These proceedings were commenced by a statement of claim filed on 5 October 2021 which pleads, amongst other things, that the plaintiff was placed into liquidation on 23 March 2021 and that Michael Gregory Jones was appointed as a liquidator. Given that Mr Jones has filed an affidavit in the proceedings I proceed on the basis that the commencement and conduct of the proceedings is with his consent.
The statement of claim further pleads that the books and records of the plaintiff demonstrated that, as of 30 June 2021, the defendant owed a total of $1,152,578.00 arising from a director's loan, and that he was called on to repay that loan within 14 days but has failed to do so.
Paragraph 2 of the defence did not admit the assertion (in paragraph 4 of the statement of claim) of a director's loan totalling $1,152,578.00, and pleaded that:
1. the financial statements of the plaintiff for the year ended 30 June 2021 had been prepared under the instructions of the liquidator;
2. the financial statements were not personally signed by the defendant; and
3. although the defendant had applied a "DocuSign" signature to the financial statements on or about 14 June 2021, he did so at a time when he believed that the financial statements were in draft and that in any event, the application of the DocuSign signature occurred after the winding up of the plaintiff had commenced, and thus at a time when the defendant had no authority to approve or sign the financial statements of the plaintiff.
Against that background, an amended notice of motion has been filed in the proceedings. The primary relief is sought in that motion is an order that pursuant to r 17.7 of the Uniform Civil Procedure Rules 2005 (NSW) (the rules), the Court enter judgment on the admissions of the plaintiff in a sum of $1,152,578.00. Alternative relief is sought in the form of an order for summary judgment pursuant to r 13.1 of the rules. Interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) is also sought, along with orders for costs. In support of the motion, the plaintiff prepared a Court Book which was admitted without objection and marked as exhibit A on the hearing.
International Money Management Pty Limited (in liq) v Anderson [2022] NSWSC 550 | Case summary | Zoe
The defendant has appeared before me today on his own behalf, his solicitors having previously withdrawn. The transcript of the proceedings will demonstrate that the defendant was given an opportunity to advance any arguments that he wished to advance in opposition to the orders sought by the plaintiff. It would be fair to say that the defendant raised no substantive dispute to the assertion that the director's loan was in the sum stipulated by the plaintiff, and that it had not been repaid. He made a number of observations about the business which had been operated by the plaintiff, in the context of advancing reasons why the business failed. The transcript will demonstrate that I endeavoured to indicate to the defendant that those matters were largely extraneous to the issue that I was being asked to determine.
Notwithstanding the absence of any substantive opposition, it remains necessary for me to be satisfied that the principal relief which has been sought is appropriately granted in the exercise of my discretion. In that regard, r 17.7 of the rules which is in the following terms:
17.7 Judgment on admissions
(1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions.
(2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined.
Included in the Court book is Mr Jones' affidavit of 21 December 2021. Mr Jones is the joint liquidator of the plaintiff. He attached to his affidavit a large volume of documentation, including the accounts of the plaintiff. The affidavit establishes (inter alia) the following facts.
The plaintiff was placed into administration on 14 December 2020 and the defendant was its sole director. In the course of investigations it became apparent that there were deficiencies in the books and records of the plaintiff, as a consequence of which the defendant was asked, and agreed, to prepare a set of accounts.
The defendant engaged an accountant, Mr Coady, to prepare the accounts, which evidenced a loan to the defendant totally $1,152,578.01. Those accounts were sent to the defendant for his perusal and signature. Appearing at page 99 of the Court Book is a document headed "Director's declaration" which is in (inter alia) the following terms:
The Director of the company declare (sic) that the financial statements and notes present fairly the company's financial position for the period 1 July 2012 to 30 June 2021 and its performance for the period 1 July 2012 to 30 June 2021. This declaration is made in accordance with a resolution of the Board of Directors.
The declaration is dated 12 June 2021. An electronic signature bearing the name of the defendant appears on that document. The accounts which are the subject of that declaration record a total loan to the defendant of $1,152,578.00. My attention has also been drawn to what has been described as an audit trail appearing at page 100 of the Court Book setting out the chronology of events leading to the defendant's signature.
In short, the plaintiff's case is those accounts:
1. showed a loan to the defendant in the sum to which I have referred;
2. were submitted to the defendant for his perusal and signature; and
3. were signed by the defendant.
It is submitted that in those circumstances, the signature of the defendant accompanying the declaration to which I referred a moment ago amounts to an admission that the monies were identified as a director's loan. There is no dispute on the material before me that those monies have not been re-paid.
Whilst the power of the Court to enter judgment on the basis of admissions is discretionary, it seems to me that in the circumstances I have outlined there is no reason why such discretion should not be exercised in favour of granting the primary relief sought. However, it is appropriate, given the nature of the defence which has been filed by the defendant, to make the following further observations.
Firstly, as a general proposition, none of the matters pleaded in the defence constitute a defence to the claim which has been made.
Secondly, the assertion that the statements were not personally signed by the defendant simply cannot be made out in light of the evidence to which I have referred.
Thirdly, the defendant's assertion that he believed that the statements were in draft is entirely at odds with the terms of the declaration which he signed.
Fourthly, to the extent that a specific objection was taken by the defendant to the fact that the declaration was electronically, as opposed to personally, signed, that mode of signature is, as the plaintiff's solicitor has point out in written submissions, expressly permitted by the provisions of the Electronic Transactions Act 2000 (NSW). I am satisfied in all of those circumstances that the defendant's electronic signature to which I have referred, and the accompanying declaration, amount to an unequivocal admission that the monies are owing to the plaintiff. I am mindful of the observations of Barrett JA in Moon v Mun [2013] NSWCA 217 as to the discretionary nature of the relief sought but for the reasons I have already stated, the defendant's admission of indebtedness is, in the circumstances, unequivocal.
For those reasons, I make the following orders:
1. Judgment is entered against the defendant pursuant to rule 17.7 of the Uniform Civil Procedure Rules 2005 (NSW) in the sum of $1,152,578.00.
2. I order that interest be payable on that sum pursuant to section 100 of the Civil Procedure Act 2005 (NSW), such interest to date from 30 June 2021.
3. I further order that the defendant pay the plaintiff's costs of the proceedings, as agreed or assessed.
[2]
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Decision last updated: 13 May 2022
Parties
Applicant/Plaintiff:
International Money Management Pty Limited (in liq)