In Re Cummins (dec'd); Cummins v Thompson

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

JUDGMENT 1 HIS HONOUR: These proceedings relate principally to the ownership of an interest as one of two tenants in common in equal shares in the property at 62-64 Nuwarra Road, Moorebank, New South Wales, in Certificate of Title Volume 7917 Folio 225. The building there is a former squash court which was used by Hi-Rel Pty Ltd for its manufacturing and other operations. The registered proprietors are the plaintiff Richard Russell Hunt and Harry Barlow, each as proprietor of a half share. Mr Hunt and Mr Barlow purchased the property from the previous registered proprietor, Mr K.C. Linden, by a contract dated 15 September 1987 and completed the purchase on 13 November 1987; the transfer was registered on 12 January 1988. 2 Mr Harry Barlow died intestate on or about 20 July 1995. The defendant Mr Peter James Barlow is one of his sons, and he obtained letters of administration from this court on 30 January 1996. 3 The proceedings turn on issues of fact, the principal issue being whether the deceased did in fact agree to transfer his interest to the plaintiff in a written agreement dated 2 December 1994. The defendant denies that any such agreement was made, and through his counsel has suggested that the evidence of the agreement given by the plaintiff and Mr Kenneth Livingstone is fabricated evidence, that the events they give evidence of did not in truth ever happen, that the copy of a written agreement which they put forward is a forgery, and that the document was created after Mr Harry Barlow died. Although there are other issues, most of the material in evidence relates directly to the alleged agreement or to probabilities which bear on whether the agreement was made as alleged. 4 The plaintiff bears the onus of proof, on the balance of probabilities, that the agreement was made; the defendant does not bear any onus of proof. Suggestions by the defendant that there has been wrongful and criminal behaviour require careful consideration, but they do not alter the standard of proof, or the burden of proof, which remains on the plaintiff throughout. In Briginshaw v. Briginshaw (1938) 60 CLR 336 at 361 Dixon J stated the standard of proof thus: "The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found." 5 Where a claim is made against the estate of a deceased person and knowledge of the facts on which the claim is based is not available to those who represent the estate, judicial experience requires a careful approach to fact-finding, although there are no special legal rules relating to the burden or to the standard of proof. In Plunket v Bull (1915) 19 CLR 544 at 548-549 observations of Isaacs J show how such cases are scrutinised. Isaacs J said: "Then we come to the question how far the onus of proof which lay upon the plaintiff was satisfied. She had the burden of establishing the original creation of the indebtedness of the deceased to her, and undoubtedly it is established that in cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue. In the case of Lachmi Parshad v. Maharajah Narendro Kishore Singh Bahadur some observations were made by the Privy Council with reference to the sufficiency of proof. In that case their Lordships were not satisfied that the plaintiff had established a reasonably clear case. For instance, he had failed to bring forward evidence which he ought to have brought forward, and which was available. That was a material circumstance, and having regard also to some other circumstances of the case their Lordships thought that his appeal should fail. Lord Morris said: 'In an action brought to recover money against an executor, or, as in this case, the heir, of a deceased person, it has always been considered necessary to establish as reasonably clear a case as the facts will admit of, to guard against the danger of false claims being brought against a person who is dead and thus is not able to come forward and give an account for himself.'" 6 Other members of the High Court did not refer to this subject and the authorities cited by counsel (at 545) do not appear to relate to it. 7 There were also expressions of caution in Birmingham v. Renfrew (1937) 57 CLR 666, which related to mutual wills; Latham CJ referred to the need for care at 674 and Dixon J at 681 said: "Such an agreement can be established only by clear and satisfactory evidence." There is no legal requirement for corroborative evidence: see In Re Cummins (dec'd); Cummins v Thompson [1972] 1 Ch 62 at 68-69. See too Grundel v. The Registrar General (1990) 5 BPR 97-340 at 11,219 (McLelland J). These cases express the results of much judicial experience in fact-finding. 8 In dealing with the facts in Lachmi v Maharaja, (1891) LR 19 IA 9, to which Isaacs J referred, the Judicial Committee took a remarkably exacting approach and showed an expectation that all persons involved in the transaction in any way should be called. It would not always be appropriate to make such exacting requirements, but in the present case the plaintiff in fact called all persons allegedly involved in making the agreement who could be called, and reasonable limits have to be accepted to the expectation that the plaintiff will call witnesses who might be able to deal with corroborating circumstances. 9 Mr Hunt and Mr Harry Barlow formed Hi-Rel Pty Ltd in 1978. 5000 shares of $1 each were issued to each of them; no other shares have ever been issued. Each became a director; Mr Hunt still is. Mr Harry Barlow remained a director until his death. Except for disputed events which are said to have made Mr Peter Barlow a director there has never been any other director. Hi-Rel's business was to manufacture electrical and electronic components for use by manufacturers of hearing aids and other electronic equipment. At first Hi-Rel operated in rented premises in an industrial complex in Chipping Norton. From 1987, when the Moorebank property was acquired, Hi-Rel carried on its operations there, and so far as appears from evidence there was no lease or formal arrangement establishing the terms of occupation. The scale of operations declined, in March 1993 the last employees were terminated and since then there has been very little activity of manufacturing or otherwise in Hi-Rel's business; the only persons who could carry out any operations were the directors, and only Mr Hunt since Mr Harry Barlow died. 10 The agreement alleged by the plaintiff is in the form of a letter on Hi-Rel letterhead in the following terms: "2nd December 1994. Mr R. Hunt 64 Nuwarra Road MOOREBANK NSW 2170 Dear Dick I confirm discussions we had in the presence of Ken Livingstone. I wish to cease my activities with the Company and retire.

I am conscious that without interest, I owe you $55,000 for my house loan and $65,000 which you paid as my proportion for the business premises. I have no capacity to find this money and offer you my equity in the freehold and the Company as repayment of my debt. As Ken explained, it would be best if this occurred after the final accounts were struck as at 30th June 1995. I seek your acceptance to the offer I make. This offer is irrevocable and is made by me or on behalf of my executors, heirs and assigns if this be the case at the time of execution of the documents. Yours sincerely H.C. BARLOW I accept your offer. R. HUNT This letter was signed by Messrs Barlow and Hunt in my presence. K. LIVINGSTONE" 11 The agreement states as facts: · Mr Harry Barlow wished to cease his activities with Hi-Rel and retire. · Mr Harry Barlow owed Mr Hunt $55,000 for his house loan. · Mr Harry Barlow owed Mr Hunt $65,000 which Mr Hunt had paid as Mr Harry Barlow's proportion for the Moorebank premises. · Mr Harry Barlow had no capacity to pay Mr Hunt $120,000. An address to the probabilities makes it relevant to establish whether these really are facts. Evidence relating to the earlier dealings between Mr Hunt and Mr Barlow was very extensive. It is also relevant to consider whether there were grounds for Mr Livingstone to explain that it would be best to complete transfers after the final accounts were struck as at 30 June 1995, so as to consider whether it is probable that he gave that explanation. 12 To establish as reasonably clear a case as the facts admit of it was necessary for the plaintiff to call the evidence of every person now available who witnessed the agreement or was present on that occasion, to produce the agreement or prove what its terms were and to explain why the original was not produced, and to produce whatever evidence was available to corroborate facts stated in it. 13 It is not essential for the proof of the plaintiff's cause of action to prove the truth of the facts stated in the agreement, and the agreement could, in logic, be authentic even if some of the facts stated in it were not accurate, but evidence about those facts is potentially a source of corroboration, and the plaintiff is entitled to prove them so as to establish as reasonably clear a case as the facts will admit. 14 According to Mr Hunt's evidence the letter was prepared by Mr Livingstone after earlier discussions, was brought to the factory premises by Mr Livingstone and there signed by all three as appears on its face. There were difficulties and variations in Mr Hunt's evidence about the times of discussions preceding the events of 2 December 1994. If the document is authentic its terms establish that Mr Barlow did owe Mr Hunt money, and that the agreement was made for consideration. When 30 June 1995 had passed and the final accounts of the company for that year had been struck Mr Hunt would have been unqualifiedly entitled in equity to ownership of the premises and the shares. 15 According to the plaintiff's case, on the same occasion as the agreement was signed Mr Barlow signed a transfer to Mr Gordon Ian Hunt, the plaintiff's son, of one share in Hi-Rel for an expressed consideration of $1; this transfer was left undated at that time (although the date 30 June 1995 was later written in it) and has never been registered. 16 In giving his evidence Mr Hunt exhibited what I regard as a good demeanour. His evidence was emphatic and clear, he spoke about the facts which constitute his case with conviction and he gave every appearance of sincerity. He gave the strong impression of a sincere person who was badgered about details he did not always remember of transactions the main points of which he regarded as undoubted. His cross-examination was extremely lengthy and occupied about seven hours on three different sitting days, and was conducted by counsel with open hostility. A number of very confronting allegations were put to Mr Hunt by the defendant's counsel as was her duty, and he showed some signs of heightened feeling and impatience. Evidence took him to circumstances of his involvement in conflict with Mr Peter Barlow, and on this subject too he showed impatience. 17 In his conflict with Mr Peter Barlow, Mr Hunt behaved in ways which were ill-considered and suggest some loss of self-possession through rage, and some heat of conflict came through in his evidence. Overall, this was not adverse to my impression of his demeanour; he projected a strong air of his sense of right. 18 I should not let an impression based on demeanour dominate fact-finding; to do that would place the process of finding the facts under the control of impression and appearance to an unduly high degree, in a case where scrutiny of the plaintiff's evidence is appropriate, the defendant is in a poor position to adduce any positive material, and sources to which it is natural to look for confirmation do not furnish it. 19 Mr Livingstone gave evidence on affidavit and orally in support of the plaintiff's case. The plaintiff had a forensic need to call his evidence. In December 1994 Mr Livingstone practised as a chartered accountant, and over many years he gave advice and accounting services to Hi-Rel and its directors. He also handled moneys and investments on behalf of Mr Hunt and of Mr Barlow. Cross examination of Mr Livingstone and scrutiny of his accounting records in evidence were very extensive. 20 Mr Livingstone is not a witness in whose evidence confidence can be placed. He is now in prison under sentences for crimes of dishonesty and grave social irresponsibility. On 11 March 1999 in the District Court at Sydney he was convicted of being knowingly concerned in the importation of prohibited imports between about 1 September 1986 and 13 November 1986, and of giving false evidence to the Crime Commission between 3 February 1994 and 17 February 1994; he was sentenced to 8 years imprisonment on the first charge and 2 years to be served concurrently on the second. Those offences and his criminal conduct did not have any direct relation to the facts of this case. 21 Mr Livingstone's accounting records of transactions involving Mr Hunt and Mr Barlow on which he gave evidence are very irregular and unsatisfactory. They were not prepared according to ordinary professional standards, contain striking anomalies, and also contain records of deposits and other transactions in the names of Mr Hunt and Mr Barlow which on other evidence are very unlikely actually to be their transactions. Some transactions attributed to Mr Hunt and Mr Barlow which probably do not really relate to them are mixed up with others which do. 22 Mr Livingstone was at a considerable disadvantage as a witness, as he was cross-examined for some hours and on two widely separated sitting days. As he was in custody and escorted by prison warders he did not have as full an opportunity as an accountant would hope to have to collect, review and consider extensive documents relating to transactions over many years. One effect of the criminal investigations and proceedings, no doubt a small part of the whole but important for present purposes, is that the order of his accounts and his opportunity to search out and produce papers have been disrupted by investigations, searches and seizures, criminal proceedings and his imprisonment. Those of his records which were produced however were quite extensive and they showed that records which he made of the transactions of Mr Hunt and Mr Harry Barlow, and other transactions relating to them, were not made to professional standards. I do not regard them as reliable, and they do not have the air of due compilation and reliability which plays a part in the acceptance of business records as evidence of the truth. Under severe challenge he adhered to the substance of his evidence about the events of 2 December 1994. I have sought to make allowance for the difficulties and embarrassments of Mr Livingstone's position, but even so I found him an unimpressive witness. 23 The other person who according to the plaintiff's case was present on 2 December 1994 was the plaintiff's son, Mr Gordon Ian Hunt. He gave evidence that he attended at the factory premises in response to a telephone call. It was a working day and he spent the day driving a truck in the metropolitan area. During the working day he made the journey to the factory because, as he stated, he had been requested to sign a share transfer. The date he gave was 4 December 1994, which was a Sunday, and was not the day or date on the letter, nor was it consistent with his account of attending the factory during a working day. He had no actual knowledge of what date or day of the week on which the event he spoke of happened, except that it was a working day. His evidence is that he was given a share transfer to sign, that he did not read it but signed it, and that he did not take any other part in the events but then left. He does not claim to have seen or read the agreement, although he speaks of seeing a document on a letterhead, and at one time said that the transfer which he signed was on Hi-Rel letterhead. The transfer form is rather strange as it would transfer one share in Hi-Rel to Mr Gordon Hunt whereas the agreement related to the transfer of all Mr Harry Barlow's equity in Hi-Rel to the plaintiff, and Mr Barlow owned 5000 shares. 24 It would not be difficult to accept that a share was to be transferred to Mr Gordon Hunt as a nominee; he had no other possible part in the event, and in 1994 it would have been usual to ensure that there were at least two share holders on a company share register. However apart from what is written in the transfer there is no evidence of an arrangement for one share to be transferred to a nominee of the plaintiff. 25 Mr Gordon Hunt gave a strong impression of blunt sincerity, while not having much involvement in the events. The plaintiff's case required that Mr Gordon Hunt's evidence be called, but what he did say does not have force as corroboration of the making of the agreement on 2 December 1994. 26 According to the letter of 2 December 1994 Mr Barlow states "… I owe you $55,000 for my house loan …". Mr Hunt's evidence is to the effect that in August and September 1987 Mr Barlow borrowed from Mr Hunt sums of money to repay mortgage debts to the St George Building Society. Mr Hunt said he deposited eight cheques for the benefit of Mr Barlow to the credit of account No. 04-707-353 at the St George Building Society; these sums total $55,000 and were as follows: 12 August 1987, $9,000; 12 August 1987, $9,000; 13 August 1987, $9,000; 26 August 1987, $9,000; 26 August 1987, $9,000; 26 August 1987, $5,000; 16 September 1987, $1,500; 17 September 1987, $3,500. Mr Hunt produced a photocopy of a list of these cheques which he had compiled in 1987. Mr Hunt did not have and claimed that he was unable to produce any other records corroborating the fact that he had made these payments, such as records of any bank or financial institution on which he wrote the cheques or from which he paid the cheques, or any records of the St George Building Society. He gave evidence to the effect that he was unable to identify the accounts he wrote the cheques on as they were in various assumed names which he could not remember, and that he could no longer remember the financial institutions with which he maintained the accounts. As he gave no significant details of the transactions, no process of inquiry and confirmation could begin. 27 Mr Hunt could not give in evidence any clear or probable account of how he was able to accumulate $55,000 in the course of several years from the sources which he indicated, namely drawings from the company, wages and business expenses. In relation to his activities at that time and his income as shown in copies of his tax returns, this is an improbably high amount for him to accumulate. He was not able to give any recognisable explanation for his having at least two and perhaps a greater number of accounts in false names, and when the cross-examiner offered him the opportunity to explain his explanations were: "I was unable to accumulate sufficient funds, I found, in my own home account" and "it seemed a good idea at the time." 28 In 1987 Mr Harry Barlow did have a mortgage debt, which related to land he purchased at Bossley Park in January 1984 on which he later built a house funded by mortgage. The mortgage was not to St George Building Society but to New South Wales Building Society and was for much less than for the $55,000 amount mentioned, namely $25,000. The mortgage was not paid off in 1987 and a small debt on it still existed when he died in 1995. Mr Harry Barlow also, with his former wife, owned a parcel of unimproved land at St Georges Basin; this is unlikely to have been of much value. 29 There is nothing which could be a written acknowledgment by Mr Barlow of a loan of $55,000 or any loan made to him by Mr Hunt, unless it is the letter of 2 December 1994. What Mr Hunt said was his own list of payments totalling $55,000 (Annexure B to his affidavit of 21 July 1997) was a copy of a memorandum which his evidence seems to mean he made at about the time of the payments: later he made a handwritten copy and gave it to Mr Livingstone at Mr Livingstone's request, and kept the original; he claims that he later lost all of his own documents in a burglary. I understand that the copy produced in evidence is based on a document which he says he obtained from Mr Livingstone. Mr Livingstone denied that Mr Hunt had given Mr Livingstone a list or any records relating to advancing $55,000 to Mr Barlow (t155). The list does not mention the name either of Mr Hunt or of Mr Barlow, and does not say that the amounts deposited were loans or advances. The heading is "Account paid to

Made payable to A.C. No 04-707-353 St George" 30 In his affidavit of 16 April 1999, relatively late in preparation for the hearing, the plaintiff gave an account of the arrangements leading to these advances. He said that Mr Harry Barlow said to him to this effect: "I am in some difficulty with my mortgage. The interest rate is very high. I need some money to cool off the interest. Can you see your way clear to lending me some money?" He also says that Mr Harry Barlow said to him at a later point of the conversation, "Can you make the payee my St George Bank Mortgage Account" and gave him the mortgage account number. Mr Barlow requested that the cheques be in amounts of $9000 because he was concerned with new regulations affecting deposits greater than $10,000. 31 There is no evidence identifying whose account was account no. 04-707-353 at the St George Building Society, whether that account related to a mortgage or whether that account had any connection with Mr Harry Barlow. None of the properties which Mr Barlow is known to have had at the time was mortgaged to St George Building Society. A mortgage to St George Building Society over a property at Kincumber which was then owned by Mr Harry Barlow's former wife was discharged in September 1987, and it was suggested that this may be an explanation for Mr Harry Barlow's borrowings. There is no evidence which establishes any real connection. The suggestion is a speculation. 32 At about the time when the plaintiff claims that he advanced $55,000 to Mr Barlow in August and September 1987 Mrs Kathleen Mahoney, who had formerly been Mr Barlow's wife, obtained finance to pay off the balance of $59,900 which she had borrowed from the St George Building Society in December 1985. She regarded paying off that loan as bridging finance pending completion of her sale of the Kincumber property. In her understanding the bridging finance was provided by Mr Livingstone, whom she did not know and with whom she did not deal directly; she dealt with Mr Livingstone through Mr Barlow. (There followed some confusing transactions extending over some years between Mr Livingstone and Mrs Mahoney, which it is neither possible nor necessary to resolve). Mrs Mahoney's evidence does not tend to confirm that Mr Barlow had a need to pay or did pay any money to St George Building Society in September 1987. Her evidence seems to mean that she paid Mr Livingstone $120,000, that after some years and some difficulties Mr Livingstone paid her $60,000, and that these transactions were treated as in some way an acquittance of the bridging finance. It has not been established that Mr Barlow had a need for funds in the order of $55,000 in August and September 1987, for the purpose of paying off Mrs Mahoney's mortgage or for any purpose. 33 There is really no objective confirmation of the plaintiff's claim that there was an agreement for loan and that he made advances to Mr Harry Barlow by paying money into the St George Building Society. 34 The plaintiff's position is that the Certificate of Title, which records the interests of both himself and Mr Harry Barlow as tenants in common, was and is held by him as a security under an arrangement with Mr Harry Barlow. In an affidavit (21 July 1997 para 12) Mr Hunt said that prior to the settlement of the property loan (and that would refer to 1987), he said to Mr Harry Barlow, "I will take possession of the certificate of title to the Moorebank property as a form of security for the money you owe me" and Mr Barlow agreed. In November 1989, about two years after settlement, the solicitors who acted for them were given a written authority, signed by both of them, directing the solicitors to hand over the Certificate of Title, which was done accordingly. The written authority did not direct the solicitors to hand the Certificate of Title particularly to Mr Hunt, and did not refer to its being held as a security. Some years later Mr Hunt sent the Certificate of Title to Mr Livingstone for safekeeping, with a letter asserting that Mr Hunt held it as security (and that he had no other security). There was no objective confirmation of the plaintiff's claim that he had the agreement of Mr Harry Barlow to hold the Certificate of Title as a security. The circumstance that one of two co-owners held the Certificate of Title does not tend to confirm that it was held by way of security; that would be an ordinary event. 35 There is no document which bears out in any satisfactory way Mr Hunt's evidence to the effect that he deposited a further $130,000 with Mr Livingstone to be held in some way to back up or support an advance to Mr Hunt and Mr Barlow of the balance of purchase money for the Moorebank property. That arrangement would be strangely convoluted, because if Mr Hunt had enough money to pay for the Moorebank property a more direct arrangement would be for him to pay the purchase price, treat half the amount paid as a loan by Mr Hunt to Mr Harry Barlow and get Mr Barlow to acknowledge this by a mortgage, or in some other way which gave security over his half interest. The disadvantage of Mr Barlow knowing that Mr Hunt possessed that amount of money does not seem to justify the convolutions of the arrangement claimed. There is no deposit receipt, loan agreement or any like document in evidence. Mr Hunt's evidence was that he did not see Mr Livingtone's records and had no statements or records of the deposit from the Scott Family Trust, with whom the money was alleged to have been deposited, or from anyone else. 36 When explaining how he had raised $130,000 in 1987 Mr Hunt attributed the money to selling mining shares which he had bought in 1985 for $50,000 to $70,000 which came from severance pay in earlier employment and from Hi-Rel. At another point he gave a narration of share transactions which could be traced back much earlier. Mr Hunt could not name what companies he held shares in, or what stockbrokers he dealt with. 37 It is established in what I regard as a clear way that there was an advance of $130,000 in 1984 by some entity to Hi-Rel, and this fact has to be regarded when considering whether it is probable that there was another and different advance of $130,000 to Mr Hunt and Mr Barlow to purchase the Moorebank property. 38 The claim that there were two different transactions each involving $130,000 was supported by evidence of Mr Livingstone which referred to Annexure A to his affidavit, a copy of a ledger sheet Folio 99 which he says was "prepared by me for my own records". There are two ledger accounts on Folio 99, the first one headed "Dick Hunt". The entries open with the following under date 1985: Dept to SFT $130,000 Lent to Hi-Rel $130,000. 39 As explained by Mr Livingstone, according to my understanding although his explanation was not clear, this entry records a deposit by Mr Hunt, not in 1985 but earlier, of $130,000 to an account Mr Livingstone referred to as the Scott Family Trust, although it was no longer conducted in the interest of that trust, and then a loan out of that account to Hi-Rel. 40 The only other entry in this account is "1992 June 30 Harry & Dick advised taken 00 sales. Coy DR SFT $130,000 CR sales $130,000." This seems to mean that by 30 June 1992 Mr Hunt had received what was treated as repayment of his deposit with the Scott Family Trust by money taken out of the proceeds of Hi-Rel's sales. The entries cannot be understood. Whatever the entry is, it is not a ledger entry in accounts of the Scott Family Trust kept according to conventional double entry bookkeeping methods. I am unable to see that these entries record the discharge of the debt of $130,000 owed by Hi-Rel to the Scott Family Trust, being a discharge effected by Messrs Hunt and Barlow paying the Scott Family Trust $130,000 which they took out of the proceeds of Hi-Rel's sales. Mr Livingstone said (t137) to the effect that those were the events recorded; in my finding, the entries do not record those events. The transaction as narrated by Mr Livingstone is very improbable. The evidence of Mr Hunt says nothing to bear it out. 41 Reference to the advance to Messrs Hunt and Barlow to purchase the Moorebank property as being for $130,000 is anomalous because the full purchase price of the Moorebank property was $130,000 of which $13,000 was paid as a deposit by Hi-Rel and charged as $6,500 each to the loan accounts with the company of Mr Hunt and Mr Barlow. If the evidence relating to the cheque (Ex G) were accepted, that would bear out an advance of $119,897.21, and not of $130,000. There is a clear possibility that the transaction involving a loan of $130,000 by Ophix Finance to Messrs Hunt and Barlow, referred to in a letter of 1 July 1991 and subject to a Deed of Guarantee and loan agreement, was the borrowing which appears in Hi-Rel's accounts from 1984 onwards; this possibility has not been rebutted. The effect of Mr Livingstone's affidavit, his schedule and his explanation is not to establish any particular state of facts, but to make it doubtful whether his records should be relied on. 42 The second series of entries on Annexure A to Mr Livingstone's affidavit and their explanation in Annexure B are also extremely difficult to follow. Whatever else they show, they do not bear out that Mr Hunt made a deposit of or exceeding $130,000 to Mr Livingstone or some entity related to Mr Livingstone against which moneys were drawn. 43 Mr Livingstone produced what he said were copies of ledger sheets relating to moneys deposited by Mr Harry Barlow with Mr Scott: Annexures E, F, G and H to Mr Livingstone's affidavit. Annexures E and F appear to show that significant sums of money were held by Mr Scott to Mr Barlow's credit from 31 May 1988 to 31 January 1991. Annexure G appears to record debits against Mr Barlow of $96,000 apparently debited as of 13 September 1988 and treated as "B to B" (meaning back to back) with the account for which he was in credit, and then resolved on 31 January 1991 by offsetting $124,196 against Mr Barlow's credit in the other account, leaving him still with the significant credit of $47,431. It could be thought of as a difficulty for Mr Hunt's case if Mr Barlow actually had significant funds available to him during this period, but only if I had confidence in Mr Livingstone's records. What are apparently records of dealings with Mr Barlow are continued in the Blue Book (Ex J), no more than rough notes in an exercise book, in which I have no confidence. It is very unlikely that the Blue Book is an original record, or was ever relied on for any serious business purpose. 44 Annexure A, whether or not supplemented by Mr Livingstone's explanation in Ex K, does not bear out the proposition that the purchase of the Moorebank property was financed with an advance of $130,000 by Ophix Finance, or by any other entity. Nor do the ledger entries provide corroboration that Mr Hunt was the source of the deposits against which moneys were drawn to settle the purchase. Both those propositions depend on acceptance of oral evidence of Mr Hunt and Mr Livingstone. I find it remarkable that there is no corroboration in written records of these two propositions; in view of the amounts involved, it is highly likely that records would exist, and the fact that none are produced in evidence is a difficulty for accepting the evidence. 45 I referred earlier to the ledger sheet (Annexure G) which appears to show that Mr Barlow borrowed $96,000 on 13 September 1988. The opening entry "Advance to friend" does nothing to assist credibility. Mr Livingstone refers to this ledger sheet in his affidavit (para 12) and says that the borrowing was repaid on 3 April 1989. However Annexure E shows a deposit of $96,000 on 3 April 1989 being credited to the other ledger sheet headed "Harry Barlow", while the borrowing of $96,000 on Annexure G continued to incur interest until 31 January 1991 when the total of the debt and interest of $124,196 was set off against the other account. I do not find these entries comprehensible. It is not consistent with the pattern of Mr Barlow's affairs suggested by the plaintiff's case that Mr Barlow should have had varying but significant sums of money held for him in the account under Mr Livingstone's control for some years, and there is no place in that pattern for Mr Barlow to have needed to borrow $96,000 in September 1988 or having been able to repay it in April 1989; let alone his being prepared to be charged interest on it for several years after he had repaid it. 46 Mr Livingstone maintained another ledger, referred to as the Chinese Ledger, which shows that as at 30 September 1987 Hi-Rel had $144,414.06 to its credit in the Scott & Slattery Clearing Account. If this were the whole position it could not be understood why those moneys were not used for the purchase of the Moorebank premises, either by Hi-Rel itself becoming the purchaser or by Hi-Rel advancing the moneys to its own principals. Mr Livingstone maintained that this is not the whole position, that Hi-Rel had another account with the Scott Family Trust which was recorded in a different account book, now missing, and was in debit in a way which should be offset against the amount shown to credit. Mr Livingstone's evidence that there was another ledger book was challenged. It cannot be said that it has been clearly proved that there was no other ledger book. However his evidence that there are two offsetting accounts but that they are not recorded in the same ledger book is anomalous and difficult to accept. It is doubly anomalous because it is difficult to see why there would be two offsetting accounts, and it is difficult to see why, if there were, they would be in different ledger books. 47 It remains obscure who it is said lent Mr Hunt and Mr Barlow money with which to complete the purchase of the Moorebank property: whether it was the Scott Family Trust (and it is obscure what entity is represented by that name) or whether it was Ophix Finance. There may be some confirmation in the letter of 1 July 1991 from Mr Scott to Mr Hunt, a copy of which is Annexure C to Mr Hunt's affidavit of 21 July 1997. The letter is headed "Re Loan by Ophix Finance to Barlow and Hunt" and in it Mr Scott purportedly states "… I have transferred an amount of $130,000 of money you have on account into the loan account of Barlow and Hunt." According to the terms of the letter a Deed of Guarantee and Loan Agreement were then returned; there is however nothing in evidence which could establish the dates or contents of those documents, or identify the guarantor. The letter was prepared by Mr Livingstone, and the defendant disputed its authenticity. 48 According to accounts of Hi-Rel a loan by Ophix Finance to Hi-Rel of $130,000 existed from 1984, well before the alleged borrowing for the Moorebank purchase. The loan is reflected in Hi-Rel's 1985 accounts, and continued until the 1991 accounts to appear as a debt of Hi-Rel to Ophix of $130,000. In the 1992 accounts there is no such liability. It seems anomalous and unlikely that that loan should have already existed before the mortgage transaction, yet that, as he claims, Mr Hunt should have made a deposit of $130,000 in 1987 to back another advance of the same amount. The terms of the letter of 1 July 1991 show a loan of $130,000 being paid by setting it off against $130,000 held on account on behalf of Mr Hunt. I regard it as very unlikely that this refers to a debt arising from an advance in 1987 for the Moorebank purchase. There is no objective support for the proposition that Mr Harry Barlow joined in borrowing $130,000 for the Moorebank purchase, and to my mind it is very unlikely that a transaction of that size would be entered into with no written acknowledgment or record of Mr Barlow's liability. I do not find it possible to accept as credible Mr Hunt's explanation in terms of that being the nature of the relationship between them in view of the size of the obligation. 49 The cheque (Ex G), drawn to cash on 10 November 1987 on a bank account called "J Scott and J Slattery Clearing Account" for $125,697.61 could very well, according to notes on the back of it, have been used to obtain bank cheques totalling $119,889.21 for the settlement of the Moorebank purchase, and to pay bank fees of $8.40, but does nothing to confirm that there was an advance or loan of the total of those amounts by any identifiable entity, or by way of loan to Messrs Hunt and Barlow. If it did show that, it would show an advance of $119,897.61, not of $130,000. 50 If there was a loan by some entity to Mr Hunt and Mr Barlow to complete the Moorebank purchase, the proposition that Mr Barlow was indebted to Mr Hunt would have to be supported by proving in a satisfactory way that Mr Hunt paid the debt or bore the burden of its payment in circumstances which created a debt by Mr Barlow to him. The letter of 1 July 1991 does not give any real support to such a proposition because its contents are consistent with its dealing with the borrowing attributed in the company's accounts to Hi-Rel as borrower. 51 Evidence which dealt with Mr Hunt's interest and dealings in a house property in Davidson was injurious to his credibility. Rent from that house was treated as income of Mr Hunt in his income tax returns for some years. Mr Hunt's evidence was to the effect that this property was bought on trust for him in 1989 for $400,000, that the trustees were Mr Livingstone's son and daughter-in-law, that there was no trust deed, and that he sold the property to the trustees for $400,000, in about 1998, and received the sale price through Mr Livingstone. Mr Hunt said that he raised $400,000 from "the remains of my share sales" or partly from the sales of shares; he did not give any manner of detail about such shares or sales. I take this with Mr Hunt's explanations of raising the $55,000 which he says he was able to advance to Mr Barlow; these explanations were difficult to accept, appear to be not always consistent, and included, at least at one point, attributing part of the $55,000 to share sales. I also have regard to his explanation how he raised $130,000 which he says be deposited with Mr Livingstone. Mr Hunt had recurring difficulties in explaining how he was able to raise significant sums of money, and in explaining the strange nature of his transactions. 52 The evidence relating to the form of share transfer to Mr Gordon Hunt presents anomalies. Although Mr Gordon Hunt's evidence was obviously not correct in all details, it is probably true in a broad way that, as he narrates, he was called to the Moorebank premises and signed a form of share transfer as transferee. However those events and the share transfer itself have no force as confirmation of the plaintiff's claims. The share transfer was not completed with a date on the occasion when it was signed, and it is not altogether clear that it was completed with any other details such as the parties' names when Mr Gordon Hunt signed it. The transfer is for one share but Mr Barlow had 5000 shares. There are anomalies about what was done with the form of transfer; the original is not forthcoming, but it does seem clear that nothing was done to stamp or register the transfer. At some time the date 30 June 1995, which is certainly not the date of the transfer, was written into it. Mr Livingstone's evidence is that he realised in January 1995 that the share transfer referred to the wrong number of shares, but he did not take any action; he left everything until 30 June. Mr Livingstone's evidence was that he put the date 30 June 1995 on the share transfer after Mr Barlow had died. If one follows the terms of the letter of 2 December 1994 the transfer was not to be required until completion which was to happen after preparation of the 1994/1995 accounts. Mr Gordon Hunt's evidence does not in any way confirm that the agreement in the letter of 2 December 1994 was made. 53 Nothing was done to carry forward the project of transferring Mr Barlow's interest in the land to Mr Hunt. The explanation offered was to the effect that Mr Livingstone advised that the next step should be taken when the accounts for the year to 30 June 1995 were available, as they would be required for valuation of the shares for stamp duty purposes. This is a possible explanation but I do not find it a convincing explanation for leaving valuable rights without any real protection, and without taking any steps to establish legal title to them. 54 In some instances Mr Hunt could not furnish confirmation for his assertions and explanations for reasons which should be regarded as unfortunate. It could well be that significant documents were lost as a result of a burglary at the factory premises in mid-December 1994 and disposal of documents by Mr Harry Barlow while cleaning up after the burglary. I do not regard that as an altogether clear and satisfactory explanation for the absence of significant documents, because if they were or were possibly significant it is hard to understand why Mr Hunt and his sister, who was present while Mr Barlow was cleaning up papers, allowed many documents to be thrown away without examining them. 55 There were some aspects of Mr Hunt's admitted behaviour which should disturb confidence in his credibility. One is his use of assumed names to conduct bank accounts; this is not an indication of reliability. Another is his behaviour in the conflict with the defendant, Mr Peter Barlow. Each accused the other of acts of harassment in relation to the occupation of the premises at Moorebank; both denied the allegations, but I was left with a strong impression that there may well be some substance in the complaints of both of them. Mr Hunt's evidence included acknowledgment that he burst in on Mr Peter Barlow in his office with a camera and took photographs of him engaged in compromising sexual activity, and his evidence showed that Mr Hunt contemplated and intended using the availability of the photographs to influence Mr Peter Barlow's behaviour. No doubt the influence Mr Hunt says he contemplated was an influence for the better. Taking the photographs is one of the things which Mr Hunt explained by saying that it seemed a good idea at the time, an expression which acknowledges that it was not a good idea. It does appear to me that Mr Hunt was contemplating using the photographs for blackmail, perhaps only in a mild form, and that this behaviour is adverse to his credit and credibility. 56 The cross-examiner challenged all the facts which are pillars of Mr Hunt's case. In the course of making these challenges various alternative interpretations of the events were put forward which cannot be regarded as established. One was that the money used as purchase money for the Moorebank property was money owned by Mr Hunt and Mr Barlow and held in the Scott & Slattery Clearing Account. Another was that the copy of the letter of 2 December 1994 and the copy of the share transfer had been concocted by using cut and paste methods to put a copy of Mr Barlow's signature on a form of the document and then making photocopies of the result. Although these suggestions were not established, or made to seem probable, it must always be remembered that the defendant does not bear an onus of proof on the plaintiff's claim. 57 Mr Livingstone was in a sea of difficulties throughout his cross examination in explaining his accounts and records. In her closing submissions the defendant's counsel described Mr Livingstone's accounts as ludicrous and this expression, although severe, was appropriate. Taken in whole, the records cannot be understood. They do not have any of the authority usually attributed to business records kept in a business-like fashion. It is not possible to be confident that transactions and dealings attributed to Mr Hunt or to Mr Barlow in these records in truth have any reference to those persons. The knowledge that Mr Livingstone has recently been convicted of giving false evidence hangs over all consideration of his evidence. 58 The plaintiff's counsel contended that it should be found that Mr Barlow was in need of funds at all material times, meaning 1987 to 1994. In my view it is not objectively clear that this is correct, and an inference that this was the position would depend, first, on the plaintiff's case generally being accepted. 59 The facts relating to the plaintiff's claim cannot be decided on the basis of certainty. I see a clear possibility that the plaintiff's claim is correct; it has not been demonstrated in a convincing way that it is false. However that is not the direction from which findings of facts should be approached. When I ask myself, reminding myself of the plaintiff's need to establish a reasonably clear case, whether I feel an actual persuasion of the existence of the facts on which the claim is based, my conclusion is that I do not. They could well be true, but the plaintiff has not carried my mind to the conclusion that they probably are. There are aspects of Mr Hunt's evidence and of his behaviour which significantly qualify his credibility. Whenever I look for corroboration it is not available or not satisfactory. The evidence is not clear and satisfactory, and the plaintiff has not established a reasonably clear case. 60 The defendant produced in evidence a copy of what purported to be minutes of an extraordinary general meeting of the members of Hi-Rel Pty Ltd held on 26 March 1996. The minute records that Mr Peter Barlow and the plaintiff were present and also that Helen Margaret Barlow was present. The meeting records a number of resolutions; a resolution agreeing to short notice of the meeting, a resolution electing Mr Peter Barlow to be Chairman of the meeting, a resolution declaring that Mr Peter Barlow was entitled to the rights formerly held by Mr Harry Barlow, a resolution approving transfer of his shares, and a resolution appointing Mr Peter Barlow as a director. The records of resolutions are entirely false; no such resolutions were passed and the plaintiff who was the only person in a position to cast a vote did not vote for or support any of them. The events of 26 March 1996 did not make Mr Peter Barlow a director; they did not confer on him any entitlement to represent the company, as he purported to do thereafter in a number of ways, although without the authorisation of the company or of the plaintiff. Mr Peter Barlow, who is an accountant, cannot possibly have believed that the purported resolutions were effective. He referred to the provisions of Table A, meaning Table A in the fourth schedule to the Companies Act 1961, and counsel referred to Arts 24 and 25; these articles do not contain any possible justification for his behaviour. Although it was very difficult to obtain responsive answers from him, in substance his evidence confirms that he always knew that there were no such resolutions as the minute purports to record. His production of this false document and his reliance on it establish that he is a person of poor credibility, but in the result his credibility is of little significance in disposing of the case. 61 The claims in the Amended Statement of Claim under heading A relate to the Moorebank property. Claims under A1 seek to establish that the plaintiff is the equitable owner of the interest of which Mr Barlow is the registered proprietor, with specific performance of the agreement to transfer it. Claim A2 seeks removal of the defendant's caveat. Claim A3 is a claim for judgment for possession and related relief arising out of the defendant's occupation. Claim A4 claims a charge over the land in respect of an alleged debt owing by the deceased and his estate; the debt has not been proved and there is no basis for the charge. These claims fail. Claim A5 is a claim for consequential orders including orders under s.66G of the (NSW) Conveyancing Act 1919. In my opinion the plaintiff should recover an order under s.66G for appointment of trustees for sale, and distribution of the proceeds on the basis that the plaintiff and the defendant as administrator are each entitled to one half. 62 Claims under heading B relate to Hi-Rel Pty Ltd. Claims under B1 relate to ownership of the 5000 shares held by the deceased. The plaintiff and Mr Gordon Hunt have no interest in those shares and these claims fail. Claims under heading B2 relate to directorships in the company. The defendant's claims and purported acts as director are quite ineffectual and these claims should succeed. 63 I have not yet considered questions of costs. 64 The orders are:

(1) Declare that the defendant has at no time been validly appointed a director of Hi-Rel Pty Ltd.

(2) Order that the defendant himself, his servants and agents be restrained from acting as or holding himself out as being entitled to act as a director of Hi-Rel Pty Ltd unless and until after the date of this order the defendant is duly appointed a director of that company.

(3) Reserve further consideration of the appointment of trustees for sale.

(4) Save as aforesaid, dismiss the plaintiff's claims.

Last Modified: 09/25/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.