Bernley Corporation Pty Ltd v AFR Group Pty Ltd t/as Anytime Fitness Randwick

Arrangements to finance the Randwick gymnasium

1. In February 2012, Mr Turner and Mr Connolly discussed raising working capital for the AFR Group to set up the Randwick gymnasium. It is said, on behalf of the plaintiffs, that they each agreed to procure loan capital in relative proportions to their respective shareholdings in the parent company, MCBT. The plaintiffs characterise this as capital loans to be advanced, respectively, by both Mr Connolly and Mr Turner. This arrangement was purely verbal.
2. This proceeding arises out of the circumstances concerning Mr Turner's loan to AFR Group. It is common ground that: 1. Mr Turner personally advanced the sum of $195,000, ultimately for the benefit of the AFR Group; and 2. The breakdown is that the total sum was advanced by Mr Turner in three instalments, being 29 March 2012 ($165,000), 20 June 2012 ($20,000) and 13 June 2013 ($10,000) either to AF Fit (Mr Connolly's associated corporate entity at the time when the bank account was established for AFR Group) (in relation to the first of these advances) or AFR Group directly (in relation to the second and third advances).
3. The plaintiffs sue the AFR Group for the recovery of what they characterised as a working capital loan, representing Mr Turner's contribution to the venture. They also brought an alternative count of an action for money had and received. This was, their Counsel explained, partly in response to the AFR Group raising a time bar in its defence. Specifically, the AFR Group pleaded in its defence that the loans were repayable on demand. The plaintiffs dispute that aspect and say that they were only repayable when a "surplus" was achieved and that this had occurred for the first time in late 2014. A response to the raising of this time bar was that the plaintiffs contended that in December 2017 the AFR Group confirmed the plaintiffs' right to repayment of $195,000. This, the plaintiffs assert, amounts to starting the clock again on the time bar under section 54 of the Limitation Act 1969 (NSW).
4. AFR Group's Counsel generally agreed with this overview of the issues; save for the plaintiffs' contention that it had alleged loans that were made by the AFR Group to Mr Turner.
5. The main issues in dispute between the parties, arising on the plaintiffs' claim, are: 1. whether the total sum of $195,000 advanced has been repaid by the AFR Group. The AFR Group says that it fully repaid Mr Turner, in separate instalment amounts, on 23 October 2014 ($140,000), 30 December 2015 ($35,000) 18 April 2016 ($20,000) and further, it says it paid the sum of $6,200 to Mr Turner on 30 May 2016. The plaintiffs say, in reply, that these payments are properly to be construed as loans advanced by the AFR Group to Mr Turner or as a dividend effectively returned to the AFR Group. They say that Mr Turner's receipt of these monies did not amount to repayment of Mr Turner's original capital loan and that the AFR Group are attempting to 'rewrite history' in suggesting otherwise. 2. Whether a time bar applies to relieve the AFR Group from repaying the sum to Mr Turner under a loan agreement; 3. If no cause of action is maintainable under a loan agreement, whether an action lies for money had and received; and 4. when interest begins to run.
6. The AFR Group brought a cross-claim. This claim was filed on the contingency that the Court should find that the AFR Group owed monies to Bernley Corp; and not Mr Turner personally. However, in his closing address, Counsel for the plaintiffs abandoned a claim that monies were owed to Bernley Corp. Accordingly the cross-claim falls away.
7. A curious feature of this case is that neither Mr Turner nor Mr Connolly gave evidence. In Mr Turner's case, there was medical evidence put before me to indicate that Mr Turner has a mental illness for the purposes of the Mental Health Act 2007 (NSW). In that regard, his interests in this proceeding have been represented by Mr Anthony Turner as tutor. Another curious feature is that a large part (that is, paragraphs 1-35 incl) of Mr Connolly's affidavit (sworn 7 December 2018) was tendered by the plaintiffs in their case.
8. Otherwise the plaintiffs relied on documentary evidence. The AFR Group did not adduce any evidence.

Admissions in the Defence

1. The plaintiffs rely upon the following admissions in the amended Defence (with appropriate references): 1. Mr Turner caused $165,000 to be transferred from Bernley Corp's bank accounts to the bank account (in the name of AF Fit Pty Ltd, but on behalf of the APR Group) on 29 March 2012 (paragraph 4(b)); 2. Mr Turner caused $20,000 to be transferred to the APR Group's bank account on 22 June 2012 (paragraph 5(b)); 3. Mr Turner caused $10,000 to be transferred to the APR Group's bank account on 11 January 2013 (paragraph 6(b)).

Mr Connolly's account

1. What follows in this section is taken from the extract of affidavit evidence of Mr Connolly which, as I have said, is relied upon by Mr Turner.
2. Mr Connolly says that in November 2011 he instructed his accountants, Myssy & Co, to incorporate a company to hold his interest in 'Anytime Fitness Randwick', whose rights he had secured to operate earlier in October of that year. That company is the AFR Group.
3. Mr Turner had expressed an interest in February 2012 in getting involved in the fitness business and investing with Mr Connolly. At paragraphs 12 - 13 of his affidavit, Mr Connolly deposed to the following circumstances concerning a conversation with Mr Turner: "12 We then discussed the way to structure our venture. I wanted to do it the same way I had done with Anytime Fitness St Leonards. I said 'we will contribute the capital as a loan into the business in the same proportion as our shareholding. We will then pay it back when we get a surplus. That's how I have structured St Leonards. I will be operational. You would be an investor only. 13 He said: 'great'. I knew he was working at Heartland motors at this time and would not be looking for day to day involvement."
4. Mr Turner also specifically relied upon paragraphs 14-15 and 18 of the affidavit. These all showed that the accounting firm, Myssy & Co, had been involved with Mr Connolly, as his accountants, in helping him to establish Anytime Fitness Randwick. This association, so it was later claimed, was important to help Mr Turner overcome any time bar: it was said that since Mr Dominic Myssy was the agent for the AFR Group, anything that he said to confirm the existence of a cause of action in Mr Turner would bind the AFR Group (by the combined operation of ss 11(2)(c) and 54 of the Limitation Act).
5. Further, Mr Turner relied upon paragraph 35 of Mr Connolly's affidavit, which was as follows: "Anytime Fitness Randwick became operational in or around June 2012. By about mid-late 2014, it had generated enough surplus funds within the business to comfortably payback most of the initial contributions. In about October 2014, I said to Mr Turner: 'we got enough surplus to payback most of the capital contribution. Where do you want me to put it?"
6. Counsel for Mr Turner submitted that this passage, when read with paragraph 12, provided an indication that the word 'surplus', was the point where, so it was said, AFR would commence repaying Mr Turner his loan. He submitted that it meant the surplus profit of the AFR Group's business. In this regard, in addition to Mr Connolly's affidavit, I was referred to financial statements for the financial years ended 30 June 2012 (where there was a loss), 30 June 2013 (where there was a modest profit of $11,253.52). Although not all of the financial statements from that year to date have been produced (notwithstanding a notice to produce requiring their production), a profit and loss statement for the year ended 30 June 2016 disclosed a profit of $443,000. During this financial year, the AFR Group had made payments (to use a neutral word) to Mr Turner on 30 December 2015, 18 April 2016 and 30 May 2016. A general ledger for AFR indicated, also that, on 23 October 2014, a 'payment' to Mr Turner of $140,000. It was contentious whether this amounted to a repayment (as ARF contends) or a loan to Mr Turner (as Mr Turner contends) but the point, for present purposes, is that it indicates that towards the end of the calendar year 2014, there was enough cash in ARF to make a substantial payment. This, so Counsel for Mr Turner submitted, was an objective circumstance favouring a construction that the point when a 'surplus' was reached was when ARF had sufficient cash to repay Mr Turner.
7. Counsel for Mr Turner submitted that the evidence of Mr Connolly, supported by such financial statements as had been produced by ARF, indicated that this point was reached during the financial year ended 30 June 2015. He further submitted that, if necessary, a Jones v Dunkel inference could be drawn from the unexplained failure by the ARF Group to call Mr Connolly to further elaborate or provide some further means to assist with what was meant by the word 'surplus'. In the same vein, I was also asked to draw a Jones v Dunkel inference from the unexplained failure of AFR to call Mr Myssy.

Financial statements

1. I was taken at some length through the financial statements of the AFR Group, such as they had emerged to deal with the pivotal question of whether payments made by AFR to Mr Turner were repayments of his prior loan advances (as AFR contends), or were simply loans, or dividend payments by the AFR Group to Mr Turner (as Mr Turner contends).
2. I was referred initially to financial statements for the AFR Group for the year ended 30 June 2013. In the notes 2-4 to the balance sheet for 'current assets', it was drawn to my attention that there was no indication of any loans made to either Mr Turner or Mr Connolly for the financial years ended 30 June 2012 or 30 June 2013. But note 7, relating to 'non-current liabilities' did indicate a loan from Mr Turner to the ARF Group whose balance was $20,000 for the financial year ended 30 June 2012 and $30,000 for the financial year ended 30 June 2013, respectively. This was, counsel for the plaintiff submitted, proof that no repayments had been made to Mr Turner prior to 30 June 2013: a loan to Mr Turner had been recognised as only $30,000 (for FYE 30 June 2013) or $20,000 (for FYE 30 June 2012). These entries on the balance sheet indicated loan advances from Mr Turner on 20 June 2012 and 13 January 2013. The only thing that was missing was any accounting for the loan advance of 29 March 2012 for the first advance, in the sum of $165,000. Counsel for Mr Turner submitted that there is no suggestion from the AFR Group of any amount being repaid to Mr Turner in these financial years. He says that the AFR Group's accountants have never been able to account for the initial advance by Mr Turner for the sum of $165,000.
3. Further, counsel for the plaintiff submits that the accounting of Mr Turner's loan as being only $30,000 in total at the end of the financial year ended 30 June 2013 was a mistake which had carried through to 2017. In this regard, I was referred to the email from Mr Myssy to Mr Turner's accountant, Mr Jepsen, dated 22 December 2017 (and copied to others, including Mr Turner and Mr Connolly [1] ). In that message, Mr Myssy said the following: "1. Amending dividends: The bookkeeper Melanie (Staas) was able to locate the initial loans made by both Ben and Matt and they are consistent with the figures that you have been sent across. The issue had been that the additional sums contributed by the shareholders were paid directly to suppliers for the fit out and not first paid into the company bank account. The original bookkeepers were working on a cash basis and not going off invoices and so these payments were overlooked. This will be amended and the result being that the money withdrawn by Ben and Matt will be a shareholder loan repayment and not a dividend (and therefore not income). The dividends for both 2016 and 2017 will be cancelled"
4. Counsel for Mr Turner submits that this statement constitutes an admission of error on the part of ARF's accountant; and, specifically, that Mr Turner's total advance of $195,000 had not been fully accounted for. He added that, to the contrary, AFR's accountants were trying to rewrite the accounts to indicate a change of the dividends so as to appear to be loan repayments. He submitted that if, as ARF contended, the sum of $195,000 had already been repaid as at December 2017, then this email from Mr Myssy made no sense. That submission comes about in the following way. By January 2018, Mr Turner's associated corporate entity, Ben Turner Pty Ltd had sold its shares in MBCT. Mr Turner was effectively out of MBCT (the parent of AFR Group) by January 2018. If he had received dividends in 2016 and 2019, and if his dividends were reclassified as loan repayments, he would be 'short-changing' himself. Counsel for the plaintiff further contends that Mr Myssy's email amounts to an admission that a debt of $195,000 still exists as it has not been repaid: it showed that Mr Myssy was proposing (if not foreshadowing) a solution whereby previous transactions were attempted to be recast.
5. This admission by Mr Myssy (who, he argued, was AFR's agent, such that it therefore bound AFR), as counsel for Mr Turner put it, constituted confirmation of an action in debt, for the purposes of section 54 of the Limitation Act. On the point of agency, leaving aside the length of Mr Myssy's Association with the AFR Group, if there was any doubt about the existence of such agency, Mr Myssy's reference to having 'needed to speak with Matt (Connolly)' in order to respond to Mr Jepsen's queries removed such doubt.
6. These circumstances party explains why, he says, a Jones v Dunkel inference should be drawn from the AFR Group's failure to call Mr Myssy.
7. I was then referred to the limited documentation produced by the head franchisor, 'Anytime Australia Pty Ltd'. I say limited because whilst there were six categories of documentation in the schedule to the subpoena, generally, seeking financial statements in relation to the AFR franchise, for the period from 1 January 2012 to 10 May 2019, only a balance sheet (as at 18 October 2016) and profit and loss statement (the latter for the financial year ended 30 June 2016) were produced (Ex PX1).
8. Despite this limited response to the subpoeana, I was referred to 2 ledger entries under the description of current assets. These were entry [1.1820], being a loan to Mr Connolly for $809,516.13, and entry [1.1830], being a loan to Mr Turner for $166,200. Counsel for Mr Turner argued that this was further proof that the amounts did not constitute a repayment to Mr Turner of his original loan. Further, the statement of long term liabilities in the balance sheet, identified as ledger entry [2-3600], a loan from Mr Connolly for the sum of $250,574.71; whereas for ledger entry [2-3610] (titled 'Shareholder loan account') there was a sum of $30,000. This, Counsel for Mr Turner invited me to interpret, was Mr Turner's loan (not MBCT's loan). In that respect, Counsel compared the reference to ARF's General ledger (Ex PX8), for the same identified ledger entry (2-3610) as being a $30,000 liability of AFR to Mr Turner. (He also compared the correspondence between the loan to Mr Turner of $166,200 in entry [1-1830] of Ex PX1, with the same amount recorded as the balance of the loan amount to Mr Turner in the same ledger entry in (Ex PX8).
9. Counsel for Mr Turner argued that each of the debits recorded in the ledger entries of the loan to Mr Turner corresponded, identically, with what AFR contends were repayments to Mr Turner of his total advances. Factoring in a reversal of an accounting entry on 31 December 2015 of the entry the previous day (a debit of $35,000), meant a total figure for the loan to Mr Turner was $166,200. Counsel submits that, in reference to the ledger account [2.3610], being the loan from Mr Turner, there was never any indication of repayments.
10. In late 2016, Mr Turner's associated company, Ben Turner Pty Ltd, ceased being a shareholder of MBCT. Mr Turner's accountant, Mr Jepsen, was seeking to obtain information so as to enable him to provide accounting services. On 27 May 2017, Mr Jepsen requested from Mr Sugiri, the senior accountant with Myssy and Co, the 2016 accounts and income tax returns for AFR and MBCT. Mr Sugiri's response was sent by email on 31 May 2017. It amounted to some information in the covering email but also the attachment of certain AFR Group documents. Two of these documents were titled 'Division 7A Loan Calculator as at 30 June 2016' (reflecting, Counsel for Mr Turner submitted, an attempt to have loans to related parties not be deemed to be dividends). The other document was another copy of AFR's general ledger of the kind that was apparent in Ex PX8 (albeit as at 8 November 2016; not, as per Ex PX8, as at 8 May 2017). The first of the documents, it was argued, indicated that the loan owing to Mr Turner had reduced. A handwritten notation on the document was 'Buy Back $79,312.57'.
11. This, Counsel for Mr Turner submitted, indicated that the buyback of his shares in MBCT, or more accurately the shares of his associated company, Ben Turner Pty Ltd, was being treated as a repayment of Mr Turner's loan advances to the AFR Group. The version of the general ledger that was annexed to this same email also carried to sets of handwritten notations. The first was a reference to 'Loan 1' (AFR's loan to Mr Turner) with a balance of $110,000; the second was a reference to 'Loan 2' (Mr Turner's loan to AFR) being $26,200. The difference between these amounts was $83,000, close to the figure of $79,312.57 relating to the share buyback.
12. In support of this proposition, Counsel for the plaintiff referred me back to part of the content of Mr Myssy's email to Mr Jepsen on 22 December 2017 under the related headings 'Share Buy Back and share sale parcels' and 'Business valuation'. The content of this part of the email was, relevantly, in the following terms: "3. Share buyback and share sale parcels: We will provide an explanation of how these transactions occurred and reconcile back to the sale proceeds. 4. Business valuation: The following factors were considered when working out a fair sale price ….. (d) the price deducted any loans and/or tax and super responsibilities …"
13. In the events that have occurred, no such explanation for how the share buyback occurred has ever been supplied by AFR to Mr Turner, or his accountant. Specifically, no indication has been supplied as to what loan may have been taken into account in valuing the sale price for the shares of Ben Turner Pty Ltd in MCBT.
14. This is another reason why, counsel for Mr Turner submits, Jones v Dunkel inferences should be drawn from AFR's failure to call Messrs Connolly and Myssy.
15. Counsel for Mr Turner submits that items 1 & 2 in the covering email from Mr Sugiri to Mr Jepsen on 31 May 2017 further strengthen Mr Turner's case that his loan advances in the sum of $195,000 were not accounted for correctly by AFR. The reference in point (d) under Section 4 ('Business Valuation') could not have been a reference to Mr Turner's advances of $195,000 since the share buyback had occurred more than a year before the email. It was said that it could only be a reference to loans appearing in the financial statements produced by the franchisor, Anytime Australia Pty Ltd, dated October 2016 in response to the subpoena (Ex PX1), about a month before the share sale. Counsel submitted that it followed from Mr Myssy's email to Mr Jepsen on 22 December 2017, and Mr Jepsen's email in response to Mr Myssy (Ex PX5) that: (a) the sum of $195,000 was still owing to Mr Turner and unpaid as at 22 December 2017; and (b) Mr Myssy's proposal to recast as dividends was rejected by Mr Jepsen of Mr Turner's behalf. Instead, Mr Jepsen called for Mr Turner's loan to be repaid with interest. At the tail end of Mr Jepsen's email to Mr Myssy, he asked for evidence confirming payment/s made to Mr Turner (and, by extension, his company) for the sale. None was forthcoming. This was, it was said, consistent with Mr Sugiri's email to Mr Jepsen previously on 19 October 2017, when he said that his firm was not authorised to provide the 2016 accounts and tax returns.
16. This, Counsel for the plaintiff argued, made it easier to infer that the first of the three advances that Mr Turner had made to AFR had been paid out of the transaction for the buyback of Ben Turner Pty Ltd's shares in MCBT.

Advances were made

1. Counsel for Mr Turner submits that he should recover a judgment for the sum of $195,000 plus interest.
2. Counsel for Mr Turner submitted that I should find that the total sum of $195,000 was advanced to AFR (by 3 instalments) by Mr Turner. He said that there should be no doubt about the second and third instalments as those respective sums were recorded in AFR's books from 30 June 2012 as a loan from the Mr Turner. As to the first instalment, there was ultimately an admission that the $195,000 was received. This meant that the $165,000 was "overlooked" by the AFR Group's accountants.

They were repayable upon achievement of 'surplus'

1. Counsel submitted that the provision made in the loan agreement for the repayment of these monies was that the monies were to be repaid when the AFR Group achieved a "surplus" of monies. He said that in accordance with Mr Connolly's affidavit, such surplus position had been reached in the middle to late part of 2014. That being so, the monies were not repayable on demand but were repayable from the point when in the middle or latter part of 2014 the 'surplus' had been achieved.
2. This evidence of Mr Connolly, it was said, re-inforced the proposition that the context for, or commercial purpose (known to all of Mr Connolly, Mr Turner and the AFR Group) underlying the entry into the loan agreement was that both Mr Connolly and Turner were responsible for providing the start-up working capital for the AFR Group. Leaving aside Mr Connolly's own assessment, as at October 2014, that the AFR Group had achieved a 'surplus', AFR's financial records for the financial year ended 30 June 2015 corroborated that assessment: this was the year in which the AFR Group made loans to Mr Turner and Mr Connolly. In the latter case, the general ledger shows that on 23 October 2014 the AFR Group made a loan of $140,000 to Mr Turner.
3. Thus, in defence to the AFR Group's limitations defence, Mr Turner's primary contention is that time began to run from the middle to latter part of 2014, and the proceeding to recover the three loan advances was commenced within time (Head v Kelk [1962] NSWR 1363 at 1370-71).
4. Its secondary contention is that I should interpret Mr Myssy's email of 22 December 2017 as constituting confirmation by the AFR Group's agent (and therefore AFR Group) of Mr Turner's cause of action to recover the advances and thereby restart the clock, as it were, on the limitation period, from 22 December 2017, pursuant to ss 11(2)(c) and 54 of the Limitation Act 1969 (NSW) (Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535 at 565-66).
5. Counsel argued that Mr Myssy's email confirms that: Mr Turner had lent $195,000 to the AFR Group; the AFR Group had not properly accounted for the loan by Mr Turner; and in order to effect the repayment of that sum, the AFR Group proposed to retrospectively cancel dividends and account for them as repayments of Mr Turner's loans so as to avoid tax. Mr Jepsen's reply of 2 January 2018 amounted to an objection of this proposal and called for the re-payment to Mr Turner of his advances. He further submitted that for the purposes of s 54(2)(a)(i) it is objectively what is conveyed by the borrower (or its agent) that the "confirmation" must be construed.

Payments to Mr Turner were in fact loans

1. It is common ground that the sum of $166,200 was paid to Mr Turner by the AFR Group. Counsel for Mr Turner submitted that the documents produced through the use of court process proved that these were loans by the Group to Mr Turner; and, further, the Group treated those loans as being repaid by Mr Turner via: 1. the sale of a parcel (5) of shares owned by Mr Turner's associated corporate entity, Ben Turner Pty Ltd, in MBCT to Mr Connolly's entity, AF Fit Pty Ltd; and 2. MBCT's buy back of the remaining parcel (30) of shares owned by Ben Turner Pty Ltd.
2. Counsel for the Plaintiff submitted that the AFR Group purported to pay out Mr Turner's loan to the AFR Group by the buyback of the shares owned by Ben Turner Pty Ltd when it ceased to be a shareholder of MBCT.

Action for money had and received

1. Counsel for Mr Turner accepted that this action could not be maintained. Mr Turner's rights were governed by contract alone. If he established a valid agreement, but AFR proved repayment, the action in contract would fail and, plainly, no action could lie in restitution. If repayment of the loan was not made, then Mr Turner could rely upon his rights in contract, such as they were.

AFR's submissions

1. Counsel for AFR acknowledged that, with Mr Turner having proved the loan advances (in total amounting to $195,000) and prima facie establishing that they had not been repaid, an evidentiary onus fell upon AFR, as debtor, to prove that the advances had been repaid.
2. Counsel for AFR submits that, with the abandonment of the case, that the monies were advanced by Bernley Corp, and the concession that the monies were advanced only by Mr Turner, Mr Turner must be taken to have accepted that he received payments in the sum of $201,200 between 23 October 2014 and 30 May 2016 (the 'AFR payments'). That being so the issues are whether the AFR payments: 1. amounted to a repayment of Mr Turner's loan advances; 2. a loan made to Mr Turner by AFR; 3. a payment of dividends to Mr Turner.
3. Counsel dealt with these competing possibilities in reverse order.
4. Counsel submits that the AFR payments could not constitute payment of a dividend from AFR. He says that Mr Turner was not a shareholder of AFR nor was a shareholder of MCBT. This, he says, is enough to dispose of this contention.
5. Nevertheless, as he expounded his position in his closing address, he accepts that AFR Group's accountants treated the AFR payments as 'dividend payments'. The steps in his argument were:

• Mr Myssy treated the sum of $166,200 paid as dividends to Mr Turner in the 2016 and 2017 years; when they were, in truth, repayment of Mr Turner's aggregate of loan advances ($195,000)
• If, as Mr Myssy proposed to Mr Jepsen, those dividends were cancelled, it would, once the sum of $166,200 was deducted from the total of Mr Turner's loan advances ($195,000), leave a balance owing on the loan of $29,000.

1. This error, Counsel said, was attributable to the circumstances deposed to by Mr Connolly: that he did not tell the AFR Group's bookkeeper that Mr Turner's initial advance had been made or how to treat it in the company's books. That bookkeeping had been outsourced to a person located in India (at Anytime Fitness franchisor's selection); and the bookkeeper had not had access to AF Fit bank account (into which Mr Turner's initial advance was deposited), but only to AFR Group's accounts that were set up later.
2. Counsel for AFR acknowledged that his submissions required the Court to go behind what appeared in the financial records prepared by accountants for the AFR Group in circumstances where none of them were called.
3. But he said that this case theory was consistent with a number of circumstances: 1. Not long after Mr Connolly's indication to Mr Turner in October 2014 that AFR had enough 'surplus' funds to repay most of his loan, AFR Group transferred the sum of $140,000; 2. It is incongruous if the receipt of $140,000 by Mr Turner was referable to a loan by the AFR Group: it would mean that the AFR Group would be increasing its assets (a loan to Mr Turner) whilst eschewing the opportunity to reduce its liability to him for his loan. There were no indications as to why in October 2014, the AFR Group was willing to grant a loan to Mr Turner. 3. In the ledger recording the $140,000 transfer to Mr Turner on 23 October 2014 (Ex PX 6), there were other transfers as well. The amounts of these transfers co-incide with repayments of Mr Turner's second and third loan advances to the AFR Group. It would, so it was said, be strange if the same ledger account treated the sum of $140,000 as a loan to Mr Turner; whilst the other transfers were treated as repayments of Mr Turner's loan to AFR. 4. The indication that the payment of $166,200 was treated as payment of dividends to Mr Turner could not be regarded as recent invention: in earlier forms of the pleadings, and in response to AFR's allegation that 3 payments had been made to Mr Turner in the sum of $166,200, Mr Turner himself (at paragraph 3(b) of the Defence to his cross-claim) said that the $166,200 was received as dividends.
4. AFR's primary argument also explains the recording of a loan to Mr Turner that appeared in Ex PX1 and PX2. This explanation, so it was said, may also explain why Mr Turner himself had never asserted that he had been loaned money by AFR and, in the absence of any assertion that a loan to Mr Turner was ever made, the contents of those exhibits must be erroneous.
5. Counsel submitted that having regard to the accounting errors and the background, the only plausible explanation for the content of the AFR's ledger (Ex PX6) is that the monies paid to Mr Turner, the AFR payments, constituted repayments of his loan advances. Counsel cited the following circumstances to support that submission: 1. the first of the AFR payments of 23 October 2014 was made not long after Mr Connolly's disclosure in about October 2014 (relied upon by Mr Turner) that the AFR Group had 'got enough surplus to pay back most of the capital contribution' and had asked Mr Turner 'Where do you want me to put it?'; 2. The circumstances that no loan to Mr Turner ever existed; 3. two of the handwritten narrations which appear in the AFR records refer to a 'Turner loan'; 4. the absence of any other explanation, such as the AFR payments being made as dividends.

Time bar

1. Counsel for the AFR Group further submitted that the Court should reject the proposition that the loan monies only became repayable at a time when a "surplus" had been achieved by AFR Group, apparently in 2014. This was because the provision for repayment was too vague and illusory. He submitted that this provision, arising from conversation between Mr Connolly and Mr Turner was very similar to a proposed term for repayment considered, and rejected, by the Federal Court of Australia (Kenny J) in Universal Greening Pty Ltd v Sabine (1999) 17 ACLC 880 at [886], to the effect that the borrower was to repay the creditor "only when it could afford to do so". This decision was then picked up in the decision of the Victorian Court of Appeal in GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315.
2. Counsel for AFR contends that the action for breach of contract is not maintainable under section 14 of the act, in circumstances where the money lent was repayable upon demand or at call and where time began to run from the date of advance (Ogilive v Adams [1981] VR 1041 at 1043. He submitted that Mr Turner had conceded that the payments were at call and that Mr Turner did not demand or commence his cause of action before the dates where he made his respective advances.
3. Counsel for AFR said that Mr Turner cannot rely upon an argument that time began to run from mid to late October 2014 because this is inconsistent with his pleading. The pleaded allegation was that the monies were repayable at call. Even if he could rely upon the circumstances that the money was repayable upon a contingency, he had still not demanded the return of the money on that basis.
4. Counsel said that Mr Turner could not rely upon section 54 of the Limitation Act. The words that were used in the email of 22 December 2017 did not, properly construed, amount to an acknowledgement that there was a present existence of a cause of action: namely, acknowledgement (or admission) of a debt outstanding and unpaid: Papas v Co [2018] NSWSC 1404 at [418]. He characterised Mr Myssy's email as an attempt to get to the bottom of an accounting misapplication. At any rate, it did not amount to an admission that the sum of $195,000 was outstanding and remained unpaid to Mr Turner. But then submitting against himself, Counsel for AFR conceded that if his primary argument was right, and that what Mr Myssy did in his 22 December 2017 email was to acknowledge that $29,000 was still owing (but not $195,000), this would be sufficient to engage s 54 of the Limitation Act at least to that extent.

Mr Turner's submissions in reply

1. Mr Turner submits that in circumstances where the AFR Group's position was that: 1. It acknowledges that Mr Turner advanced a total sum of $195,000 as an initial capital loan to AFR; but 2. This loan had, until about December 2017, been "overlooked" by its accountants in subsequent accounting records; and 3. substantial accounting errors were made, which errors were only realised in late 2017, it makes no sense for it to be in a position to say, with any reliability, that such payments as were made to Mr Turner in the period before the mistakes were recognised, amounted to repayments of Mr Turner's loan advances. He submitted that it is difficult to intentionally repay a debt when records indicate that you are unaware that anything is actually owing.
2. He also made the following further submissions: 1. I should not accept Counsel for AFR's construction of Mr Myssy's email to Mr Jepsen (22 December 2017), that Mr Turner's first advance was erroneously classified as a dividend in AFR's books when it was actually a repayment. Points 1 & 2 of the email were properly to be read as acknowledgement that Mr Turner (and Mr Connolly's) initial working capital loans were overlooked altogether (rather than being incorrectly accounted for) and his proposed remedy for the long-standing omission was to re-classify that what Mr Turner had previously received as a dividend as a repayment of his loan advances. 2. Mr Connolly's evidence (paragraph 35) as to what he said he would do did not accord with what AFR actually did: he may have said that he would arrange for a large repayment of Mr Turner's loan in October 2014, but what actually occurred was that the payment made to Mr Turner on 23 October 2014 was accounted for as a loan to Mr Turner. 3. contrary to Counsel for AFR's argument that the account in the general ledger (titled 'Loan - Ben T' and coded (1-1830) (PX 6) also evidenced repayments of the second and third of Mr Turner's loan advances, I should reach a different conclusion: that those repayments, if they were made, were more appropriately to be accounted for in the other account (titled 'Shareholder loan account') (2-3610) indicated in the ledger. AFR's balance sheet as at October 2016 (Ex PX1), based as it was upon information supplied by AFR to the head franchisor, indicated that the former ledger code belonged to the asset ledger; whereas the latter ledger code belonged to the long term liability ledger. This meant that in the 'shareholder loan account' (2-3610), for it to be accurate, the second and third loan advances (from June 2012 and January 2013, respectively) should have been recorded. The balance in this account should have shown a sum of $195,000. 4. the decision to give a loan to Mr Turner (for $166,200) in October 2014 could not be explained as accidental. The balance sheet (Ex PX 1) indicates that a very substantial loan (nearly $810,000) was also granted to Mr Connolly. But the balance sheet revealed that Mr Connolly was still owed a substantial sum (over $250,000). 5. if what was expressed to be a 'loan' to Mr Turner was not, in fact, intended to be a loan to him, there was no reason for the creation of 'Div 7A Loan Calculators' for Mr Turner (Ex PX6), the point of which was to indicate that a loan to a director was not a dividend, with tax consequences. There was no evidence that these statements, issued for the financial year ended 30 June 2017, were subsequently retracted. 6. in relation to AFR's point about Mr Turner's 'admission' in his defence to AFR's cross-claim that payments were received by dividends, such admission: 1. was made a long time ago (before it had access to AFR accounting records produced very recently in answer to Court process); 2. there has been difficulty in obtaining further instructions from Mr Turner because of his peculiar circumstances (explaining why a tutor was appointed), since the document had only very recently emerged; and 3. any admission that a dividend payment received by him did not constitute an admission that such payment was, in substance, a repayment of his loan advances to AFR. 1. the Court should reject the AFR Group's submission inviting it to infer that what was accounted for as loans (to both Mr Turner and Mr Connolly) were not, in fact, loans but repayments of previous debts. This is in a context where neither Mr Myssy nor Mr Connolly were called to explain why the AFR's accounts did not reflect the true position. 2. the issue of a subpoena to the Anytime Fitness franchisor and service of a notice to produce to AFR on 22 May 2019, which court process plainly required production of a series of accounting and financial records, indirectly put AFR on notice that the state of its accounting for Mr Turner's loans was likely to be in issue at trial. This circumstance, plus the additional circumstances that the AFR's defence required the Court's acceptance of its contention that its accounting records were erroneous, called for explanation from Mr Myssy. There being no dispute that Mr Myssy was in fact available to give evidence, I should draw a Jones v Dunkel inference that Mr Myssy's evidence would not have assisted AFR's defence. In this regard, I should reject Counsel for AFR's contention that procedural developments in the proceeding meant that by the time the correctness of the accounting records appeared to be in issue, it was too difficult, or late for Mr Myssy to be organised to give evidence. 3. the circumstance that Mr Myssy derived his instructions from Mr Connolly - the sole director of the AFR Group - meant that the Court could also have expected Mr Connolly to address why I should prefer AFR's construction of what occurred (loan repayments to Mr Turner) to what the AFR's accounting records (at least two of which were forwarded to its head franchisor) suggested (loans to Mr Turner). If Mr Connolly sought to invite the Court to infer that Mr Turner had had his loan advances paid back by 'dividend' payments in 2016 and 2017, why did he not simply say this; or at least instruct Mr Myssy that this was the position? Why did he not say to Mr Turner (or get Mr Myssy to say to Mr Jepson), words to the effect: 'despite the record indicating that in October 2014 you were paid a loan, what it really amounts to is that you were being repaid for your capital advances?'. This expectation was heightened, in the circumstances, because of AFR's omission to address Mr Turner's submission that it could be inferred that, in reality, AFR purported to pay out Mr Turner's loan advance by means of the buy-back of Ben Turner Pty Ltd's shares in MCBT. 4. the 'rule in Blatch v Archer' applies so that the evidence of a party is to be weighed in accordance with the capacity of a party to produce it. Here, there was no evidence which ever provided, in clearer terms than the indirect inferences that AFR's Counsel asks me to draw from Mr Myssy's 22 December 2017 email to Mr Jepsen, explaining or correcting the accounting errors that AFR's Counsel identified.

Were the payments to Mr Turner repayments of his advances?

1. Mr Turner bore the legal burden of proving a breach, or breaches, by the AFR Group of the loan agreement. That is, he bore the ultimate burden of proving that the AFR Group did not repay him his loan. But as noted, Counsel for the AFR Group conceded, that once Mr Turner satisfied the relatively undemanding requirement to adduce some evidence of the failure to repay him for his loan advances, in circumstances where the AFR Group asserted that he had, in fact, been repaid his loan advances of $195,000 (and not received payments for other purposes), the AFR Group bore an evidentiary onus of proving that contention. In speaking here of evidentiary onus, I am referring to the second sense of 'evidentiary burden' described by Heydon J (in dissent in the outcome, but not on the point of principle) in Strong v Woolworths Ltd (2012) 246 CLR 182 at [53]. Practically, that involved an evidentiary onus upon the AFR Group to prove that such payments as were made to Mr Turner from October 2014 were repayments for those advances, rather than transfers made for some other purpose.
2. In this regard, questions about onus of proof are assisted by certain well known maxims concerning the 'rule in Jones v Dunkel', the 'rule in Blatch v Archer' and what inferences may be drawn when facts are peculiarly in the knowledge of a defendant. As will be seen, in the events that have occurred, none of these "rules" or maxims apply favourably in the case for the AFR Group.
3. I indicated that Mr Turner had adduced evidence that he had not been repaid his $195,000. Leaving aside the question of accounting treatment for what had occurred, I consider that Mr Myssy's email of 22 December 2017 is an admission that his $195,000 advances had been "overlooked" is tantamount, also, to an admission (made by Mr Myssy, as the AFR Group's agent) as at that date that Mr Turner had not been repaid for those advances.
4. That being so, an evidentiary burden then fell upon the AFR Group to call sufficient evidence to indicate that Mr Turner had been repaid his advances. The AFR Group has attempted to discharge that evidentiary onus against a background where: 1. it is common ground that the AFR Group's accounting and financial records did not clearly identify the purpose of the payments made to Mr Turner. To the contrary, the AFR Group has been ambivalent about it: it partly disowned the accuracy of its own accounting records, but also partly relied upon it to invite the Court to draw inferences in its favour; 2. Specifically, the primary theory advanced by AFR Group's Counsel of what occurred- that Mr Turner was repaid his most significant advance ($165,000) by means of dividends paid to him in 2016 and 2017 - is not supported by any proper accounting document, or any other document, or any testimonial evidence that this was the purpose of the transactions in 2016 and 2017; 3. such documentation as does exist appears more supportive of loans being made to both Mr Turner - and Mr Connolly - rather than repayments of his loan. 4. Mr Connolly has given no explanation, at least in admissible form, as to: 1. the purpose of the payments, 2. The instructions he provided to Mr Myssy which might fully explain the circumstances in which the accounting and financial statements were erroneous; nor 3. rebut indications that the AFR Group purported to repay the loan by means of the buyback 1. Mr Myssy was not called to indicate what Mr Connolly's instructions were as to the purpose of payments nor indicated how and why he, and his staff, accounted for certain transactions; 2. The responses by the head franchisor (Anytime Australia Pty Ltd) and AFR Group to Court process (respectively a subpoena to produce and a notice to produce) for the production of conventional financial statements and accounting documentation, designed to elucidate the treatment of the loans by Mr Turner in the years from 2012 to 2018 yielded meagre results [2] . It is, in fact, difficult to conceive that what was produced in response to these forms of Court process could have been complete.
5. I consider that the least the Court could expect, in considering the AFR's defence, is a coherent and consistent theory which should have been sustained by appropriate documentation. Instead, AFR has boldly sought to draw inferences in its favour from its own incomplete, confusing and erroneous set of documentation without calling anyone who might have been in a position to explain the circumstances in which it made the payments to Mr Turner.
6. I agree with the submission of Counsel for Mr Turner, for the reasons he submitted, that the AFR Group's failure to call both Mr Connolly and Mr Myssy provide foundation for the Court to draw Jones v Dunkel inferences; although, of course, I am conscious that even drawing such inferences is not to serve as a make-weight to fill in gaps in Mr Turner's case. Contrary to the AFR Group's submissions, there were matters raised about which only Mr Myssy and Mr Connelly could give explanation. Further, just because Mr Turner relied upon parts of Mr Connolly's affidavit does not equate to calling him.
7. I consider that, of more significance, is the maxim, or rule in Blatch v Archer (1774) 98 ER 969 at 970, that 'all evidence is to be weighed according to the proof which it was within the power of one side to produce, and in the power of the other to have contradicted.' No evidence has been put before the Court to indicate that neither Mr Myssy nor Mr Connolly was unavailable to give evidence and no satisfactory explanation has been given as to why they have not been called. I do not regard Counsel for the AFR Group's explanation that recent procedural events indicate that it could not have been anticipated that the state of the accounting and financial records could become an issue in the proceeding, and that therefore Mr Myssy had nothing of value to say, as being satisfactory.
8. Further, undoubtedly, the AFR Group had it within its power to provide the Court with a complete set of accounting and financial documentation to respond to the categories in the notice to produce. In contrast, medical evidence indicates that Mr Turner suffers from a serious mental illness. In view of that evidence, I do not draw a Jones v Dunkel inference from his not giving evidence (Payne v Parker [1976] NSWLR 191 at 202). This is, it is to be recalled, a case about the alleged failure to repay loan advances made pursuant to a purely verbal agreement in 2012, with the pivotal issue being how to characterise payments made to Mr Turner in 2014 and 2016. In a case such as this, it is typically the accuracy and veracity of financial and accounting evidence that is likely to be most persuasive since it is presumed (absent unusual circumstances) to amount to objective evidence). The AFR Group has not provided this.
9. Associated with this maxim is the proposition, which is very closely aligned to (if not another way of expressing) the rule in Blatch v Archer, that where a party (here Mr Turner) bears a burden of proving a negative (that he had not been repaid his loan advances), but the other side has greater means to produce evidence to contradict the negative proposition, then provided the party bearing the burden has tendered some evidence, from which the negative proposition may be inferred, the other party carries a tactical burden to advance in evidence any matters which, if relevant, the first party would have to deal in the discharge of its legal burden of proof (Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Leave Payments Corp (1985) 1 NSWLR 561). Here, the accounting records, such as they are, are more supportive of the notion of a loan being granted to Mr Turner, than repayment to him of a loan by him; and the AFR Group tendered no evidence in its case.
10. The AFR Group submits that if it was appropriate to expect Mr Myssy to give evidence, the position is no less true for Mr Turner's failure to call Mr Jepson. The position is, however, quite different. It was Mr Connolly - not Mr Turner - who provided the instructions and information for the accounting documents. He gave them to Mr Myssy. On its face, Mr Jepson appeared, from his 22 December 2017 email to Mr Myssy, to be just as much in the dark about the state of the accounting records as Mr Turner. There is no equivalence between their positions.
11. I consider that in the circumstances, AFR Group has tried to have its cake and eat it when it comes to dividends and its accounting documentation generally. On the one hand, it says that the payments could not be treated as dividends, since Mr Turner was not a shareholder of ARF. But on the other, it seeks to take advantage of an admission in the pleading by Mr Turner that he received payments as dividends. Then, notwithstanding the complete absence of documentation within ARF to support the construction (such as production of a dividend statement, notwithstanding a subpoena requiring its production), it invites the Court to interpret Mr Myssy's email to Mr Jepsen on 22 December 2017 as supporting the view that in 2016 and 2017, Mr Turner's first advance of $165,000 had been repaid, as dividends. I regard this construction of the email as being an opportunistic explanation provided to obscure the fact that the AFR was in no reliable position to submit what had occurred. I accept the force of Mr Turner's submission that if, in 2012, AFR's accounting team had 'overlooked' accounting for Mr Turner's loan advances (or at least the $165,000 advance) and such omission continued through to late 2017, logically, AFR was in no position to say in December 2017 that such dividends paid in 2016 and 2017 amounted, in substance, to repayment of a loan advances not known to have been made at the point when dividends were paid. I also consider that if this construction were true, it would have been a straightforward matter to have rectified accounts to show what had happened, as was known as at December 2017. Contrary to the submission of Counsel for the ARF Group, the ARF Group was not denied the opportunity to doing this in light of Mr Jepsen's objection (in January 2018) to Mr Myssy's proposal to cancel the dividends. Mr Myssy, and Mr Connolly, did not need Mr Jepsen's permission to rectify the accounting records to reflect their position that payments treated as dividends in 2016 and 2017 were, in fact, loan repayments to Mr Turner.
12. Finally, in relation to the email of 22 December 2017, the AFR Group sought to take advantage of Mr Turner's pleaded admission about the receipt of dividends. But it neglects the implications of Mr Jepsen's response to Mr Myssy's email of 22 December 2017; explaining that one basis of objection to what Mr Myssy proposed was that if the dividends had been cancelled, Mr Turner's personal income tax returns would need to be amended. That could only mean that the tax returns lodged had not recognised that loan advances had been repaid.
13. To recapitulate, the AFR Group's primary submission that repayments were made in the form of dividends in 2016 and 2017 fails because: 1. The theory does not obviously arise on the face of the 22 December 2017 email; 2. No other accounting or financial documents were tendered to corroborate that this is what occurred; and 3. No testimonial evidence was advanced to support it.
14. The AFR Group asks rhetorically why, in October 2014, when it appeared to have a sufficient amount of 'surplus' (whatever that word meant - see below) to repay Mr Turner, it would wish to make a loan to him. There are at least three answers to this. First, at least the ledger account, when read with ARF's balance sheet, indicates that this is precisely what AFR did: Mr Turner's loan advances appeared to be more accurately, accounted for as a long term liability; not as an asset. The liability should have been accounted for in ledger [2-3610]; and if $140,000 was transferred to Mr Turner, it should have been accounted for in that ledger - not the ledger with 1-1830, which concerned assets. Secondly, although curious, the accounts, such as they are, do show that for both Mr Turner and Mr Connolly, there were substantial monies owed by AFR to them, and substantial monies owed by them to AFR. Precisely why that is so is a matter that the Court would have expected to have received evidence, from Mr Connolly or Mr Myssy; if not both. Thirdly, the evidence of loan calculators, leads to an inference (I emphasise that it is no more than that) that it might be advantageous, from a taxation point of view, if a disclaimer was made that a loan payment was not intended to be a dividend. There would be little point in engaging in that exercise if there was absolutely no intention on the part of AFR to designate payments to Mr Turner (and Mr Connolly) as loans. Counsel for the AFR Group says it is illogical for a company to make a loan instead of taking opportunity to repay a debt. That depends upon the circumstances of the company, including its objectives. Logic is a poor substitute for evidence.
15. The AFR Group relies upon the evidence of Mr Connolly at paragraph 30 and especially, the temporal proximity between Mr Connolly's promise that it would repay Mr Turner, to the circumstance of the company being in 'surplus'. But that promise, in 2014, is not reflected in what the bookkeepers actually did. There is no indication that they, or anyone else, were informed about the purpose of this payment; and if it was intended to be a partial repayment of an earlier loan advance, it was not a complex task to indicate this in the company's books.
16. For these reasons, I find that it is more probable than not that the payments made to Mr Turner from October 2014 were not made in repayment of his loan advances of 2012 and 2013, but were loan repayments to him.
17. That being so, Mr Turner has established that the AFR breached its obligation to repay the loan advances that were repayable on demand.

Has the time bar expired?

1. The first question in this section is when the cause of action accrued. This, in turn, more specifically, led to the question of when the loan advances made were repayable.
2. Counsel for Mr Turner says that they were repayable when AFR was "in surplus". Relying as he did upon a verbal agreement, Counsel for Mr Turner relied upon the passage (paragraphs 12 & 35) in Mr Connolly's affidavit by which, in substance, AFR Group promised to repay (only) when the AFR Group was "in surplus".
3. Having regard to the authorities to which I was referred, being Universal Greening and GoConnect, I regard this evidence as insufficient to sustain a sufficiently complete and certain term for repayment which, in substance, left it to the AFR Group to determine when, if at all, the circumstances occasioning its obligation to repay would arise. To the extent that it is suggested that the conversation gave rise to an enforceable term, the term is accordingly void.
4. It was common ground that this did not carry the consequence that the loan agreement as a whole was void. Rather, the position is that where no time for repayment is specified in a loan, the agreement creates an immediate debt by which the money is repayable immediately without the creditor first having to make a demand for payment: Central City v Montevento Holdings Pty Ltd [2011] WASCA 5, cited with approval in GoConnect at [53].
5. This means that subject to Mr Turner's reliance or successful invocation of s 54 of the Limitation Act 1969 (NSW), time began to run from the moment when Mr Turner's loan advances were made: Ogilvie v Adams [1981] VR 1041 at 1043. Counsel for Mr Turner does not dispute the AFR Group's contention that, but for the operation of section 54, the limitation period with respect to the three loan advances made by Mr Turner ended on 29 March 2018, 20 June 2018 and 11 January 2019.
6. For the purposes of section 54, I understood counsel for AFR Group to have conceded, or at least did not dispute, that: 1. it is sufficient that an acknowledgement of a cause of action comes from an agent of the borrower (s 11(2)(c)); 2. Mr Myssy was an agent for the AFR Group for this purpose; 3. the email upon which Mr Turner relies may be treated as a document "in writing and signed by" Mr Myssy, for the purposes of s 54(4); 4. Mr Jepsen was the agent of Mr Turner for this purpose.
7. The question then becomes whether the content of Mr Myssy's email to Mr Jepsen dated 22 December 2017 satisfies the requirement of s 54(2)(a)(i) of the Act.
8. The onus falls upon Mr Turner to establish the alleged confirmation. It is sufficient that the promise to pay is implied from an unconditional acknowledgement of the debt and in order to constitute such acknowledgement there must, upon the fair construction of the words read in light of the surrounding circumstances, be an admission that the debt is owed. It is unnecessary that the acknowledgement specifies the precise amount of the debt, so long as that is of ascertainable from extrinsic evidence: Papas v Co [2018] NSWSC 1404 at [414]-[415].
9. I agree with the submission by counsel for Mr Turner that what counts, for the purposes of the statutory provision, is not what the borrower, or its agent, subjectively intends, when making the statement, but what the statement objectively conveys. I interpret Mr Myssy's email of 22 December 2017 as objectively conveying: 1. that Mr Turner had made an "initial loan;" 2. that this initial loan represented his contribution as a shareholder (or less formally, investor) in ARF Group; 3. the quantum of the contribution was $195,000; 4. the initial contribution had been used (specifically for the payment of suppliers for the fit out) on behalf of and for the benefit of ARF Group; 5. The ARF Group's bookkeepers had overlooked, and therefore not accounted for, Mr Turner's contribution. I regard all of these matters as arising expressly in the email.
10. In the context in which it is written, where Mr Myssy says "This will be amended…" through to the balance of the second paragraph (under the heading '1. Amending Dividends'), I construe this message as amounting to a proposal of a method to ensure that Mr Turner would be repaid his initial contribution. That proposed method involved the retrospective cancellation of dividends received by him in the 2016 and 2017 years. Once that proposal have been implemented, it would mean that Mr Turner would be fully repaid his debt save for a residual amount of $29,000.
11. I do not regard what was being proposed here was something which ARF Group considered it had the unilateral power to impose upon Mr Turner. At the conclusion of point 2, Mr Myssy promised a ledger to be supplied "for both parties to confirm". It was not, in other words, a fait accompli. Further, there was no suggestion that there were any 'strings attached' to the obligation to repay. What the AFR Group was offering was an alternative (and one that eventually proved unacceptable to Mr Turner).
12. I regard the content of the message as constituting an admission that $195,000 was lent to and was currently owed by Mr Turner, but that if Mr Turner agreed with Mr Myssy's proposal, the debt could be reduced to $29,000. But even if it was not a proposal requiring Mr Jepson/ Mr Turner's agreement, it was still a proposal for the future to deal with the AGR Group's present indebtedness to Mr Turner. In my opinion, it amounts to an acknowledgment that Mr Turner was presently entitled to be repaid $195,000. The balance of this part of the message indicates an offer to vary Mr Turner's then subsisting rights; but the offer was made in recognition of his present right to be repaid $195,000. In my opinion, this satisfies the statutory requirement for acknowledgement of "the cause of action, the right or title" of Mr Turner to whom the acknowledgment was made.
13. Accordingly, I find that s 54 of the Limitation Act is engaged, with the consequence that time began to run again from 22 December 2017. That means that Mr Turner is not statute barred in his claim to be repaid his three loan advances.

When does interest begin to run?

1. Counsel for both parties indicated that they sought an opportunity to make submissions on this question after I had delivered these reasons. The Court is content with that course. The submissions should address the question of principle (as to when interest should begin to run), as well as quantum.

ORDERS

1. I order that: 1. There will be judgment for the second plaintiff for the sum of $195,000 plus interest pursuant to s 100 of the Civil Procedure Act; 2. The cross-claim is dismissed. 3. There is general liberty to apply within 14 days. 4. Exhibits be returned within 28 days.
2. The parties should have the opportunity to make further submissions on costs and whether, and if so, in what amount, pre-judgment interest should be recovered.
3. This should be done, in accordance with a timetable that sees: 1. Mr Turner circulating proposed short minutes to ARF within 7 days; 2. ARF Group indicating whether it consents to the short minutes and if not, to state (if appropriate, in short written submissions not exceeding 5 pages) the grounds for disagreement within a further 5 days; 3. Mr Turner is thereafter to send to my Associate his proposed short minutes, any short submissions he wishes to make in response to the AFR Group's objections and correspondence it has received from ARF Group (in response to his proposed short minutes) within a further 2 days after that.
4. My present intention is to make dispositive orders in Chambers absent any further indication to the contrary.

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 July 2019