Azzi v Phillips

Azzi v Phillips - [2016] NSWDC 40 - NSWDC 2016 case summary — Zoe

[4]

The pleadings

The plaintiffs claim sums loaned to the defendant as follows: 1. The first plaintiff claims the sum of $25,000; 2. The second plaintiff claims the sum of $55,000; and 3. The third plaintiff claims the sum of $20,000.
The plaintiffs in their statement of claim filed on 12 September 2014 (as amended) set out the basis of their claim as a series of loans on the following dates, by the following parties, for the following amounts: 1. The first advance: 8 April 2011: $10,000 advanced by the third plaintiff (paragraph 21 of the statement of claim); 2. The second advance:18 May 2011: $10,000 advanced by the third plaintiff (paragraph 22 of the statement of claim); 3. The third advance: 10 June 2011: $20,000 advanced by the first plaintiff (paragraph 4 of the statement of claim); 4. The fourth advance: 1 September 2011: $5,000 advanced by the first plaintiff (paragraph 5 of the statement of claim); 5. The fifth advance: 29 September 2011: $10,000 advanced by the second plaintiff (paragraph 12 of the statement of claim); 6. The sixth advance: 30 March 2012: $20,000 advanced by the second plaintiff (paragraph 13 of the statement of claim); 7. The seventh advance: 17 May 2012: $10,000 advanced by the second plaintiff (paragraph 14 of the statement of claim); 8. The eighth advance: 14 August 2012: $15,000 advanced by the second plaintiff (paragraph 15 of the statement of claim).
The loan agreements are recited in the statement of claim as having been executed by the defendant on the following dates: 1. A document executed on or about 14 August 2012 headed "Loan Agreement", in which the defendant acknowledged having received loans from the first plaintiff totalling $25,000, which sum he agreed to repay on demand in 30 days, together with interest at the rates specified by the Australian Tax Office in respect of Fringe Benefits Tax purposes at the end of the 30 day period ("the first loan agreement"); 2. A document executed on or about 14 August 2012 headed "Loan Agreement", in which the defendant acknowledged having received loans from the second plaintiff totalling $55,000, in the same terms as the first loan agreement; 3. A document executed on or about 14 August 2012 headed "Loan Agreement", in which the defendant acknowledged having received loans from the third plaintiff totalling $20,000, in the same terms as the first and second loan agreements.
In the course of the hearing, the plaintiffs also relied upon additional documentary evidence asserted to support the plaintiffs' claims that these advances were loans: 1. Admissions by the defendant/cross-claimant in emails that the funds advanced were a loan. These include a statement, in his email of 8 April 2011, that the first loan was repayable in 90 days; 2. The defendant/cross-claimant gave the first plaintiff a post-dated cheque for $40,000 on the occasion of the fifth loan. This 29 September 2011 advance is recorded on a cheque requisition form as a loan repayable on the same day as the defendant/cross-claimant's post-dated cheque (1 December 2011) and as payable to the second plaintiff/second cross-defendant in the sum of $40,000; 3. The 30 March 2012 advance was recorded in a document signed by the defendant/cross-claimant on that same day, described as: "This loan is to be paid as a priority with other loans still due to me from last year" (Annexure J to the affidavit of the first plaintiff sworn on 12 March 2015, page 38).
The notices in writing requiring repayment of these sums by the defendant/cross-claimant were sent on 28 May 2014 (paragraphs 7, 17 and 24 of the statement of claim). These sums are acknowledged not to have been paid.
The defendant/cross-claimant acknowledges receipt of $95,000 of the total of $100,000, but claims that the third advance was the sum of $15,000 and not $20,000, and admits signing the loan agreements.
The defendant/cross-claimant brings his cross-claim on the basis of two asserted oral contracts. These claims occupied most of the time in these proceedings. The defendant/cross claimant's pleadings set out that $5,000 was never received, $10,000 was a gift, and the remaining $85,000 consisted of sums advanced as "part-payments for services rendered by Mr Phillips that had, in effect been disguised as loans" (defendant/cross-claimant's outline of submissions, paragraph 5) because "Mr Azzi preferred to conduct his business … in an opaque manner" (the defendant/cross-claimant's outline of submissions, paragraph 8).
The defendant/cross-claimant claims payment for services rendered as follows: 1. Provision of "project management services" (cross-claim, paragraph 1) from 17 February 2011 to May 2014, in respect of the proposed redevelopment of three commercial premises, as set out in invoices 0001 - 0003 forwarded on or about 4 March 2015. This sum was reduced to $13,325 by the withdrawal of the claims set out at pp 56 - 61 of Annexure NP1 to the defendant/cross-claimant's affidavit and further by the withdrawal of 1/11 by reason of his not being registered for the Goods and Services Tax ("GST"); 2. The plaintiff additionally brings a claim for provision of services from 9 August 2011 to May 2014 at $37.50 per hour plus GST (cross-claim, paragraph 8) to "establish, and thereafter manage, a commercial cattle business" (cross-claim, paragraph 6). Settlement of the purchase by the second plaintiff/second cross-defendant of the farm, "Murrumbank", took place on 9 August 2011. The registered proprietor of this property (referred to hereafter as "Murrumbank" or "the farm") is the third plaintiff/third cross-defendant, Harissa Pty Ltd. The quantum of the damages set out in the invoices produced in support of the claim ($208,395) was also reduced by 1/11 to allow for the fact that the defendant/cross-claimant was not registered for GST at the time.
In his written submissions in reply dated 1 April 2016, Mr Zmood calculated these sums as follows: 1. $13,325 in respect of 132.5 hours, in total, worked by Mr Phillips on three redevelopment projects (to which, paragraphs 1-4 of the Further Amended Statement of Cross-Claim ("the cross-claim")) from around March 2011 until around May 2014; and 2. $189,450 in respect of 5,025 hours, in total, worked by Mr Phillips the Bookham Project (see paragraphs 6-10 of the cross-claim) from 23 July 2011 until 14 May 2014.
However, in the table set out in his submissions, Mr Zmood provides different figures again for the Murrumbank contract claim. The revised computation of the amounts sought in the cross-claim in respect of the redevelopment projects and the farm management fees shows that the latter are now $202,775.50 for 5,184.5 hours: Invoice Number Previously Claimed Amended Claim Hours Claimed 0001 $14,575.00 $13,325.00 132.5 0002 $330.00 $Nil Nil 0003 $2,200.00 $Nil Nil 0004 $412.50 $375.50 10 0005 $6,063.75 $5,512.50 147 0006 $1,113.75 $1,012.50 27 0007 $7,425.00 $6,750.00 180 0008 $11,137.50 $10,125.00 270 0009 $1,567.50 $1,425.00 38 0010 $21,037.50 $19,125.00 510 0011 $19,181.25 $17,437.50 465 0012 $17,325.00 $15,750.00 420 0013 $16,706.25 $15,187.50 405 0014 $14,231.25 $12,937.50 345 0015 $22,893.75 $20,812.50 555 0016 $13,612.50 $12,375.00 330 0017 $19,181.25 $17,437.50 465 0018 $20,418.75 $18,562.50 495 0019 $16,087.50 $14,625.00 390

[6]

I propose to accept the larger sum ($202,775.50 for 5,184.5 hours) as the correct figure.
The defendant/cross-claimant's invoice for the redevelopment work (done in Sydney) may briefly be summarised as follows. Invoice 1 sets out work from 22 March 2011 to 26 May 2012. There is then a gap until one day of work on February 18, 2013 for one hour (taking photographs) and a further claim on 23 and 27 January 2014 (taking photographs, 90 minutes), which are typical examples of a considerable amount of time taken to perform a simple task. There is a generalised claim that between 18 March 2011 and 27 May 2014 Mr Phillips was "in receipt of 100's of emails" asking him to attend to matters, for which he claims 1200 minutes, being $2,200. Those "100's of emails" appear to be the relatively small collection of documents attached to his affidavit, and it is hard to see this claim as amounting to more than a restatement of the separately itemised claims. This means that, as invoices 2 and 3 are no longer pressed, he has probably performed at best around $10,000 of work (GST-free) at $100 per hour.
The defendant/cross-claimant's invoices for the Murrumbank farm work may briefly be summarised as follows. The bulk of the cross-claim consists of the claims for management work on the farm property, which was not purchased until 9 August 2011. This is significant in relation to the claims brought by the plaintiffs, because five of the eight advances (totalling $55,000) set out in the statement of claim were made prior to, or during, September 2011, rendering the defendant/cross-claimant's assertions that these were payments on account of the management and redevelopment work he was doing implausible, in that any such entitlement would have had to have been for a fraction of that sum.
The defendant/cross-claimant brings alternate claims for these sums on the following bases: 1. A claim in contract on accounts stated (paragraphs 12 - 12B of the cross-claim); 2. Estoppel based on express oral representations asserted to have been made by the first plaintiff or alternatively by conduct (paragraphs 12C - 12K of the cross-claim); 3. Quantum meruit (paragraphs 13 - 16 of the cross-claim); 4. A plea that the loan agreements were void for lack of consideration (paragraph 17 of the cross-claim); 5. Estoppel by representation against the second and third cross-defendants, namely the "no call representation" in (f) below (paragraph 18 of the cross-claim); 6. Misleading or deceptive conduct in making the "no call representation", namely that the second and third cross-defendants induced the defendant/cross-claimant to sign loan agreements by promising that he would not be called on to repay (paragraphs 19 - 23 of the cross-claim).
For ease of reading, the first plaintiff/first cross-defendant is hereafter referred to as "Mr Azzi", the defendant/cross claimant as "Mr Phillips", and the two corporate defendants as "Harissa" and "Tony Azzi (Automobiles)". Where all of the plaintiffs are referred to, they are, however, called "the plaintiffs".

[7]

The issues for determination

As counsel for the plaintiffs' Outline (paragraph 3) and counsel for Mr Phillips' Schedule of Issues both confirm, the plaintiffs bring "a simple claim for money due under three written loan agreements" which Mr Phillips acknowledged he signed (defence, paragraphs 5,12 and 18). This is why so much of the hearing time was devoted to the representations asserted to have been made by Mr Azzi and Harissa and to the work the subject of Mr Phillips' cross-claim.
The parties have provided an outline of issues which essentially reflects the claim and cross-claim as pleaded. Counsel for both parties were in agreement that the question of credit was central to many of the findings of fact that I must make. Issues of quantum were revised during the hearing, as set out above.
At the end of closing submissions, I inquired (T 412) what the basis was for the cross-claims against Mr Azzi and Tony Azzi (Automobiles) as no submissions had been made on this point. After conferring with his client, Ms Zmood agreed that judgment on the cross-claim should be entered by consent in favour of Tony Azzi (Automobiles), but reserved his position in relation to Mr Azzi.
In Mr Zmood's submissions in reply of 1 April 2016, he states that Mr Phillips contended he had a contract with Harissa (through Mr Azzi) in respect of both projects, and that the alternative pleadings "all arise in respect of the Third Plaintiff" (although in what way is not specified in the written or oral submissions, which was the reason for my inquiry at T 412). Mr Zmood acknowledges, however, that his client's position now is that "[w]hilst it may be open for the Court to make a finding of fact that Mr Azzi acted on his own behalf (not for the Third Plaintiffs), Mr Phillips concedes that he is unable to point to positive evidence to support the contention in respect of the cross-claim" (submissions in reply, 1 April 2016, paragraph 9).
This is a lengthy judgment, based on thousands of pages of tendered documents. In the absence of submissions pointing to evidence (positive or otherwise), I am not prepared to speculate as to what the case against Mr Azzi on the cross-claim may be. Accordingly, I propose to enter judgment in Mr Azzi's favour on the cross-claim.

[8]

The role of credit in the findings of fact

It is common ground that the issue of credit plays a significant role in the findings of fact. In McGlen-McLeod v Galloway [2012] NSWCA 368 at [87], Tobias AJA noted the applicability of the observations as Tugendhat J in Thornton v Telegraph Media Group Ltd [2011] EWHC 1884 (QB) at [73]-[74], the relevant parts of which he recorded as follows: "[73] There is great assistance to be obtained from extra-judicial writing of Lord Bingham in a chapter headed "The Judge as Juror: The Judicial Determination of Factual Issues" … Lord Bingham cited Sir Richard Eggleston QC Evidence, Proof and Probability (1978), 155 who set out the main tests to be used by a judge to determine whether a witness is lying or not. (1) the consistency of the witness's evidence with what is agreed, or clearly shown by other evidence, to have occurred; (2) the internal consistency of the witness's evidence; (3) consistency with what the witness has said or deposed on other occasions; (4) the credit of the witness in relation to matters not germane to the litigation; (5) the demeanour of the witness. [74] Lord Bingham then added these observations: In choosing between witnesses on the basis of probability, a judge must of course bear in mind that the improbable account may nonetheless be the true one. The improbable is, by definition, as I think Lord Devlin once observed, that which may happen, and obvious injustice could result if a story told in evidence were too readily rejected simply because it was bizarre, surprising or unprecedented … so long as there is any realistic chance of a witness being honestly mistaken rather than deliberately dishonest a judge will no doubt hold him to be so, not so much out of charity as out of a cautious reluctance to brand anyone a liar (and perjurer) unless he is plainly shown to be such."
Each of the parties urges me to find the opposing party to be a witness without credit. I summarise these findings as follows.

[9]

The plaintiffs' submissions

The plaintiff's submissions essentially concentrated on the first to third of the five factors listed by Tugendhat J listed above, although drawing attention to all of them. Particular reliance was placed upon the internal inconsistency between Mr Phillips' oral evidence and his emails and own documentation. Examples included: 1. Mr Phillips' claim that he was "earning income" and only had a cash flow problem "on occasions" (T 255; c.f. T 270), whereas his emails to Mr Azzi seeking loans were couched in terms of the utmost urgency on the basis that his family were about to be evicted, essential services were about to be cut off, and/or that he had had to cancel a promised holiday. Either he was lying to Mr Azzi to obtain advances, or he was lying to the court, or both. His true financial situation was not able to be ascertained because he had not filed an income tax return since 2011, which was also relevant to his credit; 2. Mr Phillips' evidence that he was surprised and pressured by what he characterises as a sudden (and thus oppressive) request on 14 August 2012 for written documentation in relation to the loan. This is contradicted by Mr Phillips' own acknowledgements over this period, including admissions in emails, a post-dated cheque for the first five loans and his email to Mr Azzi which stated that it would make Mr Phillips feel "a lot more comfortable & for yourself if you could document this for you as mentioned in your email so my obligation to you is clear & defined for payment by myself in full to you for all your Loans to myself" (c.f. T 160 and 291); 3. Mr Phillips' many emails to Mr Azzi (which he asserted at one stage were in excess of 9,000 (T 288)) not only failed to refer to the alleged contractual arrangements in the cross-claim and never evinced any desire to render such an invoice (T 89), but were directly inconsistent with his email request to work one day a week on the farm assisting the farm manager, Mr Schofield; 4. The implausible and "cut and paste" nature of Mr Phillips' invoices for the work done and their inconsistency with the evidence of witnesses of repute, such as his employer at LJ Hooker (Mr Romano) and the farm manager, Mr Schofield, and changes and inconsistencies in Mr Phillips' evidence when confronted with evidence that the dates, times and tasks identified in those invoices could not be correct. 5. The implausibility of Mr Phillips' claim that he was running a business providing consulting services when he did not obtain an ABN until 8 December 2014 (T 196), was unable to provide tax returns since 2011 (T 202), and asked the court to accept that he was working more than 40 hours a week on the Murrumbank farm when he was employed in Sydney as a real estate agent for LJ Hooker at Randwick while at the same time maintaining a principal place of business in Chifley Square Sydney, and driving his daughters to and from school every day.
These are only some of the issues raised by Mr Paterson as going to Mr Phillips' credit, but this sample gives a general flavour of the issues raised in the course of the hearing on this issue.

[10]

The defendant/cross-claimant's submissions

The defendant/cross-claimant's case was more focussed on demeanour, in that the submission is put that Mr Azzi's evidence was "defensive" (T 26) and "combative" (T 39, 81, 83 and 88) and that he showed "a marked reluctance to answer the questions put to him in cross-examination" (T 48 and 68). It was submitted that his reflexive answer to questions put in cross-examination was a denial, even where evidence was to the contrary in his affidavit (T 26 and 28). His memory was asserted to be faulty in that he could not remember sending a notice of concerns in relation to a complaint of defamation being sent to Mr Bush (Exhibit 9) and he gave late 2010 as the date when he became friends with Mr Phillips.
It has often been observed that an ounce of evidence is worth pounds of demeanour: Woolworths Ltd v Perrins [2015] QCA 207 at [115]; Channel Seven Sydney Pty Ltd v Mahommed (2007) 278 ALR 335 at [6] - [9]. Comparison of the selections of the evidence relied upon, as set out in the parties' written submissions, starkly demonstrates this weakness in Mr Phillips' claims in relation to Mr Azzi's asserted lack of credit. Claims that Mr Azzi was defensive or combative are not supported by references to Mr Azzi having to be called upon to answer questions, or displaying rudeness or intractability. To the contrary, it was Mr Phillips who showed such intransigence (including, on one occasion, swearing after he had been asked not to do so: T 338).
There is an additional, and significant, problem in relation to Mr Phillips' version of events, in that there is no contemporaneous documentation recording any of the transactions or conversations supporting his account of what happened. The invoices and references to invoices all post-date the breakdown of the relationship between Mr Azzi and Mr Phillips, and are not contemporaneous. The documents which are contemporaneous contradict Mr Phillips' evidence and support the version of events given by Mr Azzi. This is of significance for the reasons explained by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319: "Where in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously describe as "misleading") within the meaning of s52 of the Trade Practices Act (or s42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the Court (1) what the alleged conduct was, and (2) circumstances which rendered the conduct misleading. 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 of 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. Each element of the cause of action must be proved to the reasonable satisfaction of the Court, which means that the Court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding" (Helton v Allen 63 CLR 691 at 712). Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a cause of action based on s52 of the Trade Practices Act (or s42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration. In a letter of 3 January 1992 (to be referred to later) in which Mr Foxman vented his dissatisfaction with the Bank, no such promise or representation is alleged. The making of such a promise or representation by a bank manager in the position of Mr Cross at the time seems both unlikely and difficult to reconcile with the documentation actually prepared by him on 28 August 1990 for submission to the Bank's regional centre to support an application for increased facilities to Foxman Holdings to assist with the purchase of the property at 38 McPherson Street, Botany. I have the clear impression that Mr Foxman's memory of conversations in 1990 between himself and Mr Cross is not sufficiently clear to enable him to actually recall any of the critical words said to have been used by Mr Cross in the conversation deposed to in para 8 of his affidavit. I believe that his account of that conversation is predominantly a reconstruction made some years after the event."
McLelland CJ in Eq applied those findings to the causes of action based on contract and equitable estoppel, both of which are also pleaded here.
These principles have repeatedly been applied at first instance, in that the words spoken must be identified with precision, and regard will be had to the potential unreliability of such testimony in factual circumstances such as the present (see for example HM&O Investments Pty Ltd v Ingram [2012] NSWSC 958; Ballard v Multiplex [2012] NSWSC 426; Walton Construction Pty Ltd v Illawarra Hotel Company Pty Ltd (2012) 28 BCL 202; Harbour Port Consulting Pty Ltd v NSW Maritime [2011] NSWSC 813; BBB Constructions Pty Ltd v Aldi Foods Pty Ltd [2010] NSWSC 1352; Citigroup Pty Ltd v CrediProtect Pty Ltd [2010] NSWSC 1054; Philips v Tower Australia Ltd [2007] NSWSC 946; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets (No 6) (2007) 63 ACSR 1; McLean Tecnic Pty Ltd v Digi-Tech (Australia) Ltd [2005] NSWSC 386).
These principles have received endorsement on appeal: Moukhayber v Camden Timber and Hardware Co Pty Ltd [2002] NSWCA 58 at [28] per (Heydon JA, with whom Beazley and Santow JJA agreed), and Aneve Pty Ltd v Bank of Western Australia Ltd [2005] NSWCA 441 at [49] (Hodgson JA, with whom Santow and Bryson JJA agreed).
The admissions made by Mr Phillips in correspondence (both as to the identity of the advances and the issues in the cross-claim), the inconsistency of his evidence when compared to witnesses of credit such as Mr Schofield and Mr Romano, the significant factual errors in his invoices and the implausibilities of his evidence are set out in detail below. For the reasons set out in my discussion of that evidence, I am satisfied that he is not a witness whose evidence should be accepted on any issue (unless it is an admission against his interest) without corroboration. The evidence of the witness called in Mr Phillips' case in relation to the redevelopment projects, Mr Bush, was similarly a witness whose evidence should not be accepted, for the reasons set out in more detail below.
Counsel for Mr Phillips also made submissions as to failure to comply with the rule in Browne v Dunn (1893) 6 R 67 and Jones v Dunkel (1959) 101 CLR 298. However, most of my findings of fact are based on Mr Phillips' contemporaneous emails, concessions in cross-examination and errors in his evidence and invoices. This is one of those rare cases where calling the witnesses listed by Mr Zmood would be of no further assistance, no further documentation is necessary, and pursuing Browne v Dunn points would have done no more than further underline the deficiencies in Mr Phillips' evidence.
I next set out a history of how Mr Azzi and Mr Phillips first met and the conversations surrounding the advances of moneys made by Mr Azzi to Mr Phillips as set out in the pleadings.

[11]

How Mr Azzi and Mr Phillips first met

Mr Phillips is a real estate agent, and Mr Azzi is a businessman and millionaire.
Mr Azzi and Mr Phillips first encountered each other when they started to correspond by email in 2009, in relation to a farm property that Mr Azzi was interested in buying, but which was sold to someone else. They first spoke on or about Friday 15 October 2010, for the purpose of inspection of this country farm. Following this meeting, Mr Phillips sent an email saying "it was nice chatting with you yesterday after over a year of communicating with your two very nice personal assistants via telephone and email" (affidavit of Mr Phillips of 29 June 2015, exhibit NP 1). They made an arrangement to meet the following week to inspect a property called "The Gables", but on 6 November 2010 it was sold to someone else.
Mr Azzi continued to look for rural properties online and through other agents and continued to consult Mr Phillips about real estate. It is clear from Mr Phillips' emails that he was keen to obtain business from Mr Azzi, and to put their relationship on a personal level. On 15 February 2011, Mr Azzi invited Mr Phillips to his office for coffee. Mr Phillips attended Mr Azzi's office again on 17 February 2011. The terms of their conversation can be gleaned from Mr Phillips' email to Mr Azzi of 18 February 2010, which contained not only information about a suitable site for a showroom and service centre for Tesla Motors and some rural properties, but also some family birthday party photographs of Mr Phillips' daughters and wife. Mr Phillips said: "Thank you for your nice email last evening. Yes we are very much alike and share very similar personal values. It is very clear and apparent what type of person you are and it comes through very naturally Tony. I really appreciated you taking the time to meet with me yesterday afternoon. I am very sure that we will do loads of good business together in the future. It is very refreshing to meet and deal with a straight and clear thinker in today's business world. It would be my pleasure to be your preferred agent as I am always available to be of assistance to your [sic] Tony. I will only introduce you to high calibre people who share the same qualities as us - whether it is a builder, Architect or interior designer…" [Affidavit of Mr Phillips sworn 29 June 2015, Exhibit NP1, emphasis added]
I have highlighted the sentence above as it is a useful indication of Mr Phillips' reasons for being "always available to be of assistance" to Mr Azzi. He was keen to obtain business from Mr Azzi and from the companies in which Mr Azzi held positions.
What Mr Phillips did not say to Mr Azzi in these early exchanges was that he had been in severe financial difficulties for some years. As is set out in his email to Mr Azzi of 7 April 2011, his fixed income ceased in April 2000 and his long term employment ended in July 2008, following which he "made a few wrong decisions with new employers which cost me $100,000's in lost income", according to the 11 April 2011 email exhibited to his affidavit of 29 June 2015. Mr Phillips had started a new company, Stirling Phillips Capital Pty Ltd, in about October 2010. However, he had no money coming in from this new business (T 34) and thus no income (T 271 - 2); he told the court he had still not prepared tax returns for the last five years (T 272).
At first blush, Mr Azzi would appear to be in the dominant position in the relationship. However, Mr Azzi, although a wealthy man at the head of a successful group of companies, was about to suffer an unexpected family tragedy, namely the death of his son on 29 April 2011.
What was the true nature of the relationship between these two men, and what does this reveal about their respective understanding of the series of loans made by the plaintiffs from April 2011 to August 2012?
Mr Azzi said: "I never agreed to pay Mr Nicholas Phillips a dollar for any minute he spent with me. Mr Phillips came to me and crawled his way around me when I lost my son in April 2011, he was a very good support to me as a friend, he became a friend from that point onward because I was vulnerable. Nicholas had never asked me that he wants to work for me and I never ever gave him a job. We were friends. We became very good friends until unfortunately we separated in 2014." (T 81)
Mr Phillips acknowledged the impact of the death of Mr Azzi's son on their relationship: "Q. By April 2011 you and Mr Azzi had formed a close personal friendship, hadn't you? A. Sorry, can you repeat that again? By what date? Q. By April 2011 you and Mr Azzi had formed a close personal friendship? A. I knew him. I knew him for about six, less than six weeks and I'd first met him at his dealership on 17 February. I wouldn't say we had a close friendship. Q. When do you say you had a close friendship? A. I think that sort of happened after the death of his son, I think. Q. That was 28 April? A. Yeah. Well, I was present in a meeting with Frank Stanisic and Mr Azzi when he got the call from his wife that a bad thing has happened to his son and he [sic] to go out. I terminated the meeting and he had to go up to St Vincent's Hospital." [T 270]
However, Mr Phillips went on (at T 270) to dispute that he was "flat broke" at the time that his friendship with Mr Azzi was developing: "Q. Could you turn to tab 7 of that folder and go to page 66? Before you look at that, in April 2011 your circumstances were that you were flat broke? A. It's not that. I disagree with that. Q. You had started a new company in about October 2010, being Stirling Phillips? A. Yeah. I became self-employed. Q. Yes, and no money was coming in? A. From the new business, correct. Q. You were crying out for some cash? A. No, I wasn't."
As is set out in the emails below concerning the eight advances, that is not what he went on to tell Mr Azzi.

[12]

Mr Azzi's gift of $2,000 and the first advance of $10,000

Mr Azzi had a practice of sending e-cards to persons he had dealings with which expressed thanks and warm thoughts. It is clear from these exchanges, and from Mr Phillips' own emails, that Mr Phillips began to disclose his financial and personal worries to Mr Azzi in terms of increasing urgency. He said to Mr Azzi, in early April 2011, that he and his family were, in the language repeated by Mr Phillips in his email, "doing it hard".
Following this revelation, Mr Azzi decided to give Mr Phillips a gift of money ($2,000). He sent an e-card at midnight on 6/7 April 2011 as follows: "Nicholas, a true friend cheers you on when you need it most, help you find a way if you are off track. I sincerely want to say thank you for being there every step of the way so far. I would not be a friend if I didn't offer a helping hand to my friends when they need it. I'll be very pleased if I can extend a cash support without being offensive to your person. It comes from the heart so please consider. I'll be happy if you accept." (Affidavit of Mr Phillips 29 June 2015, pp. 64 -65).
At 11.21 am on 7 April 2011, Mr Phillips sent the following very emotional email to Mr Azzi in response to this card, in which he set out how his financial difficulties meant he could not take his wife and daughters on a long-promised holiday: "Thank you for your sincere personal message of assistance last evening. You made me quite emotional last night upon reading your message to me. I could not sleep last night thinking about your heartfelt message. Yes we have been doing it very hard since my fixed income ceased in April 2000, but really since July 2008 as I had left my long term employment & made a few wrong decisions with new employers which cost me $100,000's in lost income. Had to wait for my licence to come through at the end of Sept 10 and then commenced business in October. I haven't even established my own website as yet as costs had to be allocated to the most important aspects of the new business so the building of a super website can wait till I bring in the dollars. Thankfully had a couple of sales last year which I put through a friends office while waiting to establish myself which has sustained my family till recently. ... My problem is with a new business venture is I have no capital as I have had to blow many $100,000's of personal monies in the past 3 years supporting my family with an inconsistent income & meeting ends meet until cash flow starts coming in is a daily draining & enormous stressful challenge! Yesterday I cancelled a 5 day trip to Qld for 18-22nd April that my daughters wanted to do as they have never been on an aeroplane & have been nagging me since our drive up the coast last xmass [sic] & wanted to again attend the team parks on the Gold Coast as we have annual passes. The idea was to celebrate Chantel's 3rd birthday on 21 April up there and make it exciting. ..."
Chantel and her sister are the little girls shown in the birthday photograph attached to Mr Phillips' email to Mr Azzi of 18 February 2011.
Mr Azzi and Mr Phillips had a meeting in Mr Azzi's office on 8 April 2011. They had been discussing a lease by Taste Living of real estate owned by Harissa which, if it eventuated, would result in Mr Phillips receiving commission as a real estate agent. In paragraph 12 of his affidavit of 11 March 2015, Mr Azzi said that the following request was made: Phillips: "Tony, I am doing it tough at the moment. Taste looks like they will rent the warehouses, can you give me some money in advance of my commission?" Azzi: "Ok, the deal looks as good as done. I'll lend you $10,000 and we will take it out of your commission. Where do you want me to transfer the $10,000.00 to." [Emphasis added.]
Mr Phillips denies the words attributed to him, but does not deny the words attributed to Mr Azzi. Inconsistently, he said this advance was nothing to do with Taste Living; the advertising of the warehouse space did not take place until 11 April 2011 (paragraph [54] of his affidavit) and the meeting with Taste Living did not take place until May 2011 (paragraph [55]).
However, Mr Azzi's unchallenged evidence was that Mr Phillips bought the Taste Living deal to him in February 2011 and the 30 March 2011 invoice for advertising costs had already been paid (having been issued on 16 March 2011). I accept Mr Azzi's evidence in this regard as it is consistent with the documentary evidence.
What does Mr Azzi's reference to "commission" mean? Mr Azzi's evidence was that Mr Phillips, in his capacity as a real estate agent, brought the proposed Taste Living lease to Mr Azzi in February 2011 (T 28), and he was not challenged on this evidence. In the absence of submissions for Mr Phillips addressing the language of this specific email, I propose to assume that one or both of the parties thought Mr Phillips would be entitled to commission if the Taste Living lease eventuated (which it never did).
As noted, Mr Azzi's evidence is that the $2,000 advance was a gift. However, when Mr Phillips, at his office the next day, was clearly in need of more money, and Mr Azzi says the additional $10,000 advanced was a loan. While the $2,000 was given in cash, the $10,000 was paid into the account of Stirling Phillips Capital Pty Ltd, after Mr Phillips had given Mr Azzi a piece of paper with the account details on it.
At 5.48 pm on that same day, Mr Phillips wrote an email clearly stating the $10,000 was a loan and insisting he wished to repay it in full in 90 days: "Tony, Thank you again for coming to my assistance at a very crucial period in my family's lives. You could tell by reaction today that I was very touched by your genuine & warm generosity toward myself. I will always be there for you Tony & wish to repay you in full in 90 days for the funds you are providing me. You are rare [sic] individual & I am most grateful that I had the good fortune to meet you. Again I wish I met you straight out of school as I think we would have achieve [sic] amazing things with your guidance. I am confident that we will still achieve some amazing achievements by our mutual association. I will be there the whole way with your Development Application & hopefully I can short cut & save you unnecessary expenditure with greedy overzealous consultants. I am sure council will not be a problem & you may even be surprised at the reception you get when you start the process. The only thing you need to work out is who the best Architect & town planner for you to appoint. Have a relaxing weekend & I will pop in on Monday morning hoping to catch you before your Family Holiday. I really appreciate your support & more so your warm words of encouragement. God Bless you Tony." [Emphasis added]
Mr Phillips is acknowledging the loan as repayable in full and offering to help with the Development Application which Mr Azzi was considering. Contrary to the cross-claim, Mr Phillips does not put this on the basis of a paid retainer. There is no submission from Mr Zmood directed to the meaning of these words in his client's email, which I regard as an offer of unpaid assistance of the "pop in" variety, in gratitude for an interest-free 90-day loan.
Mr Azzi replied on 9 April 2011 at 8:31am as follows: "Sent: Saturday, 9 April 2011 8:31 AM Subject: RE: A Sincere THANK YOU - Tony Importance: High Nick, Everything I do comes from the heart I am a sincere human I can never do wrong. Please make sure you take the girls away & try & enjoy some valuable time with your family. You are welcome, I was moved by your reaction & me too I wished I knew you a long time ago. Regards, Tony"
On 9 April 2011, Mr Phillips wrote to Mr Azzi as follows: "Subject: RE: A Sincere THANK YOU - Tony Date: 9 April 2011 8:53:48AM AEST Tony Appreciate your heartfelt words Tony. Yes I will take my girls for 5 days to the gold coast to all the kids them parks & also visit my sister-in-law in Yamba who I am very close too [sic] & will finalise this morning. Your gesture will help sustain my family till my income starts pouring in over the next 60 - 90 days. Please if there is anything you require while abroad - you can call me at all times. Thank You again Tony." [Emphasis added]
A receipt dated 8 April 2011 for $10,000.00 was issued to "Stirling Phillips Capital" and contained the notation "Capital Injection Zetland Project". Mr Azzi denied that this designation could be a reference to the proposed redevelopment of the Rosebery/Zetland Site. It is common ground that there was no capital injection into any project.
In his affidavit at paragraphs 58-62, Mr Phillips claims that he did not provide the bank details to the plaintiff for the reasons stated, but on an earlier occasion (28 March 2011), because Mr Azzi claimed that he had lost the invoice for his services which contained his banking details, and asked him to resend it. Rather than do so, Mr Phillips wrote down these details. It was Mr Phillips' understanding that he should submit invoices and that the corrected account details he supplied on 30 March 2011 were for the purposes of paying his invoices (paragraph 62). What is more, Mr Azzi sent an email advising him that the invoices would be paid (paragraph 63, referring to the exhibit on page 73).
The email of 30 March 2011 at 5.58 pm on page 73 (concerning "Frank Stanisic Architect") from Mr Azzi does say that "you should have the money in your account tonight", but this is in response to Mr Phillips' email of 4.36 pm about an appointment with Mr Stanisic and some costings. The relationship of the 30 March 2011 payment (including the identity of the account referred to) with the sum of $10,000 advanced on 8 April 2011 is unclear. What is clear, however, is Mr Phillips' claim that he was told not to render invoices, which makes this explanation confusing and implausible. It is not referred to in either of the extensive written submissions provided to me, and in those circumstances I do not propose to consider it further.
For those reasons, and by reason of Mr Phillips' own admissions in his email of the same day, I am satisfied that the advance was made for the reasons outlined in Mr Phillips' email, namely that it was a short-term loan which Mr Phillips proposed to repay in the immediate future when income he was anticipating would start to arrive.
No receipt was given for the $2,000 cash. I am satisfied that this was a gift. Mr Azzi has always said that this was the case. The fact that the $10,000 loan was treated differently by both parties is further evidence that it was a loan and not a gift. I additionally note that there is no challenge as to the identity of the lender pleaded in the defence.
It was following these events that Mr Azzi's son died suddenly on 29 April 2011, an event which I am satisfied coloured much of the parties' subsequent relationship.

[13]

The second advance

Mr Phillips' evidence is that on 17 May 2011 he had lunch with Mr Azzi and said: Phillips: "Tony, we have a problem! I can no longer do any more work for you as you are sucking all my time and capacity to earn an income with my newly established business (the Company) and you are constantly requesting that I do not generate tax invoices for work already provided to you thus far…" Azzi: "Problem solved (clicking his fingers). I have just transferred you $10,000. Don't worry and just keep eating your sandwich." [Affidavit of Mr Phillips, paragraph 72]
Mr Phillips goes on to say that at the time he received this "second payment" he had provided "Redevelopment Services to a value of slightly in excess of $10,000" and that "in the circumstances I was content to accept the Second Payment as part-payment for my services provided to date" (paragraph 73).
However, this is not what he said in the email he sent on 18 May 2011, in the very early hours of the morning, Mr Phillips sent the following email to Mr Azzi: "Subject: Thank You Card - Tony Date: 18 May 2011 1:11:16 AM AEST Tony Thank you for your personal heartfelt message to myself. Tony I treasure our friendship as true friendship is always unconditional. Your generosity of spirit is reciprocated in kind. I always believe that like minded [sic] individuals with the same core personal values always gravitate towards each other. I am the truly fortunate person to know you..! [sic] Like you we should now sign off & get some sleep. Tony see you after 10:30am."
Mr Zmood submits that this email cannot explain the terms of the advance of $10,000 because it was sent before the 10.30 am meeting and does not refer to any loan.
Mr Azzi's recollection of these events was vague: "Q. Mr Phillips said inverted commas--A. Mr Phillips said to me something to the effect-- Q. No--A. --"I need some money. Can you help me?" Q. And you said?A. I acknowledged it and said, "Yes, of course I can do that." Q. What happened next?A. Obviously I must have called my financial controller at that time and asked him to do the transfer." [T 22-23]
He had to supply this additional evidence in examination in chief because of the inadequacy of his affidavit. It was apparent from his evidence that he had only the most general recall of events.
There was no paperwork for this advance: "Q. To be fair, you say that the second payment was also a loan, was it? A. Each one of them was a loan, sir. Q. But just to be clear, that's your recollection, that is three years after the fact that it was a loan, something that happened in 2011. Your recollection was that it was a loan? A. Yes, sir. Q. You don't base it on any specific recollection of any words used in respect of that second payment, do you? A. I'm very sharp with my numbers, sir, it's a loan. Q. Thank you. But to be clear, you don't pinpoint a specific date for that second payment, do you sir, not in your evidence? A. No that's what paperwork is for, sir. Q. But what I'm saying is, in paperwork, there's no date that tells me when that loan was made, on your evidence? A. Well, if you're not satisfied with the date, what the paperwork is showing you, sir, I can't satisfy you then. Q. It's not a question of whether I am satisfied or not, it's a question of you being able to pinpoint a specific date upon which you say that loan was made? A. It would be exactly the date of the payment via electronic banking sir, for the date we put down as the cash was given. Q. No, sir, all that is, is evidence of proof of payment, not that a loan has been made. An oral promissory loan between you and Mr Phillips? A. The oral promissory one sir was executed properly, within my company, with legal documents that Mr Phillips had signed. Q. No, you seem to be misunderstanding my question. I'm not asking you about what was signed, I'm not asking about the transfer of money, I'm asking you about the day on which, on your case, you say an oral loan agreement was entered into and there's no such date given, is there, sir? A. I think it's all there." [T 71-72]
The identity of the lender and date of the loan are not challenged in the defence. The issue is whether the advance was on account of work done for Mr Azzi, or a gift, in circumstances where Mr Azzi's evidence is, for this advance, not corroborated by contemporaneous documentation.
As noted above, Mr Phillips' explanation was that this was payment for "redevelopment services", which he said was in excess of $10,000 at the time (see the cross-examination of Mr Azzi at T 71 - 74, where relevant meetings are listed).
Analysis of the contemporaneous evidence quickly establishes that this cannot be so. As counsel for the plaintiffs points out in his written submissions at paragraph 30, taken at its highest, Mr Phillips had only provided services of $3,020.00; this figure is taken from the invoices recording Mr Phillips' claim, allowing in full all amounts for the period up to and including 17 May 2011 (and following), without any deduction for GST.
Nor is there any evidence that this was a gift. Whether or not Mr Phillips acknowledged in the August 2012 loan agreement that this was a loan, the circumstances in which he could claim it is a payment for services rendered as well as a gift are hard to understand.
Some explanation for Mr Azzi's poor recollection of events may be gleaned from the chronology. His son had died unexpectedly and tragically a few weeks before. Mr Azzi's reluctance to refer to this event, except when a question was put to him directly, was noticeable, as was his distress when he did refer to it in his evidence.
Having regard to the general pattern of these transactions, the admissions in the defence of the elements referred to above, the lack of any other explanation for this advance (in that the plaintiff could not be entitled to so much commission at the due date) and Mr Azzi's recollection difficulties, I am satisfied on the balance of probabilities that the second advance was a loan.

[14]

The third advance

The date for the third loan is 10 June 2011. The amount is challenged by Mr Phillips ($15,000 and not $20,000) but not the date or identity of the lender.
Mr Phillips' explanations for the reason for this advance are confusing. At paragraph 85 of his affidavit of 29 June 2015, he says that Mr Azzi offered to pay half his commission on the Taste Living lease (which was "a done deal") to help him with his cash flow. In paragraph [86] he says that he was given $15,000 in cash. In paragraph 88 of the same affidavit, Mr Phillips asserts that the payment was a part payment of a leasing fee commission.
Dealing with the commission claim first, Mr Paterson submits that s 55(1) Property, Stock and Business Agents Act 2003 (NSW) provides that a licensee is not entitled to any commission or expenses from a person for or in connection with services performed by the licensee in the capacity of licensee for or on behalf of the person unless the services were performed pursuant to an agreement in writing signed by or on behalf of the person, and the licensee. It was put to Mr Phillips that he was not therefore entitled to commission, and he accepted this.
Mr Zmood, relying upon s 55 of the Act, submits that it was not properly a commission, in that the lease did not eventuate, and that the provisions of the legislation cannot apply. No real estate transaction (s 3) had occurred and therefore Mr Phillips could charge without the documentation required by the legislation. This would certainly be a triumph of form over content, in that the purpose of the legislation was to prevent such eventualities, and I decline to accept this interpretation. Mr Phillips was not entitled to charge commission for a real estate transaction that did not go ahead any more than if it had gone ahead, where the documentation supporting that commission was not in place.
Nor is the Taste Living lease an explanation. In paragraph [91] of his affidavit of 29 June 2015, Mr Phillips agreed that there was a conversation where the fact that the Taste Living deal did not go through was discussed, and in which he agreed to give the money back (although he asserts the amount to be returned was $15,000 and not $20,000).
Mr Azzi's version of the events of that day are set out in his affidavit as follows: "[16] On 9 June 2011, in the evening, [Mr Phillips] came to my office at the dealership and we had a conversation in words to the following effect: [Phillips]: "Tony, I need another advance." [Azzi]: "How much do you need?" [Phillips]: "$20,000, but I need it now." The dealership has a safe with cash in it. I took out and advanced to [Mr Phillips] another $20,000 in cash. [17] Weeks later I recall [Mr Phillips] telling me that Taste would not rent the property as they took up a lease with a shopping mall in O'Riordan Street Alexandria. [Mr Phillips] said to me words to the effect: "Sorry Tony, the deal is not going to happen, Taste took up a premises at O'Riordan Street. I owe you the $20,000.""
His evidence was as follows: "Q. So the beginning, when is the beginning?A. When Mr, when Mr Phillips wanted help and he needed $20,000 and he said, "If you loan $20,000, I will pay it back from my commission when the lease goes through in a couple of months' time. Q. So in June, when the cash was handed over and he said it's because the deal didn't go through, you said, fair enough?A. No, I didn't say fair enough, it was very clearly said and discussed between me and Mr Phillips at the time that if the deal does not go through, then it becomes a loan to me and that's how it turned out to be." [T 77]
On 10 June 2011, Mr Phillips sent the following email to Mr Azzi at 7:07pm: "Tony Thank you again - your [sic] continue to inspire me every moment I spend with you. I forgot to ask you whether you are free next Saturday 18th June to travel down to Melbourne for the day with John Dimopoulos. John has arranged access though some magnificent new projects in South Bank & St Kilda. If you are free I can book the 3 tickets on the web approx $180-$235 each return is what the web is quoting with Qantas. Flight can be 8am & return on late flight say 8-830pm so a full day can be crammed in gathering ideas & Architecture Styles. No-one does it better than in Melbourne - Architecture much higher standard generally - more like what you find in Europe. I am as sick as a crook dog now & very weak & just got more antibiotics to drown myself with. Cannot move as I am shivering & now have a stiff neck which has been coming on since yesterday morning."
On 11 June 2011, Mr Azzi sent the following email to Mr Phillips: "Sent: Saturday, 11 June 2011 2:22 AM Subject: Re: Tony My Heartfelt Thank You for what you did for me TODAY! Your [sic] amazing….. Importance: High Dear Nicholas, You are welcome, I am very happy I can help. This is what gives me real warmth & pleasure on the inside when I help people & especially my friends. I am a real tough person on the outside but very gentle on the inside & very very sensitive. I have always been the real pylon [sic] to everyone around me. I don't like superficial people & I value real friendship. I am still to find someone that stands for everything I stand for. In the short time we have known Each others [sic] I feel I can trust you lots & share every similar values [sic]. I am free next Saturday, so organise the tickets & I will pay for the entire day for all. Look after yourself my friend."
On 11 June 2011 at 10:41:10 AM AEST, Mr Phillips replied as follows: "Subject: Re: Tony My Heartfelt Thank You for what you did for me TODAY! Your amazi [sic] Date: 11 June 2011 10:41:10 AM AEST Dear Tony You could not describe yourself any better. I know of only a few other people like you. My Grandfather, My Dad & My lifelong best friend. We will be lifelong friends as people like you are a blessing. I have been very blessed in life as I have an innate ability to attract nice people around me. I am a very poor receiver & love giving of myself to nice people. I also in business treat people's property as it is my own as I respect clients trust that they have put in me when appointing me. I tend to become more than a client to my clients & every business transaction is always remembered by all. Going the extra on a deal - people always will remember that so leaving a lasting impression is something which is ingrained in my character. I also have the utmost respect, admiration & trust in you otherwise we would not be good friends - but just be business acquaintances. Real Estate is boring - but is an amazing medium to meet an amazingly array of very interesting people from all walks of life. John Dimopoulos is also a very nice human being & a very talented Architect who also does his work with his heart & is very trusting & loyal. You can make your own opinion on this as I sure [sic] you are a superb judge of one's character. His ability is unquestionable."
Mr Azzi was cross-examined about these emails as follows and repeated that he had loaned $20,000, not gifted $15,000: "Q. …So what you've in fact done was agreed to pay Mr Phillips $15,000, as part payment for the further work he'd done and the work he was about to do. That's what this email is about, isn't it, sir?A. No, sir. What I agreed to do is pay $20,000 for Mr Phillips, because he was desperate for some cash and we made it that once the - once the Taste deal comes on, the lease, his commission of $20,000 that's due then will counter the $20,000 cash that I gave him at the time and if it doesn't, then it will turn into a personal loan in the company." [T 78 - 9]
Mr Phillips had not performed $20,000 (or even $15,000) of work since receiving the $10,000, so the only basis upon which he could claim it would be for work in the future, or as a gift (but not both). His explanations of "half your commission now" for a future lease which never eventuated (paragraph 85 of his affidavit) conflicts with the documentary evidence and is inherently implausible. I am satisfied that the third advance was a loan of $20,000.

[15]

The fourth advance

The fourth advance was made on 1 September 2011. Mr Azzi described the conversation in his affidavit of 11 March 2015 as follows: "[20] On 1 September 2011 [Mr Phillips] came to my office at the dealership and said to me words to the effect: [Phillips]: "Tony, I need another loan, I need help, I have no one else to turn to." [Azzi]: "How much do you need?" [Phillips]: "$5,000. Thankyou, I will pay it back." [21] I took this money out of the safe and gave it to him."
Mr Phillips' version of this conversation in his affidavit of 29 June 2015 was as follows: "[119] On 1 September 2011, I attended [Mr Azzi's] office and I recall a conversation with words to the following effect: [Phillips]: "Tony, I haven't been paid for months now and I've done a lot of work for you. I need to issue you a tax invoices so that I can get paid and there is a proper record and remuneration for my extensive services that I have provided you thus far." [Azzi]: "I've already told you, I don't want you to issue invoices. It will all work itself out. I've just bought the farm and I'm just spending money at the moment. As soon as I start making money, I'll have to start paying tax so you can issue me invoices then. I'll be disappointed if you issue me invoices now. I told you just come and see me when you need money. How much do you need?" [Phillips]: "I think $5,000 would tide me over for a few weeks." [Azzi]: "Done!""
Could this amount (and the other amounts before it) have been for unpaid commission or for work done on Harissa's behalf? Once again, counsel for the plaintiffs points out (in his written submissions, at paragraph 47) that this is not mathematically possible: 1. By 1 September 2011 Mr Phillips had already received either $40,000 (on the plaintiffs' version) or $35,000 (on Mr Phillips' version); 2. On Mr Phillips' own evidence at this time he was owed probably $5,000 or $6,000 (in any event, less than $10,000 on the Bookham farm); 3. The total amount that Mr Phillips has sought to recover on the development of the Zetland site is now agreed to be $13,325 (although for the purpose of this exercise I am prepared to assume the plaintiff believed he was entitled to the full claim of $17,105). However many of the charges relate to a period after this; and many are not related to the redevelopment in any event; 4. The total of the amounts claimed up to and including 1 September 2011 are estimated by counsel for the plaintiffs as being $7,475.00 (taken from the invoices recording Mr Phillips' claim, allowing in full all amounts for the period up to and including 17 May 2011, without any deduction).
Finally, as is the case with the other transactions: 1. If Mr Phillips was wanting to provide invoices and expecting to be paid, he should have registered for GST. He was in no position to "issue tax invoices" as he claimed in his version of the conversation in paragraph 119 of his affidavit. If any of these advances were income, he was obliged to take the necessary steps to register for GST and disclose these amounts as income; 2. This explanation is inconsistent with the loan agreements Mr Phillips signed on 14 August 2012, which are discussed in more detail below; 3. Mr Phillips continued to be in parlous financial circumstances at all relevant times; and 4. Mr Phillips was beginning to put additional pressure on Mr Azzi (who was clearly becoming resistant to these continued requests for money). The level of pressure put on Mr Azzi for the future loans would include Mr Phillips coming to Mr Azzi's office crying and writing emails saying his family was about to be evicted and have the phone cut off.
The conversation as asserted by Mr Phillips is improbable when the quantum of payments is compared with the amount now being claimed.
Taking all of the above into account, I am satisfied that the fourth advance was a loan.

[16]

The fifth advance

The fifth payment was made on 29 September 2011. Mr Azzi's affidavit of 11 March 2015 set out this conversation as follows: "[23] On 29 September 2011 [Mr Phillips] came to my office. He was crying. We had a conversation in words to the following effect: [Azzi]: "Nicko, what's wrong?" [Phillips]: "Tony, I need help again." [Azzi]: "What is going on with you Nicko? What is the damage?" It became obvious that the defendant was having trouble with his finances. I felt sympathetic to his situation and as a good friend I wanted to help him. The defendant was very distressed. He said: [Phillips]: "I need to borrow $10,000. I will repay you by 31 October." [Azzi]: "Who should I pay it to?" I called into my office our financial controller, David Smith, and we advanced $3,000 cash to the defendant and $7,000 cash to the defendant which was transferred to Stirling Phillips Capital Pty Ltd's account."
This transaction is recorded on the Larke Hoskins cheque requisition form (i.e. the statement that "I will repay you by 31 October" is corroborated by being also recorded on the cheque requisition form).
Further evidence of this transaction being a loan is that, on the same day (29 September 2011), Mr Phillips wrote a post-dated cheque (1 December 2011) payable to Harissa for $40,000.
Mr Azzi also set out Mr Phillips' words when he handed over the post-dated cheque: "I have a Bunnings deal about to go through at Umina. Bank this cheque on 1 December 2011 as repayment of my loans from you, because the deal will be done by then with Bunnings and I will be paid."
In his affidavit, Mr Phillips denied this conversation, or that he was crying. He says that he told Mr Azzi he had not been paid despite two separate hourly charges being agreed to, that Mr Azzi was taking up all his working capacity and that he had to issue invoices, and that Mr Azzi volunteered the payment in response to this (paragraph122). Once again, that is inconsistent with Mr Phillips' own invoices, in terms of the amount of work done, and in circumstances where Mr Phillips appeared to expect Mr Azzi to guess the dollar value of the work done on the farm and redevelopment work and just give him the money he asked for. Mr Phillips thought that he had spent "at least 40 - 50 hours per week" on both the farm and the redevelopment services, but even on Mr Phillips' own figures, he had only been appointed as the manager of Bookham on 9 August 2011, a month beforehand.
Mr Phillips' explanation as to why he handed over a post-dated cheque is similarly unconvincing. He claims he was concerned about receiving cash payments and thought it best to return the money so that he could issue tax invoices - a strange statement from a man who was not registered for GST. He also claims that he was worried Mr Azzi might later claim that these were payments in full satisfaction of the work he had done (paragraph 124), in circumstances where, had he kept any kind of proper record, he would have known that he had not yet done $40,000 worth of work on the two contracts combined.
Neither of these explanation accords with what Mr Phillips claims (affidavit of 15 June 2015, paragraph 128) that he said: "Here is a cheque for $40,000. This is for the money that you have paid me to date. It is dated 1 December. I want you to know that I have done a lot of work for you and that I will be issuing invoices for the full amount."
Nor did Mr Phillips produce the records upon which he was basing his claims that he was owed particular sums, or what those sums actually were at this time. Mr Zmood submitted that the plaintiffs/cross-defendants should have sought these on subpoena or notice to produce, or by discovery. I am satisfied that if Mr Phillips was keeping records, the onus lay upon him to produce them, not merely to the court, but to Mr Azzi when making these claims. At their highest, Mr Phillips' requests for money from Mr Azzi amounted to generalised claims that he was owed large sums, in circumstances where the tax deductibility of those payments makes claims that Mr Azzi did not want invoices for the work done implausible.
I am satisfied that the fifth advance was a loan.
There was then a gap of six months until the next request from Mr Phillips, made on 30 March 2012. I was not addressed as to whether this is of significance.

[17]

The sixth advance

The redevelopment projects the subject of Mr Phillips' cross-claim had never left the drawing board, and by December 2011 were winding down. Mr Azzi's relationship with Mr John Bush terminated in or around late November or mid December 2011, according to the defendant's chronology, as the car Mr Azzi had provided was taken back and Mr Bush sent an invoice for services rendered.
Mr Phillips' invoice 0001 shows that, on 9 January 2011, he was asked by Mr Azzi's secretary Rania Hernando to document and outline all dealings with Mr Bush. This sort of work would have been necessary for a response to Mr Bush's claim for payment, as a notice under the Building and Construction Industry Security of Payment Act 1999 (NSW) was to be sent, and solicitors were engaged. Mr Phillips had attended meetings with Mr Bush and such a request, in those circumstances, seemed reasonable. Was the fact that Mr Phillips was asked to do this an indication that he was to be paid for this task, or was this just Mr Azzi expecting Mr Phillips to provide him with this information for some other reason, such as friendship?
Mr Phillips' affidavit does not, however, refer to this work as the explanation for his request for the March 30 advance. He says that he told Mr Azzi: "I need to issue you invoices and I need you to pay me. I've done an enormous amount of work for you and I haven't been paid. I have bills I need to pay and I can't pay them unless you pay me. This cannot keep going on otherwise I have to finish up working for you Tony!"
He says that Mr Azzi replied: "Relax Nicko, I already told you, I'll be very disappointed if you issue invoices. You know I can swipe you as a friend any time if you don't want to do it my way. Why don't I pay your bills and that way, I get a tax benefit and you don't need to issue me any tax invoices."
However, Mr Azzi and Harissa would be just as entitled, if not more, to the tax benefit of Mr Phillips performing the work referred to in Rania Hernando's email. The identity of the person who did that work, the work they did and the costs of that work were not simply tax deductible but an important part of any future litigation. Nor is it apparent how Mr Phillips' electricity and rent bills, or his own solicitors' bill, would be tax deductible for any of the plaintiffs.
Mr Azzi's affidavit gives a very different version of this conversation: "[26] On 30 March 2012 the defendant came to my office. The defendant was crying again. We had a conversation in words to the following effect: [Azzi]: "Nicko, what's wrong?" [Phillips]: "Tony, I need your help again." [Azzi]: "OK, what is the damage this time?" [Phillips]: "I need about $20,000.00." [Azzi]: "You need to get this under control. Who do you owe this money to?" I felt sorry for the defendant. The defendant went through a list of debts he had and how much he owed each person. I recall them being things like an Energy bill, a solicitor's bill, his rent for the office and his virtual office fees. ... [27] During the meeting on 30 March 2012, I said to [Mr Phillips] words to the effect: "Nicko, this is getting out of hand, all these private loans I'm making to you. I need to start documenting the loans. I'll lend you another $20,000.00 now, but you need to sign on it." [Mr Phillips] said words to the effect: "Of course Tony, I agree." I wrote out a hand written agreement, dated it "30.3.2012" and handed it to the defendant. I recall that he read it and signed it and handed it back to me."
This transaction is corroborated by a written agreement signed by Mr Phillips: "Dear Nicholas You have come to me to help you out with some financial hardship. I agreed to do so for the sake of your family & our friendship. I will pay you an amount of $20,000 made out of payments to your solicitors & the balance to be deposited in your bank account & some in cash. Total $20,000 $6,199.05 Diamond Conway$2500.00 Cash$11,300.95 Deposit into A/C This loan is to be paid as a Priority with other loans still due to me from last year (Tony Azzi) I Nicholas Phillips agree to the above [Signature] Nicholas Phillips 30-3-2012"
On 30 March 2012 (at 12.17 pm), Mr Phillips sent an email to David Smith (Mr Azzi's financial controller), requesting Mr Smith to process two payments: $3,000 to Martin Management & $439.40 to Servecorp. On 30 March 2012 (at 1.59 pm) David Smith emailed Mr Phillips that he had completed all "the EFTs and payments to disburse the $20K loan" (emphasis added).
Mr Phillips' explanation for signing this document is that Mr Azzi said to him: Azzi: "If you want the money, you need to sign this. I just need to keep a record of it for the accountant. If I call it a loan, I won't have to pay the tax on it. When we start making money, you issue me your tax invoices and it will just work itself out."
This document referred not only to this advance as a loan, but to the other loans. Mr Phillips was asked in cross-examination: "Q. Yes, and you see down the bottom, above your signature, "This loan is to be paid as a priority with other loans."A. Which other loans? Q. That's the other loans that have been advanced to you by Mr Azzi and his company, isn't it?A. I disagree. What other loans? Q. The first, second, third, fourth and fifth loans that we've been talking about today?A. This document doesn't say that. Q. No. Are there any other loans it could possibly be referring to?A. Not that I'm aware of." [T 285]
Alternatively, Mr Phillips said he was under duress: "Q. When you said "duress", what are you talking about?A. Well, I was pressured. I was told to come in the following day to pick up the money and I was - those documents were put to me at point blank without any notice and I was advised that if I don't sign it I get nothing. Q. You had an opportunity to read it?A. Momentarily, yeah. Q. You had an opportunity to say, "I don't want to sign this. Let me take it away" that you have--A. I had a - I had a 15 minute very heated discussion with Tony over the discrepancy of the $20,000 back in - back in 18 May 2011. Sorry, 10 June 2011 because I only received 15,000. We spoke about that for 15 minutes."
This is implausible from a man who has previously provided a postdated cheque, thanked Mr Azzi for a loan he assured him would be paid in 90 days (which was not repaid) and who was making his sixth request for payment of a very large sum of money in lieu of invoices when, on his own admission, he was not even registered for GST.
I am satisfied that the sixth advance was a loan.

[18]

The seventh advance

Mr Phillips' affidavit sets out that after signing this document he continued to provide both redevelopment and management services but that Mr Azzi "continued to insist" (paragraph 148) that Mr Phillips should not issue any tax invoices.
Mr Azzi's affidavit sets out the following conversation: "[29] On 16 May 2012, the defendant came to my office at the dealership. I knew the purpose of the visit and we had a conversation in words to the following effect: [Azzi]: "I feel sorry for you Nicko and I will never let my friends down. But you need to make a real effort to change your situation. How much do you need?" [Phillips]: "I need to borrow another $10,000." I agreed and the defendant then told me what he needed the money for."
Mr Phillips' affidavit sworn 29 June 2015 does not contain any denial of this conversation. He simply states that he went to Mr Azzi's office with a bundle of bills and Mr Azzi agreed to pay them as "part payment". When he asked to be able to issue invoices, Mr Azzi became "highly agitated and hostile" (affidavit, paragraph 150).
However, Mr Phillips' account is inconsistent with an email Mr Azzi wrote on 16 May 2012 to Mr Phillips, in response to his request for help ("Helping You" is the subject): "Sent: Wednesday, 16 May 2012 11:23 PM Subject: Helping You Nicholas, I have never let a friend of mine down & I certainly don't like to see them down & out. Nicko as I said to you today in principle you are not making an effort to change your situation. It's not what happens to you that determines how far you will go in life. It is how you handle what happens to you. You certainly made me feel terrible today as if I am responsible for your fuck ups & I was very honest with you about the way you are, I hope you have taken it all in (it will help). As a good human being I feel I need to help the helpless & that is your wife & kids. Call me in the morning & I will tell you to come in."
On 17 May 2012, Mr Phillips wrote to Mr Azzi as follows: "Subject: RE: Helping You Date: 17 May 2012 6:08:23 AM AEST Tony THANK YOU…!"
This exchange of correspondence supports Mr Azzi's version of events. He has clearly loaned the money to Mr Phillips as well as read him a lecture about taking responsibility for his financial problems.
I am satisfied that the seventh advance is a loan.
Independently of Mr Phillips signing a loan agreement on 14 August 2012 (the same day as the eighth advance in this series) I am satisfied, on the evidence set out above, that Mr Phillips was well aware that each of these advances was a loan, and that Mr Azzi was becoming increasingly annoyed at Mr Phillips' requests for money.

[19]

The eighth advance

This 14 August 2012 transaction is the most important, because it is the only loan evidenced by a loan agreement (which refers to and incorporates the previous loans) and because it is accompanied by acknowledgements that the other advances were all loans.
Prior to the eighth advance, Mr Phillips and Mr Azzi had an exchange of emails. The emotionality and manipulative content of Mr Phillips' emails can only be appreciated by setting these emails out in full.
On 9 August 2012, Mr Phillips wrote the following email to Mr Azzi: "Subject: Friendship & Respect….! Date 9 August 2012 8:10 AM Dear Tony I called around again yesterday afternoon for the third consecutive day this week to see you & inform you of my dealings with Kevin Schofield & Bill Frew was asked to do so by yourself last Thursday. I have sent you numerous detailed SMS's [sic], emails, telephone messages & dropped off info for you without a single response from you…? Yesterday & Tuesday you were in your office but chose not to speak or see me…? Spoken to Steven Hogan (Surveyor) on Monday & he is still working away in obtaining the transfer & securing the relevant leasehold leases as requested. Spoken also with my buddy Steve & he has arranged for his supplier to meet us at 1.30pm today at Seaforth to quote the appropriate material for the job. I thought you would take a few moments to see me or talk to me & be updated of my discussions/outcome with Kevin & Bill in person as you requested I do for you even out of courtesy of my efforts. Last Thursday when I asked for assistance again from you, you made a comment to me that it seems that I am just like Kevin…? I am like no one but myself. That comment has been on my mind & with me ever since & it has upset me when normally these days I never let anything upset me. I now feel totally uncomfortable to your office Uninvited & goes [sic] against everything that I stand for as a person to do so as I feel ignored & unnecessarily feel silly when I shouldn't! I am not that type of person & never will be! I am not a follower. But the total opposite as people close to me would attest too! Sorry Tony I am very straight forward & a matter of fact type of person & don't wish to fluff around about it…! I have a family that I am responsible for & am currently at my lowest ebb financially for the first time in my life so need to get on with my professional life again & earn again real serious income again to re-establish my professional career & financial security again for my family. I need to secure $40,000 by December & again year on year from 2013 for 13 years just for my two daughters' private schooling. I am as good if not better than most in my profession but with the highest level of personal integrity & ability than my piers [sic] & especially in my personal life as I do not associates myself with uncouth peasant's [sic] or un-educated [sic] shifty type of people. My wife & personal circle of close friends/acquaintances quantifies & reinforces [sic] all of these qualities in spades. I appreciate all that you have done for myself & my family especially over the last 16 months & will never forget your personal gestures of urgently needed financial assistance at a time of severe personal financial hardship. I have never received assistance from anyone in the past apart from mother & father on a few occasions as I have always helped them & my family & various close friends in the past when I was in a much more healthier [sic] financial position. I have given you my Word of Honour that all will be repaid & with the majority within 10-12 weeks as the Bunning's deal has finally be effected & the rest as I get on my feet again. Today I am fight off eviction as we are 5 weeks in arrears, My phone/interest services is over 3 months in arrears & could be disconnected anytime today as is Gas, Electricity, fines, insurances & other living associated bills. I have to find funds to solve this [sic] issues today simultaneously while meeting with prospective business partners at midday who have invited me to join them, also go to an Auction for a Client in the Morning in the CBD & travel with Steve to Seaforth after 1pm [sic]. The amount of work that I have generally covered each working day since becoming an adult is enormous as I have a huge capacity to take on numerous activity [sic] simultaneously. I miss the money making culture I have always been around & want to feel that taste again for myself. The type of client & acquaintances I have always attracted in my personal & professional life is a reflection of the type of individual I have always been, so need to get serious again about doing business full time & allocate all my time to income producing activity. All the good qualities I have I have received from my parents. The bad qualities I have I acquired them from God knows where…? I have dedicated hundreds & hundreds of hours of my heartfelt personal time, generosity of spirit, in genuinely/personally assisting you with all to do with your farm & efforts in assisting you in your property dealings especially with all matters relating to MURRUMBANK & CAROLHURST & 148 Joynton Avenue, ZETLAND & all matters involving the vehicles & machinery. I have introduced only quality people to you & that I still would stand by all today. You know I personally know loads of people across all walks of life as you have commented on numerous occasions. Today everyone can't walk to tell people of themselves or what they do etc. But I don't like to spell the obvious out as it is not my nature of character to do so. I like to think that I conduct myself in a Gentlemanly fashion at all times in every aspect of my life. Yes I am different & unique in that regard - as you are Tony….. In my life I have never Lost a True Friend! I felt I needed to write this email to you to reinforce my personal self esteem again & personal honour for my own self worth & get it off my chest so I am not burdened with it any longer…. I mean no offence or disrespect Tony as these thoughts can only be expressed among True Friends I feel. This is a heartfelt & emotional email for me write [sic] this morning to you." [Emphasis added].
I pause to note that, as is set out in the section of this judgment concerning the farm management invoices, the dates Mr Phillips claims to have been calling on Mr Azzi, going to Seaforth and having lunch with a prospective client are inconsistent with his claims that he was at the farm working on the same day.
Notwithstanding the assurance of repayment, Mr Phillips needed help again. On 13 August 2012 at 1:28pm, Mr Phillips sent the following email to Mr Azzi: "Tony Hope you feel better today & you bounce back to full strength health quickly. As previously advised I am in terrible trouble as our rental agent advised us on Saturday that they wish to evict us tomorrow for non-payment of our rental. I don't know what to do as my weekend has also been rough staying up all Saturday & last night worrying about keeping my family above water…. Sorry to worry you about my personal problems Tony I also wanted to tell you in person how hurt I was by your comments to me the previous Thursday. I could see that you were hurt also & was upset about it along with the Schofield & Frew issues & other matters. Yes - 10.30am tomorrow morning I would love to catch up with you Tony."
Mr Azzi replied on the same day at 2:58pm as follows: "Date: Mon 13 Aug 2012 14:58:33 + 1000 Subject: Re: Meeting 15min with You Tony…. Nicholas, You may be smart but definitely not emotionally intelligent. Every time you were with me you did more talking than listening. Remember last time I helped you it was supposed to be the last time. I was doing you a favour pushing you all the time to take hold of your responsibilities & be a real man securing a future to your family. I told you last time that I would have expected more than A "Thank You" in your email the next morning after I decided to help you financially again showing your gratitude & I remember you saying you would rather do it face to face & you did not. Studying your [sic] last time, I am the only person that could help you at the 11th hour & you dare to give me negative such as "I also wanted to tell you in person how hurt I was by your comments to me the previous Thursday" "Sorry to worry you about my personal problems Tony" Is that all you can come out with? You sound so ungrateful & arrogant & You take me for granted never really appreciated my value to you. Remember the example of the friendship being like a bank account. You need to have deposit before you can withdrawal. Well in your case for over a year & half all you have done is kept on withdrawing & never worrying In principle to deposit any amount back to keep the bank & the friendship happy. You may have showed me how many people you know, I would rather see a hard working humble man that [sic] has made it in life financially. Securing a future to his family, dignified & well respected by everyone, few good friends. A man of his word. Nicholas You were not the only person upset that Thursday I could have ended up in hospital that night, Lorraine had to fully sedate me. I certainly did not deserve You coming into my office & for 2 hours upsetting me. When you are the one wanting help & don't know how to ask by being emotionally connected with the other person. I told you again last time, Why are you leaving it until the last minute to come & ask for financial help? I thought it was your cunning Way of putting the pressure on your friends & you did it again last Thursday wanting the money there & than. Besides as a friend you did not have to remind me how many hours you spent with me. Down the farm etc… That was a very calculated way of establishing value to your friendship & that is wrong. Again with words Nicholas you can win or loose [sic] friends & wars. I am not happy with what is happening & the way the events turned up. I help you in principle any more [sic]. I have done more for you than your parents or any friend you ever had."
On 13 August 2012, Mr Phillips replied to Mr Azzi as follows: "Subject: RE: Meeting 15min with You Tony…. Date: 13 August 2012 3:32:51 PM AEST Tony You say a lot of wise & experienced words to me. I am not a calculating person unfortunately. My emotional state is reflective of my personal stressful situation which is effecting [sic] me at the present time. I value the quality of your friendship & have never placed any condition or value to any friendship in my life. If I wasn't principled I would not be in the current position I am currently in with my life. I have made many wrong decisions in my life on a point of principal which has cost me dearly. Tony I do not wish to upset you or burden you. Your friendship & trust to me has a high value to myself & I place a very high importance on it. Please do not upset yourself over anything I have done or said inadequacy. I only mean well & am genuinely kind & well intentioned from my Heart when I speak or do anything for anyone. I am not as smart as you Tony. Can I still see you tomorrow @ 10:30am…?"
As is set out below, Mr Azzi appeared favourable to the advance, and Mr Phillips replied, with the words "loan assistance" in the heading: "Subject: Your Generous Gesture - Loan Assistance Date: 14 August 2012 8:42:13 AM AEST Tony You never cease to amaze or inspire me with your wisdom & most of all your warm heart & your generosity towards my family & most of all myself. Yes I am most grateful & amazingly fortunate to have met you & value our friendship unconditionally. I got your sincere message last night & have been having my computer crash on me continuously as I have an issue with my operating system & require to do a complete system restore. It would seem I have caught your Apple issues…? I was exhausted & went to bed before the kids last night. This morning I have been battling with the computer problem since 5.30am & have just managed to get my Outlook to open up after doing repairs to all its files. As discussed I am in significant arrears with my home rental & other bills which I have been trying to juggle & delay as much as I can until I receive income. The most important to deal with is my home rental as I need to email an EFT receipt to the agent to stop eviction! # $4700 payment to MARTIN PROPERTY MANAGEMENT PTY LTD [Account details for Martin Property Management Pty Ltd] # $6000 approximately In Bills including, Office, Stationary Account, Electricity, Gas, Telephone/Telstra, Fines, School Activities/Fees & Book Club/Account. If you would be so kind to loan me $11,000 in total it will take an enormous pressure off my shoulders & allow me to get on with my business of doing business & running my family the best way I know. This amount is just for commitments & nothing left over for anything else until I receive incoming coming in. Sorry Tony this email has taken over 3 hours to write as mentioned my computer keeps crashing & I have to restart constantly from the beginning etc. Words cannot express my appreciation for all your assistance & warm consideration that that have offered me & words of wisdom you have imparted upon my person Tony. It would make me feel a lot more comfortable & for yourself if you could document this for you as mentioned in your email so my obligation to you is clear & defined for payment by myself in full to you for all your Loans to myself. Yes Tony I did say a few prayers last night as I normally do especially for people I love & care for. I did as you suggested & said several. In regards to Donna - she is my best friend & confidant & knows all matters regarding my life & family matters. She is overwhelmed by your generosity towards our family & in particular of myself. I don't need to lie to my wife as she is an amazing lady who as I have said on many occasions complements me & makes me look good in all areas of my life. She has made me a better & more tolerant person since I met her 22 years ago. In regards to Kevin Schofield he is a nice man & is a genuine person. I realise you need to discuss your accounts with him but it is my opinion that I don't think he is intentionally sticking it up you. He may have been overjealous on his invoices but he has a conscience & is easily hurt. In saying this I would advise you stop doing works & in future any significants works needs to be advised of approximate costs before commencement. I feel he is the best person for Murrumbank as it is now only a casual job for someone & at his age & stage of life it is ideal as say at most one full day's work a week. In saying this I would like to do a day's work with him weekly on a designated/nominated day each week say a Friday to overview the farm. Happy to travel down with you on other days as you wish or even on those days. Bill Frew rang me the other day again & tried to explain the transport cost. I said that it did not seem right & that you & David need to be convinced of that as it was not even close to what was actually charged as it was about double than last time & not $8 more per head as he has advised. He said that he was coming up to Sydney with his wife for a Concert late in the week & would try to catch up with you to explain the charges so as to clear any misunderstanding etc etc. This Saturday 18th it is our 10th Wedding Anniversary. If you wish for me to travel to Murrumbank with you I am available this Thursday, Friday or Saturday. I am available on other Saturday's as I am free if I do not have property inspections commitments. You know I am flexible & happy to work in on suitable days. This email could not make sense in areas as I have written the same email over & over again because of the computer crashes. Tony - I sincerely Thank You again from my Heart Tony! I will see you just after 10.45am this morning." [Emphasis added]
However, when Mr Phillips went to Mr Azzi's office, he was presented with three loan agreements. The first of these was with Mr Azzi: "LOAN AGREEMENT 1. This Loan Agreement dated 14th August 2012 is between Nicholas Phillips of Unit 37, 2 Hutchison Walk, Zetland NSW 2017 and Antonio Azzi of 146 Joynton Avenue Rosebery NSW 2018. 2. I, Nicholas Phillips, acknowledge my existing loan from Antonio Azzi with a balance at 14th August 2012 of $25,000 which was advanced as follows: 10th June 2011 $20,000 1st September 2011 $5,000 3. I agree to repay the loan as follows: (a) in full no later than 30 days after Antonio Azzi gives written notice to repay the loan, or (b) in instalments as agreed between the parties. 4. I acknowledge that the loan is interest free until after the period of 30 days from receipt of a notice from Antonio Azzi to repay the balance of the loan either in full or by instalments. The interest rate applicable after the 30 day notice period shall be the statutory interest rate set by the Australian Taxation Office for Fringe Benefits Tax purposes."
The loan agreement with Harissa similarly gave dates and amounts for the loans from that company as follows: "1. This Loan Agreement dated 14th August 2012 is between Nicholas Phillips of Unit 37, 2 Hutchison Walk, Zetland NSW 2017 and Harissa Pty Limited ABN 62 069 461 605 as Trustee for The Antonio Azzi Discretionary Trust ABN 70 781 034 685 of 146 Joynton Avenue Rosebery NSW 2018. 2. I, Nicholas Phillips, acknowledge my existing loan from Harissa Pty Limited with a balance at 14th August 2012 of $20,000 which was advanced as follows: 8th April 2011 $10,000 18th May 2011 $10,000 3. I agree to repay the loan as follows: (a) in full no later than 30 days after Harissa Pty Limited gives written notice to repay the loan, or (b) in instalments as agreed between the parties. 4. I acknowledge that the loan is interest free until after the period of 30 days from receipt of a notice from Harissa Pty Limited to repay the balance of the loan either in full or by instalments. The interest rate applicable after the 30 day notice period shall be the statutory interest rate set by the Australian Taxation Office for Fringe Benefits Tax purposes."
The third loan agreement was in identical terms, save for the dates and amounts, but I will nevertheless set it out in full: "LOAN AGREEMENT 1. This Loan Agreement dated 14th August 2012 is between Nicholas Phillips of Unit 37, 2 Hutchison Walk, Zetland NSW 2017 and Tony Azzi (Automobiles) Pty Limited trading as Larke Hoskins ABN 32 069 526 281 of 146 Joynton Avenue Rosebery NSW 2018. 2. I, Nicholas Phillips, acknowledge my existing loan from Tony Azzi (Automobiles) Pty Limited with a balance at 14th August 2012 of $40,000 which was advanced as follows: 29th September 2011 $10,000 30th March 2012 $20,000 17th May 2012 $10,000 I acknowledge receipt today of a further loan of fifteen thousand dollars ($15,000) from Tony Azzi (Automobiles) Pty Limited made to me at my request. I acknowledge that as a result, my total indebtedness to Tony Azzi (Automobiles) Pty Limited is now $55,000. 3. I agree to repay the loan as follows: (a) in full no later than 30 days after Tony Azzi (Automobiles) Pty Limited gives written notice to repay the loan, or (b) in instalments as agreed between the parties. 4. I acknowledge that the loan is interest free until after the period of 30 days from receipt of a notice from Tony Azzi (Automobiles) Pty Limited to repay the balance of the loan either in full or by instalments. The interest rate applicable after the 30 day notice period shall be the statutory interest rate set by the Australian Taxation Office for Fringe Benefits Tax purposes. 5. Tony Azzi (Automobiles) Pty Limited acknowledges receipt of a cheque made payable to Harissa Pty Limited received on 29th September 2011 and post dated 1st December 2011 drawn on the account of Stirling Phillips Capital Pty Limited and signed by Nicholas Phillips for the amount of $40,000. This cheque is still held pending advice from Nicholas Phillips as to when it can be banked."
The reference in the third loan agreement to the post-dated cheque still being held is of significance, in that it is corroborative of Mr Azzi's evidence that this post-dated cheque was provided as acknowledgement of the loan.
I find Mr Phillips' claim that he was under duress to be disingenuous. He took the loan because he needed the money. He agreed it was a commercial decision, and that in return for signing the documents he received the consideration of the loan (at T 156) in circumstances where: 1. He had offered to document the loan in his 14 August 2012 email; 2. He acknowledged both in past emails and in his evidence (at T 160) that there had been prior loans which were unpaid (although he attempted to withdraw this evidence at T 291, I consider the documentary evidence alone supports this finding); 3. He did not ask to take the documents away, or challenge the amounts, although he was an experienced businessman and was aware he was signing a document with legal implications (Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd (2004) 219 CLR 165); 4. Although Mr Phillips claimed that he was receiving these sums as part-payment for invoices because Mr Azzi did not want these advances documented, he was never in a position to give Mr Azzi invoices because there is no evidence he had ever sat down to work out how much money Mr Azzi actually owed him, and had never referred to any of these asserted entitlements to payment in any of the "100's of emails" exchanged between the parties.
For these reasons, I am satisfied that the eighth advance was a loan, and that the written loan agreement executed by Mr Phillips was confirmation that all eight transactions were loans.
This was the last of the advances, but Mr Phillips continued his association with Mr Azzi, although not quite on the same footing.

[20]

Subsequent events

It was after the eighth and final loan that Mr Phillips obtained employment at LJ Hooker Randwick. His employer, Mr Romano, gave evidence about Mr Phillips' employment (which he said was for 40 hours a week, not 35); this is discussed below. At the same time, Mr Phillips claims that he was contracted to work full time for the farm (a salary which Mr Paterson estimates at $107,250 per annum (i.e. ($37.50 plus $3.75) x 50 x 52 weeks)). The farm manager was sending invoices, although Mr Phillips states that Mr Azzi continued to urge him not to do so. The farm manager's invoices do not refer to any work Mr Phillips did. According to Mr Phillips' affidavit, Mr Azzi continued to say words to the effect "don't worry about invoices yet" (affidavit, paragraph 161).
Mr Phillips' invoices, sent almost a year after the request for repayment of the loans as well as after the commencement of these proceedings, show that he has charged for five overnight visits in September, two in October, five visits in November and two in December 2012. This was the general pattern throughout 2013 and up to mid-2014. He charged for time when he was sleeping and eating. In January 2013, when there was a bushfire, he charged for the time he spent helping with fighting the bushfire. He never turned the meter off.
Mr Azzi was, however, giving him jobs to do on the farm. Mr Azzi was unhappy with an invoice from Mr Schofield, the farm manager, and asked Mr Phillips to look at it (on 6 July 2013). Mr Phillips also gave advice about Mr Onisforou's bull, for which he was paid commission. In several of those emails (for example his email of 17 July 2013) Mr Phillips is very derogatory of Mr Schofield, urging Mr Azzi to "sack him there and then" (Exhibit NP1, page 317). Mr Azzi's concern is that if he sacked Mr Schofield, he would "do a John Bush at me" (page 317).
On 28 August 2013, Mr Azzi gave Mr Phillips a document to sign and asked him to sign it as "internal stuff for my auditors". However, he continued to regard him as a friend and to thank him for the work done on the farm. On 7 May 2014 he sent an SMS saying "Thank you for all your help especially today I really appreciate all that you do for me" (Exhibit NP1 p. 370). He sent a similar email in relation to Mr Phillips obtaining Mr Onisforou's bulls.
Mr Phillips continued to visit the farm with Mr Azzi and on other occasions by himself. On 11 May 2014 Mr Phillips sent a long email wanting to go into business with Mr Azzi and saying: "I would love to look after this [new] enterprise. We would require with [sic] a fulltime professional farmer living on site and Kevin as a part timer and a couple of other part timers. The part timers would be on daily rates as requires [sic]. I would love to do 3 days a week and would go down twice weekly once with you and once on my own to work and check with the on site manager etc. All costs and purchasers [sic] would be handled by us and only current chemical and maintenance supplies and fuel purchased by the manager with existing account holders. Let's talk tomorrow morning. I will be in at 11 am." [Exhibit NP1 to Mr Phillips' affidavit of 29 June 2015, pp 311 - 312]
It is a sign of how unreliable Mr Phillips' invoices are that the invoice at page 209 of Exhibit NP1 does not list an entry for 11 May. It does, however, set out that he visited the farm on 15 - 16 May, 19 May and 23 - 24 May 2014. Whether Mr Phillips continued to press Mr Azzi for employment is unknown, but their relationship was about to end.
On 27 May 2014, Mr Phillips sent Mr Azzi a very long email, principally attacking Mr Schofield (whom he accused of defaming him), calling him "a simple Jim". He complained about being asked to "present small bloody receipts to you for justification & reimbursement all the time like a little dishonest child" (Exhibit NP1 p. 337), a practice inconsistent with Mr Azzi's asserted dislike for invoices. He went on to complain that "nothing happens on Murrumbank without some action from my side" and adds that he no longer wants to be present on the property to "witness any number of drop kicks get paid easy money while I feed them and help them equally in a day's works. … The only person who has been to the property the most times is myself since you have owned it and the only person who doesn't put an invoice in that attends the property is myself and there isn't an individual who has done more work than myself with MURRUMBANK! I cannot afford to do this any longer and it isn't fair on myself or my family to do so any longer!"
There are also personal attacks on Mr Azzi and on Mr Phillips' former business partner. The email concludes with reference to Mr Phillips having "experienced some of the hardest years of my life financially in recent times because of my unwavering personal principals [sic]" and that he does not wish to change this "even though our daily struggles continue financially" (Exhibit NP1, p. 338). He adds that he has had "several opportunities which require my expertise" and that he has left the keys and equipment with another person on the farm.
Mr Azzi replied an hour later: "Nicko, I am shocked at the letter your [sic] wrote and I am sorry you feel this way. I don't have hours to be able to put my emotions in words to you. I think what disappointed me the most was the non mentioning [sic] of the word "friends". I would like you to come in so that we can clarify our both [sic] positions. You know it is the wrong way to finish such association with an email. Your words are very ambiguous. I am not sure what we are now: enemies or friends?" [Exhibit NP 1 p. 339]
These emails are consistent with Mr Azzi's belief that Mr Phillips was a friend who was helping him out, in circumstances where Mr Phillips, whether because of his personal principles or simply because he had the time, but essentially by reason of their friendship, was happy to do this kind of work, in circumstances where it involved their travelling to the property, having a barbecue, going shooting and enjoying country life. While they were friends in this way, Mr Azzi had been content not to call in the loans, a situation that may possibly have continued for some time but for these events (although I should note that it is no part of Mr Phillips' claim that these loans were advanced on such a basis: this is merely a passing surmise as to a topic about which there has been no pleading, evidence or cross-examination).
However, that situation now changed. On 28 May 2014 the plaintiffs issued a notice requiring Mr Phillips to pay the loans. They were issued separately but in the same format: "NOTICE REQUIRING REPAYMENT OF LOAN In accordance with Clause 3 of the Loan Agreement dated 14 August 2012 (a copy of which is enclosed for your reference) we hereby give notice that we require full repayment of the outstanding balance of your loan with Harissa Pty Ltd ATF The Antonio Azzi Discretionary Trust within 30 days of the date of this letter. The outstanding balance of your loan is $20,000."
Following receipt of these letters, Mr Phillips sent the following SMS message to Mr Azzi's personal assistant on 29 May 2014, which was then on-forwarded to Mr Azzi: "Tony - I think it is about time you & I met to have a civilised Man to Man discussion. I wish to meet for lunch at a neutral location to resolve our issues in a civilised & gentlemanlike manner. I was up till 5am this morning dictating a lengthy response which I commence last evening to you but have held back from sending because it only needs to be sent if we cannot resolve our issue amongst ourselves. We have known each on a very personal basis now for nearly 5 years & if we cannot chat like 2 civilised human beings then I have made the approach with goodwill & intentions so my conscience will be clear. Tony I am not affraid [sic] of no-one so this is to be civilised & transparent with each other. I hope you accept to meet at an independent venue over. Coffee or lunch."
However, these offers did not result in a meeting. A letter was sent to Mr Phillips by the solicitors for the plaintiff reiterating that the plaintiffs sought repayment of the $100,000 loan outstanding.
On 18 August 2014, Mr Phillips sent a very long email to Mr Azzi: "Dear Tony I am sending you this email to advise of my deepest sadness upon receipt of your solicitor's email to myself, my wife, family & especially my elderly parents are deeply sadden [sic] that you have decided to consider taking the course of action that your solicitor has advised that will change my life & family's life forever. I dedicated 3.5 years of myself to yourself - dedicated in assisting you in your business interest. I offered you genuine heartfelt compassion & solace in your hour of need. I always respected & maintained your property/equipment/vehicles as it was my own even to a larger extent as it wasn't mine…? I treated you as if I had known you all my life & acted accordingly. The blood & sweat that I dropped in establishing your Commercial Cattle Farming operation & subsequent Cattle Stud operation is very well known & easy to see. The personal time that you & I sheared [sic] travelling to the farm together, living on the farm & doing all farm activities as well as cooking & hosting all that attended the farm over the past 3 years are fond years in my memory. I have respected your assistance that you extended to myself & my family also respected this. What disappointed me & still troubles me is you never attempted to ask me why I was so angry & disappointed that I resigned my services to you & MURRUMBANK at little notice even though I went to a lot of trouble of clearly giving you a detailed handover in my resignation email to you. Clearly for me to do what I did there was not one moment that upset me but a series of several events in succession that my personal honour & self respect was compromised! I ask of you to consider meeting with me one on one to discuss our differences as two civilised & intelligent men can only do this week. It is not my wish to seek Counsel or to speak to your lawyer. Tony I hope you & I can resolve out difference & we can reacquaint again after you understand why I am upset & removed myself three months ago from your business activities. KO has their Bull Sales this Friday & I know which ones are the best for your farm with completely different genetics to what you already have. The best Weaner Bull win pay huge dividends when you mix them with Evident 2nd time around. Tony I have done an enormous amount of research especially in the past 3 months & am completely on top of all matters pertaining to the Stud industry. I still am of the opinion that you should purchase Walker's property as this will give you cost efficiencies & better scale to invest showing your own line of cattle & building a genuine & profitable Stud business. I hope the advice I gave you regarding the bull bar & LED Spot Lights & Winch proved correct & the NAVARA looks good with the equipment on it now…? I write this email in an honest spirit of co-operation & a genuine wish for us to resolve our issues together amicably. We could if you are agreeable to go together to KO Stud sale so we could discuss these matters during the day & help choose the appropriate Weaner Bull. Tony during the past 3 months you & MURRUMBANK have been on my mind & thoughts. I have discussed sending this email with my immediate family & extended family & all agree that this is the right way to approach you in a genuine & sincere manner. I wish you a nice day & week Tony."
It is significant that this email contains no reference to any contract for services, setoffs for unpaid claims or other reference to any contract or agreement between the plaintiffs, or any one of them, and Mr Phillips. Nor is there any reference to any such claim in the letter from Baron & Associates dated 2 November 2014, which accuses Mr Pappas (the plaintiffs' solicitor) of sending a letter which warrants a complaint to the Law Society as well as functioning as a Notice of Concerns under the Defamation Act 2005 (NSW) (Exhibit NP1, pp 360-361). The invoices the subject of the cross-claim were not referred to or provided to the plaintiffs until 4 March 2015, six months after these proceedings were commenced.
These events are the background to the two claims for breach of contract set out in the cross-claim. I shall first set out the claim for breach of contract for three redevelopment projects, totalling $13,325.

[23]

B. Whether the "redevelopment contract" was to provide services or to obtain a lease

Paragraph 1 of the cross claim pleads that one or more of the plaintiffs requested Mr Phillips "provide management services in respect of three commercial premises". There was no reference to any proposed lease. Despite this, in cross examination, it was put to Mr Azzi that "the two projects Mr Phillips refers to are firstly the proposed redevelopment of the Rosebery site and the proposed lease to Taste Living. You understand that to be the case?" He was not cross examined about the other matters and the two development applications in evidence (one is Exhibit 2 and the other is attached to Mr Bush's affidavit) have no relevance to the claims made by Mr Phillips.
Mr Phillips' evidence is that the only conversation in which any agreement was reached in respect of the redevelopment project was the one in paragraph 37 of his affidavit sworn 29 June 2015. However, that conversation refers to a "development" (in the singular). Mr Phillips accepted that there was nothing in this conversation referring to anything other than the Joynton Avenue site : "Q. You had a very specific agreement, which you have given evidence of. You don't say in that agreement, "Whatever I am ever going to do for Harissa, I will be charging you out at a hundred dollars an hour." That's wasn't your agreement, was it?A. Yes, it was. Q. That's not what your evidence was, is it?A. In relation to development, any development. Q. You were talking in context of a specific development, weren't you?A. At that particular moment we were, yes."
These invoices were not put to Mr Azzi in cross-examination. According to Mr Bush, the lapse of Development Application in respect of the car dealership was only discovered in May 2011, well after the retainer alleged by Mr Phillips and accordingly could not have been discussed in the March 2011 meeting.
This means there is real uncertainty as to what projects are the subject of this claim. I also note that there has been no breakdown of the sum claimed in respect of each project, an "all or nothing" approach which must render the assessment of damages impossible if one or more of Mr Phillips' project claims cannot be established.

[24]

C. Conflicts between the evidence of Mr Bush and Mr Phillips as to what work was done and when

There were significant discrepancies in the invoices of both these witnesses in terms of when meetings occurred, where and with whom. These have been set out in a table prepared by Mr Paterson, which I do not propose to reproduce.
There is no doubt that Mr Azzi and his companies were involved in a series of redevelopment projects, some of which went ahead, and some of which did not. Development applications tendered to the court either predated Mr Phillips' activities (Exhibit 2, where Ms Zmood acknowledged Mr Phillips' involvement was minimal) or were not the subject of any claim (namely the 2013 development application attached to Mr Bush's affidavit). The projects for which Mr Phillips claims payment were essentially for projects that did not go ahead, and for which Mr Bush was retained between March and December 2011.
Mr Bush gave evidence and was cross-examined. There is no submission that his evidence is tendency evidence; his evidence is simply determined to be corroborative of the evidence of Mr Phillips that Mr Phillips was, at the same time, carrying out duties for Harissa in relation to the three projects set out above.
I do not propose to spend a great deal of time on Mr Bush's evidence, beyond noting that, as is set out in the schedule prepared by Mr Paterson, a number of the dates where Mr Bush says he was performing activities do not accord with the dates given by Mr Phillips. Mr Bush was not a convincing witness, as he clearly has considerable animus against Mr Azzi, whom he refers to in derogatory terms in his emails. The circumstances in which his first invoice was doubled in size to $100,000 are hard to understand.
Even if he were a witness upon whom reliance could be placed, Mr Bush was clearly involved in a range of activities which could not have included Mr Phillips, as the disparities between the sizes of their bills, the dates for their work and their respective background and skills show. His evidence is of no corroborative value in all those circumstances.

[29]

The evidence of Mr Romano

Mr Phillips worked for Mr Romano, the proprietor of LJ Hooker Randwick, from 3 September 2012 to 28 February 2014. Mr Romano's affidavit, in paragraph 9, identifies a series of "open houses" and auctions that Mr Phillips attended, sets out his work hours and identifies a list of dates in a table where Mr Phillips was asserted to have been required to be in the office or at auctions or otherwise attending to work duties. Those dates conflict with a number of the dates given by Mr Phillips as dates when he was at the farm performing the duties outlined in his invoices.
In his reply affidavit sworn 16 February 2016, paragraphs 53 and 56, Mr Phillips does not respond to any of the specific dates beyond stating that he was not required to work on any specific day.
In cross examination Mr Romano was not directly challenged as to the accuracy of his evidence; challenges to his record-keeping were met, in re-examination, with identification of the computer records which he consulted. Bearing in mind the statutory obligations of employers to keep careful and accurate wage records, I would be reluctant, unless faced with a direct challenge to the accuracy of these records, to regard Mr Romano's records as anything other than correct.
The evidence involves considerable detail, and I am indebted to counsel for the plaintiffs for preparation of the following Table as to the evidence of Mr Romano, the answers given by Mr Phillips, and the relevant location of the material in the exhibit, which I set out in full (including Mr Paterson's footnotes): Date given by Romano Information from Phillips Invoices Page of exhibit Day of week 7.09.12 7&8.09.12 188 Friday & Saturday overnight 37 hrs 14.09.12 (also auction on 15.09.12 [1] ) 14&15.09.12 188 Friday & Saturday overnight 37 hrs 19.09.12; 19&20.09.12 188 Wednesday & Thursday 20.09.12 overnight 37 hrs 25.09.12 25&26.09.12 188 Tuesday & Wednsday 26.09.12 overnight 37 hrs 29.09.12 29&30.09.12 188 Saturday & Sunday overnight 37 hrs 13.10.12 13&14.10.12 190 Saturday& Sunday (also open house 13.10.12 x 2 [2] ) overnight 37 hrs 29.10.12 29.10.12 190 Monday day trip 3.30 am-12.30 am, 21 hours 5.11.12 5.11.12 190 Monday day trip 3.30 am-12.30 am, 21 hours 9.11.12 9&10.11.12 10.11.12 overnight 37 hrs 190 Friday & Saturday (also open house 10.11.12 [3] ) 16.11.12 15&16.11.12 190 Thursday & Friday (also open house 15.11.12 [4] ) overnight 37 hrs 21.11.12 21&22.11.12 22.11.12 overnight 37 hrs 191 Wednesday & Thursday (also open house 21.11.12 [5] ) 29.11.12 29&30.11.12 191 Thursday & Friday 30.11.12 overnight 37 hrs 6.12.12 6&7.12.12 7.12.12 overnight 37 hrs 191 Thursday & Friday (also open house 6.12.12 [6] ) 12.12.12 12&13.12.12 191 Wednesday &Thursday 13.12.12 overnight 37 hrs 15.02.13 15&16.02.13 193 Friday & Saturday 16.02.13 overnight 37 hrs 1.03.13 1.03.13 193 Friday day trip 3.30 am-12.30 am, 21 hours 5.03.13 5.03.13 194 Tuesday day trip 3.30 am-12.30 am, 21 hours 22.03.13 22.03.13 194 Friday day trip 3.30 am-12.30 am, 21 hours 30.03.13 30.03.13 194 Saturday day trip 3.30 am-12.30 am, 21 hours 3.04.13 3.04.13 196 Wednesday Pick up boat from Blakehurst Marine and deliver to Zetland 4.04.13 4.04.13 196 Thursday day trip 3.30 am-12.30 am, 21 hours 11.04.13 11&12.04.13 196 Thursday & Friday 12.04.13 overnight 37 hrs 20.04.13 20&21.04.13 196 Saturday & Sunday overnight 37 hrs 27.04.13 27&28.04.13 196 Saturday & Sunday overnight 37 hrs 4.05.13 4&5.05.13 196 Saturday & Sunday overnight 37 hrs 11.05.13 11&12.05.13 197 Saturday & Sunday overnight 37 hrs 17.05.13 17.05.13 197 Friday day trip 3.30 am-12.30 am, 21 hours 22.05.13 22&23.05.13 197 Wednesday & Thursday 23.05.13 overnight 37 hrs 29.05.13 29.05.13 197 Wednesday day trip 3.30 am-12.30 am, 21 hours 3.06.13 3&4.06.13 197 Monday & Tuesday 4.06.13 overnight 37 hrs 11.06.13 11&12.06.13 197 Tuesday & Wednesday 12.06.13 overnight 37 hrs 18.06.13 18&19.06.13 197 Tuesday & Wednesday 19.06.13 overnight 37 hrs 22.06.13 22.06.13 197 Saturday day trip 3.30 am-12.30 am, 21 hours 29.06.13 4.04.13 197 Saturday day trip, 21 hours 8.07.13 8.07.13 199 Monday; Has charged for more hours than there are in the day day trip, 37 hours 26.07.13 26.07.13 199 Friday; Has charged for more hours than there are in the day day trip, 37 hours 2.08.13 2.08.13 199 Friday; Has charged for more hours than there are in the day day trip, 37 hours 10.08.13 10.08.13 199 Saturday; Has charged for more hours than there are in the day day trip, 37 hours 17.08.13 17.08.13 200 Saturday; Has charged for more hours than there are in the day day trip, 37 hours 23.08.13 23.08.13 200 Friday; Has charged for more hours than there are in the day day trip, 37 hours 31.08.13 31.08.13 200 Saturday; Has charged for more hours than there are in the day day trip, 37 hours 7.09.13 10.09.13 200 Saturday; Has charged for more hours than there are in the day day trip, 37 hours 20.09.13 20.09.13 200 Friday; Has charged for more hours than there are in the day day trip, 37 hours 27.09.13 27.09.13 200 Friday; Has charged for more hours than there are in the day day trip, 37 hours

[30]

It can be seen that the days of the week are important, because of the need for auctions and open houses to be held over the weekend. In paragraph 56 of his affidavit in reply sworn 16 February 2016, Mr Phillips noted that he would leave Sydney after the open house inspections on Saturdays so that he could complete the three hour drive to the farm by mid-afternoon. However, as counsel for the plaintiffs has helpfully summarised: 1. On 10 August 2013, 17 August 2013, 31 August 2013, and 7 September 2013, which are all Saturdays, Mr Phillips has charged for a day trip in which he said he did 37 hours' work. 2. On 30 March 2013, 22 June 2013 and 29 June 2013, which are all Saturdays, Mr Phillips has charged for a day trip in which he said he did 21 hours' work. 3. On 14 and 15 September 2012, 9 and 10 November 2012, and 15 and 16 February 2013, the Saturday fell on the second day for which Mr Phillips has charged.
This table only covers the period from September 2012, when Mr Phillips was working at LJ Hooker, but its contents are also relevant to the claims for the period before. Mr Phillips' emails are also inconsistent. In particular, he wrote to Mr Azzi on 14 August 2012 offering to give up his wedding anniversary weekend the following weekend to go to the farm with him, and went on to say that he was free on most Saturdays. That is inconsistent with any claim that he had in fact been appointed to perform this task on 9 August 2011.
Two specific examples of Mr Phillips appearing to be carrying out his real estate duties rather than working at the farm are as follows: "14&15.7.2012 travelled to Murrumbank for weekly work activities with Tony Azzi and did 1.5 days' work alongside Kevin Schofield & to check on animals, muster them between paddocks, check fencing, take tools, supplies & tools down. Fee charged 37 hours $1485 inclusive GST - Day 14 Overnight trip"
Mr Phillips' oral evidence was that on Saturday 15 September 2012 he attended an auction at 264 Mona Vale Road, St Ives in the mid afternoon. When the inconsistency between this evidence and the entry in his bill was pointed out, Mr Phillips gave the following evidence: "A. Yeah, I, that's how, we, we, I used to travel down mostly on the Thursday afternoon, spend all of Friday there and come back by midnight on Friday night and sometimes early hours of Saturday morning".
Mr Phillips' entry for 13 and 14 October 2012 is as follows: "13&14.10.2012 deliver wire steel ropes & tools, Fuels & Oils to farm work 1.5 days with alongside Kevin Schofield & Tony Azzi Fee charged 37 hours $1485 inclusive GST - Day 22 Overnight trip"
When this was put to him, Mr Phillips' evidence was that on 13 October 2012 he attended an open house at Pitt Street between 10.45 and 11.15. He left Rosebery about 1.00 on Saturday and returned about midnight on the Sunday. However, as Mr Paterson points out, even if Mr Phillips is charging for every minute, this is only 35 hours.
Mr Zmood submitted that I would give "little or no weight" to the evidence of Mr Romano (submissions, paragraphs 204 and 230) for the following reasons: 1. Animus: There is a dispute between Mr Romano and Mr Phillips over the latter's superannuation entitlements, and Mr Romano "may be motivated by animus" (written submissions, paragraph 204(i)). 2. Poor memory: Mr Romano agreed he did not have a specific recollection for each of the days that Mr Phillips claimed to have been working for Mr Azzi; all he had were records suggesting that Mr Phillips was at work on those days. He only had an actual recollection of the auction at 364 Mona Vale Road, St Ives, on 15 September 2012. Mr Phillips' evidence was that he travelled back from the farm especially to attend this auction (T 180).
The claim of animus is a general one; Mr Romano was not caught out in any lies, and did not display any eagerness to espouse the plaintiffs' cause. To the contrary, he was frank about his inability to remember many if not most of Mr Phillips' activities. Mr Romano conceded that he did not know whether Mr Phillips worked for Mr Azzi or not (T 141). However, he recalled valuable personal details, such as Mr Phillips taking his daughters to and from school, and tailoring his work hours to this arrangement. He was not cross-examined about this evidence, which was perhaps the most important evidence he gave.

[31]

Mr Phillips' working hours at LJ Hooker

Mr Zmood attacks the reliability of Mr Romano's evidence as the Mr Phillips' attendance at work for a number of reasons. First, he submits that Mr Romano's affidavit states (at paragraph 7) that "according to my arrangement with Mr Phillips he was paid to work on the above dates", but no written contract was provided (Mr Phillips' evidence is that there never was a written contract). In the absence of a written contract, Mr Romano's claim that Mr Phillips was "required to work a 40-hour week" and that "the normal award is 9.00 to 5.30" (T 143) should not be accepted; Mr Romano's claim that these stipulations were set out in the award was without basis, as the award tendered (Exhibit 5) confirmed. Furthermore, Mr Phillips was not a clock-watcher; he could work from any location with his laptop and mobile phone, and did not need to be in the office.
Mr Zmood also drew my attention to the notation on Mr Phillips' 2013 real estate licence (Exhibit 5) which gives his principal place of business as being his own company, Stirling Phillips Capital Pty Ltd, at Chifley Square, while the address of LJ Hooker Randwick is listed only as the secondary designation. This licensing certificate, it is submitted, is further evidence that supports Mr Phillips' contention that he was only a part-time employee at LJ Hooker Randwick.
Whether Mr Phillips worked 35 or 40 hours, or was able to work from locations other than the real estate agency, will make no difference to my findings. Mr Phillips was not only working substantial hours in a job which required travelling and attending "open houses", but he was also taking up to an hour each day (or more) to drive his daughters to and from school. Mr Romano described these arrangements as follows: "Q. Sorry, when you say he worked for you full time, what sort of hours did he work?A. He's required to work a 40 hour week. The normal award is 9.00 to 5.30. However, Mr Phillips asked to start later every day, because he used to drive his daughters there and take in between 3.00 and let's say 4 o'clock off to collect his daughters and take them home. But that was Monday right through to Friday, and Sundays he's required to work as well, to attend open for inspections and auctions. Q. So when you say he worked for you full time and normally the hours are 9.00 to 5.30, he would arrive a bit late because he had taken his daughters to school?A. Daughters to school. Q. So what time would he get to work most mornings?A. Roughly about 9.30. Q.Where is your office?A. In Randwick. Q. You said he went off in the afternoon to pick up his daughters from school?A. Collect his daughters from school, take them home and then come back to work, and then generally would work after, you know, past that 6 o'clock period, because to make up the time that he had lost during the day." [T 141]
In cross-examination, Mr Phillips admitted he would pick his daughters up from school in the afternoons: "Q. In the afternoon, you picked your daughters up from school? A. Yes. Q. Then after you'd collected your daughters from school, you'd take them - and taken them home, you came back to work? A. Sometimes. Q. It was the normal occasion that you would work until about just past 6 o'clock? A. No." [T 320]
However, he denied starting work late so that he could drop the children off at school (T 320).
There is some corroboration of Mr Phillips' practice of picking up his daughters from school in his email to Mr Azzi of 17 May 2012 where he says: "I will pop in after I pick up my daughter to do so, I must run to make the school…by 3 pm." [Affidavit of Mr Azzi sworn 12 March 2015, p. 42]
This was part of an email thanking Mr Azzi for "your heartfelt assistance of my family in our hour of need". Mr Phillips intended to "pop in" to express his thanks in person on that day for Mr Azzi paying his city office rental in the sum of $847.
How long did it take Mr Phillips to pick up his daughters at school, drive them home, and return to his work activities? According to his evidence at T 249: "I would have been back in the city at 2.30 to pick up my girls from school at 3 and then taken off at 3.30." This suggests that the trip to and from school, depending upon the place of departure, could on occasions take up to an hour.
In a non-responsive answer in cross-examination, Mr Phillips claimed that Mr Azzi's "gopher" would pick up his daughters from school when he was at the farm with Mr Azzi: "Q. You went to Murrumbank as a social occasion to spend time with your friend? A. Is that why Mr Azzi gopher used to pick up my wife and take my kids to school morning and afternoon while I was with him? Q. I've asked you a question. You went to Murrumbank as a social occasion to spend time with your friend? A. I don't need to go to Murrumbank to do - if I was socialising with Mr Azzi, I would have went [sic] to his house, he would have went [sic] to my house. That never occurred. That's what I call socialising." [T 228-229]
It was not put to Mr Azzi that he provided such a "gopher" service, and there is no reference to it in Mr Phillips' affidavit. There is no reference to a "gopher" in the submissions made on Mr Phillips' behalf. It would have been significant evidence of some kind of arrangement between Mr Phillips and the plaintiffs if such an arrangement were in place, because it would have confirmed Mr Phillips' accepted presence on the farm. I am satisfied that no such arrangement was in place. It is not to Mr Phillips' credit that he would proffer such a claim in cross-examination.

[34]

Mr Phillips' whereabouts as established by his email evidence

I have set out above Mr Azzi's evidence that, apart from the payments made as commission in relation to Mr Onisforou's bull, there was no management contract or agreement with Mr Phillips. However, even if I did not accept that evidence, some of the emails sent by Mr Phillips clearly place him in Sydney at Mr Azzi's office at a time when he claims that he was travelling to or at the farm.
For example, his email of 9 August 2012 (sent at 8.10 am) refers to going to Mr Azzi's office "for the third consecutive day this week to see you". However, his memorandum of fees for 8 and 9 August 2012 describes him as travelling to Murrumbank on 8 August with Mr Azzi and staying overnight, not knocking on Mr Azzi's door trying to see him: "8 & 9.8.2012 Travel to "Murrumbank" for weekly work activities with Tony Azzi, Willy Wampfler & did 1.5 days work alongside Kevin Schofield check on animals, muster them between paddocks, check fencing, take tools, supplies & fuels down. Fee charged 37 hours $1485 inclusive GST DAY 15 Overnight trip" [Exhibit NP 1 to the affidavit of Mr Phillips sworn 29 June 2015, emphasis added]
Additionally, Mr Phillips said in his email of 9 August that he had an appointment at Seaforth at 1.00 pm that same day: "…[w]hile simultaneously meeting with prospective business partners at midday who invited me to join them and also go to an auction for a client in the morning in the CBD and travel with Steve to Seaforth after 1pm." [T 250].
I was confused by these references in Mr Phillips' email to Mr Azzi about going to his office on both 8 and 9 August and having a 1 pm meeting at Seaforth on the same period for which his invoice indicated 37 hours of work at the farm over 8 and 9 August 2012. I inquired: "HER HONOUR: And the reason I do is because I've been reading this gentlemen's email to your client about some meeting he had on 8 August and then there's a meeting on 9 August with Mr Hogan. I'm not sure how that - maybe I've misunderstood the chronology but if you look at annexure K, this is the email of 9 August 2012 at 8.10am. WITNESS: He's the local surveyor that I appointed, he was in Yass. HER HONOUR Q. You weren't meeting him in Seaforth? A. No, he lives in Yass. Q. "I spoke also with my buddy, Steven, he's arranged for his supplier to meet us at 1.30pm today at Seaforth?" A. It could have been the case, yeah, because I didn't travel on the eighth. It would have been about 3.30, 4 o'clock, that's right. I would have been back in the city at 2.30 to pick up my girls from school at 3 and then taken off at 3.30. Q. This email was dated 9 August? A. What time on 9 August? Q. Well, yes but the thing is you said - this is an entry 8 and 9 August and also you appear to have visited the plaintiff the afternoon before. Have I got the date wrong?" [T 249 - 250].
Mr Phillips' confident reference to Mr Hogan as a surveyor living in Yass quickly faded when it was shown that he was to attend an auction at Seaforth with this person. His evidence next was that auctions were on a Thursday, so he must have travelled down on late on Thursday to start work on Friday. However, on checking, it transpired that 8 and 9 August 2012 were a Wednesday and Thursday. Mr Phillips said that such a midweek visit was "a bit out of sync" (T 251) with what they normally did, and that there must have been some special reason but, if so, it is not recorded in his invoice, which refers to "weekly work activities". Mr Phillips then said that the invoice must be a day out, and that he would check his computer, but no amended records were ever tendered.
Whether Mr Phillips left after 3.30 p.m. on that day or not, his own email to Mr Azzi of 9 August 2012 as set out above is inconsistent with Mr Phillips and Mr Azzi driving down to the farm on 8 August 2012, or even 9 August 2012, even if they left after 3.30 pm on 9 August 2012. Mr Phillips suggested that his invoice could be a day out and he could have left a day later, returning on August 10 or 11 (it was unclear which).
If Mr Phillips had done so, that makes it difficult to understand Mr Phillips' email of 14 August 2012 in which he offers to give up his wedding anniversary activities to accompany Mr Azzi to Murrumbank if that is his wish: "This Saturday 18th it is our 10th Wedding Anniversary. If you wish for me to travel to Murrumbank with you I am available this Thursday, Friday or Saturday. I am available on other Saturday's [sic] as I am free if I do not have property inspections commitments. You know I am flexible & happy to work in on suitable days."
Finally, and most importantly, there is Mr Phillips' own description of the nature and frequency of his visits to the farm, and the nature of his relationship with Mr Schofield: "In regards to Kevin Schofield he is a nice man & is a genuine person. I realise you need to discuss your accounts with him but it is my opinion that I don't think he is intentionally sticking it up you. He may have been overjealous on his invoices but he has a conscience & is easily hurt. In saying this I would advise you stop doing works & in future any significants works needs to be advised of approximate costs before commencement. I feel he is the best person for Murrumbank as it is now only a casual job for someone & at his age & stage of life it is ideal as say at most one full day's work a week. In saying this I would like to do a day's work with him weekly on a designated/nominated day each week say a Friday to overview the farm. Happy to travel down with you on other days as you wish or even on those days." [Email 14 August 2012, emphasis added]
This is not the sort of email that a man who has come back from his "weekly work activities" with Mr Azzi and Mr Schofield would send. He is asking for a day's work with Mr Schofield weekly on a designated/nominated day each week, whereas his invoices paint a picture of a man who has been performing weekly work activities which involve one and a half days and overnight stays on fifteen prior occasions.
I am satisfied that the best evidence of Mr Phillips not having performed the work on the farm that he claims to have done comes from his own emails, some of which conflict in content and date with his claims. His explanations of those conflicts, in relation to the two or three that were put to him, was unconvincing. The most significant inconsistency is his attempt, in his email of 14 August 2012, to obtain employment of the kind that he is telling the court he already has had for a year.
Evidence similarly damaging to Mr Phillips' claims was given for the plaintiffs by the farm manager, Mr Schofield.

[35]

Mr Schofield's evidence

Mr Schofield, who was the farm manager, states that he has been a farmer for 49 years, mostly in the area where the farm Murrumbank is situated, and that he is now retired. As a former employee of Harissa, questions of his evidence still being coloured by personal gain seem unlikely, although it is clear that he and Mr Phillips were not well disposed to each other. He was, however, a frank and careful witness, who answered questions in a direct and straightforward manner.
Mr Schofield first met Mr Azzi in about October 2010, when he was inspecting the farm owned by Jim Dobson where Mr Schofield was then employed. In July 2011, when Mr Dobson was selling the farm, Mr Schofield was employed as the Murrumbank farm manager and commenced billing on a contract basis for $40 per hour plus GST. He worked a maximum 7 - 8 hours a day at Murrumbank and describes that work as follows: "My role was mainly to look after the pastures, fertiliser, organising spreading, looking after the stock and all their veterinary needs, building and maintaining fencing, vermin control and control of weeds. Murrumbank has 79 cows, 44 cattle, 4 bulls and 12 alpackers [sic]. Each day involves something different depending on the farm's requirements and the stock's requirements. For example - I could be there on Sunday to fix a fence and see that there is a cow with a problem calving so I do what needs to be done on a daily basis." [Affidavit sworn 6 August 2015, paragraph 8]
Mr Schofield states, in his affidavit at paragraph 9, that he musters cattle 4 to 5 times a year, and that "occasionally" he might bring in outside help for this task. The purpose of mustering is to shift cattle to specially feed them, drench them mark them or weigh them, and these events only occur 4 to 5 times a year. Mr Schofield was cross-examined only briefly, and these observations on good farming practice went unchallenged.
Mr Schofield said that to his knowledge, Mr Phillips was not employed to work on the farm and that he "thought he was a mate" of Mr Azzi (paragraph 10). He was scathing (in paragraph 12) in his assessment of Mr Phillips' farming knowledge and ability: "If I ever needed help on the farm I would get a local person, a person capable of doing farming work. Nicholas Phillips wasn't capable of doing farming work. He wasn't a farmer. I would not hire Nicholas Phillips because he doesn't understand the running of a farm. I would not hire a real estate agent at $37.50 plus GST per hour to do anything on a farm. If I employ someone to help it is on an average of $25 per hour plus GST. I contract them, I pay them and then I invoice the farm owner."
Mr Schofield said he had seen the invoices Mr Phillips provided and said that he was never employed to check fencing or muster cattle. The work Mr Phillips was describing himself as doing was Mr Schofield's own job. Mr Schofield said that two managers were not necessary for a 12,000 acre farm, in that he could manage four farms at the same time without requiring help.
In particular, Mr Schofield said in his affidavit that Mr Phillips was only at the farm "a handful of times" when Mr Schofield was working, and that on those occasions Mr Phillips did not assist him.
Mr Schofield's evidence on all these issues is corroborated by invoices he sent to Harissa for the periods July, August, October and December 2012 and May 2013. The work itemised there does not make any reference to Mr Phillips as having been present; although there is a reference to "Nick & Tony" on 12 October 2012, that is not one of the days that Mr Phillips has claimed for. He does refer to "Josh Kevin and Nick" mustering cattle on 14 October 2012 but this is not one of the days that Mr Phillips has listed as being a date for mustering: Exhibit NP1 to Mr Phillips' affidavit.
Mr Schofield does, however, refer to other farm hands (I could only just make out the handwritten names "Josh" and "Jacko") in these invoices. He also identifies tasks such as checking the stock, cementing and welding stays on posts, building a deck, fixing a front end loader to the tractor, cleaning dirt out of the cattle grid, checking the boundary fence, spraying for thistles, shifting the cattle and goats for drenching and vaccination (12 - 14 October 2012) and for weighing (April 2013), digging a trench, putting a "front diff" in the Hilux and taking delivery of a new tractor, grading and gravelling a road and buying 3 bottles of gas for $37.50 each ($112.50).
Mr Zmood submits that Mr Schofield's evidence is "of little utility as he conceded that he did not know the basis of Mr Phillips' relationship with Mr Azzi", that whether Mr Phillips had no prior farm experience "does not assist the court", and his allegiance was to his employer (written submissions, paragraphs 206-208). Additionally, his evidence was coloured by his dislike of Mr Phillips, and diluted by his lack of knowledge of what tasks Mr Phillips was performing at the farm (T 136).
I do not accept these submissions. Mr Schofield's affidavit and invoices paint a clear picture of day-to-day farm activities. The absence of Mr Phillips' name from these invoices is telling, as is the fact that there are invoices being presented to Mr Azzi by Mr Schofield for authorisation and payment. Mr Schofield's observation that Mr Phillips was there only a handful of times is of significance, and his statement that he believed that Mr Phillips was at the farm as Mr Azzi's "mate" (affidavit, paragraph 10) is an indication of his understanding of the reasons for Mr Phillips' presence on those occasions. He said that the "one thing" he did see Mr Phillips do was the barbecuing (paragraph 13).
The evidence of Mr Phillips is that he supervised Mr Schofield, a submission that is difficult to accept. If Mr Phillips was supervising Mr Schofield, not only would Mr Schofield have known it, but Mr Phillips would have been checking and authorising Mr Schofield's accounts. Instead, there are notes on the bills tendered through Mr Schofield that these were authorised by Mr Azzi, and that was the evidence of Mr Azzi.
Mr Azzi does not say, however, that he never once made a request to Mr Phillips for assistance in relation to the farming activities. He acknowledges that Mr Phillips went on his hunting trips, looked into billing issues with Mr Schofield on two occasions set out below, helped fight the fire when there was a bushfire while they were both staying on the property and introduced him to a bull breeder named Theo Onisforou. I will deal with each of these in turn.

[37]

Attending the farm without Mr Azzi

On 16 June 2012 (at 9.27pm), Mr Azzi sent an email to Mr Phillips in the following terms: "Nicko, Can you speak to Kevin & get me some more detail as to this labour. I need to know how I am spending my money, I am not sure what he thinks I can't read a crystal ball. I did say I wanted detailed invoices." [Exhibit to affidavit of Phillips 29.06.15, Page 308-309]
An invoice from Kevin Schofield was attached, which totalled $8,195.
On 5 July 2013, Mr Azzi's personal assistant forwarded one of Mr Schofield's invoices to Mr Phillips. Mr Phillips wrote back criticizing Mr Schofield for overcharging: "$165 (half day) to move 1 small calf back into ARIBIN's...? He could have done this the day we mustered the lot a few days earlier together but chose not to so he could have an excuse to charge you again."
Mr Azzi replied: "We should start looking for a replacement by looking at jobs wanted in the papers or putting an ad ourselves. The relationship could never be rescued. We both don't trust each others [sic]. Its [sic] not the end of the world. I am sure we will find someone quickly. Fuck him."
In fact Mr Schofield was not sacked. He was not cross-examined about this particular event, and I view Mr Phillips' critical comments about Mr Schofield with some caution.
The reference to mustering is surprising. Although Mr Phillips made many claims for mustering (as is noted in the table elsewhere in this judgment), he made no claims for mustering between 19 May and 8 July 2013. To what mustering event "a few days earlier" is he referring? This is a minor, but telling, inconsistency. If Mr Phillips was intending to charge for his work, he should have kept records which would avoid such errors.
Finally, Mr Phillips only had four of Mr Schofield's invoices, two of which are those set out above. That does not suggest that he was regularly being sent copies, or asked to authorise, Mr Schofield's invoices. The invoices are noted as having been approved by Mr Azzi.
Mr Phillips did, however, perform two other tasks which are not challenged. The first is that he assisted on one occasion in fighting a fire and the second is that he played a role in relation to cattle breeding.

[39]

Bull breeding

Mr Azzi agreed that Mr Phillips first suggested running Angus cattle on Murrumbank and consulting with K.O. Angus Stud, which is owned by Mr Theo Onisforou (T 119). He was paid a commission for this work of $6,600. The connection was a useful one for Mr Azzi.
However, it appears that the relevant expertise in terms of cattle breeding came from K.O. Angus Stud, as Mr Phillips's email to Mr Azzi confirms:
Mr Phillips wrote: "He [Tim Lord of KO Angus] advised that our existing Weaner Bull was related in some form to many of our heard [sic] in some manner & this would require us to purchase another Weaner Bull. ... We would use the new bull to join the closely related Heifers & use UPWRAD G154 with the unrelated Heifers. This is why we need another weaner bull."
Mr Azzi replied: "Can you get Tim to be more precise & detailed with regards to which heifer exactly is related to Upward G145 & we could not mate with him. Maybe they should offer to buy him back & we could buy the perfect match for our tribe from their sale in August."
This is not establishing expertise on the part of Mr Phillips; his knowledge is untrained and of recent origin. By way of example, it was put to Mr Phillips that he had caused cattle to be purchased that could not be mated with each other. He replied that this was an "informed" decision (T332) by K.O. Angus Stud. However, his reply to Mr Azzi's email (see above) shows that he was in fact appearing to give such advice personally to him: "Upward is one of their main lines so that is inevitable. Some are directly related & some distant but would not recommend joining them."
Mr Phillips gave long answers, full of detail, to many questions; Mr Zmood described some of these answers as "fulsome" in his written submissions. However, the degree of actual knowledge, given his lack of prior farming experience and qualifications, is doubtful. It is understandable that Mr Schofield, the Murrumbank farm manager with nearly 50 years of farming experience, dismissed his abilities as "hopeless".
I am satisfied that Mr Phillips was paid a commission in relation to Mr Onisforou's bull which was generous in the circumstances and that, if there were a contract between himself and Mr Azzi for any of the work he did, it would have been invoiced and paid in the same way as this invoice and Mr Schofield's invoices.

[43]

Mustering cattle and cattle breeding

The evidence of Mr Schofield, an experienced farmer, as to when and for what purposes cattle are mustered, is set out below. His invoices, which are Exhibit D, refer to occasions when mustering took place, and do not refer to Mr Phillips.
Mr Phillips' evidence of mustering is that it occurred on many if not most of the days that he was on the property, and that this was his job. Mr Paterson has helpfully set out each of these occasions in a table: Period No of visits in period Number of times Mustered cattle in period Dates of Mustering Pages of exhibit NP-1 of Affidavit of Phillips 20.08.11 9.08.11-30.09.11 6 4 27.08.11 172-174 10.09.11 24.09.11 21.10.11 28.10.11 19.11.11 1.10.11 - 31.12.11 9 7 28.11.11 175-177 4.12.11 10.12.11 15.12.11 7.01.12 14.01.12 21.01.12 26.01.12 1.01.12 - 31.03.12 15 9 29.01.12 180-182 4.02.12 19&20.03.12; 22.03.12; 27&28.03.12 6&7.04.12 13&14.04.12 20&21.04.12 27&28.04.12 1.04.12 - 30.06.12 12 9 11&12.04.12 183-185 11&12.05.12 28&28.05.12 3&4.05.12 9.06.12 14&15.07.12 21.07.12 1.08.12 8&9.08.12 1.07.12 - 30.09.12 10 10 30&31.08.12 186-188 7&8.09.12 14&15.09.12 19&20.09.12 25&26.09.12 29&30.09.12 29.10.12 2.11.12 5.11.12 9 9&10.11.12 1.10.12 - 31.12.12 10 [Note mustered on 6 occasions in November alone] 15&16.11.12 189-191 21&11.11.12 29&30.11.12 6&7.12.12 12&13.12.12 17&18.01.13 27&28.01.13 5.02.13 1.01.13 - 31.03.13 9 8 15&16.02.13 192-194 1.03.13 5.03.13 22.03.13 30.03.13 4.04.13 11&12.04.13 20&21.04.13 27&28.04.13 11 4&5.04.13 1.04.13 - 30.06.13 14 [Note mustered on 6 occasions in April alone; and a further 5 occasions in June] 11&12.04.13 195-197 17.05.13 22&23.05.13 29.05.13 3&4.05.13 18&19.05.13 8.07.13 21.07.13 26.07.13 2.08.13 10.08.13 1.07.13 - 30.09.13 11 11 17.08.13 198-200 23.08.13 31.08.13 7.09.13 20.09.13 27.09.13 10&11.10.13 17&18.10.13 24&25.10.13 1&2.11.13 8.11.13 1.10.13 - 31.12.13 11 11 15&16.11.13 201-203 23&24.11.13 30&31.11.13 6&7.12.13 11&12.12.13 16.11.13 18&18.01.14 25&26.01.14 30&31.01.14 6&7.02.14 14&15.02.14 1.01.14 - 31.03.13 11 11 21&22.02.14 204-206 27&28.02.14 7&8.03.14 14&15.03.14 21&22.03.14 28&29.03.14 5&6.04.14 11&12.04.14 1.04.14 - 3.06.14 10 5 18&19.04.14 207-209 15&16.04.14 23&24.05.14

[44]

Mr Phillips kept no note of how long these mustering activities took. For example, he was asked about his entries for 27/28 May 2012 and he replied that it "could have been five minutes or could have been an hour and a half" (T 245).
However, Mr Phillips agreed in cross-examination that cattle were low maintenance, and did not require mustering on what was almost a fortnightly basis: "Q. Would you agree it is a fair statement that with cattle it was low labour intensive, self manageable for most of the year apart from quarterly drenching and vaccination?A. With the cattle, we still have to check the cattle each‑‑ ... Q. No, you were asked if you would agree with that. Would you agree with that?A. Yes, cattle are the lowest maintenance of any. … Q. You don't want to, as part of good cattle management, be moving cattle to different paddocks every week. You keep them in the one paddock.A. It wasn't a big job, just that you have to put them next door. It's only when we had to round them all up and put them in the yard to do management issues with them - tagging, weighing them. We used to weigh them regularly. Q. What does regularly mean?A. Every, probably every three months when we got out the cattle scales." [T 166]
When challenged about farming evidence, Mr Phillips would change his evidence in the same way that I have noted he changed his evidence about being in Seaforth for an auction on 8 August 2012. He went on to give a series of conflicting estimates for how often cattle should be mustered, ranging from 13 days to 8 weeks to every quarter (T 170-174). On one occasion in July he said he mustered cattle on two occasions three days apart because the cows were giving birth, explaining that the six to eight week mustering was for the cattle to eat fresh grass, six months for drenching, six months for vaccination and so on.
Looking at Mr Schofield's invoices after I had reserved my decision, I noted that Mr Schofield does refer to "Nick & Tony" as being on the farm on 12 October 2012 and to "Josh Kevin & Nick" mustering cattle which were drenched and vaccinated. However, as the above table shows (and as confirmed by Mr Phillips' invoice at NP1 p. 190), for the period 1 October to 31 December 2012, Mr Phillips makes no claim for being at the property on 12 October and, more to the point, makes no claim of doing any mustering on 14 October 2012, although this mustering (which involved drenching and vaccination) would have been a task of some size.
Not only is this evidence of frequent mustering contrary to Mr Schofield's evidence and records, it is also contrary to Mr Phillips' email to Mr Azzi which described cattle as looking after themselves except for a quarterly muster.
Mr Phillips gave further conflicting evidence that new cattle must be allowed to settle in for about six weeks before they are moved, which meant that the three new batches of cattle purchased in August and November 2011 were being moved contrary to this policy (T 220). Eventually, he sought to explain this in re-examination by saying that "mustering" could refer to simply moving one or more cows or cattle.
Mr Schofield's invoices refer to the alpacas (which he spells "alpackers"), which appear to have been able to wander off on several occasions (for example, on 25 July 2012 he found a fault in the electrical fence, and again on 29 August 2012 he went looking for goats, apparently on another property. He checked them again on 22 October 2012 and 30 November 2012. Twenty new goats arrived on 4 April 2013. Mr Phillips, however, does not refer to the goats in his invoices, although they appear to have required just as much work (if not more) than the cattle. This is a further indication of the implausibility of Mr Phillips' evidence.

[45]

Filling gas bottles

Between 31 August 2013 and 16 November 2013 (a period of less than 4 months) Mr Phillips has charged for filling gas bottles on 16 separate occasions (over a 26 day period): 1. 6 and 7 December 2012; 2. 31 August 2013; 3. 7 September 2013; 4. 20 September 2013; 5. 27 September 2013; 6. 10 and 11 October 2013; 7. 17 and 18 October 2013; 8. 24 and 25 October 2013; 9. 1 and 2 November 2013; 10. 8 November 2013; 11. 15 and 16 November 2013; 12. 23 and 24 November 2013; 13. 30 and 31 November 2013; 14. 6 and 7 December 2013; 15. 11 and 12 December 2013; and 16. 16 December 2013 (Mr Paterson's written submissions, paragraph 184).
It was rarely clear how many gas bottles were bought on these occasions.
Mr Schofield's invoices refer to buying 3 bottles of gas, at $37.50 each, on 2 May 2013. If I assume that this was the price paid by Mr Phillips on each occasion he was buying gas, the amount of money he spent could have been up to several thousand dollars.
Nor was the frequency of purchase easy to understand. In cross-examination, when it was pointed out to Mr Phillips that he had charged for filling gas bottles on 31 August 2013 and a week later on 7 September 2013, his explanation was: "Because we had six of them down there. We always bring three or four of them at the same time." [T 208]
When asked why he was buying gas again on 20 September 2011, he said it could have been "just one bottle" (T 208). When he was shown the entry for 27 September 2011 referring to yet another gas bottle purchase, he became exasperated and said it could "just be an oversight", adding: "Like I said, I never charged a, a, Tony for picking up a gas bottle, how could you?" [T 211]
While I am cautious about observations of witness's demeanour in the witness box, Mr Phillips' response was, to my observation, that of a person caught out in obviously unlikely evidence. His reference to only "picking up" a gas bottle was non-responsive. Someone was paying for those gas bottles, and it is clear from Mr Schofield's invoices that, when gas bottles were purchased, they were itemised and charged for. It is clear from Mr Schofield's invoices, few though they may be, that any overlap in time between them and claims the gas bottles from Mr Phillips must be resolved against Mr Phillips.
The gas bottle claim, like the mustering, is a claim which is also challenged on the "cut and paste" submission from the plaintiffs, which is set out in more detail below.

[46]

Moving batteries

As Mr Paterson points out in paragraph 187 of his submissions, in his invoices, Mr Phillips claims that he moved batteries on 36 separate occasions (over a 65 day period): 1. 9 and 10 March 2012; 2. 16 and 17 March 2012; 3. 19 and 20 March 2012; 4. 27 and 28 March 2012; 5. 6 and 7 April 2012; 6. 13 and 14 April 2012; 7. 20 and 21 April 2012; 8. 27 and 28 April 2012; 9. 11 and 12 May 2012; 10. 27 and 28 May 2012; 11. 3 and 4 May 2012; 12. 14 and 15 September 2012; 13. 29 and 30 September 2012; 14. 8 July 2013; 15. 21 July 2013; 16. 26 July 2013; 17. 2 August 2013; 18. 10 August 2013; 19. 17 August 2013; 20. 23 August 2013; 21. 17 and 18 January 2014; 22. 25 and 26 January 2014; 23. 30 and 31 January 2014; 24. 6 and 7 February 2014; 25. 14 and 15 February 2014; 26. 21 and 22 February 2014; 27. () 27 and 28 February 2014; 28. () 7 and 8 March 2014; 29. () 14 and 15 March 2014; 30. () 21 and 22 March 2014; 31. () 28 and 29 March 2014; 32. () 5 and 6 April 2014; 33. () 11 and 12 April 2014; 34. () 18 and 19 April 2014; 35. () 15 and 16 May 2014; and 36. () 23 and 24 May 2014.
Mr Phillips' evidence initially was: "Q. Yes, so in total batteries needed to be moved up to the farm on four occasions?A. Probably at least four - no no no. Four normal car batteries yes and six 60 kilo each batteries, 60 kilos. Have you ever lifted a 60 kilo battery? Q. They were moved up you say in pairs?A. Yeah right, I put them in the back of the vehicle and one occasion on a box trailer. Q. So we're talking about batteries being moved on maybe four occasions in total when you add it all up?A. More than that. Q. How many?A. Probably half a dozen times. Q. Maybe six?A. Yeah maybe six." [T 175]
He then contradicted this evidence and, when it became obvious his claims contradicted this substantially, claimed first that his charges were "light on" and then offered to redo them: "Q. You gave evidence this morning that I think there were six occasions that batteries were carried.A. Off the - you said between a set period of time. Q. Okay. Overall, how many occasions were batteries carried?A. Quite often. Q. Can you put a number on that?A. There's, there's 12, ten to 12 vehicles on the property, and I was involved with it four years. Batteries last two and a half, three years, so you can imagine how many times I had to change them. Q. How many times do you think you carried batteries?A. I've got about half a dozen photos of the ones, the new ones that I put in. Q. How many times do you think you carried batteries?A. A dozen times I'd say, off the top of my head. I know we dumped two of them at Bookham truck stop on the way home. Q. That's your best estimate of the number of times you carried batteries, is it, about a dozen?A. I, I, it wouldn't be more than 12 times, off the top of my head, individual times. Q. I suggest to you that there were 38 occasions in your invoices where you have carried batteries.A. Well, that, that's an error. Q. Assume that.A. That's, that's an error. That, when you, when you're doing these, you think you're doing it more often than not. But I can tell you at least 12 times I went, I went to, to the local electrician and, and organised the batteries and ordered them and picked them up, as I always did with every, every other part that was delivered at the property. I would source it, pick it up, put it in the vehicle, pack the vehicle, three or four hundred kilos each week minimum, and unload it. Q. So what I am suggesting to you is that these individual date entries are not strictly reliable, are they?A. They're actually, they're actually quite light on. I can redo that and give you more detailed ones, if you like. I just couldn't be bothered. It wouldn't change the hourly rate, the time. The most important thing is the time that I spent there." [T 213 - 214].
As I have set out elsewhere, like the gas bottle and mustering claims, these claims are "cut and paste" rather than genuine claims for actual work.

[48]

Best evidence and "cut and paste"

As is evident from the analysis set out above, many entries contained in Mr Phillips' invoices are so repetitious of tasks and similarly worded as to give rise to the allegation that these are not actual records of work done, but a "cut and paste" of the work done, listed on different dates.
When cross examined about this Mr Phillips accepted that he may have just cut and paste the entry from one week to the next: "Q. That what you've done in preparing these invoices is really just do a cut and paste - A. Mm-hmm. Q. --without any actual reference to what you've done on those days. A. That, that is a, a typical sort of average activities that I would do on the property. Q. I'll ask you again. A. Yep. Q. What you've done is you've just cut and pasted one week to the next - A. I may have in that instances, I may have, I don't remember." [T 210]
He gave similar evidence at T 213: "Q. What you have done there, I suggest, is you have just cut and pasted them. A. I may have. Q. The words in the entries for 30 and 31 January, 6 and 7 February, 14 and 15 February, 21 and 22 February, leaving aside the dates, are identical. A. Mm hmm. Q. What you have done is simply cut and pasted an earlier entry? A. I, I, I may have. I may have, but you see, I did 19 of these and I was getting pretty tired of doing them. I can tell you that now. Q. Have a look at the next page, 26 and 28 February. You have again A. 27 and 28? Q. I suggest to you, simply done a cut and paste. A. Sorry, 27 and 28 February? Q. Yes. A. You said 26 February. Q. I apologise, 27 and 28. A. Yeah, look, they look fairly similar. Q. You accept that that's a cut and paste? A. Could possibly have been. I don't remember doing, doing that. I don't actually cut and paste things out of habit. Q. Look at the next entry. A. It look, it looks very similar. Q. Do you accept that that's a cut and paste? A. Yeah, it's, that's a typical trip to the farm. That's an atypical trip. Q. But it doesn't record what you actually did, does it? A. Well, it does. It tells you I, I, I, I drove down the farm. I spent the time on the farm. I, I carried fuels. I brought supplies. I had carried a couple of hundred kilos of tools, battery, the other battery, or brought batteries back that were, that were dead, did mustering. That was a regular thing, especially at that time of year because it was, it was dry in summer, around where we just supered the property in February/March. That's very typical." [Emphasis added]
The highlighted entry is of particular concern in relation to Mr Phillips' credit, all the more because the contents of those entries are not only repetitious but at variance with the time actually charged.
The example given in Mr Paterson's submissions is the entry for 6 July 2012: "6.7.2013 travelled to Murrumbank did 1.5 days work, driving, carrying fuels, supplies and batteries & did mustering of cattle etc with Tony Azzi & Kevin Schofield Fee charged 37 hours $1526.25 inclusive GST - Day 45 day trip" [Emphasis added]
In cross-examination Mr Phillips said that the driving took 7 hours and the mustering one hour. "Carrying fuels, supplies and batteries" was a reference to what was in the back of the truck while he was driving. The "etc" for the remaining 29 hours is unexplained. Mr Phillips agreed it was not possible to farm at night (T 170).
Although I have only referred to a small sample of the entries cross-examined on, it is clear that not only are the dates inconsistent with Mr Phillips' other activities (see the evidence of Mr Romano and Mr Schofield, as well as Mr Phillips' own emails) as well as implausible for a real estate agent already working 35 hours a week and driving his daughters to and from school, but their contents are also completely unreliable.
Mr Zmood submits that, in addition to putting each entry, the plaintiffs were obliged to seek "an order for discovery and/or to subpoena Mr Phillips' "original" records" as the "best evidence", and to cross-examine on each of these. The written submissions refer to a statement I made (at T 235) which is submitted to be supportive of such an approach. If those documents had been sought, Mr Zmood's submissions go on to say, "they could have verified (or attacked) each entry recorded in the invoices against those records" (written submissions, paragraph 217).
However, this is not a "just, quick and cheap" (s 56 Civil Procedure Act 2005 (NSW)) way to conduct litigation. The onus of proof in relation to disputed issues of fact in the cross-claim lies on the cross-claimant. It is not up to the cross-defendants to cross-examine on or tender the underlying documents when Mr Phillips' invoices are inadequate on their face. The evasive and contradictory answers given by Mr Phillips in his answers to questions about these invoices (as set out above) only add to the damage to his credit in relation to the cross-claim and indeed generally.
For these reasons, I do not accept the submission at paragraphs 215 - 220 that the plaintiffs' "lack of contradictory evidence" means I should infer that no such evidence exists (at paragraph 216). Nor do I accept the submission that it was necessary to put every invoice to Mr Azzi in order to give him an opportunity to explain. Mr Paterson was entitled to put a selection of entries to illustrate his "cut and paste" point, and was not obliged to put all of them. My concern that the August 2012 and other related entries (see T 237 - 8), those being matters set out in the chronology, and were not a warning to counsel to put every invoice to the witness.
Taking all of the above into account, I am satisfied not only that Mr Phillips never had any discussions with Mr Azzi about being paid to work on the farm at $37.50 per hour, but also that the invoices he has provided in relation to that work are so inaccurate in terms of dates and times that no reliance whatever can be placed upon them. This renders the task of unravelling quantum, in the event that I have erred in finding that there was no contract in relation to management work at the farm, simply impossible.

[49]

Conclusions concerning findings of fact

Why, then, did Mr Phillips spend so much time with Mr Azzi? There is no doubt that he did spend a considerable amount of time on Mr Azzi's farm, and that he did, on a number of occasions, perform work for which he could be seen to be doing paid work, such as: 1. Review Mr Schofield's invoices on two occasions at Mr Azzi's request; 2. Assist Mr Azzi to obtain a bull from Mr Onisforou, for which Mr Phillips was in fact paid a commission; and 3. Attend meetings with Mr Azzi or on his behalf in relation to Mr Azzi's development projects.
The explanation may be found in Mr Phillips' own emails, a number of which I have set out in full, and in an observation by Mr Romano which was not challenged in cross-examination (paragraphs 3 and 8 of his affidavit). Although Mr Romano said he was not told that Mr Phillips was employed to work for Mr Azzi on his farm or on a project development, he was aware of Mr Phillips' relationship with Mr Azzi, as Mr Phillips told him: "I am mates with Tony Azzi, he's a multi millionair [sic]. We go to his farm together to do shooting, have a break from work and we have great bbq's [sic] when we are there. Tony lets me drive all his cars, he has a great collection of cars."
He also said that on several occasions Mr Phillips turned up to the offices of LJ Hooker Randwick in a ute, and said to Mr Romano: "See, if you have good mates, they give you their cars to drive."
These observations are confirmed by the tone Mr Phillips' emails to Mr Azzi. Mr Phillips was assiduous in cultivating his relationship with Mr Azzi, who was not averse to flattery, and whose vulnerability to these attentions increased significantly after his son's unexpected death in April 2011. The "loan" part of the relationship ended after Mr Phillips was asked to sign the loan agreements in August 2012, but the friendship continued. It was only after the end of the relationship, and the commencement of proceedings that any reference to employment appears in any of Mr Phillips' emails (apart from the request for employment at the farm set out in his email of 14 August 2012, which is of course inconsistent with his having played such a role since 2011).
Mr Azzi said that "Nicholas did a lot of things for me as a friend" (T 40). Mr Zmood puts it to me that this reply means I should regard Mr Azzi's evidence as "equivocal" on payment (written submissions, paragraph 78).
I do not accept this submission. Mr Azzi agreed that Mr Phillips did undertake activities on his behalf, but said that (with limited exceptions such as the commission in relation to Mr Onisforou's bull) there was no arrangement for him to be paid for them. He was both consistent (T 74) and unshaken in this evidence, and I accept it.
I am accordingly satisfied, taking all of the above matters into account, that the cross-claims for breaches of the two contracts for farm management and redevelopment should be dismissed.

[50]

Alternative claims in the cross-claim

This brings me to a consideration of the other causes of action pleaded in the cross-claim, namely 1. Breach of contract (claim on accounts stated); 2. Estoppel 3. Quantum meruit 4. Voidness for lack of consideration 5. Estoppel by representation 6. Misleading or deceptive conduct
In Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation (1993) 45 FCR 265, Wilcox J described a series of alternate claims to defamation (such as injurious falsehood, misleading or deceptive conduct, negligent misstatement and deceit) as "unnecessary clutter". His Honour went on to state: "The causes of action just discussed have served only to clutter the case. It is not clear why they were pleaded. The applicants' significant claims arise out of the operation of the Trade Practices Act (or Fair Trading Act) and the law of defamation. There is a legal issue about the application of the Trade Practices Act and Fair Trading Act, to which I will turn in a moment. But the published material was clearly defamatory. To the extent (if any) that it made untrue imputations against any applicant, it was clearly indefensible; in which case the affected applicant would be entitled to recover damages without resort to claims for breach of contract, deceit, negligent misstatement or injurious falsehood. On the other hand, if the published material said nothing about a particular applicant, or the relevant imputations were true, that applicant's action would fail in any event. Nothing was gained by adding these other causes of action."
Those remarks are apposite to these alternate claims. Additionally, they were not the subject of closing submissions, written or oral, in terms of pointing to the evidence given; both parties relied upon the discussion of relevant principles set out in their respective opening statements and, almost entirely, left it to me to determine what evidence, if any, supports either of their cases. I have accordingly set out the contents of these pleaded claims in full (noting that the defence merely traverses them), as this is the most reliable starting point, but I note the Court of Appeal's concern at evidentiary matters raised on appeal which were not put to the trial judge, and consider the bringing of alternative claims of this kind, unless the subject of a separate set of careful submissions, risks being the kind of "unnecessary clutter" that is contrary to the need for just, cheap and quick resolution of proceedings: s 56 Civil Procedure Act 2005 (NSW).
In view of my findings as to the principal claims of the respective parties, my comments will be brief.

[51]

The cross-claim for breach of contract (claim on accounts stated)

This claim is set out in the cross-claim as follows: "B. CONTRACT - CLAIM ON ACCOUNTS STATED 12. Phillips claims moneys owed on the accounts stated, alternatively, from any one or more of the first, the second and/or third cross-defendants in respect of: a. the Redevelopment Projects; and/or b. the Bookham Project. 12A. Further and alternatively, in respect of the moneys owed to the Cross-claimant by the Cross-defendants (or any one of them) in respect of the Redevelopment Projects (as the term is defined in paragraph 1, above), pursuant to the invoices numbered 0001 to 0003 (as particularised in paragraph 1, above), the total quantum of the said invoices (which were appended to the letter of demand dated 4 March 2015, as particularised in paragraph 4, above), is $17,105.00. Particulars The Cross-claimant repeats the particulars pleaded in paragraphs 1, 2 and 4, above. 12B. Further and alternatively, in respect of the moneys owed to the Cross-claimant by the Cross-defendant (or any one of them) in respect of the Bookham Project (as the term is defined in paragraph 6, above), pursuant to the invoices numbered 0004 through 00019 (which were appended to the letter of demand dated 4 March 2015, as particularised in paragraph 10, above), the total quantum of the said invoices is: $208,395.00. Particulars The Cross-claimant repeats the particulars pleaded in paragraphs 6, 8 and 10, above."
Neither the plaintiffs/cross-defendants nor the defendant/cross-claimant have provided me with submissions in relation to this claim.
The issue for determination where there is a claim for accounts stated are set out in Dunwoodie v Teachers Mutual Bank Ltd (formerly NSW Teachers Credit Union Ltd) [2014] NSWCA 24 at [47] - [50]. The nature of such a claim is (if I may borrow from the helpful summary set out therein) that, where there are cross-items of account, the parties mutually agree the amounts of each and, by treating the items so agreed on the one side as discharging the items on the other side pro tanto, go on to agree that the balance only is payable.
A claim for accounts stated is bilateral, and creates a new debt and a new cause of action. There must be mutual promises, with one side agreeing to accept the amount of the balance of the debt as true (because there must in such cases be, at least in the end, a creditor to whom the balance is due). To pay it, the other side agrees the entire debt as at a certain figure and then agrees that it has been discharged in whole or in part, so that there will be complete satisfaction on payment of the agreed balance.
That is not the case here. There is no mutual consideration pleaded or particularised to support the promises on either side and to constitute the new cause of action. To the contrary, the very existence of the asserted contract is vigorously denied. Nor is there any agreement on the quantum of Mr Phillips' claim.
This claim is not made out.

[53]

The cross-claim for quantum meruit

The claim for quantum meruit is pleaded in paragraphs 13 - 16 of the cross-claim as follows: "D. QUANTUM MERUIT 13. Further or alternatively, any one or more of the first, second and/or third defendants has or have (as the case may be) accepted the benefits of Phillips' work on the Redevelopment Projects, for which they should have realised that a person in Phillips' position would expect to be paid fair and reasonable compensation. 14. Phillips' services conferred incontrovertible benefit on any one or more of the first, second and/or third cross-defendants (as the case may be) and it (or they) would be unjustly enriched if it (or they) were to be permitted to keep the benefit thereof without paying for the services provided. 15. Further or alternatively, any one or more of the first, second and/or third cross-defendants has or have (as the case may be) accepted the benefits of Phillips' work on the Bookham Project, for which they should have realised that a person in Phillips' position would expect to be paid fair and reasonable compensation. 16. Phillips' services conferred incontrovertible benefit on any one or more of the first, second and/or third defendants (as the case may be) and it (or they) would be unjustly enriched if it (or they) were to be permitted to keep the benefit thereof without paying for the services provided."
Both parties take, as their starting point, the principles set out in Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635. However, as Gummow, Hayne, Crennan and Kiefel J point out at [79], an essential step in all quantum meruit claims is to ask whether and how that claim fits with the contract the parties have made (for the reasons explained by Lord Goff of Chevely in Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 All E R 470 at 475) and (at [80]) to consider the facts of the case, as the bare fact of conferral of a benefit or provision of a service does not suffice to establish an entitlement to recovery. The general principle is that liabilities are not to be forced upon people behind their backs any more than a benefit can be conferred against a man's will: Falke v Scottish Imperial Assurance Co (1886) 34 Ch D 234 at 248 per Bowen LJ.
Further, as Mr Paterson sets out at paragraphs 222-228 of his written submissions: 1. Mr Phillips must establish that the services were performed at the request of the plaintiffs: Lumbers v W Cook Builders Pty Ltd (in liq) at [49]. As is set out in Mr Phillips' own emails, before he received any money from the plaintiffs, he was keen to be Mr Azzi's leading agent. He wrote offering to give up his tenth wedding anniversary to go to the farm with Mr Azzi one weekend, and asked for a job at the farm for one day a week. He invited himself to meetings and went to Mr Azzi's office without invitation, sometimes several days running when Mr Azzi was either unable or unwilling to see him (see, for example, Mr Phillips' email of 9 August 2012). There are very few emails from Mr Azzi asking Mr Phillips to do anything, and when he does, I am satisfied that it is in the context of asking for assistance from a friend, rather like asking a friend who is a lawyer to look over a document, or to give an opinion. While there was one occasion (in relation to Mr Onisforou's bull) where Mr Phillips received some money which he used to buy a suit, I take the view that this is the exception which proves the rule. 2. Secondly, unlike the work outlined in cases such as Lumbers v W Cook Builders Pty Ltd (in liq), the evidence is that much of the work Mr Phillips was doing (notably eating, sleeping, driving Mr Azzi on night hunting trips, cooking a barbecue and going with Mr Azzi to various meetings and functions) was not work that Mr Azzi was expecting to, or prepared to, pay for. 3. Thirdly, although these tasks were allegedly being performed in expectation of payment, not only were no invoices ever sent but, whether Mr Phillips expected to be paid or not, he had not registered for GST. 4. Fourthly, Mr Phillips needs to identify a benefit of the kind explained in Lumbers v W Cook Builders Pty Ltd (in liq) at [75]. Mr Schofield described Mr Phillips' ability (in terms of farming) as "hopeless"; description in his affidavit of Mr Phillips' incompetence (notably the circumstances in which he crashed a four wheel drive) were either not challenged or challenged so faintly that the picture of Mr Phillips as a nuisance rather than a help was reinforced. 5. Finally, the quantification of any such claim would suffer the same difficulties as Mr Phillips' contractual claims. Where a claim for quantum meruit is brought, there should be some precision as to the amounts claimed and the hourly rates. There was no evidence of the hourly rates for the kind of work Mr Phillips said he would do beyond his statement that he wanted $37.50 an hour or, if that was too much, the rates Mr Schofield said he paid his labourers.
A quantum meruit claim is a true alternative to a contractual claim, and is precluded if there is a valid contract: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256. If there was no contract between the parties, then the rates claimed by Mr Phillips are not a foundation for a claim for restitution. Mr Phillips cannot simply ask for the same amount on a restitution basis; he needs to set out what work he did, when, for whom and the rate, with appropriate evidence of the applicable rate. In relation to the claim for the farm, I agree with Mr Paterson that it is hard to imagine what hourly rate would be appropriate for an assistant who was more of a hazard than a help.
I reject the claim based in quantum meruit.
In paragraph 83 of Mr Zmood's written submissions is the statement that if a contract did not subsist, I should find that, having accepted the benefit of Mr Phillips' services, Mr Azzi "should have realised that Mr Phillips expected to be paid and that for him not to do so would unjustly enrich him", citing Vasco Investment Managers Limited v Morgan Stanley Australia Limited [2014] VSC 530 at [336] - [349] and [358].
A claim for quantum meruit, not for unjust enrichment is pleaded, and the two causes of action should not be conflated in this manner, for the reasons explained by Vickery J at [354]-[355]: "[354] However, an analysis, framed exclusively as a cause of action in unjust enrichment terms, is misplaced in this case. A claim for quantum meruit is a free standing claim arising in specific circumstances, while unjust enrichment has been identified in Australian law as a legal concept unifying a variety of distinct categories of case. It is not identified as a principle which in itself can provide a sufficient basis for direct application in particular cases, however compelling it may be as a theoretical justification for the law to operate to provide restitution in response to particular indicia. [355] As Deane J said in Pavey, what the recognition of the unifying concept of unjust enrichment does is to assist "in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case." (Citations omitted)
As noted above, in relation to the quantum meruit claim, none of the factors set out by Vickery J at [359] can be established here. As Mr Paterson points out in his written submissions, Mr Phillips put himself forward, rather than being at Mr Azzi's beck and call, and very few actual requests for assistance were made by Mr Azzi of Mr Phillips, and I am satisfied that they were made by a man calling on a friend for assistance at a time of stress due to his bereavement.
For the above reasons, the cross-claimant's quantum meruit claim is dismissed.

At a glance

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Judgment (60 paragraphs)

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Legislation Cited (5)

Cases Cited (21)