THE DISPUTED EVIDENCE
18 The critical question was said to be the intention of Mr Callipari when he handed over the two certificates of title to Mr Stirn when he signed the Deed on 14 January 2005. That in turn depends upon the effect of a conversation between him and Mr Stirn earlier on that day.
19 I have heard the evidence of Mr Stirn and Mr Pappas as to their communications on that day by telephone, and in the presence of Mr Callipari. I have also heard the evidence of Mr Stirn and Mr Callipari as to their respective communications on that day. There is much in common on the whole of the evidence of those communications. Mr Stirn was extensively cross-examined. He did not diverge in any significant way from his evidence in chief. He explained that Mr Callipari, when he first contacted Mr Stirn, indicated that he had approved borrowing from an existing significant financial institution (and he produced an approval letter for that borrowing), but that the process of settling that finance had been taking too long and he did not have the time to wait for it to be completed. That was the context in which he sought a short-term loan.
20 In my view, the evidence of Mr Stirn and Mr Pappas, to the limited extent that it disagrees with the evidence of Mr Callipari, should be preferred to that of Mr Callipari. There are several reasons for that. The first is that I found Mr Stirn and Mr Pappas to be impressive witnesses, whose evidence was given in a straightforward way and without any attempt to gloss over matters or, alternatively, to emphasise matters which they might have been expected to have glossed over or alternatively highlighted were they trying to present a version of events favourable to their case. Secondly, their evidence is inherently both consistent and coherent. Thirdly, their evidence is inherently likely. That is, it is likely that a short term advance of substantial funds by a finance broker would have been the subject of security. Even at the apparently usurious interest rates which were agreed (I use that description even though the liquidator said he had seen short term loans at considerably higher interest rates than those expressed), it is unlikely that such a large amount of funds would have been advanced where the money was required urgently without an inquiry about the availability of security and the taking of it if available. I am fortified in that conclusion by Mr Pappas' evidence as to what he conveyed to those who provided the funds to Web Wealth, which were then advanced to Helimount, and by the fact that Mr Stirn was himself one of the providers of funds to Web Wealth for that purpose, as I regarded Mr Stirn as a straightforward witness whose business did not involve dealing in such short term commercial loans and who would have proceeded only if his contribution to the loan funds was secured.
21 The alternative suggestion that Mr Callipari provided the certificates of title to Mr Stirn to hold on his behalf only to secure a grant of longer term finance, which Mr Callipari planned to seek on behalf of Helimount, and which Mr Stirn suggested might be sought through another of his contacts Club Financial Services (David Garner) is an unlikely one. There is no apparent reason why a refinancing by Helimount in a month or two after the subject advance of funds could not also be secured by the mortgage of the same land upon settlement and repayment of Web Wealth's advance.
22 I do not think that the evidence of Mr Pappas or of Mr Stirn is less credible by reason of the correspondence between the solicitors for Web Wealth and the liquidator of Helimount upon which he was cross-examined. There are, in that correspondence, assertions on behalf of Web Wealth that it did not cause mortgages of the two titles to be prepared due to the legal costs, the stamp duty costs, and the practical difficulty of doing so. The correspondence on occasions does not positively assert an agreement to provide security. Mr Pappas' affidavit of 31 May 2007 was also laconic on the topic. Mr Pappas did not recall giving instructions to send each of those letters in their precise terms, but accepted they reflected the thrust of his instructions. Looked at in that light, in my view the letters do not provide any basis for doubting the reliability of his general evidence that no mortgages were registered because the loan was intended to be short term only, because no new lender would be prepared to advance funds secured by the two pieces of land without at least holding the titles, and having regard to the steps and costs involved in arranging such mortgages.
23 I note also that the various affidavits filed on behalf of Web Wealth in support of its application to wind up Helimount do not assert any security. Given their purpose, to satisfy the statutory requirements for a winding up order, the absence of a reference to the claimed security is not surprising. Nor do I think it is significant. Clearly, soon after the winding up, the claim of Web Wealth to be a secured creditor of Helimount was raised with its liquidator.
24 The letter from the solicitors for Web Wealth to Helimount of 28 November 2005 also does not refer to an agreement to provide security. In its terms and its temporal context, I do not think that is significant: that letter followed the discussion on 1 September 2005 referred to in [26] below, when efforts were being made to agree a figure which Web Wealth would accept from Helimount in final discharge of its debt including accrued interest. Also, preferring the evidence of Mr Stirn and Mr Pappas on this topic, I consider that Mr Callipari's evidence is inconsistent with Recital B in the Deed and does not lie comfortably with his preparedness to sign the Deed on about 14 January 2005 and to initial the change to Recital B subsequently on about 20 January 2005 without deleting the reference to the mortgage and the land in Recital B.
25 Mr Callipari's evidence-in-chief is contained in the several affidavits filed on his behalf. As noted above, he agreed that he gave the two certificates of title to Mr Stirn on about 14 January 2005, although he says he did so at their first rather than their second meeting on that day. I think that is unlikely, because (as I have found) Mr Stirn initially indicated only that he would make inquiries about a possible source of funds as he (Mr Stirn) did not generally provide funds of that nature. More importantly, he says in his first affidavit that, at the time the agreement with Web Wealth was reached to advance $630,000 to Helimount, Mr Stirn expressly said that the advance "would be for one or two months duration at most, and that he would procure an alternative arrangement, with interest at a commercial lending rate of 8% per annum". Mr Callipari claims that he accepted the Web Wealth loan in its terms on that express representation by Mr Stirn. He expressly describes Mr Stirn as the agent of Web Wealth at the time of that agreement. In his affidavit of 24 July 2007, Mr Callipari makes similar assertions. He adds that he told Mr Stirn he needed urgent temporary finance, that Mr Stirn asked whether security was offered to support the proposed loan of $600,000 (as noted above, it was subsequently increased to $630,000) and that Mr Callipari said he could provide two certificates of title to secure the loan if necessary. In a subsequent affidavit of 16 August 2007, Mr Callipari said that he told Mr Stirn "that I would leave the titles with him as a sign of goodwill and trust that I would go ahead with the long term loan" and that Mr Stirn agreed to accept them only on that basis.
26 I regard it as quite improbable that Mr Stirn made the representation that he would secure long term finance in the terms claimed by Mr Callipari. It was not the nature of Mr Stirn's business to do so. It would have been commercially asinine to have made such a representation on the limited information Mr Stirn had. There is an air of unreality about the claim that Mr Stirn insisted on a two month term for the Web Wealth loan. The reality, as Mr Callipari agreed in cross-examination, was that Helimount wanted a short term loan to tide it over until a more permanent arrangement was in place, and Mr Callipari had the confident expectation that it would be realised. He claimed in cross-examination, in the face of Mr Stirn asking for security for the proposed Web Wealth loan, that he offered the security in the terms set out above but that the matter was taken no further. That is quite improbable. His explanation for having signed the Deed of Agreement, and subsequently the amended page, which refer expressly to the security to be granted by the mortgage over the two titles was simply that he did not notice that part of the document. That, too, I find quite improbable. At no time has he asked for the return of the two titles until the winding up proceedings against Helimount were instituted. In particular, at no time during 2005, after it was clear that Mr Stirn had not arranged on Helimount's behalf the long term finance which it sought, did Mr Callipari ask for the two titles to be returned. He would have been expected to do so by about June 2005 if, as he now says, those titles were not held to secure the Web Wealth loan.