. From then on, KMA in effect managed the business under the name of Carine Health, however the terms upon which it did so were not documented.
The second and third defendants (Ms Henderson and Ms Lehoczky) were employed by KMA to work in the Carine Health business.
The defendants contend KMA acquired the business of Carine Health at around the time KMA commenced managing that business, such acquisition allegedly arising from conversations between Mr Williams and Ms Andrews and also from KMA's conduct in operating the business. There is no documentation setting out the terms of any such acquisition.
During the period which KMA operated Carine Health, to the extent which the revenue from Carine Health's business was banked, it was paid into KMA's bank account.
Ultimately, two written agreements were then made for the sale of Carine Health to the fourth defendant (KM8). Ms Henderson and Ms Lehoczky were each 25% shareholders of KM8. Ms Andrews held the remaining 50% shareholding in KM8. The first agreement described the parties as being KMA, Mr Williams, KM8, Ms Andrews, Ms Henderson and Ms Lehoczky. KMA and Mr Williams were co‑sellers. Mr Williams was also a party as a covenantor. KM8 was the buyer. Ms Andrews, Ms Henderson and Ms Lehoczky were parties as guarantors of KM8's obligations. The second agreement excluded Mr Williams from the description of co-seller; otherwise the named parties remained the same. Also, the purchase price on both agreements remained the same.
The defendants contend that the second agreement is the agreement pursuant to which KMA purchased Carine Health. Further, the defendants contend that Ms Andrews, Ms Henderson and Ms Lehoczky were not parties to the second agreement. The defendants however accept there were no communications by them, or any of them, with Mr Williams to such an effect.
The disputes between the parties in respect of the Carine Health business can, for introductory purposes, be distilled to:
1.Which of the written agreements constitutes the agreement by which Carine Health was sold to KM8.
2.Whether the agreement to sell Carine Health to KM8 was made, as Mr Williams contends, between Mr Williams, alternatively Mr Williams and KMA, and all of the defendants, or, as the defendants contend, between KMA and KM8 only.
3.Irrespective of who were the parties to the agreement, whether, as the defendants contend, KM8 was only required to pay 50% of the recorded purchase price and the price for the stock value on hand.
The defendants accept that their contention as set out at [15(3)] above is inconsistent with the terms of the two competing agreements for sale as propounded by the parties. The defendants contend that the reduction of KM8's written obligations such that it was only required to pay 50% of the purchase price and stock value arises by way of an estoppel. The defendants do not contend there was a variation to either of the written agreements. This is because the conversations said to give rise to the estoppel actually took place before those written agreements were executed. Also, the defendants do not seek rectification of either written agreement to accord with their contention regarding the reduced payment obligations.
KM8 only paid 50% of the purchase price and stock value for Carine Health, which was paid to KMA. Mr Williams claims the balance of the purchase price is due to him, alternatively to him and KMA, by each of the defendants - KM8 as the principal obligor, and Ms Andrews, Ms Henderson and Ms Lehoczky as guarantors.
Further, in respect of the operation of the Carine Health business, Mr Williams claims his alleged oral agreement with Ms Andrews also applies to the profits of Carine Health paid to KMA and thus Ms Andrews must pay Mr Williams 50% of those monies.[4]
[4] Paragraph 18 of the statement of claim.
In addition, if, which Mr Williams disputes, he transferred the business of Carine Health to KMA, he contends the value of that business is also the subject of his agreement with Ms Andrews and she must pay him 50% of the value of that business.
As there is no written agreement which supports the parties' respective cases, my assessment of the oral evidence and the communications between the parties is material to the outcome of this case. All of the individual parties gave evidence. Ms Michelle Harvey also gave evidence, being called by Mr Williams. Ms Harvey was Mr Williams' finance broker and had known him for at least 12 years at the point in time when she gave evidence.[5] As I describe below, her evidence is pivotal to Mr Williams' allegation of the agreement alleged at par 6 of the statement of claim.
[5] ts 553.
Mr Williams represented himself during the trial. In conducting the trial and in considering Mr Williams' submissions, I have had regard to the principles concerning procedural fairness to a self‑represented litigant outlined in Stone v Braun.[6]
[6] Stone v Braun [2015] WASCA 103 [62] ‑ [69]; see also Woodley v Woodley [2018] WASCA 149 [77].

Issues to be resolved

The issues which I consider I must resolve are as follows:
1.Whether Mr Williams has established there was an oral agreement between him and Ms Andrews in the terms alleged at par 6 of the statement of claim.
2.Who owned the business of Carine Health at the time of its sale to KM8.
3.Who were the parties to, and what were the terms of, the agreement by which the business of Carine Health was sold to KM8.
4.Have the defendants established that an estoppel operates such that KM8 is only required to pay 50% of the purchase price and stock value for the business of Carine Health.
5.Has Mr Williams established his claim of a personal loan with Ms Andrews for payment of her personal expenses, and if he has, what monies are the subject of that loan.
6.What monies has Mr Williams advanced to the benefit of KMA.
7.What monies have been repaid to Mr Williams by KMA, either directly, or by way of paying his personal expenses.
I propose to deal with these issues in the order in which I have set them out.
In addressing the issues raised in this case, it is necessary to set out in some detail the evidence given by the parties and also the content of their communications. This is because the nature of the evidence, and of their communications, reflects the generality, informality and imprecision with which the parties were conducting their business affairs.

Legal principles regarding formation of agreement and making of representations

I make the following observations regarding the legal principles applicable to my assessment as to whether the alleged oral agreement was made between Mr Williams and Ms Andrews, and also my assessment of the alleged representations founding the defendants' estoppel case.
Where an oral agreement is alleged to have been made on or by a certain date, the conduct of the parties, including conduct subsequent to the postulated date, may be considered in deciding whether a contract has been concluded.[7] However, as Le Miere J observed in Blueprint Homes (WA) Pty Ltd v Samuel:[8]
… if the court concludes that the dealings between the parties did not result in a contract, then subsequent events or statements cannot be used to show that there was a contract.
[7] Fazio v Fazio [2012] WASCA 72 [193] (Murphy JA with whom Pullin JA generally agreed & Newnes JA agreed).
[8] Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287 [31].
In considering whether an oral agreement was made as alleged by Mr Williams, I need to consider the conversations said to constitute the agreement, the contemporaneous and subsequent written communications pertaining to the agreement and the records of KMA itself. These same observations apply to the representations alleged to found the defendants' estoppel case.
In John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd,[9] Hammerschlag J observed:
Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved.
[9] John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 [94]; see also Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 2 [39].
In Warrington Management, Vaughan J at [37] referred to the observations of McLelland CJ in Eq in Watson v Foxman[10] that:
Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
[10] Watson v Foxman (1995) 49 NSWLR 315, 318 - 319.
Vaughan J then observed at [38]:
In determining whether there was an agreement - and, if so, its terms - the matters referred to in that passage speak equally as to the difficulties in proof that arise where, in the absence of a reliable contemporaneous record or other corroboration, a party relies on spoken words to found a claim.
Vaughan J expanded on these matters in his Honour's judgment in Girgis v Poliwka [No 6].[11] In Girgis, after setting out the statement of McLelland CJ in Eq in Watson v Foxman, Vaughan J repeated his observations in Warrington Management at [38] and then stated:[12]
Watson v Foxman does not lay down a rule of universal application. It sets out considerations to which a trier of fact should have regard in determining whether misleading or deceptive conduct by oral representation - or the making of an oral agreement - is established in the circumstances of the particular case. The appropriateness of those considerations cannot be doubted. The many occasions on which this passage has been recited with approval is testament to its enduring accuracy.
The central task for me as a trier of fact is to assess whether the plaintiffs have proved, on the evidence adduced, that the pleaded alleged representations and alleged advice occurred. The standard of proof is the balance of probabilities. But a mere mechanical comparison of probabilities, independent of any belief in the reality of a fact, cannot justify a finding that the alleged fact occurred. I must feel an 'actual persuasion' of the occurrence of existence of the disputed representation or advice. The evidence as a whole must establish a reasonable satisfaction on the preponderance of probabilities so as to sustain the relevant factual finding.
Whether I am so reasonably satisfied ought not to be considered independently of the nature and consequence of the fact in issue, ie the seriousness of the allegation, its inherent unlikelihood and the gravity of the consequences arising from the finding.
(footnotes omitted)
[11] Girgis v Poliwka [No 6] [2019] WASC 230.
[12] Girgis v Poliwka [119] - [121].

I apply this same approach in the matter before me. Specifically, I must feel an actual persuasion of the occurrence or existence of the alleged conversations relied on by Mr Williams to found the oral agreements he alleges he made with Ms Andrews. In relation to the defendants' estoppel case, I must feel an actual persuasion of the occurrence or existence of the alleged representations relied on by the defendants to found their estoppel case.

Existence of oral agreement between Mr Williams and Ms Andrews regarding the funding of KMA

The circumstances in which Mr Williams and Ms Andrews agreed to co‑venture in a new business are not in dispute. Ms Andrews had previously worked for Mr Williams. They discussed creating a new business in which they would each be an equal part‑owner. The new business would use an existing corporate vehicle of which Ms Andrews was the sole shareholder and director, being KMA. Ms Andrews and Mr Williams were to be 50% shareholders in KMA. This shareholding split was to be achieved by Ms Andrews transferring the necessary number of shares to Mr Williams. This occurred and Mr Williams became a director of KMA.
It is also not in dispute that Mr Williams would provide working capital for KMA by either transferring money to it or paying its expenses. The critical issue in respect of the loan agreement alleged by Mr Williams is on what terms did he make such working capital available.
At the time at which Mr Williams and Ms Andrews held their discussions - August 2015 - they each were expected to have significant time available to pursue such a business. Ms Andrews had recently been retrenched from a job she held. Mr Williams was selling his business then called Healthy Life Carine, which is the same business as Carine Health to which I have already referred. Both had experience in the retail health shop industry. In addition to Ms Andrews having worked for Mr Williams, she and Mr Williams were, at that point in time, friends.
Mr Williams' evidence was that in his initial discussions with Ms Andrews they discussed working capital requirements between $200,000 and $300,000 as a maximum.[13] However, Mr Williams also gave evidence that he did not take that number very seriously.[14]
[13] ts 202.
[14] ts 202.
It is not in dispute that Mr Williams used numerous credit cards to provide the working capital. Doing so obviously reflected significant risk and had the potential to expose Mr Williams to significant interest liability. Mr Williams' rationale as explained in his evidence for the use of the credit cards was that it gave them 'more breathing space'.[15] He explained:
We had between 30 to 60 days to pay off those cards. That was 30 to 60 days' credit we had on top of the 30 days we had when we purchased the stock. So in some cases we had up to 90 days before the stock had to be paid for in full. That gave the business quite a good amount of movement.
[15] ts 202.
Unfortunately, in their initial conversations, Mr Williams and Ms Andrews were buoyed by the prospects of success in their new business and, it is apparent, paid very little attention to the risk, and consequences, of failure.
It is against this context that I now turn to the specific conversations relied upon by Mr Williams to found the alleged oral agreement with Ms Andrews. Critical to Mr Williams' case in this respect is Ms Harvey's involvement, Mr Williams' evidence being that it was Ms Harvey who had the specific conversation with Ms Andrews said to give rise to the agreement.
In response to a question from me as to what conversations he had with Ms Andrews regarding the loan, Mr Williams gave evidence that:[16]
I believe there was one at Dome Coffee Shop. I don't - I'm not sure where it was to be honest. Most discussions or talk was when we met up to look at the premises and basically have a view of that. We didn't meet at each other's houses as such. We did communicate a fair bit with text and Messenger but mostly - mostly just talking about who's going to get the shelving, et cetera, et cetera. When it came down - but regards the financing of it I did at the same time talk to Michelle Harvey, who I have called as a witness, and discussing with her what - what I was doing. She made it clear to me, 'Does Kim understand how this loan is going to be arranged?' And I said, 'I think so'. She said, 'Would you like me to talk to her?', and I said, 'Yes, if you think that will make it clearer.' I wasn't at any stage worried that Kim wasn't aware of it but I thought a second person just mentioning how it should be would be a good idea. …
[16] ts 175 - ts 176.
Shortly after giving this evidence, I asked Mr Williams if he was able to outline the conversation or conversations he had with Ms Andrews. His answer was:[17]
In exact details of what we had discussed, it had been pretty general I have to say. We - we really just talked about how excited we were, the opportunities. We did discuss how we would like the theme of the business. Where we would get our banking details et cetera. It - its very general structure as - as such. Ms - Kim and myself had been very close friends for a very long time, over 25 years. We had discussed many details of just life and - and everything and it was not uncommon for us to do - to send the odd picture and joke and - and things like that. And it was - the reason why it was a very casual arrangement as far as setting up. There was a great deal of trust and - and understanding and we - we - we just - well, I mean, as far as I was concerned anyway I didn't feel there was any need to go into the signing forms, getting details and that sort of thing, something I would have done with someone else for sure, but with Kim I didn't feel that was necessary. We talked about how our staff, what our - each of our commitments would be. Kim said to me that she would be able to bring a large database of customers from the previous - previous owners or store that she had been working at or stores and also she knew people in the industry that were interested in working and had jobs that could manage and work in the - work in the store if necessary. And - and I was referred to as the bank basically and was going to finance everything.
[17] ts 177- ts 178.
As can be seen from this passage, Mr Williams' evidence was that his conversations with Ms Andrews were of a general nature, reflecting their long‑standing friendship. Also, a focus of their discussions was their excitement as to the opportunities in front of them.
Mr Williams gave evidence that after he arranged for $30,000 to be paid as a deposit in respect of the commercial lease from which the business was to be conducted, he then had a further conversation with Ms Harvey. Mr Williams' evidence in examination‑in‑chief was as follows:[18]
After the 30,000 was paid we - and after talking with Ms Harvey, which was one of the last things we did before we proceeded to set up the business - referring back to Ms Harvey, we - my discussion was pretty simple.
So this is a discussion with whom?---Michelle Harvey.
Yes?---Yes (indistinct), your Honour. Sorry for the diversion there. Basically we just talked about how the share would be - the money would be split. That it was - I would lend Kim 50 per cent and I would have my 50 per cent - we both put that into the company. What I lent Kim was a loan and then what she put into the business was - would be her investment. That was our discussion. There wasn't a discussion on how we were going to get paid or if anybody was going to get paid or any loan repayments at that stage.
[18] ts 184.
Further, Mr Williams gave evidence that:[19]
LEMONIS DCJ: All right. So you were going to tell me about Ms Harvey I think before you said that? ---
WILLIAMS, D.J.: Yes. The discussion with Michelle, she said that she is a finance broker and she had been my finance broker for many, many, many years. In fact I had introduced Kim to her and I think her family members and lots of my family members all see her with regards to their loans and - and that sort of thing. I had been seeing her with regards refinancing and sorting out because I had sold the business and I had the cash. I was going to reduce down some loans and - and - and sort things out. I had been talking with Michelle. I mentioned about the business that I was planning to do and with Kim. She asked what the - as it was going to be my money what the loan arrangement was going to be. It was a general discussion and it was in agreeance with - with what I had planned to do anyway which generally was I would be the - the bank lending Kim her 50 per cent share of funds and I would be committing my 50 per cent share of the funds. And with the discussion she basically just said that she - if I would like she could clarify that with - with Kim just to make sure we're all on the same page and I agreed to that. With regards what was discussed, I wasn't there. Michelle just said to me, 'Kim's aware of that. That's fine'. Sorry.
[19] ts 196.
While Mr Williams in his evidence explained that in his conversations with Ms Harvey, he said he thought Ms Andrews understood the loan arrangements,[20] as I have set out above, Mr Williams did not give evidence of a specific conversation he himself had with Ms Andrews as to the alleged agreement. His evidence as regards his conversations with Ms Andrews remained at a level of generality.
[20] ts 175 - ts 176.
Accordingly, on the evidence given, the specific conversation where Ms Andrews was said to have agreed to be liable for 50% of the monies advanced by Mr Williams to KMA, was a conversation between Ms Harvey and Ms Andrews. That being so, the alleged oral agreement, if it exists, arises from a combination of:
1.a conversation between Ms Harvey and Mr Williams; and
2.the conversations which Mr Williams said he had with Ms Harvey prior to and post Ms Harvey's conversation with Ms Andrews.
Immediately after Mr Williams gave his evidence as to what Ms Harvey told him of her conversation with Ms Andrews, counsel for the defendants raised to flag that he objected to the admissibility of the evidence to the extent that it was relied upon for the truth of the contents of a discussion between Ms Harvey and Ms Andrews.[21]
[21] ts 197.
I accept that Mr Williams' evidence of what Ms Harvey told him is not admissible as to the proof of the asserted conversation between Ms Harvey and Ms Andrews. However, in my view, Mr Williams' evidence is admissible to the extent that I am otherwise satisfied that the conversation between Ms Harvey and Ms Andrews occurred. That is, if I am satisfied that Ms Harvey had a conversation with Ms Andrews substantially to the effect relayed by Mr Williams' evidence, in my view Mr Williams' evidence would be admissible to reflect his concurrence to the proposal discussed between Ms Harvey and Ms Andrews.
In re-examination, Mr Williams gave evidence that:[22]
With regards the discussion with regards the loan at the very beginning it was a fifty-fifty discussion and investment. That was - that was the plan. It did change later in the year as things got a little bit tighter and the only thing that changed was after discussion with the accountant interest charges had become part of that arrangement as they were not being paid, the credit cards were not getting paid because we were in difficulty and those interest charges had increased.
[22] ts 489.
The defendants' counsel in his written and oral closing submissions submitted that no weight can be given to this evidence, because it is evidence of a conclusion and not the words spoken.[23] I accept this submission. The evidence which Mr Williams gave in re‑examination recites his understanding of what the position was; it is not evidence as to how that position came about.
[23] Paragraph 18 of the defendants' written submissions; ts 899.
Mr Williams called Ms Harvey as a witness in support of his case. However, Ms Harvey's evidence did not accord with Mr Williams' evidence. Ms Harvey gave evidence in examination‑in‑chief as follows:[24]
[24] ts 573 - ts 574.
Do you understand that there was an agreement between Kim Andrews and myself financially?---No. Because you never had anything written up.
That's true, because we'd been friends for a long time, yes. But there was - was there another agreement, verbal agreement, anything that ---? --- I wasn't privy to that.
…
When I first went into the business with Kim Andrews did we ever talk about how the - if I was going to put all the money into the business, for example, whether that would be a fair arrangement or whether it should be put differently?---Can you explain more what you're - - -
Well, if, as an example, if you have a business, one person has all the money putting in and the other person is going to contribute in a different way - - - ?---Yeah, we did.
- - - you would?---Yeah, we did. And how we explained that was you had advised that you were putting the financial obligation in. However, Kim was also putting in the intellectual and contacts, was what was explained to me.
And did you say anything about that - - -?---No.
- - - to me at any stage?---All I said to you was that you needed - and I said to Kim - that you both needed to go and get something legally written up by a lawyer under your arrangement and also by an accountant regarding the financial arrangement.
So you didn't - you didn't say or indicate to me that maybe it wasn't a good idea or anything like that?---I said to you that both of you were taking a big risk unless you went and got something done, written up.
…
Mr Williams then took Ms Harvey to electronic messages between them.[25] Specifically, on 18 August 2017 Mr Williams and Ms Harvey had the following message exchange:
MR WILLIAMS:    Heading to see Kim now. Will try and sort a few things out. On the financials it shows loans by directors as $379000. Which is what I put in up to that date. So at the very least we are looking at that amount to split being $189500. It's a start
MS HARVEY:      Yes but you also need clarification on the carine store
MR WILLIAMS:    Yes. Signed over to me and agreement signed saying she owes me $189000 and I will then walk away
[25] Plaintiff's documents vol 2, page 822.
Mr Williams examined Ms Harvey in respect of these messages as follows:[26]
THE PLAINTIFF:   Both of those indicate to me that there is a split loan. I guess my question then is you don't see it that way? ---
HARVEY, M.:       No, I don't.
THE PLAINTIFF:   Okay. Okay? ---
HARVEY, M.:       Because my - that wasn't what I had arranged. That wasn't anything to do with me. That was you had put the funds up, is what my discussion - your discussion with me was. How you chose to split that was how we were trying to work through with mediation, which didn't go anywhere.
THE PLAINTIFF:   That's at the beginning - that's at the end, yes - at the beginning of the whole arrangement
HARVEY, M.:       But I wasn't privy to that, on how your arrangement with Kim was, because that would have been a conversation you had with Kim.
[26] ts 575.
As can be seen, Ms Harvey's evidence as to her conversations with Mr Williams and Ms Andrews regarding the financing of KMA was limited to Mr Williams telling Ms Harvey he had 'put the funds up'. Ms Harvey's evidence was to the effect that she was not involved in any discussion at the beginning of the new venture concerning the arrangement between Mr Williams and Ms Andrews as to the terms on which Mr Williams was to fund KMA. Further, Ms Harvey's evidence was that she became involved in such discussion during a mediation of Mr Williams and Ms Andrews' dispute, which was unsuccessful.
Two important aspects emerge from this evidence.
First, Mr Williams and Ms Harvey differ substantially as to the extent of the discussions between them around the time the proposed venture was being set up as to the terms on which Mr Williams was to fund KMA, and what Ms Andrews' liability was in respect of such funding. In particular, Ms Harvey does not say she discussed with Mr Williams the terms upon which Ms Andrews would be liable. Second, the effect of Ms Harvey's evidence is that she did not have any conversation with Ms Andrews at the commencement concerning the terms on which Mr Williams was to fund KMA.
Ms Andrews gave evidence regarding the discussions she had with Mr Williams in respect of his providing funding for KMA. In examination‑in‑chief she said:[27]
Okay. So can you please then outline to the best of your recollection a discussion or any discussion you had with David about how the store would be run?---So David - - -
The business?---The business, yeah. So I would run the business and that was always going to be the case and David was going to be the investor, loaning the money to KMA and that KMA was going to pay him a return at 5 per cent on profit or after three years of running.
All right. So you've mentioned KMA there. When was KMA brought into the discussions? Was that from the beginning?---Mid to end of August.
…
[27] ts 646.
Ms Andrews gave further evidence in examination‑in‑chief as follows:[28]
[28] ts 647 - ts 648.
So can you - can you just - I know it's some time ago, but can you just give to the best of your recollection what the words that you said and the words that David said in that meeting rather than perhaps summarising what happened? To the best of your recollection, what did David say to you about his role and what did you say about your role?---So my role was - we discussed that I would run because I had the contacts, I knew the business, I knew the people that we could rely on to get trading terms et cetera and David was - his role was purely - well, we regarded each other as the brains and the bank.
LEMONIS DCJ:      I'm not so sure that answered your last question.
CURWOOD, MR:     No?---It didn't.
No?---Sorry.
Well, just - because as I said it is a long time ago, but when I'm just asking to the best that you can recollect, what was actually said by you and what was said by David rather than a summary of your recollection. Do you - if you can't recall the actual conversation that - that's okay, but I just wanted to know if, for example, you've just said what the discussions were, but do you recall what you said specifically and what David said about how the business would operate?---It - not in depth, no. It was more me running the business and David funding - - -
Yes?--- - - - KMA.
And - - -
LEMONIS DCJ:      Well, Mr Curwood, does your client have any recollection? I mean she just said not in depth.
CURWOOD, MR:     Yes.
Well, that's it. Do - do you actually recall this meeting at all now?---We did - no, we did have a - we had a meeting and it was in his house in Morley.
Right. Well, was there anyone else there or was it just you?---No, it was David and I.
Right. Okay?---And it was very - I think because we had been friends for so long he - it was just like Carine. He funded and I ran.
So was there any discussion to your recollection about what money you would put in?---There was no money that I was putting in. At that particular time - - -
Was - - -?--- - - -I had no finances and he was aware of that. And he didn't want to be part of the everyday running of the business so - - -
Is that what he told you though?---Yes.
All right. So at that meeting he told you that?---Yes.
All right. And when you said, 'He knew I didn't have any money', was that something that came from you or did he otherwise know?---No, he - he knew. We discussed a lot of things and personal things. So he was aware of my financial situation.
Right. From you having told him or from others?---No, me having conversations with him.
…
The subject of the funding of KMA was addressed further in Ms Andrews' examination‑in‑chief as follows:[29]
[29] ts 651 - ts 652.
…
Right. Okay. Now, in the course of discussions before the business opened for trading, so if we say before 4 October, what discussion if there - if any, was there about you paying money to David or paying money to the company? So you injecting any funds to the company, was there a conversation about that?---There was never me injecting funds into the company. There was a conversation in relations to funding and it was going to be David injecting funds into KMA.
So what did he say though?---What did - sorry?
What did David say about that? You said there was a conversation about David injecting funds, what did he say?---That's where the - the phrase, 'the bank and the brains' came to, that David was the bank and I was the brains and that's how the business would be run.
And what conversation, if any, was there about David getting money back?---There was very little conversation. It was really one conversation stating that he would get a five-per cent return on his investment and that that wouldn't be before three years or profit. And we only had one conversation on that.
So that's what he said?---That's what we discussed. He - he said that Michelle Harvey had said to him that if he was to invest the money that he was investing into KMA, that the minimum he would get in his property et cetera would be around the 4.89 at that particular time. Roughly those figures. And - and he said that it would only be fair to get five per cent.
What did you say to that?---I said, yes.
All right?---I had no issues with that.
LEMONIS DCJ: Mr Curwood, are you able to explore a bit more in terms of who said what in respect of this bank, brains conversation?
CURWOOD, MR: Yes, certainly, your Honour.
So the bank and - what you've referred to as a conversation where you were referred to as the brains and Mr Williams was referred to as the bank, that conversation took place where?---In - the first time it was really mentioned was when we were setting up the store.
Right?---So we had already moved to the point of doing shelving, ordering stock et cetera. And it was just a flippant comment, bank and - B - the B and B team.
Yes?---The brains and the bank.
…

During cross-examination Ms Andrews[30] gave evidence as follows:[31]
…
Ms Marklew, I propose we had a meeting with regards to financing of KMA. My discussion with you was - I put to you that it should be fifty‑fifty and that I was putting up all the money and taking a risk anyway. Your thoughts were that it should be me just investing and you working in it and I disagreed with that and said that and said that I'd been talking to Michelle Harvey and she agreed with me and I remember saying back to you I was going to get her to have a talk with you. Do you remember that discussion?‑‑‑We did have a discussion. You had spoken to Michelle and you were funding the business. I was running the business and then we discussed the fact that Michelle said you needed to get a return on your investigation (sic investment) if you were funding the business. You didn't want to be part of the business. You didn't want to work in the business on the day-to-day basis. You wanted to do nothing. You wanted to stay exactly how you'd been for the last 10, 15 years not working. So that was the agreement. I had no funding. You had the funding. You were going to fund, I was going to run and that's what we decided and KMA was going to pay you back and it wasn't going to be before either profit or three years running that business at 5 per cent return.
So I spoke to - then spoke to Ms Harvey and asked her to contact you and explain what we had discussed. Did she contact you and discuss that?‑‑‑I did meet with Ms Harvey and my husband and I actually had business with Ms Harvey so at that particular point when we had business with Michelle she said to me, 'I hear you're going into business with David. Make sure you guys get your contract and make sure you get paid because you won't be able to pay mortgages or your living without it,' and that's what she said to me.
Okay?‑‑‑That was all she said to me, David.
…
[30] Mr Williams referred to Ms Andrews by her married name of Ms Marklew; see also ts 367.
[31] ts 848 - ts 849.
Further, given some uncertainty as to the nature of Mr Williams' questioning of Ms Andrews, I asked Ms Andrews a specific question regarding her conversation with Ms Harvey. The question and Ms Andrews' answer was as follows:[32]
[32] ts 851.
…
LEMONIS DCJ:      So, Mr Curwood, if I ask Ms Marklew whether or not she had a conversation with Ms Harvey to the effect that Mr Williams would be the bank lending her 50 per cent share of funds, are you content with me doing that?
CURWOOD, MR:     Yes, your Honour.
LEMONIS DCJ:      Yes.
So, Ms Marklew, the question is whether or not you had a conversation with Ms Harvey whereby she informed you that Mr Williams would be the bank lending you your 50 per cent share of funds and you said words to the effect, 'That's fine'?‑‑‑No, that wasn't what Michelle conveyed to myself. She just said to me after my husband and I had had a meeting with her that 'I hear you're going into business with David. Make sure you get paid and he should really get a 5 per cent return on his investment. If he was to put his money into a mortgage account, he would be getting something around 4.89 or 4.9, something like that,' and that's the only that Michelle and I had about our business, as in KMA and David moving forward.
Yes, all right.
…
Mr Williams then proceeded to cross‑examine Ms Andrews as follows:[33]
[33] ts 851 - ts 852.
…
THE PLAINTIFF: That's now how I remember the discussion with Ms Harvey. Her comments to me:
David, you've been taken advantage of too many times. You need to get this in writing.
That she did say:
You have to be careful. You have to make sure that it's fifty‑fifty and it should you the bank and you should be lending Kim 50 per cent of the money. She has to understand that.
And that's how I portrayed it back to you?‑‑‑The 50 per cent that you portrayed back to me was after the sale of Carine and when the - when we started having trouble. So when Carine came on board, that's when you brought up the 50 per cent. It was never before then, David.
Well, I can't remember the exact words, but my words to you were, 'If this is going to be my investment and I no longer have a business earning income other than my rentals, I have to make sure that my money is secure in some way. I want us to do this. I think it should be fifty-fifty. I commit the money. You're responsible for 50 per cent and I'm responsible for 50 per cent'?‑‑‑I do not recall that conversation with you ever.
And we did discuss about getting paid but it was talk - we talked about when there was going to be a profit in the business?‑‑‑For your return?
No, for you to get paid?‑‑‑No, it was when and - how the business could afford at the time is when I was going to get income
…
Ms Andrews' evidence taken as a whole was that she did not have a conversation with Ms Harvey to the effect that Ms Andrews was liable to pay Mr Williams 50% of the monies he advanced to KMA. Further, her evidence was that she did not have such a conversation to that effect with Mr Williams at the commencement of their venture and the first time Mr Williams raised this was when Carine Health came under the management of KMA and they were then experiencing business difficulties.
As I have explained, Mr Williams' version of the agreement depends upon Ms Harvey having had a conversation with Ms Andrews to the effect that Ms Andrews accepted she would be liable to Mr Williams for 50% of the monies he advanced to KMA, and Ms Harvey passing that on to Mr Williams. However, what emerges from the evidence of each of Ms Harvey and Ms Andrews is that:
1.Ms Harvey's evidence was that she did not have a conversation to that effect with Ms Andrews or Mr Williams.
2.Ms Andrews' evidence was that she did not have a conversation to that effect with Ms Harvey or Mr Williams.
As I have observed in identifying the applicable principles, I must feel an actual persuasion of the occurrence or existence of the alleged conversations relied upon by Mr Williams to found the alleged oral agreement. However, in this case there is no direct evidence of a critical aspect of the conversations said to give rise to the alleged agreement. Specifically, as the analysis set out above reveals, a critical aspect of the making of the agreement contended for by Mr Williams is the alleged conversation between Ms Harvey and Ms Andrews to the effect that Ms Andrews was liable to pay Mr Williams 50% of the monies he advanced to KMA. However, neither Ms Harvey nor Ms Andrews gave evidence of that conversation having occurred. No one else was suggested to be a party to it. There is therefore no direct oral evidence of that conversation, which I regard as being a material component of the agreement alleged by Mr Williams.
Furthermore, I prefer Ms Harvey's evidence over that of Mr Williams in respect of the conversations between them concerning the terms on which Mr Williams was to fund KMA. While Mr Williams sought to portray Ms Harvey as being hostile to Mr Williams, I do not regard Ms Harvey in that light. Rather, the impression I had of Ms Harvey in giving her evidence was she was frustrated, because she had conveyed to both Mr Williams and Ms Andrews they were taking a big risk in proceeding with their venture without a written agreement in place. This risk eventuated, as is evident from these proceedings, which gave rise to her frustration. There is a difference between a person being hostile to another, and being frustrated with how that other person has acted. In respect of Ms Harvey, while at times during her evidence she was terse to Mr Williams, I assess this as arising from frustration, not hostility. Otherwise, Ms Harvey gave her evidence in a very straightforward manner. I also find her evidence to be entirely plausible, by insisting that the arrangement should be documented from the start and that the terms of it were a matter between Mr Williams and Ms Andrews.
In respect of Mr Williams, my impression was he gave evidence in a considered manner, that he did not seek to overstate his position or undermine Ms Andrews, was matter of fact and respectful. However, I regard his evidence as to his conversations with Ms Harvey as more likely to be a reconstruction of what he thought the arrangement was between him and Ms Andrews, as opposed to being evidence of a direct recollection of what occurred. In this respect, his reconstruction was reinforced because Mr Williams believed such an arrangement was a fair apportionment of risk between him and Ms Andrews.
There is no material contest between Ms Andrews and Ms Harvey's evidence regarding their conversations held at the commencement of the venture, both giving evidence they did not have a discussion as to the terms on which Mr Williams was to fund KMA. Further, there is no direct conflicting evidence between Mr Williams and Ms Andrews on that subject matter, given the generality of Mr Williams' evidence as to his conversations with Ms Andrews. I do however have concerns about Ms Andrews' evidence in respect of other matters, which I address below.
I now turn to consider the other evidence directed to the existence of the alleged agreement.

Mr Nigel Parker

Mr Williams also called Mr Nigel Parker as a witness. Mr Parker is an accountant with the firm of certified practicing accountants called Ascent Business Directions (WA) Pty Ltd (Ascent). KMA appointed Ascent as its accountant from the inception of its business operations.[34]
[34] ts 530.
Mr Parker gave the following evidence in examination‑in‑chief:[35]
With regards to meetings that we had for KMA, directors' meetings, was the ones that Kim and I were involved in, can you remember any subjects that were discussed?---The initial meeting I know that we made a point in really discussing partnership agreements and documenting how this would work, money put into the business, things like that. We - I definitely know we made a discussion on that. Then my next recollection of you attending meetings et cetera is when things were not so good, let's say, and from the point of view of how moneys come out and paying bills.
Are you aware of any cash sales in 2016 being deposited into bank accounts?---Without having the bank statements in front, I can't recall. I just - yeah, I can't recall if they're cash or Eftpos. I can't recall that.
That's okay. Again, with regards the meetings, was there any discussions on repayments of loans or anything of that nature?---No, no.
And how many meetings do you think we had with - or do you know of that where the two directors and yourself were together?---I'd believe there'd be about five or six.
[35] ts 545 - ts 546.
Accordingly, Mr Parker was not present at any meeting between Mr Williams and Ms Andrews where there was any discussion pertaining to the loan from Mr Williams to KMA.
I now turn to the documents to consider whether they support the existence of the oral agreement contended for by Mr Williams.

Contemporaneous documents

There are no contemporaneous documents which support the existence of the agreement contended for by Mr Williams. That is, there are no contemporaneous written communications between Mr Williams and Ms Andrews, or any contemporaneous notes or records, which lend support to an agreement having been made on the terms which Mr Williams alleges.

Financial records

The financial statements of KMA for the financial year ended 30 June 2016 as prepared by Ascent were put into evidence as part of Mr Williams' bundle of documents for the trial.[36] The detailed balance sheet as at 30 June 2016 included an entry under the heading 'Non‑Current Liabilities' of:
Loans to directors $379,215.91
[36] Plaintiff's documents vol 1, pages 98 - 106.
Given this entry is recorded as a liability, it seems the description should correctly be loans from directors, not to directors. There is no separate note associated with the entry. The entry does not identify to which directors the loans relates. The entry does not delineate the loans into separate components for each of Mr Williams and Ms Andrews. In that respect, on Mr Williams' version of the alleged agreement, the loan would be split 50% between himself and Ms Andrews. Given the generality of the entry, it does not support Mr Williams' version of the alleged agreement.
Mr Parker sent a letter to Ms Andrews dated 28 February 2017 which attached the financial report for the financial year ended 30 June 2016.[37]
[37] Plaintiff's documents vol 2, page 807.
Under the heading 'Notes/Recommendations' in the letter, Mr Parker stated:
The loan accounts from the directors needs to be reconciled. At the moment we believe all this loan should be from David but your notes say it is more 50/50? We need to discuss this and work out how we are going to deal with this.
The notes from Ms Andrews as referred to in the letter were not in evidence. Mr Williams cross-examined Ms Andrews in respect of this reference in the letter. The question and answer was as follows:[38]
So your notes said it was 50, 50? --- Not my notes because I never actually said that.
[38] ts 770.
The letter refers to the loans from directors to KMA needing to be reconciled, not to the loans between Mr Williams and Ms Andrews. However, a likely consequence of the loan from directors to KMA being 'more 50/50' is that Ms Andrews would have a liability to Mr Williams such as to bring about that equalisation. Even so, in my view the letter is equivocal as to whether the relevant reference is a reference to there being in place a 50/50 arrangement, or there being a willingness on Ms Andrews' part for there to be an arrangement of such a nature. Furthermore, the letter does not descend into detail as to the extent of any such liability which Ms Andrews would have to Mr Williams consequent upon the loan from directors being equalised at 50/50.

Post alleged agreement conduct

While I may take account of the parties' conduct post the alleged making of the agreement to assess whether that conduct is consistent with the alleged agreement, I consider I must exercise caution in doing so given the absence of evidence as to the alleged agreement and the absence of contemporaneous documents lending support to such an agreement.
The passages from the authorities that I have set out at [28] and [30] above speak of conduct which corroborates the spoken words said to give rise to the alleged agreement, not to such conduct filling in material gaps in conversations which occurred at an earlier time. Furthermore, as Le Miere J observed in Blueprint Homes:[39]
… if the court concludes that the dealings between the parties did not result in a contract, then subsequent events or statements cannot be used to show that there was a contract.
[39] Blueprint Homes [31].
In this respect, I think the better view is that where there are material gaps in the evidence said to give rise to an oral agreement, for the court to find that there is an agreement between the parties, it must be an inferred agreement, arising from the acts and conduct of the parties as well as, or in the absence of, their words.[40] Here, Mr Williams' case is one of an oral agreement, not an inferred agreement.
[40] See Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23, [21] - [23], [89] - [90] and [203] - [205].
Against the background of those remarks, I now turn to the conduct of the parties post the making of the alleged agreement.

16 November 2016 meeting

Mr Williams and Ms Andrews (amongst others) attended a meeting on 16 November 2016 to consider matters relating to KMA. Ms Phoebe Lillywhite and Mr Lawrence Murphy also attended the meeting. Mr Williams called Ms Lillywhite as a witness in the proceedings.
Ms Lillywhite is an accountant[41] and as at November 2016 she worked for KMA. Mr Murphy also worked for KMA.
[41] ts 616.
On 14 November 2016, Mr Williams sent Ms Lillywhite an electronic message asking if she was available to sit in on a meeting that Ms Andrews and Mr Williams were planning on having that night.[42]
[42] Plaintiff's documents vol 2, page 861.
Ms Lillywhite was not able to attend a meeting that evening and the meeting was rescheduled for 16 November 2016.
Mr Williams sent Ms Lillywhite a further electronic message on 14 November 2016 which is in the following terms:[43]
Yep plus as you say we have no formal agreement in place. At the moment I've lent my entire available cash and cards to SUPPS4U with out it properly written up and Kim's share which is in the form of a loan to her at 5% which she has lent to SUPPS4U at the same rate. I'm in a very vulnerable position.
[43] Plaintiff's documents vol 2, page 868.
I infer that the reference in the message to SUPPS4U is a reference to KMA, with the characters SUPPS4U being a reference to the business name under which KMA was operating. Ms Andrews submitted that this message is equivocal in terms of whether or not it supports Mr Williams' version of the alleged agreement. However, in my view the message is consistent with Mr Williams' version of the agreement in that the message speaks of a loan from Mr Williams to Ms Andrews which she has lent to [KMA] at the same rate. This is consistent with the alleged agreement by which Mr Williams advanced all of the money to KMA, on his behalf and on Ms Andrews' behalf. However, the message does not descend into detail as to what Kim's share was. Accordingly, while the message supports the concept of Ms Andrews having a liability to Mr Williams for his advances to KMA, it does not delineate that support down to the 50/50 ratio alleged by Mr Williams.
Further, as Ms Andrews points out, the message is not direct evidence that the relevant agreement was discussed at the time of commencement of Mr Williams and Ms Andrews' venture. Further, the message is not contemporaneous to the point in time when Mr Williams alleges the agreement was made, nor is the message a communication with Ms Andrews. That being so, in my view, while the communication demonstrates in broad terms what Mr Williams' subsequent understanding of the relevant agreement may have been, it is not corroborative of there in fact being such an agreement. Furthermore, the language used is of such a general nature that at best, it reflects Mr Williams' overall understanding of the arrangement, without any specifics as to how that arrangement operated.
Prior to the meeting on 16 November 2016, Ms Lillywhite prepared a draft partnership agreement between Mr Williams and Ms Andrews.[44] The draft agreement provided under the heading 'Contributions' at cl 5 on page 2:
[44] ts 415 ‑ ts 416; defendants' documents, pages 221 - 234.
5.Each of the Partners has contributed to the capital of the Partnership, in cash, property & intillectual [sic] property in agreed upon value, as follows (the 'Capital Contribution'):

Partner

Contribution Description

David John Williams

Primary financial backer of the venture (to be itimised [sic] in a separate [sic] document to be agreed upon, witnessed & signed within 7 days of this document).

In terms of the venture he is known as the 'bank'.

The debt is owed by the company 'KMA Ditributors [sic] Pty Ltd and is payable to 'Bank' (as stated above) being David John Willams [sic].

David John Williams as an individual has made monetary contributions (again to be itimised [sic] in above document to be completed within 7 days)

Kim Marlene Andrews

Kim Marlene Andrews has made monetary contributions (to be itimised [sic] in a separate document to be agreed upon, witnessed & signed within 7 days of this document).

As can be seen, cl 5, which deals with the respective contributions to the partnership, does not reflect that Ms Andrews was liable to pay to Mr Williams any of the monies which he had advanced to KMA.
Mr Williams gave evidence that Ms Lillywhite had prepared the draft agreement on the following basis:[45]
She created a document for both of us, basically, on what she understood from what we'd both told her. Not what I had told her.
[45] ts 415.

The reference to both of us is a reference to Mr Williams and Ms Andrews.
Ms Lillywhite sent the draft agreement to Ms Andrews and Mr Williams prior to the meeting on 16 November 2016 by an electronic message sent at 1.03 pm.[46] Ms Lillywhite's covering message stated:
I have drafted this agreement for both of you. I have done my best to make it 100% down the line between the both of you so that its all above board and fair for everyone.
[46] Plaintiff's documents vol 2, page 802.
Mr Williams responded to Ms Lillywhite's electronic message in terms that included:[47]
Correct me if I'm wrong anywhere here regards money lent to the business for setting up and stock ect [sic]. I have put in 100% of it. This means that I need documents showing I lent Kim half the monies contributed to SUPPS4U. Which means she has a personal debt to me for that amount to be determined and we agreed on a repayment with interest of 5%. She in turn has lent that amount to the company for its set up. This means we have contributed 50% each of the capital lent to the company. This was agreed when we first started but as so much has happened we hadn't got around to it. Dose [sic] that need to be included in this document or is it a separate agreement between Kim and me? If I think of anything else I will let you know. I know I'm asking a lot here but better we ask now rather after sign unawares Lol.
[47] Plaintiff's documents vol 2, page 802.
Accordingly, by this message Mr Williams raised with Ms Lillywhite his concern that the draft partnership agreement did not reflect his understanding of the agreement he reached at inception with Ms Andrews concerning the funding of KMA.
Ms Andrews submitted Mr Williams' message was equivocal as to the terms on which Mr Williams had advanced monies to KMA. However, in my view the effect of the email is that in respect of the funding of KMA, Mr Williams had lent to Ms Andrews her 50% contribution. In this respect, the message states:
1.Mr Williams has put 100% of the money into KMA.
2.He needs a document showing that he lent Ms Andrews half those monies, which means she has a personal debt to him for that amount plus an agreed interest rate of 5%.
3.In effect, Ms Andrews has lent that amount to KMA for its setup.
4.On this basis, each of Mr Williams and Ms Andrews have contributed 50% of the capital lent to KMA.
Further, the message states the agreement was reached 'when we first started'. However, similarly to the position regarding Mr Williams' electronic communication sent to Ms Lillywhite on 14 November 2016, the communication is not contemporaneous with the making of the alleged agreement.
It is not clear from the documents whether Mr Williams' email was sent only to Ms Lillywhite, or also to Ms Andrews. Regardless, on the documents before me, Ms Andrews did not respond to that email.
Given Mr Williams' message was not contemporaneous with the making of the alleged agreement and Ms Andrews did not acknowledge its accuracy, I do not regard the message as being corroborative of the making of the alleged agreement which Mr Williams contends was made between him and Ms Andrews.
In cross‑examination, Ms Lillywhite was asked whether or not she had prepared the draft partnership agreement on instructions from Mr Williams.[48] Her answer was that her recollection is that it was mutual, with instructions coming from both Mr Williams and also from Ms Andrews. I accept this evidence, which is consistent with Ms Lillywhite's electronic message by which she sent the draft agreement to Mr Williams and Ms Andrews.[49] In this sense, the draft agreement does not reflect any settled position from the perspective of either Mr Williams or Ms Andrews. Rather, I find that the draft was prepared and sent by Ms Lillywhite for the purposes of facilitating discussions between Mr Williams and Ms Andrews.
[48] ts 625.
[49] Plaintiff's documents vol 2, page 802.
Ultimately, a meeting was held on 16 November 2016, at which amongst other matters, the draft partnership agreement was discussed.[50] The attendees at the meeting were Mr Williams, Ms Andrews, Ms Lillywhite and Mr Murphy.
[50] ts 416.
In examination‑in‑chief, Ms Lillywhite said she could not remember a lot of what was discussed at the meeting.[51] Mr Williams asked Ms Lillywhite whether she remembered any of the details of what was discussed. She answered:[52]
Not a lot of it. For the most part, from my recollection, Kim brought a lot of the more sort of intangible assets, so the intellectual property, value, so her contacts within the industry and her business acumen was what she seemed to bring to the party. And you were able to assist more with the finances and financial the business, which on my understanding was something that was going to be paid back in some measure but I'm ‑ I'm not sure what that was. I wasn't privy to that.
[51] ts 612.
[52] ts 613.
Following on from this answer, Mr Williams asked Ms Lillywhite a further question regarding him being paid back, the question and answer being as follows:[53]
With regards being paid back, how ‑ was there any discussion about how that would be referred to or how it would be actioned?‑‑‑To be honest, I wasn't privy to the finer details. And it wasn't because it was hidden by either party. It was just not part of my role. I know that Kim did ‑ sort of Kim worked within the business in terms of like hours that she put in, but I was not told specifics as to if that correlated to a dollar value. I was never told exactly how much money one party was putting forward as opposed to the other. I genuinely didn't have those details. That wasn't part of my role at any point. And it's not that it was ‑ either party was sort of hiding it or anything. I think it was just more professional on their part to have that between themselves. I do know that you have credit cards in your name and that they were used for stock to the best of my knowledge. That's as far as I knew. Like, I didn't really know anything else.
[53] ts 614.
This answer reflects Ms Lillywhite's limited appreciation of the nature of any arrangement which had been struck by Mr Williams and Ms Andrews.
Ms Lillywhite prepared minutes of the meeting held on 16 November 2016. There are two different sets of minutes. Mr Williams took Ms Lillywhite to the version of the minutes which were at pages 174 ‑ 176 of volume 1 of the plaintiff's documents. Ms Lillywhite read through those minutes.[54] After having done so, Mr Williams then asked Ms Lillywhite if she could recall anything else.[55] She responded:[56]
I know that when we walked away from that meeting, there was quite a few moving parts that needed to be looked at from both parties. And from memory, that's about all that got achieved. You both got to put your points across as to where you thought you were at. Your concern was obviously the finances and turnover and stuff. And Kim's was securing her asset, I guess ‑ her element of what she owned of that ‑ and her finances. That's ‑ ‑ ‑
Mm hmm?‑‑‑ ‑ ‑ ‑really what it ‑ where it was at.
[54] ts 616.
[55] ts 617.
[56] ts 617 ‑ ts 618.
The effect of this evidence is that from Ms Lillywhite's recollection, no agreement was made at the meeting, nor did Ms Andrews acknowledge any liability to Mr Williams in respect of the monies he had advanced to KMA.
As to the minutes of the meeting, the two different sets of minutes were produced by the parties in their respective bundles of documents. The plaintiff produced a set of minutes which appeared at pages 174 ‑ 176 of the plaintiff's documents vol 1 and also at pages 804 ‑ 806 of the plaintiff's documents vol 2. These minutes are consistent with each other.[57] Further, in both instances, the minutes were attached to an email from Ms Lillywhite to Mr Williams and Ms Andrews sent 1 December 2016 at 1.39 pm.[58]
[57] Apart from the signing clause, which appears in the minutes in vol 1, but not vol 2. Also, the minutes in vol 2 have hand written annotations on them.
[58] Plaintiff's documents vol 1, page 173; plaintiff's documents vol 2, page 803.
The defendants' documents include a separate set of minutes at pages 268 ‑ 270 of the defendants' volume. These minutes are not attached to a covering e-mail from Ms Lillywhite, but appear separately in the defendants' bundle.
The difference between the two sets of minutes is that the minutes produced by the plaintiff contain two additional paragraphs on page 2, being the third paragraph commencing with the words 'Purchase of Carine' and the fourth paragraph commencing with the words 'This was agreed'. The additional paragraphs related to Carine Health and not to the funding of KMA. Ms Lillywhite could not explain the reason why there were two different sets of minutes.[59]
[59] ts 615 and ts 626.
The version of the minutes appearing in vol 1 of the plaintiff's documents and in the defendants' documents both have provision on the final page for Ms Andrews and Mr Williams to sign confirming their approval of the minutes. I expect the minutes in vol 2 of the plaintiff's documents do not have this because the photocopying of that part of the page is faint.
Neither Mr Williams nor Ms Andrews signed the minutes in confirmation of their accuracy.
Ms Lillywhite's covering email sent 1 December 2016 forwarding the minutes stated amongst other matters:
Kim, have you been able to finalise the figure that you owe to David (bank) for the loan to KMA? If you can get that documentation together I can put it into writing to cover David and you can arrange a suitable repayment schedule. Can this please be arranged within 7 days also.
The attached minutes stated amongst other matters:
3.Discussion regarding debt outstanding. Formal debt agreement to be made within 7 days of date of minutes. Briefly discussed and agreed upon that Debt is as follows. David Williams shall be referred to as 'Bank'. David loaned capital to Kim Andrews, which she then lent on to KMA Distributors PTY LTD, which purchased Supps 4 u Morley. KMA Distributors now owes Kim Andrews, who owes 'Bank'.
4.Kim requested that all documentation for financials be sent prior to payments being made. Agreement also that interest is to be paid on any credit however only on direct expenses, overheads/suppliers etc.
5.Personal purchases not to be made on corporate cards and interest is not payable on these transactions. In the case that an error is made and a personal transaction is made, this is to be deducted from monies owed and interest adjusted accordingly.
…
8.Statement to be completed (compiled by both parties) as to the full outstanding monies owed to 'bank' and agreed upon within 7 days of date of minutes.
These items from the minutes as set out above appear in all of the versions of the minutes contained in the parties' respective documents.[60] The draft minutes and Ms Lillywhite's covering e-mail are admissible as business records of KMA.
[60] Plaintiff's documents vol 1, page 175; plaintiff's documents vol 2, page 805; defendants' documents, page 269.
In examination‑in‑chief, Mr Williams gave evidence that:[61]
… And Kim was asked to go to work out what she figured - what she thought she owed me as far as the loan was - was concerned. The minutes were then - well, we parted after - after a lot of those - that discussion. Everything seemed very friendly. There didn't seem to be any issues.
[61] ts 206.
In respect of the alleged loan agreement, in cross‑examination, Mr Williams gave evidence that:[62]
It was agreed that we had to come to a figure of what was owed and before we could formalise an agreement.
[62] ts 419.
Mr Williams also gave the following evidence in cross‑examination:[63]
Do you recall a discussion where she said to you that you needed to tell her what you considered you were owed by the company?---At that stage we had talked about that, correct. But I - it was agreed that the accountant was going to give us a figure of what that was because us individually trying to work it out wasn't - it wasn't viable because the accountant was going to do - do the final amount.
[63] ts 420.
In respect of the minutes, Mr Williams did not prepare them,[64] nor did he have any input into them prior to them being sent out.[65] Further, Mr Williams did not know why there were two versions of the minutes.[66]
[64] ts 417.
[65] ts 417.
[66] ts 417.
In my view, this evidence when taken as a whole, is reflective more of Mr Williams and Ms Andrews moving towards an agreement in relation to Mr Williams' funding of KMA, as opposed to such an agreement having already been made.
Ms Andrews gave evidence in examination‑in‑chief as follows:[67]
And - but what's your recollection though about whether there was any - was there any further discussion than that about how it was going to be paid, when it was going to be paid and who was going to pay it?---There was no discussion to those type of points. There was a lot of things discussed at the meeting about how to take the businesses forward. And Lawrence was leaving us and whether Phoebe was to step into Lawrence's role. But I had reservations because I was working with her so I didn't feel comfortable with Phoebe and I said to David that I would prefer to take on the responsibility that we had given Lawrence back to myself and that was voiced in front of Phoebe and Lawrence. And discussions on payments - nothing was going to be further discussed on payments until David could let us know - myself - what he owed on the credit cards.
Do you recall in those discussions any discussion where David asked you to pay some of the credit card debt?---Never.
Never at that meeting or - - -?---No. It was never mentioned about me paying anything on his credit cards until later on when the business - after Carine had sold and Supps 4U were - was starting to spiral. Then David said to me, 'You owe me half of what I've put in.'
[67] ts 681.
Further, in respect of the minutes of the meeting, in cross‑examination Mr Williams had Ms Andrews read out the extract from the minutes regarding the debt outstanding.[68] Mr Williams then asked Ms Andrews whether she disputed any of the information in the minutes with anybody and she answered:[69]
Yes, I did, because I never signed them.
[68] ts 776.
[69] ts 776.
In re‑examination, Ms Andrews said the minutes that came through from Ms Lillywhite were not what was discussed at the meeting.[70] Further, Ms Andrews also gave evidence that she did not want Ms Lillywhite involved as she did not trust her.[71]
[70] ts 859.
[71] ts 777.
In respect of Ms Lillywhite's covering email sent with the minutes, Ms Andrews accepted in re‑examination that she did not reply to the email.[72] The reasons given were that she had not appointed Ms Lillywhite and also the minutes sent with the email did not accord with what was discussed.[73]
[72] ts 858.
[73] ts 859.
Like Mr Williams and Ms Lillywhite, Ms Andrews does not know why there are two versions of the minutes.[74]
[74] ts 809 ‑ ts 810.
Before turning to the particular language used in the minutes, it is important to identify the context in which the meeting took place. The purpose of the meeting was to discuss and hopefully resolve outstanding matters pertaining to KMA and Carine Health, in circumstances where Mr Williams and Ms Andrews had been operating their new venture for over a year and the terms upon which they did so had not been documented. In that sense, I find that a purpose of the meeting was to clarify the arrangements between Mr Williams and Ms Andrews, both from an historical sense, and also going forward.
In my view, when regard is had to item 3 of the minutes in the context in which the meeting took place, the minutes are equivocal and are more likely to reflect a potential resolution between Mr Williams and Ms Andrews, as opposed to a record of what had been agreed between Mr Williams and Ms Andrews at the commencement of their venture, or a record of an agreement being reached at the meeting. In this respect:
1.The minutes reflect that the discussion itself was brief.
2.The minutes provide that the formal agreement is 'to be made'.
3.The use of the word now in the final sentence of item 3 suggests that the discussion did not reflect an historical agreement, but rather an agreement going forward.
4.I do not consider that items 4 and 5 take the matter any further. Item 4 is directed to the provision of documents prior to payments being made and that interest is only to be paid on direct expenses. This reference is equally consistent with an agreement having been reached at the meeting, and what was discussed at the meeting being a possible framework for such an agreement going forward. Item 5 is directed to personal purchases not being made on corporate cards and again is consistent with the observation I just made in respect of item 4.
5.I regard item 8 as being more consistent with no agreement having been made. It suggests the parties were to go away and work out what would be Ms Andrews' liability to Mr Williams, as opposed to what was Ms Andrews' liability to Mr Williams.
6.Furthermore, the covering email from Ms Lillywhite asked both Mr Williams and Ms Andrews to review and advise of any issues in respect of the minutes, thus reflecting that the minutes did not constitute a final position.
Further, while the covering email also states 'Kim, have you been able to finalise the figure that you owe to David (bank) for the loan to KMA?', that sentence cannot be viewed in isolation from the minutes, or the purpose of the meeting. In my view, when regard is had to the purpose of the meeting and the content of the minutes, that particular sentence in the covering e-mail conveys what Ms Andrews would owe to Mr Williams if an agreement as reflected by item 3 of the minutes was ultimately made.
Accordingly, I think the better view is that the minutes set out an indicative position as to an agreement to be made between Mr Williams and Ms Andrews regarding Mr Williams' funding of KMA.
Further, the minutes do not have any particular standing as a record of the meeting. The minutes were not approved by the directors of KMA, being Mr Williams and Ms Andrews, nor were they signed by either as the chair of that meeting or of the immediately following meeting.[75] The minutes therefore are not prima facie evidence of what occurred as provided for by s 251A (6) of the Corporations Act. Furthermore, Ms Lillywhite did not fulfil any corporate secretarial role within KMA.
[75] See s 251A(2) of the Corporations Act 2001 (Cth).
In addition, I am not satisfied that the effect of Mr Williams' evidence is that at the meeting Ms Andrews agreed that an agreement as reflected by item 3 of the minutes had previously been made between them, or such an agreement was made at the meeting. In that respect, Mr Williams' evidence was that Ms Andrews was asked to go to work out what she thought she owed him regarding the loan.
I also consider the effect of Ms Lillywhite's evidence is that the matters discussed at the meeting were preparatory to an agreement being reached between Mr Williams and Ms Andrews. In this respect, Ms Lillywhite gave evidence that:[76]
I know that when we walked away from that meeting, there was quite a few moving parts that needed to be looked at from both parties. And from memory, that's about all that got achieved. You both got to put your points across as to where you thought you were at.
[76] ts 617 - ts 618.
I accept this evidence. I consider it is consistent with the preferred interpretation of the minutes. I also consider Ms Lillywhite's reference to there being quite a few moving parts is consistent with the various subject matters dealt with in the minutes, which address Carine Health (item 1), Mr Williams and Ms Andrews' working in the stores during trading hours (item 2), the funding of KMA and how that should operate (items 3 to 5), Mr Williams becoming a distributor (item 6), the amendment and signing of the partnership agreement (item 7) and a statement of all monies owing to Mr Williams being complied and agreed (item 8). An overall review of the minutes (on both versions) reflects that a number of matters of some complexity and detail were discussed as a result of which the parties were to consider amendments being made to the proposed partnership agreement and execution of that agreement.

Ms Henderson prefaced her answer by saying 'I could have had a few options', then identified putting her efforts into a clinic in the city, getting a fulltime retail job in the health profession or going back to being a sales representative.[208]
[208] Which is what I infer 'repping' means; see ts 871.
Ms Lehoczky's answer was:[209]
I probably would spend a bit more time in Malaysia with my mum, and probably look for some part-time job.
[209] ts 882.
There is no evidence before me as to how successful the business of Carine Health has been under the operation of KM8, or as to what financial benefits Ms Andrews, Ms Henderson and Ms Lehoczky have received from that business while it has been owned by KM8. Nor is there any evidence as to what the business may now be worth.
It therefore becomes quite difficult to assess what detriment each of Ms Andrews, Ms Henderson, Ms Lehoczky and KM8 have suffered in reliance on the assumed state of affairs that KM8 was only required to pay 50% of the purchase price.
As a general observation, the asserted detriment is of a very different type to the 'life changing decisions with irreversible consequences of a profoundly personal nature' referred to in Donis, as cited in Sidhu.
A further difficulty in assessing detriment is that on Ms Andrews' case, it was her inability to pay (and thus by extension KM8's inability to pay) which was the fundamental premise for the reduced payment obligations. Accordingly, it was her asserted incapacity to pay which brought about the alleged assumption. It was not an unwillingness to pay.
Ms Andrews asserted generally in her evidence that she was unable to contribute to the purchase price. Mr Williams said that he assumed Ms Andrews could not contribute to the purchase price. However, there is limited material before me as to the extent of Ms Andrews' financial position at the time of purchase and whether or not it allowed for alternative funding options to be considered.
Furthermore, I find it difficult to accept that Ms Andrews, Ms Henderson and Ms Lehoczky would have immediately walked from the deal if Mr Williams had insisted on full payment. The supposed concern was as to a perceived difficulty in paying the balance on settlement. There is no suggestion the purchase price did not reflect fair value. Accordingly, steps which would have been available to the defendants if Mr Williams had insisted on full payment included:
1.Considering what ability Ms Andrews had to obtain finance to contribute to the purchase price.
2.Considering whether or not Ms Henderson and Ms Lehoczky could contribute further to the purchase price with a consequent adjustment to the shareholding percentages in KM8.
3.Discussing with Mr Williams an extended time for payment of the balance of the monies owing, or linking such further payment obligations to the performance of the business.
On the evidence, the matter is left with:
1.General propositions as to what each of Ms Andrews, Ms Henderson and Ms Lehoczky would have done if Mr Williams had insisted on full payment of the purchase price.
2.A general assertion as to Ms Andrews' financial position at the time of purchase.
3.No evidence as to how successful the business of Carine Health has been under KM8's operation.
When regard is had to these matters, in my view, on the evidence before me I am not able to come to a view that any of the defendants have suffered substantial detriment by acting in reliance upon the assumed position that KM8 was only required to pay 50% of the purchase price.

Unconscionability

Even if I were satisfied there was detriment suffered by the defendants in that they would have walked away from the deal and pursued other options, the question of unconscionability needs to be considered at this point in time.
I have held that Mr Williams agreed to forego payment of 50% of the purchase price, however there was no consensus between the parties as to why that was the case. Further, I have found that no replacement obligation was put in place in exchange for the reduced payment obligations.
While it is feasible I could make an estoppel order conditioned on the acceptance by the defendants of a form of replacement obligation to compensate KMA, in my view such a replacement obligation should not be to the effect that only Ms Andrews is liable for the remaining balance. This is so for two reasons. First, as I have found, I am not satisfied that Mr Williams suggested such a replacement obligation in his discussions with Ms Andrews leading up to the sale of Carine Health. Second, on the evidence before me, I am unable to discern Ms Andrews' current financial position and therefore unable to discern the value of such a condition.
The defendants' estoppel case does not suggest any alternative replacement obligation to that of Ms Andrews being personally liable for the balance. That being so, when regard is had to my findings, the effect of the estoppel case is that KM8 will have purchased the business of Carine Health for half of the agreed purchase price, bearing in mind the balance is a significant sum of money - $100,000.
Furthermore, there is no evidence before me that KM8 is unable now to pay the balance of the purchase price. Nor is there any suggestion on the evidence that the purchase price did not represent fair value.
Having regard to these matters, in my view it is not unconscionable for KMA to now seek payment of the remaining balance of the purchase price.
Accordingly, I would not have been prepared to make an order that Mr Williams and KMA are estopped from seeking the payment of the remaining 50% of the purchase price, as the effect of such an order would be that KMA only receives 50% of the agreed price for Carine Health.
It may well have been that if KMA had immediately sought payment of the balance post settlement, that would, in all of the circumstances, have been unconscionable. However even if that were so, this would not justify an order that KM8 was not required to pay the balance. Instead, in my view any such unconscionability could be addressed by orders to the effect that KMA was estopped from seeking payment of the full amount for a reasonable period of time, thus giving the defendants a sufficient opportunity to put in place measures to come up with the required additional monies. The defendants do not seek an estoppel in those terms. Further, a significant period of time has now lapsed since the settlement date, so in my view such a reasonable time would already have expired.
For these reasons, if I had found that Mr Williams was a seller in the agreement by which Carine Health was sold, I would not have upheld the defendants' estoppel claim.

Personal loan

Mr Williams also makes a claim against Ms Andrews as to a loan alleged to arise out of his payment of certain of her personal expenses.[210] The expenses the subject of the claim are set out at items 189 to 198 on the Scott Schedule.[211]
[210] Paragraph 8 of the statement of claim.
[211] Plaintiff's documents, vol 2, page 903.
I will commence by dealing with items 193 to 198 of the Scott Schedule.

Items 193 - 198

It is not in dispute that Mr Williams paid a number of personal expenses for Ms Andrews, which are those items referred to at items 193 to 198. The amounts total $9,158.46. Relevantly, the payments were for items associated with Ms Andrews' home - pool, gas, water and rates; and payment of her car registration.
The relevant invoices are contained in the plaintiff's documents.[212] Mr Williams paid them on 10 December 2015 using his MasterCard.[213]
[212] Plaintiff's documents, vol 2, pages 781 - 786.
[213] Plaintiff's documents, vol 2, page 788.
Mr Williams in examination-in-chief said that Ms Andrews produced a number of bills that she would like him to pay for her as she was having financial difficulties.[214] He then went through the relevant payments made, which equate to the claims at items 193 to 198. Before turning to the specific items, he said he had told Ms Andrews that he would be happy to pay as a loan those bills which Ms Andrews was having difficulty paying.[215] After having described the relevant payments, he said he told Ms Andrews that if she paid it back when she could afford it that would be fine.[216]
[214] ts 186.
[215] ts 185.
[216] ts 186.
Ms Andrews in examination-in-chief said that she gave Mr Williams $9,000 in cash for the purposes of him making these payments, describing it as a regular activity she and Mr Williams engaged in.[217] She described the rationale behind the arrangement as being that Mr Williams uses his credit cards and:[218]
… I give him cash and he pays things on his credit card, then he's got a cash flow.
[217] ts 659 - ts 660.
[218] ts 660.
In cross‑examination, Ms Andrews expanded on this saying that Mr Williams was going overseas in December and was going to be taking a long extended trip and was looking for cash.[219]
[219] ts 765.
In cross‑examination Ms Andrews said that the $9,000 in cash had come from 'personal excess with [her] husband'.[220] She also said she had received a redundancy of $36,000 and had excess funds from the purchase of a property.[221] She said she kept the excess cash in a safe at home.[222] In answer to a question which I asked, Ms Andrews said that the $9,000 came from sources other than the bank account statements which were evidence in these proceedings.[223]
[220] ts 764.
[221] ts 763.
[222] ts 764.
[223] ts 764.
I have set out above at [139] electronic messages which Mr Williams and Ms Andrews exchanged on 16 March 2017. In the second message from Mr Williams as part of that exchange, Mr Williams stated:
I've lent Kim 100% of the investment money into KMA and I'm not sure of the exact amount over $150000 let's say plus personally for home, Pool and mortgage.
Ms Andrews' response was:
... as for the personal loan that was between you and me and when rupert found out he hit the roof!
In Ms Andrews' examination-in-chief, she said that the reference to the personal loan in the 16 March 2017 messages was a reference to Mr Williams lending her his cars for her to use.[224]
[224] ts 695 - ts 696.
In cross‑examination, Mr Williams took Ms Andrews to these messages. She again said that the personal loan mentioned in the messages was a reference to the loan of Mr Williams' cars.[225]
[225] ts 779 - ts 780.
In response to a question from me regarding the reference in Ms Andrews' message to Rupert (that is her husband), hitting the roof when he found out, Ms Andrews said that:[226]
Because I hadn't paid David for the cars. He didn't know I was paying for the cars and that I had offered money for the cars. Otherwise Rupert would have said, 'Don't borrow the cars'.
[226] ts 781.
Ms Andrews made three payments to Mr Williams which are recorded on Mr Williams' bank accounts.[227] The relevant references show that on 16 March 2017, 23 March 2017 and 31 March 2017 Ms Andrews deposited into Mr Williams' bank account the sum of $300, thus a total of $900.
[227] Plaintiff's documents, vol 2, pages 789 to 791.
In respect of these entries:
1.For the 16 March 2017 entry, it includes a notation 'personalloan repay'.
2.In respect of the 23 March 2017 entry, it includes a notation 'David loanrepay'.
3.In respect of the 31 March 2017 entry, it includes a notation 'loan repay'.
As can be seen, each of these entries is different, thus reflecting that they were separately entered. Furthermore, the first payment on 16 March 2017 occurs on the same day as messages exchanged between Mr Williams and Ms Andrews referring to a personal loan.
In examination-in-chief, Ms Andrews said that the three payments of $300 were payments in respect of the loan of a car.[228]
[228] ts 696.
In my view, the reference in Mr Williams' electronic message sent 16 March 2017 to a personal loan is plainly a reference to a loan of money. Mr Williams' message refers to the amount of a loan in respect of KMA and then refers to 'plus personally for home, Pool and mortgage'. These descriptions are broadly consistent with the subject matter of the payments that Mr Williams made using his MasterCard. Further, Mr Williams' message makes no reference to the loan of his cars to Ms Andrews.
Ms Andrews' message in response acknowledges the existence of the personal loan. Her complaint regarding it was directed to Mr Williams including her husband as a recipient of the message. She makes no mention to a loan of cars.
The relevant bank entries all refer, albeit in different language, to repayment of a loan. They also make no reference to a loan of cars.
In addition, there were a number of electronic messages between Mr Williams and Ms Andrews regarding Mr Williams lending his cars to Ms Andrews.[229] I have read through these messages. They take place over the period from 9 February 2016 to 3 May 2016. The messages do not make any mention of Ms Andrews paying Mr Williams for the loan of the cars. There is therefore no historical context where Ms Andrews was paying for the use of Mr Williams' cars.
[229] Plaintiff's documents, vol 2, pages 846 - 851.
I reject Ms Andrews' evidence that the references to a personal loan in the messages exchanged on 16 March 2017, and in the bank entries, is a reference to a loan of cars. For the reasons I have explained, such a suggestion is entirely at odds with the terms of both the messages and of the bank entries.
In addition to these matters, in my view Ms Andrews' explanation as to the source of this supposed $9,000 cash is unsatisfactory. The explanation that she had $9,000 in a safe at home lacks plausibility. As to the source of these monies, Ms Andrews said in cross‑examination that:[230]
I had a redundancy in June of that year. I also had - we had just purchased a property in March of that year and we had excess funds.
[230] ts 763.
Ms Andrews' bank statements which were in evidence did not show these monies and in answer to my question, Ms Andrews said that the monies came from sources other than that bank account.[231] However, Ms Andrews did not explain how monies paid by way of redundancy and her having excess funds arising from a purchase of a property ended up being held in cash.
[231] ts 764.
For these reasons overall, I reject Ms Andrews' evidence that she gave Mr Williams $9,000.
I accept Mr Williams' evidence. It is consistent with his message to Ms Andrews regarding the personal loan and having regard to my rejection of Ms Andrews' evidence, there is no other plausible explanation why Mr Williams would make those payments. That being so, in my view, Mr Williams' payment of those items for Ms Andrews' benefit gives rise to an agreement between them whereby Mr Williams lent the subject monies to Ms Andrews on terms that she would repay them within a reasonable time of Mr Williams making demand for payment. The reasonable time for payment arises from Mr Williams' evidence that Ms Andrews could repay the bills when she could afford to do so. Mr Williams has by these proceedings made such a demand and a reasonable time has expired to allow for payment.

Items 189, 190, 191 and 192

Item 192 is in respect of a payment made by Mr Williams to the Australian Taxation Office (ATO) in the sum of $4,103.00 to meet a liability of KMA. The payment was made on 3 November 2015.[232] It was in respect of KMA's GST liability for the period 1 July 2014 to 30 June 2015.[233] Accordingly, the liability is in respect of the period prior to Mr Williams becoming a shareholder and director of KMA. In that respect, the ASIC records for KMA report that Mr Williams became a shareholder and director of KMA on 24 August 2015.[234]
[232] See plaintiff's documents, vol 1, page 316 and the notation on the document at plaintiff's documents, vol 2, page 777.
[233] Plaintiff's documents, vol 2, pages 778 - 779.
[234] Defendants' documents, pages 472 and 475.
Mr Williams' evidence was the bills at pages 777 to 779 were included in the bills that he had told Ms Andrews that he would be happy to pay as a loan because she was having difficulty paying them.[235] Mr Williams also said that the payment of $4,103 the subject of item 192:[236]
… formed part of the personal loan that I'd arranged with Kim.
[235] ts 184 ts 185.
[236] ts 185.
Ms Andrews did not address this payment in her evidence.
I accept Mr Williams' evidence, which acceptance is consistent with my acceptance of his evidence regarding items 193 to 198. Further, his evidence is consistent with the liability relating to the period prior to his becoming involved with KMA. On the evidence before me, the only plausible explanation as to why Mr Williams would make such a payment is by way of a personal loan to Ms Andrews.
Accordingly, in my view, the making by Mr Williams of the payment claimed at item 192 gives rise to an agreement between him and Ms Andrews whereby Mr Williams lent the subject monies to Ms Andrews on terms that she would repay them within a reasonable time of Mr Williams making demand for payment. The reasonable time for payment arises for the same reasons I have expressed in relation to items 193 to 198. By these proceedings, such a demand had been made and a reasonable time has expired to allow for payment.
I therefore allow the claim for the sum of $4,103. I also allow the credit card fee of $17.23 in respect of that payment, claimed at item 191 of the Scott Schedule, it being the cost of making the payment. The fee appears two lines above the relevant entry in the bank statement for the payment of $4,103 and I infer from its description and quantum that it relates to that payment.[237]
[237] See plaintiff's documents vol 1, page 316.
The same reasoning as I have set out in relation to items 191 and 192 applies to items 189 and 190, being the sum of $932.10 made to the ATO and the credit card fee of $3.91 associated with that payment.[238]

Conclusion regarding personal loan claim

[238] See plaintiff's documents, vol 2, page 776 as to the ATO payment slip and plaintiff's documents vol 1, page 316 recording the making of the payment and the charging of the fee.

I allow Mr Williams' claim for the personal loan against Ms Andrews in the sum of $13,314.70, which I calculate as follows:
1.The total of the payments at items 189 to 198 of the Scott Schedule is $14,214.70.
2.Ms Andrews has made payments totalling $900.
3.The balance is therefore $13,314.70.

Consequential matters if I had upheld Mr Williams' claim at par 6 of the statement of claim

While I have not allowed Mr Williams' claim as alleged at par 6 of the statement of claim, it seems to me that as best I can, I should still determine the disputes regarding the magnitude of that claim.
These disputes fall into three separate categories:
1.Carine Health.
2.Expenses Mr Williams paid for the benefit of KMA.
3.Payments which were made by KMA to Mr Williams, or for his benefit, and therefore are to be deducted from Mr Williams' claim.
I will start with Carine Health.

Carine Health

I have made the following findings in respect of Carine Health:
1.That by the time of execution of the first agreement for the sale of Carine Health, Mr Williams had transferred to KMA 50% of his interest in that business.
2.That the likely consideration for this transfer is KMA's assistance in the re-establishment of the Carine Health business.
3.Mr Williams transferred the remaining 50% interest to KMA by way of his execution of the second agreement.
4.That my preliminary view was that KMA must account to Mr Williams for the benefits it receives by way of the sale of that remaining 50% interest.
Mr Williams contends that:
1.The transfer to KMA of the Carine Health business constitutes a loan to KMA equivalent to the value of that business.[239]
2.The profits of Carine Health which were paid into KMA's bank account constituted an advance of monies the subject of the alleged loan agreement pleaded at par 6 of the statement of claim.[240]
[239] Paragraphs 16 and 17 of the statement of claim.
[240] Paragraph 18 of the statement of claim.

I will deal with these matters in the order in which I have just stated them.
In my view, what occurred in respect of the transfer of Carine Health to KMA falls outside the scope of the alleged agreement. In that respect, the matters pertaining to Carine Health arise in respect of it being brought under the KMA umbrella as a business operation, not it being provided to KMA as a means of funding.
Further, Mr Williams' message to Ms Andrews on 3 May 2017[241] is inconsistent with a proposition that the transfer to KMA fell within the terms of the alleged loan agreement, that message accepting that he had in effect given 50% of Carine Health to KMA.
[241] Plaintiff's documents vol 1, page 61.
Furthermore, such a result also would be inconsistent with the findings I have made regarding the consideration which KMA had provided, or is liable to provide, to Mr Williams in respect of his transfer of Carine Health to it.
Accordingly, I am not satisfied that the transfer of Carine Health to KMA would have constituted funding within the terms of the alleged agreement which Mr Williams contended for.
In respect of the profit from the Carine Health business, in my view this cannot be viewed in isolation. While monies were banked into KMA's account, KMA paid the expenses for the Carine Health business and also paid the salary of the staff who operated that business. Whether or not the relevant revenue paid to KMA exceeded the costs of operating the business is not a matter I am able to determine in these proceedings. If there is a net balance in favour of Mr Williams, then I consider that is a matter which would need to be brought to account between KMA and Mr Williams, with consequent adjustment for KMA being a 50% owner of Carine Health prior to the first sale agreement being executed.
However, I do not consider that would fall within the terms of the alleged agreement between Mr Williams and Ms Andrews. That alleged agreement was directed to Mr Williams' funding of KMA and self-evidently could not have addressed Carine Health, as it was not under the KMA umbrella at the time Mr Williams contends the alleged agreement was made. Further, on the evidence, I cannot be satisfied there was any agreement between Mr Williams and Ms Andrews as to Ms Andrews assuming a personal liability to Mr Williams to account to him if the Carine Health revenue banked into KMA exceeded the operational expenses which KMA paid. In my view, such a contention is of a very different character to the funding agreement which Mr Williams contended was made at the start.

Dispute regarding specific matters in the Scott Schedule

The Scott Schedule contains items pertaining to payments:
1.Made by Mr Williams for the benefit of KMA, which form part of his claim.
2.Made to Mr Williams, or for his benefit, which form part of what Ms Andrews says are repayments made to Mr Williams.
As a result of useful conferral that took place between the parties during the course of the trial, the parties reduced the items in dispute to items 64, 128, 442, 443, 444, 492, 659, 678 and 683 of the Scott Schedule.
Items 64 and 128 pertain to expenses which Mr Williams says he paid for the benefit of KMA.
Items 442, 443, 444, 492, 659, 678 and 683 pertain to payments which Ms Andrews says were made for Mr Williams' benefit and therefore are to be deducted from the total amount claimed by him. In his closing submissions, Mr Williams did not press his objection to items 442, 443 and 444.[242] This then leaves items 492, 659, 678 and 683. Item 492 pertains to the payment of a monthly expense for an iPad. Similar payments are the subject of items 514, 530, 544, 554, 563, 589, 597, 608, 620, 643, 653, 660, 667, 669, 673, 679, 681, 686, 688 and 689.
[242] ts 1002 - ts 1003.
I will start by dealing with those items which Mr Williams says should be included in his claim, being items 64 and 128.

Item 64

Item 64 is for the sum of $853.82 processed for payment on 19 November 2015.[243] The issue in respect of this item related to there not being an invoice which identified the purpose for which the payment was made. During closing submissions, I allowed Mr Williams further time to locate the relevant invoice.[244] From my review of the file subsequent to the closing submissions, it is not apparent that any further documents were produced or identified. That being so, I am not satisfied on the material that the payment claimed for at item 64 was payment of an expense for KMA. I therefore do not allow the claim at item 64.

Item 128

[243] Plaintiff's documents vol 1, page 316; see also ts 381.

[244] ts 1002; see also ts 331 - ts 338.

This item relates to the invoice at plaintiff's documents vol 1, page 264, which is the sum of $930 and is in respect of Lets Kiki Australia. Mr Williams gave evidence that this was in respect of sending out texts and emails for the company's promotion and advertising.[245] Further, in cross-examination he gave evidence to the same effect.[246] Ms Andrews' evidence was to the effect that as no invoice was produced, no work was done.[247] She also said in cross-examination that it was purely for personal use by Mr Williams and it was a live streaming site. She also said that she was aware of this:[248]
Because we Googled it and that's what came up.
[245] ts 335.
[246] ts 484 - ts 485.
[247] ts 706.
[248] ts 842.
Ms Andrews' explanations are more supposition than based on any particular personal observations. Mr Williams in his evidence was able to provide some detail as to what the work was that related to the claim. Given that detail and my overall impression of Mr Williams as a witness, I accept his evidence and allow the claim at item 128.
I now turn to the items which Ms Andrews contends should be deducted from Mr Williams' claim as they were payments made by KMA for his personal benefit.

Item 492

The relevant dispute relates to whether the iPad was used for KMA's business. The relevant cost is $54.99, which then varied over time with the final charge being $65.00, which is item 689.
Ms Andrews in her evidence accepted that the iPad was used on the opening day on 28 February and said Mr Williams then took it.[249] Ms Andrews also gave evidence to the effect the iPad was not very handy for doing stocktake and recording in the Morley store and Mr Murphy did not use the iPad for posting on social media.[250]
[249] ts 705, ts 840.
[250] ts 840.
Mr Williams' evidence was to the effect that the iPad was used in the Morley store and not for his personal use during the time the business was operating.[251] However, Mr Williams was not in the store regularly.
[251] ts 479, ts 481.
The deduction is sought on the basis that after initial use on the opening day, the iPad was solely used by Mr Williams for his personal use.
There is no information before me as to what was on the iPad. Given the informal way in which the parties conducted their business affairs, I cannot discount the possibility that it was used in some way in the Morley store, or otherwise for the purposes of KMA. It is not an implausible proposition.
I am therefore not satisfied on the evidence that the iPad was used solely for Mr Williams' personal purposes. Therefore I do not allow the deduction in respect of item 492 or the associated items, being items 514, 530, 544, 554, 563, 589, 597, 608, 620, 643, 653, 660, 667, 669, 673, 679, 681, 686, 688 and 689.

Item 659

This related to $625 spent at Bob Jane T-Marts. In cross‑examination Mr Williams accepted that it was probably correct that it was for his car.[252] Given that evidence, I accept it is likely that the expense related to a personal matter for Mr Williams and therefore I allow the deduction of item 659.

Item 678

[252] ts 482.

This relates to a charge at Beechboro Mechanical in the sum of $990 on 30 March 2016. Mr Williams gave evidence that he believed this was for an expense to do with Ms Andrews' Hummer vehicle.[253] Ms Andrews says that she dropped off Mr Williams' silver Mercedes for a service.[254] She then walked down to pick up the car as Mr Williams was not available and paid for it with her KMA credit card.[255] It seems to me without details from Beechboro Mechanical as to what car was worked on I cannot resolve this dispute and therefore I cannot find in favour of the deduction of item 678. In addition, the payment was made on 30 March 2016, so some significant time before evidence was given in this trial. Overall, I am not satisfied that the payment related to Mr Williams' car and I do not allow it.

Item 683

[253] ts 483.

[254] ts 705.

[255] ts 705.

This is in respect of a payment to Barr Dental Pty Ltd on 17 February 2016 for the sum of $160. Mr Williams says it was for personal dental work for Mr Murphy, a KMA employee.[256] Ms Andrews said that the relevant dentist, being Barr Dental was a dental place that Mr Williams and his family used.[257] Ms Andrews also said she was unaware whether it was for an employee.[258] In my view, I cannot resolve this dispute without documentation as to who the relevant patient was on the day. Overall, I am not satisfied this related to a personal expense for Mr Williams and therefore I do not allow the deduction.

Final matter to raise

[256] ts 483.

[257] ts 706.

[258] ts 706.

Mr Williams extensively cross-examined Ms Andrews on matters pertaining to the accuracy of her taxation returns and also work she performed extraneous to the activities of KMA.[259] Having regard to my findings, I am of the view that I do not need to address these issues.
[259] See for example, Mr Williams' closing submissions in relation to Ms Andrews’ taxation returns at ts 994 ‑ ts 995.

Conclusion

In conclusion, my findings are as follows:
1.I do not allow Mr Williams' claim against Ms Andrews as alleged at par 6 of the statement of claim.
2.I allow Mr Williams' claim against Ms Andrews as alleged at par 8 of the statement of claim, which I calculate to be in the sum of $13,314.70.
3.The agreement for the sale of Carine Health was constituted by the first agreement, varied by the second agreement, so as to remove Mr Williams as a co-seller and to extend the settlement date to 20 May 2017.
4.The parties to the agreement were KMA as seller, KM8 as buyer, Mr Williams as covenantor and Ms Andrews, Ms Henderson and Ms Lehoczky as guarantors.
5.Mr Williams was not a seller under the terms of the agreement. He therefore has no standing to enforce the obligations owed by the defendants to KMA as the sole seller.
6.If I had found that Mr Williams was a seller under the terms of the agreement, I would not have allowed the defendants' estoppel case.
As is apparent from this summation of my findings, the parties have respectively each had some success in the proceedings. I will hear from the parties as to what orders ought be made to give effect to my findings and also as to what costs orders ought be made.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
CA
Associate to Judge Lemonis
24 MARCH 2021