51 There are only two pieces of paper which shed any real light on the resolution of the conflict in the parties' competing versions of their discussions in mid-2001: Annexure "A", which was prepared by Mr Keith Forrester on 16 August 2001 and which refers to a non-refundable "option fee" but does not state what the amount is, although Mr Forrester says that that amount was known and agreed by 16 August; and Annexure "B", prepared by Mr Forrester shortly thereafter, which contains a much fuller statement of the terms of the agreement for sale of shares but does not refer at all to the non-refundable payment. Annexure "A", taken on its own, could lend some support to the Defendants' case; Annexure "B", taken on its own, could lend some support to the Plaintiffs' case. If one simply looks at the terms of the documents, taken together, they are equivocal.
52 In my opinion, the resolution of the case depends essentially on the credit-worthiness of the parties' evidence, as tested in cross examination. The terms of Annexures "A" and "B" themselves are plausible if either version is accepted.
53 I prefer the evidence of the Messrs Forrester to the evidence of Messrs McGraw and Neskovski. My reasons are as follows.
54 First, there was a serious discrepancy between the affidavit evidence and the oral evidence of Messrs McGraw and Neskovski as to when the deposit of $150,000 was first discussed. The time of the discussion was important: the Plaintiffs said there were two meetings at which purchase of the Penrith Land was discussed; the Defendants said that there was only one meeting.
55 In cross examination, both Messrs McGraw and Neskovski were, at first, firm in their recollection that the $150,000 deposit had been first discussed only at the second meeting with the Forrester family on 14 August 2001. However, their affidavit evidence was unequivocal that the discussion had taken place at the alleged first meeting in mid-July 2001.
56 When Mr McGraw was confronted with this inconsistency in his cross examination, he was unable to give an explanation. He said that he was feeling confused because he was suffering from the 'flu and was not "thinking straight" and that he could not concentrate. He asked for a few minutes to recover himself. When the hearing resumed I was informed that Mr McGraw felt unable to continue and had gone to the doctor. I was informed that Mr McGraw would resume his cross examination later.
57 While, to my observation, Mr McGraw was suffering from a cold or something similar, he gave his evidence fluently and confidently up to the point when he was confronted with a glaring and inescapable inconsistency between his affidavit evidence and his oral evidence. His sudden apparent inability to continue at that critical point caused me some disquiet.
58 Mr Neskovski was equally firm in his oral evidence that the $150,000 was first discussed at the 14 August meeting and that the mid-July meeting had discussed only the purchase of the Penrith Land directly.
59 Mr Neskovski was then confronted with his affidavit evidence that the $150,000 payment was first discussed in the meeting in mid-July. He was asked to explain the discrepancy. His answers were evasive and non-responsive. He said at one stage that both versions, although contradictory, were correct. His attempted explanation and his manner in giving it were most unsatisfactory.
60 Much later in his cross examination Mr Neskovski said that the $150,000 payment had been discussed at both the mid-July and the August meetings. This evidence, again, contradicted his affidavit evidence and his earlier oral evidence.
61 Second, it is an inescapable inference that Mr McGraw and Mr Neskovski have colluded in preparing their affidavit evidence as to the critical discussion about the $150,000. As I have noted, what is set out in paragraphs 15 to 17 of Mr McGraw's affidavit of 2 April relating to the discussion is mirrored word for word in paragraphs 25 to 27 of Mr Neskovski's affidavit of the same date, with a very few inconsequential differences.
62 In circumstances to which I will come shortly, the Plaintiffs' solicitor gave evidence as to how the affidavit evidence came to be the same. He said that he separately taken instructions from Mr McGraw and Mr Neskovski as to what was said in the critical discussions with the Messrs Forrester, and he had inserted their accounts in their draft affidavits. He did not show Mr McGraw's draft affidavit to Mr Neskovski nor did he show Mr Neskovski's draft affidavit to Mr McGraw. He sent the draft affidavits to Messrs McGraw and Neskovski respectively.
63 Mr McGraw and Mr Neskovski then came to his office to make changes to the affidavits. He saw them separately and made the changes to their affidavits which they requested. After he had completed that exercise, he noted that the changes had resulted in the critical passages in the two affidavits becoming identical, save for a few minor changes. He expressed his concern to Messrs McGraw and Neskovski but his instructions in respect of the affidavits were confirmed.
64 As I have said, it is an inescapable inference from this evidence that the changes which Messrs McGraw and Neskovski made to their draft affidavits in the critical passages concerning the discussions with the Messrs Forrester were the result of collusion on their part between the time they received their draft affidavits from their solicitor and the time they attended their solicitor's office to make changes.
65 The fact that Messrs McGraw and Neskovski colluded in the preparation of what was obviously the decisive evidence in their case casts a cloud over their credibility as a whole and over their evidence as to the discussion in particular.
66 Third, there was inconsistency in Mr Neskovski's evidence that it was the Plaintiffs who had proposed to the Defendant to make the payment of $150,000 as a sign of good faith, whereas the Plaintiffs' Statement of Claim alleges that it was the Defendants who made the proposition. When asked to explain the discrepancy, Mr Neskovski was unable to give any satisfactory answer.
67 Fourth, on the Plaintiffs' case they were entitled to immediate repayment of the $150,000 in mid-September 2001 when Westpac refused the finance necessary for the purchase of the Nessena shares. Yet Mr Neskovski, whose company had provided the money, made no forthright request to the Defendants that the money should be repaid until late November, according to his evidence. The letter of demand was sent in December 2001 and proceedings were commenced in August 2002.
68 Mr Neskovski's evidence explaining this apparent lack of interest on Activerain's part in pursuing its rights to recover the money was to the effect that Activerain had no particular need for the money at that time. In the context of a real estate development business, which Activerain was carrying on, this is not a convincing explanation. Bearing in mind the fact that Mr Neskovski is, to my observation, an astute and shrewd businessman, the explanation is even less likely.
69 It is open to conclude that the Plaintiffs made no immediate demand for the $150,000 in September 2001 because they did not then believe that they were entitled to it and that they only decided to pursue a claim for its payment when they learned that the Penrith Land had been sold by Nessena to the RTA and another developer and sought to recover some of the loss which they had incurred in their involvement with the Forrester family.
70 Fifth, upon the resumption of Mr McGraw's cross examination, he denied having discussed the content of his affidavit of 2 April 2004 with Mr Neskovski prior to swearing it. When asked to explain how the critical paragraphs of his affidavit were the same, word for word, as paragraphs of Mr Neskovski's affidavit of 2 April, Mr McGraw could offer no explanation except that "if two people spend as much time together as we do, you probably pick up each other's narrative speech patterns" .
71 In view of the evidence of the Plaintiffs' solicitor to which I have referred above, and to the inescapable inference which flows therefrom, I conclude that Mr McGraw's denial of discussion with Mr Neskovski concerning the draft affidavit was untrue.
72 Sixth, it is a fair summary to say that the manner in which Messrs McGraw and Neskovski gave their evidence was rambling and unfocussed, quite apart from the inconsistencies which I have noticed. It seemed to me that much of their evidence, particularly as to the alleged two meetings in July and August 2001, was an attempt at reconstruction.
73 Seventh, in stark contrast, the evidence of the Messrs Forrester was clear, careful and consistent and remained so despite a thorough cross examination.
74 Mr John Forrester was a highly impressive witness. Although now long retired, he is clearly an intelligent and experienced businessman with firm views. He was adamant that because of Macquarie's failure to produce any results under the Joint Venture Agreement by August 2001 and because he and his companies had been incurring considerable holding charges in respect of the Penrith Land during that period, he would not contemplate entering into another proposal with the Plaintiffs for the acquisition of the Penrith Land unless they first paid a non-refundable sum of $150,000 as a demonstration of good faith. He said that he did not really trust the Plaintiffs.
75 Mr Forrester was clear and consistent in his evidence that there was only one meeting with Messrs McGraw and Neskovski and Keith, Bradley and Gregory Forrester, and that that meeting occurred on 14 August 2001. He was unshakeable in his account of what was discussed and agreed at that meeting.
76 Mr Forrester's evidence as to his requirement for a non-refundable payment of $150,000 was probable in the light of his disappointment in Macquarie's failure to perform under the Joint Venture Agreement.
77 Mr Keith Forrester was also a highly impressive witness. He is an accountant by training and has spent many years in senior executive positions. Like his brother, he is now long retired. His evidence was consistent, clear and careful, to the point of being punctilious. He confirmed the substance of his brother's evidence of what was said in the 14 August meeting.
78 I find convincing Mr Keith Forrester's evidence that at the meeting with Mr Neskovski on 16 August 2001 he wrote out only Annexure "A" and not Annexure "B", as Mr Neskovski says. Mr Forrester is clearly not in good health and he gave his evidence from a wheelchair. I accept his evidence that he finds writing difficult. Mr Neskovski says that his meeting with Mr Forrester lasted only about thirty to forty minutes. Bearing in mind time for discussion and time for writing slowly and painfully, I find it difficult to accept that Mr Keith Forrester wrote out the three pages of Annexure "B" in the course of that meeting.
79 Further, Annexure "B" bears the date 17 August 2001, not 16 August 2001. It was not put to Mr Forrester that even though he wrote out Annexure "B" on 16 August he inserted the incorrect date.
80 It is strange that Mr Forrester left blank the two figures for the repayment and retention sums in the final paragraph of Annexure "A" when, he says, at the time he wrote the document he knew what those figures were. His explanation is that when he came to write the final few lines of the document, Mr Neskovski was already running late and was standing up, ready to leave, so that he just left the figures to be inserted later.
81 It is also strange that Annexure "B" makes no reference to the payment of $150,000 being non-refundable. Mr Forrester's explanation is that he is not a lawyer and that he regarded the payment of $150,000 as a separate matter, already concluded and non-refundable in any circumstance, whereas Annexure "B" was designed to record the terms of a conditional share sale agreement to be incorporated in a formal document.
82 Human experience teaches that people do not always act with logical consistency on the spur of the moment and that their conduct, when examined minutely after the event through legal eyes, can seem anomalous - yet their evidence can be true. I have come to the conclusion that this the case with Mr Keith Forrester's evidence. I reach that conclusion aided by the consistency of his evidence generally, its conformity with the evidence of Mr John Forrester which I regard as reliable, and the fact that the evidence is not inherently improbable. To reject Mr Forrester's evidence as to what occurred on 16 August would mean acceptance of Mr Neskovski's evidence in that regard. For the reasons which I have given, I prefer the evidence of Mr Keith Forrester.
83 Having accepted Mr Keith Forrester's evidence, it follows that his reference in Annexure "A" to the non-refundable "option fee" supports the conclusion that there was an agreement made on 14 August that the sum of $150,000 would be paid by the Plaintiffs as a demonstration of good faith and that it would be non-refundable in any circumstance.
84 Gregory and Bradley Forrester gave affidavit evidence as to the critical discussions and they were also cross examined. The paragraphs in their affidavits dealing with the critical discussions about the $150,000 payment are in virtually identical terms.
85 When I expressed my concerns at the identity of affidavit evidence filed by both the Plaintiffs and the Defendants, observing that such identity could have been produced by collusion between witnesses or by some act of their solicitors, the solicitors for both parties were called to evidence as to the process by which they produced the relevant affidavits. I have already recounted above the evidence given by the Plaintiffs' solicitor.
86 The Defendants' solicitor said that he had interviewed each of Gregory and Bradley Forrester separately and had taken down their statements as to the critical discussions. He did not show the draft affidavit of Gregory to Bradley, nor did he show the draft affidavit of Bradley to Gregory. Both witnesses were sent their respective drafts and made some changes. Gregory swore his affidavit first.
87 The solicitor says that when he came to prepare Bradley's affidavit for swearing, he noted that Bradley's evidence about the critical discussions was very much to the same effect as Gregory's evidence although not identical. He decided to 'cut and paste' the relevant passage from Gregory's affidavit into Bradley's affidavit.
88 The Defendants' solicitor is young and relatively inexperienced. It appears that he was not preparing these affidavits under the direct supervision of a senior solicitor of his firm. Counsel for the Defendants frankly and properly acknowledges that, ultimately, it was his responsibility to ensure that the evidence adduced by the Defendants was proper and appropriate to be given. He says that he did not notice that the relevant paragraphs in the affidavits of Bradley and Gregory were in the same terms.
89 Clearly, the Defendants' solicitor failed to appreciate that the evidence of each witness must be in the words of that witness and that it is totally destructive of the utility of evidence by affidavit if a solicitor or anyone else attempts to express a witness' evidence in words that are not truly and literally his or her own.
90 Save in the case of proving formal or non-contentious matters, affidavit evidence of a witness which is in the same words as affidavit evidence of another witness is highly suggestive either of collusion between the witnesses or that the person drafting the affidavit has not used the actual words of one or both of the deponents. Both possibilities seriously prejudice the value of the evidence and Counsel usually attacks the credit of such witnesses, with good reason.
91 Where the identity of evidence is due to collusion, the devaluation of the evidence is justified but where, as in the present case, the identity of evidence is due entirely to a mistake on the part of a legal adviser, a witness' credit and a party's case may be unjustly damaged.
92 I accept the evidence of the Defendants' solicitor as to how the identity of the affidavit evidence of Gregory and Bradley Forrester occurred, and that the mistake was an honest one on his part. The explanation entirely removes any suspicion that there has been collusion on the part of Gregory and Bradley Forrester in the preparation of their affidavit evidence.
93 I should add that it is clear to me that the mistake which the Defendants' solicitor has made in the preparation of the affidavits of Bradley and Gregory Forrester has caused him acute distress. My experience of this solicitor in other matters before the Court convinces me that he is a competent and diligent solicitor and that this mistake was an uncharacteristic error of judgment which should not reflect on his career.
94 I turn now to an examination of the evidence which Gregory and Bradley Forrester have given in cross examination.
95 Gregory is an accountant in a commercial firm. He qualified in law but has never practised. He confirmed the substance of the evidence given by Mr John Forrester and Mr Keith Forrester as to the critical discussions on 14 August 2001 and did so in his own words. His evidence was clear, careful and consistent. I can see no reason not to accept it.
96 Bradley Forrester has a degree in economics and in law. He has not practised as a lawyer and is now a builder. He also confirmed, in his own words, the substance of the evidence given by Mr John Forrester and Mr Keith Forrester as to the critical discussions on 14 August. Like Gregory, he gave his evidence clearly and consistently. I can see no reason not to accept it.
97 For these reasons, I do not accept the evidence of Mr McGraw and Mr Neskovski as to the discussions which took place concerning the payment of the sum of $150,000. I find, in accordance with the evidence of the Messrs Forrester, that there was only one meeting in which the payment was discussed, namely, a meeting on 14 August 2001, and that at that meeting it was agreed that the payment by the Plaintiffs of the sum of $150,000 would be non-refundable in any event. It was in consideration of that agreement Mr John Forrester agreed that the sale of the shares in Nessena in which he had the beneficial interest could proceed upon the other terms discussed.
98 It follows that the Plaintiffs' claim fails on the facts.