Coastline Constructions (Aust) Pty Ltd & Ors v Kakavas & Ors

Coastline Constructions (Aust) Pty Ltd & Ors v Kakavas & Ors - [2009] NSWSC 1438 - NSWSC 2009 case summary — Zoe

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The third agreement 12 The plaintiffs' claim that there was a third oral agreement made between Mr McCracken and the three defendants in October 2006, which all three defendants deny. 13 This agreement is alleged to have contained a number of elements. Firstly, Mr Kerwick was to purchase a Queensland property from Mr Pilarinos, the third defendant. Secondly, Mr Pilarinos was to purchase Mr McCracken's family home where he lived with his wife and children. Thirdly, Mr McCracken was to advance $2 million to Mr Kerwick, to be used as the deposit on his purchase from Mr Pilarinos. Fourthly, Mr Pilarinos was to repay that deposit to Mr Kerwick, who would then repay Mr McCracken, if Mr Pilarinos did not obtain finance for his purchase of Mr McCracken's home. Fifthly, Mr Kakavas would act as agent on the two sales and would guarantee that they would proceed, and that if they did not proceed, that the $2 million advanced by Mr McCracken to Mr Kerwick, would be refunded to Mr McCracken. 14 Mr McCracken claimed that Mr Pilarinos did not obtain finance for his purchase. Instead of then repaying the $2 million deposit to Mr Kerwick, in order that it could be repaid to Mr McCracken, Mr Pilarinos paid it to Mr Kakavas, who lost the money gambling. 15 There is no question that Mr McCracken paid Mr Kerwick $2 million. Mr Kerwick and Mr Kakavas claim that this payment was made in respect of another transaction entirely, namely an agreement between Mr McCracken and Mr Kerwick, that Mr Kerwick would sell a property which he owned, situated at Palm Beach Queensland, to Mr McCracken. Mr McCracken denies that there was any such agreement ever discussed or agreed. 16 There is also no question that Mr Kerwick paid Mr Pilarinos $2 million, but they claim that this was not a payment made under the third agreement. Their case is that Mr Kerwick paid Mr Pilarinos $2 million, in order to repay a debt of $800,000 and to make a $1.2 million investment in an $80 million property development which Mr Pilarinos had underway in Melbourne. Neither of these transactions were documented. They, too, were oral agreements, Mr Kerwick and Mr Pilarinos claimed. 17 Mr Pilarinos did not seek any finance to purchase Mr McCracken's house. His case was that he never intended, or even discussed with Mr McCracken buying his family home. Mr Kerwick and Mr Pilarinos also claim that they never agreed that Mr Kerwick would purchase any property from Mr Pilarinos. Mr Kakavas claims that he never agreed to act as agent in respect of such sales. 18 It was Mr Pilarinos and Mr Kakavas' case that Mr Pilarinos loaned Mr Kakavas over $4 million for gambling and that these loans had nothing to do with the third agreement, or the $2 million given to Mr Pilarinos by Mr Kerwick, which he had received from Mr McCracken. There is no question that Mr Pilarinos did not repay $2 million to Mr Kerwick. He later paid Mr Kerwick $300,000, he and Mr Kerwick claim, when Mr Kerwick wanted part of the $2 million he had invested with Mr Pilarinos for other purposes.

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The assault and payment of $1 million 19 As to Mr Kakavas' cross claim, there is no issue that at around midday on 10 November 2006, Mr McCracken met with Mr Kakavas at his home, and that Mr McCracken then assaulted Mr Kakavas. This was Mr Kakavas' wedding day. Mr Kakavas claims that Mr McCracken subsequently made threats that he would cause Mr Kakavas and his father harm, if he did not repay Mr McCracken $6,250,000. Mr Pilarinos and Mr Kerwick conveyed these threats to Mr Kakavas, as did another mutual friend, Mr Chrysaffis. While Mr McCracken does not deny the argument and the assault, he denies making such threats or claiming such payment. On his case, he only then wanted $2 million repaid. 20 On 11 November 2006, Mr Kakavas signed a document which he had handwritten, acknowledging that he owed Mr McCracken $6,250,000. Mr Kakavas claims that this document was not signed voluntarily, but that it was in terms dictated by Mr McCracken and that Mr Chrysaffis conveyed those terms to him, together with threats to his safety and that of his father. He signed the document and subsequently paid Mrs McCracken $1 million, through Mr Kerwick, money which he did not owe Mr McCracken, other than $250,000, as a result of his fear of Mr McCracken. Mr McCracken denies that he obtained the document by these means. While he had asked for an acknowledgement, he did not extract it by threats and did not dictate the terms in which it was given. He understood that the payment was made in relation to the $2 million he had given Mr Kerwick under the third agreement. 21 On Mr McCracken's case, when Mr Kakavas produced the acknowledgement, he was seeking only repayment of the $2 million owing under the third agreement. The first agreement was then still on foot. Mr Kakavas denies this, claiming that on 10 November, Mr McCracken also told him that he was not proceeding with the first agreement. Mr McCracken was then claiming repayment of $6,250,000 in total. 22 Payments totalling $1 million were made by Mr Kerwick to Mrs McCracken between November 2006 and July 2007. The plaintiffs accept that Mr Kakavas provided these funds to Mr Kerwick. Mr Kakavas claims that he asked Mr Kerwick to pay the money to Mrs McCracken, because of Mr McCracken's assault, his threats and because he no longer wanted to have any direct dealings with Mr McCracken, after the breakdown of their relationship. 23 Mr Kakavas seeks to recover $750,000 of the payments made by Mr Kerwick, accepting that Mr McCracken is entitled to retain $250,000, that being what he owed him under the second agreement. 24 Mr Kakavas also claims, in the alternative, that in March 2007 another agreement was made with Mr McCracken, that any moneys owed to the plaintiffs would not be payable until judgment or settlement of certain proceedings which he had brought against Crown Casino in the Supreme Court of Victoria, with interest accruing at nine per cent in the meantime. In those proceedings, Mr Kakavas claims Crown Casino owes him in excess of $20 million. Mr McCracken denies that such an agreement was made.

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The further amendment of the claim 25 After the hearing commenced, it was indicated that the plaintiffs proposed to seek to further amend their claim, in terms then provided to the other parties. Those terms were further refined, while Mr McCracken gave his evidence. At the conclusion of that evidence, leave to further amend was sought and opposed. During the course of the parties' submissions, those amendments were explained and even further refined. Finally, they were contained in the third further amended statement of claim. The plaintiff was given leave to proceed on those pleadings and I indicated that I would later give reasons for granting that leave. 26 There was no real explanation for the late amendments, other than that there were problems with the pleadings as they stood. That appeared to reflect the unusual circumstances which brought the parties before the Court. 27 There was no issue that very substantial sums of money had passed from the plaintiffs to Mr Kakavas and Mr Kerwick, to Mr Pilarinos and Mr Kakavas and from Mr Kakavas to Mr Kerwick and through him, to Mrs McCracken. There was a very substantial dispute as to what the contractual or other arrangements underpinning those payments were. The plaintiffs undoubtedly paid $6,250,000 in total to Mr Kakavas and Mr Kerwick. They received nothing in return, other than the $250,000 repayment in respect of the second agreement and the $1 million Mr Kerwick paid Mrs McCracken, $750,000 of which Mr Kakavas claims the plaintiffs have no entitlement to. On the defendants' cases, pursuant to the agreements under which the payments were made, the plaintiffs were entitled to have received nothing in return for the $4 million paid to Mr Kakavas and the $2 million paid to Mr Kerwick. 28 The amendments to the statement of claim sought to ensure that even if it was found that no enforceable agreements of the kind claimed had been made, that the defendants would be ordered to repay what the plaintiffs had paid them, they having no right to retain any of the money they had obtained from the plaintiffs. 29 In considering the parties' respective cases, I took the view that it could not be overlooked that by the time the hearing commenced, the original statement of claim had already been amended a number of times. The further amendments pressed in relation to Mr Kakavas, in respect of the first agreement, were sought to be pressed on the additional basis, in summary, of:

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"180 In Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2005] NSWSC 951, White J declined to strike out TVL's claim in conversion. However, his Honour did not deal with the merits of the argument and in any event considered that for a Judge at first instance the matter was settled by binding authority. In Hoath v Connect Internet Services Pty Ltd (2006) 229 ALR 566, White J dealt with the issue of conversion of intangible property. In that case the plaintiff alleged that the defendants had committed the tort of conversion by their unauthorised dealings with the domain name "dragon.net.au". White J regarded Ferguson v Eakin as binding on him and clearly establishing that there could be no claim in conversion or detinue of a chose in action (at 594). His Honour noted that the English Court of Appeal had come to the same conclusion in OBG Ltd v Allan [2005] 2 All ER 602. (Since his Honour delivered his judgment in Hoath the House of Lords dismissed the appeal from the Court of Appeal in OBG : [2007] 4 All ER 545). White J held that the plaintiff had to: identify a chattel embodying the intangible rights with which the defendant interfered; establish that it owned or had an immediate right to possess that chattel; and establish that the defendants dealt with the chattel in a manner repugnant to the plaintiff's rights. His Honour said (at 597-598): Mr Hoath's right to use the domain name, the IP addresses and the AS number was recorded in an electronic form on the database of the internet registrar. … However, Mr Hoath was never the owner nor did he have a right to possession of the chattel or chattels being, I infer, a hard disk, or a server, or some other piece of computer equipment, on which the information as to his right to use the domain name, IP addresses and AS number was stored. In my view, the defendants did not act in a way which was repugnant to any right which Mr Hoath had to the ownership or possession of a chattel. That is to say, although Spin and Com-Cen's interference with the internet registrar's records has deprived Mr Hoath of what I assume is his intangible property, namely the right to use the domain name, the IP addresses and AS number, they have not interfered with his ownership or right to possession of goods. Accordingly, the fiction by which a person may recover damages in conversion for the loss of a chose in action where the defendant has wrongly dealt in a chattel which contains, or, possibly, evidences, the chose, is of no avail to him. It would only be if the law of conversion were extended to dealings in intangible property that Mr Hoath could sustain these causes of action. 181 In their dissenting opinions in OBG Lord Nicholls and Baroness Hale expressed the view that there was no logical reason why the law should afford a remedy for misappropriation of tangible property but not intangible property. As Lord Nicholls said (at 602): "This distinction makes no sense. It lacks rhyme or reason"." 33 It became apparent from the cases which the parties each advanced that the claims and their defence rested on the same facts already pleaded and that if the leave sought was granted, the claims sought to be brought in conversion would, nevertheless, have to be dismissed, it being unarguably the law that no claim in conversion could be pressed in relation to the money here pursued by the plaintiffs. The granting of the leave would thus only preserve any case which the plaintiffs might seek to pursue on appeal. In those circumstances, it seemed to me that no injustice could flow to the defendants in granting the leave sought in relation to the conversion claim. The law was on their side and no additional hearing time, or adjournment, or any other prejudice in the hearing could flow from the grant of the leave. 34 As to the other amendments proposed, it had to be noted that in the original statement of claim filed in 2007, the second and third agreements were not expressly pleaded. Mr Kakavas was then the only defendant. Breach of only the first agreement was alleged. It was claimed that the plaintiffs were the beneficial owners of all of the outstanding $5,250,000; that Mr Kakavas had been unjustly enriched, by failing or refusing to repay the money; in the alternative, that the plaintiffs were entitled to restitution; in the further alternative, that the plaintiffs were entitled to sue Mr Kakavas, for moneys had and received and that Mr Kakavas owed the moneys to the plaintiffs, who sued for that amount. It was Mr Kakavas who raised the second agreement in his defence. 35 In the amended statement of claim filed in May of 2008, Mr Kerwick and Mr Pilarinos were named as defendants. The three agreements now pursued were pleaded. Breaches of the third agreement by Mr Kakavas, Mr Kerwick and Mr Pilarinos were alleged. Against Mr Kakavas $5,250,000 was claimed for moneys had and received. Against Mr Kerwick and Mr Pilarinos, jointly with Mr Kakavas, $1 million was claimed. Unjust enrichment and restitution were not pleaded. 36 The basis of the claims advanced in the second further amended statement of claim, was similar to that advanced in the amended statement of claim and the further amended statement of claim. The various amendments there made went to the details of which of the plaintiffs were entitled to repayment of several of the sums claimed to have been advanced from time to time under the three agreements. In the second further amended statement of claim it was also alleged that Mr Kakavas had converted the $2 million paid under the third agreement, ($1 million of which was later repaid). 37 It followed, as was argued for the defendants, that while the new claims sought to be pursued by the amendments which finally found their way into the third further amended statement of claim, arose out of the same factual matters pleaded in the second further amended statement of claim, new bases were sought to be advanced, for money orders in favour of the plaintiffs, in the event that they failed to establish the existence of the three agreements which they claimed had been breached. 38 The provisions of s 64 of the Civil Procedure Act governed the application for leave to so amend. The application had to be determined in accordance with the requirements of sections 56, 57 and 58 of the Civil Procedure Act, which require that the discretion be exercised in accordance with the dictates of justice and that the overriding purpose of the Act and the Rules, the just, quick and cheap resolution of the real issues in the proceedings, be facilitated. 39 There was no question that what has always lain at the heart of the plaintiffs' case was that they had advanced various moneys, all of which ended up in the hands of Mr Kakavas, who had no entitlement to retain it and who was bound to repay it, given what had been agreed. Similar claims have been made against the other two defendants. 40 In considering this application and deciding what justice required as between the parties, attention had to be paid to what then had recently been said in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27. There, the High Court took the view that a trial judge had erred in granting an adjournment of a hearing, in circumstances where a substantial amendment to the claim was foreshadowed. The judgment in Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, arose for consideration, a decision given before the enactment of the Civil Procedure Act, but which has been regarded to be of continuing relevance to the application of the provisions of that Act, albeit in the way discussed by the Court of Appeal in cases such as Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 and those which have followed that decision. 41 The circumstances which arose here were considerably different to those dealt with in Aon Risk Services. While this case, on one view, involved parties of considerable commercial sophistication, involving as it does claims and counter claims made between a number of businessmen involved in very substantial property transactions, on another view it concerned a serious falling out amongst close friends, who had not dealt with each other on a commercial basis, because of that friendship. Assaults and threats of violence to Mr Kakavas and members of his family were said to explain why an acknowledgment of a very large debt, which does not represent the true position, was given. 42 It was apparent that the plaintiffs had had a sufficient period time to put their case on a proper footing. While originally, in 2007, claims of unjust enrichment and restitution were advanced, they were abandoned and not claimed when Mr Kerwick and Mr Pilarinos became parties to the proceedings. There was little explanation for the very late amendments pressed at the commencement of the hearing, a matter which the High Court emphasised required explanation, if an application such as this is to be granted. The explanation such as it was, was advanced in the context of the very unusual situation which came forward to be considered and the need to identify a basis upon which orders could be made in favour of the plaintiffs, given the position they were in and the difficulties presented by these unusual circumstances. 43 It seemed to me that there was much in the circumstances which weighed against the leave sought being granted. Undoubtedly, the defendants would have had to have been given an opportunity to amend their defences and to consider whether further evidence should be called, or whether further cross examination of Mr McCracken should be undertaken, had they submitted that was necessary in the circumstances, if the leave sought was to be granted. 44 No such case was pressed however. After explanation of the claims sought to be advanced and their basis, none of the defendants finally suggested that any real prejudice would flow to them from the leave sought being granted. No adjournment was thought necessary, no further cross examination of Mr McCracken was required and it was not thought that any other evidence would have to be called in any of the defendants' cases. 45 Seeing that no real prejudice would flow from the grant of the leave and that there might be serious disadvantage flowing to the plaintiffs from its refusal, I concluded that justice required that the leave sought be granted.

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46 In these proceedings, a great deal turned on the credit of those who gave evidence. The respective cases each had seemingly implausible elements. Resolving what was in dispute meant that either the evidence of Mr McCracken, or that of Mr Kakavas, largely had to be rejected. A similar contest lay between Mr McCracken on the one hand and Mr Kerwick and Mr Pilarinos on the other. 47 Having carefully considered the evidence, particularly that given in cross examination, I have came to the conclusion that there was real difficulty in accepting that Mr Kakavas, Mr Kerwick or Mr Pilarinos were entirely truthful in the evidence which they each gave. There were also certain difficulties with Mr McCracken's evidence, but to a much lesser degree. The conclusion which I have reached is that the evidence of the three defendants had to be approached with particular caution. I found aspects of their evidence entirely without credit. In most instances, where there was a contest between their evidence and that of Mr McCracken, I have reached the view that his evidence had to be preferred. I have also concluded that Mrs McCracken's evidence must be preferred over that of Mr Kakavas. 48 Unraveling what truly transpired between these four men was difficult, requiring close consideration of affidavit and oral evidence, as well as various documents. For their part, the defendants relied on the changing claims which emerged from the various amended statements of claim advanced by the plaintiffs, Mr McCracken having repeatedly sworn affidavits attesting to the truth of the different claims advanced. While a relevant consideration, this was finally but of relatively little assistance in resolving the various issues lying between the parties, particularly those lying between Mr McCracken and Mr Kakavas. 49 This was because consideration also had to be given to the affidavits sworn by Mr Kakavas supporting various defences he advanced, as well as his other affidavits and oral evidence which cast quite a different light on what had transpired between he and Mr McCracken, to what had been suggested in these defences. 50 In the original statement of claim, filed in August 2007, Mr McCracken claimed that $6,500,000 was paid to Mr Kakavas under the first agreement and that it was in October 2006, that he learned the Elite sale was not to proceed. He explained this was a typographical error and that this had occurred in November. He was closely cross examined as to other apparent errors in this and other claims. For his part, in his defence, filed in November 2007, Mr Kakavas denied that such an agreement had been made or that he received payments in accordance with the first agreement; he pleaded the second agreement, $250,000 of which had been repaid and claimed that he had only provided an acknowledgement of debt of $6,250,000 and subsequently made payments totaling $1 million through Mr Kerwick, because of Mr McCracken's threats. No reference was made in the defence to any agreement in relation to the sale of Mr Kerwick's property to Mr McCracken, under which it was later claimed by Mr Kerwick and Mr Kakavas, that $2 million had been paid to Mr Kerwick by Mr McCracken. 51 So far as Mr Kakavas was concerned, the claimed agreement between Mr McCracken and Mr Kerwick only emerged in an affidavit which was sworn in May 2009, after the statement of claim had been amended to allege the existence of the third agreement and Mr Kerwick and Mr Pilarinos had been joined as defendants and they had filed their defences. 52 Before those defences were filed, the first agreement was admitted in Mr Kakavas' amended defence, filed in July 2008. There he claimed that he and Mr McCracken had recorded this agreement in writing in September 2006; that it was a term of the agreement that $4 million would be paid prior to the end of September 2006 and that it would not be refundable, in the event that Mr McCracken failed to complete the purchase. It was then also admitted that $4 million had been given to Mr Kakavas as part payment of the purchase price under the first agreement. It was also claimed that on 10 November, Mr McCracken had advised that he would not proceed with the purchase. While the third agreement was denied, there was no mention made of the alleged agreement in relation to the sale of Mr Kerwick's property. 53 In Mr Kerwick's original defence, filed in November 2008, the third agreement was denied and the alleged agreement in relation to the sale of his property, in respect of which it was claimed that Mr McCracken had paid him $2 million, was first pleaded. In Mr Pilarinos' defence, also filed in August 2008, the third agreement was also denied, as was any obligation to refund any money to Mr Kerwick. 54 It was not until Mr Kakavas filed a defence to the third further amended statement of claim in September 2009, that he claimed that it was a term of the written contract which evidenced the first agreement, that the $4 million deposit paid in relation to the first agreement was not refundable at all, because of special conditions which he had drafted. Still, there was no reference made to the claimed sale of Mr Kerwick's property to Mr McCracken, a transaction in which Mr Kakavas claimed he had been closely involved, having drafted special conditions for the written sale agreement which Mr Kerwick claimed he had signed and provided. For his part, Mr McCracken denied that such an agreement had ever been made, documented or provided to him. 55 The way in which the claims and defences emerged in the pleadings undoubtedly had to be considered in resolving the conflicts in the evidence of Mr McCracken, Mr Kakavas, Mr Kerwick and Mr Pilarinos. So did the respective interests which the various parties had in the outcome of the proceedings. 56 The interest which Mr McCracken and Mr Kakavas each had was obvious. Mr Kerwick and Mr Pilarinos each had an interest not only in resisting the claims made against them, but also in Mr Kakavas succeeding. This was because, on their evidence, they had each loaned Mr Kakavas very substantial sums, which he was not in a position to repay. Mr Kerwick had loaned Mr Kakavas between $1 and $2 million and Mr Pilarinos, over $4 million. On his evidence, entities associated with Mr Pilarinos had also loaned Mr Kakavas further millions of dollars. These transactions were all undocumented. It was plainly in their interests to have Mr Kakavas succeed in his resistance of the case brought against him.

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57 There were three other witnesses who should be mentioned at this point, whose evidence I found credible, for reasons which will become apparent. They were Mrs McCracken, Mr McKenzie-McHarg and Mr Chrysaffis. Mrs McCracken also had an obvious interest in the outcome of these proceedings. So did Mr McKenzie-McHarg. 58 Mr McKenzie-McHarg was a friend of Mr Kakavas, who had worked with him at Colliers International in Melbourne, where Mr McKenzie-McHarg was the chief executive officer when Mr Kakavas worked there as a salesman in the 1980s. 59 He had loaned Mr Kakavas $500,000, which Mr Kakavas gave to Mr Kerwick in November 2006, to pay to Mrs McCracken, after Mr McCracken had assaulted him, money which Mr Kakavas could not repay. Mr McKenzie-McHarg loaned Mr Kakavas the money, because of his account of the assault. There was no suggestion that Mr McKenzie-McHarg had anything to do with Mr Kakavas and Mr McCracken's dealings with each other, or that Mr Kakavas or Mr Kerwick owed Mrs McCracken any money. 60 Mr Chrysaffis was a friend of both Mr McCracken and Mr Kakavas, who had known Mr Kakavas since they had met in Melbourne in 1984. Only Mr Chrysaffis had not loaned Mr Kakavas any money, appeared to have no ongoing business dealings with Mr Kakavas and had no other obvious pecuniary interest in the outcome of the proceedings. He had witnessed the assault on 10 November and was closely involved in the creation of the acknowledgment which Mr Kakavas signed on 12 November. I found his evidence, that he knew Mr McCracken to be an honest man, of particular relevance in unraveling the conflicting stories which emerged from Mr McCracken, Mr Kerwick, Mr Pilarinos and Mr Kakavas. 61 The last witnesses who should be mentioned were Ms Dixon, the solicitor who acted for Mr Kakavas in relation to the first agreement and Ms Carter, a real estate agent to whom both Mr Kakavas and Mr McCracken were known. Neither had any personal interest in the proceedings and their evidence was also of assistance in resolving certain conflicts in the evidence of other witnesses.

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What happened on 10 November to bring the relationship between Mr McCracken and Mr Kakavas to an end? 62 A myriad of factual issues lay between the parties. Resolving what happened on 10 November 2006, which resulted in the breakdown of a friendship of the closest kind between Mr McCracken and Mr Kakavas and their business dealings with each other, throws much light on other matters which are in issue. What occurred that day also had ongoing ramifications for the friendship which had existed between Mr McCracken, Mr Kerwick and Mr Pilarinos. To resolve that question, some matters of background must be considered. 63 Both Mr Kakavas and Mr McCracken each described the other as their best friend. They first met in 2002 and quickly formed a bond of friendship out of their business relationship. Their families socialized and holidayed together. Between 2004 and 2006, Mr and Mrs McCracken accompanied Mr Kakavas and his fiancée on various trips to Las Vegas, paid for by a casino where Mr Kakavas was a large gambler. Mr McCracken was due to be a groomsman at Mr Kakavas' wedding on 10 November 2006. 64 Mr McCracken, a former professional footballer, was then pursing a living as a property developer, an occupation which he had commenced in 1989. He conducted a business buying, improving and selling commercial and residential properties through various companies, including the corporate plaintiffs. Mrs McCracken was also involved in that business. On Mr McCracken's evidence, in 2006 he had substantial property holdings throughout Queensland. What they were was not explored in the evidence. 65 When Mr McCracken met Mr Kakavas, he understood Mr Kakavas to be working as a real estate consultant, selling residential and commercial properties in the Gold Coast area. Mr McCracken was then developing three residential apartments at Albatross Avenue, Mermaid Beach and Mr Kakavas sought the opportunity to list and sell these properties. Mr Kakavas' work was successful, with the properties being sold for $10 million. He later gave Mr McCracken other advice, for which he was paid. It was common ground that over time Mr Kakavas and Mr McCracken came to make a number of property deals with each other, on the basis of handshake agreements, not recorded in writing. 66 On Mr McCracken's evidence, in 2004, he and his wife purchased a house from Mr Kakavas at 89A Albatross Avenue, where they proposed to live, selling their Townsville home, for which Mr Kakavas found a purchaser. These agreements were not documented. A similar arrangement was made in 2003 in relation to the purchase and sale of a property at Hedges Avenue. The point was reached where the transactions in which Mr Kakavas and Mr McCracken were involved with each other, were rarely documented and they loaned each other money, amounting to millions of dollars, on the basis of a handshake. 67 For his part, Mr Kakavas' evidence was that certain of the details of the transactions about which Mr McCracken gave evidence were inaccurate. For example, it was Mrs McCracken who was the purchaser of the Albatross Avenue property and he was not its owner, but had been paid commission on the sale, because of his introduction of the purchaser to the buyer. The Hedges Avenue property had involved a put and call option which Mrs McCracken had entered. That property was later sold to another purchaser introduced by Mr Kakavas, after the option was assigned. 68 Little turns on the details of these transactions. It was not in dispute that a personal and business relationship of the closest kind existed and that Mr McCracken and Mr Kakavas helped each other out on numerous occasions. On Mr Kakavas' evidence, the first time that he loaned Mr McCracken money was in 2003, when he loaned him $1 million under an oral agreement. The money was later repaid, Mr McCracken not being asked to pay any interest on the loan. Subsequently they made substantial short term loans to each other, always by undocumented oral agreements. Such loans were always repaid. 69 By 2005, Mr McCracken had become aware that Mr Kakavas gambled a lot and that his gambling had become more frequent and involved larger amounts of money. Mr Kakavas had told him that he had won $11 million on one occasion and he was aware that on others, Mr Kakavas had lost over $1 million on a night. Mr McCracken accompanied Mr Kakavas when he gambled in certain high roller rooms, where Mr Kakavas made numerous bets, for very large sums. In August 2006, while they were together in Las Vegas, Mr McCracken counseled Mr Kakavas that he had to stop gambling, because it would get him into trouble. While the details of the conversation were not agreed, Mr Kakavas agreed that there was such a conversation. 70 For his part, Mr Kakavas described himself as a pathological gambler, who had lost over $30 million gambling and whose addiction had ruined his life. In 1994, he had been convicted of an offence of obtaining property by deception, and had been sentenced to four months in prison, with a one year, eight month sentence suspended. When he gave his evidence, he was being sued in respect of credit of $1 million extended to him by a casino in the Bahamas, during his honeymoon in November 2006. There were other proceedings on foot, brought against him by another casino, in relation to another line of credit of $1 million. He owed very significant sums of money to various people from whom he had borrowed money for gambling. Mr Kakavas was himself then pursuing a claim in excess of $20 million against Crown Casino in the Victorian Supreme Court. 71 Mr McCracken made the first agreement with Elite in June 2006, without any documentation as to what had been agreed. He understood from Mr Kakavas that the $4 million deposit was to be used to refurbish the property. He agreed to a settlement in January 2007, when the mortgage on the property fell due for repayment. 72 On Mr Kakavas' evidence, he agreed to sell Elite's property for $14 million, even though it was worth $15 million, because of his friendship with Mr McCracken. He required a substantial deposit to be paid before settlement. There is no question that the $4 million was paid in instalments, as had been agreed. It was common ground that Mr McCracken was anxious to have a written contract put in place and that steps were later taken by Mr Kakavas to have one drawn up. There were issues as to when that occurred, what the document provided and what happened to the document, which Mr Kakavas claims he signed and provided to Mr McCracken, who also signed it. This Mr McCracken denies. 73 The second agreement, involving a loan of $500,000 was then made later in 2006 and the third, involving the $2 million paid to Mr Kerwick, was on Mr McCracken's case, made in early October. 74 Mr McCracken's evidence was that Mr Pilarinos was another friend, who he had met through Mr Kakavas in 2002. The proposal which led to the third agreement came from Mr Kakavas. Mr Kakavas raised it with him in a conversation at which Mr Pilarinos was present. Mr Kakavas and Mr Pilarinos deny this. At the time, because of Mr McCracken's concern about Mr Kakavas' gambling, he also had a private conversation with him, seeking an assurance from Mr Kakavas that the $2 million he was to advance to Mr Kerwick would not be used to fund Mr Kakavas' gambling. Mr Kakavas assured Mr McCracken that it would not and that he would make sure that it came straight back, if the deal fell through. Mr Kakavas also denied this. 75 On Mr McCracken's case it was he who then spoke to Mr Kerwick, to tell him what had been proposed and that Mr Kerwick agreed. Mr Kerwick denies this. Mr Kerwick was also a friend of Mr McCracken's, but not as close a one as Mr Kakavas. They were also neighbours. 76 There was also a disagreement as to whether the first agreement was brought to an end by Mr McCracken on 10 November, or by Mr Kakavas, when he put the property on the market on 11 November, which Mr McCracken learned of later. It was Mr McCracken's evidence that this was Mr Kakavas' decision, made after the assault and that it was a decision which he accepted. Mr Kakavas denies this. He claims that it was Mr McCracken who told him on 10 November that he did not want to proceed with the deal. 77 On Mr Kakavas' evidence the reason for Mr McCracken's decision was that he had come to the belief that he had agreed to pay too much for the Elite property. On 22 September, he had attended an auction of a National Australia Bank building with Mr McCracken. This was a property comparable to that which Elite had agreed to sell to Mr McCracken, although the Elite property was more substantial and generated greater rental income than the NAB property. The NAB property was passed in for $11.2 million. On 29 September, there was a newspaper report that the property had been sold for $12 million. Mr McCracken spoke to Mr Kakavas about the $14 million he had agreed to pay for the Elite property. Mr Kakavas told him the price was right, because his property was a 20% better one. On 10 November, Mr McCracken spoke to Mr Kakavas by phone and told him that he did not want to proceed with the purchase and wanted the deposit he had paid back, although he was happy to wait until Mr Kakavas had sold the property. Mr McCracken denies these events. 78 Mr Kakavas' evidence was that on 10 November they had also discussed another purchase. In April 2006, Mr McCracken had told Mr Kakavas that he needed to sell his family home, but Mr Kakavas counseled him to move in and freshen the place up first. Mrs McCracken had the house under a put and call option, which was not due to settle until later in the year. In October 2006, he introduced Mr McCracken to a property at Mermaid Beach which Mr Kerwick had bought. That property required renovating and he believed Mr McCracken could get it for between $5 - $6 million. Mr Kakavas then told Mr Kerwick of Mr McCracken's interest and Mr Kerwick fixed a price of $5.5 million. 79 It was Mr Kakavas and Mr Kerwick's evidence that they then met with Mr McCracken at the house and a price of $6 million was agreed, with a delayed settlement and a $2 million deposit, to be released to Mr Kerwick. Mr Kakavas filled out a blank contract for sale of land provided to him by Mr Kerwick, who executed the contract and Mr Kakavas witnessed his signature. Mr Kerwick's evidence was that he then dropped the contract in Mr McCracken's letterbox. They kept no copy. Mr McCracken denied any such discussions or agreement, or that he had ever received such a contract. 80 Mr Kakavas' evidence was that on 10 November, he also discussed this transaction with Mr McCracken on the telephone, as well as the Elite sale, which Mr McCracken did not want to proceed with. Mr McCracken, who had earlier paid Mr Kerwick a $2 million deposit, said that he did not want to proceed with this purchase either and wanted his money back and that Mr Kakavas, who had got him into the deal, had to get him out. Mr Kakavas concluded the conversation by saying that he did not want to discuss 'that stuff' that day. Mr McCracken denied such a discussion. 81 On Mr McCracken's evidence, it was in early November that Mr Kakavas informed him that the third agreement, under which Mr Pilarinos was to purchase his house had fallen through. Mr McCracken asked for the return of the $2 million he had paid Mr Kerwick. While Mr Kakavas promised to see to its return, it was not repaid and so Mr McCracken followed the money up with him. Mr Kakavas promised that it would be in Mr McCracken's account by 10 November, Mr Kakavas' wedding day. 82 When the money had not arrived in his bank account that day, Mr McCracken spoke to Mr Kakavas, who promised to follow the matter up with Mr Pilarinos. Mr McCracken did not hear back from Mr Kakavas. Instead, at about 9.30 am, he had a phone call from his wife, who told him that she had seen Mr Kakavas in the street. He had stopped her and told her that he had taken the $2 million and sent it to a casino in Las Vegas, to pay off gambling debts which he owed. Mr Kakavas had told her that he could not tell Mr McCracken this himself. Mrs McCracken's evidence corroborated Mr McCracken's account of their conversation. Mr Kakavas denied having such a conversation with Mrs McCracken. 83 On Mr Kakavas' evidence, what he told Mrs McCracken on the morning of 10 November, when they met in the street shortly after he spoke to Mr McCracken, was that Mr McCracken had told him that morning that he did not want to proceed with the Elite purchase; that he had told Mr McCracken that he did not want to discuss it that day and that in any event, he could not give the money back, because he didn't have it. 84 Mrs McCracken rang to tell Mr McCracken what Mr Kakavas had told her and that she would come home to talk to him. When Mrs McCracken returned home at about midday, she explained to Mr McCracken how she came to be stopped in the street by Mr Kakavas and what he had said to her. On his evidence, Mr McCracken formed the view that Mr Kakavas had stolen the $2 million, having promised him that it wouldn't go to the casino. He was enraged and felt betrayed. This was what caused him to go to see Mr Kakavas at his home, to confront him. This was what led to the assault. 85 On Mr Kakavas' evidence, Mr McCracken telephoned him at about midday, told him that he had a gun and threatened to come and kill him. Mr McCracken denies this, but does not deny that he assaulted Mr Kakavas after he arrived at the house. It was common ground that Mr McCracken had no gun and did not threaten Mr Kakavas with a gun at his home. 86 Unraveling what in truth happened between Mr McCracken and Mr Kakavas, particularly on 10 November is difficult. Much is disputed. What there is no doubt about at all, is that the dealings between Mr McCracken and Mr Kakavas on 10 November were out of the ordinary. That was the direct result of what Mr Kakavas told Mrs McCracken that morning. It was what Mrs McCracken understood from Mr Kakavas and what she then conveyed to Mr McCracken, which led to Mr McCracken's assault of Mr Kakavas and the shattering of their relationship.

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97 Mr Kakavas stopping Mrs McCracken in the street to discuss repayment of money which Mr McCracken was pursuing with him, money which he could not repay because he had lost it gambling, seems quite consistent with his own description of Mrs McCracken, his relationship with her, his gratitude to her and with his own account of his gambling habits. As Mr Kakavas said in his own evidence, Mrs McCracken's account of their conversation sounded like him. By way of contrast, Mr Kakavas' evidence about what occurred this day was contradictory and implausible in a number of respects. Mrs McCracken's evidence was not. 98 Mr Kakavas' version of his conversation with Mrs McCracken was inconsistent with his own account of his conversation with Mr McCracken earlier that morning. If that version were accepted, when Mr Kakavas stopped Mrs McCracken in the street, he understood that Mr McCracken was content to wait for the return of the $4 million deposit until the Elite property was later sold elsewhere. While Mr McCracken wanted the return of the $2 million he had given to Mr Kerwick, on Mr Kakavas' account, Mr McCracken did not demur, when Mr Kakavas told him that he did not want to talk about 'that stuff', that day. Why then would Mr Kakavas discuss with Mrs McCracken the repayment of the $4 million Mr McCracken was prepared to wait for and make no mention of the $2 million paid to Mr Kerwick, which he had also raised? 99 Mr Kakavas was due to leave for his honeymoon to the Bahamas early the following week. On Mr Kakavas' account, Mr McCracken had no difficulty waiting for his money, as Mr Kakavas had asked. That accorded with the evidence of the nature of the relationship between the two men to that point. If this was the case, there was no reason for Mr Kakavas to have stopped Mrs McCracken in the street, to speak to her about his earlier discussion with Mr McCracken, or to speak to her about the matter at all. What motivated him to do so? Having the conversation which he claimed he had with Mrs McCracken, on his evidence, would have been both unnecessary and contrary to his relationship with her. 100 On Mr McCracken's account, he had earlier asked Mr Kakavas for the return of the $2 million, he understanding from early November, that the third agreement was not to proceed and that accordingly, the $2 million was to be returned to him. They had not discussed the $4 million paid in respect of the Elite property at all. As far as Mr McCracken was concerned, the Elite purchase was proceeding. It was when the promised $2 million had still had not arrived by 10 November, that he rang Mr Kakavas, who promised to follow it up with Mr Pilarinos. 101 That account provides a plausible reason for Mr Kakavas stopping Mrs McCracken to speak to her in the street. He was close friends with both Mr and Mrs McCracken and could not bring himself to tell Mr McCracken that he was unable to return the $2 million which had been given to Mr Kerwick, because he had spent it. That scenario also sat quite comfortably with the oral evidence which Mr Kakavas gave, as to his intentions in relation to the money here at issue between he and Mr McCracken, even if he succeeded in resisting the claims brought against him in these proceedings and with the evidence as to what occurred to the $2 million paid to Mr Kerwick, which I will deal with later. 102 Mrs McCracken's description of Mr Kakavas' behaviour was not only consistent with Mr Kakavas' emotional language and demeanor in the witness box, it also explains Mr McCracken's reaction to what his wife told him, a reaction seemingly entirely out of character, given the two men's relationship to that point. From Mrs McCracken, Mr McCracken learned that instead of pursuing the return of the $2 million with Mr Pilarinos as he had promised, Mr Kakavas had himself in fact gambled that money away and was not in a position to repay it to Mr McCracken. 103 Mr Chrysaffis' evidence also shed some light on what was occurring at the time. That Mr McCracken had some concern, and that there was some problem between the two men shortly before the wedding, was confirmed by Mr Chrysaffis. His evidence was that he was a close friend of both men; he was the other groomsman at the wedding; he had spent time with the two families in the week before the wedding and he was not aware of any problems between Mr Kakavas and Mr McCracken. Still, he had noticed that Mr McCracken was preoccupied and reserved. That demeanor is entirely consistent with a growing concern on Mr McCracken's part, that Mr Kakavas had promised to ensure the return of the $2 million and that the money had not been forthcoming, despite his promises. Mr McCracken had himself borrowed the money and needed to repay it. 104 There was a question as to why it was that Mr McCracken did not go to Mr Kakavas' house until around midday, when his wife had spoken to him at about 9.30 am, after she spoke to Mr Kakavas. Mr Kakavas' case was that Mr McCracken had delayed in order to put 'maximum pressure' on him, to repay money which he did not owe Mr McCracken. On Mr Kakavas' own evidence, that would have been entirely out of character for Mr McCracken, given their relationship and inconsistent with their discussion that morning. The only explanation Mr Kakavas gave for Mr McCracken seeking the return of $4 million from him was that Mr McCracken had changed his mind about the Elite purchase, because he came to believe that the price was too high, given the price for which the NAB building sold. The case advanced for Mr Pilarinos was that Mr McCracken had overextended himself, a matter to which I will return, but that Mr Kakavas then had such an understanding, was not apparent from his evidence. He claimed that Mr McCracken had just changed his mind about the purchase. He often changed his mind. 105 Mrs McCracken's explanation for her delay in returning home to speak to her husband, as she told him she would when they spoke on the phone, was that she had a hairdressing appointment for the wedding and was on her way to collect Mr Chrysaffis' partner, Sophie, when stopped in the street by Mr Kakavas. After she spoke to her husband, she said she would go home to speak to him, but first continued with her hairdressing appointment. She did not return home until shortly before Mr McCracken left to go to Mr Kakavas' house. I am unable to reject Mrs McCracken's explanation. I did not find her to be an untruthful witness and the explanation seems a plausible one, in the circumstances. 106 On 10 November, Mr McCracken was concerned about the return of the $2 million he had been pursuing with Mr Kakavas for some time. Waiting for several hours for his wife to return, ruminating over what she had earlier told him, namely, that the money could not be repaid because Mr Kakavas had lost it gambling, explains why Mr McCracken went to confront Mr Kakavas in a fit of anger, after Mrs McCracken returned at around midday. Then he learned the details of her conversation with Mr Kakavas. Mr and Mrs McCracken's evidence as to what occurred that morning was credible, particularly when considered in the light of Mr Kakavas' own description of the nature of his relationship with Mr McCracken to that point and Mr Chrysaffis' evidence that Mr McCracken's behavior was out of character, in the week before the wedding. Mr McCracken's explanation as to how he then felt was:

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What did Mr McCracken and Mr Kakavas discuss on the morning of 10 November? 110 It follows that Mr McCracken's account of his conversation with Mr Kakavas at about 9 am on 10 November must also be preferred over Mr Kakavas' account. I am satisfied that what Mr McCracken was asking of Mr Kakavas when they spoke that morning, is what Mrs McCracken described Mr Kakavas having told her about half an hour later, namely that Mr McCracken wanted the $2 million paid to Mr Kerwick repaid. They did not discuss the termination of the Elite sale. It was after Mr McCracken learned from his wife that Mr Kakavas had gambled and lost that $2 million and that Mr Kakavas was too embarrassed himself to tell his best friend what he had done and that he was not in a position to repay the money, that Mr McCracken went to confront his friend in a fit of anger, seeking repayment. 111 Support for that conclusion is also provided by the evidence as to what transpired when Mr McCracken went to Mr Kakavas' home. 112 Mr Kakavas' affidavit account was that when Mr McCracken confronted him at his home on 10 November, he was screaming '[y]ou fucking dog, Kakavas! Where is my money? I want my fucking money back!'. Mr McCracken and Mr Chrysaffis gave a similar account. On Mr Kakavas' own evidence, from their earlier conversation that morning, Mr McCracken had asked for the return of the $2 million paid to Mr Kerwick, but was prepared to wait for the $4 million deposit, until the property was sold, but accepted that they would not discuss the matter further that day. On Mr Kakavas' evidence nothing that had occurred in the meantime, could have given him to understand that Mr McCracken had changed his mind about waiting for the $4 million. Mr McCracken did not mention any particular money amount during the confrontation at the house. It follows that nothing which Mr McCracken had done, could have given Mr Kakavas to understand that he wanted both the $2 million and the $4 million repaid. No amount was mentioned, as Mr Chrysaffis' evidence confirmed. 113 Also to be considered is Mr Kerwick's evidence that it was on 12 November that Mr McCracken spoke to him about the return of the $2 million. He has also not spoken to Mr McCracken since that day. Mr Kerwick's evidence as to their conversation was:

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116 There are some obvious inconsistencies between these accounts. I am unable to accept Mr Kerwick's evidence over that of Mr McCracken. Even Mr Kerwick and Mr Kakavas' accounts do not coincide and contain some curious omissions. 117 While Mr Kerwick claims that he told Mr Kakavas that both they and Mr Kakavas' father had been threatened, by Mr McCracken, Mr Kakavas makes no mention of any threat to Mr Kerwick. That is consistent with there having been no such conversation or threat made. Mr McCracken's understanding was that it was Mr Kakavas who had spent this money, after it was given to him by Mr Pilarinos. On Mr Kerwick's account, Mr Kakavas did not claim to have had nothing to do with the $2 million, as was his account. Even that is consistent with Mr Kakavas having spent the money. 118 Tellingly, in neither Mr Kerwick nor Mr Kakavas' account was anything said about Mr McCracken also demanding to be repaid $4 million in respect of the Elite sale. Given the nature of their relationship and the fact that by 12 November, Mr Kakavas had already put the Elite property on the market and had acknowledged owing Mr McCracken $6,250,000, that he did not mention to Mr Kerwick, that Mr McCracken was also pursuing him for the repayment of the $4 million deposit in respect of the Elite sale, also suggests that as Mr McCracken claims, he was not doing so at that time. 119 Nor was anything said about the $2 million Mr Kerwick and Mr Kakavas were discussing having been paid by Mr McCracken as a non-refundable deposit on the sale of Mr Kerwick's house. Given Mr Kerwick and Mr Kakavas' evidence as to the terms on which Mr Kakavas came to organise this sale between his two friends, that neither said anything to the other about the $2 million not being repayable to Mr McCracken, seems a most unlikely omission from their discussion, if those terms had in fact been agreed. Given Mr Kakavas' command of the details of the various transactions in which he has been involved with Mr McCracken and what he claims was his emotional state at the time, that he would have had such a short and dispassionate discussion with Mr Kerwick about the threats which he claims Mr Kerwick recounted to him, also seems rather unlikely. I am entirely sceptical that there ever was such a conversation. 120 To my mind, if such a conversation did occur between Mr Kerwick and Mr Kakavas on 12 November over Mr McCracken seeking repayment of $2 million, that tends to support Mr McCracken's evidence as to what led him to go and confront Mr Kakavas on 10 November and what he was then pursuing with Mr Kakavas, namely repayment of the $2 million he had given to Mr Kerwick under the third agreement, not the $4 million paid in respect of the Elite sale. That they made no mention of the basis on which they now claim that Mr Kerwick had no obligation to repay that amount, also tends to support Mr McCracken's evidence that there was no such agreement and that the conversation simply did not take place. 121 For those reasons, I have concluded that on 10 November, Mr McCracken and Mr Kakavas did not discuss the Elite sale, or its termination.

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Who decided that the Elite sale would not proceed? 122 The consequence of these conclusions is that it must be accepted that it was Elite which brought this agreement to an end, after Mr Kakavas decided that the sale would not proceed. That decision was made by Mr Kakavas after the assault. He and Mr McCracken have never discussed that matter. 123 I accept Mr McCracken's evidence that the Elite transaction was not discussed between he and Mr Kakavas on 10 November. It was common ground that they have not spoken since the assault. Mr Kakavas put the property on the market on 11 November without discussion with Mr McCracken. While it was common ground that Mr McCracken asked Mr Kakavas, through Mr Chrysaffis and Mr Pilarinos, to give him an acknowledgement of what he owed, I accept that Mr McCracken only learned of Mr Kakavas' decision to put the property on the market when he received that acknowledgment. On Mr McCracken's evidence, his attitude when he heard of Mr Kakavas' decision was that Mr Kakavas was entitled to proceed with that sale. That was not only consistent with the basis of their dealings with each other, but as he explained, Mr McCracken did not understand that he had a binding contract with Elite, because the written agreement had not been executed. 124 On Mr McCracken's evidence, to that point he had no reason to believe that the Elite sale would not proceed, despite the falling out. He was in a position to proceed and was not unhappy with the price. He did not learn that the two properties had been put onto the market, until he received the acknowledgment of debt on 12 November. He had nothing to do with the second property. He explained that he had asked for the acknowledgment on 11 November, because there was no document evidencing any of the transaction and he wanted something to protect his position, before Mr Kakavas left the country on his honeymoon. That was why he approached Mr Pilarinos and Mr Chrysaffis for help and why he later sought his solicitor's help, after he received the acknowledgement and learned that the Elite sale was not proceeding. 125 This conclusion is also consistent with Mr Kakavas' evidence, that after the assault he resolved to have nothing more to do with Mr McCracken. Such a resolution was entirely consistent with a decision on his part, that Elite would not proceed with the sale and with his view that he was selling the property to Mr McCracken at a very substantial discount of $1 million, given their friendship. On 11 November, Mr Kakavas put both the Elite property and another property which Elite also owned, onto the market, as he said in the acknowledgment which he handwrote that day. Those steps were also consistent with his financial situation, the need to find another purchaser for the Elite property, before the mortgage fell due in January and his impending departure on his honeymoon. 126 The only cogent evidence which might have supported Mr Kakavas' version of events was that given by Mrs Carter. Mr Kakavas' explanation for Mr McCracken's decision not to proceed with the purchase was that he was always changing his mind and that he came to the conclusion that he had agreed to pay too much for the Elite property, because a comparable, although lower valued property, the NAB building, had sold in November for some $12 million, after being passed in at auction. In Mr Kakavas' opinion, the price was not too high, but a concern on Mr McCracken's part over what he agreed to pay, grew after he learned of the price obtained for the NAB building, he and Mr McCracken having attended the auction at which that property had been passed in. 127 Mr McCracken denied attending this auction, or having such a concern, but Mrs Carter's evidence that she saw him and Mr Kakavas at the auction, may not be rejected. The auction was conducted on the footpath, outside the building, near her office. She went out to watch the auction, where she saw Mr Kakavas and Mr McCracken, who she knew because she had acted for him in the past. She spoke briefly to them. Mrs Carter was not certain whether they stayed for the whole of the auction, but that she saw Mr McCracken there, may not be doubted. 128 Mr McCracken agreed that he and Mr Kakavas were together that day, on their way to lunch at a nearby café, the Sonata. He agreed that he was interested in the price obtained for the NAB building and believed that it was Mr Kakavas who later told him of the price. His evidence that they drove past the auction, but did not stop may not be accepted in the face of Mrs Carter's evidence. His recollection was plainly mistaken. 129 Nevertheless, I am unable to accept that this fairly leads to the conclusion that it was Mr McCracken who decided not to proceed with the Elite purchase, because he had become dissatisfied with the price agreed, or that this was what he told Mr Kakavas on 10 November, given the other evidence, which I have dealt with. 130 It was Mr McCracken's case that it was some days after 14 November, when Mrs McCracken received a payment of $500,000 from Mr Kerwick, that he learned from Mr Pilarinos that Mr Kakavas could not proceed with the Elite sale because he needed to sell the property for $15,325,000, in order to pay out the mortgage falling due for repayment in January. Mr Pilarinos denied this, but that account seems entirely consistent with it being Mr Kakavas who decided that the Elite sale would not proceed, having in mind his evidence as to the problems which his gambling caused and Mr Pilarinos' evidence, that since November 2006, he has assisted Mr Kakavas financially, including in relation even to meeting his legal and living expenses and that even before this discussion Mr Pilarinos and entities associated with him had loaned Mr Kakavas very substantial sums, which he believed were used for gambling - well over $4 million. It was undoubtedly in Mr Kakavas' interests at this point to sell the Elite property for the value which he believed it had at the time, rather than at a substantial discount to Mr McCracken. 131 Mr Pilarinos certainly tried to help broker a resolution between Mr Kakavas and Mr McCracken after the assault. By the time he gave his oral evidence, Mr Pilarinos' recollection of what had occurred appeared to have deteriorated significantly, since swearing his affidavit. While Mr Pilarinos apparently had a clear memory of his discussions with Mr McCracken and Mr Kakavas at the time he swore his affidavit, when he was cross examined, he no longer had such a recollection. I found a great deal of his evidence unconvincing and implausible, with the result that I have concluded that Mr McCracken's evidence has to be preferred over that of Mr Pilarinos, in the event of conflict. 132 On Mr Pilarinos' evidence on 11 November Mr McCracken told him that he did not want to proceed with the Elite purchase, because he had agreed to pay too much for the property and he wanted his deposit money back. He told Mr McCracken that it was a matter he had to sort out with Mr Kakavas, but that he didn't think Mr Kakavas had any money at present. It was common ground that Mr McCracken asked Mr Pilarinos to pass on his request that Mr Kakavas sign an acknowledgement of what he owed, but he denied asking that the Elite property be put on the market, a denial which I accept. An understanding on Mr Pilarinos' part that Mr Kakavas had no funds was certainly consistent with Mr Pilarinos having recently provided over $4 million for Mr Kakavas to gamble with, at a time when on Mr Kakavas' evidence, he was in serious difficulties, following his gambling losses in Las Vegas in August. 133 In cross examination, Mr Pilarinos said at one stage that the property he was discussing with Mr McCracken on 11 November was the two properties referred to in Mr Kakavas' acknowledgement. Later, when pressed, he agreed that was not what he had meant, they had discussed only the Elite property. The distinct impression which Mr Pilarinos gave was that aspects of his evidenced had been tailored to assist Mr Kakavas' case. The Elite property was certainly put on the market by Mr Kakavas on 11 November, as he wrote in the acknowledgement, together with a second property. That was not a property in which Mr McCracken had any interest. On the evidence, it being put on the market was not a matter which could have been known to Mr McCracken before he received the acknowledgment Mr Kakavas wrote on 12 November. That it was Mr Kakavas who decided to put both properties on the market for reasons of his own, may not be doubted, despite Mr Pilarinos' evidence. 134 Mr McCracken took the acknowledgment document to his solicitors on 13 November, to seek advice in relation to protecting his position. They recommended that a mortgage be documented. One was prepared, but Mr Kakavas refused to sign it. 135 The Elite property did not sell and it was taken off the market in March 2007. Mr Chrysaffis then told Mr McCracken that the only way he was going to get his money was if Mr Kakavas' case against the Crown Casino succeeded. In cross examination, Mr Kakavas repeatedly confirmed his intention to pay Mr McCracken at least something, in respect of the first agreement, even if these proceedings went his way. That was undoubtedly what Mr Kakavas also intended to do with the proceeds of the sale of the Elite property when he put it on the market. 136 That Mr Kakavas felt so strongly that he ought to repay Mr McCracken, notwithstanding his defence of these proceedings, also tended to confirm that Mr McCracken was being truthful in his evidence, that it was Mr Kakavas, not he, who decided not to proceed with the Elite sale.

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Both the buyer and seller agree that a further deposit of $2,000,000 will be made by no later than Sept 30 th 2006 and will be immediately released to the seller and will be non-refundable. 138 I have concluded that there was no such agreement. Mr Kakavas claimed that in preparing the Elite contract, the solicitors were instructed to keep the name of the purchaser and other details such as the price blank, because of Mr McCracken's desire for confidentiality. Why that would be so, was not apparent from the evidence, but Mr McCracken's evidence was that the contract which he collected was in that form. 139 It was Mr Kakavas' case that it was he who collected the contract which the solicitors had prepared and left out for Mr McCracken to collect; that he then handwrote the above terms as special conditions in that contract, together with other details including the price; that he then signed that contract, returned it to his solicitors and left it in the envelope for Mr McCracken to collect. Mr McCracken denies that such terms were agreed, or that the contract he collected had such handwritten provisions, or that the contract had been signed. I have concluded that Mr McCracken's evidence may not be rejected. 140 I am satisfied that while it was agreed that Mr McCracken would pay the $4 million deposit direct to Mr Kakavas, understanding that the money was to be used for refurbishment work underway, rather than to Elite or a stakeholder, the idea that Mr Kakavas, or Elite, were entitled to retain this deposit if the sale did not proceed, was never discussed or agreed as Mr Kakavas claimed. 141 Not even Mr Kakavas suggested in his evidence that there had been any discussion between he and Mr McCracken about such a term, when the oral agreement was made. That was understandable. Such an agreement would have been quite inconsistent with the basis on which Mr McCracken and Mr Kakavas had dealt with each other up to that point. The idea that Mr Kakavas would ask Mr McCracken to release to him a deposit of $4 million, on the basis that Elite would not need to repay it, if the sale did not proceed, as the result of a decision made by Mr Kakavas, is simply not credible, given Mr Kakavas' own account of his relationship with Mr McCracken. Such an arrangement would have put Mr Kakavas in a position where he could have exploited his friend in a way entirely contrary to their dealings with each other and quite different to how he described he had always treated and dealt with Mr McCracken and how he proposed to deal with him in future. I am unable to conclude that Mr Kakavas sought such an opportunity, or that it was agreed. That conclusion was supported by the way in which this aspect of Mr Kakavas' defence emerged so belatedly in the pleadings, another matter which casts doubt on Mr Kakavas' version of events. 142 At the time the oral agreement was made, there had never been any difficulty in their dealings with each other. They had been in the habit of helping each other out, by loaning very substantial sums, undocumented, on occasion even without interest being required to be paid. Otherwise, they had been involved in a number of other undocumented transactions. That was not possible in the case of a sale of property, which required documentation in order that the transaction could be completed. So it was agreed that the contract for sale would be documented and it was. Even though Mr Kakavas claimed that he had signed the contract and given it to Mr McCracken, who also signed it, it was common ground that contracts were never exchanged. 143 No such contracts were in evidence. Mr Kakavas kept no copy of what he claimed he provided and Mr McCracken did not retain a copy of the contract which he collected. 144 It was not until Mr Kakavas swore his affidavit in 2009, that this version of his dealing with Mr McCracken emerged. There he annexed a copy of a reconstituted written contract, which contained the claimed term as a special condition. He claimed that Mr McCracken himself later signed the contract, but had concealed the document, in order to advance the plaintiffs' case. Mr Kakavas' evidence was that Mr McCracken told him on 21 September 2006, the day before they attended the auction of the NAB building, that he had also signed the contract and would keep it, 'in case something happens to you'. Mr McCracken denied this. That would certainly have been an unlikely thing for him to do, or to say, had Mr McCracken had the concerns Mr Kakavas' described him having in relation to obtaining a written contract, in order to protect his position. Again, Mr Kakavas' evidence was most implausible and I am not able to accept it. 145 Mr Kakavas' case was also that the special condition, which he drafted, referred to $2 million already having been paid as a deposit. The difficulty with that evidence was that it was common ground that by early September, when the contract was prepared and provided to Mr McCracken, $2.325 million had been paid to him. That the special condition Mr Kakavas claims he wrote, would have reflected an amount different to that already paid, is entirely unlikely. On his own account, Mr Kakavas had an excellent command of his dealings with Mr McCracken and paid close attention to details. It was Mr McCracken who did not. 146 It was Mr Kakavas who wanted a delayed settlement and the release of the $4 million deposit in the meantime. In those circumstances, no reason for requiring a term that the deposit would be non-refundable was apparent, other than Mr Kakavas' claim that he was agreeing to give Mr McCracken a discounted price on the property, because of their friendship. When the sale to Mr McCracken did not proceed, Mr Kakavas had difficulty selling the property to other buyers. Another contract was later issued for $14.2 million, but the sale did not proceed. On Mr Kakavas' evidence, it was eventually sold for $9 million, after a downturn in the market. 147 Mr Kakavas had an obvious motive for concocting this scenario, following Mr McCracken's assault; the difficulties which flowed from his pathological gambling; the consequences which he perceived had followed from the acknowledgement of debt he had signed and the $1 million he had later paid to Mrs McCracken, which he now seeks to recover, apart from $250,000. It was very much in Mr Kakavas' interests to recover what he had paid, given his very substantial indebtedness to others, including Mr McKenzie-McHarg, Mr Kerwick, Mr Pilarinos and entities associated with him. 148 By way of contrast, the evidence as to the approach which Mr McCracken and Mr Kakavas customarily adopted to their dealings with each other makes the agreement to payment of a $4 million deposit, before the contract was formalised, entirely understandable. That was how Mr McCracken and Mr Kakavas commonly dealt with each other. The settlement was not due until the end of January 2007. There was nothing unusual in Mr McCracken and Mr Kakavas proceeding in the interim in accordance with an oral agreement, in the absence of the written contract being executed, even when one was necessary. That was certainly the case here, given the requirements of the Property Law Act 1987 (Qld), Mr McCracken and Mr Kakavas were aware of the need to reduce the oral agreement to writing; agreed that would occur; took steps to ensure that it happened and in the meantime, acted in accordance with the oral agreement. 149 For Mr Kakavas, it was claimed that three things supported his version of what had occurred. The first, that in his first affidavit Mr McCracken said that while he had not retained a copy of the contract, it had a price of $14 million. The contract Ms Dixon had prepared did not contain a price. It was submitted that the price was an amount which only Mr Kakavas could have written in the document Ms Dixon had produced. In cross examination, Mr McCracken said the price was blank and that by his affidavit, he was not intending to convey that the price was written in the contract, but that $14 million was what had been agreed. 150 Mr McCracken's affidavit evidence that the contract he collected specified a price of $14 million, certainly supported Mr Kakavas' evidence that he had filled in the price. In his oral evidence, Mr McCracken claimed that the price had not been written in. That Mr McCracken might have made a mistake in his recollection of what the contract provided, as he explained, when he did not have a copy at the time of swearing his affidavit, is certainly possible. It is also possible that he was lying, but that is a conclusion which I have not been able to reach. 151 The second matter was that when Mr McCracken went to see his solicitors on 13 November 2006, to seek their advice about the $4 million deposit he had paid, he did not show them the contract, even though he then had the original contract provided to him, in his possession. It was argued that Mr McCracken concealed that contract, because the special condition would not have assisted his case. In cross examination, Mr McCracken explained what had become of the contract:

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152 This was submitted not to have been credible evidence, but there is no question that the family home was sold in December and that the family moved overseas. When that occurred is not clear. Mr McCracken also explained that he did not take the contract, which he then had, to his solicitor when seeking assistance in November, because it was a blank document, without a name, price or any other conditions, and he believed that it was not of assistance to him, in the circumstance in which he was then seeking advice. He accepted that Mr Kakavas was entitled to put the Elite property on the market. What he took with him was Mr Kakavas' acknowledgement of debt. He denied that the contract contained the special conditions Mr Kakavas claimed; that both he and Mr Kakavas had signed it, or that he was concealing that document from his solicitors. He explained that at the time he was not contemplating taking legal action, but was seeking advice as to how he could protect his position, given that there was no written contract exchanged. The advice received was to have a mortgage documented, with Mr Kakavas as the borrower and Elite as guarantor. Such a document was prepared, but Mr Kakavas refused to sign it. 153 The third matter relied on was that in other property transactions, Mr McCracken and his wife had agreed to conditions such as those which Mr Kakavas here claimed were agreed. Given his relationship with Mr Kakavas, there was no reason to think that Mr McCracken would not have agreed to such terms, in this case. The natural thing would have been for Mr McCracken to sign the contract supplied by Mr Kakavas, once the lease information had been supplied, as Mr Kakavas claimed Mr McCracken told him that he had done. 154 The evidence showed that Mr McCracken and his wife had agreed, in some transactions in which they had been involved, to terms of the kind claimed by Mr Kakavas to have been agreed on this occasion, in relation to the deposit. Why they were agreed in those transactions was not explored. Presumably it was because they were conditions which other vendors required. In other transactions in which Mr McCracken and his wife had been involved, such terms had not been agreed. Here, there was no evidence of any discussion of such a term, before or after Mr Kakavas claims he drafted the term and provided it to Mr McCracken, when he collected the executed contract. 155 I am unable to accept the case advanced for Mr Kakavas. I accept that Mr McCracken showing his solicitors the contract, which he then had, when he sought advice in November 2006, would have been the obvious step for him to take. 156 Mr McCracken's evidence as to his understanding of the blank contract he had been provided with and what had occurred to it, it seemed to me was credible, according with Mr Kakavas' own account of Mr McCracken's approach to and understanding of the details of transactions in which he was involved. By way of contrast, that Mr Kakavas would not have kept a copy of a contract for the sale of a $14 million property prepared by his solicitors and which he had signed, was not. 157 I am simply unable to accept Mr Kakavas' evidence that the claimed special condition was ever agreed, documented or provided to Mr McCracken, whose denials of these matters I accept.

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Was the written contract signed? 158 Mr Kakavas claims that he was never provided with a copy of the written agreement when signed by Mr McCracken. If, as Mr Kakavas claims, Mr McCracken signed the written agreement because he had been anxious since August 2006 that it be made, on Mr Kakavas' case, because of Mr McCracken's concerns about Mr Kakavas' gambling losses, why did Mr McCracken not provide the agreement to his lawyers, when he received the signed contract from Mr Kakavas in early September so that the transaction could be finalised? Mr McCracken could then have proceeded to have the contracts exchanged, thereby obtaining the security Mr Kakavas claimed he was so anxious to achieve. On Mr Kakavas' case, Mr McCracken was an experienced property developer; not across the details of transactions in which he was involved, but anxious to secure the very substantial deposit he had by then already advanced to Mr Kakavas. 159 It was common ground that Mr McCracken believed that the contract needed to include a tenancy schedule and information in relation to leases. On Mr Kakavas' case that information was supplied, but still Mr McCracken did nothing to ensure that his legal position was protected. 160 Mr McCracken never provided the contract to his solicitors. He did ask Mr Kakavas for information about the leases over the property; he paid more of the agreed deposit, as well as loaning Mr Kakavas $500,000 under the second agreement, for a bet on the football. Mr Kakavas claimed that the information sought about the leases was provided. Had that been the case, there would have been no reason for Mr McCracken not to give the contract to his solicitors to arrange an exchange. To the contrary, had Mr McCracken had the concerns Mr Kakavas claimed he had, it would have been unlikely for him to delay, or to have loaned Mr Kakavas a substantial sum of money, to gamble with. 161 Providing the contract to his solicitors would have been the natural step, once Mr McCracken received the information about the leases, which he was seeking. While Mr McCracken claimed that he did not receive the contract prepared by Mr Kakavas' solicitors until early October, after the $4 million had all been paid, it is apparent from Ms Dixon's evidence and a file note in evidence, that she produced a contract in early September and left it out to be collected. It was entirely possible that Mr McCracken and Mr Kakavas discussed the contract in early October, as was Mr McCracken's evidence, there was still been no exchange by that, but that he only collected the contract in October seems unlikely. 162 Mr Kakavas, however, claimed that he had himself collected the contract, added the handwritten special condition and a tenancy schedule, signed it, and returned it to the solicitor for Mr McCracken to collect, with instructions that information about the leases be provided to Mr McCracken. This scenario is difficult to believe and is not supported by other relevant evidence. If that is what occurred, why would Mr Kakavas not himself have given the contract to Mr McCracken? After all, they were very close friends, in very frequent contact with each other. 163 It was common ground that whenever Mr McCracken obtained the contract, he was not happy with it, because it did not contain information in relation to leases, which he thought was needed. Mr Kakavas' evidence was that he promised to have the leases put together for Mr McCracken to collect. He then spoke to Ms Dixon, asked her to copy the leases and leave them out for Mr McCracken to collect, which he did. Mr McCracken also denied this. 164 Ms Dixon had no recollection of doing anything in relation to the leases, which under the relevant Queensland laws did not have to be annexed to the contract. In evidence was a letter of 2 October 2007 from Mr John Ramsden, a principal of the firm by which Ms Dixon was employed, to Mr Kakavas, confirming that the contract Ms Dixon had prepared in early September had been collected, as Mr Kakavas had instructed it would be and that subsequently, leases had been copied and also left out for collection. Mr Ramsden advised that copies of the leases had not been retained, only originals. A copy of the contract Ms Dixon had prepared was said to be annexed to the letter, but it was not in evidence. There was no suggestion that it contained the claimed special condition, or the tenancy schedule. 165 In her oral evidence Ms Dixon said that when she left the contract out to be collected, she was not aware that it was collected by Mr Kakavas as he claimed, returned and collected again by Mr McCracken, which would have been 'a little unusual'. There was also no note on the file as to anything being done in relation to the leases. Ms Dixon had no recollection of the leases later being copied and collected. She did not provide the information contained in Mr Ramsay's 2 October 2007 letter. There was no suggestion that Mr Ramsey himself had any personal knowledge as to these matters. He was not called. Later in December 2006, Ms Dixon produced another contract for the sale of the property to a different purchaser, at a price of $14.2 million. 166 Mr McCracken's evidence that the contract he collected was not signed and did not include a tenancy schedule or the claimed special condition accorded with Ms Dixon's account of what she had prepared, but not when it was collected, which was earlier in September. It was agreed that when he spoke to Mr Kakavas about the leases, Mr Kakavas told Mr McCracken to go direct to speak to his lawyers, about the changes which McCracken wanted. Mr McCracken claims that he did so in mid-October, when he spoke to a male solicitor whose name he could not remember, not Ms Dixon. He was promised an amended contract, but he never received one. 167 It seems unlikely, given Ms Dixon's evidence, that Mr McCracken only received the contract in mid-October. Still, I am unable to accept Mr Kakavas' evidence that he signed the contract in the terms which he claims and returned it to his solicitor, from whom Mr McCracken collected it, without his solicitor's knowledge and without he or they keeping a copy. Nor is it credible that Mr McCracken then signed that contract, even though he had concerns with it, but did not engage his solicitors to pursue an exchange and did not provide Mr Kakavas with the copy he had signed. That Mr Kakavas and Mr McCracken had a very relaxed approach to their dealings with each other is not open to doubt. That there would have been such a departure from the usual course, once solicitors were engaged to document the sale, Mr Kakavas having signed the contract and provided all that Mr McCracken required, who also signed the contract, is not plausible and not supported by the other evidence to which I have referred. 168 In this respect I have also concluded that Mr Kakavas' evidence may not be preferred over that of Mr McCracken.

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Can any relief be granted on the breach of contract claim? 169 The plaintiffs' case was if a contract had come into existence between Elite and Mr McCracken it was unenforceable, given the provisions of s 59 of the Property Law Act, which requires that contracts for the sale of land be in writing. Further, that s 11 of the Land Sales Act 1984 (Qld) had the effect that a provision for the payment of money by way of deposit, without the purchaser becoming entitled to receive a registrable instrument of transfer in exchange therefore, other than to a solicitor or real estate agent to be held in a trust account, is void. (See Emilien v Cabbala [1989] 1 Qd R 620). In later submissions it was accepted that this legislation did not in fact apply to the property, but that other provisions of the Property Law Act had similar effect. 170 It was further argued that Elite had no right to terminate the agreement, without notice of default. It followed that Mr Kakavas had no basis for claiming that the $4 million deposit was not refundable. There was no exchange and Elite never received any of the deposit money, which never went into a solicitor or agent's trust account, Ramsden Fae being identified as the stakeholder in the written contract which they had prepared. 171 For his part, Mr Kakavas did not dispute that while the oral agreement on which the plaintiffs sued had been made in 2006 between Elite and Mr McCracken and that there had never been any exchange of written contracts. It was argued, however, that the oral agreement was of the first or second classes of contracts discussed in Masters v Cameron (1954) 91 CLR 353 at 360, the parties contemplating that the making of a written contract was merely a step in the performance of the legally binding agreement already made between them. 172 In Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd; Brown v Hodgkinson [2009] NSWCA 386, consideration has recently been given to the principles to be applied in determining whether parties intended to contract with each other. This depends on the facts of the case, considered objectively in the commercial context in question. At [116] it was observed:

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116 The fact that the parties to an agreement expressly contemplate that "the matter of their negotiation shall be dealt with by a formal contract" does not necessarily mean that they have not entered into a binding contract: Masters v Cameron , at 360, per curiam. Indeed, two of the three classes of case identified in Masters v Cameron result in a binding agreement notwithstanding that the parties contemplate that a formal contract will be executed later. Whether or not there is a fourth class of case (cf Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd at 628, per McLelland J; G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd , at 634-635, per McHugh JA; Tasman Capital Pty Ltd v Sinclair , at [25]-[26], per Giles JA), the parties may intend to be bound immediately by the terms they have agreed, while expecting to make a further contract in substitution for the first, containing additional terms: Sinclair, Scott & Co v Naughton [1929] HCA 34; 43 CLR 310, at 317, per Knox CJ, Rich and Dixon JJ. As was said by Giles JA in Tasman Capital Pty Ltd v Sinclair , at [29]: "Uncertainty and incompleteness in what has been agreed and the prospect of refinement and future agreement are material to whether the parties intended to make a concluded bargain, but once the intention be found the court will seek to uphold the bargain by resolving the uncertainty and fulfilling the incompleteness; although if that can not be done by accepted principles of construction and implication, the intention as found may fail". 173 On the evidence of both Mr McCracken and Mr Kakavas, until the property was put onto the market on 11 November, they each conducted themselves on the basis of an understanding that Elite and Mr McCracken had reached a binding agreement in respect of the sale of the property. Unlike the circumstances which arose for consideration in Abadeen Group Pty Ltd, they had made no note of the oral agreement, which Elite's solicitors were instructed to document, but it was not suggested that there were any gaps in the agreement which had been reached, which required further negotiation. 174 It is apparent that when the property was put on the market, Elite repudiated the first agreement, a repudiation which Mr McCracken then accepted, as he was entitled to do. While the necessary steps were being pursued to have the written contract finalised, as I have earlier explained, they were not yet complete, when Elite acted to ensure that the sale would not proceed. That does not leave open the conclusion that the parties were not already bound by their agreement. On the evidence they intended to be bound by their oral agreement, formal documentation of the agreement being but a step in the performance of what had already been agreed and acted on. 175 While the written agreement was never exchanged, as the oral agreement contemplated, the $4 million deposit had already been paid by instalments direct to Mr Kakavas. Mr McCracken understood that the money was to be used for refurbishment work. Consistently with that understanding, the payments were reflected in Elite's accounts and bank records. In accordance with the agreement they were payments received by Mr Kakavas, on Elite's behalf, as the accounts reflected. That Mr Kakavas used the money to gamble with, cannot alter the contractual arrangement. 176 Mr McCracken's argument that it followed that Elite could never have performed the contract, because it never received the deposit money may not be accepted. Nor can it be accepted that the contingent special condition in the written contract, of money being released to the seller, even if agreed, was also never satisfied. 177 For reasons which I have already explained, I have concluded that there was no agreement in the terms claimed by Mr Kakavas, that the $4 million deposit was not refundable. Mr McCracken did not fail to make any payment due under the contract, or to adhere to any other of the terms agreed. Mr Kakavas was Elite's guiding mind. The decision that the sale would not proceed was Elite's, not Mr McCracken's. It follows that under the parties' agreement the vendor, Elite, had no right to retain the deposit, when it terminated the agreement. 178 Section 59 of the Property Law Act precluded any action being brought on the contract for sale, unless it was reduced to writing. Given the terms of the oral agreement, once Elite had repudiated the oral agreement, Mr McCracken could have rejected the repudiation, sued upon that agreement, requiring Elite to execute a written agreement in the terms which had been agreed. (See Freedom v AHR Constructions (1987) 1 Qd R 59). As I have found, those terms did not include the special condition Mr Kakavas claimed. While the oral agreement was brought to an end by Elite before the written agreement was executed, in the circumstances there can be no question that Mr McCracken was entitled to recover the $4 million already paid in accordance with the oral agreement from Elite, he having accepted the repudiation of the agreement. In those circumstances it had no right to retain that deposit. 179 Those conclusions cannot, however, lead to any orders being made against Mr Kakavas. There was no claim that he was ever a party to the oral agreement and no evidence that it was contemplated that he would become a party to the written agreement. (See Wilson v Darling Island Stevedoring & Lighterage Company Limited [1956] HCA 8;(1956) 95 CLR 43.)

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The acknowledgment of debt 180 Can the acknowledgement of debt which Mr Kakavas provided Mrs McCracken, nevertheless form the basis of the relief sought against Mr Kakavas? The answer must be no. I will deal separately with the question of the circumstances in which it was given, when dealing with the cross claim, where the circumstances in which it was produced, must be considered. 181 What must be considered at this point is that the plaintiffs did not sue upon the acknowledgement itself and did not suggest that they could. The plaintiffs' case was that the document was an admission, in accordance with s 84 of the Evidence Act 1995. If the document was an admission, what did it admit? There is no suggestion that Mr Kakavas was ever a party to the first agreement. The acknowledgement cannot alter the nature of, or the parties to, that agreement. That Mr Kakavas acknowledged a debt, which did not in fact exist, cannot create a contractual basis upon which Mr McCracken can now sue, nowthstanding the acknowledgement. 182 That Elite and Mr McCracken made an agreement that a substantial part of the purchase price would be paid before completion of the sale cannot give rise to any contractual entitlement to recover what was paid to Mr Kakavas, a third party, in accordance with the agreement, notwithstanding his acknowledgement. 183 The fact that there was no written contract entered into, as the oral agreement contemplated, can take the matter no further. Mr McCracken undoubtedly has an action against Elite in respect of the agreement, but not against Mr Kakavas. He certainly received the deposit it was agreed would be released to Elite, but not on his own account. That Mr Kakavas later acknowledged a debt which did not exist, cannot alter that position. 184 While it was accepted for Mr Kakavas that it might have been possible to advance a claim that there was an agreement reached between Mr Kakavas and Mr McCracken, that they would each take the steps necessary to have the corporate entities through whom they conducted their businesses, enter into a binding agreement in relation to the sale of the Elite property, that was not the case advanced by the plaintiffs.

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[47] In Pan Ocean Shipping Co Ltd v Creditcorp Ltd [[1994] 1 WLR 161 at 166; [1994] 1 All ER 470 at 475.] , Lord Goff of Chieveley said: I am of course well aware that writers on the law of restitution have been exploring the possibility that, in exceptional circumstances, a plaintiff may have a claim in restitution when he has conferred a benefit on the defendant in the course of performing an obligation to a third party (see, eg, Goff and Jones on the Law of Restitution, 4th ed (1993), pp 55 et seq, and (for a particular example) Burrows on the Law of Restitution (1993) pp 271-272). But, quite apart from the fact that the existence of a remedy in restitution in such circumstances must still be regarded as a matter of debate, it is always recognised that serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract. [79] The doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a "benefit" at the "expense" of another which the recipient "accepts" and which it would be unconscionable for the recipient to retain without payment. And as is well apparent from this Court's decision in Steele v Tardiani (1946) 72 CLR 386; [1946] HCA 21, an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made . It is essential to consider how the claim fits with contracts the parties have made because, as Lord Goff of Chieveley rightly warned in Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 166; [1994] 1 All ER 470 at 475, " serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract ". In a similar vein, in the Comments upon s29 of the proposed Restatement, (3d), " Restitution and Unjust Enrichment " Tentative Draft No 3, 22 March 2004. Section 29 deals with the topic of restitution in cases of "Self-Interested Intervention", the Reporter says: 188 Here there is no question that Mr McCracken was contracting with Elite for the purchase of the property. While it was as the result of Mr Kakavas' decisions that the sale did not proceed, that does not provide a basis for any order being made against him. The deposit was paid direct to Mr Kakavas, as Elite had agreed with Mr McCracken. Mr Kakavas said that he had spent the money gambling and claimed that this was known to Mr McCracken, which he denied. Whether that was so or not, in contracting with Elite, rather than with Mr Kakavas and paying him as he and Elite had agreed, Mr McCracken must look to Elite to recover that deposit. No such claim is advanced. 189 Reliance was placed on Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 185 ALR 335. It was argued that there were three bases upon which orders could be made against Mr Kakavas: firstly, failed consideration; secondly, a failed bargain; and thirdly, a void or illegal contract. These arguments rested on an analysis of what had occurred, which treated the payment of the deposit to Mr Kakavas, as putting Elite into the position where it could not perform the agreement, because it had never itself received the deposit. I cannot accept that characterisation of what occurred. 190 This was not a case of failed consideration, but repudiation of the agreement by the vendor. The parties acted entirely in accordance with their agreement, until it was brought to an end by Elite, who then failed to repay the $4 million deposit it had received from Mr McCracken and which it was not entitled to retain. Undoubtedly, thereby Elite was unjustly enriched. That it was Mr Kakavas to whom the money was paid does not alter that situation. It was Elite, not Mr Kakavas, who had and received the part payment of the contract price under this agreement, notwithstanding its actual payment direct to Mr Kakavas.

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The claimed agreement for the sale of Mr Kerwick's property to Mr McCracken 194 All three defendants denied the existence of the third agreement. The payment of $2 million to Mr Kerwick is explained on another basis entirely - an alleged agreement for the sale of Mr Kerwick's house to Mr McCracken, to become his family home. I have already explained how this defence came to feature in the case. It is convenient to deal with that defence immediately, because I have concluded that no such agreement, was ever made. 195 Both the third agreement and the agreement for the sale of Mr Kerwick's house to Mr McCracken, have a number of seemingly implausible elements, although both were transactions of the kind which Mr Kakavas was then brokering in his business, bringing buyers and sellers of substantial Queensland properties together. Mr Kakavas and his relationships with the other three men lay at the heart of what was alleged in respect of both of these claimed agreements. The competing evidence must be considered, against that background. 196 Mr McCracken and Mr Kerwick met through Mr Kakavas. Mr Kerwick described Mr Kakavas as one of his best friends, a man with whom he had many business dealings, shared an ANZ bank account and had loaned between $1 to $2 million. They had helped each other, for over 15 years, having first met when Mr Kerwick worked at Jupiter's Casino. They became friends when Mr Kerwick looked Mr Kakavas up in Melbourne in 1994. Mr Kerwick became friends with Mr Pilarinos in 1998. This was the only occasion that Mr Kerwick had had any business dealings with Mr McCracken, another friend, who he met through Mr Kakavas in 2003 or 2004. He was not as close a friend as Mr Kakavas. 197 Mr Kerwick had bought this beachfront property at Mermaid Beach for $4 million. He had not yet settled on the purchase, which he claims that he was considering on-selling the following January, when Mr Kakavas approached him in October 2006 and proposed that he sell the property to Mr McCracken, as his new family home. Mr Kerwick was prepared to sell for $5.5 million and claimed that when later told by Mr McCracken that he needed an extended settlement, a price of $6 million, with a $2 million non-refundable deposit, to be released to him immediately, with an option to further extend the settlement, for another $300,000, was agreed. Mr McCracken denied this. 198 On its face the claimed agreement was rather extraordinary. Not only did it deliver Mr Kerwick a profit on the property of $2 million, before he had even settled on its purchase, the agreement was also claimed to have been made on the basis that the $2 million deposit was immediately released to Mr Kerwick and would not have to be repaid to Mr McCracken if the sale fell through, no matter what the reason. 199 Again, the written contract claimed to have reflected this agreement was not in evidence. Mr Kerwick's claim that he obtained a blank agreement from his solicitor, was corroborated by other evidence, but that does not take the matter far. His evidence was that he was already contemplating a sale before being approached by Mr Kakavas, even though he has never in fact sold the property. It was Mr Kerwick and Mr Kakavas' evidence that Mr Kakavas completed the contract details, including handwritten special conditions of a similar kind to those claimed in relation to the first agreement. Mr Kerwick then signed the agreement, Mr Kakavas witnessed it and it was left in Mr McCracken's letterbox, with neither Mr Kerwick nor Mr Kakavas keeping a copy. Curiously, Mr Kerwick explained in cross examination that when he signed the contract and gave it to Mr McCracken, he could see no reason for needing to keep a copy. Mr McCracken then paid $2 million to Mr Kerwick, without any exchange of contracts, or solicitors being involved. 200 This scenario seemed to me so unlikely, that great caution had to be exercised before Mr Kerwick and Mr Kakavas' evidence as to this agreement was accepted, in the face of Mr McCracken's denial. 201 When asked to explain how it was that such an extraordinary profit was achieved in such a short timeframe, Mr Kerwick's evidence was that there was a 'hot' property market at the time. That evidence seemed fanciful. Commonsense dictates that before such an explanation could be accepted, some corroborating evidence as to the state of the property market would have to be produced. There was no such evidence. 202 Mr Kerwick's evidence was that when Mr McCracken informed him on 12 November that he did not wish to proceed, Mr Kerwick told him that he regarded the agreement to have been terminated, and that he was entitled to retain the $2 million. Mr Kerwick still resides in this property and has never put it on the market again. 203 I have earlier set out Mr Kerwick's account of this conversation, which Mr McCracken denies. Mr Kerwick described Mr McCracken's tone that day as very violent and very, very angry and claimed that Mr McCracken threatened him, but he did not know why. He claimed that his only response to Mr McCracken was that he should 'stick to the contract'. I have great difficulty believing this evidence, for reasons earlier explained, given what Mr Kerwick and Mr Kakavas claim they subsequently discussed. When asked whether he thought it fair, that he had retained the deposit, Mr Kerwick had some difficulty answering, finally agreeing that he put the money over his friendship with Mr McCracken, who he claimed knew that it was a non-refundable deposit. Mr Kerwick explained that he regarded this as business and that Mr McCracken had to honour their contract. 204 That evidence had to be contrasted with the terms of the conversation which Mr Kerwick and Mr Kakavas claim they had with each other that day, when they discussed Mr McCracken's conversation with Mr Kerwick, about the matter of the $2 million, which I have earlier reproduced. In that conversation neither of them refer to any agreement that the deposit Mr McCracken had paid was non-refundable, as one would expect, if that term had been drafted by Mr Kakavas; agreed between Mr Kerwick and Mr McCracken and relied on by Mr Kerwick to retain the $2 million deposit. 205 In the face of Mr McCracken's denials, I am unable to accept Mr Kerwick's evidence, resting as it does on the claimed existence of yet another missing contract, in terms again drafted by Mr Kakavas, whereby Mr McCracken agreed to release a $2 million deposit, which was not to be repaid to him, no matter the reason why the sale could not be completed, in circumstances where Mr Kerwick himself had not even yet settled on the purchase of the property. Again, it is claimed by Mr Kerwick and Mr Kakavas, that they retained no copy of that contract, it was held by Mr McCracken, to whom the only executed copy was provided. That evidence was also quite implausible. 206 The existence of such an unlikely contract, not raised in Mr Kakavas' pleadings, after Mr Kerwick's defence was filed, seems but an invention designed to provide an explanation for why Mr McCracken would have advanced Mr Kerwick $2 million. Mr McCracken understood that when Mr Kerwick later made payments to Mrs McCracken of $1 million, they were made in repayment of this amount. Mr Kerwick said nothing to either Mr or Mrs McCracken to dispel that impression, an impression which accords with his conversation with Mr Kakavas, when asked to make the first payment. It was only at the hearing that it was claimed by Mr Kerwick and Mr Kakavas, that they were not intending to repay what Mr McCracken had advanced to Mr Kerwick. 207 It followed, as Mr Kerwick uncomfortably accepted, that if his defence of Mr McCracken's claim was not established and Mr Kakavas' explanation as to why the payment of $1 million was made by Mr Kerwick, after Mr Kakavas' November acknowledgement of debt was accepted, Mr Kerwick was at risk of being found to owe Mr McCracken $2 million, not $1 million. I do not accept the submission that in this respect, Mr Kerwick must be accepted as a witness of truth and candour, his evidence being against self interest. The realisation of the consequence of his evidence, was to my observation, a bit slow to come to Mr Kerwick. 208 Another obvious explanation for what had occurred was that Mr Kakavas repaid Mr Kerwick some of the over $1 million which Mr Kerwick reluctantly revealed in his cross examination that Mr Kakavas owed him, in order that Mr Kerwick could repay part of the $2 million which Mr McCracken had advanced to him. Mr Kerwick maintained, however, that Mr Kakavas still owed him that money and that he neither owed, nor had intended to repay Mr McCracken anything. 209 It was Mr Kerwick's case that Mr McCracken's evidence that he did not know the property the subject of this claimed agreement, or the area was not believable. Given Mr McCracken's acknowledgement that he had looked at the property on the internet, that evidence did not assist much in resolving what here lay between the parties. 210 Other evidence supported the conclusion that there was never an agreement of the kind Mr Kerwick claimed. At that time Mr and Mrs McCracken were living with their four children in a home in Albatross Avenue, pursuant to a put and call option, due to be settled in December 2006. 211 On Mr Kakavas' evidence, he had introduced Mr and Mrs McCracken to the Albatross Avenue property, in October 2005. Mrs McCracken had acquired the property under the put and call option. The price was $13.2 million. In April 2006, Mr McCracken told him that that he had too much money tied up in the property and Mr Kakavas counselled him to move in and 'touch the place up a bit'. 212 It was Mr McCracken's evidence that in April 2006 he had no intention of selling, the property was gutted and not in a fit state for sale. It was due to settle in November. This was their dream home; it had a lot of potential and they were keen to complete extensive renovations before the settlement. Architects and interior designers were retained and more than $1 million spent, with Mrs McCracken working on the interior design. The house was expensively furnished. Finance for over $9 million was arranged for the settlement.

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213 It was Mr Kakavas' evidence that he introduced Mr McCracken to Mr Kerwick's property in early October 2006, when he took Mr McCracken to see the property, after Mr Kerwick told him that he would sell for $5.5 million. The sale was agreed and he prepared a contract that day, which Mr Kerwick signed and it was left in Mr McCracken's mailbox. 214 It was Mr McCracken's evidence that he never made an agreement to purchase Mr Kenwick's home as his family home; that it was never introduced to him by Mr Kakavas; that he never discussed its acquisition with Mr Kerwick, that he had never inspected it, was not interested in property in that area and would never have acquired it, without consulting his wife. That evidence certainly accords with Mr Kakavas' description of Mr McCracken's decision-making process in relation to the Queensland Ave acquisition, where Mr McCracken told him that he had consulted his wife, before deciding to make the acquisition. On the evidence, Mrs McCracken was intimately involved in Mr McCracken's property development business. Properties were acquired in her name and she was involved in interior design decisions when refurbishments were undertaken. Mr McCracken said that he would never decide to acquire a family home, without his wife even seeing it. I am satisfied that evidence must be believed. 215 I am unable to accept that in early October 2006, Mr McCracken made and acted on a decision to acquire a new family home without involving his wife. There was no suggestion that it was even shown to her, before Mr McCracken agreed to buy the property on the basis of payment of a non refundable $2 million deposit. That he would then have agreed to purchase another family home for $6 million, at a time when he was committed to settling the acquisition of his existing family home in December, as well as the Elite acquisition in January, for over $22 million in total, is difficult to accept. That Mrs McCracken signed a contract for the purchase of the existing family home on 7 November, before the difficulty which arose on 10 November, further reinforces this conclusion. It was not until early December that this contract was assigned, pursuant to an agreement whereby $2 million was immediately released to Mrs McCracken. It was not until April 2007, that another property, land, was bought at Airlie Beach, where the family later settled on their return from living overseas for two years. 216 That Mr McCracken encountered financial difficulties when Mr Kakavas failed to repay the $250,000 due under the second agreement and gambled away $2 million which Mr McCracken had borrowed on a short term loan, may be accepted. That he would have agreed to purchase another $6 million property from Mr Kerwick on the terms and in the circumstances claimed, seems entirely improbable. 217 Mrs McCracken gave no evidence about the claimed acquisition from Mr Kerwick. It was not put to her in cross examination, that she was aware of this acquisition, or that she was involved in any decision to make this property the family home. On her evidence, she and her husband had, however, discussed the Elite acquisition under the first agreement and she was aware of the agreement for the sale of her existing family home under the third agreement, when Mr Kakavas raised it with her on 10 November. Going ahead with finalising the purchase of that property, which she had signed on 7 November, was obviously a prerequisite to selling it on under the third agreement. That evidence also provided a basis for rejecting Mr Kerwick's claim that he had agreed to sell his property to Mr McCracken. 218 For these reasons, I have concluded that this defence was simply not established.

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Kerwick: "Yes." 223 As was argued for the defendants, an arrangement of the kind claimed by Mr McCracken does not seem especially plausible, in the scheme of things. I do not accept, however, that it was the least plausible of all of the transactions here claimed. In this case, after all, Mr McCracken was making a loan to his friend Mr Kerwick under an arrangement brokered by his friend Mr Kakavas, he was not claiming an agreement that his other friend Mr Pilarinos, was to release a large deposit to him on a non-refundable basis. 224 It has to be remembered that not only Mr Kakavas and Mr McCracken were in the habit of helping each other out and loaning each other large sums of money, without any documentation or legally binding agreements being reached. Mr Pilarinos and Mr Kerwick also conducted themselves in this fashion with each other and with Mr Kakavas. Mr Kakavas was at the heart of this agreement between his three close friends. He was to benefit by earning commission in relation to the two transactions, income which it would appear he desperately needed. Given what else these three men agreed to do with and for Mr Kakavas from time to time, and the fact that both Mr Kerwick and Mr Pilarinos purchased other property around this time, that they agreed to an arrangement of this kind, does not seem very surprising. 225 As I have earlier explained, this contest has to be resolved on the basis of credit. The agreement is denied by Mr Kakavas, Mr Pilarinos and Mr Kerwick, but I have been unable to accept their denials in the face of Mr McCracken's evidence. 226 Even so, I am also satisfied that it may not be concluded that there was a legally binding agreement reached between Mr McCracken, Mr Kakavas, Mr Kerwick and Mr Pilarinos on the basis of these discussions. I am unable to see how these two limited conversations could provide a basis upon which it might be concluded that any of these parties had agreed to enter a binding agreement with each other, particularly in the terms claimed by the plaintiffs. Basic terms such as the sale price for the two properties, the terms of the loan, or the timing of the purchases were not even discussed, let alone agreed. Nor was there any discussion about any written agreements being entered in respect of those properties. Mr McCracken's evidence in cross examination confirmed that there was no intention at that stage, to create any legally binding agreement. His evidence was that he was operating on trust. 227 That there was an arrangement made between these four men at this time was, nevertheless quite apparent on the evidence. While the third agreement and how it unravelled was denied by all three defendants, Mr McCracken's claim that Mr Kakavas had brokered this arrangement, was not only consistent with the evidence as to Mr Kakavas' business and property dealings, it explains various transactions which were not in dispute, as well as Mr Kakavas' behaviour on 10 November and subsequently; and why it was that Mr McCracken initially pursued only Mr Kakavas, rather than Mr Kerwick and Mr Pilarinos. 228 There is no question that on 10 October, Mr McCracken (through Crackers Corporation) paid Mr Kerwick $2 million. Mr Kakavas agreed that he provided Mr Kerwick's bank details to Mr McCracken for this purpose. It is also clear that on 11 October, Mr Kerwick paid $2 million to Illari Nominees Pty Ltd ('Illari'), a company controlled by Mr Pilarinos. On Mr Pilarinos' evidence, this was the money he received from Mr Kerwick. The same day, Illari sent some $2,748,485.04, including the $2 million received from Mr Kerwick to an account which Mr Kakavas maintained with the Bellagio Casino Hotel. On 8 November, Illari paid $2 million to Mr Kakavas, who then paid $2.2 million to SkyCity Adelaide Pty Ltd, (which Mr Kakavas explained in his evidence operated a New Zealand casino where he also gambled). 229 It was the case advanced for Mr Kerwick, Mr Kakavas and Mr Pilarinos that none of these payments had anything to do with Mr McCracken or the third agreement. I am unable to accept that case. The claimed agreement for the sale of Mr Kerwick's property to Mr McCracken was not established. Mr Kerwick claimed no other basis for any entitlement to the money, which both he and Mr Pilarinos said he paid to Mr Pilarinos. The money went into the Illari account and was then paid on to the Bellagio Casino, for Mr Kakavas' benefit and at his request. Mr Kakavas then spent it on a trip taken in the company of Mr Pilarinos. 230 Mr Pilarinos claims that this transaction was but another loan which he made to his friend Mr Kakavas, using money received from Mr Kerwick, which he was free to do with as he wished. That evidence may not be accepted. Mr Kerwick's evidence was that he paid the money to Mr Pilarinos to repay an existing debt and so that Mr Kerwick might make a $1.2 million investment in a property development Mr Pilarinos had underway in Melbourne. Mr Pilarinos corroborated the existence of that debt, although again, no document evidenced its existence. What the debt related to was not explained. Nor was there any evidence as to the property development in which the investment was to be made. There seems to have been no document as to the basis on which the investment was accepted. Accepting for the moment that Mr Kerwick partially used the money to make such an investment, Mr Pilarinos dealing with the money as he wished, was not consistent with the majority of it having been given to him to be invested in a particular property development. This evidence, to my mind, was simply an implausible explanation invented for the use to which the money was put by Mr Pilarinos, for the benefit of Mr Kakavas. 231 Something more must be said, at this stage, about Mr Pilarinos' evidence. He was a most reluctant witness. It was claimed that Mr McCracken had named him as a party, only to put pressure on Mr Kakavas to agree to a settlement, which Mr McCracken denied. On his evidence, Mr Kakavas was certainly very sorry that Mr Pilarinos had been joined, claiming that he should not be there, understandably perhaps, given the ongoing support he was receiving from Mr Pilarinos. Still, he was prepared to issue a subpoena requiring him to give evidence, when Mr Pilarinos decided that he would not do so, with the result that Mr Pilarinos finally did give evidence. 232 Mr Pilarinos was evidently not a well man, but he appeared to have no difficulty being present in court, giving instructions, throughout the hearing, until it came time to give his evidence. Then an unusual situation developed. I was apprised of Mr Pilarinos' ill health, albeit no details were provided and a short adjournment was sought, so that he could prepare himself. 233 On resumption, I was informed that Mr Pilarinos had left the building, with his solicitor chasing after him. After lunch, it was revealed that he had gone to Sydney Hospital, where he had been advised not to proceed with giving his evidence. The next day, Mr Pilarinos met with his solicitor before the hearing resumed, but did not attend court. An application was then made that his affidavit evidence be read, even though he was not available for cross-examination. Two medical certificates were relied on, which did not provide a basis upon which that application could be granted. When the application was refused, there was a further adjournment so that instructions could be sought from Mr Pilarinos. His counsel and solicitors then left the building without notice and had to be found and informed that the hearing would proceed in their absence, if they did not return. Mr Pilarinos did not give any instructions to his legal representatives, with the result that the hearing then proceeded on the basis that Mr Pilarinos would not give evidence. Later that afternoon, Mr Pilarinos' position altered after the other defendants announced they intended to subpoena him. He then gave his evidence, seemingly with little difficulty, but his recollection of what had occurred had diminished very significantly since he had sworn his affidavit. 234 The evidence then given was rather implausible and unconvincing in a number of respects. I have mentioned Mr Pilarinos' changing evidence as to the property he discussed with Mr McCracken on 11 November. Mr Pilarinos also explained that on his understanding, Mr McCracken's purchase of the Elite property did not proceed, because he understood from Mr Kakavas that certain terms and conditions of the contract were not abided by Mr McCracken. That was not Mr Kakavas' case. Mr Pilarinos did not enquire further, not being interested in the details. Nevertheless, Mr Pilarinos understood from Mr McCracken, that he believed that Mr Kakavas owed him money.

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239 Mr Pilarinos agreed that he had had sold a house on the Gold Coast for $20 million in April 2006, but claimed that he had bought another property, in which he was not living, in October 2006, because the vendor remained as a tenant for about 8 to 9 months. He was then living in Melbourne. 240 There is no question that Mr Pilarinos was involved in the discussions which led to payments of $1 million being made to Mrs McCracken, beginning with $500,000 paid in November 2006. Mr Pilarinos denied telling Mr McCracken on 11 November that he transferred the $2 million received from Mr Kerwick to Mr Kakavas' account, who told him that he would transfer it to Mr McCracken. That was certainly not what happened. Mr Pilarinos also denied telling Mr McCracken some days after 14 November that Mr Kakavas had transferred the money to a casino. That is also not what occurred. The money went into Illari's account and was then transferred to a Las Vegas casino. It was then spent by Mr Kakavas on a trip on which he was accompanied by Mr Pilarinos. 241 On Mr McCracken's evidence it was on 14 November that a payment of $500,000 was promised, with Mr Pilarinos explaining that he had looked into Mr Kakavas affairs and that he needed to sell the Elite property for over $15 million, in order to pay out the mortgage. Mr McCracken would be repaid what he was owed when the property was sold. This, too, Mr Pilarinos denies, although he was aware that the property had been put on the market. 242 I have concluded that Mr McCracken's evidence about these matters must be accepted. There was an agreement of the kind Mr McCracken claimed made between these four men. The payment of $500,000 was made as promised by Mr Pilarinos. Finally a total of $1 million was paid by Mr Kakavas, in repayment of what he had gambled away. No further payments were made, when the Elite property was not sold as hoped, Mr Kakavas eventually talking it off the market. A promise that Mr McCracken would be repaid when the property was sold was entirely consistent with Mr Kakavas' evidence at the hearing as to his ongoing intentions, which he now hoped to finance out of the proceeds of the Crown Casino litigation. Mr Pilarinos conveying such promises was consistent with his evidence, that he had tried to help resolve the differences lying between these two men. That assistance was understandable, given what had occurred to the $2 million which Mr McCracken was pursuing. 243 Even if it is not established that a legally binding agreement was reached, that Mr McCracken paid Mr Kerwick $2 million, which was given to Mr Pilarinos, who used it for Mr Kakavas' benefit when paid by Illari to the Bellagio casino was established.

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The claims against Mr Kakavas 244 The claims advanced in relation to Mr Kakavas are brought in restitution and conversion. 245 So far as restitution is concerned, it had to be shown that the $2 million paid to Mr Kerwick on Mr McCracken's behalf by Crackers Corporation, came to Mr Kakavas, Mr McCracken having title to that money. The claim may only be advanced in relation to payments made after the money was received by Mr Kerwick on 10 October. 246 The $2 million paid to Mr Kakavas on 8 November, cannot be viewed in this way. Mr Pilarinos' evidence was that this was money which he loaned to Mr Kakavas to gamble with. The source of that payment was funds received by Illari from a Equititrust account. The source of this money was not shown to be Mr McCracken. 247 By way of contrast, it was Mr Pilarinos' evidence that the money paid by Illari to the Bellagio casino for Mr Kakavas' benefit on 11 October, included the $2 million paid to him by Mr Kerwick. Neither Mr Kerwick nor Mr Pilarinos had title to that money. Mr Kakavas telling Mrs McCracken on 10 November, that he could not pay Mr McCracken the $2 million he was seeking, because he had paid the $2 million to the Las Vegas casino, was plainly not strictly accurate. It was Illari which had paid that sum to the casino, to Mr Kakavas' account there, it was never paid to Mr Kakavas. That it was paid for Mr Kakavas' benefit and spent by him, however, is not open to doubt. 248 There is no doubt that Mr Kakavas was given the benefit of that money and that it was not paid to Mr Kakavas in his capacity as Mr McCracken's agent, as was submitted for Mr Pilarinos, when Mr Pilarinos caused Illari to transfer over $2 million to the Bellagio casino, including the $2 million paid to him by Mr Kerwick. I do not accept their explanation of why that payment was made to Mr Pilarinos. That conclusion accords not only with what Mr Kakavas later told Mrs McCracken on 10 November the money had been used for, his gambling, it also explains why he couldn't repay it and why he did not go to Mr Pilarinos to ask for the money, as he had earlier told Mr McCracken he would. By then the money had been spent on the trip he had taken with Mr Pilarinos to Las Vegas. It also explains why Mr Kakavas then acknowledged that he owed Mr McCracken that money and why he later made a repayment of $1 million to Mrs McCracken, through Mr Kerwick, as Mr McCracken understood in partial repayment of that $2 million. 249 On this evidence, I am well satisfied that a case in restitution has been established. $1 million remains outstanding. 250 As to the conversion claim, it must fail for reasons already explained.

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Harry Kakavas 12/11/06 TOTAL OF 2 PAGES" 274 For a number of reasons, I am satisfied that Mr Kakavas' account of what Mr Chrysaffis told him, is simply a reconstruction, reflective of the document which he himself drafted. Mr McCracken's evidence that he was not the author of this document, must be accepted. Mr McCracken undoubtedly told Mr Chrysaffis what he wanted the acknowledgement to deal with, namely the money which Mr Kakavas had received. At that time their dispute was over $2 million. It was Mr Kakavas who wrote the document in terms which he chose. This conclusion follows from various matters, including the fact that there is no question that Mr McCracken had no interest in the second property mentioned in the acknowledgement, and no evidence that he knew that either that property, or the Elite property had been put on the market on 11 November. When he spoke to Mr Chrysaffis on 11 November, there is simply no evidence that Mr McCracken had any means of knowing that either property had been put on the market. 275 Mr McCracken claimed that on 11 November he still intended to proceed with the Elite sale, which was not due to settle until the end of January 2007 and understood that Mr Kakavas did too. He was waiting for a revised contract. That is not inconsistent with a desire to have a written acknowledgement of debt, given the casual way in which Mr McCracken had paid money to Mr Kerwick, without any documentation; that Mr Kakavas was in serious financial trouble as the result of his gambling; that he had spent the $2 million which Mr McCracken had given to Mr Kerwick gambling; and that Mr Kakavas was about to leave the country to go to the Bahamas on his honeymoon, where he intended to continue gambling. 276 That Mr Kakavas acknowledged all the money which Mr McCracken now pursues, is simply reflective of the fact that he never disputed owing him $250,000 under the second agreement; accepted that he had gambled away the $2 million Mr McCracken wanted repaid and had decided not to proceed with the Elite sale to Mr McCracken. As his evidence showed, he believed that he should repay all of this money, no matter what the legal position between he and Mr McCracken was. 277 The acknowledgement was couched in terms consistent with Mr Kakavas' evidence of his regard for Mr McCracken, even containing a provision dealing with the event of his death. Appointing Mr McCracken as his trustee, was consistent with the regard which Mr Kakavas explained he held for Mr McCracken and consistent with the handwritten note which he had given Mr McCracken, while they were in Las Vegas together, which I earlier set out. Mr Kakavas described having written that note in gratitude for Mr and Mrs McCracken's support of him, at a difficult time, when he was crying after having lost millions of dollars gambling. Appointing Mr McCracken as his trustee was entirely consistent with the regard revealed by this document and Mr Kakavas' evidence, tearfully given at times in the witness box, of his great love for Mr McCracken. 278 Also to be considered is Mr Kakavas' evidence that Mr McCracken was no draftsman. On Mr Kerwick's evidence, it was Mr Kakavas who drafted contractual documents for Mr McCracken, that being the explanation for why it was Mr Kakavas who drafted the terms of the special conditions which he claimed had been agreed in respect of the sale of his house to Mr McCracken. 279 On 14 November, Mr Pilarinos told Mr McCracken that around $500,000 would be paid to him straight away. Mr Kakavas had borrowed that amount from Mr McKenzie-McHarg and gave it to Mr Kerwick, who then paid that sum to Mrs McCracken. Mr McCracken's evidence was that when he learned of the payment, he believed that it was a partial repayment of the $2 million he had been seeking from Mr Kakavas in relation to the third agreement. Both Mr Kerwick and Mr Kakavas deny that this was so, because they claim that they had no obligation to repay that sum and on Mr Kakavas' evidence, because he did not intend to repay it, no matter what he had said in the acknowledgement. I am unable to accept this evidence, in the face of other evidence which Mr Kakavas gave. 280 It is for these reasons that I have concluded that while the acknowledgement was one sought by Mr McCracken, it was in terms Mr Kakavas himself drafted.

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Why did Mr Kakavas make payments in accordance with the acknowledgment? 281 Mr Kakavas made three payments totalling $1 million through Mr Kerwick to Mrs McCracken in 2006 and 2007 and Mr Pilarinos and Mr Chrysaffis continued their discussions with Mr McCracken, about when Mr Kakavas would be in a position to make further repayments to him. I am simply unable to believe Mr Kakavas' claim that he gave the acknowledgement and paid Mrs McCracken this money, because of the assault and threats which Mr McCracken later made against him and his father. Mr Kakavas' own evidence does not permit that conclusion. 282 In order to obtain the funds which enabled him to make the first payment of $500,000 to Mrs McCracken, on 11 November Mr Kakavas gave Mr McKenzie-McHarg a harrowing account of the assault, an account quite at odds with Mr Kakavas' evidence at the hearing and the evidence of Mr Chrysaffis, who witnessed the assault. Mr Kakavas' account so alarmed Mr McKenzie-McHarg that he loaned Mr Kakavas the $500,000 he asked for, without security or documentation, something he had never done before, but which was commonplace for Mr Kakavas. 283 Mr McKenzie-McHarg urged Mr Kakavas to go to the police, being fearful of what would happen to him. Mr Kakavas did not do so, because, he told Mr McKenzie-McHarg, that would only make things worse. There was nothing in the evidence of any witness which revealed a basis on which such a belief could have rested. To the contrary, in his oral evidence Mr Kakavas gave quite a different explanation as to why he did not go to the police, to have them deal with Mr McCracken. 284 Mr Kakavas' explanation was that he waited for two years after the assault and only approached the police after the commencement of these proceedings, because that was the first time Mr McCracken had made an admission about the assault in an affidavit. That entirely underscored that while Mr Kakavas was angry with Mr McCracken over what had occurred on his wedding day, that he was never in fear of him. There were a number of witnesses to the assault, which Mr McCracken has never denied. It required no acknowledgement on his part, to take the matter to the police, as Mr Kakavas eventually did. Even then, on his own evidence Mr Kakavas did not act because of any fear of Mr McCracken, who still believed that he owed him over $5 million, which he wanted repaid. 285 There is no suggestion that Mr Kakavas made any complaint to the police about the threats by which he claims in these proceedings that Mr McCracken extracted the acknowledgement and the payment of $1 million from him. His explanation of his approach to the police in 2008 was:

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289 Given Mr Kakavas' evidence as to his father's frail health, his concern for his welfare and that of his other family members present with him at his home on 10 November, that he would not have warned them, or Mr Chrysaffis, who was also already at the house, that Mr McCracken was on his way with a gun to shoot him, if that threat was made, was simply not believable. That Mr Kakavas just waited upstairs and watched to see if Mr McCracken had a gun, is not plausible, given his other evidence about his concern for his family. 290 Consideration also has to be given to what actually happened in the assault. Mr Chrysaffis gave a detailed account of the assault, which he witnessed from start to finish. This evidence corroborated Mr McCracken's account of what had occurred that day. 291 When he arrived at the house, Mr McCracken was demanding to see Mr Kakavas. He pushed his way through a locked gate and grabbed Mr Kakavas, when he came to a glass sliding door. It was then that Mr McCracken hit Mr Kakavas, while others present pulled him away and he hit Mr Kakavas' brother in law. This was an assault which resulted in no injury to Mr Kakavas other than two bruises to the forehead and required no medical attention. It was then that Mr Kakavas' father confronted Mr McCracken. He did not threaten Mr Kakavas' father, it was the father who confronted Mr McCracken. Mr Chrysaffis had no problem guiding Mr McCracken away. 292 Consistent with this description of the incident, on any view this was a relatively minor assault. There is no question that Mr McCracken was angry with his best friend, angry enough to assault him. That Mr Kakavas was not afraid of Mr McCracken, before, or even after the assault, was also apparent. 293 For his part Mr McCracken denied making threats against Mr Kakavas or his father that day, or in the days after the assault. There was evidence from Mr Pilarinos, Mr Kerwick and Mr Chrysaffis about what Mr McCracken said to them and what they told Mr Kakavas on 11 and 12 November. 294 Mr Kakavas agreed that while Mr McCracken assaulted him that day, he had not threatened him to his face since that day, nor had anyone on his behalf. Nevertheless, he claimed that Mr Chrysaffis, Mr Kerwick and Mr Pilarinos told him that Mr McCracken had made threats in their hearing after 10 November. He was in shock and in fear and that was why he gave the acknowledgment and made the payments he seeks to recover. I am unable to accept this evidence. I have been led to that conclusion, not because I have been convinced that Mr McCracken never made any statements at all which might be perceived as threatening, given what he said to Mr Chrysaffis, but because it was apparent on Mr Kakavas' own evidence, that he was motivated to give the acknowledgment for other reasons entirely. 295 I earlier set out Mr Chrysaffis' evidence as to what Mr McCracken said on 11 November. While it was submitted for Mr McCracken that Mr Chrysaffis' evidence should not be accepted in various respects, I have come to the conclusion that his evidence as to what Mr McCracken said to him on 11 November, must be accepted. The only 'threat' which Mr Chrysaffis recollected was "Harry is a dog. He should not go on his honeymoon while he owes me money. If I see Harry's father in the street he is not safe." Mr Chrysaffis did not give evidence as to what he told Mr Kakavas, but I do not accept Mr Kakavas' account that Mr Chrysaffis told him that Mr McCracken had made threats against both he and his father. That was not Mr Chrysaffis' evidence as to what Mr McCracken had said. I find it extremely unlikely that Mr Chrysaffis would have been untruthful in what he told Mr Kakavas. What was said also has to be considered in the context of Mr Chrysaffis' evidence as to what had occurred on 10 November between Mr McCracken and Mr Kakavas' father. 296 Even if Mr Chrysaffis mentioned this threat to Mr Kakavas, as Mr Kakavas claims, it must be considered that Mr Chrysaffis was not concerned. Unlike Mr McKenzie-McHarg he did not suggest that Mr Kakavas should go to the police to report what had occurred. Nor did Mr Kerwick or Mr Pilarinos. The only person who appears to have truly been frightened by what happened was Mr McKenzie-McHarg, who neither saw the assault nor had any discussions with Mr McCracken. 297 While I accept Mr Chrysaffis' evidence, I have reservations about what Mr Pilarinos and Mr Kerwick heard and said. Mr Pilarinos' evidence was that threats were made by Mr McCracken against Mr Kakavas in his presence on 11 November, which caused him to believe that Mr Kakavas' safety was at risk, given Mr McCracken's anger and demeanour that day. What was said was:

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299 I have reservations about this evidence, indeed, I am inclined to the view that it was more invention, designed to bolster Mr Kakavas' case. It was not Mr Pilarinos' evidence that he told Mr Kakavas about these threats. To the contrary, he said that he had worked to help the two men get over their difficulties. How he did this is unclear from his evidence. His affidavit was remarkably silent as to the terms of any of his conversations with Mr Kakavas. 300 Mr Kerwick's evidence as to his conversation on 12 November with Mr McCracken and Mr Kakavas is also earlier set out. I have rejected his evidence as to his discussion with Mr McCracken. It follows that his claimed conversation with Mr Kakavas is also unlikely to have occurred. 301 Even if it had occurred, that the conversation occurred after the acknowledgement had been provided by Mr Kakavas, must be considered. What Mr Kerwick told him plainly cannot have motivated Mr Kakavas to give the acknowledgement. On Mr Kerwick's evidence it might have motivated the payments which Mr Kakavas later made, except that it was Mr Kakavas' evidence, he did not intend to make the payments dealt with in the acknowledgment. On Mr Kerwick's evidence, when Mr Kakavas transferred $500,000 to his account, Mr Kakavas asked him to transfer it to Mr McCracken 'to keep him from getting out of control' and when asked if he was sure, Mr Kakavas said he wanted to avoid further violence. 302 This was the high point of the evidence, but it was contradicted by other relevant evidence. 303 On Mr Chrysaffis' evidence, it was apparent that at the time Mr McCracken believed that Mr Kakavas owed him the money which he asked him to acknowledge. Even Mr Pilarinos' evidence was to that effect. The only money which Mr Kakavas and Mr Kerwick had discussed Mr McCracken wanting repaid, however, was the $2 million paid to Mr Kerwick. On Mr Kakavas' evidence, that was not what he was repaying when he made the payments to Mr McCracken. He never intended to repay the $2 million. 304 Mr Kerwick paid Mrs McCracken $500,000 on November 2006, a further $250,000 in December and another $250,000 in July 2007. It was Mr Kakavas' case that the acknowledgement and the payments did not reflect what he actually owed Mr McCracken, apart from the $250,000 owing under the second agreement. Given that the threats which he claimed motivated these payments had been made long before the final payment and he was not concerned enough to go to the police, what was it that caused Mr Kakavas to make these payments? That was revealed by his oral evidence. 305 Mr Kakavas used Elite as a corporate vehicle for his business undertakings. It was the legal owner of the property to be sold under the first agreement. Despite the legal position, in their dealings Mr McCracken and Mr Kakavas behaved towards each other with but little regard for such legalities. That remained Mr Kakavas' attitude, even at the hearing. The acknowledgement which he gave was entirely consistent with that approach. 306 Mr Kakavas gave quite extraordinary, emotional evidence about his relationship with Mr McCracken, why it had broken down, what he owed him and what he would do, even if Mr McCracken were unable to establish any legal basis for the claims advanced in these proceedings. His own evidence moved Mr Kakavas to tears at times. At one point, he lost his temper during cross examination and threatened Mr McCracken. Mr Kakavas was certainly angry with Mr McCracken over the assault and the institution of these proceedings, which he believed ought never to have been brought and certainly should not have involved Mr Pilarinos. He did not appear to have that view about Mr Kerwick's involvement. His emotions were not only anger, they were also sorrow over the loss of Mr McCracken's friendship, regret over what he had done and an insistence that he had not intended to steal from Mr McCracken and his family and that he would repay him, no matter what happened in these proceedings. 307 This was entirely in accordance with the acknowledgement which Mr Kakavas wrote in his own hand, acknowledging what he owed his closest friend, at a time when his other friends, Mr Pilarinos and Mr Chrysaffis, were trying to help settle things down between them. It was also consistent with the payments which were then made to Mrs McCracken, through Mr Kerwick. Mr Kakavas also had a close friendship with her. He certainly never wished to hurt her. As he explained, he chose to make the payments to Mrs McCracken, because at the time he wanted nothing to do with Mr McCracken; he had no intention of paying him what he had acknowledged, but paid $1 million in order to placate him and intended to pay him the rest of what he claimed, if he could find the money to do so. 308 That Mr Kakavas produced the acknowledgement which Mr McCracken had asked Mr Chrysaffis and Mr Pilarinos to approach him about, because he was intimidated and fearful of Mr McCracken, was patently not the case. At the hearing, Mr Kakavas explained what he was angry about, namely the effect of Mr McCracken's assault on his mother, father and brother in law, hours before the wedding. He was clearly much less concerned for his own sake and wanted to make amends for the wrong he perceived he had done. He was certainly not frightened of Mr McCracken when he gave the acknowledgment, made the payments, or on my assessment, at any other time. Rather, he acted as he felt morally bound to act. 309 Mr Kakavas repeatedly insisted in cross examination, that if he won his proceedings against Crown Casino, despite owing Mr McCracken nothing, he would pay him. 310 It is in this light that the acknowledgment of debt must be understood. The assault certainly helped ruin the relationship, which was plainly damaged in any event by Mr Kakavas' loss of the $2 million Mr McCracken wanted repaid. As I have explained, I am quite satisfied that the document was written in terms drafted by Mr Kakavas, reflecting his own view of his obligations to Mr McCracken, notwithstanding the legalities of the arrangements they had made with each other. The acknowledgement confirmed that it was Mr Kakavas who decided after 10 November, that he would not proceed with the sale of the Elite property to Mr McCracken. Instead, he put it and another property on the market, having used the $4 million paid by Mr McCracken under the first agreement to gamble with, as well as the $2 million paid to Mr Kerwick. 311 The decision not to sell to Mr McCracken, was entirely consistent with the view which Mr Kakavas then formed, that he would have nothing further to do with Mr McCracken. He has not spoken to Mr McCracken since. Mr Kakavas arranged for Mr Kerwick to make the payments to Mrs McCracken. Mr McCracken understood that these sums were repayments of the $2 million paid to Mr Kerwick, which he had sought from Mr Kakavas on 10 November. That understanding is consistent with Mr Kerwick's account of his conversation with Mr Kakavas, when the first $500,000 was paid. 312 A decision not to proceed with a sale of the Elite property, which he had agreed to sell at a substantial discount because of their friendship, was entirely consistent with Mr Kakavas' later conduct towards Mr McCracken. Such a sale would have provided him with some of the funds needed to repay what Mr McCracken then sought and what Mr Kakavas plainly still considers he ought to pay Mr McCracken, if he can find the funds to do so. He believed himself morally obligated, at least, to repay the money dealt with in the acknowledgement and began by taking steps to borrow money from Mr McKenzie-McHarg, to do so. 313 At that time, the Elite property was heavily mortgaged and Mr Kakavas was in very significant debt to others as well as Mr McCracken, including Mr Kerwick, Mr Pilarinos and Mr McKenzie-McHarg. He denied he ever told Mr Pilarinos that he needed to sell the property for over $15 million, because he had arrangements in place with Equititrust. Documents emanating from Equititrust in December 2006, lend support to that evidence, but what must also be considered is Mr Kakavas' evidence that he had ruined his life through his gambling his debts and his evidence as to the need to sell the property, when the mortgage fell due in January. I find his evidence in this respect, as in so many others, unconvincing. 314 As he said in his evidence, Mr Kakavas never had any intention of hurting Mr McCracken's family, but he did not have the money with which to repay what he accepted he owed Mr McCracken, because of his gambling addiction. That not only explains why Mr Kakavas gave the acknowledgement, it also explains his claim that it was later agreed between he and Mr McCracken, that he would pay what was owed, out of the proceeds of his Crown Casino litigation, if he succeeded. In his original defence Mr Kakavas claimed that this agreement was made on his behalf by Mr Pilarinos and on Mr McCracken's behalf, by Mr Chrysaffis. This was not established on the evidence, but was a position which Mr Kakavas maintained in his oral evidence. 315 In the face of Mr Kakavas' own evidence, I have simply not been convinced that the acknowledgement was given as the result of Mr Kakavas' fear of Mr McCracken.

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The payment of $1 million 316 By cross claim, Mr Kakavas seeks repayment of $750,000. I am satisfied that he has not met the onus falling upon him to establish that he was in fear of Mr McCracken when he paid the three instalments totalling $1 million, which he seeks to recover. 317 Mr Kakavas' claim that the payment of $1 million to Mrs McCracken, was made in order to repay part of the $4 million deposit paid in respect of the Elite sale, may also not be accepted. Mr McCracken understood that the money was repaid in relation to the third agreement. That understanding appears consistent with the other evidence to which I have referred. I am satisfied that these payments were not made by way of repayment of that deposit. 318 I am unable to reach the view that these payments were made by Mr Kakavas, as the result of the assault or acknowledgement of debt extracted from him by Mr McCracken in the aftermath of the assault and as a result of his fears for his own safety and that of his father. 319 Mr Kakavas' evidence gave conflicting and contradictory evidence about these matters. He said at one point in his cross examination that he feared Mr McCracken when he gave the acknowledgment, because Mr McCracken had 'exploded under the pressure' and that while he was in fear of Mr McCracken at the time he gave the acknowledgement, he was no longer in fear. To be contrasted with this evidence was Mr Kakavas' evidence that on 10 November, he did not fear Mr McCracken, he feared the gun he said he was coming with and his explanation that even when he gave the acknowledgement, he had no intention of acting on it, he was only trying to placate Mr McCracken. Mr Kakavas also explained that he then considered that he might have repaid the $250,000 outstanding under the second agreement and that he might also have paid something more out of the goodness of his heart, had the Crown Casino proceedings succeeded. 320 While the acknowledgement is one which Mr McCracken undoubtedly sought the day after the assault, the document was given in terms drafted by Mr Kakavas, after he decided that he would not proceed with the Elite sale. The acknowledgement reflects a view on his part that he should repay Mr McCracken the money there dealt with, whatever be the legal position between them, no matter what had occurred on 10 November. That approach was consistent with their prior dealings with each other and views which Mr Kakavas' still held at the hearing. 321 On his own evidence Mr Kakavas is guilt ridden over how he has treated Mr McCracken and his family, claiming that he would have earlier refunded the money which Mr McCracken wanted, if he had been in a financial position which enabled him to do so. That emotion also reflects, in my assessment, that Mr Kakavas gave evidence in these proceedings which departed from the truth, in a number of important respects. Yet he claims that he was never going to cheat or steal money from Mr McCracken or his family and that he would have repaid the money, even after Mr McCracken's assault and threats, if he had it. 322 Mr Kakavas said, at one stage, that if he then had the money, he would pay Mr McCracken, even though he did not owe him the money. He also said that if he were later successful in his proceedings against Crown Casino, he would pay the money. Later in his cross examination, he explained that if Mr McCracken had apologised, he would have paid the money earlier and even if he didn't apologise, if he succeeded against Crown Casino, he would still repay at least some of the money. Mr Kakavas was angry that Mr McCracken had earlier refused to discuss the possibility of a settlement, when pursued through his lawyers, but still he would pay him. He wasn't sure how much money he would be left with, but Mr McCracken would recover a substantial amount, to prove to him that Mr Kakavas never stole the money, and that he loved him. He also explained that he did not want Mr McCracken to be out of pocket and that he would be paying his creditors, including Mr McCracken, even if he lost these proceedings, on a pro rata basis. 323 Despite all of this evidence, Mr Kakavas denied that he had provided the acknowledgement of debt, for reasons such as these, insisting that it was extracted by duress and that he never had any intention of honouring it. That evidence was not believable. Mr Kakavas plainly intended honouring the acknowledgement. That was why he paid Mrs McCracken $1 million through Mr Kerwick and why he insisted that he intended to pay Mr McCracken more, even though he owed him nothing. 324 If the payments had truly been made under duress, or as the result of fear, why did Mr Kakavas not raise these matters with the police, when he finally reported the assault, long after these proceedings had been commenced? Why did he send a message to Mr McCracken, through Mr Pilarinos and Mr Chrysaffis in March 2007, that he would pay him what he owed after the Crown Casino case concluded and why was an agreement to this effect raised as a part of his defence? 325 In my assessment, the payments were not extracted by duress, by threats, or by the assault. Those payments were a reflection of how these close friends had always dealt with each other and Mr Kakavas' continuing feelings towards Mr McCracken, his closest friend, even after the assault and alleged threats. The payments reflected Mr Kakavas' view that whatever the legalities were, he intended to repay the money which Mr McCracken claimed initially by the sale of the two properties mentioned in the acknowledgment. For good reason, it seems on his own evidence, Mr Kakavas felt obligated to Mr McCracken for a sum of $6,250,000; that was what he acknowledged, in his own words and that is why he began making payments to Mrs McCracken. 326 By his evidence in these proceedings, in reality Mr Kakavas stands by that acknowledgment. He intends to honour it, no matter the outcome of these proceedings and he hopes to have the means to do so, when his proceedings against Crown Casino are resolved. At one point, looking directly at Mr McCracken sitting in the body of the Court, Mr Kakavas said:

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327 Mr Kakavas explained the assault charges and why he finally pursued them years later, claiming that he only went to the police to stop Mr McCracken from doing 'something silly', not to get him into trouble. There was no suggestion of any further threats from Mr McCracken at that time. These proceedings were then on foot. Mr Kakavas did claim that he agreed to more serious charges against Mr McCracken being dropped by the police. This evidence was difficult to accept, particularly when considered with the rather extraordinary and repeated claim that Mr Kakavas had done Mr McCracken a 'big favour' by eventually going to the police, after his affidavit in these proceedings had been sworn. Why that was so, was not explained. There was no evidence that at the time, other than the pursuit of these proceedings, Mr McCracken and Mr Kakavas were having any dealings with each other. 328 The truth was that Mr Kakavas was never in fear of Mr McCracken. He paid part of the money which his best friend had asked for, undoubtedly sorry about what he had told Mrs McCracken on 10 November; how he had used his best friend's money to gamble with and what that had done to their friendship. 329 It follows that no basis for any orders in favour of Mr Kakavas in relation to the $1 million he paid Mrs McCracken was established on the evidence. There was no basis established upon which it might be concluded that Mr McCracken was obliged to repay that money to Mr Kakavas. It was entirely open to Mr Kakavas to repay part of what he and Elite owed Mr McCracken, by giving money to Mrs McCracken, as he did. That he made the payment he did to Mrs McCracken through Mr Kerwick, is reflective of what he had had told her on 10 November he had done with the $2 million which Mr McCracken was seeking to have repaid and the promise which he then made to her, that he would try to find funds to repay it. 330 There was no basis in the evidence upon which it may be concluded that by that payment, Mr Kakavas was intending to repay Mr McCracken the $250,000 which he owed him under the second agreement. Indeed, he claimed that the payment was made in relation to the $4 million deposit. It follows that the claim that $250,000 of that payment should be treated as repayment of the debt owing under the second agreement, must also be refused.

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339 Having observed that extraordinarily unrestrained outburst, I can only conclude that what Mr Kakavas was doing was himself threatening Mr McCracken. But for his immediate apology, some other steps might have been necessary. 340 I have dealt with the evidence that Mr McCracken threatened Mr Kakavas and his father on 10 November and subsequently. On the cross claim, this was particularised as Mr Kakavas claiming that Mr McCracken told him before he arrived that he had a gun and was coming to kill him, which Mr McCracken denies. I have earlier dealt with Mr Kakavas' evidence in that regard, which I do not believe. 341 I accept Mr Chrysaffis' evidence as to Mr McCracken's behaviour on 10 November and subsequently. I have rejected Mr Pilarinos' and Mr Kerwick's accounts of subsequent threats, but as I have observed, like Mr Kakavas, if those threats were made, neither they nor Mr Kakavas took them seriously. That is understandable in the face of the relationship between all these men. Not all threatening words are intended to be, or are understood to be threats. In this case, no one was sufficiently concerned to go to the police. Only Mr McKenzie-McHarg counselled Mr Kakavas to do so, but Mr Kakavas told him that would only have made matters worse. 342 How could that have been so? The reality was that Mr Kakavas had no reason to go to the police. The assault was minor, he was not in fear of Mr McCracken and intended to repay him. The distinct impression I was left with was that the harrowing account of the assault and threats given to Mr McKenzie-McHarg, was given to extract a $500,000 loan from him. That account, after all, was quite at odds with the claims made in these proceedings and with Mr Chrysaffis' evidence of what had occurred and even with what was put before the Court in the criminal proceedings, given the result in those proceedings. 343 The account given by Mr Kakavas to Mr McKenzie-McHarg, must have been considerably embellished, given his resulting concerns. What he perceived was 'a desperate situation', which he thought might have escalated 'into something quite out of control'. He was frightened, having picked up his concerns from Mr Kakavas who he described as having been 'very frightened and very disturbed'. He described this is an 'incredible experience', which he did not wish to repeat. No-one else gave such an account, not even Mr Chrysaffis who witnessed it and was the go-between who obtained the acknowledgement which Mr Kakavas gave. 344 Mr McKenzie-McHarg's concerns were sufficient to cause him to loan Mr Kakavas $500,000, without even any documentation, an action which Mr McKenzie-McHarg described as being entirely out of character on his part. I am satisfied that the truth was that Mr Kakavas thought that Mr McCracken posed no real threat to him and was not in fear of him. Had that not been the case, Mr Kakavas would have accepted Mr McKenzie-McHarg's advice and gone to the police, long before he went some two years later. 345 Still, that the assault which occurred as it did, within hours of Mr Kakavas' wedding, delaying and disrupting it as it did, as Mr McCracken would have known given the role which he was to play in the wedding, may not be overlooked. In Fontin it was observed:

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There remains a question relating to damages. The learned trial judge found that, as a result of his injuries, the plaintiff had incurred expense for medical and hospital treatment amounting to 100 pounds. He assessed the damages for earnings lost up to the date of the trial and for reduced earning capacity in the future at 1,600 pounds and went on to say "in respect of his general pain and suffering and loss of amenities and enjoyment of life I find that a fair figure for compensatory damages would be a further 1,250 pounds". This, as his Honour said, would normally result in a verdict against Fontin for 2,850 pounds. He was of opinion, however, that since Fontin's action in throwing the glass had been provoked by the plaintiff, that fact might be taken into account in mitigation of damages. Accordingly he reduced the amount which he otherwise would have awarded to 2,000 pounds. In this respect, I think his Honour fell into error. In an action for assault, as in many other cases of tort, the conduct and motives of the parties may be taken into account either to aggravate or mitigate damages. In a proper case the damages recoverable are not limited to compensation for the loss sustained but may include exemplary or punitive damages as, for example, where the defendant has acted in a high-handed fashion or with malice. But the rule by which the defendant in an action in which exemplary damages are recoverable is entitled to show that the plaintiff's own conduct was responsible for the commission of the tortious act and to use this fact to mitigate damages has no application to damages awarded by way of compensation. It operates only to prevent the award of exemplary damages or to reduce the amount of such damages which, but for the provocation, would have been awarded. The subject is discussed at length in Chap. XI of Sedgwick on Damages 8th ed. In s. 383 of that work, the learned author says "Since the cause for inflicting exemplary damages is a malicious intent on the part of the defendant, and the amount is regulated according to the degree of wrong, all circumstances bearing on the defendant's intent may be shown to the jury, to be considered by them. All circumstances which negative the existence of malice, or show the malice to have been but little, may be shown to mitigate the damages". And, in s. 384, he says "The existence of provocation, though it may not be a defence, will prevent the allowance of exemplary damages". To the same effect is the statement in Halsbury's Laws of England, 3rd ed. vol. 11 p. 224 that "a plaintiff, however, who has provoked the defendant's conduct by his own, will not be entitled to exemplary damages". We were referred, however, to the case of Griggs v. Southside Hotel Ltd (1946) 4 DLR 73 which, it was submitted, was an authority for the proposition that compensatory damages may be reduced where the defendant's act giving rise to the cause of action is provoked by the plaintiff's conduct. The report does not make it clear whether or not the learned trial judge in that case reduced the amount of the compensatory damages which he would otherwise have awarded or merely treated the plaintiff's actions as justifying a refusal to grant exemplary damages. If he took the former course, I think, with respect, that he was wrong. (at p187)

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