Merlin Advisors Pty Limited v Coombs

Loan Term Sheet

1. Exhibits 5 and 6 are documents put before me by the defendant. Exhibit 5 has a title, "Loan Term Sheet", and bears, at its foot, "11 February 2017". Exhibit 6 bears a heading, "Loan Term Sheet Extension", and bears, at its foot, "7 September 2017". Neither of the documents put before me has been executed by any person, but it would appear from the oral evidence that if these documents were not actually executed by anybody, they were certainly acted upon.
2. According to the terms of Exhibits 5 and 6, the parties to the agreements which they purport to record were Andrew Wilkinson, Tony Coombs, Flying Tigers Ltd, Mr David Venn-Brown of Turramurra (Mr David Venn-Brown being generally referred to in the evidence as Mr Wilkinson's uncle). The two documents which I am currently discussing describe Flying Tigers and David Venn-Brown as the parties, and Mr Wilkinson and Mr Coombs as, "the guarantors".
3. Exhibit 5, under heading, "Terms", says this: "The parties and the guarantors agree that this Term Sheet and its terms are legally binding. This Term Sheet sets out the material terms of the commercial agreement between The Parties and The Guarantors. 1. Purpose: The purpose of the Term Sheet is to set out lending terms between The Parties. 2. Principle: The DVB [sic, scil. David Venn-Brown] agrees to lend [to] FT [Flying Tigers Limited] the amount of $100,000 to be paid into the 'Nominated Account' with the following details: [redacted a bank account held by the plaintiff company] 3. Draw Down: Loan drawdowns will be made in $20,000 increments, the first occurring on the Loan Date. 4. Subsequent drawdowns will be paid by DVB into the nominated account within 10 working days of DVB receiving a request from FT. 5. Loan Date: The 'Loan Date' is 15 February 2017. 6. Interest: Interest will be charged at a fixed rate of 7% per year, calculated monthly on drawn funds, paid on the Term Date or every six (6) monthly from the Loan Date if the Duration is extended. 7. Interest will be charged at a fixed rate of 2% per year calculated monthly on all undrawn funds, paid on the term date or every six (6) monthly from the loan date if the duration is extended. 8. Duration: The loan is for a period of six (6) months from the Loan Date to 15 August 2017 ('Term Date'). 9. Unless otherwise extended by The Parties, the full outstanding Principle [sic] and interest is payable in full on the Term Date. 10. Early repayment: FT may, at its discretion, and without penalty, repay the full outstanding amount prior to the Term Date. 11. Applicable Law: The loan is governed by the laws of NSW. 12. Guarantee: The Principle [sic] and interest is wholly and irrevocably guaranteed both by the guarantors. Each guarantee is responsible for 50% of the liability. This loan ranks above all others and is due in full prior to any monies payable to any other creditors."
4. Thereafter appear the places where the document was to be executed. Exhibit 6, the document headed "Loan Term Sheet Extension" extends the duration of the loan for a further six months to 15 February 2018.

Deed of Acknowledgment of Debt and Loan Agreement

1. The principal document relied upon by the plaintiff is a deed of acknowledgement of debt and loan agreement bearing date 31 July 2019, which is annexed to Exhibit A, commencing at page 6 of the annexure to Exhibit A. Page 6 is, in fact, a cover sheet. The deed itself commences on page 7, the first page of 14 pages. The parties to the deed are David Venn-Brown of Turramurra and the defendant. The recitals are these: "(A) The Lender has lent to the Borrower money, from time to time, totalling the sum of $194,076 (the Loan Amount). (B) The Loan Amount was lent as a result of the terms of a loans term sheet dated around February 2017 and drawdowns made since 2 February 2017 pursuant to, at the very least, the terms of the Loans Term Sheet (the Original Loan). (C) Pursuant to the Original Loan, drawdowns of that Loan were made and given to the Borrower totalling the sum of about $194,076. (D) It was a term of the Original Loan, that the Borrower was to repay to the lender the amounts loaned [sic] plus interest, within six (6) months (Due Date). (E) The borrower did not repay the amounts loaned [sic] plus interest as at the Due Date, and despite demand from the Lender, the Borrower has failed and is unable to repay the amounts of loaned [sic] plus interest. (F) By this Deed, the borrower agrees that the Loan Amount is the amount now owing, being the amounts loaned plus interest after loan [sic] plus interest, and the Lender agrees to extend the time for the repayment of the amounts loaned [sic] plus interest pursuant to the terms of this Deed, and in replacement of any prior agreements in relation to the repayment of the amounts loaned [sic] plus interest, and the Borrower, agrees to repay the Loan Amount pursuant to the terms of this Deed. (G) In agreeing to this Deed, the Lender does not agree to the Borrower then borrowing money or obtaining credit from anyone else until the Loan Amount is repaid except where expressly outlined in this Deed. (H) The Lender and the Borrower both agree that, other than circumstances and creditors expressly referred to in this Deed, the Borrower must repay the Loan Amount pursuant to this Deed, and the schedule hereto. (I) In addition, the Lender and the Borrower wish to record in this deed that any future monies lent to the Borrower by the Lender are repayable pursuant to the terms of this deed. (J) The Lender and the Borrower have either taken legal advice or have waived their rights to obtain legal advice, and agreed to be bound by the terms of this Deed".
2. I ought to have said initially that in the deed, David Venn-Brown is referred to as, "the Lender", and that the defendant is referred to as, "the Borrower". There is great legal significance not only in the recitals in the deed, but in the deed itself. During the course of the hearing, I had to explain that legal significance to the defendant.
3. I was appointed to the Bench in 1994. The Evidence Act was enacted in 1995. Prior thereto, the substantive law of evidence in New South Wales was governed by the Common Law as well as the Evidence Act 1898. I kept, in my Chambers, as a barrister, a copy of Phipson on Evidence. I still have the copy that I had when I was appointed to the Bench. It is the 15th edition of Phipson, published in 1982, together with the second cumulative supplement thereto updating the work to 1 August 1985. Phipson on Evidence was the 10th in the series of books known as the "Common Law Library". Commencing at [41-30] Phipson says this: "Where a party has entered into a solemn engagement by deed as to certain facts, neither he (Bowman v Taylor (1834) 41 LJKB 58. Conferto: Employment Secretary v Globe Elastic (1980) AC506 (H.L.)) nor anyone claiming through or under him (Dalton v Fitzgerald [1897] 2 Ch. 86; Clarke v Hall (1888) 24 L.R.Ir. 316...) is permitted to deny such facts. This rule, however, is subject to the following qualifications:"
4. None of the qualifications listed in Phipson is here applicable. At [41-33] Phipson goes on to record this: "Although these rules were evolved in the context of recitals in deeds, this species of estoppel has now been so broadened as to merge into the next category. It is thought that estoppel by deed is merely a branch of estoppel by conduct, and that there can be a 'convention' between the parties which arises from words, conduct, silence or acquiescence just as much as from a deed. When parties have acted in their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction, each will be estopped against the other from questioning the truth of the statement of facts so assumed. This principle has very wide-ranging implications. It may, for instance, be a means of circumventing the rule that it is impermissible to construe a contract by reference to the subsequent actings of the parties. On the other hand, it is doubtful whether this species of estoppel can create a contract where none existed before between the parties."
5. Phipson then goes on to discuss estoppel by conduct, or as it is sometimes called, estoppel in pais. A more recent statement of the applicable law has been made by Lindsay J in Labracon Pty Ltd v Cuturich [2013] NSWSC 97 at [105], where his Honour described the principal of estoppel by deed as follows: "The essential idea of estoppel by deed is that a party who, by entry into a deed, expresses a solemn intention to be bound by a particular proposition will, in proceedings against a party entitled to the benefit of the deed, be precluded (i.e., estopped), by reason of entry into the deed, from denying the truth, or at least the operation, of that proposition: KR Handley, Estoppel by Conduct and Election (Thomson, Australia, 2006), ch 7; Spencer Bower, Estoppel by Representation (4th ed, 2004), ch 8, pp 201-208; RF Norton, A Treatise on Deeds (Sweet & Maxwell, London, 1928), pp 211-215, 225-228 and 626-627; PW Young, C Croft & ML Smith, On Equity (Law Book Co, Sydney, 2009), para [12.80]."
6. Learned counsel for the plaintiff has also referred me to Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395 at 408 [42] per Finn and Sunderberg JJ.

Defence

1. The defendant is unrepresented. The defendant is not a lawyer. The defendant was completely unaware of the legal principles which I must apply in determining this case. The defendant is bound by the deed into which he entered on 31 July 2019 because the benefit of that deed has been assigned to the plaintiff. I shall get to that in a moment. It is not open to the defendant to go behind the indebtedness he owed to David Venn-Brown of $109,076 that is referred to in the recitals which I have quoted.
2. The defendant's written submissions, MFI 7, show that they were filed on 6 December 2023 at 8.54am, which of course is the first day of the hearing. So, they are not final submissions but they contained this matter: "The plaintiff's evidence is centred only on the debt deed which it assisted and led the construction of, in a dishonest and fraudulent design, understanding it had negotiated to transfer the agreement to itself (whilst apparently representing the original loan agreement party and while still involved in the Flying Tigers business activity and businesses) before it was signed by any party, and continued to negotiate on behalf of itself in regard to the execution of that document. The plaintiff has failed to lodge with the Court the original loan agreement and the Debt Deed relates to, and has failed to acknowledge it received those funds in full on behalf of the Flying Tigers business, ..." I permitted the defendant to put into evidence Exhibits 5 and 6 because of that type of complaint, however, it was completely unnecessary for the plaintiff to put those into evidence because of the effect of the deed.
3. The deed effectively replaces the original agreement, and the parties, including the defendant, are bound by the recitals in the deed. I turn now to certain parts of the deed. The operative part of the deed contains these provisions: "1. ACKNOWLEDGMENT (a) The Borrower acknowledges that the total sum of $194,076 (inclusive of principal and interest) is presently owing by the Borrower to the Lender and for the avoidance of any doubt, further acknowledges having received the sum of $194,076, being part principal and interest (again, the Loan Amount). (b) For the avoidance of doubt, the Loan Amount includes all money lent, and any interest accrued to date. (c) For the Borrower warrants and agrees that in acknowledging the matters in clauses 1(a) and 1(b), they have carried out their own investigations and are satisfied that the loan amount specified is correct. (d) The parties acknowledge and agree that this Deed constitutes the entire agreement between the parties in relation to the Loan Amount. 2. REPAYMENT OF LOAN AMOUNT (a) The Borrower will repay the Loan Amount, plus interest pursuant to this Deed, pursuant to the payment schedule set out in Schedule A hereto (the Repayments). (b) The Repayments must be received, in cleared funds, by the Lender by the first day of each month as set out in Schedule A commencing on 1 September 2019. (c) The Repayments will continue until the Loan and all associated interest is repaid in full. (d) The Repayments are to be made into the bank account nominated by the Lender from time to time. (e) The Borrower may make the repayments more frequently than set out in Schedule A at the Borrower's sole discretion. 3. INTEREST (a) The Borrower agrees to pay interest on the Loan Amount, calculated monthly on a compounding basis, at the higher rate of either: (i) The Annual 'Interest Rate' of eighteen per cent (18%) per annum, calculated on a monthly basis; or (ii) For any period where the official Reserve Bank of Australia cash rate ('RBA Cash Rate') as published on the RBA's website, is equal to or greater than two and half per cent (2.5%), then the Interest Rate will be equal to the RBA Cash Rate plus sixteen and a half percent (16.5%). (The Interest Rate). (b) In the event: (i) that the borrower makes at least the minimum monthly payments pursuant to cl C2; and, (ii) does not otherwise reach any terms of this Deed, the interest rate will be reduced to the higher of: (iii) eleven per cent (11%) per annum; or, (iv) The RBA cash rate plus eight and a half per cent (8.5%) calculated and compounded on a monthly basis (the Lower Interest Rate)."
4. Clause 4 of the operative part relates to a security being provided by the borrower, that is, by the defendant. Clause 5 relates to provisions in the event of a breach of the terms of the deed. So do clauses 6 and 7. Clause 9 of the operative part of the deed bears a heading "reporting responsibilities", and provides this: "(a) The Borrower will email the Lender monthly 'Income Statements' listing all income paid or owing to the Borrower for each calendar month by the tenth (10th) day of the following calendar month. (b) Included with the monthly Income Statements, the Borrower will outline updates of the Security. (c) In addition to any other obligations in this Deed, the updates will include but are not limited to security status, progress, cancellation, expansion, conflict and all information relevant to the value of the Security."
5. Clause 13 is headed "transfer of the agreement". It provides this: "(a) The Lender may at their discretion sell, transfer, novate or assign their right to this deed to any other party. (b) Upon transfer, all obligations and privileges granted to the Lender under this Deed will immediately transfer to the acquiring party. (c) The Lender must advise the Borrower prior to this process being complete."
6. Clause 15 of the operative part provides that the deed was governed by the law of New South Wales. The deed was executed by the plaintiff on 30 August 2019, and was witnessed by Rose Coombs, whom, very presumptuously, I would suppose to be his wife. The deed has been executed by David Venn-Brown on 13 September 2019. Although the deed bears the date 13 July 2019, the deed has been executed at different times by each of the parties. However, having signed, sealed, and delivered the deed, each of the parties is bound by its terms, which includes its date.

Deed of Assignment

1. There is, in evidence, a deed of assignment of that deed of acknowledgement of debt and loan agreement.
2. The deed of assignment of the agreement bears the execution date of 25 September 2019. That can be found on page 26 of the annexure to Mr Wilkinson's affidavit, which is Exhibit A. The recitals in the deed of assignment are these: "A. The Assignor and Anthony Coombs of [redacted] Brunswick, Victoria (Coombs) are parties to an agreement dated 31 July 2019 (the Agreement) a copy of which is attached to this deed. B. The Assignor wishes to assign to the Assignee the Assignor's estate and interest in the Agreement subject to the performance and observance by the assignee of the Agreement and subject to the following provisions. C. The Assignee agrees to receive from the Assignor the Assignor's estate and interest in the agreement subject to the performance and observance by it of the Agreement and subject to the following provisions. D. Upon the execution of this deed of assignment, the Assignee, will notify Coombs of the assignment."
3. Clause 1(a) of the operative part of that deed is this: "(i) In consideration of the assignment, the Assignee has paid to the assignor the sum of $200,000 as follows: (1) $140,000 up to and including the date of this Deed, receipt of which is hereby acknowledged by the Assignor; (2) $60,000 to be paid by the Assignee to the Assignor upon or after execution of this deed, hereinafter referred to as the Agreed Consideration. (ii) As a result of the Agreed Consideration, the Assignor assigns all its right, title and interest to the agreement to the Assignee who will from the date of this deed be solely entitled to the rights and be bound by the obligations of the Assignor under the Agreement."
4. The deed of assignment was composed by the same lawyer who composed the deed of acknowledgement of debt and loan agreement. In the first of the two documents, although each of the parties was a single male, each single male is constantly referred to by a plural pronoun. In the second deed, while one party, the Assignor, was a single male, and the other party was a company, each of the parties is referred to by a singular neuter pronoun. So have linguistic standards dropped in the legal profession. I would also point out, as ought be evident from what I have quoted, that the draughtsman of the deed clearly did not realise that the word "loan" is a noun, and that the appropriate verb is the verb to lend. Nouns should not be used as verbs.
5. The benefit of a contract is what a lawyer calls a chose in action, a type of legal property which is not visible to the naked eye. A chose in action can be transferred from one person to another. The chose in action includes the benefit of the chose owned here by the lender, or his assignee, and the burden of the chose borne by the borrower, namely the defendant.
6. The notice of the transfer was conveyed to the defendant on 12 September 2019 at 3.29pm. Mr David Venn-Brown sent an email to the plaintiff which says this: "As per s 13 of the Deed dated 31 July, I am notifying you that I will be transferring the Deed to Andrew Wilkinson of [address redacted]. The transfer will occur on 20 September 2019. From this date forward all notices as set out in s 8(a) should be sent to [Mr Wilkinson's email address redacted]. Regards, David."
7. On 13 September 2019 at 3.37am, a message was sent by Mr Coombs, the defendant, to Mr Venn-Brown, which says this: "Hi David, thanks for your email. Andrew and I have spoken briefly about this. However, as I did not receive a soft or hard copy of the signed contract, I was unaware it was in effect. Can you please send me a soft copy? In good faith, please be advised that there has been no income to date since I signed and sent the contract to you. Best regards, Tony."
8. I quote the niceties in those emails because they show that at that stage of their relationship, there were good relations between both Mr Wilkinson, Mr Venn-Brown, and the defendant. On 10 November 2019, Mr Wilkinson sent to the defendant this email, at 2.24am: "Hi Tony, As per section 13 of the deed of acknowledgement of debt and loan agreement dated the 31st of July 2019, I am notifying you that I have transferred the deed of acknowledgement of debt and loan agreement to Merlin Advisors Proprietary Limited (ACN 137746475). The transfer occurred on the 25th of September 2019. Please continue sending all correspondence to this address: [Mr Wilkinson's email address at Merlin Advisors redacted] Regards, Andrew."

Provision of Additional Funds

1. The notice sent by Mr Venn-Brown to the defendant on 12 September 2019 at 3.29pm is defective. It states that the assignee of the original deed was Mr Wilkinson, personally. That was incorrect. The assignee was the plaintiff company. However, that defect in notice was remedied on 10 November 2019. Accordingly, as a matter of law, the defect was cured by 10 November 2019. Since the execution of the first deed, further monies have been provided, and I use that word because it is neutral, to the defendant. In his written submissions, MFI 6, Mr Smith of counsel who appeared for the plaintiff said this: "6. Following the assignment, additional funds totalling $177,933.18 were advanced by Merlin to the defendant. This further advance was subject to the terms of the Financing deed [the original deed]. The further advances fell into two categories: (a) Payments made directly to the defendant, totalling $99,898 (b) Payments made by Merlin (totalling $72,780) in respect of the Flying Tiger business. Mr Wilkinson and the defendant were required to fund the expenses of the business on a 50/50 basis. As the defendant was of limited means, Merlin paid the entirety of the business expenses on the basis that 50% of such expenses would be considered to be a loan from Merlin to the defendant. 7. Clause 3 of the financing deed provided that interest was payable on a monthly basis. Interest was, however, never paid by the defendant. 8. Clause 9 of the financing deed provided that the defendant was required to provide monthly income statements by the 10th day of each month. The defendant did not do so for 35 consecutive months, from September 2020 until August 2023. 9. Under the terms of the financing deed, where the defendant breached the terms of the financing deed, (and where such default was not remedied within 14 days) the entire loan amount became due and payable within 14 days. 10. On 22 September 2022, Merlin (through its solicitor) demanded payment of the sum of $660,795.00 plus interest and costs. The letter by which such demand was made pointed to the defendant's failure to provide the monthly income statements. It is apparent from the letter that although Merlin may have waived all previous breaches of clause 9, it did not waive the breach for September 2022. The letter also pointed to the defendant's failure to pay interest monthly as required by clause 3 of the Financing Deed."
2. A number of points should be made about that. Page 61A, 61B, and 61C of the annexure to Exhibit A are spreadsheets made by Mr Wilkinson. On the left-hand side of those four pages are listed Flying Tigers transactions between 4 August 2019 and 11 September 2023. On the right-hand side of page 61, at the top, is a heading, "Tony's Loan Drawdown", and lists a number of payments made to the defendant between 21 July 2019 and 22 October 2022.
3. According to evidence given by Mr Wilkinson, each of those payments was for rent and living expenses; moneys advanced to the defendant personally, except for the last entry which was the cost of a letter of demand sent to the defendant on the 20 October 2022. The entries between 14 August 2019 and 21 November 2019 are mainly described as being, "rent". It is common ground between Mr Wilkinson and the defendant that that was money given to the defendant for the payment of his rental accommodation in Melbourne.
4. The payments made on 23 December 2019, of which there are two, show under their description as a transfer from a Bankwest bank account, but they were described by Mr Wilkinson as being for rent and living expenses.
5. The payment made on 22 January 2020 is described as "computer and rent", and that appears to be common ground it was for payment of the defendant's rent and living expenses, and some computer expenses. The payment made on 4 September 2020 was to an accountant for work done by the accountant for a family trust or the like, employed for the use of the defendant.
6. The transactions between 25 September 2020 and 21 August 2020 bear no description, and Mr Coombs would not agree to what they were. Evidence was given by Mr Wilkinson that they were for the defendant's rent and living expenses, a proposition with which Mr Coombs would not agree, but when I asked him what was his income during that period, income no doubt which would be used to pay for his rent and living expenses, he told me that he had no income at all.
7. I have no hesitation accepting what Mr Wilkinson told me. It is consistent with the earlier entries, and of course it explains how Mr Coombs was able to survive during the first part of 2020 during the COVID lockdown, which was more stringent in Melbourne, where Mr Coombs lives, than it ever was in Sydney.

Equity Split

1. That Mr Wilkinson and the defendant agreed to share equally the costs of running the business known as Flying Tigers, is confirmed by the defendant in paragraph 15 of his affidavit of 5 December 2023, which is Exhibit 1. Referring to a time in 2016 in which Mr Wilkinson and the defendant were discussing this proposed business of Flying Tigers, Mr Coombs said this: "15. At that time, Mr Wilkinson also confirmed past conversations in that regards to the ownership of all assets, companies, IP, and associated products relevant to the business activity of Flying Tigers would be equally shared 50/50 between myself and the company he was using at the time, which I now know to be called Smirk About Pty Ltd."
2. That this continued to be Mr Coombs' belief is confirmed in an electronic communication that he sent to Mr Wilkinson on 19 September 2020 at 11.59. I do not know whether it was at 11.59am or 11.59pm. The subject of the electronic communication was, "Flying Tiger's equity split". It refers to a gentleman called Jesse, that is Mr Jesse Weiner, who is a lawyer. Communication addressed by the defendant to Mr Wilkinson commences thus: "Hi Andrew, To clarify what Jesse put forward: You asked for 15% to be gifted to you. The first option presented was put forward in good faith, despite the fact as I said from the outset of the communication - I don't agree with your proposition of greater contribution. The offer put forward was 20% equity to you, based on a combination of swapping debt for equity, plus extra percentage. Whilst we could discuss Flying Tiger's valuation all day I used a simple scenario of the investment ask in US dollars, against the entire amount owing in Australian dollars, and then gave further percentage on that. For the record that offer is withdrawn. The second option was, yes, a buyout. I presume the second option of the buyout was put forward because if you are not valuing the contribution I have made, then perhaps you would be happy to operate the business without me. At your request I will address what you have written in your emails and consider to be the factors to valuing your supposed greater contribution."
3. There is then a heading "Time" which compares the time put into the business of Flying Tigers by each of the plaintiff and the defendant. The second heading is "Money". The first four paragraphs of that section of the electronic communication are these: "Your personal ability through your hard work has seen the financial contribution. This has been appreciated, I have stated this to you countless times. You work hard Andrew. Your investment funds relevant to the 50% shareholding of the business portion is exactly that. Investment. My investment funds relevant to the 50% shareholding hold no lesser value because they are a loan from funds provided by you. The company costs to date are evenly divided by us and I am bound to a contract (interest bearing) for my part on the said investment. Therefore, the argument of your greater contribution does not hold water with respect to the monetary issue alone. The other part of the loan which is 'personal' is also a loan. Are you linking this to the business? When you know and agreed that and were fine with it up until now?"
4. That is a clear admission by the defendant that he was liable for 50% of the costs of the administration of the Flying Tigers business and a clear admission that personal loans had been made to him, and that his part of the contribution to Flying Tigers had been provided from moneys lent to him by the plaintiff.

Relief Sought

1. The defence in these proceedings is lengthy but seeks no relief, for example, under the Contracts Review Act 1980 of this State, no relief under consumer protection legislation of either of the Commonwealth or of the State, no relief under any provision of the company legislation, no relief under any other statutory provision of either the Commonwealth or the State. Much of what has been said by the defendant is based, it would appear, on a view he now has that there has been some "collusion" between Mr Wilkinson and his uncle, and that there has been some impropriety because certain matters have been claimed by the plaintiff company as tax deductions in taxation returns made by the defendant to the Australian Taxation Office.
2. The simple answer to the submissions made by the defendant about how the defendant may have arranged its tax affairs is that those arrangements are acts between persons outside the relationship of the persons governed by the contract or, as a lawyer would say, using the ancient Latin maxim, res inter alios acta. In any event, a perfectly clear and transparent answer to what the defendant has said is dealt with by learned counsel for the plaintiff in his written submissions. They contain this: "29. In relation to that part of the loan that constitutes 50% of the Flying Tiger business expenses the defendant contends that such amount is not owing, given that Merlin may have sought a deduction in its taxation return for the amounts he lent to the defendant. That submission should not be accepted. How the loan that was used to fund the defendant's share of the Flying Tiger business is treated tax-wise is irrelevant to the issue of whether the debt is still owing. 30. A simple example bears this out. Assume an employment agreement contained a term that the employer would purchase a laptop computer (or provide funds to do so) for the employee. The employer is slow in doing so, and the employee purchases the computer with his or her own funds and seeks reimbursement from the employer. The employee might in the interim seek a tax deduction for the amount he or she pays, but that does not mean that the employee is no longer owed money by the employer. All it means is that the receipt of the reimbursed funds by the employee will have tax consequences for the employee (would likely be counted as assessable income) and for the employer."
3. How the plaintiff company has arranged its tax affairs with the Australian Taxation Office is a question for it and if there be any anomaly it is a matter to be sorted out between the plaintiff and the ATO. It does not provide a defence to the defendant. Much of what has been said by the defendant, in his written submission, represents what appears to have been a falling out between him and Mr Wilkinson/Mr Wilkinson's company after the letter of demand sent by the plaintiff's lawyers to the defendant on 21 September 2022, followed by the commencement of the current proceedings. A lot of what is said is inflammatory and some of it is defamatory, but it does not raise any defence on the merits of the plaintiff's case.

Quantum

1. Yesterday and this morning, there were some exchanges between learned counsel for the plaintiff and myself about quantum and disputes about calculations. Suffice to say I'm assured by learned counsel for the plaintiff that the computations contained in MFI 8, the plaintiff's supplementary submissions, which were handed up this morning, are correct. I should say this on the question of quantum.
2. Clearly, the interest rate is that prescribed in the first deed, the deed of acknowledgement of debt and loan agreement. The interest rates are proved in the evidence before me. Clause 7 of that agreement, which appears under the heading "In the event of a breach of the terms of this deed", the following provisions are made as to costs: "(a) The Borrower must pay all the Lender's reasonable legal costs, and other costs, (Costs) to be calculated on a solicitor/client basis, as a result of any breach by the borrower of this deed. (b) The cost will be capitalised to the Loan Amount. (c) The Interest Rate applies to any Cost."
3. Those provisions have been applied to the calculation of the quantum of the plaintiff's claim, but the plaintiff's claim does not include the costs of yesterday and today, and I will make an appropriate order that they be included in the judgment to be obtained by the defendant.
4. The calculations relied upon have been made by Mr Wilkinson, and are conveniently set out in his affidavits - Exhibit A, and his second affidavit, Exhibit B, an affidavit sworn on 5 December 2023, which made some adjustment and further calculations. I need not go into the nitty-gritty of those calculations. I am a lawyer, not a mathematician. I am persuaded on the evidence given by Mr Wilkinson that the sum claimed is the correct sum.

Verdict

1. For those reasons, I give verdict and judgment for the plaintiff against the defendant for $831,009.68. I order the defendant to pay tothe plaintiff its costs of yesterday and today on an indemnity basis.

Amendments 29 August 2024 - In [11] amended "plaintiff" to read "defendant" in final sentence. 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: 29 August 2024