Dickinson v Crisp

TEXTS CITED: Cross On Evidence 7th Aust ed (2004) Restitution Law in Australia, 1st ed (1995)

PARTIES: Stephen Dickinson (Plaintiff) David Crisp (Defendant)

COUNSEL: Mr N Beaumont (for the plaintiff) Mr D Alexander (for the defendant)

SOLICITORS: Mr P Chamberlain (for the plaintiff) Mr P Karp (for the defendant)

In August 2006, Stephen Dickinson was employed by Darryl Stretton to manage Stretton's caravan park on the south coast of New South Wales. Stretton was friendly with David Crisp, a director of Damac Holdings Pty Ltd. Crisp/Damac owned a South Coast caravan park/resort that had approval for significant redevelopment. Unbeknownst to Dickinson, Stretton was interested in purchasing the resort. Although he hoped to make a huge profit from redeveloping the resort, in July/August 2006 Crisp was under financial pressure. Stretton proposed that Dickinson make a short-term loan of $100,000 to his "mate", Crisp.

On 23 August 2006, Dickinson paid $100,000 into the account of Crisp. He was not repaid.

Dickinson sues Crisp in contract. Alternatively, he claims restitution. Crisp denies that he contracted with Dickinson. He admits receipt of $100,000 and that he used the money to develop the resort, but claims that it would be unjust to order restitution because, in February 2007, he paid $101,000 to Stretton.

Dickinson made important concessions against interest, inter alia in relation to a telephone conversation with Crisp in September 2007. There was no significant attack on his credit. I formed the view that he was an honest and completely reliable witness.

Dickinson said that, on 14 August 2006, he received a telephone call from a man who identified himself as Crisp. The caller said that he was "looking for a loan of $100,000 for six months with a $30,000 cash payment at the end of the loan" as he wanted to "get some cabins ordered" for his resort. The caller offered to send a valuation report by fax.

On 18 August, Dickinson received a faxed valuation report addressed to Crisp, stating that the resort was valued at $6.4 M. On the same day, Stretton's personal assistant told Dickinson that he should collect documents from the office of solicitors. Dickinson knew that the solicitors acted for Stretton. He collected the documents. They comprised an unsigned loan agreement, a statutory declaration and Annexure B to a mortgage.

On 21 August 2006, Dickinson received a second call from the person who had identified himself as Crisp. The caller said that Stretton was prepared to sign a guarantee. Dickinson requested signed documents, Stretton's guarantee and Crisp's account details.

On 23 August, Dickinson received by fax Crisp's account details, a guarantee signed by Stretton, an unsigned statutory declaration by Crisp, a document entitled "Annexure B referred to in Mortgage dated 22 August 2006" (apparently referring to a mortgage between Dickinson and Crisp/Damac) and an unsigned loan agreement between Dickinson and Crisp/Damac. The written loan agreement fixed interest at 0%. The mortgage document referred to interest of 10% from 22 February 2007. Dickinson signed the agreement and deposited $100,000 into the nominated bank account.

Dickinson expected to receive an agreement signed by Crisp, but it did not materialise. He spoke to Stretton, who undertook to contact Crisp. Stretton later told Dickinson that Crisp was away. Dickinson's other attempts to contact Crisp were fruitless.

Stretton was under financial pressure. In October 2006, Dickinson left Stretton's employment.

In September 2007, Dickinson contacted Crisp by telephone and demanded repayment. Crisp stated that he had paid $100,000 to Stretton and that Dickinson may have been mislead by Stretton. He offered to speak to Stretton. Dickinson heard nothing more.

Crisp denied speaking or faxing documents to Dickinson.

Crisp said that, in the context of negotiations for the purchase of the resort by Stretton, Stretton offered to lend him $100,000 interest free for six months as it was "in (his) interests as a purchaser to see the property completed". Stretton said that he would forward legal documents, but he did not do so.

In late January, Stretton requested repayment of the loan and asked for a further $1000 "to cover some legal fees I've got". On 2 February 2007, Crisp paid $101,000 to Stretton. Negotiations for sale of the resort continued until mid-2007, when Stretton announced his impending bankruptcy and Crisp severed the friendship.

(i) Did Crisp contract with Dickinson? The answer to this question depends upon whether it was Crisp who sent the loan agreement to Dickinson. (ii) Was there a collateral oral agreement to pay $30,000? (iii) Does Crisp have a defence to the claim for restitution?

Crisp was a very uncomfortable witness. In my view, he was not forthright. He sought to downplay the level of his indebtedness as at August 2006. I attach little weight to his denials of contact with Dickinson.

Based on circumstantial evidence and application of the rule in Jones v Dunkel (1959) 101 CLR 298, I am well satisfied on the balance of probabilities that the person who made the August 2006 telephone calls and sent the loan agreement was Crisp or someone acting on behalf of Crisp.

In August 2006, Crisp was in desperate need of funds. He admitted that his credit card debt was $140-150,000. Annexure A to his affidavit refers to a credit card debt of up to $350,000. He owed up to $450,000 to "private lenders", i.e. relatives and friends. He needed cash to continue the redevelopment (para 6 of his affidavit).

Crisp did need a loan of $100,000 for about 6 months. On his own evidence, he accepted and used the money. He obtained other "private loans" for similar sums. It was not until January 2007 (five months after receiving the $100,000), that he secured some institutional finance.

The August 2006 caller must have had access to Crisp's personal account details, as he provided them to Dickinson. Dickinson was familiar with Stretton's voice and the caller was not Stretton.

The header on the documents faxed to Dickinson suggests that, on the two occasions in question, the documents were sent from the same location. Crisp tendered evidence that his mobile telephone was at a different location on each occasion. However, the telephone was a company phone, it was by nature mobile and, even if it was in Crisp's possession, that would not preclude another person forwarding the documents at Crisp's direction.

The loan agreement received by Dickinson was in the same terms as a loan agreement that Crisp admits having provided to Stretton. I infer that it came from Crisp, Stretton or someone acting in conjunction with one or both men.

Crisp gave evidence that he gave the loan agreement to Stretton, but there was no evidence that he had given the valuation to Stretton and the purchase negotiations suggest that he had not done so (Stretton proposed an option to purchase for $12M, but the valuation was only $6.4M). I infer that the valuation was transmitted by or on behalf of Crisp.

Contemporaneous negotiations between Stretton and Crisp were documented on email, but there is no email or other documentary reference to an interest-free six-month loan of $100,000 from Stretton to Crisp. Rather, in an email dated 12 August 2006, Stretton suggested a 12-month loan of $2.5M at 8.4% interest.

Crisp said that his computer "crashed" (impliedly destroying possible evidence of the interest-free 6-month loan from Stretton). That is unlikely, as other emails concerning contemporaneous business arrangements with Stretton survived on another computer. Coincidentally, the surviving emails are helpful to Crisp's case as they suggest that Stretton was a financially irresponsible developer whom Crisp ultimately characterised as lacking sincerity and good faith.

The amount "repaid" to Stretton was not $100,000 but $101,000. It is bizarre that Stretton would request an additional $1000 from a man to whom he was negotiating to pay $12-20M. I infer the payment of $101,000 was connected to another dealing between Crisp and Stretton.

On Crisp's bank statement, the $100,000 deposit was noted as "DICKINSON S J Stretton/Dickinson". Crisp did not explain how a deposit in those terms was consistent with the alleged loan from Stretton. There is no evidence that he queried the deposit. He did not plead that the deposit was a transfer by direction from Stretton, nor did he adduce oral or documentary evidence to that effect.

In support of the proposition that Crisp could not provide a satisfactory explanation for his failure to query the deposit, Dickinson is entitled to rely on the rule in Jones v Dunkel (1959) 101 CLR 298. In Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 419, Handley JA quoted with approval a decision of the Appellate Division of the Supreme Court of New York in Milliman v Rochester Ry Co 3 App Div 109; 39 NYS 274 (1896) to the effect that an unfavourable inference may be drawn when a party fails to interrogate a friendly witness who is so situated as to be presumed to know vital facts. See also Cross On Evidence, 7th Aust ed (2004), 44, [1215].

Following discussions, the loan agreement was transmitted by or on behalf of Crisp. Dickinson signed it. Pursuant to the agreement, Dickinson paid the money and Crisp accepted it. On an objective analysis, the parties reached finality in negotiating the terms of their bargain when Dickinson deposited the money, signifying his agreement with the terms proposed by Crisp. Although the written loan agreement was never signed by Crisp, he is bound by its terms: Empirnall Holdings Pty Ltd v Machon Paul Partners Pty Ltd (1988) 14 NSWLR 523.

In the context that the written loan agreement fixes interest at 0%, Dickinson contended that there was a collateral oral agreement for the payment of $30,000.

Contractual terms are to be determined by words and conduct, not beliefs and intentions: Equuscorp Pty Ltd v Glengallen Investments Pty Ltd Pty Ltd v [2004] HCA 55. If the words in a written contract are unambiguous, then the court must give effect to them, notwithstanding that the result may appear unreasonable or the court suspects that the parties intended something different: Peppers Hotel Management Pty Limited v Hotel Capital Partners Limited [2004] NSWCA 114 per McColl JA at [69].

From Dickinson's perspective, the written loan agreement lacks commercial sense. However, the terms of the written agreement are clear. Clause 16 provides that the written agreement is the whole agreement between the parties and "supersedes" all oral and written communications.

In any event, on 14 August 2006, the caller said that he was "looking for" a loan of $100,000 with a cash payment of $30,000 at the end of the loan. The reference to $30,000 was part of the negotiations that preceded the written loan agreement.

The whole of the agreement is contained in the written loan agreement. There was no collateral agreement to pay $30,000 to Dickinson.

As I find for Dickinson on the contract claim, it is not necessary to consider the claim in restitution, but I will do so.

There is no dispute that, if Dickinson did not pay the money pursuant to a contract, then he did so in the mistaken belief that there was contract, and that Crisp is prima facie liable to make restitution: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376.

It is a defence to such a claim that the payee has adversely changed his or her position in reliance on the payment such that it would be unjust to require repayment: David Securities, 385. Crisp argues that, in reliance on the loan provided to him, he used the funds to further develop the resort and made repayment to Stretton.

38. First, Crisp must show that he acted differently and to his detriment on the faith of receipt: David Securities, 385; Restitution Law in Australia, 1st ed (1995), 845-7, [2414- 2417]. He acted neither differently nor to his detriment. He used the funds for his benefit, applying them to the redevelopment.

39. Second, the defence examines the payee's conduct following receipt, not at a later time: David Securities, 385. Consequently, Crisp's later payment to Stretton is irrelevant.

40. Third, the defence is only available to a payee who acts in good faith, in the absence of notice of the mistake: Restitution Law in Australia, 1st ed (1995), 847, [2418]. The deposit note on Crisp's bank statement put him on notice that the money came from Dickinson.

Verdict 41. There will be a verdict for Dickinson and judgment in the sum of $117,950.82 ($100,000 plus 10% interest from 23 February 2007).

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