Kure v He

PARAMETERS OF DISPUTE

1. The parties are at issue on a number of points, some of which overlap.
2. First, there are questions about onus of proof.
3. Secondly, there is a dispute between the parties about the operation of the Limitation Act 1969 NSW and, in relation to the plaintiff's claims for equitable compensation, analogous equitable principles and general equitable principles governing laches.
4. Thirdly, there are questions about the ambit of the pleadings that define, and limit, the plaintiff's claims for relief.
5. Fourthly, there are questions about the credit worthiness of the evidence given, principally, by the plaintiff and the defendant personally. Those questions are a product of vastly different competing narratives about the factual matrix of the parties' dispute. They focus particular attention on evidence of the plaintiff about the terms upon which he alleges that monies were lent by him to the defendant, and on the defendant's evidence about the manner in which she managed the plaintiff's finances in Australia in circumstances in which he resided overseas and only visited Australia intermittently.

ONUS OF PROOF ON THE PLAINTIFF'S CLAIMS FOR RELIEF

1. Questions about who bears the onus of proof are important to the outcome of these proceedings because: (a) contested events occurred sufficiently long ago to warrant caution as to the reliability of oral evidence about them; (b) contemporaneous documentation bearing upon those events is limited and itself contested; (c) banking records, which might have been expected to cast light on the events, and sequelae, are patchy in their availability; and (d) each party's evidence is largely uncorroborated.
2. The ultimate onus rests on the plaintiff to prove his case; but, if he proves that money was paid to, or received by, the defendant in circumstances in which she came under an obligation to repay it, or to account for it to the plaintiff, the onus shifts to the extent that she bears the onus of proving that she has repaid, or accounted for, the money.
3. A useful summary of the law, in the context of a common law claim to remuneration (a case analogous to the plaintiff's claims in debt) is found in the judgment of the Court of Appeal in Coshott v Sakic (1998) 44 NSWLR 667 where Spigelman CJ (with the concurrence of Mason P and Handley JA) reviewed seminal authorities of the High Court of Australia in the following terms (at 671B-672D): "In the course of reaching the conclusion that matters of onus were not susceptible to determination in accordance with a single principle or rule, Wigmore [said in Evidence in Trials at Common Law, at paragraph 3486]: 'It is sometimes said that it is upon the party to whose case the fact is essential. This is correct enough, but it merely advances the inquiry one step; you must then ask whether there is any general principle which determines to what party's case a fact is essential.' The submissions of counsel for the appellant in the present case [a solicitor seeking to enforce a retainer agreement against a client] essentially came down to a matter of characterisation. Counsel submitted that it was a matter for the client to establish that there was a 'special arrangement', namely, that a solicitor would be remunerated from the proceeds of a successful action. The contrary proposition is that the solicitor had to establish that he was entitled to remuneration and reimbursement upon performance of services. The 'issue', to use [terminology in Phipson on Evidence, 14th ed], was either: 'What are the terms of the retainer?', for which the solicitor bears the onus, or alternatively, 'Was there a special arrangement as to remuneration?', for which the client bears the onus. There is a useful analogy in the authorities which determine which party bears the onus of proof that an advance of money was a loan not a gift. In Australia, the burden of proving the fact that an advance of money was by way of loan, rather than by way of gift, is on the plaintiff. In Heydon v Perpetual Executors Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111 at 113, the defendant, who alleged that money advanced was a gift, was held not to bear the onus. This case is to be contrasted with the High Court's decision in Young v Queensland Trustees Ltd (1956) 99 CLR 560. The issue in that case was not the characterisation of the arrangement between the parties, because it was conceded that the original payment to the defendant was by way of loan. The issue was who bore the onus of proving, as the defendant alleged, that the money had been repaid. The High Court said (at 569-570): 'The law was and is that, speaking generally, the defendant must allege and prove payment by way of discharge as a defence to an action of indebtedness in respect of an executed consideration.' Heydon has been consistently applied in Australia: see Joaquin v Hall [1976] VR 788 at 789; Jenkins v Wynen [1992] 1 Qd R 40 at 43-44; Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 138 FLR 118 at 132; Public Trustee as Administrator of the Estate of Pere Grljusich v Grljusich (Supreme Court of Western Australia, 17 January 1996, unreported). A different approach has been taken in England and New Zealand: see Seldon v Davidson [1968] 1 WLR 1083; [1968] 2 All ER 755, an ex tempore judgment, and Re Matthews [1993] 2 NZLR 91 at 94. The divergence turns on characterisation. In Seldon v Davidson, the English Court of Appeal appeared to treat the matter as one of 'confession and avoidance' and not one of 'denial of an essential ingredient in the cause of action': Joaquin v Hall (at 789), per Jenkinson J; see Seldon v Davidson (at 1085, (arguendo) 1088 and 1089-1090). This terminology is virtually identical to that of Walsh JA in Currie v Dempsey [(1967) 69 SR (NSW) 116 at 125; 85 WN (Pt 2) (NSW) 460 at 468; [1967] 2 NSWR 532 at 539]. I will, of course, follow the Australian authorities, which are in any event more persuasive. There is a reasonable analogy with the issue before the Court. In the present case it is not appropriate to characterise the issue as 'Was there a special arrangement?''. Rather, what the respondent [the client] alleged was that certain events were a pre-condition to the payment of reasonable fees and those events had not occurred. It may have been that, without this assertion, the Court would readily infer that payment was to be made upon performance. However, the onus of establishing the contract upon which the appellant [the solicitor] sued, remained throughout on the appellant. In my opinion, the onus the appellant assumed of establishing the terms and conditions on which payment was to be made, required him to prove all the terms of his retainer including identification of the performance for which the payment was to be remuneration. This was a matter which the appellant had to establish and on which accordingly, he bore the onus of proof. It was not a matter which it is appropriate to characterise as a 'special arrangement' which had to be established by way of 'confession and avoidance'. His Honour Justice Blanch [the primary judge] correctly concluded that the appellant bore the onus of establishing the terms of his retainer. His Honour held that he failed to discharge that onus. By this conclusion, I understand his Honour to mean that he was not satisfied that it was a term of the appellant's retainer that he would be entitled to remuneration upon performance of services or to reimbursement upon the incurring of disbursements. …"
4. The plaintiff bears the onus of proving the character, and terms, of the transactions with the defendant that he alleges were loans and, if that onus is discharged (either by evidence or admission), the defendant bears the onus of proving any repayment she claims to have made.
5. A similar outcome governs the parties' respective cases on the plaintiff's allegation that the defendant, said to be a fiduciary, failed to account for monies of the plaintiff alleged to have been received by the defendant in that capacity. The plaintiff bears the onus of proving the defendant's receipt of money as a constructive trustee of misappropriated funds or otherwise in a fiduciary capacity and the defendant bears the onus of proving that she repaid, or accounted for, any such money.

The Defendant's Pleading

1. By her Defence the defendant pleads that the plaintiff's claims are "barred" by provisions of the Limitation Act 1969 NSW without express regard to the operation of the Act as effecting an extinguishment of a cause of action rather than merely a bar to its enforcement.
2. The Defence makes no reference to section 63 or section 64 of the Act, which respectively provide for "extinguishment" of a cause of action in debt or on an account on a liability at law to account.
3. Section 68A of the Act requires, in substance, that a defendant must plead a Limitation Act defence in order to obtain the benefit of the Act. It requires, in particular, that "a party to … proceedings shall not have the benefit in [the] proceedings of any extinction of [a] right or title unless, as part of the proceedings, the party has pleaded or otherwise appropriately claimed in accordance with the procedures of the [Court] that the right or title has been … extinguished [under the Act]".
4. The defendant's Defence does not, in terms, allege that the plaintiff's "causes of action" have been "extinguished"; but the proceedings have been conducted on the basis that the defendant is entitled to claim the benefit of the Act.
5. Accordingly, I proceed on the basis that the defendant's allegation of a "bar" to the plaintiff's claims for relief is sufficient to enable the defendant to rely upon the Act as an answer to the plaintiff's claims.

The Alleged Loans

1. The defendant contends, in substance, that the plaintiff's entitlements to claim repayment of loans (if his claims are otherwise made out) were extinguished by operation of sections 14 and 63 of the Act, six years after the dates upon which the loans were allegedly, respectively made. The plaintiff's response to that is an allegation that each loan was not simply repayable "on demand" (in which case, it is common ground, they would have been extinguished by the Act) but expressly repayable "only if and when demanded" and, in the case of the first alleged loan, "on two months' notice". Some elaboration is required.
2. Each of the three alleged loans was transacted orally. None was the subject of a written agreement. Nevertheless, the second and third of the alleged loans were each the subject of a written acknowledgement prepared by the defendant. The second alleged loan of $312,000 was the subject of an acknowledgement dated 25 March 2009. The third alleged loan of $159,738.47 was the subject of an acknowledgement dated 1 May 2009. Both documents expressed the purpose of the loans to be to assist Italasia Pty Ltd, a company through which the defendant conducted a commercial partnership with an Italian family.
3. In the first version of his statement of claim (filed on 17 March 2017) all three alleged loans were said to have been repayable by the defendant (and her corporate vehicle, Italasia Pty Ltd) "on demand".
4. At the time the current proceedings were commenced, Italasia Pty Ltd had been deregistered for about four years, as a consequence of which the plaintiff applied to the Court in separate proceedings for an order that its registration be reinstated. That application was dismissed by Brereton J on 2 June 2017 (for reasons published as In the matter of Italasia Pty Ltd [2017] NSWSC 811) because (as established in Ogilvie v Adams [1981] VR 1041 at 1043, following Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566) the limitation period on a cause of action in debt for recovery of monies lent "on demand" commences to run on the date upon which the loan was made, without any need for a demand. His Honour refused to reinstate the company because, on the case then pleaded against the company in these proceedings, it was bound to fail by operation of sections 14 and 63 of the Limitation Act 1969 NSW.
5. In the second version of the plaintiff's statement of claim (filed on 1 April 2019) he appears to have abandoned his claim to recover the first, disputed loan and to have alleged that the second and third loans were "repayable [by the defendant] only if and when demanded by the plaintiff".
6. In the third and final version of the plaintiff's statement of claim (filed on 25 February 2020) the plaintiff reinstated his claim to recover the first, disputed loan and alleged that the loans were "repayable [by the defendant] only if and when demanded by the plaintiff and in the case of the [first, disputed loan] two months after receipt of that demand".
7. Neither party to the present proceedings disputes the correctness of the analysis set forth by Brereton J in In the matter of Italasia Pty Ltd [2017] NSWSC 811 at paragraphs [14]-[18] of his judgment, here reproduced (omitting footnotes): "[14] In Ogilvie v Adams, Fullagar J held that when money is advanced on terms that it is to be repayable on demand, then the cause of action for recovery accrues on the date of the advance without the need for any demand. In this respect, his Honour was following the authority of the High Court of Australia in Young v Queensland Trustees Ltd. His Honour said (at 1043): [T]he common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor's money and this is whether the creditor brought an action of debt or an action in indebitatus assumpsit. Therefore, if A lends money to B then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words, clearly and consistent with that situation. The courts have long since settled it that a mere statement or agreement that the money is repayable on demand (or request or at call), is not sufficient to contract out of that situation where all that is known is the terms of the contract is that A has paid money to B by way of loan. The lender's cause of action still arises instanter on the receipt of money by the borrower, so that the lender's course of action becomes statute barred at the expiry of six years after receipt of the money. [15] In Young v Queensland Trustees Limited, the High Court said (at 566): Speaking of a promissory note payable on demand, Parke B. in Norton v. Ellam said: "It is the same as the case of money lent payable upon request, with interest, where no demand is necessary before bringing the action. There is no obligation in law to give any notice at all; if you choose to make it part of the contract that notice shall be given, you may do so. The debt which constitutes the cause of action arises instantly on the loan. Where money is lent, simply, it is not denied that the statute begins to run from the time of lending. [16] Ogilvie v Adams has been followed by the Queensland Court of Appeal in Haller v Ayre, by Young J in Drinkwater v Caddyrack Pty Ltd (No 3), and by Ward J (as her Honour the Chief Judge then was) in Chidiac v Maatouk. [17] In order for a special term of a loan contract to prevent the cause of action from arising instantly on the loan being made, there needs to be something from which the Court can see that the parties, had made provision inconsistent with the ordinary position. In Fischer v Nemeske Pty Ltd, Stevenson J was able to do so where there were words in the charge that provided that moneys were payable "without the necessity for any demand or notice" in certain circumstances, and that such words had the consequence that in other circumstances it could be inferred that demand was necessary. [18] In the present case, there is nothing in the pleading that would support any such special condition in the relevant loan contracts. The pleading does no more than plead that the loan was one payable on demand, which brings it within the ordinary rule and not the exception. Nor does the evidence, so far as it goes, provide any basis for supposing that there was such a condition. The documents referred to in particulars B and C - which evidence the second and third loans - refer to the loan amount, the purpose or application of the loan, and the interest payable (including the rate), but are silent as to the duration of the loan or any requirement that there be a demand before it would be repayable. It is, I suppose, theoretically possible that oral evidence might be adduced of an oral term to that effect, but there is nothing in the particulars so far provided that would support one; and it would be surprising if that were so in light of the matters that are covered in the written receipts."
8. The plaintiff no longer alleges that any of the three alleged loans was repayable simply "on demand". Each of the loans is now alleged to have been repayable "only if and when demanded by the plaintiff". The first of the alleged loans is alleged to have been repayable not only "if and when demanded" but also only "two months after [the defendant's] receipt of [a] demand" for repayment".
9. In fact, the case presented by the plaintiff would, if accepted, justify a finding that all three of the alleged loans were repayable "only if and when demanded, on two months' notice".
10. In my opinion, a finding that any one or more of the alleged loans was repayable "only if and when demanded by the plaintiff" (without any requirement for two months' notice) would be sufficient to displace what Brereton J describes as "the ordinary position" defined in Ogilvie v Adams by reference to Young v Queensland Trustees Ltd. A contractual provision for repayment "only if and when demanded" represents a contracting out of the "situation where all … that is known of the terms of the contract is that A has paid money to B by way of loan".
11. A contract for the provision of a loan repayable "only if and when demanded" by the lender might fairly be regarded as unusual, and something approaching the character of a conditional gift, but the question of whether any or all of the alleged loans were the subject of such a contract falls to be determined in the context of a Chinese cultural connection between the parties' two families. The plaintiff saw his loans to the defendant as acts of generosity in favour of a close family friend with whom he hoped to do further business, perhaps laying foundations for a move to Australia.
12. Whether the plaintiff's causes of action in debt for the recovery of the alleged loans have been extinguished by operation of sections 14 and 63 of the Limitation Act depends upon a finding of fact as to the terms of the agreement between the parties in respect of each loan. The plaintiff bears the onus of establishing his allegation that each loan was repayable "only if and when demanded" by him and, in the case of the first alleged loan, "two months after [the defendant's] receipt of [a] demand".

The Alleged Misappropriation

1. In her submissions, the defendant contends that any entitlements the plaintiff might otherwise have to compensation in respect of the alleged misappropriations are "time-barred" (directly or by analogy) by section 15 of the Act or unenforceable by reason of equitable principles governing laches (Sze Tu v Lowe (2014) 89 NSWLR 317 at [349]-[415]). In her defence, she relied upon sections 14 and 23 of the Limitation Act without mention of section 15.
2. The plaintiff responds to this defence by a contention that his claims are made in respect of "undisclosed misappropriations" discovered by him only during the course of these proceedings. They are, he contends, permitted, inter alia, by the operation of section 55 of the Act, a contention which the defendant disputes on the ground that neither the plaintiff's reliance on section 55, nor any independent allegation of fraud or fraudulent concealment, was pleaded by the plaintiff.
3. The defendant's reference to section 15 is an unnecessary distraction. That section relates to "[an] action on a cause of action for an account founded on a liability at law to account". The plaintiff grounds his claim for compensation on purely equitable principles. In any event, section 15 provides for a limitation period of six years, just as section 14 does, and no submission has been made by the plaintiff that, upon consideration of section 23 of the Limitation Act, a limitation period of something other than six years is open to be "applied by analogy".
4. The plaintiff has not pleaded, or otherwise contended, that section 47 of the Limitation Act has a role to play. Section 47(1)(c) and (e) might be thought to provide for a limitation period of 12 years from the date of an alleged misappropriation that (as discussed in Black v S Freedman and Company (1910) 12 CLR 105 and Heperu Pty Ltd v Bell Pty (2009) 76 NSWLR 230) might attract imposition of a constructive trust.
5. Although the plaintiff has not pleaded reliance upon either section 47 or section 55 of the Limitation Act he has presented a case that includes as an element a feature found in both section 47 and section 55. He contends that his cause of action did not commence to run until he first discovered the alleged misappropriations or could, with reasonable diligence, have discovered them.
6. Although the plaintiff did not plead either section 47 or section 55, his case on section 55 was laid out in his opening written submissions dated 23 March 2021 (MFI P1), paragraph 35 of which read as follows: "With respect to the misappropriated funds claims, the plaintiff only discovered that those claims existed after these proceedings were commenced and documents were subpoenaed. There are claims based upon the undisclosed misappropriation of funds by the defendant, and hence are covered by s 55 of the Limitation Act. There appears to be no case mounted that the plaintiff's lack of diligence delayed discovery and that he would have discovered the claims any earlier if he had acted with reasonable diligence. It follows that, by virtue of s 55 of the Limitation Act, the limitation period does not begin to run in relation to these claims until after the present proceedings were commenced and hence … the plaintiff is not out of time."
7. The facts upon which the plaintiff relies in support of his contention that no "cause of action" on the alleged misappropriations arose until, after the commencement of these proceedings, he discovered the "fact" of misappropriations are pleaded in his further amended statement of claim filed 25 February 2020 at paragraphs 3K and 9B. In substance, the plaintiff expressly pleads that he only became aware of the alleged misappropriation (being transactions effected without his knowledge or consent) after the commencement of the proceedings when banking records were subpoenaed in the proceedings. Each of the transactions is expressly alleged to have been effected by the defendant in breach of a fiduciary duty owed to the plaintiff, giving rise to a failure to account.
8. The plaintiff's pleadings do not expressly, in terms, allege "fraud" or "fraudulent concealment" but they do, in substance, allege a concealment involving a breach of fiduciary obligations, equitable fraud.

PLEADING DISPUTES

1. The defendant took particular objection to any case advanced by the plaintiff on two particular points.

The Limitation Act 1969 NSW

1. A curious feature of these proceedings is that, in presentation of their respective cases, neither party adhered precisely to their pleadings in relation to that part of the case that concerns the operation of the Limitation Act 1969 NSW.
2. Although the plaintiff's case was conducted on the basis that each of the three loans he allegedly made to the defendant were conditioned upon repayment on two months' notice, paragraph 5(c) of the Further Amended Statement of Claim filed on 7 February 2020 pleads that condition as applying only to the first of the three loans.
3. Although the defendant's case was conducted on the basis that the defendant relied upon each of section 15 and section 14 of the Limitation Act 1969 NSW in relation to the monies alleged to have been misappropriated by the defendant, paragraph 17 of the Defence filed on 12 March 2020 makes no reference to section 15.
4. The plaintiff relied in his final submissions (as he did in his opening submissions) on section 55 of the Act in support of an allegation that (because the defendant "fraudulently concealed" her misappropriations) no limitation period commenced to run against the plaintiff in respect of them because they were not discovered by him until, after the commencement of these proceedings, in the course of interlocutory discovery procedures. The defendant for her part objects to any reliance upon section 55 because, she contends, although the plaintiff pleaded a breach of fiduciary obligations against her, he did not plead "fraudulent concealment".
5. In oral submissions on 11 June 2021, senior counsel for the defendant objected to the plaintiff's reliance on section 55 because (as confirmed by Sze Tu v Lowe (2014) 89 NSWLR 317 at [341]) an allegation of fraud such as made in an allegation of "fraudulent concealment" referrable to section 55 must be specifically pleaded and particularised. In his oral submissions in reply, senior counsel for the plaintiff simply relied upon his written submissions, later supplemented by further written submissions provided when I sought clarification of the parties' competing submissions.
6. Upon an assumption that the alleged misappropriations attract the operation of sections 14 and 23 of the Limitation Act (as alleged in the defendant's defence) so that the plaintiff's claim to equitable compensation attracts, by analogy, a six year limitation period (as the parties have assumed), an analogy with the Limitation Act is complete if and only if predicated upon a determination that time commenced to run against the plaintiff on his misappropriation claims before commencement of the proceedings only if he could with reasonable diligence have discovered the "fact" of the alleged misappropriations before commencement of the proceedings.
7. Equitable principles include an acceptance that a "fraudulent concealment" of an entitlement to equitable relief may postpone the running of time.
8. The following extracts from Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (LexisNexis, Butterworths, Australia, 5th edition, 2015), with editorial adaptation, make the point:

"Concealed Fraud [36-095] When the Court of Chancery developed the doctrine of applying Statutes of Limitation by way of analogy, it refused to do so in cases of 'concealed fraud'. Being a court of conscience, it applied the statutes by analogy only when it accorded with conscience to do so. This is what Sir Charles Pepys MR meant when he said in Trevelyan v Charter (1835) 4 LJ (NS) Ch 209 at 214: 'Time is no bar, except [if] the party, having full information of his injuries and rights, allows time to elapse without seeking relief. [36-100] Two Categories There were two main classes of case to which the doctrine applied: (a) when the action was one alleging fraud, or when fraud was an element in the cause of action, in which case time did not run until the discovery of the fraud; and (b) where the cause of action was one which did not involve fraud, but its existence was fraudulently concealed by the defendant, in which case time did not begin to run until the concealment was discovered and the cause of action ascertained. The former category includes not only actions involving the common law notion of deceit, and equitable doctrines such as the purchase by an agent for sale of property without the knowledge of the principal, but also the commission of underground trespasses, whether or not active measures are taken to prevent detection. The latter category comprises such causes of action as wrongful entry upon land, unauthorised investments by company directors, and drawings by a partner in excess of that partner's share of profits - in all of which cases, active concealment by the defendant must be shown. … [36-105] Absence of Concealment but Ignorance by the Plaintiff The Courts have been astute not to find 'knowledge' in a plaintiff sufficient to disentitle reliance on the doctrine of 'concealed fraud'. But what if: (a) there is admitted ignorance on the part of the plaintiff; and (b) no attempt at concealment on the part of the defendant? The answer would seem to be that in such circumstances, no case of 'concealed fraud' can be made out, and that the limitation period applies. …"

1. The answer to the problem of "absence of concealment, but ignorance by the plaintiff" was supported by reference to the judgment of Brightman J in Bartlett v Barclays Bank Trust Co Limited (No 1) [1980] Ch 515 at 537 where his Honour applied the formulation of equitable doctrine of Lord Denning MR in Applegate v Moss [1971] 1 QB 406 at 413 and King v Victor Parsons & Co [1973] 1 WLR 29 at 34. Brightman J held that while 'fraud' in the present context does not mean deceit, it does envisage conduct which is unconscionable as between the parties bearing in mind their relationship. The focus for attention is on whether the conduct of the defendant has been such as to hide from the plaintiff the existence of his right of action in such circumstances that it would be inequitable to allow the defendant to rely on the lapse of time as a bar to the plaintiff's claim.
2. The correctness of that approach is confirmed by P.W. Young, C. Croft and M.L. Smith, On Equity (Lawbook Co, Sydney, 2009) at paragraphs [5.110] and [17.330].
3. In the present proceedings, the plaintiff alleges that the defendant effected transactions (the alleged misappropriations) without his knowledge or approval in breach of a fiduciary duty and a continuing obligation to account, withholding from him banking records that would have disclosed unauthorised transactions. Implicit in that is an allegation that it would be inequitable to apply against the plaintiff a six year limitation period, measured from the time of an alleged misappropriation, where the plaintiff was ignorant of the misappropriation and the defendant was guilty of a continuing breach of fiduciary duty.
4. The parties must be held to their pleadings. Their dispute falls to be determined within the framework of sections 14 and 23 of the Limitation Act, including equitable principles governing a "concealed fraud". It is, accordingly, open to the plaintiff to contend that any time bar upon an "action" by him to recover equitable compensation for unauthorised transactions was postponed until after the commencement of these proceedings. The substance of this case was plainly stated in opening submissions, albeit (but not only) by reference to section 55.

Alleged Repayment by Term Deposits in the Plaintiff's Name

1. Another point of contention about the pleadings (and implicitly about the evidence before the Court) relates to what was required of the defendant in proof of repayment of monies received from the plaintiff and repayable to him. The defendant contends that it is sufficient if she proves that she deposited money into a bank term deposit in the name of the plaintiff without a need to prove that the term deposit was known to the plaintiff or that the proceeds of the term deposit were actually received by him. For his part, he contends that proof of a term deposit established by the defendant in his name falls short of proof of repayment to him if unaccompanied by evidence that the proceeds of the term deposit were paid to, or received by, him.
2. On the evidence, this dispute arises (particularly, in relation to the defendant's contention that the alleged loans were repaid via term deposits) because there is (contested) evidence that supports a finding that funds supplied by the plaintiff to the defendant were managed by her in term deposits in circumstances in which the evidence is silent, or equivocal, about whether, when and how the proceeds of the term deposits actually found their way to the plaintiff.
3. On the pleadings, the dispute arises because: 1. In his Further Amended Statement of Claim (filed on 25 February 2020) the plaintiff alleged, inter alia, that the defendant had "failed to repay the pleaded loans" and "failed to account" to him for the allegedly misappropriated funds. 2. In her Defence (filed on 12 March 2020) to that statement of claim, the defendant denied the plaintiff's allegations of non-payment and failure to account, and alleged affirmatively that the alleged loan monies were repaid "to the plaintiff including by the [defendant] using her own monies to fund or assist in funding the fixed term deposits opened with the [Commonwealth Bank of Australia] in the plaintiff's name". 3. The plaintiff did not file a Reply expressly taking issue with the defendant's allegation of repayment by term deposits.
4. In my opinion, the plaintiff was not obliged to file a Reply to the defendant's allegation that monies repayable by the defendant were repaid via term deposits established by the defendant in his name. In the absence of a Reply, the parties joined issue on the defendant's Defence. The plaintiff's allegation that the defendant had failed to repay monies (and failed to account for monies) to him stood without qualification. The defendant's establishment of a term deposit under her control in the name of the plaintiff could not, of itself, constitute a repayment.
5. This question, and my view on it, were squarely raised before senior counsel for the defendant completed his cross examination of the plaintiff and before the defendant, or any other witness, had been called to give evidence. No unfairness attaches to my reading of the pleadings as opposed to the reading for which the defendant contends.
6. The defendant formally took her pleading point at the end of the evidence, but declined an opportunity to adduce further evidence to demonstrate that the proceeds of term deposits were paid to, or received by, the plaintiff. For his part, the plaintiff declined an opportunity at that time to file a Reply. Both parties were content to abide a determination by the Court as to the correctness or otherwise of their respective positions.
7. The defendant's final submissions nevertheless contended that in March 2011 the plaintiff in fact received the proceeds of term deposits created by her, in his name, as a means of her repayment of any money due to him.

COMPETING NARATIVES

1. The case of each party depends critically upon acceptance of the evidence given by them personally and the evidence of forensic accountants charged with examination of banking records for the purpose of tracing the flow of money between the parties.
2. Subject to one exception, the lay evidence adduced in the proceedings was limited to the evidence of the plaintiff and the defendant personally. The exception is that the brother of the defendant gave (contested) evidence about an informal meeting between the parties and himself, in 2014, when the plaintiff alleges (and the defendant denies) that the defendant admitted her indebtedness to him and asked for further time to make repayments. The brother's evidence, coloured by a desire to assist his sister and on that account unreliable, is not determinative of any issue in the proceedings; at most, he denied the plaintiff's evidence that the defendant made an admission of indebtedness in 2014.
3. Only the broad parameters of the case are agreed. The parties agree that they were childhood friends in China, where their birth families lived as neighbours; that they lost contact when the defendant migrated to Australia and the plaintiff, later, to Japan; that they resumed contact when the plaintiff, and his parents, visited Australia in 2006; that between about January 2007 and March 2011 the defendant (not to the exclusion of the plaintiff) managed on behalf of the plaintiff money he transferred to Australia for investment; that, for the purpose of managing the plaintiff's money, the defendant was nominated by the plaintiff as an authorised signatory on bank accounts operated by her in his name with Citibank and the Commonwealth Bank of Australia, with authority to open accounts in his name; that, in the course of managing the plaintiff's money, the defendant opened, and rolled over, term deposits in the plaintiff's name; that the plaintiff could not speak, write or read English, but could deal with a Chinese speaking member on the staff of Citibank and the Campsie Branch of the Commonwealth Bank; that the defendant, by reason of her business activities over two decades in Australia, was experienced in dealing with day-to-day business with Australian banks; that, on or about 25 January 2011 (in the case of Citibank) and between 28-30 March 2011 (in the case of the Commonwealth Bank), the defendant's authority to operate bank accounts in the name of the plaintiff was terminated; and that most business dealings between the parties were entirely informal.
4. Within these broad parameters, the parties' competing narratives are starkly different.
5. The plaintiff says that he was encouraged to invest money in Australia by the defendant; that he did so, in part, to take advantage of interest rates in Australia that were higher than those available to him in Japan and, in part, to establish a financial presence in Australia in case he might decide to migrate to Australia; that the defendant asked him for loans to assist her embroidery business conducted, in partnership with an Italian family, through their corporate vehicle, Italasia Pty Ltd; that he agreed on three occasions (on or about 6 May 2008, 25 March 2009 and 1 May 2009) to lend her money for her business purposes; that he was dependent upon her for information about his Australian accounts until, in 2010, he obtained access to internet banking; that he was alarmed to discover, on or about 25 March 2011, that, without reference to him, the defendant had withdrawn from one of his accounts, the sum of $385,633 which, when he challenged her, she returned; that, alarmed by this discovery, he travelled to Australia, without notice to the defendant, for the purpose of closing all his accounts and repatriating his money to China; that he confronted the defendant at the Campsie Branch of the Commonwealth Bank on 28 March 2011 and demanded that she repay to him all loans he had made to her; that she initially claimed a one half share entitlement to the funds held by the Bank in his name, but she later disclaimed any interest in his accounts; that, for several years after March 2011, he from time to time entreated the defendant to repay the loans he had made to her, only to be met by requests by her for more time; that she eventually refused to take his phone calls; that he initially refrained from commencing proceedings against the defendant because of their close family connection; and that, after he commenced proceedings, he discovered, from records made available by subpoenas for the purpose of the proceedings, that he could not account for what appeared to have been unauthorised transactions on his accounts by the defendant.
6. The defendant says that she was at all times reluctant to receive or manage any of the plaintiff's money; that she did so only to help him out as an old friend, although (because of their age difference) he had never been a close friend; that she never asked him for money; that she never borrowed money from him for any purpose, business or personal; that their first financial dealing occurred in about July 2006 when he asked her for, and she gave him, a short term loan of $20,000; that Italasia Pty Ltd (ostensibly a borrower from the plaintiff to pay down mortgage debt) had no debts; that he obtained a bank cheque in favour of Italasia Pty Ltd in May 2008 to disguise his withdrawal of funds from Citibank so as not to hurt the feelings of his Citibank manager that he was withdrawing business from Citibank (and transferring it to the Commonwealth Bank); that she always acted on his instructions; that his purpose in investing money in Australia was to hide assets from his Japanese wife, with whom he was engaged in divorce proceedings in Japan; and that in March 2011 she asked him to come to Australia and to close all his bank accounts because she had received from the ATO (the Australian Tax Office) a letter, not in evidence, querying her business activities.
7. She also drew attention to transfers of funds by her to accounts of the plaintiff. This evidence was relied upon by the defendant in support of a contention that she had, in fact, fully repaid the plaintiff any monies owed to him. It is, perhaps, better viewed as supporting a submission that the Court needs to exercise caution in acting upon less than a full taking of accounts of dealings between the parties, notwithstanding that no application for the taking of accounts generally has been made (by cross claim or otherwise) and the proceedings have been conducted on the basis of a review of particular transactions only.

QUESTIONS OF CREDIT

1. The plaintiff, the defendant and the brother of the defendant (the lay witnesses in these proceedings) each gave evidence with the benefit of an interpreter. The plaintiff gave his evidence via a video link. The defendant and her brother gave evidence in person. All three witnesses were native mandarin speakers.

The Plaintiff

1. In my assessment, the plaintiff presented as an honest witness, but his evidence about conversations long ago without the benefit of more than a few contemporaneous records requires caution in its assessment.
2. Critically, in relation to the plaintiff's claim to recover loans in debt, if the plaintiff is to succeed the Court must be comfortably satisfied that the parties agreed at the time each loan was made that the alleged loans were repayable otherwise than simply "on demand"; only "if and when" demanded and, in the case of the first alleged loan, "on two months' notice".
3. The plaintiff blamed his former solicitors for any failure on his part to plead a two months' notice stipulation in his earlier pleadings. No evidence was adduced from the solicitors and no submission was made by the defendant by reference to Jones v Dunkel (1959) 101 CLR 298 in connection with the absence of such evidence.
4. On the plaintiff's case, arrangements for the first, disputed loan were oral, without any confirmatory documentation. The second and third loans were each the subject of a written confirmation (prepared by the defendant as a receipt rather than as a loan agreement) in terms that were silent as to their duration. There is no written corroboration of the plaintiff's affidavit evidence that all three loans were agreed between the parties to be repayable (if and when demanded and) on two months' notice.
5. When challenged in cross-examination, he omitted from his narrative account of the parties' conversations any stipulation that the loans were repayable on two months' notice. An assessment of the significance, if any, of that omission requires that allowance be made for the fact that the plaintiff of necessity gave evidence through an interpreter, by video link, and was unfamiliar with the Court's processes. Although he omitted to refer to the alleged agreement for repayments on two months' notice when giving evidence of a conversation with the defendant he did, more than once when specifically challenged, adhere to his evidence that there was a two months' notice stipulation discussed with the defendant in relation to the alleged loans.
6. I accept that, in the years between his granting of the "loans" to the defendant and his commencement of these proceedings, the plaintiff turned his mind to the defendant's indebtedness to him and demanded repayment; but that is not to say that he consistently remembered conversations (to which he has deposed in these proceedings) that the "loans" were repayable only upon condition of a demand or on two months' notice.
7. The defendant accepts that the first "loan" was not a gift, but she denies that it was a loan; on her case, it was no more than money of the plaintiff which she invested for him. She accepts that the second and third "loans" were in fact loans (albeit, she says, sham transactions designed to hide the plaintiff's assets from his Japanese wife), but she denies that any money was ever advanced to her on terms of repayment on two months' notice.
8. The plaintiff cannot overcome doubts about the reliability of his evidence about the terms of the alleged "loans" by attributing a lack of credibility or reliability to the evidence of the defendant on the same topic.
9. Any doubts I may have about the credibility of the defendant or the reliability of her evidence about the terms upon which she received the "loans" - rejection of her evidence - cannot, of itself, establish the plaintiff's case if I do not accept his evidence. Disbelief of her evidence does not establish his case: Jack v Smail (1905) 2 CLR 684 at 698; Scott Fell v Lloyd (1911) 13 CLR 230 at 241; Edmunds v Edmunds [1935] VLR 177 at 186-187; Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 684 and 694.
10. By the same token, doubts I may have about the defendant's evidence that she repaid all three "loans" do not advance the plaintiff's case. That is because he bears the onus of proving that the "loans" were repayable (as he alleges) "if and when" demanded and, in the case of the third alleged loan, "on two months' notice". His failure to prove that would result in a finding that his causes of action arose upon his payment of the "loans" and were extinguished by operation of sections 14 and 63 of the Limitation Act 1969 NSW before the commencement of these proceedings.
11. Legitimate doubts about the reliability of the plaintiff's evidence about the terms of the "loans" are accompanied by similar doubts about the reliability of his evidence in support of his allegations of misappropriation.
12. Those allegations surfaced during his inspection of documents made available to him in the course of interlocutory discovery procedures in these proceedings. He has no personal memory of the transactions "discovered" as a result of those procedures. The state of the records kept on both sides of the record is such that one is left with little more than bank statement entries ostensibly recording deposits in an account of the defendant from an account of the plaintiff and withdrawals by the defendant from an account of the plaintiff. Ultimately, the plaintiff's case requires an acceptance of his belief that he did not authorise these transactions. He invites the Court to draw inferences from incomplete records and that state of belief.

The Defendant

1. Criticism of the reliability of the plaintiff's evidence is not intended to displace doubts about the reliability of the evidence of the defendant.
2. She presented as a calculating personality, not as open as the plaintiff, and prone to tailor her evidence according to her perception of self-interest. An apparently recurrent need to borrow funds from the plaintiff, and an ability to open and operate bank accounts in his name, are consistent with the possibility, as he alleges, that she took opportunities to use his funds for her personal purposes.
3. She appears, at least, to have been an unreliable manager of the plaintiff's money. This manifested itself in her treatment of banking records relating to the plaintiff's affairs in at least two respects. First, although bank statements relating to an account of the plaintiff with the Commonwealth Bank of Australia were sent to her she prevaricated in her evidence about whether, when and how regularly she forwarded them to the plaintiff. Secondly, the address attributed to the plaintiff in bank records relating to term deposits opened by her in the plaintiff's name were sometimes incomplete, introducing a risk that he may not receive communications from the Bank addressed to him.
4. Inherent in the defendant's version of events are allegations that the plaintiff acted dishonestly, and that she was complicit in his dishonesty, in that: 1. She facilitated a payment by the plaintiff of a bank cheque for $633,774.57 in favour of Italasia Pty Ltd on or about 6 May 2008 never intended (as he contends) for investment in the defendant's business. 2. She drafted and signed two written acknowledgements of loans (of $312,000 on 25 March 2009 and $159,738.47 on 1 May 2009), on the letterhead of Italasia Pty Ltd, which (she says) were sham transactions, not intended by either party to evidence real loans. 3. On or about 24-25 January 2008 she signed a curriculum vitae, before a Justice of the Peace, which (she says) falsely recorded that in 2007 she had been offered a position as an Accounts Auditor for the plaintiff's Japanese company (Umino Trading Co Ltd). She says that the plaintiff requested this for his own purposes at the same time as he solicited from her a loan of $20,000.
5. On 29 March 2011 the defendant also signed a written statement for the Commonwealth Bank of Australia disclaiming any personal entitlement in bank accounts in the name of the plaintiff when, she maintains, she had never made such a claim, and the written statement was prepared by the Bank at her request, rather than as a requirement of the Bank.
6. The chronology of events at the Campsie Branch of the Commonwealth Bank on 28, 29 and 30 March 2011 is not entirely clear. At the end of that period, the plaintiff appears to have withdrawn funds then held by the Bank in accounts in his name. However, a reading of letters dated 29 and 30 March 2011 addressed by his then solicitor to the Bank, and the defendant's written statement dated 29 March 2011, coupled with evidence of the plaintiff that he attended the Bank on 28 March 2011 in the vain hope of withdrawing his funds, raises questions about whether the proceeds of two term deposits totalling $633,774.57 were paid to the plaintiff or to the defendant. Bank records show (as the plaintiff's forensic expert reported) that that term deposits were closed on 28 March 2011. That is the date upon which the plaintiff says that he attended the Bank, unexpectedly met the defendant there and was prevented from closing any of his accounts at the Bank because of a claim by the defendant that she owned half of the proceeds of his accounts. Strange as it may seem, the paper trail in evidence does not unequivocally record who ultimately received the proceeds of the $633,774.57 term deposits when those accounts were closed.
7. When pressed in cross examination about her knowledge of particular transactions, the defendant commonly denied knowledge of them, and invited the Court to rely upon the evidence of the parties' expert accounting witnesses.
8. The defendant's behaviour at about the time when on 28 March 2011 the plaintiff attended personally upon the Campsie Branch of the Commonwealth Bank to close all his accounts was indicative of her pursuit of self-interest. I accept the plaintiff's evidence that she appeared at the Bank, claimed ownership of half the money in accounts in the plaintiff's name, before apparently retracting her claim the next day. The plaintiff's evidence lacks clarity in dealing with the sequence of events, but that deficiency is counter balanced by the terms of the written statement signed by the defendant on 29 March 2011. It reads naturally as a disclaimer of an interest in the plaintiff's accounts necessary to displace an earlier insistence by her of an entitlement.
9. The evidence does not explain beyond doubt how the defendant came to be at the Campsie Branch of the Commonwealth Bank on 28 March 2011 if, as the plaintiff contends, he gave her no notice of his intention to attend the Bank. It is possible that the Chinese speaking staff member of the Bank, accustomed to dealing with her, told her of the plaintiff's attendance at the Bank; but there is no evidence of this, and it is mere speculation. On the other hand, the defendant's evidence that the plaintiff's attendance at the Bank with her was a product of her insistence that he close all his accounts upon which she was an authorised signatory (because of her receipt of a letter from the Australian Tax Office, not adduced in evidence) does not sit comfortably with evidence that he had discovered, and complained to her about, a perceived irregularity of her dealing with $385,633 of his money on or about 25 March 2011. That sequence of events sits more comfortably with the plaintiff's evidence that he attended the Bank without notice to the defendant in order to protect his funds from further unauthorised transactions.
10. The evidence of the defendant cannot lightly be accepted unless and to the extent it is corroborated. When their evidence is in conflict I generally prefer the evidence of the plaintiff to that of the defendant, but not without exception. Close attention needs to be given to context.

THE FACTUAL MATRIX

1. For cultural reasons (which, once explained, justify no criticism) the plaintiff has been known by apparently different names. Before January 2008 he was known as Kuandao Wu. "Wu" was his original Chinese surname. In or about January 2008 he changed his name to Hiromichi Matsuzawa, in deference to the family of his Japanese wife. Later he changed his name to Hiromichi Kure, his current name. "Kure" is a Japanese form of his original Chinese surname "Wu". "Hiromichi" is a Japanese equivalent of "Kuandao".
2. The parties grew up as neighbours in Shanghai, China. The defendant is five years older than the plaintiff: she was born in 1958, he in 1963. On her own admission, she was like a big sister to him in their Shanghai days. She still knows him by his nickname, "Dao". In the late 1980s, she moved to Australia, he moved to Japan, and they lost contact with one another until 2006.
3. The close early connection of the respective families of the parties may explain why it was that the plaintiff entrusted management of large amounts of money to the defendant; why he acquiesced in informal arrangements with her; why he allowed her an indefinite time to repay funds he believed she was obliged to repay him; and why his commencement of proceedings against her was delayed. Because of their early association, he trusted her.
4. With his parents (who flew separately from China as he flew from Japan), the plaintiff visited Australia for the first time between 28 April 2006 and 8 May 2006 or thereabouts. During that visit he met the defendant, visited her embroidery factory premises, met her business partners and opened an account in his name at the Ashfield branch of the Commonwealth Bank of Australia.
5. His initial object in opening the account was to allow him to transfer money to Australia from overseas, in anticipation of travel to Australia, so as to minimise any necessity to travel with large amounts of cash. He also hoped that transfers of money to Australia might assist him to come to live in Australia.
6. The defendant says that he was actually motivated by a desire to hide money in Australia as he navigated divorce proceedings in Japan. Viewed over all, the evidence does not permit me to make such a finding. Even if it did, the fact remains that the defendant received money of the plaintiff otherwise than as a gift.
7. That the plaintiff at one time or another did divorce his Japanese wife is apparently correct, but the evidence before the Court lacks sufficient detail to ground a finding that there was a connection (and, moreover, a dishonest connection) between divorce proceedings and the plaintiff's investment of money in Australia.
8. The plaintiff says, and I accept, that the defendant persuaded him to transfer money to her account rather than to his own account in the first instance. This was on the basis that she would transfer the money to his account, ostensibly to facilitate dealings with the Bank and to avoid the possibility that the Bank would require his personal attendance upon it to effect transactions.
9. At or about the time of the 2006 visit the defendant proposed that the plaintiff invest funds in Australia as Australian interest rates were then higher than those available in Japan, and she offered to help manage his bank accounts in Australia.
10. Between 3-8 January 2007 or thereabouts the plaintiff visited Australia for a second time. During that visit he met the defendant. They agreed that she would help him by managing his funds in Australia and placing those funds in term deposits. To facilitate that, he added the defendant as an authorised signatory on his Commonwealth Bank account and opened another account (in his name) with Citibank Australia (located in the Central Business District at 2 Park Street, Sydney), nominating the defendant as an authorised signatory.
11. Although the defendant, in her defence to the plaintiff's statement of claim, joins issue with him on his contentions about the terms of their arrangement, in paragraph 3A of her defence she acknowledges that: 1. she was a co-signatory with the plaintiff on Citibank and Commonwealth Bank accounts; 2. she had authority to operate and open new accounts, at least in relation to the Commonwealth Bank; and 3. at the request of the plaintiff she opened "various fixed term deposit accounts at the Commonwealth Bank".
12. The evidence does not include a complete set of bank documents recording the plaintiff's nomination of the defendant as a person authorised by him to open, operate and close particular accounts in his name. Nevertheless, the fact that, as he says, she had plenary authority is consistent with other evidence as well as her defence.
13. First, in cross examination she accepted that the plaintiff had entrusted her "to manage his bank accounts in Australia", she described what she had done as "managing" the plaintiff's money, and she conceded that in March 2011 she had power as an authorised signatory on the plaintiff's Commonwealth Bank accounts sufficient to transfer all the money in his accounts to herself had she wished to do so. Secondly, bank statements were routinely posted to her address. Thirdly, in a signed statement the defendant provided to the Commonwealth Bank on 29 March 2011 (in which she ostensibly disclaimed ownership of funds with the Bank in the name of the plaintiff), she declared: "I only acted as an authority to operate on his [that is, the plaintiff's] past accounts …". Fourthly, in a curriculum vitae dated 24 January 2008, signed by her the defendant claimed to have been offered in 2007 a position as an "Accounts Auditor" for international transactions involving the plaintiff's Japanese company, a document she sought to disclaim in her cross examination. Fifthly term deposits in the plaintiff's name appear to have been rolled over (by the defendant) at times when the plaintiff was out of Australia. Sixthly, the plaintiff cannot speak English whereas the defendant (despite her precautionary use of a translator in giving evidence) could speak English and was familiar with the Australian banking system.
14. From time to time thereafter the plaintiff transferred money from Japan to his Commonwealth Bank and Citibank accounts (principally his Commonwealth Bank accounts), relying upon the defendant, from time to time, to place funds from those accounts in term deposits on his behalf.
15. That the defendant agreed with the plaintiff to manage money of the plaintiff transferred to Australia is consistent with her curriculum vitae dated 24 January 2008 signed by the defendant before a Justice of the Peace (and dated 25 January 2008) in the following terms (with emphasis added): "To Whom It May Concern, Xin Mei He left Shanghai China and arrived in Sydney Australia on the 27th July 1987 for the many opportunities the prosperous country offered. After working various jobs for several years she acquired a managerial role at Italasia Pty Ltd where she worked full time for nine years (1994-2003) while simultaneously raising her children. Following this role, Xin Mei He left her position as a manager for Italasia Pty Ltd and founded her own company Embroidery Knit & Trim Pty Ltd in 2003, which maintains close relations with the company she formerly worked with. In the beginning Embroidery Knit & Trim Pty Ltd only dealt with machine embroidery and collars. However, the year 2004 saw Xin Mei He introduce an import and export service which still continues successfully to this day. In 2007, Xin Mei was offered a position as an Accounts Auditor in transactions between China and Japan for Umino Trading Co Ltd [the plaintiff's Japanese company], which is enjoyed immensely as it allows travel to between the three countries of China, Japan and Australia. Timeline 1987 - left Shanghai, China for Sydney Australia (27/06/1987) 1994 - acquired managerial position at Italasia PTY LTD 2003 - founded Embroidery Knit & Trim PTY LTD 2004 - introduced imports/exports to Embroidery Knit & Trim PTY LTD 2007 - acquired positions [sic] as an Accounts Auditor for Umino Trading Co Ltd in financial transactions between China and Japan."
16. That the defendant managed funds of the plaintiff (at least in respect of accounts with the Commonwealth Bank) is consistent with the terms of the written statement she gave to the Campsie Branch of the Commonwealth Bank on 29 March 2011 formally disclaiming an interest in accounts with the Bank in the plaintiff's name.
17. The plaintiff visited Australia again between 5-12 May 2008 or thereabouts. During that time the defendant asked him for a loan of $640,000 to assist her in connection with the business she conducted through the corporate vehicle, Italasia Pty Ltd. In response to that request he, on 6 May 2008, obtained a bank cheque for $633,774.57 (representing the proceeds upon maturity of a Term Deposit arranged for him by the defendant) payable to Italasia Pty Ltd which he delivered to the defendant. She deposited it into the company's account on 7 May 2008 and, later that month, used it to fund two term deposits in the plaintiff's name.
18. In her pleaded defence, the defendant gives an explanation of her receipt of the sum of $633,774.57 which I do not accept. She contends that that sum was credited to the account of Italasia Pty Ltd without her knowledge and that she subsequently followed instructions of the plaintiff by using the funds to invest in a Commonwealth Bank term deposit in the name of the plaintiff. The plaintiff's request to Citibank for the Bank cheque which the plaintiff says he gave to the defendant personally is in evidence. Its existence is consistent with the plaintiff's version of events, and less likely to be so with the defendant's version of events.
19. On 26 June 2008 $7,000 was withdrawn from the plaintiff's Commonwealth Bank account without, he contends, his knowledge or authority.
20. On three occasions during the latter half of 2008 money of the plaintiff was deposited into a mortgage account of the defendant with the Commonwealth Bank: 1. $7,240 was deposited on 1 September 2008. 2. $79,277.11 was deposited on 7 October 2008. 3. $162,135 was deposited on 11 December 2008.
21. In March 2009 the defendant asked the plaintiff, by telephone, for a loan of $312,000 and he agreed.
22. $312,000 is recorded as a "cash deposit" into an account in the defendant's name on 25 March 2009 in respect of which she sent the plaintiff (by facsimile transmission) the written and signed acknowledgement, dated 25 March 2009, on the letterhead of Italasia Pty Ltd.
23. That document was prepared by the defendant personally, without involvement of the plaintiff or any other person. Although a record of a loan, it was not in nature a loan agreement. Nor is it necessarily inconsistent with the existence of an agreement that borrowed funds were repayable on two months' notice. In her cross-examination, the defendant characterised it as a receipt.
24. The evidence is unclear whether the plaintiff received a copy of the document at the end of March 2009 or only when he visited Australia in May 2009. Nothing appears to turn on that uncertainty. Nevertheless, he did not, upon receipt of the document, protest the absence from its terms of any reference to an arrangement for repayment on two months' notice. He had little regard to the document because, he says, he trusted the defendant implicitly. Nevertheless he kept it.
25. One English translation of the original acknowledgement written in Chinese (annexed to the plaintiff's affidavit) is, in substance, in the following terms: "$312,000 is hereby borrowed from Kuandao Wu [the plaintiff], and has been transferred into the mortgage account for ITALASIA P/L for the mortgage over its factory. The company shall pay the interests [sic] according to the floating interest rates (current bank loan interest rate at 4.9%) by transferring the interest amount to Commonwealth Bank. This loan notice is kept by Kuandao Wu as a receipt. Borrower: XIN MEI HE [the defendant] Passport Number […] On 25-03-2009 XIN MEI HE (sign)"
26. In the course of cross examination of the defendant (who gave evidence with the benefit of an interpreter), the interpreter confirmed that this translation omitted a reference in the original, Chinese document to a payment required to be made on the 25th day of each month.
27. As recorded in the transcript at page 164, the interpreter's ex tempore translation of the original documents was in the following terms: "Mr Kuan Dao Wu has transferred the amount of AUD$312,000 in Italasia mortgage account on the 21st of March, and the company will pay back to loan based on the floating interest rate set by the Bank, and also will transfer the interest rate to Commonwealth Bank on the 25th of every month and … (Not transcribable) … The current bank mortgage interest rate is 4.9%, and this loan note will be kept as a record for the receipt, and will also be kept by Kuan Dao Wu. Borrower: Xin Mei He. Passport number :… Date 25 March 2009. Signature: Xin Mei He"
28. On 6 April 2009, $107,952.69 was withdrawn from the plaintiff's Commonwealth Bank account, he says, without his knowledge or authority.
29. On 30 April 2009, $159,738.47 was deposited into an account in the defendant's name and marked as a "term deposit withdrawal". The next day, by telephone, the defendant asked the plaintiff for a further loan of approximately $160,000 (in an amount to be confirmed by her) and he agreed. She then sent him (by facsimile transmission) the written and signed acknowledgement, dated 1 May 2009,on the letterhead of Italasia Pty Ltd of a loan of $159,738.47.
30. This acknowledgement bears a character similar to the acknowledgement dated 25 March 2009. It was prepared by the defendant without the involvement of the plaintiff or any other person. Although a record of a loan, it was not of itself a loan agreement. Its terms are not necessarily inconsistent with a term that borrowed funds were repayable on two months' notice.
31. The plaintiff did not upon receipt of the document protest the absence from its terms of any reference to an arrangement for the repayment on two months' notice. He had little regard to the document because he trusted the defendant implicitly. Nevertheless he kept it.
32. An English translation of the original acknowledgement written in Chinese is, in substance, in the following terms: "Today 159,738.47AD is borrowed from Kuandao Wu, by transfer of cash through Commonwealth Bank. Italasia P/L shall use the money to pay interests [sic] for the mortgage over the factory (current interest rate is 4.9%). This loan notice is issued as receipt for Kuandao Wu. With complement [sic] Person who borrows the money temporarily XIN MEI HE At Sydney 1.5.2009"
33. In fact, the borrowed funds were not paid into an account of Italasia Pty Ltd but to the defendant's personal bank account. On the one hand, she says that the acknowledgement was prepared by her in the form it bears only as a receipt, if required by Italasia Pty Ltd for the Australian Tax Office. On the other hand, she suggests that the transaction was a sham.
34. On 10 August 2009, $335,000 was withdrawn from the plaintiff's Citibank account, he says, without his knowledge or authority.
35. Only in or about 2010 (at a time not precisely identified) did the plaintiff begin to have internet access to his accounts from Japan. Before that time he relied upon the defendant to manage his Australian funds, rolling over term deposits on maturity.
36. From the time that the defendant was added as an authorised signatory to the plaintiff's Commonwealth Bank and Citibank Australia accounts, the only persons authorised with those banks to operate the plaintiff's accounts were the plaintiff and the defendant. There is no evidence, or suggestion, that there was a third authorised signatory.
37. On 25 January 2011, the plaintiff wrote a letter to his CBD branch of Citibank (received by the Bank no later than 1 March 2011) in which he instructed the Bank to remove the authority to operate on his accounts given to the defendant. It was expressed to relate to "all my accounts" (including several specifically identified accounts) and "all future accounts" and to be implemented "immediately".
38. There was no exploration in the evidence as to whether this instruction was communicated to the defendant or any particular significance it may have had in the deterioration of the parties' relationship, which appears to have begun some time earlier.
39. It is relied upon by the defendant as part of a chain of evidence in support of her contention that the second and third loans were repaid to the plaintiff via term deposits in his name of which he was aware at the time her authority to operate Citibank accounts in his name was terminated.
40. The defendant contends that the second and third alleged loans (respectively for $312,000 and $159,738.47, totalling $471,738.47) were "repaid" by term deposits opened by her in the plaintiff's name.
41. One of those term deposits was for $100,000 deposited in Commonwealth Bank account number 220050124612. That account was opened on 14 May 2009 with a seven months' term. The defendant contends that that deposit was rolled over until the plaintiff closed his Commonwealth Bank accounts between 28-30 March 2011. Of the $100,000, $95,000 was withdrawn from a Commonwealth Bank account in the name of the defendant and $5,000 was withdrawn from a Commonwealth Bank account in the name of the plaintiff, an explicit intermingling of funds.
42. Two Commonwealth Bank term deposits of $200,000 (totalling $400,000) were opened by the defendant in the name of the plaintiff on 3 February 2010, for a six month term. On 16 August 2010 the proceeds of those term deposits were paid into a Commonwealth Bank account in the name of the plaintiff. On 17 August 2010, $410,028 (said to be the proceeds of the term deposits) was transferred from the plaintiff's Commonwealth Bank account to a Citibank account in his name and from there transferred into a Citibank term deposit in his name in the amount of $410,000, which is said to have rolled over until 17 January 2012, after which it was paid into a Citibank account of the plaintiff, at a time when the defendant was no longer a signatory on any account of the plaintiff.
43. By these means, the defendant contends that the loans totalling $471,738.47 were repaid by her creation of term deposits in the total sum of $495,000.
44. There is no evidence that the defendant's "repayments" were, before the commencement of these proceedings, characterised by her, or by anybody else, as repayments of the second alleged loan or the third. The defendant's characterisation of particular transactions as repayments of the loans is a rationalisation of an incomplete set of banking records in the absence of a full accounting for all dealings between the parties.
45. In her affidavit evidence, the defendant records that, according to documents produced on subpoena by the Commonwealth Bank, the last term deposit she signed for the plaintiff was on 11 May 2010. It was at or about, or after this time in 2010, that the plaintiff says that he started to have internet access to his bank accounts.
46. On or about 25 March 2011 the plaintiff discovered, as he believed, that $385,633 had been transferred out of one of his bank accounts by the defendant into her Commonwealth Bank mortgage account on 25 March 2011. In his statement of claim, and evidence, he says that that was done without his approval. In her defence she says that the transfer was done on his instructions or, at least, so she thought. By telephone, he sought an explanation of this from the defendant. He says she asked if she could have the money as a loan. He said he would think about it. Shortly after, she transferred the disputed sum back to the account from which it was withdrawn.
47. The defendant contends, in her defence, that on or about 26 March 2011 the plaintiff requested her to transfer the $385,633.10 to a bank account nominated by him and that she did so on 28 March 2011. Her allegation has significance beyond treatment of the sum of $385,633.10 because it supports a finding that she transacted banking business at the Commonwealth Bank on 28 March 2011, the date upon which the Bank's records show that two term deposits (for $300,000 and $333,774.57) totalling $633,774.57 were closed.
48. Upon an analysis of what happened between 28-30 March 2011 (inclusive) importance attaches to: 1. the attendance by the plaintiff and the defendant at the Campsie Branch of the Commonwealth Bank on 28 March 2011. 2. closure by the Bank of the two term deposits (in the total sum of $633,774.57) on 28 March 2011. 3. the timing and terms of the letter dated 29 March 2011 written by the solicitors for the plaintiff to the Bank. 4. the timing and terms of the defendant's written acknowledgement dated 29 March 2011. 5. the timing and terms of the letter dated 30 March 2011 written by the plaintiff's solicitors to the Bank.
49. I infer from the dates of the documents dated 29 and 30 March 2011 that they were each created, and communicated to the Bank, on the dates they respectively bear, not some other date. Neither party contends otherwise.
50. On 28 March 2011 the plaintiff arrived in Sydney. He says he arrived unannounced to close his Commonwealth Bank accounts. She says he came because she asked him to come and to close his accounts. He attended the Campsie Branch of the Commonwealth Bank (the staff of which included a person fluent in Mandarin) and asked to close all his accounts. When he was at the Bank the plaintiff arrived (he says, unexpected by him)and asserted a claim to ownership of half the funds in the plaintiff's accounts, resulting in a demand by the plaintiff of the defendant that she repay all loans he had made to her.
51. In cross examination (at transcript page 186 lines 12-15, read with a question recorded at page 184 lines 42-43) the defendant agreed that she visited the Campsie Branch of the Commonwealth Bank on 28 March 2011. She volunteered a reason for doing so: "Yeah, he [the plaintiff] needed to transfer money so I helped him. He needed to transfer money back to China so I went there together with him."
52. After his encounter with the defendant at the Bank the plaintiff engaged solicitors to assist him in retrieving his money from the Bank.
53. On 29 March 2011 the plaintiff's solicitor (Alan Yeung of Frank Low Yeung, solicitors) wrote to the manager of the Campsie Branch of the Commonwealth Bank accusing the defendant of unauthorised withdrawal of funds from his accounts.
54. In substance, the letter was in the following terms: "Dear Sir/Madam Hiromichi Kure also known as Kuandao Wu Various accounts with Commonwealth Bank We act on behalf of Hiromichi Kure also known as Kuandao Wu. Enclosed is a Statutory Declaration in relation to our client's name. Our client has held various accounts with you including the following: [The letter then identified six accounts in the name of Kuandao Wu and five accounts in the name of Hiromichi Kure. In the name of Kuandao Wu were a "Complete Access" account, a "Netbank Saver" account and four term deposits. In the name of Hiromichi Kure were a "Streamline Access" account, a "Netbank Saver" account and three term deposits.] It has been made known to our client that a certain HE XIN MEI [the defendant] has been attempting to transfer monies out of our client's accounts to her own account, without authority of our client. We would like to confirm that to safeguard our client's position, all of the above accounts have been closed and all proceeds transferred to a new account: [The letter identified a "Netbank Saver" account and a "Complete Access" account in the name of Hiromichi Kure]. We note that HE XIN MEI has no authority whatsoever in relation to the new account [sic]. Please let us know as a matter of urgency if the above does not accord with your understanding of the situation."
55. The enclosed statutory declaration was made by the plaintiff in the name of Hiromichi Kure on 29 March 2011. It confirmed that he was one and the same as Kuandao Wu. It explained that Hiromichi Kure is the Japanese transliteration of the name Kuandao Wu. It also annexed a certified copy of the plaintiff's Japanese passport showing the two versions of his name.
56. Of the accounts in the name of Kuandao Wu identified in the solicitor's letter: 1. one (account number 212550058789) was a term deposit for $300,000 and another (account number 212550058797) was a term deposit for $333,774.57, totalling $633,774.57, in accounts both formally recorded by the Bank as having been opened on 19 May 2008 for a term of six months; 2. another account (number 50124612) was a term deposit account for $100,000 opened on 14 May 2009 for a term of seven months.
57. In their joint report, the parties' experts found that the first two term deposits (with a total value of $633,774.57) represented the capital sum of $633,774.57 funded by the Citibank bank cheque dated 6 May 2008 (payable to Italasia Pty Ltd) delivered by the plaintiff to the defendant on or about that date. That cheque funded a term deposit in the sum of $300,000 and another in the sum of $333,774.57 established by the defendant in the name of the plaintiff on 19 May 2008 with a commencement date of 14 May 2008.
58. On 29 March 2011 the defendant signed and provided to the Bank a letter, bearing that date, addressed to the manager of the Campsie Branch of the Commonwealth Bank in the following terms: "I XIN MEI HE OF … STRATHFIELD NSW 2135 DO NOT OR INTEND TO HOLD ANY INTEREST IN MR HIROMICHI KURE ALSO KNOWN AS KUANDAO WU ACCOUNTS OR SAVINGS WITH THE COMMONWEALTH BANK. ALL FUNDS IN HIS NAME BELONG TO ACCOUNT HOLDER AND I ONLY ACTED AS AN AUTHORITY TO OPERATE ON HIS PAST ACCOUNTS. I HAVE NO LEGAL INTEREST IN HIS FINANCIALS AND HAVE NO FURTHER INTEREST TO DO SO. REGARDS XIN MEI HE (SIGNED)
59. On 30 March 2011 the plaintiff's solicitor wrote a further letter to the Bank manager as a result of which the Bank allowed the plaintiff to withdraw his funds from the Bank, thereby closing them.
60. The solicitor's letter was, in substance, in the following form: "Dear Sir/Madam Hiromichi Kure also known as Kuandao Wu Various accounts with Commonwealth Bank Further to our letters [sic] of 29 March 2011, we understand that our client [the plaintiff] has not been able to resolve this matter by him closing his accounts with proceeds of his accounts to be given to him. We understand that HE XIN MEI [the defendant] may have contacted you in relation to her alleged rights. Please forward by return facsimile a copy of the authority from our client to HE XIN MEI. There is no information in our knowledge which would preclude you from acting on our client's instructions and having his funds returned to him. Please let us know immediately if you consider this to be not the case. Our instructions are to refer this matter to the Banking Ombudsman if this matter is not resolved forthwith."
61. On or about 30 March 2011, the plaintiff attended the Campsie Branch of the Commonwealth Bank with his solicitor, who helped him to explain the situation to Bank staff and to liquidate his accounts.
62. Thee is no evidence that the plaintiff or his solicitor at or about this time made a formal written demand for repayment of the plaintiff's loans. His demands for repayment of the loans were personal and oral
63. The evidence includes no written response by the Bank to the letters dated 29 and 30 March 2011 written to it by the plaintiff's solicitor.
64. The documentary evidence is also silent as to whether, in fact, the funds recovered by the plaintiff on or about 30 March 2011 included: 1. the two term deposits (for $300,000 and $333,774.57 respectively) totalling $633,774.57 referable to the accounts ending "789" and "797"; or 2. the term deposit (for $100,000) referable to the account ending "612", identified in the solicitor's letter dated 29 March 2011.
65. The defendant invites the Court to infer from the reference to those deposits in the letter of the plaintiff's solicitor dated 29 March 2011 that the plaintiff at that time knew of these term deposits and that he recovered the proceeds of the deposits.
66. The term deposits totalling $633,774.57 are said by the defendant to represent the plaintiff's receipt of that sum as a consequence of her "repayment" of the first alleged loan by term deposits opened in his name in May 2008.
67. The plaintiff invites the Court to infer (from the attendance of the defendant at the Campsie Branch of the Bank on 28 March 2008, the date and terms of her written statement dated 29 March 2008, the date and terms of the letter of the plaintiff's solicitor dated 30 March 2011, the attendance of the plaintiff and his solicitor on the Bank on or about 30 March 2008 to take possession of his accounts, the fact that the term deposits for $633,774.57 are recorded in the Bank's records as having been closed on 28 March 2008 and the fact that, on her own admission in cross examination, in March 2011 she was an authorised signatory with power to transfer all of the money in the plaintiff's accounts to herself had she wished to do so) that the defendant recovered the proceeds of those term deposits on 28 March 2011 before she signed the statement dated 29 March 2011.
68. Alternatively, the plaintiff submits that the defendant bears the onus of proving repayment of the amount of $633,774.57 and that she has not discharged that onus simply by proof that the term deposits were in the name of the plaintiff and he was aware of term deposit account numbers that corresponded to the deposits totalling $633,774.57.
69. As earlier explained, the $100,000 term deposit is said by the defendant to have been a part repayment of the second and third alleged loans, together with two other term deposits each of $200,000.
70. On 10 February 2012 the plaintiff visited the defendant at her home in Strathfield and complained to her of her failure to repay the loans he had made to her. She asked for more time.
71. On 26 November 2014 the plaintiff met with the defendant, and her brother Ji Fa He, at which time she again asked for more time to repay the plaintiff's loans.
72. After 2014, the plaintiff made numerous telephone calls to the defendant, but the defendant did not answer his calls.
73. There is no evidence that, when the plaintiff demanded repayment of his loans, the defendant protested or explained that they had already been repaid.
74. Whatever the precise course of events after 30 March 2011, the relationship between the plaintiff and the defendant took a dramatic turn for the worse at that time. There were residual family ties that called for patience and discretion on the part of the plaintiff, but it is common ground that their business relationship had come to an abrupt end.
75. It was not until 17 March 2017 that the plaintiff commenced proceedings to recover the loans.
76. That was more than six years after the three alleged loans were made (on or about 6 May 2008, 25 March 2009 and 1 May 2009 respectively), but less than six years after the plaintiff (on 28 March 2011) demanded repayment of the loans, and still less after the expiry (on 28 May 2011) of two months from the date of the demand.
77. The plaintiff's commencement of the proceedings was more than six years after the dates (between 26 June 2008 and 10 August 2009 or thereabouts) upon which the defendant allegedly misappropriated funds of the plaintiff.
78. In the context of the (direct or indirect) operation of the Limitation Act 1969 NSW, the plaintiff's success depends critically (in the case of his claims in debt for repayment of the alleged loans) on acceptance of his evidence about the terms upon which the alleged loans were made and (in the case of his claim for equitable compensation for alleged misappropriations) on acceptance that he could not, with reasonable diligence, have discovered the fact of the alleged misappropriations earlier than he did.

THE DEFENDANT MANAGED FUNDS OF THE PLAINTIFF AS A FIDUCIARY AGENT

1. Between January 2007 and March 2011 or thereabouts the plaintiff relied upon the defendant to manage his funds in Australia and trusted her to do so. She accepted his trust and, independently of him, opened and operated bank accounts in his name, exercising discretionary powers of management, ostensibly as an agent acting on his behalf.
2. These features of their relationship are sufficient to characterise their relationship as a fiduciary one (as described by Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97), attracting an obligation on the part of the defendant to account to the plaintiff for her dealings with his funds.
3. The defendant's fiduciary obligations did not preclude her from accepting loans from the plaintiff because, by the nature of a loan agreement, he ostensibly gave his fully informed consent to those particular transactions: Maguire v Makaronis (1997) 188 CLR 449 at 466-467. The plaintiff has not contended otherwise.
4. The position is different with respect to monies of the plaintiff allegedly appropriated by the defendant for her own purposes without the knowledge or approval of the plaintiff. For those funds she is liable to account to the defendant as a fiduciary, a constructive trustee by another name.

THE MONEY TRAIL

1. The outcome of these proceedings depends ultimately upon an interplay between the parties' pleadings, location of the onus of proof, an incomplete tracing exercise, acceptance or otherwise of the defendant's contention that she (re)paid money to the plaintiff by her creation of term deposits in his name, questions of credit bearing upon discharge of the onus borne by a party, and the operation of the Limitation Act 1969 NSW.
2. Crystallisation of the issues for the Court's determination of these questions requires consideration of evidence bearing upon: (a) transfers of funds from the plaintiff to the defendant; and (b) transfers of funds from the defendant to the plaintiff.
3. The plaintiff claims that funds belonging to him were (to use a neutral expression) transferred from a bank account in his name to an account of the defendant's choosing. Three of those transfers relate to the alleged loans. Six relate to the alleged misappropriations.
4. There is no allegation by the defendant that any of the transfers were transfers by way of a gift. In substance, she acknowledges that the second and third alleged loans were in fact loans, albeit (she contends) sham transactions, never intended to be treated as borrowings by her. This is hardly a concession because her written acknowledgements of those transfers characterise the transfers as loans. Her resistance to characterisation of the first alleged loan as a loan is consistent with her case that any obligation upon her to repay any or all of the alleged loans arose at the time of the transfers to her, as a result of which (she contends) the plaintiff's alleged causes of action in debt have been extinguished by operation of the Limitation Act.
5. As appears in paragraphs 4(a), 16(a) and 16(b) of her Defence, the defendant contends that each of the three alleged loans was repaid to the plaintiff by her creation of term deposits in his name. Implicitly, by her Defence, she invites the Court to infer from the fact of her creation of a term deposit in the name of the plaintiff that he received the funds on deposit, if not that he also knew and approved each deposit. In paragraph 16(b) of the Defence she identifies term deposits said to have been opened by her (allegedly paying back money to the plaintiff, including by using her own monies to fund or assist in the funding of fixed term deposits) - term deposits opened with the Commonwealth Bank in the name of plaintiff "including but not limited to" $633,774.57 (on or about 7 May 2008), $95,000 (on 14 May 2009), $362,000 (on 14 December 2009), $400,000 (on 3 February 2010), $61,092.12 (on 11 May 2010), $25,000 (on 15 October 2010) and $30,000 (on 14 January 2011).
6. The defendant does not contend that the six alleged misappropriations were with the subject of a transfer by way of gift. A primary submission on her part, rather, is that any entitlement the plaintiff may have had to recover compensation relating to the transfers occurred at the times the transfers were effected, outside the times limited by the Limitation Act 1969 NSW.
7. As appears in paragraphs 3H, 3I, 3J, 9A, 9B, 9BB, 16(a) and 16(c) of her Defence: 1. The defendant denies that she was a signatory on any account of the plaintiff from which amounts of $7,240 (on 1 September 2008), $79,277.11 (on 7 October 2008) and $162,135 (on 11 December 2008) were transferred to her account from an unidentified account in the name of the plaintiff; and 2. The defendant implicitly denies that the amounts of $7,000 (on 26 June 2008), $107,952.69 (on 6 April 2009) and $335,000 (on 10 August 2009) were transferred out of accounts in the name of the plaintiff (at the Commonwealth Bank, in relation to the first two amounts and Citibank in relation to the third amount) by her or without the plaintiff's authority.
8. In paragraph 3I of her Defence, the defendant contends that the amount of $79,277.11 transferred on 7 October 2008 "was probably used to assist the funding the six month fixed term deposit of $91,000 opened by the [defendant] at [the Commonwealth Bank] on 8 October 2008 styled 'Kuandao Wu [the plaintiff]'".
9. In paragraph 3J of her Defence, the defendant contends that the sum of $162,135 transferred on 11 December 2008 "was probably used to assist funding the various fixed term deposits opened by [the defendant] during 2009 styled 'Kuandao Wu' and 'Hiromichi Matsuzawa' [the plaintiff]".
10. In response to the plaintiff's allegation that the defendant had transferred a total of $248,652.11 (comprising the amount of $7,240 transferred on 1 September 2008, the amount of $79,277.11 transferred on 7 October 2008 and the amount of $162,135 transferred on 11 December 2008) the defendant, in paragraphs 3K and 3L of her Defence, denies the plaintiff's allegations and says further "that she deposited more money to the plaintiff's bank accounts than the money transferred from 'Kuandao Wu' to her bank account".
11. The records available to the Court for the purpose of tracing the movement of funds referable to the plaintiff's claims and any repayment of funds by the defendant are less than is necessary for certainty. Each party retained a forensic accountant to examine the documents. The plaintiff's expert (Trevor Vella) produced two reports. The defendant's expert (Sally Davitt) prepared one. They joined in presentation to the Court of a joint report dated 30 November 2020 and together submitted to an examination by counsel.
12. Appendix A to the joint report summarises the experts' conclusions. Those conclusions are here paraphrased by reference to the plaintiff's claims. Both parties have cautioned the Court against simply adopting the experts' conclusions because the exercise of the experts was largely one of attempting, from incomplete records, to identify matching payments.

The Alleged Loans

1. The First Alleged Loan. Perhaps the most controversial transaction concerns the plaintiff's allegation that he lent $633,774.57 to the defendant on or about 6 May 2008. In her defence to paragraph 4(a) of the plaintiff's further amended statement of claim filed on 7 February 2020 the defendant denies that she was lent that sum, but she explains that after a request by the plaintiff for assistance "in or about May 2008" she "noticed that there was a sum of $633,774.57 credited to her company account from the plaintiff. On or about 7 May 2008, the [defendant] informed the plaintiff, and followed the plaintiff's instructions by deposited [sic] the $633,774.57 to the Commonwealth Bank in term deposit under the plaintiff's name on about 14 May 2008".
2. The defendant gave a similar explanation of the events of May 2008 in an affidavit sworn by her, but in cross examination she conceded that she had deposited the plaintiff's bank cheque in Italasia Pty Ltd's account before recasting her evidence to say that she and the plaintiff together deposited the cheque in the company's account.
3. As I have previously explained, I do not accept the defendant's version of how the sum of $633,774.57 of the plaintiff's money came under her control. At her request, the plaintiff gave to her a bank cheque for $633,774.57 (made payable to Italasia Pty Ltd) which she deposited in the company's account. The point of present significance is that, although she denies that the sum of $633,774.57 was a loan, she acknowledges that it came into her possession and under her control on the basis that it was money belonging to the plaintiff.
4. The experts, in substance, agreed that via two term deposits (one of $300,000 and the other of $333,774.57), replacing earlier dated deposits in those amounts which were likely cancelled, term deposits in the name of the plaintiff in the total sum of $633,774.57 were current as at 28 March 2011.
5. The first report of the plaintiff's expert records that those two term deposit accounts were closed on 28 March 2011. That evidence was neither challenged nor contradicted.
6. The experts agreed that they could find no evidence of interest having been paid to the plaintiff on the amount of $633,774.57. Nor does the evidence disclose what happened to interest paid by the Bank on the term deposits relating to that sum.
7. The Second Alleged Loan. The experts agreed that the amount of $312,000 was transferred by the plaintiff to the defendant on 25 March 2009 and that they were unable to conclude that the amount had been repaid.
8. The Third Alleged Loan. The experts agreed that the amount of $159,738.47 was transferred from a term deposit (likely from the plaintiff) to the defendant on or about 1 May 2009 and that they were unable to conclude that it had been repaid.

The Alleged Misappropriations

1. The experts agreed that the amount of $7,000 was on 26 June 2008 transferred from a Commonwealth Bank account of the plaintiff, but they could not identify the destination of the transferred funds or the person who authorised or effected the transfer.
2. They agreed that on 1 September 2008, $7240 was transferred from a Citibank account of the plaintiff to a Commonwealth Bank account of the defendant and that they were unable to conclude that the amount had been repaid.
3. They agreed that an amount of $79,277.11 was on 7 October 2008 transferred from a Citibank account of the plaintiff to a Commonwealth Bank account of the defendant. They were unable to identify who authorised or effected the transfer. They regarded it as possible that the amount went towards the creation of a term deposit of $91,000 on the following day, but they were unable to trace the source of that term deposit and they were unable to conclude that the amount of $79,277.11 had been repaid.
4. They agreed that on 11 December 2008, $162,135 was transferred from a Citibank account of the plaintiff to a Commonwealth Bank account of the defendant. They regarded it as possible that that amount was part of a withdrawal of $322,245 eight days later, but they were unable to trace the application of those funds, and they were unable to conclude that the sum of $162,135 had been repaid.
5. They agreed that on 6 April 2009, $107,952.69 was paid from a Commonwealth Bank account of the plaintiff. They were unable to identify who effected or authorised the payment or who received the funds.
6. They agreed that on 10 August 2009, $335,000 was transferred from one Commonwealth Bank account of the plaintiff to another of his Commonwealth Bank accounts. The amount was then transferred, that same day, with the narration "Transfer to multicurrency account …". They agreed that it is likely that that transfer was represented by a term deposit made on that day in the name of the plaintiff.

ANALYSIS OF THE FIRST ALLEGED LOAN

1. An analysis of the first alleged loan (of $633,774.57) is attended by several difficulties, not the least of which is the fact that it was undocumented apart from an incomplete set of bank records and the ultimate destination of the funds represented by the plaintiff's bank cheque dated 6 May 2008 is not the subject of definitive evidence.
2. The defendant's affidavit evidence that it was the plaintiff who deposited the sum of $633,774.57 into the account of Italasia Pty Ltd without reference to her was contradicted by her in cross-examination.
3. It does not, in any event, ring true. That is because Italasia Pty Ltd was the corporate vehicle through which the defendant and an Italian family conducted an embroidery business. The plaintiff is unlikely simply, without notice to the defendant and some form of agreement with her, to have deposited any money (let alone as much as $633,774.57) into the Bank account of a company with which he had no connection beyond a friendship with the defendant.
4. On the other side of the story, it is not clear why the defendant established two term deposits ($300,000 and $333,774.57) totalling $663,774.57 in the name of the plaintiff, drawing on the plaintiff's funds in Italasia Pty Ltd Pty, within days of the plaintiff's bank cheque being deposited into the company's account. The plaintiff's bank cheque was deposited in Italasia Pty Ltd's account on 7 May 2008. The term deposits were formally established on 19 May 2008 with a date of commencement recorded (for reasons not established by the evidence) as 14 May 2008.
5. Nor is it clear why the defendant retained, and rolled over, those term deposits so that the funds represented by them remained available in term deposit accounts that were closed on 28 March 2011.
6. In her affidavit evidence the defendant contended that she had repaid the sum of $633,774.57 to the plaintiff by the two term deposits (for $300,000 and $333,774.57) opened by her on 19 May 2008 with a commencement date of 14 May 2008.
7. That evidence does not, of itself, establish any form of repayment of the $633,774.57 to the plaintiff. The term deposits remained in isitu until they were "closed" on 28 March 2011. An inference available from the letter dated 29 March 2011 written by the plaintiff's solicitor to the Commonwealth Bank is that it was not the plaintiff who "closed" the term deposits on 28 March 2011.
8. The only person other than the plaintiff who had authority to "close" the term deposits was the defendant. Up until the time the term deposits were "closed" she was, as she admitted in cross-examination, an authorised signatory with power to transfer all of the money in the plaintiff's accounts to herself should she wish to do so.
9. On her evidence (but not that of the plaintiff) she had forewarning of the plaintiff's intention to visit the Campsie Branch of the Commonwealth Bank on 28 March 2011. Whether or not she took an opportunity on that date to "close" the term deposit accounts and to appropriate the proceeds of the deposits for her own purposes, she appears to have had an opportunity to do so and the means of doing so.
10. Albeit in a different context (relating to a sum of $385,633.10 transferred by the defendant to an account of the plaintiff on 25 March 2011), paragraph 9H of the defendant's defence records that she transferred funds of the plaintiff (from an account of hers at the Commonwealth Bank) on 28 March 2011. This is consistent with the plaintiff's evidence that he met the defendant at the Campsie Branch of the Commonwealth Bank on 28 March 2011 when, in cross-examination, she said she visited that branch of the Bank because the plaintiff "needed to transfer money … back to China" so she went there to help him.
11. The terms of her written statement dated 29 March 2011 provided to the Campsie Branch of the Commonwealth Bank are open to different constructions. However, they are consistent with the defendant having "closed" the term deposit accounts on 28 March 2011 before the plaintiff had an opportunity to retain the solicitor who wrote the letters dated 29 and 30 March 2011 to the Bank. Those letters are consistent with a finding that the plaintiff was not, in a practical sense, in a position to close any of his accounts with the Bank until 30 March 2011.
12. The absence of any evidence of a response by the Bank to the solicitor's letters is notable, but consistent with the plaintiff's evidence that he and his solicitor attended the Campsie Branch of the Bank on 30 March 2011, at which time he closed all his accounts with the Bank.
13. The available bank records are apparently silent as to the date upon which the plaintiff's accounts other than the two term deposits totalling $633,774.57 were closed.
14. The absence of any evidence from a bank officer who dealt with the plaintiff's accounts in March 2011 or from the plaintiff's solicitor is notable, and unexplained, but no submission was expressly made by the defendant by reference to Jones v Dunkel.
15. The circumstances in which the $633,774.57 was provided to the defendant by the plaintiff on or about 6 May 2008 may throw light upon subsequent events.
16. It is common ground that in May 2008 the defendant was, and the plaintiff was not, engaged in the commercial partnership conducted through Italasia Pty Ltd.
17. I accept that the defendant told the plaintiff at about that time that her Italian partners were looking to retire from the business and that she wanted to position herself to acquire equipment of the business in aid of her continuing embroidery business.
18. I infer from this that it may have suited the defendant to retain the plaintiff's $633,774.57 in term deposits in his name, but under her control, in case she needed funds for her evolving business purposes.
19. The defendant's placement of the plaintiff's $633,774.57 in term deposits in May 2008 might be thought to be consistent with an intention on her part, and that of the plaintiff, that the funds would be retained for more than a little time.
20. The plaintiff's account of the circumstances in which he came to provide to the defendant a bank cheque for $633,774.57 on or about 6 May 2008 is found in paragraph 17 of his affidavit affirmed 24 June 2019. With editorial adaptation, that paragraph is in the following terms (with emphasis added): "On 5 May 2008, Xin Mei [the defendant] and I had a conversation, during which words to the following effect were said: Xin Mei [said]: 'The big boss, Antonio Cipolla, the Italian-Australian, do you remember him [the person to whom the defendant had introduced the plaintiff on an earlier occasion]?' I [said]: 'Yes, of course. What's wrong?' Xin Mei: 'He is too old to run the business and he wants to sell the factory premises to repay the debts of Italasia Pty Ltd.' I: 'I remember the premises. You told me you have been doing business together with him and his family for a long time.' Xin Mei: 'Yes. But now I still have orders and lots of customers. When he sells the factory premises and equipment, I will need to secure a new factory and buy new equipment because I do not want to lose the orders and customers.' I: 'What do you want to do then?' Xin Mei: 'I would like to borrow money from you for Italasia business so that when Antonio sells the factory I can secure equipment and factory premises to continue the company's business. Our tailor also said we need to upgrade the industrial embroidery machinery because the current ones we use always get stuck.' I: 'I see. Machines made in Japan are very good, and I can help sourcing embroidery machinery for you in Japan. I'm doing business in international trade and I can arrange the export of such machines to Australia for you. And in the future, if you need spare parts or something, I can arrange them to be delivered to your company. It would be very convenient.' Xin Mei: 'The tailor recommended to me embroidery machinery from Germany or Italy. We have been working for a long time together. So I would prefer to follow that recommendation. Don't worry. If the company cannot repay you the money, I will repay you and if necessary, will sell my own properties to do so. You have seen my big house already and my uniform business operations in Australia.' I: 'Of course I trust you. Okay, how much do you need and how long do you need my money for?' Xin Mei: 'I need about $640,000 from you. I am not sure how long I need it for as I do not know when Antonio will sell the factory. But I do need you to give me plenty of notice when you require me to pay you back the money as I would need time to make alternative financing arrangements from the time you give me that notice to pay you back.' I: 'Okay okay. How about I give you no less than two months' notice when I require you to pay me back the money?' Xin Mei: 'That should be enough.' I: 'Since we are such close friends, I will help you and your company by lending the money, but you must promise me you will only apply those funds to the purchase of factory premises and equipment. Otherwise, I will not lend you such a big amount and you know that I am happy for you to use my money for the business assets. So it is safe for me. You need not worry about repaying it unless and until I give you notice requiring you to pay me back the money, in which case, I will give you at least two months prior notice.' Xin Mei: 'Thank you so much. Of course, it will only be used to buy the factory and equipment. You know I personally have several properties too, which I would sell to pay you back if necessary and I am not going anywhere. The only other thing is that when I take over the business without the support of the Italians, I won't be able to pay interest.' I: 'That's all right. The money would not earn any interest in Japan and you are earning interest for me on my other money. Besides, I do not need it at the moment.'"
21. In his affidavit, the plaintiff explains that on the next day, 6 May 2008, he went to his branch of Citibank in the central business district (where there was a Chinese speaking bank officer) and obtained a bank cheque in the amount of $633,774.57 payable to Italasia Pty Ltd, funded by the proceeds of a matured term deposit that had been procured by the defendant, and he gave the Bank cheque to the defendant personally later that day.
22. The plaintiff's account of his conversation with the defendant on 5 May 2008 is consistent with the fact that the defendant very quickly transferred the sum of $633,774.57 from the account of Italasia Pty Ltd into which it had been deposited into term deposits, in the name of the plaintiff, under her day-to-day control.
23. Senior counsel for the defendant very properly referred me to well known warnings about the frailty of human memory and the need for caution and acceptance of uncorroborated evidence of distant conversations: Watson v Foxman (1995) 49 NSWLR 315 at 319; Atanaskovic v Birketu Pty Ltd [2019] NSWSC 1006 at [366]; Volonakis v Erceg [2019] NSWSC 1875; and Fox v Percy (2003) 214 CLR 118 at [31].
24. That warning was accompanied by emphasis placed upon difficulties in the identification and tracing of money flows by reason of deficiencies in the availability of banking records.
25. Counsel also reminded me of the need to take into account section 140 of the Evidence Act 1995 NSW (the statutory embodiment of Briginshaw v Briginshaw (1938) 60 CLR 336 at 362). He also referred to the following extract of the judgment of Campbell JA in Brown v NSW Trustee and Guardian [2012] NSWCA 431 at [52]: "To satisfy an onus on the balance of probabilities is not simply a matter of asking whether the evidence supporting that conclusion has greater weight than any opposing evidence. As well, both under the common law and under section 140 of the Evidence Act 1995, the evidence must be enough to enable the Court to feel actual persuasion that a particular fact is so. … It is perfectly possible for there to be a scrap of evidence that favours one contention and no countervailing evidence but for the judge to not regard the scrap of evidence as enough to persuade him or her that the contention is correct."
26. I approach my task of assessing the plaintiff's evidence conscious of a need for caution.
27. Senior counsel for the defendant did not contend that it was not open to the Court to accept the plaintiff's evidence. He urged only, and properly, that caution was required in the acceptance of that evidence and that I should be comfortably satisfied of its correctness before accepting it.
28. Taking into account the course of events relating to the sum of $633,774.57 between the time when (on 6 May 2008) the plaintiff obtained the Bank cheque in that amount payable to Italasia Pty Ltd and the time when (on 28 March 2011) term deposits in the same total amount were closed, and the parties' competing narratives, I am comfortably satisfied that the plaintiff lent that sum to the defendant on or about 6 May 2008 and that it is more probable than not that she did not repay the loan to him or allow him to receive the proceeds of the term deposits when closed on 28 March 2011. In any event, I am not satisfied that the defendant has satisfied any onus she has to prove the fact of repayment.
29. Despite impediments in the way of accepting the reliability of the plaintiff's account of his conversation with the defendant on 5 May 2018 (in paragraph 17 of his affidavit affirmed 24 June 2019) - principally the lack of any contemporaneous documentation, the passage of time between the conversation and the affidavit and the course of the plaintiff's pleadings - I accept that evidence as substantially correct, including the plaintiff's account as to the parties' agreement that the plaintiff's advance of $633,744.57 would be repayable upon two months' notice. The requirement of two months' notice, proffered by the defendant herself, is consistent with the subsequent course of events, including the almost immediate investment of the funds in term deposits that were subsequently rolled over. I am comfortably satisfied that the evidence of the plaintiff about the circumstances in which the $633,744.57 transaction came about is correct.
30. In reaching that conclusion I take into account the possibility that the plaintiff's evidence was tailored to meet the observations of Brereton J in In the matter of Italasia Pty Ltd [2017] NSWSC 811 at [18]. I accept the plaintiff's evidence that the original form of his statement of claim did not reflect the true position because of a misunderstanding on the part of his then solicitor.
31. My acceptance of the plaintiff's evidence carries the consequence that I formally find that the agreement of the parties was, as the plaintiff contends, that the first of the alleged loans was repayable "if and when demanded" and on two months' notice. That, in turn, carries the consequence that I formally hold that the plaintiff's entitlement to recover the loan in debt has not been extinguished by operation of sections 14 and 63 of the Limitation Act.

ANALYSIS OF THE SECOND ALLEGED LOAN

1. I accept that the plaintiff lent the defendant on or about 25 March 2009 the sum of $312,000.
2. I am not satisfied that the defendant has discharged her onus of establishing repayment of that sum. I am not satisfied that the defendant's creation of term deposits in the name of the plaintiff in the total sum of $495,000 or thereabouts (by transactions effected on or about 14 May 2009 and 3 February 2010) had any connection with either or both of the second and third alleged loans. The defendant's case is a rationalisation of incomplete records, epitomised by the absence of any correlation between amounts lent and amounts allegedly repaid and by the absence of any pre-litigation protest or explanation that the loans had been repaid.
3. A critical question is whether the plaintiff has discharged his onus to prove that the terms of the loan were otherwise than for repayment on demand.
4. In paragraph 30 of his affidavit affirmed 24 June 2019 the plaintiff swore to a conversation which preceded the making of the loan on or about 25 March 2009. With editorial adaptation, it is in the following terms (with emphasis added): "In or about mid-March 2009, I received a phone call from Xin-Mei [the defendant] while I was in Japan, during which words to the following effect were said: Xin-Mei: 'My company mortgaged the factory premises to the Bank when we purchased it and we want to borrow some money from your bank account in Australia to repay some of the mortgage debt. I am not going to let you earn nothing this time. I have been helping you manage your accounts here and putting your money into term deposits. Rather than sitting your money there and earning deposit interest, what about you lend us and the company will pay you interest at the same rate as the Bank charges and I will transfer the interest to your CBA account every month until we repay the principal.' I: 'If I lend you the money, it is primarily because I trust you, not because how much interest I can earn. The amount of interest earned on the loan is secondary consideration to me. How much do you need actually and how long do you need it for.' Xin-Mei: 'We need $312,000. As to how long, could I suggest the same as last time? Just give me two months' prior notice when you require me to pay the money back. I will provide you with a note acknowledging the loan. If you agree, I can do this without you coming to Australia because I manage your account and have your authority to move the funds. I will send you the note and a receipt for the transfer.' I: 'As long as you use the loan for your company mortgage repayment, I am okay with that. But you must let me know in advance if the company wants to sell the property. Because if I lend you the money to repay the mortgage for the factory premises, I should be entitled to the equity of the factory premises.' Xin-Mei: 'Thank you so much for your help. Of course you will have the security of an interest in the factory. But I personally have properties which could cover the repayment too and will sell them if necessary as you have my personal guarantee for the loan as you are doing this for me, not the factory. When do you plan to come next time? I need the money this month.' I: 'I have not decided yet. I need to take care of my business here. I will let you know when I come next time. You don't need me to come in person for the transfer of the money, do you? You have authority and you can do it without my coming in person to Australia.' Xin-Mei: 'No. Of course, but I'd love to see you soon.'"
5. The defendant's written acknowledgement of the loan of $312,000 dated 25 March 2009 is a mixed blessing for both parties. Notwithstanding the defendant's characterisation of the transaction as a sham loan, the acknowledgement confirms that the transaction was a loan and exposes her to the criticism that she arranged for the borrowed funds to be paid into her personal account rather than an account of Italasia Pty Ltd. The absence of any express definition of the duration of the loan favours a finding that the loan was simply repayable on demand. On the other hand, the document expressly bears the character of "a receipt", not a document one would ordinarily expect necessarily to set out the terms of a loan agreement. That character of the document is reinforced by its notation that the borrowed sum "has been transferred". It also serves to identify the defendant personally as the borrower.
6. The impediments to acceptance of the plaintiff's evidence of his conversation with the defendant "in or about mid-March 2009" are similar to those encountered in relation to the first alleged loan, except for the added complication of the written acknowledgement dated 25 March 2009. There is no contemporaneous documentation of any discussion about the duration of the loan. The passage of time between the conversation and the plaintiff's affidavit is large. The course of the plaintiff's pleadings does not inspire confidence in the plaintiff's evidence. The Court also needs to take into account the possibility that that evidence was tailored to meet the observations of Brereton J in In the matter of Italasia Pty Ltd [2017] NSWSC 811 at [18].
7. It is with a consciousness of a need for caution in accepting the plaintiff's evidence that I record that I am comfortably satisfied that the parties' entry into the loan transaction of 1 May 2009 or thereabouts was preceded by a conversation between them substantially in the terms to which the plaintiff has deposed. I accept his defence of a retentive memory about the duration of the loan that the terms of the loan were of particular importance to him and that he had turned his attention to them several times between 2009 and the commencement of these proceedings when he (unsuccessfully) chased the defendant for repayment. I accept also his explanation that any misstatement of his case in earlier versions of his statement of claim was the product of a failure on the part of his former solicitors to appreciate his instructions, coupled with his inability to read English. In my assessment, his evidence has been honestly given.
8. I am comfortably satisfied that the evidence is correct. That carries the consequence that I find that the plaintiff's loan of $312,000 was not repayable simply "on demand" but (in common with the first alleged loan) "if and when demanded" and on two months' notice. It has the further consequence that the plaintiff's entitlement to recover the loan in debt has not been extinguished by sections 14 and 63 of the Limitation Act.

ANALYSIS OF THE THIRD ALLEGED LOAN

1. I accept that on or about 1 May 2009, the plaintiff lent to the defendant the sum of $159,738.47.
2. For the same reasons given in respect of the second alleged loan, I am not satisfied that the defendant has discharged her onus of proving the fact of repayment of the third alleged loan.
3. As with the first two loans, a critical question is whether the plaintiff has discharged his onus of establishing that the loan was made on terms otherwise than repayment on demand.
4. In paragraph 32 of his affidavit affirmed on 24 June 2019 the plaintiff deposes to the following conversation with the defendant, following upon the conversation about the second alleged loan set forth in paragraph 30 of the affidavit. With editorial adaptation, paragraph 32 is in the following terms (with emphasis added): "On May 2009 [sic], I received another telephone call from Xin-Mei [the defendant] during which words to the following effect were said: Xin-Mei: 'I need to borrow some more money from you one more time because we are short of cash flow now.' I: 'Isn't my money lent to you last time sufficient?' Xin-Mei: 'Yes. It was sufficient when we thought we only needed that amount, and the rest I thought the Italians could raise from their connections. But it seems like they could not make it. We will not borrow a lot from you this time. I promise. We will pay you interest the same as last time.' I: 'Okay okay. Tell me how much you need and for how long. Xin-Mei: 'I will provide you with the exact figure later when I prepare the borrowing note. Everything else would be the same as last time. The figure will be roughly $160,000.' I: "Okay okay, then. I am okay with that amount. The same conditions for the loan as before?' Xin-Mei: 'Yes. I cannot thank you enough for this. You will receive the borrowing note today by facsimile.' I agreed to lend this money to Xin-Mei and her company because I did not want to damage my friendship with her and believe that I had the factory premises as security."
5. This conversation is closely aligned, in time and content, with the plaintiff's conversation with the defendant in relation to the second alleged loan.
6. My analysis of the evidence relating to the later (third) alleged loan is substantially the same as my analysis of the earlier (second) alleged loan. Criticism of the defendant's written acknowledgement dated 1 May 2009 is substantially similar to criticism of her written acknowledgement dated 25 March 2009. The plaintiff's evidence of his conversation with the defendant in May 2009 is susceptible to the same criticism recorded in relation to their conversation of mid-March 2009 (and, without the mixed blessings of a written acknowledgement, of the parties' conversation of 5 May 2008).
7. In the defendant's evidence (essentially a denial of the plaintiff's evidence) does not lend itself to particular criticisms of the plaintiff's evidence.
8. Accordingly, I confirm that I am comfortably satisfied that the third alleged loan (of 1 May 2009 or thereabouts) was preceded by a conversation between the parties substantially in the terms to which the plaintiff has deposed.
9. That carries a consequence that I am satisfied that the loan was made on terms, as alleged by the plaintiff, otherwise than simply "on demand" and that the plaintiff's entitlement to recover the loan, in debt, has not been extinguished by the operation of sections 14 and 63 of the Limitation Act.

ANALYSIS OF THE ALLEGED MISAPPROPRIATIONS

1. The plaintiff's allegation that he is entitled to recover equitable compensation for alleged misappropriations by the defendant of amounts totalling $698,604.80 is based upon his rationalisation of banking records made available to him upon subpoena during the course of the current proceedings.
2. The force of those allegations depends not so much upon questions of credit as upon objective factors.
3. I accept that the plaintiff honestly believes that he did not effect or authorise the several transfers underlying his claim for compensation.
4. I have doubts about the defendant's denial of responsibility for the transfers even though she played a major role in management of the plaintiff's Australian funds. In my assessment, she has no real memory of particular transactions and her evidence is dependent upon a reconstruction of incomplete records.
5. However, objectively, substantial impediments stand in the way of acceptance of the plaintiff's case.
6. First, that case is based upon the plaintiff's rationalisation of an incomplete set of contemporaneous records.
7. Secondly, the plaintiff's case ultimately depends upon acceptance of the reliability of his memory of what occurred in distant days.
8. Thirdly, and perhaps more importantly, the plaintiff's delay in commencement of proceedings after he terminated the defendant's authority to operate bank accounts in his name (no later than 30 March 2011 or thereabouts) is coloured by an apparent failure on his part to exercise reasonable diligence in discovery of the alleged misappropriations. That is because, from at least 30 March 2011 or thereabouts: 1. the plaintiff was on notice, in fact, of irregular dealings with his funds by the defendant which, on his own evidence, induced him to revoke her authority to operate his bank accounts. 2. as the undisputed authority for operation of accounts in his name, he had it within his power to obtain from his banks records relating to dealings with his accounts. 3. had he pursued enquiries with the banks in a timely manner, there is no reason to believe he would not have discovered the alleged misappropriations within the six year period following his revocation of the defendant's authority.
9. Although the plaintiff relied heavily on the defendant's management of his accounts before 30 March 2011 or thereabouts, he did, well before that time, have access to a Chinese speaking member of the Bank staff of both Citibank and the Commonwealth Bank.

The Problem of Delay

1. Because each of the sums totalling $698,604.80 allegedly misappropriated by the defendant was "appropriated" more than six years before the commencement of these proceedings, and the parties have invited the Court to proceed on the basis that, upon an exercise of equitable jurisdiction, a six year limitation period is the period, if any, that should be treated as analogous, a critical question is whether the plaintiff has discharged an onus of establishing that the defendant conducted herself in a way which "fraudulently concealed" her unauthorised transactions from him, in a way which he could not with reasonable diligence have discovered, rendering it unconscionable on her part to rely upon the lapse of time as a bar to the plaintiff's claims and inequitable for her to be allowed to do so.
2. The Plaintiff's Case. On the plaintiff's case, it would be inequitable to allow the defendant to rely on the lapse of time to defeat the plaintiff's claims, by an application of the Limitation Act by analogy, because: 1. In not disclosing the unauthorised transactions to the plaintiff before the commencement of these proceedings the defendant was acting in breach of a continuing obligation to account to him as a fiduciary. 2. The defendant hid the unauthorised transactions from the plaintiff by not providing him, in a timely manner, with bank statements (addressed to him but sent to a post office box under her control) which would have disclosed unauthorised transactions. 3. The defendant did not ensure that the plaintiff received, in a timely manner, copies of bank records relating to term deposits, some of the accounts for which (opened by the defendant) misstated the plaintiff's address in Japan. 4. The defendant borrowed funds from the plaintiff without disclosing to him that she had accessed his funds for her own purposes. 5. The defendant's conduct occurred in a context in which, because of his absence overseas and his lack of facility with the English language, the plaintiff was peculiarly dependent upon her honesty and integrity in dealing with his funds. 6. It was only in 2010, when the plaintiff accessed internet banking facilities, that he might be said to have had some practical means of auditing the defendant's dealings. However, there is no evidence that his internet access would have enabled him to review historical accounts. All the unauthorised transactions revealed during the course of these proceedings occurred a substantial time before the plaintiff acquired internet access to his accounts. 7. There is no basis upon which it can reasonably be held that the plaintiff should have discovered the defendant's unauthorised transactions earlier than he did. He trusted the defendant and was reliant upon her honesty and integrity in dealing with his funds. She had day-to-day access to his accounts. That he was diligent is illustrated by the fact that he was able to monitor the defendant's dealings, and did so, once he obtained internet access to his accounts. 8. This carries the consequence that the plaintiff is not precluded from recovery of equitable compensation for the misappropriated funds by the "direct or indirect" operation of the Limitation Act.
3. The question whether the plaintiff's claim for equitable compensation should be refused by reason of laches on his part is a separate question.
4. In Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 Meagher JA (with the concurrence of Beazley P and Emmett JA) made that point in the following terms, at paragraphs [72]-[73]: "[72] The distinction, referred to by Isaacs J in R v McNeil [(1922) 31 CLR 76], between equity applying its own doctrine of laches and adopting, in analogous cases, the measure of time fixed by statute unless there is a "greater equity", is one of substance. The circumstances in which such an equity arises include where fraudulent conduct of the defendant has denied the plaintiff the opportunity to sue within the statutory period. That equity is satisfied by preventing the defendant from taking advantage of the plaintiff's omission to do so. [73] The doctrine of laches is directed to a broader and different question. That question is whether, as between the parties, it would be practically unjust to give relief which otherwise would be just. In answering that question, account is taken of the length of any delay, the nature of acts done during the period of that delay, whether the plaintiff had sufficient knowledge to justify the commencement of proceedings, whether there has been prejudice to the defendant or others and the nature of the relief claimed: see Lindsay Petroleum Co v Hurd [(1874) LR 5 PC 221] at 239-240. That doctrine does not focus on circumstances that would justify not permitting the statute to be relied on because there has been fraud or mistake or misrepresentation or other conduct or circumstances against the consequences of which equity relieves."
5. On the plaintiff's case, although there was a lengthy delay between the time of the defendant's unauthorised transactions and the plaintiff's commencement of proceedings, the defendant's non-disclosure of the transactions and her concealment of banking records relating to them, coupled with the plaintiff's ignorance of them, mean that, as between the parties, it would not be practically unjust to the defendant to require her to compensate the plaintiff for her unauthorised use of his funds.
6. Such a finding would carry the consequence that the defendant's defence of laches would not be upheld, and the plaintiff would be entitled to equitable compensation for the allegedly misappropriated monies.
7. The Defendant's Case. In essence, the defendant's case is based upon three pillars.
8. First, there is no basis for displacement of a six year limitation period (such as the parties have assumed), applied by analogy on a claim for equitable compensation, because the plaintiff could, with reasonable diligence, have discovered the "fact" of the alleged misappropriations no later than 30 March 2011 when he became the sole signatory to his bank accounts.
9. Secondly, in the absence of a complete accounting between the plaintiff and the defendant (neither of whom, on the pleadings, has sought, or offered, such an accounting), the Court cannot safely uphold the plaintiff's claims relating to the alleged unauthorised payments.
10. Thirdly, as between the parties, it would be practically unjust to award equitable compensation against the defendant because of the length of the plaintiff's delay in commencing proceedings and the loss of contemporaneous banking documentation bearing upon the transactions said to have been effected by the defendant without the knowledge or authority of the plaintiff.

Determination

1. In my opinion, the plaintiff is precluded from maintaining his claim for equitable compensation because he made the claim more than six years after the time it first became available to him and, by analogy with the limitation period of six years for which the Limitation Act 1969 NSW provides, it must be taken (by reference to sections 14 and 23 of the Act) to have been barred by an effluxion of time.
2. The plaintiff cannot escape that outcome by a finding of "fraudulent concealment" on the part of the defendant because, in my opinion, he could with reasonable diligence have discovered the alleged misappropriations no later than a time at or about the time when (in early 2011) he determined the defendant's authority to operate his accounts and took personal control of them to the exclusion of the defendant. The "enquiries" he made by subpoena after the commencement of these proceedings could have been made of the banks, in a timely manner, directly.
3. Because these findings are fatal to the plaintiff's claim for equitable compensation, it is not necessary to deal with the defendant's other defences to the claim.

CONCLUSION

1. Subject to allowing the parties to be heard about any award of pre-judgment interest and costs, I propose to enter judgment for the plaintiff in the sum of $1,105,513.04 and otherwise to dismiss the statement of claim.
2. For the reasons I have articulated, the plaintiff succeeds on his claim in debt (for recovery of loans) and fails on his claim for equitable compensation (for alleged misappropriations).
3. Prima facie, pre-judgment interest should be calculated to accrue from 28 May 2011, the date upon which the period of two months expired after the date of the plaintiff's demand for repayment of his loans.
4. Prima facie, costs should follow the event, which I take to be the entry of a judgment in favour of the plaintiff, albeit for part only of his claim.

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. Decision last updated: 15 September 2022