Events following the acceptance of the Funding Offer
299 The events of 22 January 2015 are contentious.
300 Mr Watts deposed that prior to 22 January 2015, he spoke with Ms Sharpe by telephone during which he was informed by Ms Sharpe that she had obtained funding for the Chains and requested an invoice be sent to Chopsonion for the Chains, as well as shoulder pulling equipment, the Yarrawonga Beef Floor, and the rent due for storage at Oringi. That may well be the case, however WMM had already provided the July 2014 Chains invoice, which I have found was provided by Mr Watts to Ms Sharpe in the knowledge that Ms Sharpe was seeking funding to purchase the Chains. In the circumstances, the request by Ms Sharpe for an invoice for the Chains simply strengthens the applicants' case that the July 2014 Chains invoice was not genuine and that the price for the Chains was $528,000 (incl GST).
301 So too the request by Ms Sharpe for invoices for shoulder pulling equipment, the Yarrawonga Beef Floor, and rent due and payable for storage of the Chains at Oringi strengthens the applicants' case that the July 2014 Chains invoice was not genuine and that it contained within the sum of $760,000 undisclosed amounts for the Yarrawonga Beef Floor, shoulder pulling equipment and Oringi rent.
302 On 21 January 2015, Ms Sharpe requested that Ms How pay the amount of $760,000 to WMM for settlement of the outstanding balance of the Chains invoice.
303 That same day, Ms How replied requesting further evidence of invoices to ensure there were sufficient funds and that the funding would result in the Chains arriving in Australia, however since Ms How had the July 2014 Chains invoice, on 22 January 2015 PFM sent $760,000 to WMM's account. The deposit was withdrawn from PFM's Bank, Commonwealth Bank of Australia, at 2.52pm that day.
304 Mr Watts deposed that he was surprised and confused when the sum of $760,000 appeared in WMM's bank account on 22 January 2015. He deposed at [151]-[152]:
151. I was also confused when I received the Payment as the Purchase Invoices totalled the amount of $685,707.98. Consequently, PFM had overpaid for the Purchase Invoices by the amount of $74,292.02 ("Overpayment").
152. On receipt of the Payment, I noted that the Overpayment had been received and made contact with Wendy via phone to ask why we'd been given too much cash. Wendy and I then had a conversation to the following effect:
Me: "Wendy, we've received the money for the Oringi Chains and there's more than we invoiced for. What's the go?"
Wendy: "Oh yeah, the people that helped us sort out the finance get a commission, so they sent us the commission as part of the loan too."
Me: "Righto mate, what do I need to do with it then?"
Wendy: "Well I just need you to send it back to me and then I can forward it to these finance guys."
Me: "Alright, but I need you to send through some invoices for it to Nancy so we've got a record of why the money is going to you."
Wendy: "Sure, I'll organise it. I'll just get you to send $20,000 first though because that's got to be used straight away."
Me: "Sure mate, once we get the invoice through Nancy will go to the bank and do it."
305 I do not accept Mr Watts was surprised and confused when WMM received $760,000 and consider his evidence to that effect in the conversation he had with Ms Sharpe on 22 January 2015 above to be a reconstruction. Mr Watts knew from Ms Sharpe that funding had been obtained prior to 22 January 2015 and that WMM had previously issued the July 2014 Chains invoice to Chopsonion for $760,000, ostensibly for the purchase of the Chains, after a credit for a $90,000 deposit. It was that invoice which had been provided by Mr Watts/WMM to Chopsonion through Ms Sharpe for the purposes of obtaining the funding.
306 The same day at 12:10pm, Ms Sharpe sent an email to Mr Watts asking him to send $20,000 by way of cash transfer to Chopsonion's bank account. The email was sent prior to Mr Watts/WMM's account receiving the funds from PFM. The email continued "we can sort out the rest next week when we can all take a breath".
307 However, Mr Watts deposed that he spoke with Ms Sharpe after the funds had been received into WMM's bank account and it was during the course of that conversation that he asked for an invoice to be sent for the $20,000 Ms Sharpe had requested during the course of the conversation. He deposed that WMM received the $760,000 before he read the email sent by Ms Sharpe on 22 January 2015.
308 Mr Watts said under cross-examination that Ms Watts did all the banking and that before any money was paid to Chopsonion, follow-up paperwork was needed. The payment of $20,000 to Chopsonion was made on 23 January 2015 but Chopsonion's invoice no. 15031 for that $20,000 was not sent by Ms Sharpe to WMM until 29 January 2015.
309 Invoice no. 15031 from Chopsonion for $20,000 is expressed as being "for services in relation to the sale/purchase of Oringi Chains". The covering email reads:
Hi to both
Please let me know if the below is your understanding of the transaction:
Payment for chains 760,000.00 (no GST)
Invoices now paid:
01204 528,000
01207 29,007.98
01206 46,200
01205 82,500
Invoice amount 20,000
705707.98
Balance $54,292.02 (am guessing is in your account)
Have attached an invoice for your records
Talk soon
Wendy
Ph 0433 213 548
310 I find that the attached invoice to which Ms Sharpe refers is invoice 15031 issued by Chopsonion to WMM for $20,000.
311 I do not accept that Mr Watts spoke to Ms Sharpe after the money had been deposited into WMM's account and that he did not read Ms Sharp's email sent 22 January 2015 until after the money had been deposited. The sum of $760,000 was transferred by PFM's bank, CBA, at 2:52pm on 22 January 2015, some two hours and forty minutes after Ms Sharpe sent the email at 12:10pm. It is Ms Sharpe's email which requests the $20,000. I find Ms Sharpe's email was sent in response to Mr Watts' request for an invoice for $20,000. That email is not an invoice, but I find Mr and Ms Watts acted on the basis of that email immediately because Ms Watts completed the paperwork for the $20,000 the same day before transferring it on 23 January 2015: A1 1/56B/478B.
312 It is for these reasons that I find that Mr Watts and Ms Sharpe knew prior to the receipt of funds that a payment of $760,000 was to be received in WMM's bank account on 22 January 2015.
313 As to Chopsonion's invoice no. 15031, Mr Watts agreed in cross-examination that Chopsonion never provided services to WMM in relation to the sale/purchase of the Chains. Nonetheless, WMM paid that $20,000 to Chopsonion on 23 January 2015 at 10:27am which is the date and time on WMM's bank records: A1 1/56B/478B.
314 Mr Watts denied that Chopsonion's invoice no. 15031 was a false record, saying that all he wanted was an invoice from Chopsonion to cover the funding because "it wasn't my money". In fact, Mr Watts/WMM did not receive an invoice until 29 January 2015: A1 1/61A/493A. Mr Watts also denied that he was pretending that the $20,000 payment was under an invoice which he knew had no foundation.
315 I do not accept Mr Watts' denial. He knew invoice no. 15031 was false because he agreed in cross-examination that Chopsonion had not provided the services described on the invoice.
316 I find that Mr Watts was well aware that $760,000 had been paid into WMM's account as the balance payable on the July 2014 Chains invoice. Indeed, there is no other plausible explanation.
317 Further, his attempt to give credibility to the payment of $20,000 by relying on an invoice from Chopsonion he knew to be false, indicates to me his preparedness to participate in a transaction he knew to be false which was the funding of the Chains by a funder to the extent of $760,000 on the basis of the July 2014 Chains invoice.
318 Mr Watts deposed that WMM issued invoice no. 1204 for the Chains on 22 January 2015 in the sum of $528,000 (incl GST). That is undoubtedly the case, however that merely confirms what I find to be the arrangement between WMM through Mr Watts, and Chopsonion through Ms Sharpe and Mr Sharpe, whereby funding would be obtained on the basis of the July 2014 Chains invoice, which was not genuine in the sense that WMM's actual price for the Chains was $528,000 (incl GST).
319 On 22 January 2015, Mr Watts also caused invoice nos. 1205, 1206 and 1207 to be issued by WMM for the Yarrawonga Beef Floor, shoulder pulling equipment and the due and payable Oringi rental respectively. Nonetheless, Mr Watts did not question where funds for the other equipment the subject of invoice nos. 1205 and 1206, and the rent the subject of invoice no. 1207 was coming from. Instead, he caused those invoices to be issued and applied the funds received into WMM's bank account on 22 January 2015 against those invoices from the balance remaining after the sum of $528,000 was applied to the purchase of the Chains.
320 Subsequently, WMM received two further invoices, one being invoice no. 889, dated 31 January 2015, from Jechbo for, "Report and consideration for Chains ex NZ" in the sum of $30,000 (incl GST) and the other from Annomac being invoice no. 25, also dated 31 January 2015, for, "To consult in relation to design/drawings of small stock chains for abattoir purposes. Inclusive of travel costs" in the sum of $24,292.02 (incl GST), giving a total of $54,292.02.
321 Those invoices followed the email from Ms Sharpe sent on 29 January 2015 which refer to a balance of $54,292.02 remaining from the $760,000.
322 Mr Watts agreed that the total of the Jechbo and Annomac invoices reflected the balance of the $760,000 remaining in WMM's account after payment of the earlier invoices to which I have referred. Payment of the invoices from Jechbo and Annomac was made by WMM on 2 February 2015.
323 Mr Watts agreed that Annomac did not consult to WMM, but as with invoice no. 15031 for $20,000, denied it was a false business record. He said that WMM received an invoice from Annomac with an ABN number and which included GST so WMM paid it. I do not accept Mr Watts' denial. I find that Mr Watts turned a blind eye to the fact that Annomac had performed no services for WMM, yet WMM paid Annomac from funds deposited in WMM's bank account which he characterised as an "overpayment". Mr Watts' attempt to legitimise the payments to, in this case Annomac, from the $760,000 paid into WMM's bank account by relying on a false invoice, not only fails, it demonstrates a knowledge and complicity in the conduct of Chopsonion/the Sharpes in obtaining funding on the basis of the false July 2014 Chains invoice.
324 So much so is consistent with Mr Watts' admission to Ms How in his telephone conversation with her on 23 September 2016 which was confirmed in an email from Ms How to Mr Watts/WMM on 26 September 2016. In that email, Ms How reiterated what Mr Watts had told her:
… that Wendy asked him to change the original price ($490,000) and provide us with an invoice with an inflated amount.
You in fact changed your invoice to indicate to us that she was paying $76,000 (sic $760,000) for both chains which is some 360K more for the chains that she actually was. The Invoice also indicated that a 90K deposit was paid, which it was not.
You also indicated that once we paid you the $760,000 that you in turn kicked back the overpayment to Wendy.
325 There is no evidence that Jechbo provided any services to Mr Watts or WMM. I make the same finding in relation to invoice no. 889 from Jechbo.
326 Ms Sharpe did not send Ms How a copy of WMM's invoice no. 1204 for the Chains dated 22 January 2015 in the amount of $528,000, nor WMM's invoice nos. 1205, 1206 and 1207, nor the invoices from Annomac and Jechbo. Insofar as the payment to WMM was concerned, she had proceeded only on the basis of the July 2014 Chains invoice.
327 Accordingly, PFM had provided funding on an entirely erroneous basis, a central component of which was the July 2014 Chains invoice.