Except for the Third Defendant who is the First Defendant's son and employed by Artline Kitchens, all of the relevant parties in these proceedings were at the relevant time employees of Prysmian working at a factory ('Factory Three') in Liverpool, New South Wales.
The First Defendant during the period of 2006 to 2016 organised lottery syndicates for his Prysmian workmates and other individuals. The members of these syndicates varied over time. The First Defendant took total administrative control of these syndicates and sometimes, certainly prior to early 2016, subsidised entry payments of syndicate members, who would repay him at a later date.
Prior to January 2016, the First Defendant ran the Pre 2016 Core Syndicate comprising around 20 members (Robert Adams affidavit of 15 June 2016 at [8], [15], [25]-[27]).
From time to time, the parties accepted that the First Defendant organised one-off lottery syndicates at his discretion (D [70]-[77]; P in reply [55]). These were in addition to the regular syndicates he organised and varied in terms of the nature of the draw, the number of participants and the money required to enter. The recording and organisation of these syndicates seems to be ad-hoc and somewhat haphazard. Sometimes the First Defendant would record these syndicates on a cardboard 'drum card' while at other times he would not record them at all.
On the evidence it was clear that these one-off syndicates did not always include the members of the core syndicate of the time, with participation totally left to the First Defendant's discretion. Many of the witnesses also explained that these one-off syndicates were organised to pursue 'big draws'. What constituted a "big draw" was never conclusively defined by any of the parties, and was a matter left entirely to the discretion of the First Defendant.
In late 2015, the First Defendant decided to cease the Pre 2016 Core Syndicate. The last draw in which the Pre 2016 Core Syndicate participated was on 2 January 2016, funded by the balance of funds which the First Defendant retained on behalf of the Pre 2016 Core Syndicate (Adams affidavit of 15 June 2016 at [31]).
In January 2016, the First Defendant told the Plaintiff that the Pre 2016 Core Syndicate was "finished" (Adams affidavit of 15 June 2016 at [79]; King affidavit of 17 May 2016 at [26]).
In March 2016, the First Defendant established the 2016 Core Syndicate comprising 12 members on the basis that all requested monies were to be paid by each participant upfront and that the syndicate would participate in "big draws" (Adams affidavit of 15 June 2016 at [42], [79]).
Around 14 or 15 March, the First Defendant bought 10 tickets in Saturday Lotto draw 3617 on behalf of the 2016 Core Syndicate to be drawn on 19 March 2016 (Adams affidavit of 15 June 2016 at [45]). After purchasing these tickets, at a time before 19 March, the First Defendant provided the Plaintiff with a copy of the tickets, in advance of the draw (King affidavit of 3 August 2016 at [5]).
On 27 April 2016, the First Defendant put up a notice on the Factory Three notice board confirming the closure of the Pre 2016 Core Syndicate (Adams affidavit of 15 June 2016 at [32]; Court Book 191).
On 27 April 2016 at 11:57am, the First Defendant bought tickets in the $25 million Powerball draw 1041 on behalf of the 2016 Core Syndicate which was to be drawn on 28 April 2016 (CB 120). After purchasing these tickets, at a time before the draw, the First Defendant provided the Plaintiff with a copy of these tickets (King affidavit of 3 August 2016 at [5]).
On 29 April 2016 at 12:58pm, the First Defendant purchased a ticket in the $40 million Powerball draw 1042 on behalf of the 2016 Core Syndicate, to be drawn on 5 May 2016 (Adams affidavit of 15 June 2016 at [55]; CB 121). The First Defendant used funds of the 2016 Core Syndicate to purchase $186 worth of tickets in the 5 May draw (Adams affidavit of 15 June 2016 at [51]).
On 29 April 2016, the First Defendant decided to form a further syndicate to enter the same 5 May draw (Adams affidavit of 15 June 2016 at [55]-[56]). On the same day, at 12:59pm the Plaintiff left work and at 1:29pm, the First Defendant arrived at work (Prysmian Time Records).
On 1 May 2016, the First Defendant purchased a ticket in the Saturday Lotto Mothers' Day draw 3631 on behalf of the 2016 Core Syndicate to be drawn on 7 May 2016 (King affidavit of 3 August 2016 at [5]; CB 122).
On 4 May 2016 at 11:48am, the First Defendant used funds he had collected from the Winning Syndicate (apart from Xay and Mico, who paid later) to buy $595.20 worth of tickets in the 5 May draw to be drawn on 5 May 2016 (Adams affidavit of 15 June 2016 at [59]).
Although I will attend to the more precise factual circumstances below, it turned out that the tickets purchased by the First Defendant on behalf of the 2016 Core Syndicate won $13.65, while the tickets the First Defendant purchased on behalf of the Winning Syndicate won the jackpot prize of $40,445,165.25. After this draw, there was significant controversy surrounding the composition of the Winning Syndicate, particularly whether the plaintiff was a member of it. Again, I will explain and examine the precise circumstances surrounding the 5 May draw when analysing each of the witnesses' evidence below.
The controversy I refer to came to a head in May, when the plaintiff commenced proceedings in this Court against the First Defendant by way of Summons dated 18 May 2016.
As duty judge on 18 May 2016, I ordered the Second Defendant, NSW Lotteries, to pay $2,696,364 (one fifteenth of the prize money) into a bank account in the name of the First Defendant by 12:00pm on 19 May 2016, on the basis that he undertook not to deal with those funds pending the outcome of this litigation.
I made further orders on 12 August 2016 which granted leave to the Plaintiff to join thirteen members of the Winning Syndicate as defendants in these proceedings.
[2]
Relevant general legal principles
A number of legal principles are invoked in this case. I propose to address each before analysing the facts.
[3]
The existence of a fiduciary relationship
Australian courts have recognised that the categories of relationships giving rise to fiduciary obligations are not closed: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at [28] (per Gibbs CJ), [67] (per Mason J); United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1.
A fiduciary duty is not lightly to be implied into relationships, namely because of the onerous obligations it burdens the relevant parties with. As Cardozo CJ famously explained in Meinhard v Salmon 249 NY 458 (1928) at 546:
"A trustee [or fiduciary] is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the "disintegrating erosion" of particular exceptions. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd."
Professor Finn also recently stated in "Fiduciary reflections" (2014) 88 ALJ 127 at 132 that fiduciary relationships exist where:
"[T]here is an actual (or presumed) trust and confidence reposed, and an actual (or presumed) power or influence acquired. It is the abuse of that power or influence and of the knowledge and opportunity these provide, that are to be guarded against."
He went on to expand at 139:
"It is obviously not enough that one is in an ascendant position over another: such is the invariable prerequisite for the unconscionability principle. It is obviously not enough that one has the practical capacity to influence the other: representations are made, information is supplied (or not supplied) as of course with the object of, and in fact, influencing a host of contractual dealings. It is obviously not enough that the other party is in a position of vulnerability: such is the almost inevitable state in greater or lesser degree of most parties in contractual relationships. It is obviously not enough that some degree of trust and confidence are there: these are commonly placed in the skill, integrity, fairness and honesty of the other party in contractual dealings. It is obviously not enough that there is a dependence by one party upon the other. Indeed elements of all of the above may be present in a dealing - and consumer transactions can illustrate this - without a relationship being in any way fiduciary. Something more is needed.
What must be shown is that the actual circumstances of a relationship are such that one party is entitled to expect that the other will act in his or her interests in and for the purposes of the relationship. Ascendancy, influence, vulnerability, trust, confidence or dependence doubtless will be of importance in making this out, but they will be important only to the extent that they evidence a relationship suggesting that entitlement. The critical matter in the end is the role - the function - that the alleged fiduciary has, or should be taken to have, in the relationship. It must so implicate that party in the other's affairs or so align that party with the protection or advancement of that other's interest that foundation exists for the "fiduciary expectation". Such a role may generate an actual expectation that the other's interests are being served. This is commonly so with lawyers and investment advisers. But equally, the expectation may be a judicially prescribed one because the law itself ordains it to be that other's entitlement. This may be so either because that party should, given the actual circumstances of the relationship, be accorded that entitlement irrespective of whether he or she has adverted to the matter, or because the purpose of the relationship itself is perceived to be such that to allow disloyalty in it would be to jeopardise its perceived social utility."
The essence of these relationships is 'trust and confidence', and that the other person is 'vulnerable' to the powers of the fiduciary: Phipps v Boardman (1967) 2 AC 46 at 127; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at [68]; Breen v Williams (1996) 186 CLR 71 at [14]; John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [93]; Furs Ltd v Tomkies (1936) 54 CLR 583 at 590; Day v Mead [1987] 2 NZLR 443 at 458.
However, the fact that one party to a relationship subjectively 'trusted' another is neither necessary for, nor conclusive of, the existence of a fiduciary relationship: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 69; Gibson Motorsport v Forbes (2006) 149 FCR 569 at [11]. Similarly, 'vulnerability' is not itself sufficient to give rise to a fiduciary relationship: Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at [136]; LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14 at 39. Both 'trust' and 'vulnerability' are of course related concepts. 'Trust' may give rise to 'vulnerability' while 'vulnerability' may lead a person to 'trust' in another.
Lockhart, von Doussa and Sackville JJ added to this in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 541 by stating:
"…the actual circumstances of a [fiduciary] relationship are such that one party is entitled to expect that the other will act in his interests in and for the purposes of the relationship. Ascendancy, influence, vulnerability, trust, confidence or dependence doubtless will be of importance in making this out, but they will be important only to the extent that they evidence a relationship suggesting that entitlement."
A relationship between parties can of course give rise to fiduciary obligations even if there is no contract between them. As Mason, Brennan and Deane JJ explained in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 12:
"A fiduciary relationship can arise and fiduciary duties can exist between parties who have not reached, and who may never reach, agreement upon the consensual terms which are to govern the arrangement between them. In particular, a fiduciary relationship with attendant fiduciary obligations may, and ordinarily will, exist between prospective partners who have embarked upon the conduct of the partnership business or venture before the precise terms of any partnership agreement have been settled. Indeed, in such circumstances, the mutual confidence and trust which underlie most consensual fiduciary relationships are likely to be more readily apparent than in the case where mutual rights and obligations have been expressly defined in some formal agreement. Likewise, the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavour will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation."
The Honourable Sir Frederick Jordan expressed the following views in Chapters on Equity in New South Wales (6th ed, 1945, Thomas Henry Tennant) at 114-115:
"The relation must be an existing Relation.
The [fiduciary] duty has no application to a person who has not yet assumed the fiduciary office. Thus, it does not apply to a person who is entitled to become a trustee, but has not yet assumed the position; nor to a trustee who has disclaimed without acting. Nor does it apply to a person who has ceased to occupy the fiduciary position, unless the confidence continues. In this case, however, not only must the fiduciary relation be at an end, but in any subsequent dealing full disclosure must be made of all knowledge acquired while the relation existed.
The Matter must be substantially connected with the Relation.
Where a fiduciary relation exists, the fiduciary duty extends only to matters which are substantially connected with the relation. Thus, if a trustee of city property for a cestui que trust sells the latter a horse, he owes him no fiduciary duty in the matter of the sale." (citations omitted)
Ultimately, the critical feature of a fiduciary relationship is that the fiduciary undertakes or agrees to act for, on behalf of, or in the interests of another when exercising a power or discretion which will affect the interests of that other person in a legal or practical sense: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 68-69 (per Gibbs CJ), 96 (per Mason J); John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [87] (per French CJ, Gummow, Hayne, Heydon and Kiefel JJ).
[4]
The scope of fiduciary obligations
If it is shown to exist, the scope of a fiduciary relationship will be ascertained according to the particular facts of the case.
The character and purpose of the relationship between the relevant parties lies at the core of the court's determination of the duties arising from this relationship. This is established through an analysis of the express agreement or understanding of the parties (written or otherwise), the course of dealings between them and the relevant circumstances surrounding their relationship: Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 408; New Zealand Netherlands Society "Oranje" Inc v Kuys [1973] 1 WLR 1126 at 1129; Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 378; Kelly v CA & L Bell Commodities Corporation Pty Ltd (1989) 18 NSWLR 248 at 256; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 539.
It must also be noted that fiduciary obligations operate within a specific scope. A person may be a fiduciary in relation to some activities but not others: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 98; Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 408; Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137 at [105]; New Zealand Netherlands Society 'Oranje' Inc v Kuys [1973] 1 WLR 1126 at 1130; Phipps v Boardman (1967) 2 AC 46 at 127; Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569 at [8]. This may be the case where a contract governs part of the relationship between the relevant parties.
In Van Rassel v Kroon (1953) 87 CLR 298, Dixon CJ specifically examined the nature of fiduciary obligations in the context of a lottery arrangement. His Honour explained at 302-303:
"When one man agrees with another that he will obtain a lottery ticket for the latter or for the latter and himself jointly the identification of the lottery ticket he acquires in pursuance of the arrangement is likely to present difficulties. The person in whose name the lottery ticket issues obtains the legal title to what is a chose in action. If he is the applicant he obtains custody of the ticket and is in a position to exercise whatever rights the ticket confers and deal with it as he chooses. If the application is or must be taken to be for the benefit of another or others or of himself and another or others he has the legal title unless the ticket issues in the names of the person or persons beneficially entitled. Otherwise they have nothing but an equitable interest in the ticket and its proceeds if it wins a prize. In other words he becomes a fiduciary agent or trustee. It is not a trust or a fiduciary agency involving many duties or burdens. It is of the simplest kind and the fiduciary obligations flowing from it are few and for the most part negative, that is to say he must do nothing to impair the rights of the persons for whom he holds the ticket. But one of the duties of a person acquiring any piece of property, whether chose in action or corporeal thing, for the benefit of others as a fiduciary is to distinguish the piece of property he so acquires from other similar things which he may obtain for himself or in which he may be interested. This duty has a particular application to the acquisition of a lottery ticket. For a lottery ticket is a chose in action possessing characteristics making the discharge of the duty specially important. When the ticket is applied for it is one of a series, very large in number, no one of which is distinguishable from the others except by the numerals they bear. Every one of them has the same value, a small uniform value. But when the lottery is drawn the value of some of the tickets will become very great indeed while most of the tickets will become valueless. The fiduciary is at perfect liberty before the drawing to acquire for himself beneficially any number of tickets in the same lottery as that in which he holds a ticket on behalf of others or of himself and others. It is evident that before the drawing the identity of the ticket which is held for others or for himself and others ought, if he fulfils his duty, to be ascertained so that it is clearly distinguished from those he holds for himself. If there is any confusion, the burden must be upon him of showing which is his property. It could not be otherwise where the duty rests upon him as a fiduciary not to confuse his own beneficial property with that which is subject to his fiduciary obligations and where at the same time his are the hands in which are placed the means of identifying the property (emphasis added)."
Dixon CJ's comments about the 'negative' nature of a fiduciary's obligations reflect the contemporary Australian law. The starting point for determining the scope of any fiduciary obligations is that they are proscriptive or negative in nature, particularly embodying the 'no profit' and 'no conflict' rules: Breen v Williams (1996) 186 CLR 71 at 113; Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at [74]; Chan v Zacharia (1984) 154 CLR 178 at 198-199; Blythe v Northwood (2005) 63 NSWLR 531.
McHugh, Gummow, Hayne and Callinan JJ observed in Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at 198:
"In this country, fiduciary obligations arise because a person has come under an obligation to act in another's interests. As a result, equity imposes on the fiduciary proscriptive obligations - not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. If these obligations are breached, the fiduciary must account for any profits and make good any losses arising from the breach. But the law of this country does not otherwise impose positive legal duties on the fiduciary to act in the interests of a person to whom the duty is owed."
Deane J, in Chan v Zacharia (1984) 154 CLR 178, further examined the 'negative' nature of fiduciary obligations, explaining at 198-199:
""The variations between more precise formulations of the principle governing the liability to account are largely the result of the fact that what is conveniently regarded as the one 'fundamental rule' embodies two themes. The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage. … Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee … That constructive trust arises from the fact that a personal benefit or gain has been so obtained or received and it is immaterial that there was no absence of good faith or damage to the person to whom the fiduciary obligation was owed. In some, perhaps most, cases, the constructive trust will be consequent upon an actual breach of fiduciary duty: eg, an active pursuit of personal interest in disregard of fiduciary duty or a misuse of fiduciary power for personal gain. … The principle governing the liability to account for a benefit or gain as a constructive trustee is applicable to fiduciaries generally including partners and former partners in relation to their dealings with partnership property and the benefits and opportunities associated therewith or arising therefrom." (also see Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384; Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309; Blythe v Northwood (2005) 63 NSWLR 531.
[5]
The legal definition of a 'joint venture'
In the present case, the plaintiff alleges, as his secondary case, that the relationship between the parties in participating in lottery draws was a joint venture, which gave rise to fiduciary obligations. It is therefore necessary to consider how such a joint venture arises in law and whether it is appropriate for fiduciary duties to arise from this relationship.
A joint venture arrangement is generally an arrangement between parties for a common business purpose. In such a case, each party operates as an individual, is not an agent of the other joint venturers and each joint venturer bears responsibility on their own for their individual expenses and losses: Canny Gabriel Castle Jackson Advertising Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321.
As Mason, Brennan and Deane JJ explained in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10-11:
"The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, "adventure") will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred. Thus, where one party contributes only money or other property, it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to the profits made by the other."
Apart from the obvious distinction between a partnership having to satisfy the legal definition of 'partnership' in sections 1 and 2 of the Partnership Act 1892 (Cth) (also see Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at [7]; Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 at [7]-[8]), Dawson J also explored the distinction between a partnership and joint venture by stating in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 15-16:
"Although in this country a partnership is defined in the Partnership Acts as the relation which subsists or exists between persons carrying on a business in common with a view of profit, the requirement that a business should be carried on provides no clear means of distinguishing a joint venture from a partnership. There may be a partnership for a single adventure or undertaking, for the Acts provide that, subject to any agreement between the partners, a partnership, if entered into for a single adventure or undertaking, is dissolved by the termination of that adventure or undertaking. See, e.g., Partnership Act 1892 (N.S.W.), s.32(b).
A single adventure under our law may or may not, depending upon its scope, amount to the carrying on of a business: Smith v. Anderson (1880) 15 ChD 247, at pp 277-278; In re Griffin; Ex parte Board of Trade (1890) 60 L.J. QB 235, at p 237; Ballantyne v. Raphael (1889) 15 VLR 538. Whilst the phrase "carrying on a business" contains an element of continuity or repetition in contrast with an isolated transaction which is not to be repeated, the decision of this Court in Canny Gabriel Castle Jackson Advertising Pty. Ltd. v. Volume Sales (Finance) Pty. Ltd. (1974) 131 CLR 321 suggests that the emphasis which will be placed upon continuity may not be heavy. Certainly each of the enterprises which were to be undertaken and the enterprise which was finally undertaken in this case, was to have an operation which was sufficiently extended to amount to the carrying on of a business and, since the association was with a view to profit, the conclusion is warranted that the parties were either in partnership or were negotiating partnership at the relevant time.
Perhaps in this country, the important distinction between a partnership and a joint venture is, for practical purposes, the distinction between an association of persons who engage in a common undertaking for profit and an association of those who do so in order to generate a product to be shared among the participants. Enterprises of the latter kind are common enough in the exploration for and exploitation of mineral resources and the feature which is most likely to distinguish them from partnerships is the sharing of product rather than profit. It is, however, unnecessary to pursue that matter here."
Crennan J (as her Honour then was) articulated the position of the Australian law in relation to joint ventures in Gibson Motorsport Merchandise Pty Ltd v Forbes [2005] FCA 749 at [77]-[81]:
"[77] Whilst the term 'joint venture' has no settled common law meaning in Australian law, and there is no separate body of law dealing with the special features of joint ventures, like the well‑developed jurisprudence in respect of partnership, some legal incidents of joint ventures were dealt with in United Dominions at 12-13 (per Mason, Brennan and Deane JJ) and at 14-16 (per Dawson J).
[78] Distinctions which can be made between a joint venture and a partnership are not always simple or without controversy. The term 'joint venture' has conventionally and commonly been used to refer to an association for the purposes of a single undertaking rather than for the continuous 'carrying on (of a) business' characterising a partnership (s 5, Partnership Act 1958 (Vic)), yet, numerous single undertakings, to which the term joint venture may reasonably be applied, do not always in truth lie outside the uniform Partnership Acts or partnership principles and the collocation has certainly been used in a general sense to describe undertakings which do not have legal attributes differing from partnerships: see: J D Merralls QC., 'Mining and Petroleum Joint Ventures in Australia: Some Basic Legal Concepts' (1988) 62 ALJ 907; see also, extra‑judicially, Hon. Justice McPherson, 'Joint Ventures' in Equity and Commercial Relationships, ed. Finn, 19 at 30-32, and Hon. Mr Justice J A Dowsett 'Operator of a Joint Venture - Principal or Agent' (1987) AMPLA Yearbook 269, and see generally W D Duncan (ed) Joint Venture Law in Australia (1995) Ch 2. Federation Press in Association with the Centre for Commercial and Property Law, Queensland University of Technology, 1994.
[79] While joint venture agreements are generally governed by the principles applicable to contract and property, equity, through the mechanism of a constructive trust, may be called in aid in circumstances of incomplete agreement: Muschinski v Dodds (1985) 160 CLR 583 ('Muschinski') at 618, or called in aid because of a breach of a fiduciary duty: Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300 ('Ravinder v Krizaic'). Agreed contractual duties of joint venturers are not necessarily or routinely subject to any implied duty to act in good faith: Noranda Australia Ltd v Lachlan Resources N.L. (1988) 14 NSWLR 1; Australian Oil and Gas Corporation Ltd v Bridge Oil Limited (1995) 14 AMPLA Bull 60 at 70, Kelly v C.A. & L. Bell Commodities Corporation Pty Limited (1989) 18 NSWLR 248 at 258. See also the observations of Ormiston J. in Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 96-97 ('Vroon').
[80] Recognisable and common characteristics of joint ventures include:
1. Participants hold proprietary interests in the assets of the joint undertaking, often, but not necessarily, as tenants-in-common: see the abovementioned article of Mr Merralls QC.
2. Participants exercise joint control of the undertaking.
3. Participants contribute to the joint undertaking, not necessarily equally; such contributions may be disparate: Canny Gabriel Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at 327; Television Broadcasters Limited v Ashton's Nominees Pty Ltd (No.1) (1979) 22 SASR 552.
4. Participants in the joint undertaking enjoy rights and assume obligations, which are often several, and calculated by reference to ownership of shares and/or contributions made.
5. Participants have a joint (or community of) interest in the performance of the undertaking's purpose: Cummings v Lewis (1993) 41 FCR 559 at 314/315 (per Cooper J);
6. Participants associate in the undertaking for mutual commercial gain which can be mutual profits.
[81] These recognisable and common characteristics can be found in various permutations and constellations such that it is not appropriate to attempt to isolate which characteristics would be both necessary and sufficient for the constitution of a joint venture agreement. It is always a question of fact whether any particular undertaking constitutes a joint undertaking for mutual commercial gain. (also see EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd (2010) 41 WAR 23 at [10]; Perry v Anthony [2016] NSWCA 56 at [56])." (emphasis added)
[6]
Joint ventures and fiduciary obligations
The existence of a joint venture itself is not enough to give rise to fiduciary obligations. Ultimately this is because, as with all fiduciary relationships, the existence and scope of any fiduciary obligations arising from the alleged joint venture must be determined, as I have already said, by the character and purpose of the parties' joint venture relationship: Birtchnell v Equity Trustees Executors and Agencies Co Ltd (1929) 42 CLR 384 at 408; Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309 at [156]; Kelly v CA & L Bell Commodities Corporation Pty Ltd (1989) 18 NSWLR 248 at 256; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 539. Therefore, not all joint venture relationships will automatically give rise to fiduciary obligations.
As the High Court (per French CJ, Gummow, Hayne, Heydon and Kiefel JJ) stated in John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [44]:
"Describing…arrangements as a 'joint venture' does not however have any particular legal consequences. The rights and obligations of the parties remain to be determined by examination of the detail of what they have agreed and done."
(also see Gibson Motorsport v Forbes (2006) 149 FCR 569 at [2]; United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10-11)
Examining the relationship between joint ventures and fiduciary duties, and when fiduciary duties may be said to arise in the context of a joint venture, Finn J explained in Gibson Motorsport v Forbes (2006) 149 FCR 569 at [16]:
"If the term "fiduciary relationship" be substituted for "joint venture", this observation reflects commonplace experience in this country. The short point to be made is that cooperative action, the pooling or sharing of resources (human and otherwise), or multiple, interlocking or interdependent contracts are characteristic of many types of business arrangements which only in a colloquial sense could be described as a "joint venture". Such arrangements may highlight the importance in a given instance of such implied duties as the duty to cooperate (cf, Butt v M'Donald (1896) 7 QLJ 68). Rarely, though, will there be anything fiduciary about the arrangements themselves as they will not envisage a form or forms of cooperation which is or are potentially fiduciary in character (eg, the sharing of control or of profits and losses; the creation of a commonly owned vehicle to effectuate what is agreed; the assumption of similar rights and obligations etc)."
Mason, Brennan and Deane JJ also stated in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10-11:
"One would need a more confined and precise notion of what constitutes a "joint venture" than that which the term bears as a matter of ordinary language before it could be said by way of general proposition that the relationship between joint venturers is necessarily a fiduciary one: but cf. per Cardozo CJ in Meinhard v. Salmon. The most that can be said is that whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken. If the joint venture takes the form of a partnership, the fact that it is confined to one joint undertaking as distinct from being a continuing relationship will not prevent the relationship between the joint venturers from being a fiduciary one. In such a case, the joint venturers will be under fiduciary duties to one another, including fiduciary duties in relation to property the subject of the joint venture, which are the ordinary incidents of the partnership relationship, though those fiduciary duties will be moulded to the character of the particular relationship."
Similarly, Dawson J said in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 16:
"Although the relationship between participants in a joint venture which is not a partnership will be governed by the particular contract rather than extrinsic principles of law, the relationship may nevertheless be a fiduciary one if the necessary confidence is reposed by the participants in one another. Of course, in a partnership the parties are agents for each other and this may constitute a separate reason for the fiduciary character of a partnership. There may be no such agency between participants in a joint venture but, as Dixon J. pointed out in Birtchnell v. Equity Trustees, Executors and Agency Co. Ltd. (1929) 42 CLR 384, at pp 407-408, even in a partnership it is really the mutual confidence between partners which imposes fiduciary duties upon them and the same confidence may, in appropriate circumstances, be found to exist between participants in a joint venture."
[7]
Contractual relationships and fiduciary duties
It is difficult for a court to hold that a fiduciary relationship exists where "a term to like effect as the suggested fiduciary obligation cannot be implied": John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [92] (per French CJ, Gummow, Hayne, Heydon and Kiefel JJ).
In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at [70], Mason J (as his Honour then was), explained the relationship between contractual and fiduciary obligations:
"That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction."
(affirmed in John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [91])
Approving the dissent of Mason J in Hospital Products, the High Court observed (per French CJ, Gummow, Hayne, Heydon and Kiefel JJ) in John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [90] that:
"…the reason why commercial transactions falling outside the accepted traditional categories of fiduciary relationship often do not give rise to fiduciary duties is not that they are "commercial" in nature, but that they do not meet the criteria for characterisation as fiduciary in nature." (citations omitted)
[8]
Intention to contract
If a contract is found to exist, the parties must objectively intend to create legally binding relations. As the High Court explained in the seminal case of Australian Woollen Mills Pty Ltd v The Commonwealth (1953-1954) 92 CLR 424 at 457:
"It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.''
The court is not concerned with the parties' subjective intention to contract. It is only concerned with their objective intention, to be ascertained from the totality of the evidence in the case: Australian Woollen Mills Pty Ltd v The Commonwealth (1953-1954) 92 CLR 424 at 457; Taylor & Ors v Johnson (1982-1983) 151 CLR 422 at 429; Merritt v Merritt [1970] 1 WLR 1211 at 1213; Parker v Clark [1960] 1 WLR 286 at 293; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at [20]; Wyllie v Tarrison Pty Ltd [2007] NSWCA 184 at [62]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40], [72]; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at [34] (per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ); Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25] (per Gaudron, McHugh, Hayne and Callinan JJ).
Most recently approved by the Gageler, Nettle and Gordon JJ in Simic v New South Wales Land and Housing Corporation [2016] HCA 47 at [18] and [78], French CJ, Nettle and Gordon JJ explained in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104 at [46]-[52]:
"[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.
[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".
[52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd." (citations omitted)
(See the judgments of Bell and Gageler JJ at [119]-[121] and Kiefel and Keane JJ at [107]-[113] which are of similar effect).
Gaudron, McHugh, Hayne and Callinan JJ elaborated on the appropriate test for determining intention to contract in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-106:
"It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty." (Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 457 per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ) To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet "[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts" (South Australia v The Commonwealth (1962) 108 CLR 130 at 154 per Windeyer J).
Because the inquiry about this last aspect may take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances (South Australia v The Commonwealth (1962) 108 CLR 130 at 154; Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 367 per Windeyer J), not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (Masters v Cameron (1954) 91 CLR 353 at 362 per Dixon CJ, McTiernan and Kitto JJ; ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-549 per Gleeson CJ) (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened (Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 348-353 per Mason J; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436; 186 ALR 289). It is not a search for the uncommunicated subjective motives or intentions of the parties."
Further, the commercial context and parties' previous dealings are relevant to determining whether a binding agreement has come into existence between the parties: Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605 at [15] (per Bathurst CJ), [72], [84] (per Beazley P), [162] (per Meagher JA); Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548; Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 138. It also appropriate to consider the object of the transaction between the parties: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22] (per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 82 ALJR 419 at [8] (per Gleeson CJ).
Regard can also be given to the conduct of the parties after they make any arrangement, to give meaning to the communications between them and to determine whether they objectively intended to be contractually bound: Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at 69; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-106; Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 at 548-549.
As Bathurst CJ explained in Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605 at [15]:
"It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties' dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337)."
[9]
The existence of an oral contract
Ascertaining the existence and terms of an oral contract is a question of fact: Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at [90] (per Campbell JA, Allsop P and Basten JA agreeing); Gardiner v Grigg (1938) 38 SR (NSW) 524 at 532 (per Jordan CJ, Nicholas J agreeing); Maggs v Marsh [2006] EWCA Civ 1058 at [26] (per Smith LJ, Moses and Hallett LJJ agreeing).
Consideration of surrounding circumstances and post contractual conduct is permissible when the existence or terms of an oral contract are in issue: County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [20] (per Spigelman CJ, Beazley and McColl JJA); Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 at [47]; King v Benecke [2013] NSWSC 568 at [186].
Spigelman CJ explained in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]:
"The subject matter and the concomitant terms of the [oral] contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?"
In Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, Heydon JA (as his Honour then was) observed:
"…a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words … The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement … The conduct of the parties, however, must be capable of proving all the essential elements of an express contract … Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances … Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed."
In Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424, Allsop J (as he then was) similarly explained:
"[Contracts] can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t's or where they think they have done so … Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound/ in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract." (citations omitted)
[10]
Implying terms of an oral contract
Where a term is sought to be implied into a contract, it is necessary to turn to the requirements set out in the well-known passage from BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283, where Lord Simon of Glaisdale delivered the majority judgment and observed:
"…for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
(see also Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at [9] and Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [21]-[29])
Where there is no written contract between the parties, the above test is not to be strictly or rigidly applied: Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 121; Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 at [51].
The key question that arises where a contract is "not reduced to complete written form" is whether "the implication of the particular term is necessary for the reasonable or effective operation of the contract in the circumstances of the case": Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 (per Brennan CJ and Dawson and Toohey JJ); Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588 at [46] (per Gaudron, McHugh, Gummow and Hayne JJ); Hawkins v Clayton (1988) 164 CLR 539 at 573 (per Deane J).
[11]
Estoppel by convention
An estoppel by convention arises where the relevant parties make an assumption about the conventional basis of their relationship: Dabbs v Seaman (1925) 36 CLR 538 at 549; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226 at 244-5. This usually arises where parties act on the basis of agreed or assumed facts and are 'estopped' from denying those agreed or assumed facts because such a denial will cause detriment to one of them: Waterman v Gerling Australia Insurance Co Pty Ltd (2005) 65 NSWLR 300 at 322-323; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [200]; Thompson v Palmer (1933) 49 CLR 507 at 547.
In Ryledar Pty Ltd & Anor v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [194]-[209], Tobias JA reviewed the authorities and explained:
"[194]…estoppel by convention is a form of estoppel founded upon an assumed state of affairs by the parties whether as to a matter of fact or a matter of legal effect which both will be estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norrich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244-245. That assumed state of affairs takes as a given the terms of the contract as known to and understood by the parties but from which the parties have departed for the purpose of their furtherance of their relationship under the contract.
[195] As Dixon J therefore observed in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 676, belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.
[196] In his recent book Estoppel by Conduct and Election, Handley described estoppel by convention in the following terms (at par 8-001):
"When parties make a statement of fact or of mixed fact and law the conventional basis of their transaction … both are estopped from questioning its truth for the purpose of that transaction. Estoppels by convention can be created ad hoc, expressly, by a course of dealing, or by other acts and declarations. In such a case 'there must be some mutually manifest conduct by the parties' with the intention of effecting their legal relationship."
[197] In Amalgamated Investment & Property Co Ltd v Texas Commercial International Bank Ltd (in liq) [1982] QB 84, Lord Denning MR observed (at 121):
"To use the phrase of Latham CJ and Dixon J in [ Grundt ] … the parties by their course of dealing adopted a 'conventional basis' for the governance of the relations between them … They are bound by the 'conventional basis' in which they conducted their affairs. The reason is because it would be altogether unjust to allow either party to insist on the strict interpretation of the original terms of the contract - when it would be inequitable to do so having regard to dealings which have taken place between the parties."
His Lordship also observed that:
"[t]here is no need to enquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it."
[198] The principles were restated by Lord Steyn in delivering the principal speech in The Indian Grace (No. 2) [1998] AC 878 at 913 where his Lordship said:
"… an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared … or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption."
[199] Recently the principles were restated by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5, where his Honour observed (at [30]) that the doctrine of conventional estoppel precluded either party to a contract from denying an assumption which has formed the conventional basis of the relationship between them. Accordingly, it is necessary to determine whether the parties have in fact adopted such an assumption as the conventional basis of their relationship.
[200] His Honour then stated the matters necessary to establish conventional estoppel (at [32]) as being that:
(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;
(b) the defendant has adopted the same assumption;
(c) both parties have conducted their relationship on the basis of that mutual assumption;
(d) each party knew or intended that the other act on that basis; and
(e) departure from the assumption will occasion detriment to the plaintiff.
[201] In noting the differences between promissory estoppel and conventional estoppel his Honour then observed with respect to the latter (at [33]) that it:
"is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved so as to hold both parties to their common understanding."
[202] Before dealing with the factual material, two other legal aspects of conventional estoppel need to be noted. The first is whether the parol evidence rule operates to exclude evidence of an alleged estoppel by convention arising from pre-contract negotiations. This is relevant in the present case given that Ryledar relies upon the correspondence between the parties containing their negotiations which led up to the 1999 Variation. The second concerns whether it is necessary for Ryledar to establish reliance and detriment before it can establish the relevant estoppel. This question has been answered by this Court in the affirmative in MK & JA Roche Pty Ltd v Metro Edgely Pty Ltd [2005] NSWCA 39 where Hodgson JA, with whom Beazley and Ipp JJA agreed, held (at [72]) that reliance and detriment were essential for the existence of conventional estoppel.
[203] Hodgson JA referred to the statement of Dixon J in Grundt (at 674), that the relevant principle was that "the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations". That principle, he continued, involved actions such that the party relying on the estoppel would suffer a detriment if the other party were afterwards allowed to set up rights inconsistent with that assumption. After citing the Commonwealth v Verwayen (1990) 170 CLR 394 at 444, his Honour concluded that conventional estoppel required that the party relying thereon must have "placed himself in a position of significant disadvantage if departure from the assumption be permitted".
[204] So far as the parol evidence rule is concerned, in Johnson Matthey Ltd v A C Rochester Overseas Corporation (1990) 23 NSWLR 190, McLelland J, after referring to the remarks of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352 as to the unrewarding and time consuming exercise in investigating pre-contract negotiations and the similar remarks of Kirby P in State Rail Authority of NSW v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 177, stated his conclusion in the following terms (at [195]-[196]):
"In my view, reasons of principle and policy combine to exclude evidence of alleged estoppels by convention or any other agreements or understandings arising in the course of pre-contract negotiations which culminate in a written contract, except in proceedings for the rectification of the written contract, when the established requirement, as a condition of obtaining relief, of clear and convincing proof of a common intention of the parties not reflected in the written document provide the necessary degree of security of the written contract. I would therefore exclude on general principles the evidence of pre-contract negotiations for the purpose of proving an alleged estoppel by convention."
[205] In Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 at 279 [52], Bryson J, as his Honour then was, followed and applied the views of McLelland in Johnson Matthey as being well founded on the principle of giving effect:
"to the formal, final and considered expression of the parties' contractual intention; the fact that they chose writing to express that intention shows the relative weight they attributed to earlier arrangements and understandings."
[206] Bryson J in so holding declined to follow the decision to the contrary of Rolfe J in Whittet v State Bank of New South Wales (1991) 24 NSWLR 146 where his Honour declined to follow Johnson Matthey and held that matters arising out of pre-contractual negotiations, which could be proved to the extent necessary to justify rectification, namely, by clear and convincing proof, may be relied upon to found an estoppel by convention. In so doing, his Honour referred to the decision of this Court in State Rail Authority noting that McHugh JA expressly found that regard could be had to pre-contractual negotiations and that neither Kirby P nor Glass JA suggested that this was incorrect. Rolfe J acknowledged the significance to be accorded to written contracts but considered that the relevant protection for maintaining the integrity of a written instrument was the requirement of clear and convincing proof.
[207] In Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424, Allsop J, with whom Drummond and Mansfield JJ agreed, at 543-544 [444]-[446] reviewed the Australian authorities which both permitted reliance upon pre-contractual negotiations to set up an estoppel by convention notwithstanding that those negotiations culminated in a written contract as well as those authorities to the opposite effect.
[208] Relevantly, his Honour observed (at 543-544 [446]):
"Though not specifically directed to equitable estoppel arising out of pre-contractual communications, McPherson JA in MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152 at 154-156 in dealing with the equitable remedy of rectification arising from pre-contractual communications saw little merit in the argument that the parol evidence rule or an entire agreement clause impeded that remedy in the face of material calling it in aid to remedy a mistake. If that be correct, as I think that it plainly is, it is difficult to see why another remedy of equity based on unconscionability and equally arising out of pre-contractual communications should be defeated by a common law rule about the construction of documents."
Ultimately, however, his Honour found it unnecessary to decide this question (at 544 [447]).
[209] In Walterman v Gerling Australia Insurance Co Pty Ltd (2005) 65 NSWLR 300, Brereton J at 321-323 referred to the line of authority which held that parol evidence of pre-contractual negotiations which culminated in a written contract might not be relied upon to set up an alleged estoppel by convention. However, in that case it was argued that where there was a written contract, parol evidence of post-contractual as well as pre-contractual matters should not be permitted to set up such an estoppel. His Honour rejected that submission with respect to post contractual matters. This was because the policy considerations which informed the decision of McLelland J in Johnson Matthey did not have the same force when it came to post-contractual conduct because (at 323)
"in the latter context what is set up is not an argument that the
terms of the parties' arrangements when made are to be found in the oral negotiations and not the written agreement, but rather that since the contract was made, the parties have acted on an assumed state of affairs which is inconsistent with the contractual position and has arisen as a result of conduct after the contract was made."
(emphasis not in original)
[12]
Mixing of funds held on trust
When Mr Adams received and held funds on behalf of the participants in each draw, he clearly held those funds on trust. The fiduciary obligations arising if Mr Adams mingled or mixed these trust funds with non-trust funds were explained in Cook v Addison (1869) LR 7 Eq 466 at 470:
"It is a well-established doctrine in this court, that if a trustee or agent mixes and confuses the property which he holds in a fiduciary character with his own property, so as that they cannot be separated with perfect accuracy, he is liable for the whole." (emphasis added)
This was applied by Ungoed-Thomas J in Re Tilleys Will Trusts [1967] Ch 1179 at 1183 who said:
"The words in that passage so as that they cannot be separated with perfect accuracy are an essential part of the Vice-Chancellors proposition, and indeed of the principle of Lupton v White 15 Ves Jun 432. If a trustee mixes trust assets with his own, the onus is on the trustee to distinguish the separate assets, and to the extent that he fails to do so they belong to the trust."
Similarly, in Foskett v McKeown [2001] 1 AC 102, Millet LJ approved the comments of Page Wood VC in Frith v Cartland (1865) 2 Hem & M 417 at 420, explaining:
"…if a man mixes trust funds with his own, the whole will be treated as the trust property, except so far as he may be able to distinguish what is his own."
Most recently, Lord Neuberger of Abbotsbury MR further approved the above line of authority and further stated in Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administrative receivership) and others [2012] Ch 453 at [138]:
"Where he has mixed the funds held on trust with his own funds, the onus should be on the fiduciary to establish that part, and what part, of the mixed fund is his property".
(see also In re Tilley's Will Trusts [1967] Ch 1179 at 1182-1189; Re Sports Alive Pty Ltd (in liquidation) [2013] VSC 69 at [125]-[128]; Lupton v White (1808) 15 Ves 432; Re Hallett's Estate (1880) 13 Ch D 696; Farnell v Cox (1898) 19 LR (NSW) Eq 142)
Australian courts have accepted these principles: Brady v Stapleton (1952) 88 CLR 322 at 336-339; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 109-110.
In the context of lottery tickets, Dixon CJ explained in Van Rassel v Kroon (1953) 87 CLR 298 at 303:
"If there is any confusion, the burden must be upon him of showing which is his property. It could not be otherwise where the duty rests upon him as a fiduciary not to confuse his own beneficial property with that which is subject to his fiduciary obligations and where at the same time his are the hands in which are placed the means of identifying the property."
As such, if there is 'confusion' about which tickets in the 5 May 2016 draw belonged to the Winning Syndicate and which belonged to the 2016 Core Syndicate, Mr Adams would bear the onus of particularising which syndicate had a beneficial interest in the multiple tickets he purchased in the 5 May 2016 draw. The plaintiff need not prove actual mixing of funds, but only satisfy the court that on the balance of probabilities, there was 'confusion' about who had an interest in each ticket.
Further, where it is proven that there has been a mixing of funds, and these mixed funds are used to acquire other property which is not "specifically severable", the trust funds may be traced into the newly acquired property and the beneficiaries may claim an interest in the new property proportionate to their trust funds used to acquire it: Scott v Scott (1963) 109 CLR 649 at [14]; Raulfs v Fishy Bite Pty Ltd; Fishy Bite Pty Ltd v Raulfs [2012] NSWCA 135 at [95]. As Ungoed-Thomas J explained in Re Tilleys Will Trusts [1967] Ch 1179 at 1193:
"…if, having regard to all the circumstances of the case objectively considered, it appears that the trustee has in fact, whatever his intention, laid out trust moneys in or towards a purchase, then the beneficiaries are entitled to the property purchased and any profits which it produces to the extent to which it has been paid for out of the trust moneys."
(see also Hagan v Waterhouse (No 2) (1991) 34 NSWLR 308 at 357-359; Heperu Pty Limited v Belle (2009) 76 NSWLR 230 at 256-259)
[13]
The imposition of a remedial constructive trust
It is a feature of precedent that an equitable remedy must be 'appropriate' in the circumstances and achieve 'practical justice' for the parties: see Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [503]-[512].
A constructive trust is an institution or remedy used to grant equitable relief which is to some degree equivalent or analogous to relief that would be available against an express trustee for breach of trust: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at [152].
A constructive trust is distinct and typically remedial in nature, usually imposed by operation of law when it would be inequitable, by reference to established equitable principles, for a defendant to unconscionably retain a benefit: Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137.
Unconscionability has been accepted by the High Court as the benchmark criterion for determining the propriety of the award of a constructive trust. As Deane J said in Muschinski v Dodds (1985) 160 CLR 583 at 614:
Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle."
Deane J added at 615 that constructive trusts are not "mediums for the indulgence of idiosyncratic notions of fairness and justice". Further, constructive trusts go beyond unjust enrichment as a sole basis, unlike in jurisdictions such as Canada: Rathwell v Rathwell (1978) 83 DLR (3d) 289 at 305; Pettkus v Becker (1980) 117 DLR (3d) at 257; Sorochan v Sorochan (1986) 29 DLR (4th) at 1; Everson v Rich (1988) 53 DLR (4d) at 470.
A common intention constructive trust is a particular species of constructive trust that may be ordered by a court where two requirements are met. First, there must be the existence of a common intention between the parties and secondly, one party must act to their detriment based on that common intention: Green v Green (1989) 17 NSWLR 343 at 355; Stowe and Devereaux Holdings Pty Ltd v Stowe (1995) 15 WAR 363.
In Parsons and Parsons v McBain (2001) 109 FCR 120, Black CJ, Kiefel and Finkelstein JJ explained at [9]-[15]:
"[9] There is a divergence of views as to when a constructive trust such as that under consideration arises. Some courts have taken the position that this type of trust is not a title to, or lien on, property, but a mere remedy to which equity resorts in granting relief against fraud, and it does not exist so as to affect property held by a wrongdoer until it is declared by a court of equity as a means of affording relief: International Refugee Organization v Maryland Drydock Co, 179 F2d 284, 287 (4th Cir, 1950). This view is based on the proposition that in every case where a constructive trust may arise, the beneficiary has an option to claim a beneficial interest in the trust property or sue for a personal remedy, and it is only when the beneficiary successfully obtains a declaration that there is a constructive trust, that he will have elected to forego his non-proprietary claim: see generally Bogert, Trusts and Trustees (Revised 2nd ed, 1978) s 471.
[10] This approach has been roundly criticised by many commentators including the great equity lawyer Austin Scott. In his treatise on the Law of Trusts (4th ed, 1989) at s 462.4, Professor Scott wrote:
"It has been suggested that the constructive trust does not arise until the defrauded person brings a suit in equity and the court decrees specific restitution. The notion seems to be that a constructive trust is created by the court and that it therefore does not arise until the court creates it by its decree. The notion is in part fostered by the terminology employed. It is sometimes said that when there are sufficient grounds for imposing a constructive trust, the court 'constructs' a trust. The expression is, of course, absurd. The word 'constructive' is derived from the verb 'construe', not from the verb 'construct'. It is true that both verbs are derived from the same Latin word, but they have quite different meanings in English. No one would think of saying that where there is constructive fraud or malice or notice, the court constructs fraud or malice or notice. When it is said that there is constructive fraud or malice or notice, what is meant is that, although there is no actual fraud or malice or notice, the same consequences, or many of them, follow. The court construes the circumstances in the sense that it explains or interprets them; it does not construct them. So in the case of a constructive trust, the court finds from the circumstances that some of the consequences that would follow from the creation of an express trust should also follow."
[11] The law in England is to this effect. For example, in In re Sharpe (A Bankrupt); Ex parte Trustee of the Bankrupt's Property v The Bankrupt [1980] 1 WLR 219, a judgment handed down four months before the decision in Re Osborn, Browne-Wilkinson J considered whether an irrevocable licence that arose under a "common intention constructive trust" was binding on a trustee in bankruptcy. The trustee had argued that the trust was not a substantive right but an equitable remedy and that it would be inequitable to grant the remedy after bankruptcy. Browne-Wilkinson J rejected this argument. He said (at 225):
"I cannot accept that argument in that form. Even if it be right to say that the courts can impose a constructive trust as a remedy in certain cases - which to my mind is a novel concept in English law - in order to provide a remedy the court must first find a right which has been infringed. So far as land is concerned an oral agreement to create any interest in it must be evidenced in writing: see section 40 of the Law of Property Act 1925. Therefore if these irrevocable licences create an interest in land, the rights cannot rest simply on an oral contract. The introduction of an interest under a constructive trust is an essential ingredient if the plaintiff has any right at all. Therefore in cases such as this, it cannot be that the interest in property arises for the first time when the court declares it to exist. The right must have arisen at the time of the transaction in order for the plaintiff to have any right the breach of which can be remedied."
[12] The law in Australia is the same. In Giumelli v Giumelli (1999) 196 CLR 101 the respondent, who was in partnership with his parents, had been promised by them that he would become the owner of part of their property, known as Dwellingup. In reliance upon that promise, the respondent remained in the partnership and worked to improve the Dwellingup property. The High Court found that the parents held the land upon a constructive trust. As to the nature of the trust, Gleeson CJ, McHugh, Gummow and Callinan JJ, in their joint judgment, said (at 112) that:
"A constructive trust of this nature is a remedial response to the claim to equitable intervention made out by the plaintiff. It obliges the holder of the legal title to surrender the property in question, thereby bringing about a determination of the rights and titles of the parties.
The term 'constructive trust' is used in various senses when identifying a remedy provided by a court of equity. The trust institution usually involves both the holding of property by the trustee and a personal liability to account in a suit for breach of trust for the discharge of the trustee's duties. However, some constructive trusts create or recognise no proprietary interest. Rather there is the imposition of a personal liability to account in the same manner as that of an express trustee. An example of a constructive trust in this sense is the imposition of personal liability upon one 'who dishonestly procures or assists in a breach of trust or fiduciary obligation' by a trustee or other fiduciary.
In the present case, the constructive trust is proprietary in nature. It attaches to the Dwellingup property. Such a trust does not necessarily impose upon the holder of the legal title the various administrative duties and fiduciary obligations which attend the settlement of property to be held by a trustee upon an express trust for successive interests. Rather, the order made by the Full Court is akin to orders for conveyance made by Lord Westbury LC in Dillwyn v Llewelyn (1862) 4 De G F & J 517 at 523 [ER 1285 at 1287] and, more recently, by McPherson J in Riches v Hogben [1985] 2 Qd R 292 at 302.
In these cases, the equity which founded the relief obtained was found in an assumption as to the future acquisition of ownership of property which had been induced by representations upon which there had been detrimental reliance by the plaintiff. This is a well recognised variety of estoppel as understood in equity and may found relief which requires the taking of active steps by the defendant."
[13] Thus, the notion that a "common intention constructive trust" first comes into existence when so declared by the court must be rejected. In virtue of the fact that such a view informed the decision in Re Osborn, the case should not be followed. In any event, it is clear that Deane J was not of opinion that a "common intention constructive trust" is brought into existence by court order. In Muschinski, at 614, he said:
"Equity acts consistently and in accordance with principle. The old maxim that equity regards as done that which ought to be done is as applicable to enforce equitable obligations as it is to create them and, notwithstanding that the constructive trust is remedial in both origin and nature, there does not need to have been a curial declaration or order before equity will recognize the prior existence of a constructive trust … Where an equity court would retrospectively impose a constructive trust by way of equitable remedy, its availability as such a remedy provides the basis for, and governs the content of, its existence inter partes independently of any formal order declaring or enforcing it. In this more limited sense, the constructive trust is also properly seen as both 'remedy' and 'institution'. Indeed, for the student of equity, there can be no true dichotomy between the two notions."
[14] It was submitted by the trustee, however, that an observation by the Full Court in Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 was inconsistent with the views just expressed. The Full Court said (at 365) that:
"… the court has a discretion to modify the prima facie date on which the [constructive] trust takes effect. We would adopt the view of A J Oakley that 'in the absence of any judicial order to the contrary, a constructive trust will take effect from the moment at which the conduct which has given rise to its imposition occurs': Oakley, Constructive Trusts (3rd ed, 1997), p 5. See also Pawlowski, pp 12, 130-132. Compare Re Sabri; Ex parte Brien v Australia & New Zealand Banking Group Ltd (1996) 21 Fam LR 213 at 223-229."
[15] We do not agree. We do not take the word "discretion" in the passage cited to mean that what is involved, in determining when a constructive trust is deemed to exist, is a weighing process where various factors found to be relevant are taken into account, an assessment made of the weight to be given to each of those factors, and then a weighing of the factors so assessed and a determination made as a result of that process. A decision of that kind may be described as discretionary but as the cases show, that is not what is involved in determining the date on which a constructive trust is to take effect."
[14]
The evidence
A number of themes permeated the evidence of all of the witnesses. In relation to Mr Robert Adams' administration of the syndicates generally, many of the witnesses identified that Mr Adams made notes in an exercise book after receiving payment from them to enter draws. They also stated that they received a photocopy of the relevant tickets prior to each draw or that such a photocopy would be placed on the factory notice board with the names of the people in that draw. Most of the witnesses, crucially Mr King and Mr Robert Adams, accepted that the Pre 2016 Core Syndicate had closed by early 2016 and was replaced by a new regime, the 2016 Core Syndicate (T 3 per Gyles SC, 14 per King, 49 per King, 171-172 per R Adams; Adams affidavit of 15 June 2016 [79]; King affidavit of 17 May 2016 [26]; Andres affidavit of 15 June 2016 [3]; Cheak affidavit of 15 June 2016 [3]; Mico affidavit of 15 June 2016 [2]; Hashim affidavit of 15 June 2016 [2]; Cheak affidavit of 4 August 2016 [3]).
Each of the witnesses gave varying views relating to the processes Mr Robert Adams followed when organising the lottery syndicates. Mr Adams himself described his processes as being, at some points, a "dog's breakfast" (T 113). His processes may have been occasionally haphazard, which explains the various accounts of each witness in relation to the practises Mr Adams used when recording the members of each syndicate and receiving their payment. Yet, it is clear from the evidence as a whole and the history of Mr Robert Adams' administration of the syndicates at Prysmian that he was a trusted and well-regarded organiser. All of the factory workers continued to play in his syndicates. Furthermore, they all confirmed that Mr Adams had total discretion as to what draw they would play in, how many tickets to buy and how many participants there would be in each draw or syndicate.
It is necessary to examine each witness' account of the circumstances surrounding the Winning Syndicate in greater detail below. In a somewhat novel situation such as this, a careful account of the circumstances of the case is a necessary step to properly consider whether a fiduciary obligation and/or contract existed between the parties.
[15]
Brendan King
Mr King, the plaintiff swore four affidavits, dated 17 May, 25 May, 30 June and 30 August 2016.
In his first and principal affidavit the plaintiff describes himself as a forty three year old production manager at Prysmian.
He commenced employment in about 2011 as a process owner, which was a factory management role. During the time he has been employed at Prysmian he has only ever been located at the Heathcote Road site although there are five main operational factories, two warehouses, a maintenance building, a drum shop and a three storeyed office building. In total there are about 300 employees on site at Heathcote Road.
Workers at the manufacturing facility work shift work.
He stated that after about a year in employment he joined what he describes as the workplace lottery syndicate. He was asked by Mr Adams to join and was told by Mr Adams that it would involve a contribution of about $5 a week. Mr King gave Mr Adams money when he requested it. Mr Adams would request funds irregularly. Sometimes other people would collect money from Mr King on Mr Adams' behalf (King affidavit of 17 May 2016 [15]-[16]).
Mr King stated that from time to time he took the initiative to check with Mr Adams to ensure he was up to date with any payments and from time to time asked Mr Adams if he owed any monies. Mr Adams would then get back to him if arrears were owing and Mr King would bring his payments up to date as it were (King affidavit of 17 May 2016 [17]).
Mr King stated that Mr Adams had a list of people in the syndicate which was handwritten on a piece of paper. He said that Mr Adams would occasionally pin the piece of paper with the syndicate members' names and the lottery ticket to the notice board or give various persons a copy of the ticket without their names on it. Mr King only became aware of who was in the syndicate by word of mouth and also by looking at the list posted on the board from time to time (King affidavit of 17 May 2016 [18]-[20]).
On Mr King's understanding, the members of syndicate changed from time to time, either because people withdrew or no longer wanted to play. However there were usually between 18 and 22 people who were in the syndicate (King affidavit of 17 May 2016 [21]-[22]).
In about December 2015, Mr Adams approached Mr King indicating that there was a surplus of money in the "kitty" and he was going to divide it up against employees. Shortly after this, Mr King received an envelope in which approximately $300 to $400 in cash was contained (King affidavit of 17 May 2016 [25]).
On or about 11 January 2016, Mr Adams was in Mr King's office. He informed Mr King that the Pre 2016 Core Syndicate was finished and that Mr Adams had found it too hard to collect people's monies and intended to put a notice on the notice board indicating that the syndicate was finished. Mr Adams told Mr King he was putting together a new syndicate and asked Mr Adams did he want to be in. If so, Mr Adams said Mr King would have to contribute $50. Mr King said he informed Mr Adams that he wanted to be involved and that he would get the money to him. Mr King recalled some days later seeing a note on the notice board advising all syndicate members that the former syndicate had been dissolved (King affidavit of 17 May 2016 [26]-[27]).
During 2016, Mr King received copies of tickets for the draw. Normally a copy would be left on his desk. He kept some but not all of the tickets he received in this manner (King affidavit of 17 May 2016 [29]). Annexed to his affidavit are a number of copies of tickets, dated 14 March, 15 March, 27 April, 29 April and 1 May 2016.
Mr King asserts that on 13 January 2016 he withdrew $50 from an ATM and at some point in that week or early the following week he handed $50 to Mr Adams. He told Mr Adams at the time it was the money for the Lotto (King affidavit of 17 May 2016 [30]-[31]). Mr King produced a bank statement indicating this withdrawal on 13 January 2016 at 6:58am (CB 124).
Mr King also asserts that in or about February he noticed that Mr Adams had not asked him for any money since January. He said he spoke to Mr Adams and asked him to let him know when he needed the next lot of money for the Lotto. He said Mr Adams told him that they had won some money and that he would use the money in the "kitty" and keep playing, and tell Mr King when the money had run out (King affidavit of 17 May 2016 [32]).
Although he cannot recall the exact date, Mr King thought that at some time in February, after a request by Mr Adams, he left $50 under the keyboard in his office for the syndicate. He asserts he rang Mr Beever and told him that he had put $50 under his keyboard. He asked Mr Beever to pick it up and pass it on to Mr Adams (King affidavit of 17 May 2016 [33]).
On or about 9 March, Mr King asserts that he was approached by Mr Cheak who told him that Mr Adams wanted the next lot of money. He indicated he would get that money and says that he withdrew $60 on 14 March at 7am from his ATM. Mr King says that afternoon he gave Mr Cheak $50 and told him that that was the money for Mr Adams for the Lotto. Mr King recalled that Mr Cheak said that he would pass the monies on (King affidavit of 17 May 2016 [35]).
On or about Wednesday 27 April, Mr King and Mr Adams had a conversation in which Mr Adams told Mr King that there was a big draw coming up for Mother's Day and that "we'll be in it". Mr Adams told Mr King that he was going to start collecting for the next lot of draws "after that" (King affidavit of 17 May 2016 [36]). Mr King told Mr Adams to let him know when further monies were required (King affidavit of 17 May 2016 [36]).
Mr King says that between the conversation he had with Mr Adams on 27 April and the 5 May draw, he did not recall seeing Mr Adams nor was he told by anyone that any further monies were due. Mr King believed he was fully paid up at the date of the draw (King affidavit of 17 May 2016 [37]).
On or about 3 May, Mr King noticed some copied Lotto tickets on his desk. He picked them up without looking at them and placed them in the drawer of his desk.
The 5 May 2016 draw was drawn at 8.30pm, the first division prize money being $40,445,165.25 (King affidavit of 17 May 2016 [38]-[41]).
Early on Friday 6 May 2016 Mr King had a telephone conversation with Mr Manoj Prabhu. Mr King said he had a conversation with Mr Prabhu about the win, in which he indicated that he believed he was part of it (King affidavit of 17 May 2016 [42]). Mr King immediately went through the tickets on his desk but could find no ticket which corresponded with the ticket he believed had been the winning ticket. He stated that he immediately rang Mr Adams to tell him that "the lotto numbers had gone off". Mr King says that Mr Adams immediately said that Mr King was not part of the syndicate and that it was a group of different people (King affidavit of 17 May 2016 [42]).
Mr King spoke to Mr Adams again the next day. Mr Adams consistently said that Mr King was not part of the syndicate and that they were a different group of people. Mr King then extended his congratulations (King affidavit of 17 May 2016 [47]).
Thereafter on 10 May Mr King had numerous conversations with employees, including Mr Adams (King affidavit of 17 May 2016 [50]-[52]).
In his affidavit of 3 August 2016 Mr King sets out in tabular form together with copies of certain tickets he says he obtained from time to time from Mr Adams between 14 March and 1 May 2016.
Mr King was cross examined. He agreed that he had only one conversation with Mr Adams about a week before the 5 May draw. This conversation is set out in [36] of his affidavit of 17 May 2016 (T 12/35-40).
Mr King agreed that when he had his conversation with Mr Adams on 11 January 2016 the only syndicate that was in place was that which had been conducted up to the end of 2015 and that that one was coming to an end (T 13/35-40).
Mr King understood that Mr Adams was indicating that the reason he was bringing the syndicate to an end was that he was having difficulty getting people's money. Mr King also stated that he had an expectation that there would be a new syndicate put in place (T14/1-10).
Mr King understood that it would mean that, in effect, Mr Adams would not enter persons in every draw on a week to week basis. He understood that what Mr Adams was saying to him was the syndicate which he proposed of 12 would go into draws where there had been sufficient jackpotting to make it a "big draw" (T 14/28-33).
Mr King acknowledged that Mr Adams told him that the syndicate which had operated prior to 2016 in fact engaged in their last draw on 2 January 2016 where the balance of funds in the "kitty" had been used for that purpose (T 15/8-11).
Mr King agreed that during one of the conversations he had with Mr Adams Mr Adams may well have said that he wanted $50 up front (T 16/43-46).
Mr King believed that there was a draw concerning the 2016 Core Syndicate prior to the draw on 19 March 2016 but he agreed that he had no records or other documents to verify this belief (T 18/26-49).
Mr King would not concede that for each of the draws he was in since early 2016 he has received a copy in advance of the draw (T 19/45-50). Mr King said the reason why he could not make that concession is that just before "these draws" he had numerous tickets in his office and he discarded them because he only kept the more recent ones (T 20/1-5).
However, Mr King conceded that on or about 28 April he received a ticket in a Powerball draw 1041 (T 20/30-44). He also agreed that when he had his conversation with Mr Adams on 27 April it was not then known whether or not the Powerball which was to be drawn the following night would jackpot or not (T 21/1-5).
Mr King understood from what Mr Adams had told him that there was going to be a Mother's Day draw which was a "big draw" and that he intended to purchase a ticket in that draw (T 22/8-11). Mr King understood that Mr Adams did in fact purchase a ticket for the 2016 Core Syndicate in the 5 May draw and a ticket for the 2016 Core Syndicate in the Mother's Day draw 3631 to be held on 7 May (T 22/15-19).
Mr King conceded that he got a copy of the 2016 Core Syndicate's ticket in the 5 May draw (T 22/24-27).
At the time of the draw Mr King believed that he was in fact in the 5 May draw along with other members of the 2016 Core Syndicate (T25/15-20).
Mr King agreed that he also received a copy of the 2016 Core Syndicate's ticket in the Mother's Day draw 3631 on 7 May (T26/5-14).
Mr King asserted that between 11 January and mid-March he had a distinct recollection of being provided with tickets in relation to the 2016 Core Syndicate and in respect of a big draw, but he could not remember which draws (T 30/41-47). He rejected the suggestion that there were no such draws (T 31/15-17). Mr King rejected giving false evidence in relation to the number of syndicates he was in between January and March. He also rejected any notion that it was false to suggest that he had given Mr Cheak $50 on 14 March (T 31/24-39).
Mr King was taken to a number of media articles and he agreed that they reflected his feeling that he had been unfairly excluded at the time (T 32/30-40). Mr King asserted that as at 17 May his understanding was that there was only ever one syndicate (T 34/1-3).
Mr King was taken to a Daily Telegraph article of 16 May and agreed that certain remarks in the article had been accurately attributed to him, in particular the assertion that Mr Adams had replaced Mr King with his son who did not work at the factory (T 36).
Mr King agreed that he was happy to convey to the media that he had been replaced by someone else (T 37/50-T38/7). Mr King also agreed that it was always a matter left to Mr Adams' discretion as to who would be in the core group from time to time and it was also left to Mr Adams to make a decision about whether or not he would buy tickets in other draws during that time (T 38/34-50). Mr King said he would not be surprised to hear that Mr Adams had purchased a ticket in the same draw on behalf of himself, his wife, or his family and other workmates at work (T 39/26-46). Mr King agreed that he made comments at the time which in effect accused Mr Adams of engaging in wicked behaviour (T 40/37-40). He admitted that he now knows that allegation is without foundation (T 40-38-40).
Mr King was shown other media statements and agreed that he had decided prior to the commencement of the proceedings to engage in a process in which he was content for statements to be made which were disparaging of Mr Adams (T 41/30-35).
Mr King accepted that the statement made about one of Mr Adam's sons being placed in the syndicate at his expense was wrong and he also accepted that although he had suspicions at the time he lacked any reasonable basis for making allegations of that sort against Mr Adams (T 42/1-38).
Mr King also agreed that he was not suggesting at any point that the exercise book kept by Mr Adams was a concoction (T 48/5-20).
Mr King agreed that when the new syndicate came into place (ie the 2016 Core Syndicate) he would not have been concerned to hear that Mr Adams was purchasing tickets on behalf of a number of different persons (T 49/15-25). Mr King agreed that Mr Adams immediate response after the draw was that Mr King had not been part of the group who held the winning ticket (T 50/5-15).
Mr King again confirmed that had received a copy of the ticket that the 2016 Core Syndicate had in respect of the 5 May draw and the 7 May Mother's Day draw prior to those draws taking place (T 55/41-45).
Mr King agreed that what was to be understood as a "big draw" was left completely to Mr Adams (T 61/5-10). Mr King also accepted that he saw a notice on the noticeboard at work indicating that the Pre 2016 Core Syndicate was officially closed (T 62/5-10).
[16]
Robert Adams
Mr Adams is the first defendant. He has been employed by Prysmian as an extruder operator for about 15 years. Since February 2016 he has worked a fixed shift from Monday to Friday starting at 2pm and finishing at 10pm. Prior to that he worked the night shift from 10pm to 6am. He operates two machines which insulate and sheath copper cable.
Mr Adams lives with his wife and two sons. One of his sons is employed at Prysmian and the other by Artline Kitchens.
For at least 10 years he was responsible for organising lottery syndicates at Prysmian. Until late 2015 or very early 2016 he organised syndicates of his workmates and others to buy "Lotto" and other lottery tickets on hundreds of occasions. He ran the Lotto on a weekly basis. He stated that he also bought tickets for other groups of his work mates and for his sons and himself for jackpot draws on a regular basis. He also purchased tickets with his wife and sons from time to time (Robert Adams affidavit of 17 August 2016 [3], [5], [6] and [8]). Until early 2016 Mr Adams organised the Lotto tickets for groups of employees. He also bought Powerball and Oz Lotto tickets on many occasions (Robert Adams affidavit of 17 August 2016 [10] and [11]).
He asked some of his fellow workmates and his sons to contribute money each week to purchase "Lotto" tickets. This varied from week to week, but was normally $5. However, sometimes Mr Adams said he would ask for larger amounts, up to $50 per person (Robert Adams affidavit of 17 August 2016 [14]). At any given time there would be a group or "syndicate" as he describes it of about 20 men who contributed on a weekly basis. He ran this "Lotto" until late 2015 or early 2016. The group sometimes changed. Some people dropped out and others decided not to play anymore (Robert Adams affidavit of 17 August 2016 [15]). Mr Adams acknowledged that Mr King became part of what he described as the "Core Group" after he started at the factory several years ago. Others had been members for longer periods (Robert Adams affidavit of 17 August 2016 [16]).
Mr Adams said that there were no rules as to who could or could not join the "Core Group", it was really a matter for him. Sometimes he invited people to join, other times they asked whether they could (Robert Adams affidavit of 17 August 2016 [17]).
Mr Adams said he considered it important to keep careful contemporaneous records of the number of tickets in a particular draw and the persons on whose behalf he bought those tickets. He did this to ensure good record keeping but also so as not to intermingle funds which belonged to one group of people as opposed to another. He kept an exercise book from the very beginning in which to record the names of each member of the core group of the time and their respective contributions. When the exercise book was full or "dog eared", he would throw it away and start another one (Robert Adams affidavit of 17 August 2016 [18]).
He usually collected the amounts he needed in cash from each person and clipped it with a bulldog clip to his exercise book or put it in a plastic bag. He would usually collect his sons' payments at home. So far as workmates were concerned he would usually obtain the monies during breaks or when he bumped into them in the factory (Robert Adams affidavit of 17 August 2016 [19]). Prior to early 2016, sometimes a workmate would be late in making the required payment because he was short of money, on holidays or absent from work. On those occasions prior to early 2016 Mr Adams said he would normally pay the contribution from his own money and be reimbursed later. He kept a record in an exercise book whether workmates were behind or ahead in their contributions (Robert Adams affidavit of 17 August 2016 [20]). He decided each week which tickets would be purchased and whether or not the winnings were to be distributed or retained for future draws. After purchasing tickets he would normally make multiple photocopies of them and distribute them to those persons in the syndicate or make arrangements for someone else to pass them on. He would normally keep the originals and therefore he would not do copies for himself or his sons (Robert Adams affidavit of 17 August 2016 [21]-[22]).
Prior to the 5 May draw he believed the largest win he and his workmates ever had was about $8,000. He kept cash and winnings that were related to the "Core Group" of the time separate from any cash and winnings that he held in respect of "Other Syndicates" (Robert Adams affidavit of 17 August 2016 [24]).
Mr Adams asserted he also ran what he described as "one off" syndicates. Very often, those syndicates would have tickets in the same draw as tickets purchased on behalf of the "Core Group". He would often "rollover" extra cash and winnings to buy tickets in subsequent draws so that a one off syndicate was often more than a single draw. He did this because he thought it would be impractical to distribute small surplus amounts. The one off syndicates typically had about 10 members (Robert Adams affidavit of 17 August 2016 [25]-[26]).
Although he kept records of all syndicates at the time of each draw he did not record all the details in the exercise book. He stated that whenever he decided to run a one off syndicate he collected a fixed amount from each person whom he met and who he wanted to be in the draw. He wrote their name on a "drum card" which he described as a piece of cardboard that he used at work. He then bought the tickets and gave each member a copy of the ticket. He clipped the drum card to the exercise book and then threw it away after each draw. Winnings were, as he had previously explained, distributed or sometimes rolled over into another draw (Robert Adams affidavit of 17 August 2016 [29]).
Mr Adams decided by late 2015 that he was tired of running the "Core Group". He said it involved him spending too much time chasing up people for small amounts of money (Robert Adams affidavit of 17 August 2016 [30]-[31]).
The money that was in kitty as at early 2016 was used to buy a final lot of tickets in the Lotto draw held on 2 January 2016 (Robert Adams affidavit of 17 August 2016 [31]). He said he wanted to make the closure of the "Core Group" official, and to that end in April 2016 he put a notice on the noticeboard to the effect that the $5 a week Lotto was officially closed (Robert Adams affidavit of 17 August 2016 [32]).
Exhibited to his affidavit of 15 June, Mr Adams attached a copy of the "last exercise book" that he used to record the activities in relation to Lotto. Apart from two minor additions in red ink on page 9, he stated that he had not made any entries in the book since the win on 5 May 2016 (Robert Adams affidavit of 17 August 2016 [33]).
Mr Adams says that after he closed the Pre 2016 Core Group in early January 2016 he nonetheless continued to run other syndicates on a one off basis. However, he also started that another $10 weekly syndicate began in March and comprised 12 members. That 12 included the Plaintiff (Robert Adams affidavit of 17 August 2016 [42]-[43]).
Mr Adams said that starting in March 2016, he asked each member of this group of 12 to pay him $50 at a time because he wanted continually to avoid chasing people for money. He explained the first draw in which he bought tickets for the group of 12 was on 19 March 2016. He said he collected $570 from the 12 persons and bought $270.48 worth of tickets leaving a balance of $299.52. He made entries of the dollar amounts of cash given to him by each person against each person's name, which was in accordance with his usual practice. In the case of the plaintiff he made contributions by instalments of $10 followed by $40 (Robert Adams affidavit of 17 August 2016 [45]-[46]). Mr Adams' records disclose that there was a return of approximately $262 in the draw held on 19 March. That left $561 in kitty which was made up of $299 he was holding at the beginning of the draw, together with winnings of $262 (Robert Adams affidavit of 17 August 2016 [47]).
Mr Adams stated that in addition to their initial contributions of $50, he received further amounts of $50 from all members of the syndicate of 12, with the exception of the Mr Prasad who paid $70 (Robert Adams affidavit of 17 August 2016 [48]). Importantly, Mr Adams said that the Plaintiff did not pay his second $50 (Robert Adams affidavit of 17 August 2016 [48]). All up, Mr Adams asserted he collected $1,170 from the 12 and clipped the cash that he received into the exercise book as he received it.
He then asserted that he bought $186 worth of Powerball tickets for a draw on 28 April and bought another $186 worth of Powerball tickets for the Powerball draw on 5 May which returned a win of $13.65. His records also disclose that he purchased $328.25 worth of Lotto tickets for a $21 million Lotto draw that was held on 7 May and the syndicate of 12 won $1,142.05. He collected that amount and it remains in his bank account (Robert Adams affidavit of 17 August 2016 [51]).
Mr Adams asserted that on 29 April he became aware that there was to be a $40 million Powerball draw on 5 May. He discovered that by accessing the Lotteries website on that day which indicated the outcome of the Powerball draw the night before. Notwithstanding that the 2016 Core Syndicate was already part of that draw, he decided to set up another syndicate to participate in that draw (Robert Adams affidavit of 17 August 2016 [55]).
Mr Adams said that on 29 April he sent a text to Mr Prasad inviting him to go into the draw. He asserted that from about Friday 29 April he invited work mates with whom he came into contact to contribute $50 to what he describes as the Winning Syndicate and by the time he had finished his shift at 10 pm Tuesday 3 May he asserted that he had collected $600 in cash which he put on a clip in his exercise book. Mr Adams asserted that the $600 included $50 from both of his two sons and himself. He collected $50 from each of the other people identified except from Mr Mico and Mr Thattamanivong, each of whom had told him they wanted to take part in the Winning Syndicate but did not pay immediately (Robert Adams affidavit of 17 August 2016 [56]). He said he wrote the names of those people into the exercise book indicating they had given him the $50 (Robert Adams affidavit of 17 August 2016 [54], [57]).
As each person gave him cash he asserted that he clipped the cash to his exercise book, being careful to keep it separate from the remaining cash he was holding on behalf of any other person. The Plaintiff made no further financial contribution, because Mr Adams says he did not see or speak to the Plaintiff between 29 April and 4 May when he bought the tickets (Robert Adams affidavit of 17 August 2016 [58]).
Mr Adams asserted that at some time during the morning of Wednesday 4 May he transferred the $600 that he was at that time holding on behalf of the Winning Syndicate on a clip on the exercise book into an envelope or a plastic bag and took the cash and went shopping with his wife at Campbelltown. He left the exercise book at home. He bought 32 Powerball tickets in the 5 May draw 1042 from a newsagency at Campbelltown. Each ticket cost $18.60 and there was a total outlay of $595.20. He took the original tickets home and put them in an envelope in his work bag. He then took the tickets to work with him as usual at about 2pm on 4 May. Later that day he arranged for photocopies to be distributed to each member of the Winning Syndicate. He did not make a copy for his sons or himself, as he had the original. Before his shift finished that day he said Mr Thattamanivong gave him $50. He said he also received $50 from Mr Mico prior to his shift finishing on Wednesday. He retained the original $100 for future tickets and placed $100 on a clip in the exercise book, (Robert Adams affidavit of 17 August 2016 [59]-[62]).
A few days after the win he went back to the newsagency and cashed in some tickets which had won small amounts of money. He did not count the cash at the time but later discovered there was $132.10 (Robert Adams affidavit of 17 August 2016 [66]).
Mr Adams stated that he did not ask the plaintiff to contribute or to be part of the Winning Syndicate nor did he ask any of his workmates to collect $50 from the plaintiff. His only reason he said for not asking the plaintiff to become part of the Winning Syndicate is that he did not speak with him from the time he decided to put the syndicate together until the draw on 5 May. He asked additional persons over and above the usual 12 to be members of the Winning Syndicate, who were Messrs Sengchangsavang, Lai and Thattamanivong (Robert Adams affidavit of 17 August 2016 [68]-[69]). He agreed that the advantage of buying tickets with others was that it increased the chances of winning for all those participating but also for him as the organiser (T 74/32-45).
Mr Adams agreed that prior to early 2016 if persons involved in the syndicates were late in payment he would make up the payments. He also agreed that the Plaintiff eventually gave him monies when he asked for contributions to the syndicate (T 76/15-35). He also agreed that the Plaintiff was not only a member of the syndicate prior to the end of 2015 but one of the 12 from March 2016 (T 77/29-34).
Mr Adams agreed that he is holding money in particular the amount of $1,142 as the result of any earlier win in April in part on behalf of the Plaintiff (T 79/30-40).
He was asked when it was that he invited Mr Singh to contribute $50 towards the Winning Syndicate. Mr Adams thought it could be on Monday afternoon or Tuesday afternoon but he was not sure (T 80/45-50). He could also not remember when he had a conversation with Mr Singh or Mr Andres about the Winning Syndicate (T 81/15-20). He said however that persons normally gave him money usually before work or during work breaks (T 83/515-19).
Mr Adams agreed that he did not always photocopy the tickets he purchased to distribute amongst persons who were participating in a draw (T 85/5-10). He said however that if he did not hand out multiple copies he would put a copy on the noticeboard (T 85/20-25).
He was positive that he kept cash winnings that related to various syndicates separate at all times (T 85/35-45). In relation to the one off syndicates, he agreed that the only documents he was able to provide in relation to them were two syndicates which are set out in his exercise book (T 86/5-10).
Mr Adams agreed that in relation to the one off syndicates he would not know how many people would be involved (T 91/30-45). Likewise, he could not tell those participating how many people would be in the syndicates or who they were (T 92/15-15).
Mr Adams thought that from March 2016 there were 4 one off syndicates, one in January, one in April, the $25 million Powerball in March and the 5 May draw (T 93/5-10).
When pressed further about the one off syndicates Mr Adams indicated that he thought things "tend to get muddled" but denied seeking to over emphasise the number of one off syndicates to assist his case (T 100/25-45). He also agreed that his usual procedure in dealing with the one off syndicate was to record the persons participating on a drum card (T 100/20-25). He agreed that that process was a different one to that which he followed when dealing with the "Core" syndicate (T 101/40-50).
Mr Adams agreed that there were no drum cards available to produce as evidence and he agreed that when the process of each draw was over he would throw them out (T 102/20-25).
Mr Adams also agreed that on 29 April he became aware there was to be a $40 million Powerball draw because the previous Powerball draw had not 'gone off'. He agreed that on 29 April he texted Mr Prasad because he knew Mr Prasad would want to be in any draw. He agreed he had not received any money until Monday when he received monies from his sons and he put his $50 in at home (T 106/1-35). He thought it was correct to suggest that he had not collected any money before 2pm on Monday 2 May (T 106/38-40). He agreed that he collected monies from Mr Mico and Mr Thattamanivong after he had purchased the tickets on Wednesday. He agreed that he did not have their $100 when he purchased the tickets at the newsagency. He had no independent recollection, for example, of when Mr Prasad paid him nor could he say when any of the other persons paid him on Monday and/or Tuesday (T 107/25-50). Mr Adams agreed that he would have to defer to their recollections of when they said they paid (T 108/1-5).
Mr Adams had no records as to when he spoke to these people. He also agreed that he would have to have $600 by the end of his shift on Tuesday and that 12 people would have to have paid him $50 for him to have $600 (T 108/15-30). At one point, he said that as he often passed his workmates in the warehouse, they would speak and it is quite possible that conversations took place on the warehouse floor (T109/45-50).
It was put to Mr Adams that when he went to purchase the tickets on the Wednesday morning he had not collected $600 at all. He denied that and asserted that he had collected $50 from 12 people (T 112/5-39). When pressed about the 14 names in his exercise book, Mr Adams indicated that he might have first put the names down on a drum card and then transferred the names to the exercise book, but he was not sure. The main concern he had was that he got everyone's name down in the book. He said "I know it looks like a dog's breakfast and I am not an accountant and just the way that I ran the Lotto would make sense to me at the time it may not make sense if anyone else looked at it" (T 113/15-30).
Mr Adams agreed that the order of the names in the exercise book was not in order of receipt of payment so it was not a contemporaneous running record of him being given money (T 114/45-40).
Mr Adams agreed that he must have made a record after he received the last payment and that that suggestion "makes sense" (T 115/1-5). When pressed further he did not know whether the document had been prepared after all the monies had been received. He agreed that another possibility was that he created the list and then ticked people off when they paid him (T 116/15-35).
As to the suggestion that he had prepared a drum card and then transferred the names of persons to the exercise book it was suggested that that would not be rational. He rejected that proposition and said "No but I did" (T 117/45-50).
It was put to Mr Adams that the reason he had made the entries in his exercise book was to "try to get some more formal confirmation that Brendan was not in the syndicate?" (T 118/5-7). He rejected that proposition.
Mr Adams believed he had created the list in the exercise book before the draw, because that was the way that he worked "every Lotto". He indicated that the names of the relevant persons would either be on a drum card or in his exercise book before a draw (T 118/10-30).
It was put expressly to Mr Adams that he could have created the list after the draw, to which he responded "No it would not be after the draw as I said earlier to his Honour that all names have always been put somewhere before a draw (T 118/40-45).
Again he rejected the proposition that the reason he had transferred the names to the exercise book after the draw was to seek to establish "some formality about the fact that Brendan had been excluded from the syndicate?" He responded "No" (T 119/5-10).
Mr Adams agreed there was nothing in his affidavit in which he suggested he had prepared a drum card prior to creating the list of persons in his exercise book (T 120/25-35).
It was put to Mr Adams again that he did not have $600 because he had not collected the $600 from the group at the time. He rejected that proposition and said that he had collected $600 from 12 people and that he had the money. He rejected that he used some monies that he had collected from other syndicate members in relation to other draws for the purposes of making up the $600. He said he never mixed money (T 124/5-25).
He asked Mr Prasad to make the copies of the tickets for distribution because when he tried to use the photocopier in Factory Three it was not working. He believed he asked Mr Prasad to make a number of copies but he is not certain he told Mr Prasad how many. Mr Prasad came back with 16 copies but he only needed 14 and he said he threw the balance away (T 125/5-35).
Mr Adams rejected the proposition that it made no sense belatedly to receive $100 from Mr Mico and Mr Thattamanivong and then not put that on Lotto tickets (T127/45-50). He asserted that he did make a copy of tickets for Mr Mico and Mr Thattamanivong before he received their money but after he purchased the tickets (T 128/5-15).
He rejected the proposition that it was unusual not to have used what was described as the "stray $100" (T 129/40-50).
Mr Adams rejected the proposition that when he bought the second lot of tickets in the winning syndicate he did so "on behalf of the syndicate of 12 plus those extras you allowed in?" He responded "No" (T 130/45-50).
He also rejected the proposition that the contribution of the $50 was a contribution being made by the 2016 Core Syndicate "in the ordinary way". In rejecting that proposition, he said the 2016 Core Syndicate had nothing to do with the winning tickets (T 132/20-30).
Mr Adams could not be precise about when he asked people for the second $50 and there was no document relating to that issue (T 133/40-50). He rejected the proposition that the Plaintiff had already paid the $50 and he had simply forgotten to record it (T 134/25-30). Mr Adams says there is no tick beside the Plaintiff's name because he did not pay him the second $50 (T 134/40-45).
Mr Adams said he wanted 14 copies of the tickets because there were 14 people in the draw. He said he wanted a copy for Mr Mico because he was in his mind a part of the Winning Syndicate even though he had not paid (T140/5-20).
Mr Adams agreed that he did not ask the Plaintiff to be in that particular draw. He had included him in other draws but did not ask the Plaintiff to go in the Winning Syndicate because he was already in the 2016 Core Syndicate which held tickets in the same draw (T 140/30-50).
It was put to Mr Adams that it was his intention at the time he purchased the tickets that it would be the 2016 Core Syndicate plus whoever else he wanted to add in. He rejected that proposition. Further, he said "I did not ask Brendan because he honestly was just not in my mind. I did not go down the list and pick out those 11 people from those 12 people" (T 141/5-10). Yet again, it was suggested to Mr Adams that when he bought the tickets he had not collected $600 and yet again he rejected that proposition (T 142/5-10)
Mr Adams also accepted that he currently holds $1,617.42 on behalf of the 2016 Core Syndicate partly in cash and partly in his bank account.
[17]
Bradley Adams
In affidavit evidence, Mr Bradley Adams explained that while he had never worked for Prysmian, he participated for at least 10 years in lottery syndicates that his father, Mr Robert Adams, had organised (B Adams affidavit of 15 June 2016 [1]-[5]). He explained that he always paid his father the required amount to enter each draw at home and had never been behind in making his payments (B Adams affidavit of 15 June 2016 [7]). He also stated that his father would record his payments in an exercise book and place received cash entry payments in a plastic bag or attach it to the exercise book (B Adams affidavit of 15 June 2016 [8]).
On 2 or 3 May 2016, he recalled his father asking for an additional $50 to enter the Winning Syndicate and paid it to his father immediately (B Adams affidavit of 15 June 2016 [13]). He also said that he never received photocopies of any tickets from his father nor did he know about who else participated in each draw (B Adams affidavit of 15 June 2016 [11]; B Adams affidavit of 15 August 2016 [1]).
In oral evidence, Mr Bradley Adams affirmed that he did not know the identity of any other participants in each draw and affirmed that he paid his father an additional $50 prior to the 5 May draw (T 155-156). He could not recall whether his father had the exercise book with him, or whether his father recorded his name in the exercise book when he paid the additional $50 (T 156-157).
[18]
Matthew Adams
In affidavit evidence, Mr Matthew Adams asserted that he had worked for Prysmian for about 18 years and had participated in lottery draws his father, Mr Robert Adams, organised for over 15 years (M Adams affidavit of 15 June 2016 [3]-[5]). He also stated that his father would record his payments in an exercise book and place received cash entry payments in a plastic bag or attach it to the book (M Adams affidavit of 15 June 2016 [7]; M Adams affidavit of 4 August 2016 [1]). However, he stated that his father would occasionally record participants' names on a drum card for 'jackpot draws' (M Adams affidavit of 4 August 2016 [2]). He also said that he never received photocopies of any tickets from his father nor did he know about who else participated in each draw (M Adams affidavit of 15 June 2016 [10]-[12]). On 3 May 2016, he explained that his father asked him for an additional $50 to enter "another Powerball" and he immediately paid his father this amount (M Adams affidavit of 15 June 2016 [13]).
In oral evidence, Mr Matthew Adams affirmed that he paid his father the additional $50 to enter the Winning Syndicate on 3 May 2016 (T 161) but could not recall whether his father recorded this payment in the exercise book or not (T 161-162).
[19]
Hassan Hashim
In affidavit evidence, Mr Hashim stated that he had participated in lottery draws Mr Adams organised ever since he was employed full time by Prysmian (Hashim affidavit of 15 June 2016 [2]). Mr Hashim explained that Mr Adams informed him of the winning draw on 2 May 2016 and he immediately paid the required $50 to Mr Adams to enter this draw (Hashim affidavit of 15 June 2016 [8]). He also stated that Mr Andres gave him a photocopy of the tickets for that draw (Hashim affidavit of 15 June 2016 [9]). Mr Hashim also gave evidence that Mr King said to him "Congratulations. I wasn't part of the group that won unless someone wants to make a donation" (Hashim affidavit of 15 June 2016 [11]). Mr Hashim was not cross-examined in relation to this statement.
In his second affidavit, Mr Hashim stated that he did not expect Mr Adams to give him the opportunity to participate in every lottery draw that Mr Adams organised and that he always received photocopies of the relevant tickets bought for each draw he participated in (Hashim affidavit of 4 August 2016 [4]). He also recalled that there was an occasion where he refused Mr Adams' offer to participate in a 'big draw' (Hashim affidavit of 4 August 2016 [3]).
In oral evidence, Mr Hashim could not recall the particular circumstances in which he paid Mr Adams the $50 to enter the Winning Syndicate (T 169) or if Mr Adams told him how many persons were in the Winning Syndicate (T 170) but was sure that he saw Mr Adams 'tick him off' in an exercise book which Mr Adams regularly used to administer syndicate payment and participation (T 170-171).
[20]
Sean Cheak
In affidavit evidence, Mr Cheak stated that he participated in lottery draws organised by Mr Adams for over 15 years (Cheak affidavit of 15 June 2016 [2]). He explained that Mr Adams recorded lottery payments in a book and gave Mr Cheak a photocopy of the tickets for each draw Mr Cheak entered (Cheak affidavit of 15 June 2016 [3]; Cheak affidavit of 4 August 2016 [11]-[12]). Mr Cheak stated that he occasionally collected money from lottery participants on behalf of Mr Adams, but denied that he received any money from Mr King in 2016 to give to Mr Adams and stated that the most he had ever collected from Mr King was $15 (Cheak affidavit of 15 June 2016 [7]-[8]). He recalled that on 2 May 2016, Mr Adams informed him of the winning draw in the lunchroom and required $50 for entry, with Messrs Andres, Singh and Thattamanivong also present (Cheak affidavit of 15 June 2016 [9]). He stated that immediately after it was requested by Mr Adams, he gave Mr Adams his $50 and Mr Adams clipped it onto his exercise book (Cheak affidavit of 15 June 2016 [10]). Mr Cheak explained that Mr Adams gave him a photocopy of the Winning Syndicate tickets on 4 May (Cheak affidavit of 15 June 2016 [11]).
In oral evidence, Mr Cheak confirmed that he never received any money from Mr King to be given to Mr Adams in 2016 (T 177-178). He also affirmed his written evidence about the lunch room meeting on 2 May 2016 (T 180-181), but acknowledged that his memory may have been incorrect about the date and people present at this meeting (T 181). Mr Cheak also gave evidence that Mr Adams told him the number of members of the Winning Syndicate "at his machine" on 4 May 2016, although he did not specify the number he was supposedly told (T 182-183).
[21]
Peter Prasad
Mr Prasad gave affidavit evidence that he had participated in lottery draws organised by Mr Adams since about 2011 (Prasad affidavit of 15 June 2016 [2]). Mr Prasad explained that Mr Adams would always record his payment in an exercise book and place the money in a plastic bag clipped to the exercise book (Prasad affidavit of 15 June 2016 [4]). He also recalled that he received photocopies of the tickets of draws he entered from Mr Adams personally or someone acting under Mr Adams' direction (Prasad affidavit of 15 June 2016 [5]). Mr Prasad states that he gave Mr Adams the $50 for the 5 May 2016 draw on 29 April 2016, after receiving a text message requesting this money from Mr Adams to enter the 5 May 2016 draw (Prasad affidavit of 15 June 2016 [7]-[8])
In oral evidence, Mr Prasad had no clear recollection of the method, place or time at which he gave Mr Adams the money to enter the draw (T 186-188). He only recalled that he paid Mr Adams the $50 on Friday 29 April 2016, after he received a text message from Mr Adams requesting it (T 186-188). Mr Prasad denied having accepted that Mr King was a member of the Winning Syndicate and denied other statements which Mr King attributed to him (T 188-189). Mr Prasad also gave evidence that he photocopied 32 tickets for Mr Adams on Wednesday 4 May 2016, although he could not recall how many copies of these tickets he made for Mr Adams (T 190). Mr Prasad recalled taking one of these photocopied tickets for himself, but did not recall any conversation with Mr Adams about the number of people in the Winning Syndicate (T 191).
[22]
Robert Griffiths
In affidavit evidence, Mr Griffiths said that he had played in lottery draws organised by Mr Adams for "many years" (Griffiths affidavit of 15 June 2016 [2]). He also recalled that he decided not to go into draws organised by Mr Adams on some occasions (Griffiths affidavit of 15 June 2016 [4]; Griffiths affidavit of 4 August 2016 [4]). He also stated that when he paid Mr Adams, Mr Adams would usually record his name in an exercise book and either gave him a copy of the relevant tickets or placed a copy on the Factory notice board (Griffiths affidavit of 15 June 2016 [5]-[6]). On either 29 April or 2 May 2016, Mr Griffiths stated that Mr Adams informed him of the 5 May draw and after some initial hesitation, he paid Mr Adams the $50 a day or two later (Griffiths affidavit of 15 June 2016 [9]-[11]). Mr Griffiths asserted that Mr Adams gave him a copy of the tickets for the 5 May draw when Mr Griffiths started his shift on 4 May 2016 (Griffiths affidavit of 15 June 2016 [12]). Mr Griffiths also said that he did not expect to be included in all "big draws" because he was in Mr Adams' other lottery draws (Griffiths affidavit of 4 August 2016 [4]).
In oral evidence, Mr Griffiths had no precise recollection of the day which he paid Mr Adams the $50 to enter the 5 May 2016 draw (T 196-198), although he was sure he did so and received a photocopy of the tickets before the 5 May draw (T 199).
[23]
Davendra Singh
In affidavit evidence, Mr Singh explained that he had worked at the Liverpool Prysmian site since 1988 (Singh affidavit of 15 June 2016 [1]) and had participated in lottery draws organised by Mr Adams for many years (Singh affidavit of 15 June 2016 [2]-[6]). He also explained that Mr Adams almost always gave him a photocopy of the tickets for each draw he entered, or placed a photocopy on the factory noticeboard (Singh affidavit of 4 August 2016 [1]). In the week of 2 May 2016, Mr Singh gave evidence that he was told by Mr Adams in the lunchroom, with Messrs Andres, Mico, and possibly Lai and Thattamanivong present, that there was an upcoming $40 million Powerball and that they all had to pay $50 to enter (Singh affidavit of 15 June 2016 [7]).
Mr Singh stated that he did not give this money to Mr Adams immediately because he had to discuss it with his wife, but gave Mr Adams $50 the next day and received a photocopy of the tickets from Mr Adams (Singh affidavit of 15 June 2016 [8]). At some time before the draw, Mr Singh also recalled that Mr Adams bumped into him near the Factory Three toilets and told him there were 14 people in the Winning Syndicate (Singh affidavit of 15 June 2016 [9]).
Mr Singh also gave evidence that Mr King, said to him "I've rung Bob. He says I'm not in it. Good luck to the winners. I'm open for donations" (Singh affidavit of 15 June 2016 [14]). Mr Singh was not cross-examined in relation to this statement.
Further, Mr Singh asserted that he took down the original notice dated 27 April 2016 from the factory notice board which stated that the Pre 2016 Syndicate was closed (Singh affidavit of 15 June 2016 [15]). Mr Singh affirmed this was the original notice in re-examination (T 205).
In oral evidence, Mr Singh stated that he could not recall the circumstances surrounding his payment of the $50 to Mr Adams prior to the 5 May 2016 draw or how his payment was recorded by Mr Adams (T 203-205). However, he was sure that he paid Mr Adams the $50 prior to the 5 May 2016 draw (T 204) and Mr Adams told him at the time that the Winning Syndicate comprised 14 people (T 204). Mr Singh also affirmed that the original notice saying the Pre 2016 Syndicate had closed.
[24]
Peter Andres
Mr Andres gave affidavit evidence that he knew Mr Adams organised both regular weekly lottery draws and one-off 'big draws', although he did not know who was in each of these draws (Andres affidavit of 15 June 2016 [3]-[6]). Mr Andres stated that he always paid Mr Adams cash at work to enter the draws and that Mr Adams would record his payment in a 'school book' (Andres affidavit of 15 June 2016 [7]). He also recalled that he was generally given a photocopy of the tickets from Mr Adams or these were placed on the factory notice board (Andres affidavit of 15 June 2016 [8]).
Mr Andres also stated that he knew Mr Adams would sometimes pay out winnings from the lottery draws and sometimes "winnings went into a kitty for future draws" (Andres affidavit of 15 June 2016 [9]). On 2 May 2016, Mr Andres asserted that Mr Adams told himself, Mr Singh and a "couple of other workmates" in the lunch room that he was entering a big Powerball and Mr Andres then gave Mr Adams $50 to enter "on the spot" (Andres affidavit of 15 June 2016 [13]). He said that on 5 May 2016, Mr Adams gave him a photocopy of the tickets for the draw to be held that night (Andres affidavit of 15 June 2016 [14]) and that Mr Adams always did so for any draw that he participated in (Andres affidavit of 4 August 2016 [6]).
Mr Andres gave oral evidence that he participated in lottery draws Mr Adams had run for about 15 years (T 207). While Mr Andres had no precise recollection of the date on which Mr Adams told him about the 5 May 2016 draw or who was in attendance when this occurred (T 209-210), he clearly recalled that it occurred in the factory lunch room (Andres affidavit of 15 June 2016 [13]; T 210) and that he gave Mr Adams $50 very soon after Mr Adams asked him for it in the lunchroom (Andres affidavit of 15 June 2016 [13]; T 211). He also affirmed that Mr Adams gave him a photocopy of the ticket prior to the draw and another copy which he gave to Mr Hashim (Andres affidavit of 15 June 2016 [14]; Hashim affidavit of 15 June 2016 [9]). Mr Andres also said he recalled Mr Adams recording his payment in an exercise book at the time he paid him the $50 (T 212).
[25]
Robert Beever
In affidavit evidence, Mr Beever stated that he had participated in lottery draws Mr Adams had organised for about five years (Beever affidavit of 15 June 2016 [2]). He also said that Mr Adams would either give him a photocopy of the tickets in each draw he participated in or post them on the factory notice board (Beever affidavit of 15 June 2016 [4]). Mr Beever asserted that Mr Adams would usually tick his name off in an exercise book that he carried around with him and placed any entry monies he received in his wallet (Beever affidavit of 15 June 2016 [4]-[5]). On 3 May 2016, Mr Beever asserted that Mr Adams requested $50 to enter a draw and he paid this to Mr Adams (Beever affidavit of 15 June 2016 [15]). He also stated that Mr Mico or Mr Lai gave him a photocopy of the 5 May 2016 tickets on 4 May 2016 (Beever affidavit of 15 June 2016 [16]).
In oral evidence, Mr Beever affirmed the conversation of 3 May 2016 where Mr Adams informed him of the winning draw and his payment of $50 to Mr Adams on this night (T 214-215). He did not accept that he had a conversation with Mr Manoj Prabhu after the 5 May draw where he told Mr Prabu that all Mr King needed to do was give Mr Adams $50 and he would have been a part of the draw (T 216).
[26]
Silvestre Mico
Mr Mico in affidavit evidence said that he had participated in lottery draws run by Mr Adams for "many years" (Mico affidavit of 15 June 2016 [2]). Mr Mico stated that Mr Adams informed him of the 5 May draw on the 3 May and he immediately said he wanted to be in the draw (Mico affidavit of 15 June 2016 [7]). However, he said that he did not have the $50 to pay immediately and gave this to Mr Adams on 4 May and that Mr Adams gave him a photocopy of the relevant tickets as soon as he paid (Mico affidavit of 15 June 2016 [8]). Mr Mico also explained that Mr Adams asked him to distribute photocopies to Messrs Beever, Griffiths and Lai (Mico affidavit of 15 June 2016 [8]). Mr Mico stated that he believed Mr Adams had total discretion in relation to the participants in each lottery draw (Mico affidavit of 3 August 2016 [2]-[3]) and believed that the photocopies were evidence of participation in any given draw (Mico affidavit of 3 August 2016 [1]).
In oral evidence, Mr Mico affirmed that he paid Mr Adams the $50 and received a photocopy of the tickets on 4 May 2016, but did not recall whether Mr Adams had his exercise book with him at the time of payment (T 218-219).
[27]
Quem Lai
In affidavit evidence, Mr Lai stated that he had participated in lottery draws organised by Mr Adams for at least 10 years, was usually asked by Mr Adams to enter draws on his break, that Mr Adams recorded any payment of monies in a book and that Mr Adams clipped any received monies to this book (Lai affidavit of 15 June 2016 [4]-[6]). Mr Lai asserted that early in the week of the 2 May 2016, Mr Adams asked him for $50 to enter the 5 May draw and he paid this to him in cash (Lai affidavit of 15 June 2016 [7], [12]). He also stated that Mr Adams told him the names of the 14 people in the draw and Mr King was not one of these 14 (Lai affidavit of 15 June 2016 [8]). Before the draw, Mr Lai said Mr Mico gave him a photocopy of the winning tickets for the 5 May draw (Lai affidavit of 15 June 2016 [9]). In his second affidavit, Mr Lai explained that he believed Mr Adams had total discretion about the participants in each draw and that Mr Adams almost always gave him a copy of the tickets for any draw in which he participated (Lai affidavit of 15 June 2016 [3]).
In oral evidence, Mr Lai accepted that he could not have paid Mr Adams on 2 May because he took a rostered day off, but must have paid Mr Adams on 3 or 4 May 2016 (T 223-224). Mr Lai was also adamant that Mr Adams told him before the draw that there were 14 people in the Winning Syndicate and also told him the names of these people (T 225).
[28]
Phongsavath Sengchangsavang
Mr Sengchangsavang gave affidavit evidence that he participated in lottery draws organised by Mr Adams for more than 10 years (Sengchangsavang affidavit of 15 June 2016 [4]). He also stated that a day or two before 5 May 2016, Mr Adams asked him for $50 to enter the 5 May draw, which he immediately paid and Mr Adams marked his name off in an exercise book and clipped his money to this book (Sengchangsavang affidavit of 15 June 2016 [5]). Mr Sengchangsavang asserted Mr Adams gave him a photocopy of the winning tickets for 5 May draw on 4 May 2016 (Sengchangsavang affidavit of 15 June 2016 [6]) and told him the names of the 14 people in the Winning Syndicate (Sengchangsavang affidavit of 15 June 2016 [7]). Mr Sengchangsavang denied that he told Mr King that he paid less than $50 to Mr Adams prior to the draw and that he told Mr Adams that he put in $50 (Sengchangsavang affidavit of 15 June 2016 [10]-[11]).
In oral evidence, Mr Sengchangsavang had obvious difficulties in both reading and understanding English. For that reason, perhaps he did not give an entirely clear account of the circumstances surrounding his payment of the $50 to Mr Adams or how Mr Adams recorded his payment (T 231-232). Nor did Mr Sengchangsavang give clear evidence about which day he gave Mr Adams the $50 (T 229-230). Although, he did make it clear that he gave the $50 to Mr Adams before the draw (T 232).
[29]
Veingxay Thattamanivong
In his affidavit, Mr Thattamanivong stated that he had participated in lottery draws organised by Mr Adams for "many years" (Thattamanivong affidavit of 15 June 2016 [4]). He explained that when he paid Mr Adams money to enter any given draw, Mr Adams would write this in a 'book' and put the money "on a clip or in small bags" (Thattamanivong affidavit of 15 June 2016 [4]). Mr Thattamanivong stated that Mr Adams told him about the 5 May draw on 2 or 3 May 2016 and that he did not pay immediately but gave the $50 to Mr Adams sometime before he left work on 4 May 2016 (Thattamanivong affidavit of 15 June 2016 [5]-[6]; Thattamanivong affidavit of 19 October 2016 [1]). He also said that Mr Adams gave him a photocopy of the tickets for the 5 May draw when he paid Mr Adams the $50 (Thattamanivong affidavit of 15 June 2016 [5]).
Mr Thattamanivong had substantial difficulties in understanding the questions posed to him and answering them appropriately. He was cross-examined on why he changed his affidavit on the eve of giving his evidence. Mr Thattamanivong explained that he did so because he realised he "made a mistake from the first affidavit" yet did not precisely state how he came to this realisation (T 237-238). He also gave oral evidence that Mr Adams would normally record all received payments in a book and place the received monies in his wallet (T 239). Mr Thattamanivong stated that he gave Mr Adams the $50 to enter the draw on 4 May 2016 in the lunch room (T 239).
[30]
The parties' submissions and consideration of the evidence
[31]
Brendan King
The plaintiff submitted that court should accept Mr King's evidence that he paid Mr Adams an additional $50 to enter the Winning Syndicate (P in reply [51]). Further, the plaintiff asserted that the court should find there was no evidence for Mr King to believe the 2016 Core Syndicate was to operate differently from the Pre 2016 Core Syndicate (P [12]). The plaintiff submitted that the court should also accept that Mr King was not aware that Mr Adams organised other syndicates than those in which Mr King participated in (P in reply [17]).
The defendants submitted that the court must reject Mr King's original evidence that only one lottery syndicate existed (D [70]-[77]). Further, that the court should find that Mr King had no difficulty with the concept that Mr Adams might have more than one ticket in any given draw, on behalf of different groups (D [22]). The defendants also asserted that the court should accept Mr King's alleged concession that Mr Adams' exercise book was not a concoction (D [45]). Further, the defendants submitted that the court should accept that Mr King was aware a new and different syndicate from the Pre 2016 Core Syndicate began in 2016 (D [57]). The defendants also argued that the court should reject Mr King's evidence that the 2016 Core Syndicate participated in any draws between 11 January and 19 March 2016 (D [58]). Finally, the defendants submitted that the court should not find that Mr King paid an additional $50 to Mr Adams to enter the Winning Syndicate, and that he only contributed one amount of $50 to Mr Adams in early March 2016 (D [61]).
While I am satisfied he did his best to tell the truth, on any material matter upon which he and Mr Adams differ I prefer the evidence given by Mr Adams. That is because Mr Adams has records which corroborate the regime he insists he followed. Mr King has few relevant records. Most importantly, Mr Adams was the sole administrator of the draws, with a unique knowledge about their creation, composition and functioning. He had an interest in keeping accurate records and I believe he has a reasonably good memory. Further, Mr Adams' account was largely corroborated by the other witnesses, while Mr King's account of contentious matters was not. I consider Mr King could contribute very little to the relevant factual exercise.
I should indicate specifically that I do not accept Mr King's assertion that he gave $50 to Mr Cheak on 14 March. I accept Mr Adams' evidence that he did not receive an additional $50 from Mr King, with Mr Adams' evidence corroborated by Mr Cheak's denial of having received the $50 from Mr King. Indeed, Mr King appeared to recant this assertion in cross examination (T 29/21-25). It seems to me that the better view of the evidence is whenever he did so, Mr King only ever made one contribution to the 2016 Core Syndicate. I am satisfied that Mr Adams' record is accurate in that regard and that it does not show anything other than one payment of $50 by Mr King. I am also satisfied that that amount was in all probability paid in March 2016.
I am also satisfied that either Mr King knew about other syndicates or he did not care one way or the other. On balance, I consider the later the preferable view of the evidence. Further, I reject the Plaintiff's submission that Mr King did not know that the Pre 2016 Core Syndicate had closed and was replaced by a new regime. In fact, Mr King expressly recognised this in cross examination and acknowledged the reason for this was that Mr King was having difficulty getting people's money (T 14/1-10). Again, as to the number of draws between January and March I prefer Mr Adams' recollection as organiser and I reject Mr King's evidence on this matter.
[32]
Robert Adams
The Plaintiff submitted that the court should find that Mr Adams had not asked all the members of the Winning Syndicate to enter the 5 May draw prior to purchasing the tickets and should find that he had not collected $600 prior to purchasing the tickets on behalf of the Winning Syndicate (P [22]-[23], [34]). Further, the Plaintiff argued that Mr Adams mingled funds and used monies he held on behalf of the 2016 Core Syndicate to purchase the winning tickets in the 5 May 2016 draw (P [26]). The Plaintiff also asserted that the court should find that Mr Adams' objective intention was to include Mr King in the Winning Syndicate and simply forgot to collect money off Mr King to enter (P [27]-[33]). The Plaintiff argued that the evidence of Mr Adams that he recorded the names of the Winning Syndicate members on a drum card was a fallacy and that the exercise book was not a contemporaneous record of the members of the Winning Syndicate (P [67]-[68]).
The Defendants asserted that the court should accept that Mr Adams ran gambling syndicates for many years at the factory on behalf of different groups of people (D [20]). The Defendants argued that the exercise book kept by Mr Adams should be held by the court to be a reliable, contemporaneous record of Mr Adams' administration of the various gambling syndicates (D [42]-[46], [59]-[61]). The Defendants submitted that the Court should reject the contention that Mr Adams intended to include all 2016 Core Syndicate members in the Winning Syndicate and did not have any positive intention to exclude Mr King, but simply forgot to do so at the time (D [28]-[31]). Further, the Defendants submitted that Mr Adams received monies from each of the Winning Syndicate members prior to the draw and distributed copies of the winning tickets to them (D [3]). The Defendants also submitted that the court should accept that Mr Adams gave the members of the 2016 Core Syndicate copies of the tickets he purchased on their behalf in the 5 May draw (D [24]). The Defendants asserted that Mr Adams did not mix or mingle any funds he held on behalf of each syndicate (D [3]) and bought the tickets on behalf of the Winning Syndicate solely from the funds he received from its members (D [59]-[66], [69]).
Having carefully considered the evidence and the parties' submissions, I entirely accept Mr Adams' evidence.
Although there was undoubtedly a general understanding between Mr Adams and a number of people in the factory who were invited to join in a gambling syndicate from time to time, there was no shared knowledge as to what they would be gambling on, the precise amount they may be asked to contribute or who may or may not be invited into the group. This general understanding was shared by around 20 people right up until the end of 2015. From early 2016, especially after Mr Adams posted his notice on the notice board, the group who were regularly invited was much smaller, comprising 12 people.
It is clear that Mr Adams not only nominated the persons concerned but chose the timing of each venture. People generally responded positively by indicating their willingness to participate. But some did not. This was either because they did not want to, because they could not afford to at the time or because they could not be contacted. A clear example of this is given by Mr Hashim, who I accept, refused Mr Adams' offer to participate in a 'big draw' on one occasion (Hashim affidavit of 4 August 2016 [3]).
It seems that there was also an understanding that copies of tickets would be usually be distributed to persons who made contributions or posted on the Factory Three notice board. Indeed, there may have been an expectation that this would occur after a contribution was made. However, this may not have been done for all draws and arguably was only done for the larger draws, especially those in 2016.
I am satisfied that Mr Adams never assumed, nor did his workmates always expect, to be in every syndicate or draw Mr Adams organised. Of course, they trusted him if he was holding the proceeds of a win to exercise his discretion as to whether to distribute the funds or reinvest them. In those circumstances, much would depend upon the size of the "kitty", as it was called.
Certainly, after the payment of money from any participant, Mr Adams assumed a responsibility to acquire a ticket and there was an expectation on the part of the participant that he would do so and perhaps distribute a photocopy of the purchased ticket or post it on the Factory Three notice board. I am satisfied that Mr Adams was acutely conscious of the fact that he was dealing with workmates who could not always afford to go into a draw especially when asked to contribute $50. That is the reason why I think he made contact on each occasion so as to enable that person to assess whether he wanted to or could afford to go in any given draw. This was unless Mr Adams was already holding funds on their behalf, in which case Mr Adams would exercise a direction to either reinvest in a new draw or distribute these funds.
The new regime commencing in 2016, the 2016 Core Syndicate, saw very definite closure of the previous arrangement. It was clear that Mr Adams was no longer prepared to subsidise the entry payment of anybody simply because they said they wished to be in any given draw.
I am satisfied on the evidence that from early 2016 when Mr Adams put his new regime in place, despite his practice in the past, his new and invariable approach was to make contact with each person prior to including them in a draw. This was whether they were from the 2016 Core Syndicate or otherwise. Mr Adams made no assumptions and either collected the money immediately or, after the express agreement from his fellow workmates, proceeded without money. This is entirely inconsistent with any notion that there was some overarching or implicit arrangement, that each member of the 2016 Core Syndicate would be included without any contact having first been made.
Within obvious limitations, Mr Adams was very organised about his regime. He was relatively disciplined in his approach to record keeping. He would often create a list of names on a drum card and then discard it once he had purchased the tickets, photocopied them and distributed them.
Mr Adams gave evidence that from time to time he had a practice of keeping details of draws and participants in draws in an exercise book. The current exercise book (CB 193-202) is an example. Mr Adams fully understood the importance of keeping a careful record so he knew who precisely who was involved in the draws and on whose behalf he was buying tickets.
Mr Adams said he kept the exercise book in his work bag at all times and almost always took it to work. I accept his evidence in that regard. It seems to me the exercise book is a reliable record of his various activities.
A number of the persons indicated their awareness of Mr Adams' practice in keeping the exercise book. There is no reason to reject that evidence. Indeed, it is entirely consistent with what Mr Adams said he did. I accept his evidence that he said he collected money from various persons, clipped their cash to his exercise book and made sure that he kept cash separate for each and every draw. I accept that the money he took with him to the newsagency on 4 May 2016 was the $600 he collected for the purposes of purchasing the winning tickets in the 5 May draw. I also accept his evidence that two of the 14 members of the Winning Syndicate had not given him their entry payment by the end of his shift on 3 May. But, because he knew them well, had dealt with them for many years and because both expressly told him they wanted to take part in the Winning Syndicate, Mr Adams was prepared to include them in the Winning Syndicate. I also accept his evidence that he retained their money in cash after the draw because it would have been difficult to divide $100 by 14.
I accept Mr Adams' evidence that he wrote down the names of the people who gave him cash in the exercise book, although he could not say when he wrote the names down nor did he have a precise recollection of when he did so. However, I am satisfied on his evidence that he did it before the draw. It was entirely consistent with the way he organised himself and his desire to clearly know in advance who was in the draw. I do not think the fact that most members of the Winning Syndicate could not attest to having witnessed Mr Adams writing their names down when they paid him is of real moment. I note that in fact Mr Hashim and Mr Sengchangsavang corroborated Mr Adams' evidence by asserting that they saw him make a notation of some sort after they paid him their $50 (T 170/24-171/27 and T 232/13).
Considering the exercise book as a whole, I am satisfied that in his own way Mr Adams kept quite detailed notes of various draws and contributions made by different people, from time to time. Indeed on the page which concerns the Winning Syndicate (CB 198) is written the words "Bank $100". In my mind, this certainly corroborates Mr Adams' assertion that he was paid the $600 prior to purchasing the tickets and received the $100 afterwards. His note suggests he banked the $100 and supports his assertion that he retained the $100 he received after the 5 May draw.
I accept Mr Adams's evidence that between 29 April and 3 May he invited the other 13 members of the Winning Syndicate to participate in the 5 May draw at a cost of $50 per head.
I am also satisfied that he created the list (of the 14) not necessarily in the order that people paid him but perhaps in the order he met them and/or they indicated they would be party to the syndicate. I consider it likely that he ticked their names off when they paid him. Although it was put to him that this was not the case, I am satisfied that he created the list and ticked the names off prior to the draw.
It is important I consider that none of the witnesses gave evidence that the First Defendant ever informed them that there were more than fourteen members in the Winning Syndicate. This corroborates Mr Adams' account that he never intended Mr King to be included in the Winning Syndicate.
Further, each gave evidence that they received a photocopy of the winning tickets from the First Defendant, apart from the Plaintiff. Therefore, despite each witness having no precise recollection of the method, place or manner in which they were informed of the 5 May draw or paid their $50 to enter it, on the evidence, it remains clear that there were only 14 members of the Winning Syndicate. Mr Adams had no reason to exclude Mr King from the Winning Syndicate, and no such motive was agitated by the Plaintiff during the case. There is simply no evidence to suggest that Mr King was, or was ever intended to be, a member of the Winning Syndicate.
There were inconsistencies in Mr Adams' evidence and that of the other defendants. However, Mr Adams had a special reason to recall how much he held at any particular time on behalf of participants of draws. First, he had been administrating draws quite methodically for years and was undoubtedly in a routine. He took his task seriously. His system or methodology would by no means have been approved by a sophisticated businessman or an accountant. But the regularity with which he attended to these functions and the order in which generally speaking he did things also supports his account.
Mr Adams denied that he had subsidised anybody when he purchased the winning ticket. The plaintiff's alternative case would have to be, if accepted, that he had subsidised the purchase by a considerable margin. Their analysis of the case invited the Court to accept that Mr Adams simply could not have collected anywhere near $600 by 4 May when he went to the newsagency. I do not regard that as a viable theory on the facts. It runs contrary to Mr Adams' sworn evidence which I have already indicated I accept. The Plaintiff meticulously analysed the Prysmian time records to attempt to undermine each of the various defendants who purported to corroborate Mr Adams version of events. However, I still regard the defendants' responses and analysis to be more plausible and persuasive.
Absent some wholesale conspiracy, a case theory which unsurprisingly was not put, all the inconsistencies that arose between the various defendants and Mr Adams were in my view perfectly understandable.
It was put to Mr Adams that when he bought the winning tickets he had in fact intended to include each member of the 2016 Core Syndicate which would include the Plaintiff. He repeatedly denied that. I accept his evidence. In my view, it is plain that the Plaintiff simply did not enter Mr Adams' head. His answer as to why he did not think of the Plaintiff to my mind is perfectly plausible. After all, the Winning Syndicate, on all of the evidence, was in my view somewhat of an afterthought on Mr Adams' part. Mr Adams was simply promoted through no more than instinct to put together another group of people for the purposes of purchasing additional tickets. Undoubtedly, he thought of some of those people he was close to such as Mr Prasad. However, he also thought of other people that he bumped into, two of whom were not part of the 2016 Core Syndicate. This rather corroborates the notion of an afterthought. His intention, I am quite satisfied, when he bought the tickets on behalf of the Winning Syndicate was only to include those persons he had made contact with and from whom he had obtained assent.
Mr Adams denied that he mingled funds. Again, I consider the exercise book indicates a careful approach on his part so as not to do just that. The most notable example is CB 195. Although not totally relevant to the Winning Syndicate, the book shows how Mr Adams carefully made calculations which clearly disclosed the amounts he was holding in relation to various draws. This is entirely consistent with Mr Adams' practice of running multiple syndicates including one-off syndicates and keeping the various contributions and wins separately recorded and accounted for.
It is clear that where Mr Adams decided to roll winning monies over into another draw, he did so with the agreement or acquiescence of the various participants. This was especially the case where returns were small. They all trusted him and would not, it seems to me, have expected any such consultation over a win. He realised the importance of keeping quite precise accounts as to how much he had referable to which draw.
In other words, I am satisfied that Mr Adams kept monies which he received from various sources separate and capable of precise identification. This included both winnings and contributions from participants.
Apart from Mr Adams' evidence about the composition of the Winning Syndicate, a number of the members of it gave evidence that they were told and hence knew prior to the draw that there were 14 people in the draw. Mr Singh is an example of someone who says he was told prior to the draw (Singh Affidavit 15 June 2016 [9]). Mr Lai also said that Mr Adams told him before the win that there were 14 people involved and Mr Sengchangsavang gave evidence to similar effect. I accept their evidence. However, I have doubts about Mr Lai's and Mr Sengchangsavang's evidence that Mr Adams identified the 14 members of the Winning Syndicate to them by name before the draw.
There were a number of other persons who gave evidence that on the evening immediately after the draw Mr Adams informed them that they won and indicated their respective shares, effectively informing them that 14 persons were sharing. Mr Andres, Mr Griffiths and Mr Mico fall into that category. As I accept that Mr Adams only ever intended to include 13 other people in the Winning Syndicate, it is perfectly plausible that he would have informed these men after the draw that 14 persons were sharing the prize money and I therefore accept their evidence in this regard.
As I have already said, I am satisfied that the reasons why Mr King was not included in the Winning Syndicate were that Mr Adams had already included him in the 2016 Core Syndicate ticket for the very same draw and that Mr Adams simply did not approach Mr King or see him in the period when he decided to form the Winning Syndicate. I am also satisfied that because the men did not have any contact with each other, Mr Adams did not intend to purchase a ticket on behalf of Mr King. I am also satisfied that Mr King did not at any point agree to participate in the Winning Syndicate.
The Plaintiff also argued that the court should reject Mr Adams' evidence that he recorded the Winning Syndicate members' name on a drum card and contemporaneously transferred this into the exercise book which he used to record draw participants (P [68]), labelling this as "tailored to assist the defendants' case" (P [66]) and a "fallacy" (P [67], [68]). I do not accept that Mr Adams gave that evidence with that purpose in mind. I regard him as simply saying that when provoked, although he can no longer recall, that he believed he may have made an earlier record of the names before he recorded their names in the exercise book. I accept that evidence. A failure to belatedly recall is not of itself destructive of a witness' credibility. As I understood it, what Mr Adams was simply saying was that he had made a contemporaneous record of the persons in the draw and possibly more than one record.
I am also satisfied on the evidence that March 2016 was in all probability the first foray for the 2016 Core Syndicate. I accept that Mr King and Mr Adams had a conversation on or about 11 January 2016 about Mr Adams' formation of this new syndicate and the system he was going to use, particularly that he expected payments to be made to enter each draw 'up-front'. As Mr Adams played the key role as organiser with a keen interest in keeping a careful track on funds, I am disposed to accept his evidence that March 2016 was the first purchase of tickets for the 2016 Core Syndicate.
I accept Mr Adams' evidence that the relevant record about the purchasing of tickets for the 2016 Core Syndicate is found at CB 199. It has the number "12" in the upper left hand corner circled and the names of 12 people who were agreed to comprise the 2016 Core Syndicate. That page of the exercise book records that each of those people made two contributions of $50, except for Mr King who only contributed $50, made up of a $10 contribution followed by $40 contribution and Mr Prasad who contributed an extra $20.
Mr Adams has also recorded on that page the number of tickets purchased involved an outlay of $270.48. The Defendants submitted that in each case the exercise book entry at CB 199 precisely matches the number and cost of tickets purchased by Mr Adams on 10 March 2016 in Lotto Draw 3617, copies of which were given to Mr King and annexed to his affidavit. The Plaintiff further submitted that the return of $262 which Mr Adams noted at the bottom of that page almost precisely reconciles with the return from those tickets.
The Defendants also identified that at the top of the page is the notation "$561" which they submitted is the total of $299 and $262, which are both amounts also noted on this page. The Defendants submitted that this recorded the amount Mr Adams had in hand following the 19 March draw. I believe that is the better view of the evidence.
The Defendants however also asserted that Mr Adams should be accepted when he says he used the balance of those funds to purchase a big draw for the 2016 Core Syndicate. Again, in my view that is more probable.
I am also satisfied that on 27 April he paid $186 for a "Quick Pick" power hit Powerball ticket in draw 1041. This was to be held the following day on 28 April 2016. A record of this draw is at CB 200. Mr King had a copy of that ticket which did not win any money. Mr King accepted in cross examination that he received a copy of that ticket before the draw (T 20/41-44).
Next on 29 April 2016 at 12.58pm I accept that Mr Adams paid $186 for a Quick Pick power hit Powerball ticket in draw 1042 which was to be held on 5 May 2016. This is also recorded at CB2/200. Again Mr King had a copy of this ticket before the relevant draw. It won a Division 6 prize of $16.65.
Thirdly, on 1 May 2016, I accept that Mr Adams paid $328.25 for a Saturday Lotto Quick Pick Systems 11 ticket in draw 3631 to be held on 7 May 2016. This is again recorded at CB 200. Mr King had a copy of this ticket before the draw. The ticket won a prize of $1,142.05.
Mr Adams also gave evidence that he only received one payment of $50 from Mr King. Mr Adams gave evidence that he started collecting money from the 2016 Core Syndicate in March 2016, in advance of buying tickets for the 19 March 2016 Saturday Lotto draw. I accept that evidence. I do not accept Mr King's evidence that he paid money to Mr Adams at an earlier time. I consider the evidence of Mr Adams to be corroborated by the exercise book page (CB 199) showing that Mr King paid Mr Adams one $50 payment, in accordance with Mr King's own evidence that he withdrew $60 out of an ATM to pay Mr Adams this $50 (T 54).
[33]
Bradley Adams
The plaintiff submitted that Bradley Adams' payment of the $50 to enter the Winning Syndicate occurred on either 2, 3 or 4 May (P [39]).
The defendants submitted that it was most probable that Mr Bradley Adams had a conversation with Mr Robert Adams about the 5 May draw over the weekend of the 30 April to 1 May and that there was no basis for the court to find that this did not occur before Mr Adams purchased the winning tickets on 4 May 2016 (D [37(a)(i)]). The defendants also argued that Mr Bradley Adams' unchallenged evidence that he gave Mr Robert Adams $50 as soon as he was asked should also be accepted and therefore paid prior to Mr Robert Adams' purchase of the winning tickets (D [37(a)(ii)]).
I am satisfied Mr Bradley Adams paid his father the required $50 prior to the 5 May draw, probably at home. This was the regular routine adopted between them and there is no reason for me to conclude that this would not have occurred in the context of the 5 May draw.
[34]
Matthew Adams
The plaintiff submitted that Matthew Adams' payment of the $50 to enter the Winning Syndicate occurred on either 2, 3 or 4 May (P [39]).
The defendants submitted that there was no basis for the court to find Mr Matthew Adams did not have a conversation with Mr Robert Adams about the 5 May 2016 draw before Mr Adams purchased the winning tickets on 4 May 2016 (D [37(b)(i)]). The defendants also argued that Mr Matthew Adams' unchallenged evidence that he gave Mr Robert Adams $50 when asked should also be accepted and he therefore paid prior to Mr Robert Adams' purchase of the winning tickets (D [37(b)(ii)]).
I am satisfied Mr Matthew Adams paid his father the $50, again prior to the draw and probably at home.
[35]
Hassan Hashim
The plaintiff submitted that because Mr Hashim had no clear recollection of when he paid Mr Adams the $50 (T 169), this could have occurred anytime from the 2 to 5 May, even after Mr Adams had bought the tickets (P [40]).
The defendants submitted that the court should accept Mr Hashim's evidence that he had a conversation with Mr Adams who invited him to go in a "big draw" and that the court should find that this conversation occurred on Tuesday 3 May, between 13:41 when Mr Adams arrived and 18:00 when Mr Hashim left as this correlates with the objective time records (Annexure B; D [37(c)(i)]). Further, that Mr Hashim's unchallenged evidence that he gave Mr Adams $50 on being asked should be accepted and was paid on 3 May 2016, prior to when Mr Adams bought the winning tickets (D [37(c)(ii)]). The defendants also argued that Mr Hashim's unchallenged evidence that he was given a photocopy of the tickets by Mr Andres with his nickname "Huss" written on them before the draw should be accepted (D [37(c)(iii)]).
I am inclined to accept Mr Hashim's evidence, in particular his assertion that he gave Mr Adams the $50 as soon as he was asked and prior to the draw. I also accept that he received a photocopy of the ticket before the draw.
[36]
Sean Cheak
The plaintiff submitted that the evidence shows Mr Cheak is likely to not have paid Mr Adams the $50 prior to his purchase of the tickets and that the meeting in the factory lunch room in fact occurred at 4pm on 5 May 2016 (P submissions [48]).
The defendants submitted that the court should accept Mr Cheak's evidence that he had a conversation with Mr Adams about the draw and this occurred broadly as Mr Cheak said it did, likely on 3 May, as the objective time records show that Messrs Cheak, Singh, Thattamanivong and Adams were all at work between 13:41 and 14:02 on 3 May (D [37(d)(i)]). The defendant also argued that the court should find Mr Cheak paid Mr Adams $50 immediately following this conversation, which may well have been at Mr Adams' machine immediately following the conversation above, as Mr Adams would have attended his machine shortly prior to 14:00, and Mr Cheak would have gone to his locker immediately before leaving work (D [37(d)(ii)]). The defendants submit that there was time for this to have occurred, and no reason to think it did not occur. Therefore, the defendants argued that Mr Cheak's $50 was paid on 2 or 3 May 2016, and prior to 4 May 2016, when Mr Adams bought the relevant tickets on behalf of the Winning Syndicate (D [37(d)(iii)]).
In reply, the plaintiff asserted that the evidence from Mr Andres' cross-examination showed that the meeting between Messrs Cheak, Singh, Andres, Thattamanivong and Adams did not occur on 3 May but rather at 16:00 on 4 May 2016, after the tickets were purchased (P in reply [24]-[26]). Further, the plaintiff submitted that the evidence did not support a finding that Mr Cheak spoke to and paid Mr Adams on 3 May when Mr Adams was starting and Mr Cheak finishing his shift (P in reply [27]-[29]).
Mr Cheak may well be in error when he purported to recall the circumstances in which Mr Adams spoke with him. However, regardless of who he was with, I still accept that he gave Mr Adams the $50 following a conversation with him prior to the draw. I also accept his denial when he says Mr King never gave him $50 to give to Mr Adams.
[37]
Peter Prasad
The plaintiff accepted that Mr Prasad received the relevant text message from Mr Adams on Friday the 29 April and was "likely to have paid by Monday" 2 May (P [38]), before Mr Adams bought the Winning Syndicate tickets.
The defendant submitted that the court should accept that Mr Adams sent Mr Prasad a text inviting him to contribute $50 to go into the 5 May draw, that Mr Prasad paid Mr Adams $50 on 29 April (D [37(e)(i)]) and that Mr Prasad made photocopies on Wednesday 4 May at Mr Adams' request (D 37(e)(ii)]).
I accept Mr Prasad's evidence that he photocopied tickets for Mr Adams. Although Mr Prasad had no precise recollection of the number of photocopies Mr Adams asked him to make, it is most plausible that this was 11 copies, as Mr Adams' evidence suggests. It seems to me that Mr Prasad would have taken his copy, as he said he did, and then left it to Mr Adams to keep the original for himself and his sons and distribute the other 10 photocopies to the remaining Winning Syndicate members.
Most importantly, I accept Mr Prasad's evidence that he paid Mr Adams the required $50 prior to the 5 May draw.
[38]
Robert Griffiths
The plaintiff submitted that because Mr Griffiths had no clear recollection of paying Mr Adams the $50 (T 196-198), this could have occurred on 2 May 2016 or on Wednesday 4 May (P [41]).
The defendants submitted that the court should accept Mr Griffiths' evidence that he spoke with Mr Adams on either Friday 29 April or Monday 2 May and paid Mr Adams $50 either on Monday 2 May or Tuesday 3 May (D [37(f)(i)]). The defendants argued that there was no basis for considering that it occurred at any later time, given that Mr Griffiths stated that he paid Mr Adams a "day or two" after Mr Griffiths had the conversation with Mr Adams, either on 29 April or 2 May (D [37(f)(i)]). Further, that the court should accept Mr Griffiths' evidence that he was given a photocopy of the tickets by Mr Mico on 4 May 2016 when he started his shift (D [37(f)(ii)]).
In reply, the plaintiff submitted that Mr Griffiths' evidence does not permit a more definitive finding than that that he simply paid Mr Adams on either the 3 or 4 May 2016 (P in reply [38]-[39]).
I accept that Mr Griffiths paid his $50 prior to the draw, partly because he says, which I also accept, that he received a copy of the ticket before the draw. I am satisfied that he paid Mr Adams the $50, after some hesitation, probably on 3 May, as I accept Mr Adams' evidence that he had $600 from the Winning Syndicate members on the morning of the 4 May 2016.
[39]
Davendra Singh
The plaintiff submitted that it was impossible for Mr Singh to have paid Mr Adams the additional $50 on 2 May 2016 (P [47(a)]) and that Mr Singh, at the earliest, paid these monies to Mr Adams on 4 May 2016 after Mr Adams purchased the tickets on behalf of the Winning Syndicate (P [47(b)]).
The defendants submitted that the court should find that Mr Singh agreed to go into a syndicate organised by Mr Adams early in the week commencing 2 May 2016 and paid Mr Adams $50 on Tuesday 3 May between when Mr Adams started (13:41) and when Mr Singh finished (14:00) work (D [37(g)(i)]). Further, that while Mr Singh mixed up the timing of his initial conversation with Mr Adams with his payment to Mr Adams, this does not affect the veracity of Mr Singh's evidence once other evidence is taken into account (D [37(g)(ii)]). Finally, the defendants argued that Mr Singh's evidence that Mr Adams gave him a copy of the tickets before the draw should be accepted (D [37(g)(iii)]).
In reply, the plaintiff submitted that the evidence from Mr Andres' cross-examination showed that the meeting between Messrs Cheak, Singh, Andres, Thattamanivong and Adams did not occur on 3 May but rather at 16:00 on 4 May 2016, after the tickets were purchased (P in reply [24]-[26]). Further, the plaintiff submitted that because the meeting occurred on 4 May 2016, and even if the meeting occurred on 3 May as the defendants suggest, because Mr Singh paid Mr Adams the day after this meeting, he must have paid Mr Adams after the winning tickets were purchased on the 4 or 5 May (P in reply [30], [35]).
I am satisfied that, after checking with his wife, Mr Singh paid Mr Adams the $50 and received a copy of the ticket prior to the draw, not necessarily on 2 May but likely to be on the 3 May when he crossed shifts with Mr Adams.
[40]
Peter Andres
The plaintiff submitted that the evidence was such that Mr Andres is likely to not have paid Mr Adams the $50 prior to Mr Adams' purchase of the tickets and that the meeting in the factory lunch room in fact occurred at 4pm on 5 May 2016 (P submissions [48]).
However, the defendants submitted that it should be accepted that Mr Andres had a conversation with Mr Adams on 3 May and paid Mr Adams the additional $50 on this day (D [37(h)(i)]). Further, the defendants argued that the court should accept Mr Andres' unchallenged evidence that he was given a photocopy of the tickets with his name "Peter A" written on them, before the draw, and also received a copy to give to Mr Hashim (D [37(h)(ii)]).
In reply, the plaintiff submitted that the evidence from Mr Andres' cross-examination supported the fact that the meeting between Messrs Cheak, Singh, Andres, Thattamanivong and Adams did not occur on 3 May but rather at 16:00 on 4 May 2016, after the tickets were purchased (P in reply [24]-[26]).
On balance, while I have doubts over when exactly Mr Adams spoke to Mr Andres about entering the Winning Syndicate, I am satisfied that such a conversation occurred prior to the 4 May, that Mr Andres paid $50 to Mr Adams before the 4 May and received a copy of the ticket prior to the draw.
[41]
Robert Beever
The plaintiff did not make any explicit submissions in relation to Mr Beever's evidence.
The defendants submitted that it should be accepted that Mr Adams asked Mr Beever to enter the draw on 3 May and paid Mr Adams the additional $50 on this day (D [37(i)(i)], [37(i)(ii)]). Further, the defendants argued that the court should accept Mr Beever's unchallenged evidence that he received a photocopy of tickets from Mr Mico on 4 May with "Bob B" written on them (D [37(i)(iii)]).
Again, I am satisfied Mr Beever paid the $50 to Mr Adams prior to the draw and received a copy of the ticket also prior to the draw. I also accept Mr Beever's evidence that he did not have a conversation with Mr Prabhu where he stated that all Mr King needed to do was give Mr Adams $50 and he would have been a part of the draw. It is important that Mr Prabhu was not called by the Plaintiff to give evidence in these proceedings. This fortifies my acceptance of Mr Beever's denial that such a conversation took place.
[42]
Silvestre Mico
The plaintiff submitted that Mr Mico paid Mr Adams the $50 to enter the Winning Syndicate after the tickets were purchased (P [48]).
The defendants submitted that the court should accept Mr Mico's evidence that he paid Mr Adams on 3 May (D [37(j)(i)]) and that Mr Mico paid Mr Adams at around 14:00 on 4 May after Mr Adams bought the tickets on behalf of the Winning Syndicate (D [37(j)(ii)]). Further, the defendants contended that the court should find that Mr Adams gave Mr Mico a copy of the tickets with "Mico" written on it, along with other copies to distribute to Messrs Beever, Griffiths and Lai (D [37(j)(iii)]).
I accept that Mr Mico paid Mr Adams the $50 after Mr Adams bought the tickets, having previously accepted Mr Adams' invitation to join the Winning Syndicate.
[43]
Quem Lai
The plaintiff submitted that the evidence shows Mr Lai could have only had a conversation with Mr Adams on 3 or 4 May, where Adams informed him of the 5 May draw (P [42]). Therefore, the plaintiff argued that it was likely that Mr Lai did not pay Mr Adams the $50 prior to his purchase of the tickets and that the meeting in the factory lunch room in fact occurred at 4pm on 5 May 2016 (P [48]). The plaintiff further submitted that it was highly unlikely that Mr Adams told Mr Lai the number of people in the draw, and definitely not their precise names (T 305).
The defendants submitted that the court should find Mr Adams asked Mr Lai to enter the draw on 3 May and paid Mr Adams the $50 at the time this conversation occurred (D [37(k)(i)], [37(k)(ii)]). Further, the defendants contended that Mr Lai's evidence was that Mr Mico gave him a photocopy of the tickets prior to the draw should be accepted (D [37(k)(iii)]) and also his evidence of knowing 14 people were in the draw prior to the 5 May because "he was a witness of credit who gave truthful and accurate evidence" (D [37(k)(iv)]).
In reply, the plaintiff submitted that the evidence did not permit a finding of whether the meeting between Mr Lai and Adams occurred on the 3 or 4 May, and that it could have occurred on either (P in reply [43]).
On balance, I am satisfied Mr Lai paid Mr Adams the $50 prior to the draw and at about the time he had his conversation with him. I also accept that he got a photocopy of the ticket prior to the draw. Although I have some doubt over whether Mr Lai was told the names of each member of the Winning Syndicate, in the end this aspect of his evidence is really of no moment in assessing Mr Lai's credit otherwise.
[44]
Phongsavath Sengchangsavang
The plaintiff submitted that the time records show that Mr Sengchangsavang must have paid Mr Adams after he purchased the tickets for the 5 May draw on Wednesday 4 May after 6pm when he started work (P [44]).
The defendants submitted that on the balance of probabilities, Mr Sengchangsavang had a conversation with Mr Adams on 2 May 2016 between 17:15 and 22:00 (D [37(l)(i)]) and paid $50 to Mr Adams at the time of this conversation (D [37(l)(ii)]). The defendants also argued that the court should find Mr Sengchangsavang was given a copy of the winning tickets with his nickname "Phong" written on it on 4 May 2016 (D [37(l)(iii)]) and accept Mr Sengchangsavang's evidence that he was told in advance of the draw that there were 14 people in it, given that he must have been told how many people were in the draw in which he had a ticket in order to work out his individual share (D [37(l)(iv)]).
In reply, the plaintiff submitted that because Mr Adams and Mr Sengchangsavang's shifts did not cross over on 3 May, they must have had their conversation about the draw on 4 May, after Mr Adams purchased the tickets (P in reply [45]).
I consider it more likely Mr Sengchangsavang had a conversation, as the defendants submit, on 2 May. I also accept he paid the $50 and got a copy of the ticket prior to the draw. Further, I accept Mr Sengchangsavang's denial that he did not tell Mr King that he paid less than $50 to enter the Winning Syndicate, as this would have been contrary to what Mr Sengchangsavang actually did in paying Mr Adams the required $50.
[45]
Veingxay Thattamanivong
The plaintiff submitted that Mr Thattamanivong paid Mr Adams on 4 May after he purchased the tickets on behalf of the Winning Syndicate (P [48]), that Mr Thattamanivong did not receive a copy of the tickets until the 5 May or after (P [55]) and that he tailored his evidence to suit his case (P [56]).
The defendants submitted that the court should accept that Mr Adams told Mr Thattamanivong in the lunchroom that there was a big draw on 2 or 3 May (D [37(m)(i)]) and that Mr Thattamanivong gave $50 to Mr Adams on 4 May between 13:39 and 14:04 (D [37(m)(ii)]). Further, the defendants argued that Mr Thattamanivong was given a photocopy of the tickets with his name on the "Xay" on it before the draw, most likely on the morning of 5 May 2016 (D [37(m)(iii)]) and that Mr Thattamanivong changed his written evidence because he wanted to ensure his evidence was right, implying that his mistake was due to English being his second language (D [37(m)(iv)]).
In reply, the plaintiff submitted that the evidence from Mr Andres' cross-examination shows that the meeting between Messrs Cheak, Singh, Andres, Thattamanivong and Adams did not occur on 3 May but rather at 16:00 on 4 May 2016, after the tickets were purchased (P in reply [24]-[26]).
I consider it most likely that the witness paid Mr Adams the $50 on 4 May in the afternoon and received a photocopy of the ticket before the draw but perhaps as late as the morning of 5 May.
[46]
The primary case
The plaintiff's primary case was that Mr Adams' subjectively intended to include all members of the 2016 Core Syndicate (including Mr King) in the Winning Syndicate and purchase the winning tickets in the 5 May draw on their behalf (ASOC [15]; P [19]-[33]). The plaintiff then argued that this meant Mr Adams held the prize money on trust for Mr King and had a duty to account to Mr King for Mr King's proportionate share of this prize money (T 262-263).
In response, the defendants submitted that the plaintiff's primary case must fail because there was a clear delineation between the 2016 Core Syndicate and the Winning Syndicate, and that the evidence showed Mr King was clearly not a member of the Winning Syndicate (D [70]-[77]).
In reply, the plaintiff submitted that Mr Adams' evidence of his subjective intention when buying the ticket on behalf of the 14 excluding Mr King was inadmissible and irrelevant to the court's objective determination and that all surrounding evidence suggests Mr Adams bought the Winning Syndicate's tickets intending to include Mr Adams (P in reply [4]-[6]).
Further, the plaintiff submitted that the objective circumstances suggested Mr Adams intended to purchase the ticket on behalf of a syndicate which included Mr King because Mr Adams had "not collected $600" by the time of buying the winning tickets, "but rather probably about $450" (P in reply [20]). Further, it was submitted that the exercise book was of no probative value in relation to timing of payment (P in reply [47]) and the defendants' reliance on post draw conduct carried little weight (P in reply [48]). Further, the plaintiff submitted that all evidence of members of the Winning Syndicate being told of its composition before the draw should be rejected because it is not corroborated by Mr Adams, against Mr Adams' stated practice and not supported by contemporaneous records (P in reply [46]).
In further reply, the defendants submitted that Mr Adams' subjective intention was critical to determining the composition of the Winning Syndicate (T 288). Further, the defendants argued that the unchallenged post-draw evidence of many of the defendants that they calculated the proportion of the prize money they received post draw suggested they knew that there were only 14 members of the Winning Syndicate (T 296).
[47]
The secondary case
The plaintiff's secondary case is that a joint venture existed between the 2016 Core Syndicate members which was operated by Mr Adams (ASOC [27(a); P [80]-[95]). The plaintiff asserted that fiduciary obligations arose from this joint venture which conferred on Mr Adams "the honest and fair dealing obligation, the obligation not to prefer the interests of himself or of any member over the interests of another, and not to use his powers to gain an advantage for himself" (T 273; ASOC [30]). As a result, the plaintiff alleged that Mr Adams had breached his fiduciary duty by excluding Mr King from the Winning Syndicate and held an appropriate portion of the prize money on constructive trust for Mr King or was liable to account for these profits to Mr King (T 273; ASOC 31, [35], [40]).
In response, the defendants submitted that this case must fail because the evidence did not justify the existence of any joint venture, trust or fiduciary relationship and that even if such a relationship was proven, Mr Adams was not bound by any fiduciary obligation to include Mr King in the Winning Syndicate (D [78]-[87]).
In reply, the plaintiff again submitted that legal or equitable obligations flowed from the 2016 Core Syndicate which prevented Mr Adams from excluding any member of this syndicate in any other draw in which the other members of this syndicate were participating (P in reply [7]) and obliged Mr Adams to act in Mr King's best interest and to treat him fairly by including him in the Winning Syndicate (P in reply [61]). Further, the plaintiff submitted that Mr Adams did not have a discretion unilaterally to exclude Mr King because of the manner in which he went about collecting funds for any given draw (P in reply [80]).
In further reply, the defendants submitted that while Mr Adams had a duty to treat the 2016 Core Syndicate members in good faith, this did not extend to a prescriptive duty to include all members of the 2016 Core Syndicate in the Winning Syndicate (T 296-297).
[48]
The contract case
The plaintiff's contract case is that separate, legally binding contracts existed between each of the 2016 Core Syndicate members and Mr Adams, each containing an implied term that all 2016 Core Syndicate members would participate in any lottery draw conducted by Mr Adams at the factory unless they expressly opted out prior to that draw (ASOC [31]; P [96]-[102]). As such, the plaintiff asserted that Mr Adams had breached the terms of this contract by "shutting him out" of the Winning Syndicate and denying him an equal share of the prize money (P [103]-[104]).
In response, the defendants submitted that there was no evidence to support the proposition that a contract ever existed between Mr Adams and any of the syndicate members and that there was no basis for the court to imply any of the terms submitted by the plaintiff (D [94]-[103]).
In reply, the plaintiff submitted that a contract should be implied because Mr Adams, through regular monetary contributions, provided Mr Adams with ongoing consideration to be a member of syndicates Mr Adams organised and therefore entitled to an equal share for the tickets Mr Adams purchased for these syndicates (P in reply [65]). Further, the plaintiff submitted that intention to enter legally binding relations should be found through Mr King's contribution of thousands of dollars over time to participate in syndicates, which could not be simply a part of a "social enterprise" but must have created a legal relationship between the parties (P in reply [66]).
[49]
The estoppel by convention case
The plaintiff also raised an estoppel by convention case, which was said to estop Mr Adams from denying that Mr King was a member of the Winning Syndicate and further, in relation to the primary case, to estop Mr Adams a proportion of the prize money to Mr King because he had not paid Mr Adams his entry monies prior to the draw (P [105]-[111]; T 292).
In response, the defendants submitted that there was no convention established by which the estoppel would apply (D [104]-[108]). Further, the defendants argued that as so far as the estoppel case ran in relation to the primary case, it was unnecessary to deal with, because if the primary case succeeded the court would be satisfied that the ticket was purchased on behalf of the Core Syndicate and Mr King would have been entitled to his proportionate share of the prize money (T 281).
[50]
The pooling case
Finally, the plaintiff raised a 'pooling' case, alleging that Mr Adams mixed funds he held on behalf of the 2016 Core Syndicate with funds he had obtained from members of the Winning Syndicate to purchase the Winning Syndicate's tickets in the 5 May 2016 draw (P [112]-[124]). Therefore, the plaintiff submitted that Mr Adams had to discharge the onus of proving that he did not use the 2016 Core Syndicate's funds to buy the tickets on behalf of the Winning Syndicate and if he did not satisfy this onus, Mr King was beneficially entitled to a rateable share of the prize money (P [120]; ASOC [40(iii)]).
In response, the defendants submitted that this case could not succeed because Mr Adams, supported by the other witnesses' evidence, discharged the relevant onus of distinguishing between the funds he held on trust for the 2016 Core Syndicate and the funds he used to purchase the Winning Syndicate's tickets in the 5 May draw were solely derived from members of the Winning Syndicate (T 294; D [115]-[117]).
In reply, after analysing the witnesses' evidence (P in reply [23]-[45]), the plaintiff stated that the evidence showed Mr Adams had "not collected $600" by the time of buying the winning tickets, "but rather probably about $450" (P in reply [20]). Further, the plaintiff submitted that Mr Adams failed to prove to the court where he obtained the $600 to buy the tickets and that the probabilities therefore suggested that because he believed that all 2016 Core Syndicate members were in the Winning Syndicate, he used the money he was holding for them (P in reply [54]).
In further reply, the defendants submitted that Mr Adams had $600 at the time of purchasing the winning tickets and the "good reason" for this was that because he only bought $600 worth of tickets, which was the money he had at the time because two members had not yet paid (T 290-291). The defendants also pointed to Mr Adams' statement in cross examination at page 124 of the transcript that he "had 600" (T 291) and that the contemporaneous records show he never mixed funds (T 291-292). Further, the defendants submitted that it did not follow that Mr Adams used the 2016 Core Syndicate funds even if he did not have $600 at the time he purchased the winning tickets (T 290-292).
[51]
Consideration
For the reasons which follow, it is my view that Mr Adams was under no fiduciary obligation as alleged by the plaintiff and was therefore not in breach of any such duty. Likewise, I do not regard him as contractually bound as alleged by the plaintiff nor was he in breach of any implied contractual term. Further, in my view, the estoppel case is not tenable. I am also of the view that the pooling case must fail. Consequently, the plaintiff fails in these proceedings.
[52]
The primary case
In my view, given my earlier findings, especially at [253], there is no basis to conclude that Mr Adams harboured a subjective intention to include Mr King in the Winning Syndicate.
I am satisfied that Mr Adams simply did not turn his mind to Mr King when he decided to form the Winning Syndicate and purchase a ticket on its behalf. I accept Mr Adams' explanation that he did not cross paths with Mr King at work during the relevant period. No assertion was made to suggest Mr Adams' omission of Mr King was the result of any motive to do so. The Winning Syndicate was an afterthought. Mr Adams did not regard it as an activity for or on behalf of the 2016 Core Syndicate and hence Mr King did not genuinely enter his head. I am satisfied he did not have a subjective intention to buy the ticket on behalf of the 2016 Core Syndicate or Mr King, but only the members of the Winning Syndicate he had approached before the draw.
[53]
Fiduciary or not (the secondary case)
At the risk of undue repetition, it is accepted that the categories of relationships giving rise to fiduciary obligations are not 'closed', however they are not infinitely extensible: Howard v Commissioner of Taxation (2014) 253 CLR 83 at [34].
Fiduciary relationships may take a wide variety of forms and may give rise to a wide variety of obligations. There are relationships or circumstances whose very nature obliges a person to act with the duties required of a fiduciary. However, this is not such a case. It is not an established category of fiduciary relationship.
In my view, fiduciary obligations can only be imposed outside the established categories if they are warranted in all the circumstances. The existence and scope of any such fiduciary relationship will be determined by those circumstances.
Crucially, fiduciary obligations cannot be said to arise until the 'fiduciary office' is assumed in some way, perhaps by words or conduct. A pre-existing contract is not necessary. But, if the parties embark upon conduct towards each other in mutual trust and confidence a fiduciary obligation may be said to arise. That is, if they assume a relationship and proceed to take steps involved in its establishment and implementation.
However, the simple fact that one party in a relationship subjectively trusted another is neither necessary nor conclusive of the existence of a fiduciary relationship. Further, a fiduciary relationship, however created, is rarely fiduciary for all purposes. It will cease when the relevant person no longer occupies the position to which the fiduciary duty applies.
Most obviously perhaps, a fiduciary relationship arises if a person entrusts another with property and relies on that person to deal with that property for the benefit of another or for purposes authorised by them and not otherwise. A fiduciary duty may also clearly arise when one person undertakes to act on another's behalf for a specific purpose, in subordination of their own interests.
In this case, it seems to me Mr Adams only assumed the fiduciary "office" at the moment he approached a participant and received money for the purposes of buying a ticket or alternatively, by approaching a participant, undertaking to buy a ticket on their behalf and then doing so, even without receiving money from them. Mr Adams was careful not to assume this "office" prior to making contact because he had a clear intention to no longer subsidise any draw entry payments after late 2015. It is likely that his reluctance to assume this "office" also arose from his respect for the personal circumstances of each of the workers and the likelihood that many may not always have wanted to part with money to gamble in any given draw. Of course, his fiduciary and/or contractual obligations would continue if he held any winnings, and he obviously had a discretion to reinvest and/or distribute the winnings.
While it was recognised by the defendants that Mr Adams presently holds $1,617.41 on behalf of the 2016 Core Syndicate members (D [62]), Mr Adams' obligations regarding the holding of such monies on behalf of the 2016 Core Syndicate was not addressed by the parties with any precision. It is clear to me that when Mr Adams held monies after a draw (from either winnings or excess payments) on behalf of the 2016 Core Syndicate, he had a fiduciary discretion, not an obligation, to do one of two things with these funds: to distribute them to the 2016 Core Syndicate members or to reinvest them in future draws. Mr Adams could not do anything else with these funds, except with the informed direction of a beneficiary.
The plaintiff puts his case by asserting the existence of a "joint venture", which comprised the 2016 Core Syndicate members (including Mr King). The submission is to the effect that Mr Adams was required to act honestly and in the best interests of these members, so that any such ticket bought by Mr Adams became an asset of the joint venture, regardless of whose funds were actually used to buy those tickets and whether or not there had been any contact between Mr Adams and the member. At its logical extension, it would simply mean that every ticket purchased by Mr Adams after the 2016 Core Syndicate was formed would belong to the 2016 Core Syndicate in Equity. I respectfully consider such a proposition to be absurd.
Mr King had no difficulty with the suggestion that Mr Adams might purchase tickets on behalf of differing groups of people. The existence of fiduciary duties in respect of one draw could not involve Mr Adams breaching that duty by buying tickets for himself, for himself and family members or for himself and persons outside the factory, in the same or another draw. This is entirely consistent with Dixon CJ's analysis in Van Rassel v Kroon (1953) 87 CLR 298 at 302-303.
As I have already observed, Mr Adams simply agreed to buy lottery tickets with funds contributed by members of the 2016 Core Syndicate. There is no basis for considering that that undertaking imposed a negative obligation or restriction upon what Mr Adams might do with other money, whether this be his own money or money contributed by other potential participants.
It is the case that Mr Adams necessarily assumed fiduciary obligations when he received money from the 2016 Core Syndicate and bought tickets in "big draws" on its behalf. However, in my view, he discharged this obligation by purchasing a ticket on behalf of the 2016 Core Syndicate in the 5 May draw. He would further discharge his fiduciary obligations to the 2016 Core Syndicate by accounting to its members for the $13.65 winnings. However, in my view this is where his fiduciary duties relevantly ended.
In my view, it could not be said that this fiduciary obligation prevented him from buying any other tickets in any other draws. Likewise, it could not be said that this fiduciary obligation obliged Mr Adams to include the 2016 Core Syndicate members in every single lottery draw he participated in. It would be inconsistent with the current law to impose any wider fiduciary obligations upon Mr Adams.
Further, in my view, it would be untenable to suggest that there would be a subsequent conflict in respect of subsequent purchases by Mr Adams of other tickets for himself and/or others. Mr Adams did not derive any opportunity or knowledge which he used to his own profit that was contrary to the interests of Mr King or any of the other 2016 Core Syndicate members. He therefore did not breach, for example, the 'no profit' and 'no conflict' rules.
In addition, it seems to me that there is no evidence of any discussion having ever taken place in which Mr Adams promised to provide an opportunity to Mr King to participate in each and every draw Mr Adams entered, nor did Mr King proceed on that assumption. Further, there was no evidence suggesting that any of the other 2016 Core Syndicate members made such an assumption. On the evidence, nothing Mr Adams said or did could be reasonably construed as his undertaking to act for Mr King, or any of the other 2016 Core Syndicate members, on all occasions and in respect of every draw. Quite to the contrary, as I have observed, Mr King himself indicated he had no difficulty with the proposition that Mr Adams might purchase tickets on behalf of differing groups of people. Once again, these facts lead to the conclusion that Mr Adams did nothing to assume the fiduciary "office" or give rise to a fiduciary obligation to include Mr King in the Winning Syndicate.
In my opinion, Mr King could do no more than reasonably believe that he would share in draws in which he was either invited to join, had received a copy of the relevant tickets or had made a financial contribution. There is no evidence to suggest that Mr King ever participated in or received proceeds from a draw in which he did not receive a copy of the relevant tickets beforehand. I consider it entirely artificial to contemplate a person having rights to participate in a draw when they had not agreed to participate in it and/or paid to participate in it, and certainly not where a ticket had not been explicitly bought on their behalf.
I do not believe that Mr Adams owed Mr King any fiduciary obligations unless and until he either: made contact with him in relation to entering the Winning Syndicate (which he did not do), was given money by him to enter the Winning Syndicate (which he did not receive) or continued to hold winnings from previous draws on behalf of the Winning Syndicate and used those funds, in part or in whole, to purchase the Winning Syndicate's tickets in the 5 May 2016 draw (which he did not do).
There is simply no evidence to suggest that Mr Adams assumed the fiduciary office in relation to any of the factory workers, in any given draw, without making contact with them or receiving or holding their funds to be used for that purpose and there is similarly no evidence to suggest that Mr Adams presumed that any particular individuals would be automatically included in any given draw which he chose to enter.
Moreover, in the relevant sense, there is no vulnerability on the part of Mr King or any of the other syndicate members until they parted with money they 'entrusted' to Mr Adams or unless Mr Adams had invited them to participate in any given draw. Each syndicate member had an absolute choice as to whether they would pay Mr Adams money to enter any given draw. 'Vulnerability' could be only said to arise after they had given this money to Mr Adams, after which they were then at his mercy in terms of what he was to do the money they 'entrusted' to him. Thereafter he had to deal with their money or winnings appropriately.
[54]
Common intention constructive trust
The defendants complain that the plaintiff has sought to advance in submissions, but not pleaded, a common intention constructive trust or alternatively a constructive trust of the Muschinski v Dodds and/or Baumgartner v Baumgartner variety. The defendants submit that the plaintiff should not be permitted to run those cases.
The defendants submitted that the notion of "common intention is inappropriate here because when one looks at its history it was resorted to as a device to resolve property relations between disaffected properties where unequal contributions had been made to purchase prices in which a presumption of advancement might otherwise lie": J D Heydon and M J Leeming, Jacob's Law of Trusts in Australia (7th ed, 2006, Lexis Nexis Butterworths) at [1214]. Further, the defendants submitted that the device was resorted to for the purposes of enabling the discernment of a resulting trust or an interest by way of a proprietary estoppel and that neither concept arose in this case. The defendants also pointed to the Muschinski v Dodds and/or Baumgartner v Baumgartner constructive trust as equally inapposite in the current case.
In my view, this case fails even if leave had appropriately been granted for an amendment explicitly to plead such a claim. It fails because I am satisfied there was simply no evidence of any common intention in the relevant sense. The only 'common intention' I am prepared to find, if one could call it that, was an understanding that from time to time Mr Adams may or may not invite Mr King to join in syndicates, whether a syndicate of 12 or perhaps otherwise.
Further, there is no basis in the evidence, and in fact no clearly articulated circumstance by the plaintiff as to how Mr Adams acted unconscionably so as to warrant the imposition of a Muschinski v Dodds and/or Baumgartner v Baumgartner constructive trust. It is clear to me that the evidence suggests, and in accordance with my findings above, that Mr Adams did not act unconscionably in excluding Mr Adams from the Winning Syndicate.
For these reasons, the constructive trust case likewise fails.
[55]
The contract case
As with his other cases, Mr King bears the onus in relation to the contract case. He asserts, for example, that the contract was developed over the time, whatever that may mean.
It seems to me that a fundamental obstacle in relation to this case is that I do not accept there is any evidence to support the proposition that a contract of that sort ever existed.
When viewed objectively, it simply does not seem to me that the parties ever intended to create legal relations as pleaded. I acknowledge that ad hoc contracts were arguably created from time to time when a syndicate entered into a particular draw, being limited to that specific purpose. However, I am satisfied there is simply no evidentiary basis for suggesting that there was some overarching agreement of the sort asserted. It seems to me that a clear understanding on the part of all concerned was that Mr Adams would exercise a discretion as to if, when and to what extent he would invite people to join or participate in syndicates. While the putative participants may have had some general understanding, there was certainly no precision about who would or would not be included.
Indeed, none of the parties to the contract appeared to know of its existence. In my mind, the only plausible construction of the evidence is that from time to time Mr Adams made direct contact with people in order to obtain their willingness to or not to participate in a draw. The understanding extended to any winnings that might have eventuated but it is limited to that. In my view, until this occurred, there was no relationship between them, legal or otherwise.
The conversation which Mr King asserts he had with Mr Adams on or about 11 January in my mind is no more than an exchange of a most informal kind, where neither party intended to create any legally binding arrangements that covered each and every draw Mr Adams chose to enter.
Most importantly, although at a very high level it can be said that at least from 11 January, Mr Adams indicated to Mr King that he would be forming a new syndicate which was for the purposes of big draws. However, in my view, it is fanciful to suggest on the state of the evidence that anything was said which would oblige Mr Adams not to enter any draws other than those on behalf of the 2016 Core Syndicate.
The stakes were higher, and so was the contribution of $50 required of each participant. For these workmates, $50 was a significant amount and I am satisfied, although they had a desire to participate when they could, they did not objectively regard themselves as bound to contribute the $50 if their household could not afford the $50 when Mr Adams came calling. Likewise, it is clear to me that Mr Adams never subjectively believed that he had the right to sue any participant who failed to give him any of the money required to enter any given draw.
As I say, while there might have been some general understanding of who might or might not be in the draw it is not as if Mr Adams distributed a list or formalised the arrangement beyond simply saying that he was changing the old regime to a new regime. It seems to me that on the evidence there is simply no support for a contract of the kind asserted by Mr King.
Mr King's evidence is that there were two conversations of moment on 11 January and 27 April 2016. I have already referred to the conversation of 11 January that goes no further than simply suggesting that Mr Adams announced the creation of the new syndicate and that Mr King would have to put in $50. Mr Adams version of that conversation Mr King accepts may well have occurred. Mr Adams said that during this conversation he said "the Lotto has finished… I might get up another one, but it will be less people. I will want $50 up front, that way we will always be ahead. We will only be going in the big draws. Do you want to be in it?" (Affidavit of Adams 15 June 2015 [79]). Mr King accepted Mr Adams may well have said exactly that (T 16-17).
Mr King accepted that he understood that Mr Adams wanted money up front because he did not want to chase people as he had done in the past. Mr King, unsurprisingly also accepted that Mr Adams had complete discretion over what "big draws" he would enter on behalf of the 2016 Core Syndicate (T 60/36-40, T 61/5-14).
In my view, the conversation on 27 April, viewed objectively, was nothing more than an informal exchange about a particular draw. I cannot see how it could, even on Mr King's version of events, give rise to any form of contractual obligation or a variation to any allegedly existing contract (See King affidavit 17 May 2016 [46]).
I am of the view that there is simply no factual basis to support a contractual promise on either occasion, taken separately or together, that Mr Adams would only ever run a lottery draw which Mr King was part of. That would be enough to dispose of the contract claim. However, as I have already indicated, it is also submitted that terms should be implied into the contract to oblige Mr Adams to include Mr King in the Winning Syndicate.
Again, I do not see any basis for an implication or implications of the kind suggested. I do not see why it would be necessary to give business efficacy to the purported contract in the sense understood in the authorities. There is no suggestion that custom or usage would support such an implication. Indeed, there is no evidence in any event. Although clearly not determinative, but of passing interest, a number of witnesses said they did not think they had to be in every draw (Affidavit of Griffiths 4 August 2016 [4]; Affidavit of Andres 4 August 2016 [4]; Affidavit of Hashim 4 August 2016 [4]; Affidavit of Singh 4 August 2016 [3]; Affidavit of Cheak 4 August 2016 [10]). Mr Hashim even explained that on one occasion he refused Mr Adams' invitation to enter a 'big draw' (Hashim affidavit of 4 August 2016 [3]).
Further, as the defendants rightly point out, even assuming that a contract of the sort pleaded existed which included Mr King in a "big draw" (including the Mother's Day Draw), that contract was fulfilled because Mr Adams bought a ticket on behalf of the 2016 Core Syndicate in all the "big draws": the $25 million Powerball draw held on 28 April 2016, the 5 May draw and the Mother's Day Saturday Lotto Draw held on 7 May 2016. Having done so, it seems to me Mr Adams had total discretion to buy as many more tickets as he wished in any of those draws, on his own or in combination with any other person. I do not see any contractual obligation which could restrain him otherwise. Mr King could not reasonably have expected that any other tickets Mr Adams purchased would have included Mr King.
For these reasons, in my view, the contract case fails.
[56]
The estoppel by convention case
It seems to me that the estoppel case has no foundation in fact. There is simply no evidence to support the proposition that Mr King, let alone anyone else, proceeded upon any assumption or belief that Mr Adams would invite Mr King to participate in each and every ticket he purchased, whether for himself or for himself and others. Indeed, everyone including Mr King recognised that this was simply not going to be the case. The so called convention therefore has no foundation in fact and likewise must fail.
[57]
The pooling case
The pooling case could only succeed if there were not two distinct syndicates or if Mr Adams used mixed funds to purchase the tickets on behalf of the Winning Syndicate in the 5 May draw.
As to the latter, in my view there is simply no evidence to prove that funds were mixed. I am satisfied that there were two distinct syndicates which entered the 5 May draw (the 2016 Core Syndicate and the Winning Syndicate) and the funds received by Mr Adams from each syndicate were kept in two distinguishable pools of money. Mr King did not contribute to the relevant Winning Syndicate pool and therefore could not have a claim over the proceeds of the Winning Syndicate.
As to the former, I do not consider there is any evidence to support the proposition that Mr Adams mixed the funds of the 2016 Core Syndicate with that of the Winning Syndicate. As per my findings above, there is no basis to find that Mr Adams used funds other than the $600 he obtained from the Winning Syndicate members (bar Mr Thattamanivong and Mr Mico who paid after the ticket was purchased) to purchase the tickets on behalf of the Winning Syndicate in the 5 May draw. Mr Adams kept separate each of the funds from his various endeavours. He was readily able to account appropriately for all monies he had or was still holding. It follows that the proceeds of each pool belong only to those who contributed to that pool.
In my view, Mr Adams has more than adequately accounted for the various funds he obtained from time to time including the funds he obtained for the Winning Syndicate. I am satisfied that Mr Adams purchased the tickets in the 5 May 2016 draw on behalf of the Winning Syndicate, only using the funds that he received from the Winning Syndicate members. Those funds were simply not the subject of any contribution by Mr King and were not mingled funds.
The pooling case must therefore fail.
[58]
Conclusion
I would invite the parties to prepare Short Minutes of Order to reflect my decision. If need be I would also hear any dispute on the question of costs.
[59]
Amendments
14 December 2016 - 1. Amendment in hearing dates additions
2. Note that legal representation for second defendant filed a notice of appearance on 20 June 2016
15 December 2016 - Jurisdiction: Equity Division - Expedition List
16 December 2016 - Correct plaintiff's name in cover sheet, pages 39 and 67
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: 16 December 2016
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Category: Principal judgment
Parties: Brendan Wilfred King (plaintiff)
Robert Lawrence Adams (first defendant)
New South Wales Lotteries Corporation Pty Ltd (second defendant)
Matthew John Adams (third defendant)
Bradley Robert Adams (fourth defendant)
Silvestre Gavina Mico (fifth defendant)
Peter Andres (sixth defendant)
Davendra Singh (seventh defendant)
Robert Eric Beever (eighth defendant)
Sean Cheak (ninth defendant)
Peter Salendra Prasad (tenth defendant)
Robert Griffiths (eleventh defendant)
Hassan Hashim (twelfth defendant)
Phongsavath Sengchangsavang (thirteenth defendant)
Quem Singue Lai (fourteenth defendant)
Viengxay Thattamanivong (fifteenth defendant)
Representation: Counsel:
L Gyles SC, C Johnstone, C McMeniman (plaintiff)
M Lee SC, W A D Edwards (first to fifteenth defendants)
Unrepresented (second defendant)