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[2026] NSWSC 522
Supreme Court of NSW
2026-05-14
Sirtes J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Notley v Huang [2026] NSWSC 522
Hearing dates: 28 April – 1 May 2026
Date of orders: 14 May 2026
Decision date: 14 May 2026
Jurisdiction: Common Law
Before: Sirtes J
Decision: (1) Judgment for the Plaintiffs in the amount of $746,072.62. (2) Pre-judgment interest pursuant to s 100 CPA to be calculated from 29 March 2023. (3) The Defendants pay the Plaintiffs’ costs of the proceedings.
Catchwords: LOANS – whether single or multiple loans – where evidence goes beyond documents – Manzi v Smith distinguished – whether agreed contractual interest – whether payments appropriated to principal or interest
EVIDENCE – credibility and reliability – whether signature authentic
LIMITATION OF ACTIONS – whether payment confirmed cause of action – confirmed
Legislation Cited: Civil Procedure Act 2005 (NSW) s 100
Limitation Act 1969 (NSW) s 54
Cases Cited: APX Projects Pty Ltd v The Owners - Strata Plan No 64025 [2015] NSWSC 1250
Cory Brother & Company v Owners of Turkish Steamship ‘Mecca’ [1897] AC 286
Damjanovic v York Agencies Pty Ltd [2003] NSWCA 222
Deane v City Bank of Sydney (1918) 25 CLR 215; [1918] HCA 42
Falk v Haugh (1935) 53 CLR 163; [1935] HCA 35
Falkner v Bourke (1990) 19 NSWLR 574
Gawne v Gawne (1979) 2 NSWLR 449
Gray v Gray [2004] NSWCA 408; 12 BPR 22,755
Healey v Commonwealth Bank of Australia [1998] NSWCA 103
Heydon v Perpetual Executors, Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111; [1930] HCA 26
Jeans v Cleary [2006] NSWSC 647
Maestrale v Aspite (No 2) [2014] NSWCA 302
Manzi v Smith (1975) 132 CLR 671; [1975] HCA 35
MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; [1991] HCA 3
Mills v Fowkes (1839) 5 Bing (NC) 455; 132 ER 1174
Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125
SAS Institute Inc v World Programming Ltd [2019] EWHC 2495 (Comm), QBD
Schmierer v Taouk [2004] NSWSC 345; 207 ALR 301
Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535
Category: Principal judgment
Parties: Nicholas Richard Harold Notley (First Plaintiff)
Amanda Jane Notley (Second Plaintiff)
Sarah Louise Notley (Third Plaintiff)
Simone Michele Notley (Fourth Plaintiff)
Lin Gui Huang (First Defendant)
Zheng Wang (Second Defendant)
Elite Glass Pty Ltd (Third Defendant)
Elite Marble & Granite Furniture Pty Ltd (Fourth Defendant)
Representation: Counsel:
M Auld / P Wiggins (Plaintiffs)
J Tsang (Defendants)
Solicitors:
Tebbutt Lawyers (Plaintiffs)
IT Lawyers Australia (Defendants)
File Number(s): 2024/00211852
In these proceedings, the Plaintiffs claim $1,695,482.14 as a debt from the Defendants, comprising the principal owing under a loan ($746,072.62), interest ($946,757.52), and other amounts incurred in recovery. The Plaintiffs also seek, in the alternative to contractual interest, interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) (CPA).
Each of the four Plaintiffs are the children of the late Richard Franke Notley, who died on 6 August 2021 and to whom I shall, without intending any disrespect, refer to as the Deceased. The Deceased died on 6 August 2021. A grant of probate was made to Peter George Notley on 29 November 2021.
The Deceased was an accountant. In the course of his career, he brokered credit arrangements for his clients. From 2005 to 2008, the Deceased was the accountant for the First, Second and Fourth Defendants, and for the Third Defendant from 2006 to 2008. The Statement of Claim (the SOC) pleads that, in or about 2005, the Deceased agreed to lend the Defendants sums of money as follows:
in the case of the First and Second Defendants, to construct a house at XXXX, Enfield; and
in the case of the Third and Fourth Defendants, to extend the factory at XXXX, Condell Park (together, the Loan Agreement).
Further aspects of the Loan Agreement are pleaded in the SOC, particularly that:
there was an oral agreement as between the Deceased and the First and Second Defendants on behalf of themselves and on behalf of the Third and Fourth Defendants;
interest payable on the loan would accrue at 10% per annum;
monies advanced by the Deceased were repayable on demand; and
the Defendants’ liability was joint and several.
The Plaintiffs contend that the Deceased advanced $806,554 to the Defendants between 10 October 2005 and 10 October 2008. The Plaintiffs also say the Defendants have repaid $60,481.38 of the principal and $272,130 of the interest.
The Plaintiffs’ case, in reliance upon the ‘Centrelink document’ discussed below (Centrelink Document), is that $332,611.38 has been repaid over a period of 18 years, including after the Deceased’s death.
On 28 March 2023, the Plaintiffs demanded repayment of the money advanced to the Defendants together with interest. The Plaintiffs plead that the legal interest of the Deceased in the debt was transmitted to them by way of Deed on 17 April 2023. Notice of the same was given to the Defendants on 28 April 2023 by way of letter from the Plaintiffs’ solicitors. The SOC pleads that after May 2023 the Defendants stopped making repayments under the purported Loan Agreement.
The Defendants deny that any money was advanced to them as a loan by the Deceased. The position of the Fourth Defendant, Elite Marble & Granite Furniture Pty Ltd, is somewhat different. At [12(c)] of the Defence, the Fourth Defendant accepts that it received several amounts from the Deceased but denies that those amounts were received as a loan. Those amounts and the corresponding dates of receipt are as follows:
$40,000 on 12 February 2008;
$20,000 on 15 February 2008;
$50,000 on 3 March 2008;
$5,000 on 26 March 2008;
$20,000 on 9 May 2008;
$10,000 on 21 May 2008;
$10,000 on 11 June 2008; and
$20,000 on 20 August 2008.
Despite this concession, the Defendants advance two responses. First, these amounts were not advanced as a loan in circumstances where the Deceased transferred them to the Fourth Defendant without the “Defendant’s knowledge” (although the Defence does not say which Defendant, unless it was a punctuation error). Secondly, the decision to transfer that sum was a decision made unilaterally by the Deceased, and the Defendants did not request or seek money from the Deceased.
The Fourth Defendant, in a table set forth in [13(c)] of the Defence, admits that it paid certain amounts to the Deceased between 2007 and 2023. The Fourth Defendant admits that it repaid certain amounts as alleged by the Plaintiffs. The remaining payments are either denied by the Fourth Defendant or it disputes amount the Plaintiffs contend was repaid.
The Defendants accept that some of the money was repaid by the Third Defendant, but they claim that every such repayment was at the direction of the Fourth Defendant. Moreover, the Defendants deny that any of the repayments constituted repayment of a loan, “but were to return the money which the Deceased had provided to the Fourth Defendant or were amounts of money which were requested by the Deceased”. The Defence has been verified by the First and Second Defendants personally and by the First Defendant, on behalf the Third and Fourth Defendants, as a director of both companies.
During closing submissions, the parties produced an agreed list of issues for determination. That list was slightly altered by me, with the agreement of the parties, and is as follows:
What funds were transferred by the Deceased to the Defendants?
Were the funds transferred by the Deceased to the Defendants advanced by way of loan?
If there was a loan, or loans, what were the terms of repayment, including whether interest was payable and, if so, at what rate?
Whether the payments were made by the Defendants in reduction of any principal and/or interest.
Whether any part of the Plaintiffs’ claim is statute barred.
Whether the handwritten ledgers maintained by the Deceased and relied upon by the Plaintiffs are authentic, admissible, and probative of the matters asserted by the Plaintiffs.
Whether the Second Defendant signed any document acknowledging the alleged debt and, if so, the legal effect of that document.
I propose to deal with the evidence first and return to these issues at the conclusion of the judgment in respect of my findings on each issue.
Each of the Plaintiffs and the Defendants in their pleadings have tabularised the various amounts allegedly loaned to or received by the Defendants, as well as amounts repaid. The position between the Defendants themselves is not uniform.
A narrative summary of the parties’ positions is as follows:
the Plaintiffs contend that the Deceased advanced a total of $806,554 to the Defendants, $225,000 of which the Fourth Defendant admits receiving;
the First to Third Defendants deny receiving any money;
the Plaintiffs contend that they have been repaid $332,611.38, comprising $60,481.38 toward the principal and $272,130 toward interest;
the Fourth Defendant denies that the monies it received from the Deceased were loans and, further, disputes amounts that the Plaintiff characterises as loan repayments between 2011 and 2023; and
the Defendants deny the existence of the Loan Agreement, a term imposing interest at 10% (or at all), a term of repayment on demand, and that liability was joint and several. They also deny that the interest in the debt was transmitted to the Plaintiffs.
The Plaintiffs prepared a detailed table in the proceedings which sets forth the amounts they allege have been paid over successive years, which was cross-referenced with Court Book pages containing the supporting documentation. A reconciliation of Exhibit 3 together with other tables contained in the pleadings is contained in the Schedule to this judgment.
The Plaintiffs’ case is documentary. The substantive claim relies upon the cash journal entries made by the Deceased over a number of years.
Those documents confirm the amounts which the Plaintiffs assert were provided to the Defendants. All of the Deceased’s transactions appear to have been recorded, by manuscript, in sufficient detail to identify the dates upon which payments are alleged to have been made and the recipient of those payments. Often the purpose of the payment is also recorded, albeit in shorthand.
Accepting, as I do, that certain amounts set forth in the journal were, as conceded by the Defendants, received by at least the Fourth Defendant, I have no reason to find that the entries made by the Deceased are not genuine. The Defendants did not suggest that the entries were fraudulent, confected or the product of a delusional mind. Of course, the journal entries alone do not establish the Loan Agreement or receipt of such money. However, what it does establish is that the Deceased, over a period of years, recorded book entries that, in his mind, confirmed his payment of large sums of money to one or more of the Defendants.
The Plaintiffs also relied upon two affidavits of the First Plaintiff and an expert report of Melanie Holt, a forensic document examiner.
After the Deceased was admitted to hospital, the First Plaintiff nominated himself to assist the Deceased with his financial affairs which included recovery of the balance owing under the Loan Agreement. The First Plaintiff deposes to having spoken with the Second Defendant on 24 November 2020 and, thereafter, communicating with her by email. That email states, in part:
“Hi Julia,
As discussed today my father has had a health set back and I am helping him with his finances.
I have been banking the cheques from [the Third Defendant] and I have one left to bank which is dated 22nd November, I will depositing it in the next couple of days.
From the cheques I have been banking the payments are $1,000 per fortnight, in order for the payment to continue can you advise if you want to continue with cheques or if you would prefer to direct credit to dad’s bank account.
I would like to come out to meet with you at some point, if you want to continue with the cheques I can come out later this week or next week. If you want to move to direct credit I will leave it until the new year.”
There is no evidence that any of the Defendants responded to this email. Nor is there evidence of any telephone conversation between the First Plaintiff and the Second Defendant after the Second Defendant’s receipt of the email. The First Plaintiff states that, on 8 December 2020, the Deceased received a payment in the sum of $1,000 from the Defendants.
After the Deceased died, several letters were sent to the Defendants in relation to the claim. There were four letters sent by the Deceased’s executor (some by email, others by post) and two letters from the executor’s solicitors, Tebbutt Lawyers. Whether in consequence of these letters or not, the evidence records that the Defendants made frequent payments into the trust account of Tebbutt Lawyers of $1,000 each. However, there does not appear to have been any response by the Defendants to the correspondence sent to them concerning the claim after the Deceased died.
The contents of the letters sent by Tebbutt Lawyers are not insignificant. The first letter, sent on 30 June 2022, stated, relevantly, as follows:
“We act for the Estate of the late Richard Frank Notley and have been instructed by the executor of the said estate, Peter George Notley, as follows: –
- Commencing in 2005 and continuing through to 2009, Richard Franke Notley did advance funds to a combination of borrowers being yourselves and your respective companies Elite Glass Pty Ltd (ACN) 119 343 976 And Elite Marble and Granite Furniture Pty. Ltd. (ACN) 061 405 436.
- That in your letter to Centrelink dated 14 March 2012, forwarded with a signed supporting balance sheet, you confirmed that the then balance outstanding under those loans as at 30 June 2010 was the sum of $753,032.62. This amount excluded accumulative unpaid accounting fees owing to Richard Franke Notley from 2000 of $65,000.
- That the attached balance sheet of the loan arrangements incorporating calculations of interest repaid and interest accrued, as forwarded to you by our client on 28 March and 13 May 2022 shows a prospective balance under the loans in the sum of $1,554,527.86 as at 30 June 2022.
- Despite several requests from our client, no alternative balance sheet or indeed communication has been received indicating that you were prepared to negotiate the satisfaction of the above debt.
…
We are instructed that in the event that the amount of $1,554,527.86 remains unpaid to our client for a period of 28 days from the date of this letter, we are authorised to proceed with such action as may be appropriate to effect recovery of that amount, together with costs.
We strongly urge you to take the opportunity to meet the payment of the account at this stage to avoid the further difficulties – in terms of time, money and corporate reputation – that will necessarily result from the commencement of any recovery action in this matter.”
“We refer to previous correspondence in this matter. We do genuinely trust this finds you both well. Once again, our clients thank you for your payment of interest instalments fortnightly in the order of $1,000.00 in keeping with your and your companies’ outstanding debt to the above Estate. We do note with disappointment that the numerous attempts to communicate with you by our client Peter Notley at first instance, and subsequently our firm, have gone without response.” (Emphasis added)
There was no suggestion at the hearing that the First or Second Defendants had any difficulty comprehending English. Although both gave their testimony using a Mandarin interpreter, the following also appears to be true:
as stated, each of the First and Second Defendants’ verified the Defence. The affidavits verifying the Defence disclose that the Defence was not translated into Mandarin prior to the verifications;
the same observation can be made in relation to the First and Second Defendants’ substantive affidavit evidence. The contents of those affidavits were not interpreted for each of those deponents; and
they retained the Deceased as their accountant and there is no suggestion that the Deceased conversed with them in anything other than English.
For these reasons, I am satisfied that the First and Second Defendants would have read and understood the contents of the two letters sent to them from Tebbutt Lawyers. I am equally satisfied that, had they wished, they could have responded to these letters, denying the matters contained in them. The allegation that they owed over $1.5 million of principal and interest to the Deceased would ordinarily be expected to invite some remonstration by one or both if the contents of those letters were untrue.
Whilst I do not treat the Defendants’ silence as an admission, I attach some significance to it in the face of the allegations being made against them. In addition to their silence, they were paying $1,000 fortnightly. This conduct was confirmed in the 29 March 2023 letter and is certainly conduct which I treat as an admission that, by those payments, the Defendants accepted liability for monies owed to the Deceased. Those payments are recorded in a series of trust account receipts maintained by Tebbutt Lawyers. The money was recorded as having been paid by the Second Defendant with the reason for payment being described as “interest payment on debt”. That description is one conceived and applied without the knowledge of the Defendants such that they are not in any way bound by it.
The Plaintiffs’ evidence deals with a documentary case. The significance of the First Plaintiff’s evidence is largely limited to establishing the provenance of the documentation upon which the Plaintiffs found their case. That documentation was not prepared by any of the Plaintiffs. The First Plaintiff was not present when the documentation was prepared by the Deceased. It appears to be agreed that the records were not shared with the Defendants. They were the Deceased’s business records.
Objection was taken to those records being treated as evidence of the truth of their contents insofar as they contain information of the alleged Loan Agreement which the Plaintiffs must prove. In addition to this, the Defendants invite the Court to attach limited weight to those entries owing to the inability of the Defendants to cross-examine the Deceased.
I have not treated the entries as evidence of the truth of their contents. I am, however, entitled to have regard to those book entries for the following reasons:
the Deceased was an accountant and, in the course of his career, which involved borrowing and lending money, he kept detailed records; and
the records display a high degree of detail. They set out, systematically and carefully, the chronological evolution of the alleged loans as they increased in number over the years.
Existence of these records is one part of the mosaic that I am required to consider when determining, on the balance of probabilities, whether to accept that the Plaintiffs have established that the Defendants remain indebted to the Deceased. Following transmission to the Plaintiffs, the Defendants would now be indebted to the Plaintiffs in these proceedings (subject to the limitation defence which I also address below).
The Defendants read affidavits sworn by the First and Second Defendants. The Second Defendant contended the following:
no loan agreement, written or oral, was ever made between the Deceased and any Defendant;
the transactions on 10 October and 4 November 2005, which totalled $84,323 and were allegedly for the payment of income tax by “Elite”, are denied entirely as the Fourth Defendant (being Elite Marble) owed no income tax for that financial year and the Third Defendant (being Elite Glass) did not yet exist;
the 2006 transaction of $20,000 does not have a corresponding receipt recorded in the Fourth Defendant’s bank records;
in relation to the 2008 cheque deposits, totalling $225,000 over 12 transactions, the Second Defendant states that the Deceased proposed that these deposits be made to “adjust” the Fourth Defendant’s revenue figures to support a refinancing application for an existing ANZ business loan;
no loan documentation was signed;
no interest was ever discussed, requested or payable. The Second Defendant states that she understood that the arrangement was temporary and that the funds would be returned when the Fourth Defendant could afford it;
the Third Defendant had repaid the $225,000 by the payment of 206 cheques and 61 bank transfers to the Deceased between 2010 to 2023 in instalments of $1,000 to $2,000 at the Deceased’s request. By May 2023, the Second Defendant discovered the repayments had exceeded the $225,000 received and ceased making further payments; and
the Second Defendant denied signing any statement to Centrelink acknowledging the loans. She denies authoring the signature on the third page of the Centrelink Document.
Curiously, the Second Defendant deposes to having overpaid the Deceased by $62,000.01. Yet no Statement of Cross-Claim has been filed by any of the Defendants seeking the repayment of the same, as money had and received. These proceedings would be the appropriate forum to raise such a claim which flows directly from the Defendants’ evidence (if I accepted it). The absence of any such claim is a matter I have taken into consideration as to the authenticity of the Second Defendant’s evidence of overpayment. I have neither ignored nor attached much weight to it.
In her detailed affidavit, the Second Defendant states that she has managed the day-to-day financial affairs of the Third and Fourth Defendants since approximately 1993, including accounts and payroll. Her husband, the First Defendant, retained authority over major decisions including any transactions exceeding $50,000.
The Second Defendant concedes that the Fourth Defendant received $225,000 across 12 transactions between 12 February 2008 and 20 August 2008. She states that, in May 2006, the Fourth Defendant obtained a $478,000 business loan from the ANZ bank for the extension of its factory at Condell Park for a one-year short-term facility. The Second Defendant states that she and the First Defendant simultaneously obtained separate ANZ loans of $1,430,000 and $450,000 respectively for home renovations. She states that, in or around February 2008, at a time when she says the ANZ bank were demanding repayment of the business loan, she discussed refinancing with the Deceased at the office of the Fourth Defendant. She recalls the Deceased proposing that he would “adjust [the Fourth Defendant’s] revenue”, to improve prospects of loan approval, by providing cheques to deposit into the business account, with such money to be transferred back to the Deceased ‘when [the Fourth Defendant] could afford it’. The Second Defendant stated that she did not understand this arrangement to be a loan agreement, nor was interest ever discussed, requested or documented.
The Second Defendant deposes that, from late 2010, the Deceased asked the Defendants to repay the whole of the funds he had provided to them. The Second Defendant says that she agreed with the Deceased that the Third Defendant would make the transfers on behalf of the Fourth Defendant in instalments of $1,000–$2,000. Pursuant to that agreement, the Third Defendant paid approximately 206 cheques, and 61 bank transfers to the Deceased amounting to $287,000.01 between 2010 and 2023.
The Second Defendant was cross-examined by Mr Auld, Counsel for the Plaintiffs, at some length. The cross-examination covered several topics, namely:
the methodology used by the Second Defendant in determining that the Fourth Defendant received $225,000 (only) from the Deceased;
the refinancing arrangement and the purpose for the receipt of funds;
the 2005 ATO payments;
questions concerning the Deceased’s manual cash books;
the 4 July 2006 transaction of $20,000;
repayments and the Centrelink Document; and
the $225,000 methodology.
During her cross-examination, the Second Defendant confirmed that she had received and banked cheques from the Deceased. She also confirmed that repayments were made to the Deceased directly.
Importantly, she was tested at length as to the methodology she employed to arrive at the figure of $225,000, said to have been the total of the amounts received from the Deceased. That cross-examination established that the evidence contained in the Second Defendant’s affidavit ([60]–[67]) was derived entirely from comparing the Fourth Defendant’s bank statements with the SOC and the Plaintiffs’ documents. The Second Defendant asserted that she had her own handwritten records in a notebook, but conceded that the notebook could no longer be located and that she had not been able to consult it when preparing her affidavit.
At [67] of her affidavit, the Second Defendant states that “based on what I can find in [the Fourth Defendant’s] ANZ bank account statements, the total amount that [the Fourth Defendant] received from the deceased… is $225,000”. Ultimately, the Second Defendant accepted that the $225,000 figure was the upper limit of money received and was reached through comparing documents rather than her own recollection.
At [31] of her affidavit the Second Defendant denies that the Fourth Defendant was liable for income tax in the period 1 July 2004 to 30 June 2006. She also denies that the Fourth Defendant ever had any loan with the Deceased.
During cross-examination, the Second Defendant was taken to the ATO Activity Statement the Fourth Defendant generated on 2 May 2025. This document recorded two payments into the Fourth Defendant’s account, one on 7 October 2005 for $32,400 and another on 11 October 2005 for $40,000. Although the Second Defendant denies these payments were received from the Deceased, she acknowledged that she had no records to identify the source of those two payments. The Second Defendant initially accepted that it was possible the money did in fact come from the Deceased, but she later denied the proposition, saying that the Deceased only started working for the Defendants in 2005. That denial did not assist the Second Defendant’s narrative, as those payments were both made in late 2005.
It appears that the amounts recorded by the Deceased in his cash journals as being paid for the Fourth Defendant’s tax liability were used for that purpose. This establishes a corroborative nexus between the Deceased’s records and ATO records.
The Fourth Defendant’s ANZ bank statement showed a credit of $67,186.52 on 3 July 2006. The Plaintiffs contend that the Deceased advanced $20,000 to the Defendants on 4 July 2006 and that part of the deposited amount included $20,000 from the Deceased. The disconformity between these dates must be acknowledged. The Deceased’s cash book recorded transactions on 3 July 2006 referencing the Fourth Defendant, cheque number 127, for an amount of $67,186.52.
The Second Defendant had no documentary records to show what comprised the $67,186.52. The Plaintiffs issued a Notice to Produce for the deposit slips and payer details, but the Defendants responded that they did not have access to those documents.
In addition to the consistency of the amount, I consider that there is a sufficiently proximate relationship between the dates. I am satisfied that such amount was paid by the Deceased.
The Centrelink Document was contained in the Deceased’s records. It comprises a document dated 14 March 2012 purportedly written by the First and Second Defendants to Centrelink. Attached to the document is a page of figures that states the “Balance of Loan” is, as of 30 June 2009, $753,032.62.
The document is of considerable significance to the Plaintiffs’ case, if authentic. It contains a powerful admission, signed under the hand of the Second Defendant, acknowledging the existence of a loan as well as the outstanding balance as of 30 June 2009.
The Second Defendant denies that she signed the Centrelink Document. Each of the parties have retained expert document examiners to determine the authenticity of the signature.
I do not approach the task of determining the authenticity of the signature solely on the basis of the competing expert evidence. It is only one factor, alongside others, that constitute the set of facts informing my decision. The other matters are the following:
whether I accept the Second Defendant’s evidence denying that she executed the document; and
how I treat the implicit counterfactual to the Second Defendant’s denial, being the notion that some forgery was undertaken either by the Deceased himself or his amanuensis and, if so, his motivation in doing so.
The first issue concerns the credibility and/or reliability of the Second Defendant’s evidence.
In dealing with the three lay witnesses I am not required, and do not make, credit findings in relation to the First Plaintiff’s evidence. No credit attack was made upon him. The First Plaintiff, both on his own behalf and that of the other Plaintiffs, bases the claim on the Deceased’s records. He readily and candidly accepted that he was not involved in any of the transactions the subject of the claim.
The First Defendant, during his cross-examination, displayed a considerable degree of ignorance concerning dealings with the Deceased. There appears to have been a division of responsibility between the Defendants whereby those dealings were almost entirely between the Second Defendant and the Deceased. I found the First Defendant to be a generally candid witness who did not involve himself with the finances of the business being conducted by the Third and Fourth Defendants.
The Second Defendant was intimately involved in the transactions. I must therefore assess her credibility and reliability in denying the existence of the loans, the payment of interest and whether she executed the Centrelink Document, amongst other issues.
For the reasons that follow, I do not accept the evidence of the Second Defendant unless that evidence is independently corroborated.
First, I consider that the defence pleaded in [12(d)] to be implausible. The notion that large amounts of money were unilaterally transferred by the Deceased to the Fourth Defendant without the Defendants’ knowledge is not merely implausible, it is inconsistent with the Defendants’ acceptance that they knowingly received funds from the Deceased, albeit in the amount of $225,000. The contention that large amounts of money simply turned up in the Defendants’ accounts, unannounced, with no anterior discussions, is fantastic. Such a defence discredits the Defendants.
Secondly, the refusal by the Defendants to treat such monies, which they admit were received, as loans, was disingenuous and absurd. Counsel for the Defendants accepted, correctly, that if the money was not a loan it could only be a gift. Not even the Defendants suggest that the Deceased made any gift of money to them. Even so, on one view, it would follow that this is how they are attempting to characterise the receipt of money from the Deceased.
Thirdly, the cross-examination of the Second Defendant revealed inconsistencies between her oral testimony and affidavit evidence. For example, as stated at [42] above, the Second Defendant deposed that the purpose of receiving funds from the Deceased was to “adjust” the revenue figures of the Fourth Defendant to improve its refinancing prospects. Cross-examination revealed that the money paid by the Deceased was used for cash flow purposes. Similarly, as stated at [44] above, the Second Defendant denied that the 2005 ATO payments could have been received in relation to an income tax obligation despite an ATO Activity Statement for the Fourth Defendant which directly contradicted her evidence. Those inconsistencies undermine her credibility and reliability. Moreover, the Second Defendant sought to bootstrap her evidence by stating that the Deceased only started to work for the Defendants in 2005. Here, the Second Defendant’s credibility and reliability is undermined not by inconsistency, but by the consistency of her evidence with receiving money late that same year. Again, unless independently corroborated, I do not accept the Second Defendant’s evidence on any of these matters. I find that the Second Defendant was committed to a tendentious, unreliable and implausible version of events.
Fourthly, I find the Defendants’ failure to respond to the allegations made against them in the two letters from Tebbutt Lawyers to be conduct significantly inconsistent with the denial now asserted in these proceedings.
Fifthly, I find the Second Defendant’s explanation of why the Defendants ceased paying money in May 2023 unpersuasive and implausible. The Defendants contend that one or more of them had overpaid the amounts repayable to the Deceased (being $225,000) by many tens of thousands of dollars. The notion that they would not have requested this money be repaid and, if necessary, sought repayment by way of a cross-claim strongly suggests that the Defendants did not truly believe that they owed only $225,000. It is an insufficient explanation for why the Defendants, in the absence of any obligation to do so, continued to pay money to the Deceased’s estate each fortnight.
Both parties in this matter engaged forensic document examiners. Ms Melanie Holt was the Plaintiffs’ expert, while Mr John Ganas was the Defendants’. Both experts are experienced in their field, and I have had significant regard to their evidence.
There were two questions which handwriting analysis was called to answer. Those were:
whether the Second Defendant’s signature (the impugned signature) on the Centrelink Document sent to Centrelink in 2012 was signed by the same person who signed the sample signatures; and
whether the handwriting contained in some of the Deceased’s cash journals was written by the same person who wrote certain documents said to be written by the Deceased.
Both experts were asked the first question. Only Ms Holt was asked the second.
The Centrelink Document comprises 19 pages. The impugned signature appears on the third page of the bundle at the end of a loan ledger. Both experts noted that the first page had been printed using an inkjet printer and had been stapled multiple times, possibly indicating that pages had been added at some point or that the bundle had been reorganised.
Mr Ganas analysed the Centrelink Document in greater detail. He noted that the first 13 pages had been stapled more than once, while the final three pages were stapled together separately. Further, although both experts observed that the Letter had been hole‑punched, only Mr Ganas identified variations in the holes. Some pages had been hole‑punched once with double holes, whereas others had two or three overlapping sets of holes.
Both experts were provided with an array of specimen signatures (Ms Holt was given 49, and Mr Ganas 54), which could be compared to one another to assess the degree of natural variation among the signatures. Once that normal degree of variation was understood, the impugned signature was examined to determine whether its features bespoke a greater degree of variation.
As to whether the Second Defendant’s signature was “simulated” (a technical term with a meaning akin to “forged”), the experts were diametrically opposed. Ms Holt concluded that there was “strong support” for the proposition that the Centrelink Document was signed by the same person who executed the specimen signatures. In her opinion, there was strong evidence that the signature, notwithstanding the differences outlined below, was written by the Second Defendant.
Ms Holt opined that this conclusion was supported by the “good degree of speed and fluency” exhibited in the impugned signature, as well as several other “very subtle, similar and consistent” characteristics. She noted the absence of any “tell‑tale” signs of signature simulation and emphasised the difficulty a writer would face in attempting to execute the signature in a manner matching the fluency of the Second Defendant’s other specimen signatures.
In Mr Ganas’ view, there was “very strong support” for the opposite conclusion. Such a strong difference of opinion between handwriting experts is unusual. Ms Holt noted that total disagreement occurs in only 2% of cases.
There were, in any case, several areas of agreement. Both experts characterised the Second Defendant’s signature as complex and exhibiting fluency, although there was a dispute concerning the degree of complexity. They further agreed that there were pictorial similarities between the impugned signature and the specimens provided to them, although Mr Ganas noted several differences which, in his opinion, fell outside the range of variation observed in the sample signatures.
Of the several points in dispute between the experts, there were three main subjects on which they joined issue in relation to the impugned signature. These were the connection between the letters “W” and “a” in “Wang”, the absence of an “n” in “Zheng”, and the angle at which the signature appeared on the page.
Mr Ganas noted that, in the impugned signature, the “W” was connected to the “a” from the apex of the right leg of the “W” and proceeded in an anticlockwise loop back into the staff of the “a”. That loop did not appear in any of the sample signatures. Mr Ganas regarded this as a significant construction difference which, relevantly, occurs when two or more letters, despite being almost indiscernible, are formed in entirely different ways.
Ms Holt acknowledged in cross‑examination that she had missed that loop. She stated that this was attributable, in part, to the fact that the sample signatures were reproductions, which did not permit close examination of the finer details of structure and dynamics. Mr Ganas pointed out that Ms Holt had, in fact, examined the original letter. Nevertheless, Ms Holt did not regard the Wang connection as a significant construction difference. Mr Ganas disagreed, characterising it as a “distinct feature”.
The second point of serious disagreement between the experts concerned an “n” that was absent from “Zheng”. Mr Ganas stated that the “n” was absent in the impugned signature, yet was present in all of the sample signatures provided. By contrast, Ms Holt contended that there were examples of the “n” being absent in the sample signatures, although she conceded that such examples were rare.
Mr Ganas did not accept that the signature to which Ms Holt referred, and which she claimed also excluded the “n”, in fact did so. Although he regarded the “n” as “not readily observable”, he was of the opinion that the strokes preceding the “g” indicated its presence, however slight that presence may have been.
Ms Holt suggested that there could be numerous reasons for the missing “n”. Possible explanations included an accidental occurrence, defined as “an unexpected and unintentional change in a signature due to chance or carelessness”; the Second Defendant having been interrupted; or an attempt at disguise, although Ms Holt noted that the variation did not bear the expected hallmarks of disguise.
Both experts observed that the impugned signature was written at a 45-degree angle. This did not occur with any of the specimen signatures provided to the experts.
In Ms Holt’s analysis, this was not a significant difference. Several of the specimen signatures were written on lines or confined within a defined area of the page, such as a box. Further, another specimen signature also displayed a rising baseline, albeit to a lesser degree. Ms Holt regarded this as suggestive of the writer, from time to time, writing on an angle, or of the page having been rotated at the time of signing.
Mr Ganas did not regard such explanations as sufficient. He pointed out that the other signatures said to display rising baselines rose by only approximately seven degrees, and even then only in the second half of the signature.
Although Mr Ganas accepted that there were pictorial similarities, he considered that there were several differences which fell outside the range of variation observed in the specimen signatures provided.
The legal principles to which I must have regard in considering this evidence are well known. The party alleging that the signature is forged bears the onus of proof: Damjanovic v York Agencies Pty Ltd [2003] NSWCA 222 at [25] (James J, Meagher and Beazley JJA agreeing). Handwriting evidence should be considered alongside other evidence and should not be given undue weight: Gawne v Gawne (1979) 2 NSWLR 449 at 453 (Glass JA, Reynolds JA agreeing). I am entitled to compare the handwriting that has been admitted into evidence, though I must pay particular regard to expert evidence on the topic: Jeans v Cleary [2006] NSWSC 647 at [157] (Johnson J).
With those principles in mind, it is fortuitous that Ms Holt and Mr Ganas generally agreed as to the observable features of the impugned signature. Ms Holt did not, in general, dispute the additional observations made by Mr Ganas. In each of the three areas outlined above, the disagreement was fundamentally one of characterisation. That is, whether the differences between the impugned signature and the specimen signatures were sufficient to give rise to doubt as to whether the Second Defendant wrote the impugned signature.
After reading the expert reports and examining the impugned and specimen signatures, my opinion is that the Second Defendant did write the impugned signature.
First, the sharp baseline angle of the signature does not cause me significant concern. In my experience, it is not unusual for the angle at which handwriting and signatures are written to change, particularly where documents do not specify a designated place for a signature. It is also common for documents to be passed across or down a table, which can result in a signature exhibiting a sharp rising baseline of the kind seen in the impugned signature.
Secondly, I am not persuaded that the absence of the “n” in “Zheng” is evidence of simulation. Mr Ganas’ report, both on this issue and generally, is logical and carefully reasoned. However, I accept Ms Holt’s proffered explanation that the omission was an accidental occurrence. I acknowledge that none of the specimen signatures omits the “n” in the same manner as the impugned signature. Nevertheless, the letter is difficult to discern in several of the specimen signatures, and it appears that the “n” could disappear altogether with only minimal variation in the relevant strokes.
Of the three main differences, the Wang connection causes me the greatest difficulty. I agree with Mr Ganas that the connection and loop go beyond slight differences and constitute distinct features in their own right. None of the other signatures displays such features, and I find it peculiar that they appear only in the impugned signature.
Despite this peculiarity, I am not persuaded that it constitutes sufficient evidence of simulation. As noted above, the party alleging forgery bears the onus of proof, and I am not satisfied that this difference, despite its peculiarity, is capable of discharging that onus.
The Plaintiff bears the onus of establishing the existence of a loan: Heydon v Perpetual Executors, Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111; [1930] HCA 26 at 113 (Gavan Duffy CJ, Rich, Starke and Dixon JJ agreeing). That onus is not discharged by mere proof of payment: Gray v Gray [2004] NSWCA 408; 12 BPR 22,755 at 22,757 [16] (Young CJ in Eq, Sheller and Bryson JJA agreeing).
A loan is a simple contract whereby the lender agrees to pay money in consideration of the borrower’s promise of repayment; the obligation to repay is to be found in an express or implied promise to repay. The essence of a loan is that it involves payment and an obligation to make repayment: Schmierer v Taouk [2004] NSWSC 345; 207 ALR 301 (Taouk) at 309 [43] (White J).
I consider that the Deceased’s cash journals, as well as other documents under his hand, makes plain that the Deceased did not consider any of the payments made to be a gift. He carefully notated them as loans. There is not a single document in evidence that states or indicates otherwise.
The Defendants in these proceedings rely upon Manzi v Smith (1975) 132 CLR 671; [1975] HCA 35 (Manzi) in answer to the Plaintiffs’ claim which, they allege, rises no higher than the evidence contained in the Deceased’s cash journals. Manzi concerned a claim by a company’s liquidators against the appellants for payment of money they were said to owe the company. That claim was based solely on the company’s books of account. There was no evidence that the individuals were parties to the journal entries or that they were aware of them. Chief Justice Barwick, with whom Mason and Jacobs JJ agreed, said at 674:
“The company’s assertions in its books of account did not establish the indebtedness of the appellants or any payment of money in discharge of that indebtedness.”
That statement would have been a formidable defence if the evidence in this case rose no higher than the Deceased’s journals. The evidence, however, goes further than this in circumstances where:
the Defendants accept that they received hundreds of thousands of dollars from the Deceased;
the Defendants, for years after receipt of these payments, continued to make payments to the Deceased in $1,000 increments;
the Defendants remained silent when confronted, in a letter from Tebbutt Lawyers, with the basal allegations that inform the claim before me. They also continued to make payments after receipt of such correspondence; and
the Centrelink Document, which I have found to have been signed by the Second Defendant, constitutes a powerful admission.
The extensive evidence in this case distinguishes it from Manzi. Accordingly, I do not consider that the case offers a defence to the Plaintiffs’ claim.
In addition to the journal entries, the following matters are also relevant to my determination as to the existence, and amount, of any loan or loans:
the Defendants’ acceptance that the money they received was accompanied with an obligation to repay it;
the Defendants continued to make payments, over a number of years, to the Deceased, which is obviously consistent with the repayment of the loan;
the admission contained in the Centrelink Document; and
the Defendants’ silence in the face of the letters from Tebbutt Lawyers which spelt out, in the clearest of terms, the precise nature of the claim now pursued by the Plaintiffs.
I am satisfied, based upon a concatenation of the above events, that one or more of the Defendants borrowed the sum alleged by the Plaintiffs in the form of a loan and have failed to repay the principal in full. The Defendants’ denial that any money was received as a loan is more than merely implausible. I consider it to be untruthful.
If the Defendants refuse to admit something as self-evident as the existence of a loan it makes it difficult to accept, without independent corroboration, other parts of the evidence save and except for when such evidence is against interest.
The Defendants, in their submissions, put the Plaintiffs to proof as to whether the Deceased was the source of the funds. The evidence, in the Plaintiffs’ own documents, suggests that some of the funds was derived, by the Deceased, from other parties. I do not consider this to be a matter of significance. The argument conflates two separate issues; the identity of the parties in the lender-borrower relationship and the source of the funds. It may well have been the case that some of the funds received by the Defendants was sourced by the Deceased from third parties. The evidence does not suggest, nor do the Defendants, they had any communications or dealings with such third parties. Their relationship was solely with the Deceased. If, for example, the Deceased borrowed money from a bank to on-lend it to the Defendants, with such money being paid directly from such bank to the Defendants, that fact alone would not diminish the Defendants’ obligation to repay such money to the Deceased with whom they were indebted. I am satisfied that, whatever the source, the Deceased facilitated the Defendants’ receipt of money and the obligation to repay such money is governed by the relationship between the Defendants and the Deceased under their lender-borrower relationship.
The First to Third Defendants deny being indebted to the Deceased. Although the Deceased’s records show the First and Second Defendants as the borrowers, that does little more than establish the Deceased’s belief. It is worth noting that the Centrelink Document dated 14 March 2012 identified all four of the Defendants as debtors.
The First and Second Defendant’s evidence on this issue was dissonant. The First Defendant accepted that he and the Second Defendant owed the money whereas the Second Defendant did not. Again, there is little weight in subjective beliefs, although there is consistency between the records maintained by the Deceased and the evidence of the First Defendant. I can treat the First Defendant’s acceptance that he was liable as an admission against his interest. However, he cannot by his admission bind the Second Defendant.
Aside from disregarding the subjective view of the Second Defendant as to her liability, I would not, in any event, accept the evidence of the Second Defendant for the reasons I have addressed above.
For the following reasons, I am satisfied that the loans were made to all the Defendants:
first, I accept that the purpose of some of the loans was to assist the completion of the house at Baker Street, Enfield. That house was not owned by the Third or the Fourth Defendant. I see no reason why money that was advanced to assist the construction of the First and Second Defendants’ home would be a loan made to the Third or Fourth Defendant;
secondly, the letters from Tebbutt Lawyers, which I have addressed above, were sent to the First and Second Defendants and referred, in the subject title of the letters, to an outstanding debt owed by all the Defendants. In the letter of 30 June 2022, this assertion was contained in paragraph 1. At no stage was there any response to these letters refuting their contents including the allegation, contained in each letter, that the loans were made to all the Defendants; and
thirdly, the relationship between the parties was informal and the Deceased dealt with the First and Second Defendants as the alter egos of the Third and Fourth Defendants. In her affidavit, the Second Defendant recalls the Deceased’s request for payment in late 2010, to which the Second Defendant responded saying that “we are doing most of our business through Elite Glass. I will arrange for Elite Glass to transfer the funds to you”. I consider it would have been unlikely that the parties would have been prescriptive as to which of them was in fact borrowing the money. Indeed, such informality would have made any attempt to earmark a loan as being only with the Fourth Defendant, as the Second Defendant contended, an artificial exercise. Further, the Second Defendant’s response is telling; she took responsibility for facilitating the payments from the Third Defendant even though she deposes to the money being received by the Fourth Defendant. This underscores the fluidity of the parties’ dealings. To make a finding that the loan was made only to the Fourth Defendant would be antithetical to the reality of the parties’ intentions and dealings.
I consider that the Deceased’s loans were to all the Defendants. I also consider the Defendants’ liability was and is joint and several.
The Plaintiffs allege that it was a term of the Loan Agreement that monies advanced to the Defendants under the loan were to be repaid on the Deceased’s demand.
The Second Defendant’s affidavit recalls a conversation between herself and the Deceased in “late 2010” where the Deceased asked her “can [the Fourth Defendant] transfer the funds back? I’m retired and need money to live”. While I do not treat this as evidence informing the duration of the Loan Agreement, i.e. that the money was repayable on demand, I rely on it to find that the parties had not agreed to any date of repayment. I find this conversation consistent with their informal relationship which, I find, extended to silence as to the repayment date of the loaned amounts.
In the absence of an agreement as to the time at which a loan should be repaid, that loan is payable on demand: Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125 at [10]–[16] (Ward J). Accordingly, I am not required to find whether the Deceased and Defendants agreed that money was payable on demand. Quite the opposite. In the absence of any evidence of a discussion of repayment dates, the loan amounts were payable instanter.
There then arises an issue as to whether the terms of repayment were negotiated in 2010 and the effect, if any, that the fruits of that negotiation had on the date of repayment. There seems to have been an agreement between the Deceased and the Second Defendant in late 2010, whereby the Deceased appeared to accept repayment of the loan by the Defendants in $1,000 increments. That is found from the Second Defendant’s evidence taken together with the Defendants’ performance of such an agreement. It is unnecessary to find that such an agreement was binding, but I infer that the Deceased’s forbearance, regarding his entitlement to immediate payment of the whole debt, would be sufficient consideration to bind the parties.
No estoppel is raised by the Defendants, so the loaned amounts remain payable instanter and the cause of action arose immediately upon the Deceased’s payment to the Defendants.
The Plaintiffs claim that the Loan Agreement included a term requiring interest payments of 10% per annum on amounts outstanding. Whilst I am satisfied that the relationship between the Deceased and the Defendants was one of lender and borrower, the identification of a term of a particular rate of interest is not without difficulty.
There are three questions I must consider in determining this issue. First, whether I am persuaded on balance that there was any agreement for the payment of interest. Secondly, if there was an agreed interest rate, was it 10% per annum? Thirdly, does the Plaintiffs’ claim for 10% interest fail if the agreed interest rate was not for 10% but a different amount?
The Defendants contend that no interest was payable by them at all. They appear to argue that because there was no loan, consequently, there was no interest payable. They also appear to argue that even if there was a loan there was, nevertheless, no interest payable. The notion that the Deceased would have made interest-free loans to the Defendants, while accepting the repayment of principal for more than 10 years after the Deceased’s demand for repayment, is commercially rebarbative. I reject it.
Yet again, I am forced to return to the communications between Tebbutt Lawyers and the Defendants. The Defendants seek succour in the First Plaintiff not mentioning interest (as opposed to principal) in his email to the Second Defendant. This argument does not advance the matter at all. The email does not characterise the payments as principal either. It cannot be presumed that the payments referred to therein were one or the other.
The letter from Tebbutt Lawyers of 30 June 2022, at paragraph 3, makes specific reference to “calculations of interest repaid and interest accrued” and attaches a balance sheet which differentiates between repayments of principal and interest accrued. Not only that, but the line-item recording interest for the 2009 financial year calculated the amount of $75,300 which is 10% of the balance, set forth in the previous line, of $753,032.62. This is, plainly enough, the application of a 10% interest rate.
However, the balance sheet does not consistently apply a 10% interest rate. The rate appears to change from year to year. Fluctuations in the interest rate appears consistent with the Reserve Bank of Australia’s cash rate target from time to time over this period. I take judicial notice of that cash rate so applied, observing that between 2005 and 2010 the cash rate varied between 5.5% (2005) to 4.75% (2010), albeit reaching 7.25% in March 2008. The cash rate progressively fell from 2010 through to 2021, at which time it was 0.10%. There was, in the balance sheet provided to the Defendants by Tebbutt lawyers on 30 June 2022, a correspondingly progressive decrease in the interest rate applied between the 2010 and 2022 financial years.
It would be surprising if, despite the cash rate target falling to 0.10%, the Defendants would have been paying an interest rate of 10% per annum.
The balance sheet seems to suggest that the interest rate applied by the Deceased was commensurate with some external scale. I infer this was most likely the RBA cash rate target, but I need make no finding about it.
The Plaintiffs’ evidence does not permit a finding that there was any agreement between the Deceased and the Defendants that the Defendants would pay a 10% per annum interest rate. There is no objective evidence of such an agreement. Whilst I find that interest was being paid, the Plaintiffs have not satisfied their burden of proving the existence of a contractual term that interest was repayable at 10% per annum.
The question then arises whether, in the absence of such a finding, the pleaded case for interest fails. I so find. It is not for this Court to confect a different rate of interest, particularly when it appears that different rates were applied from time to time.
The Plaintiffs’ claim for the imposition of 10% contractual interest fails.
100 Interest up to judgment
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit—
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
(2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit—
(a) on the whole or any part of the money paid, and
(b) for the whole or any part of the period from time to time the cause of actions arose until the time the money was paid.
The current proceedings are proceedings for the recovery of money within the meaning of s 100 of the CPA.
The Plaintiffs submit, and I agree, that the Defendants have had the use of the loaned monies and the Plaintiffs have been out of that use. Although the Court has a discretion to award interest, the circumstances in which a claim for interest is refused are rare and it is almost invariably to be allowed when claimed: Falkner v Bourke (1990) 19 NSWLR 574 at 575 (Priestley JA). Indeed, the purpose of pre-judgment interest is to compensate plaintiffs for being kept out of their money: MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; [1991] HCA 3 at 663. I do not consider that this case falls within one of those rare circumstances and will award pre-judgment interest.
In their written submissions, the Plaintiffs seek pre-judgment interest from the date the Deceased paid monies to the Defendants. Alternatively, they submit that the date from which pre-judgment interest should be calculated be no later than the date of the Deceased’s demand in “late 2010”. Little reasoning attends this submission.
In support of their submissions, the Plaintiffs rely upon Maestrale v Aspite (No 2) [2014] NSWCA 302 (Maestrale), where Beazley P, Marfarlan and Barrett JJA said at [8]:
“The Civil Procedure Act 2005, s 100(1)(b) provides that interest is to be calculated ‘for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect’. The time at which the cause of action arises will often provide an appropriate date from which interest should run, as it is on that date that the successful party is taken to have had a legal entitlement to the judgment sum and is therefore kept out of their money in the relevant sense. However, the facts of the particular case may indicate that pre-judgment interest should be calculated from some later date. In this case, there is a question as to whether the appellant was “kept out” of his money, and therefore ought to be awarded compensation by way of interest, from the period between 15 November 2002 and 8 November 2007.”
Maestrale concerned professional negligence proceedings brought against a solicitor, Mr Aspite, for his failure to attend upon the plaintiff’s hospitalised father for the purposes of preparing a new will. The plaintiff’s dying father sought to replace his existing will with one that would increase the plaintiff’s share of the property.
Significantly for this case, pre-judgment interest in Maestrale was awarded to the plaintiff from the date at which his financial loss crystallised: at [9].
As I have outlined above, the cause of action in respect of each payment from the Deceased to the Defendants crystallised immediately upon that payment being made. However, the Plaintiffs have provided scant reasons to support an award of pre-judgment interest reaching so far back in time. This is for several reasons:
I accept the Second Defendant’s evidence, which I treat as a concession made against interest, that the Deceased in 2010 demanded repayment of funds he had advanced. There is no evidence that establishes that, thereafter, he remonstrated with the Defendants that they were paying insufficient amounts (i.e. less than 10% per annum) in satisfaction of (what I find to be) an agreement, reached in 2010, that the Defendants would make regular payments to him;
the evidence does not suggest the Deceased sought legal advice in relation to the recovery of deficient interest payments. Letters from Tebbutt Lawyers emerged for the first time on 30 June 2022 from the Deceased’s estate rather than by the Deceased himself during his lifetime. It is fair to infer from the Deceased’s inaction during his lifetime that he was satisfied with the amounts he was receiving in comparison to him taking steps to recover any shortfall between the interest he was receiving an amount representing 10% per annum; and
I find that at the point in time when the Defendants elected to cease making payments to the Deceased’s estate, they remained, for reasons set forth above, obligated to make such payments but that their ceasing to do so was repudiatory conduct which repudiation was accepted by the institution of these recovery proceedings. The cessation of payments in my view crystallised the Plaintiff’s cause of action to recover the entirety of sums outstanding as to principal and entitles the Plaintiffs to pre-judgment interest accruing from the demand that was made for repayment even though it slightly predates the cessation of payments.
I will order pre-judgment interest to be paid the date on which the Plaintiffs first demanded repayment. That occurred when the first letter was sent by Tebbutt Lawyers on 30 June 2022. I therefore consider the date of the second letter set by Tebbutt Lawyers, 29 March 2023, to be the appropriate point in time from which pre-judgment interest should run.
The SOC pleads that a total of $60,481.38 has been toward the principal owing, and a further $272,130 has been paid toward interest. The Plaintiffs in their submissions note that they considered that the payments made by the Defendants in 2005, 2006, and some of those made in 2008, were payments toward the principal. This is based on those payments being described as such in the cash journals maintained by the Deceased while he was alive.
Those same cash journals also indicate that all payments made by the Deceased from 2009 onwards were toward the interest. I must determine whether those payments were towards the principal or interest, respectively. The Defendants, consistent with their denial that any interest was payable, submit that all payments were to principal only. To resolve this question requires more detailed analysis than that undertaken by Counsel.
The Deceased’s cash journal entries reconcile the payments in 2005, 2006, and 2008 as principal. Those payments reduced the principal amount owing.
On balance, I treat these repayments as principal, primarily because the Centrelink Document signed by the Second Defendant appears to recognise this. The Centrelink Document records that, as of 30 June 2010, the outstanding balance of the loan was $753,032.62.
There is an immediate discrepancy between the balance owing contained in the Centrelink Document and that in the SOC. The latter claims the principal owing is $746,072.62. That error arises for the simple reason that the SOC incorrectly applies payments made by the Defendants in 2009 towards the principal. The Plaintiffs’ submissions make clear that payments made in 2009 were in reduction of interest. Applying this to the table at [13] of the SOC, repayments toward principal total $53,521.38. It follows that the total owing under the loan, on the Plaintiffs’ own case, would be $753,032.62.
Accordingly, given the harmony between the two principal figures, I find that the payments made by the Defendants in 2005, 2006 and 2008 were allocated towards the principal sum.
The Plaintiffs claim that payments in 2009, and thereafter, were recorded and allocated as payments of accrued interest.
I find support for this proposition in the Centrelink Document. Payments from the Defendants to the Deceased in 2005, 2006, and 2008 were made towards the principal and totalled $53,521.38. this brings the total principal owing to $753,032.62, which is precisely the balance recorded in the Centrelink Document. I also accept that the Defendants made payments toward interest in 2009. The Centrelink Document shows no change in the principal owing, which indicates that both parties regarded the payments in 2009 as being towards interest.
As there is no allegation that the Defendants made repayments in 2010, there is a lacuna in the evidence regarding whether payments between 2011 and 2023 were, in fact, made towards the payment of interest or principal.
The Plaintiffs assert that the payments between 2011 and 2023 which, after adjusting for the error in the SOC, total $279,090, were toward interest. It is apparent that the Deceased considered them to be of that character. So too did Tebbutt Lawyers in their trust account receipts. This does nothing more than demonstrate the Deceased’s understanding of those payments, as opposed to how those payments were understood by both the Deceased and the Defendants pursuant to any agreement they may have had.
A debtor with multiple debts has the right to declare which debt a repayment is directed towards: Deane v City Bank of Sydney (1918) 25 CLR 215; [1918] HCA 42 at 223 (Barton J); Mills v Fowkes (1839) 5 Bing (NC) 455; 132 ER 1174. That declaration must be in clear terms: Healey v Commonwealth Bank of Australia [1998] NSWCA 103 (Giles JA, Mason P and Fitzgerald AJA agreeing). Where a debtor fails to make such a declaration, it may be possible for the appropriation of the payment to be implied by the circumstances: APX Projects Pty Ltd v The Owners - Strata Plan No 64025 [2015] NSWSC 1250 at [31] (Slattery J).
There is no evidence of the Defendants ever, expressly or impliedly, directing their payments from 2011 onwards to either interest or principal. The right of appropriation therefore fell to the Deceased (the creditor): Cory Brother & Company v Owners of Turkish Steamship ‘Mecca’ [1897] AC 286 at 293 (Lord Macnaghten). Although it is evident from his records that he considered payments from the Defendants from 2011 onwards to be interest repayments, any appropriation by a creditor must be communicated: SAS Institute Inc v World Programming Ltd [2019] EWHC 2495 (Comm), QBD at [64]–[65] (Cockerill J). The Deceased did not do so, meaning that his consideration of the payments as going towards interest was ineffective.
In circumstances where neither debtor nor creditor appropriate a repayment going towards a debt which comprises part interest and part principal, the payment is applied to interest in priority of principal: Fa**lk v Haugh (1935) 53 CLR 163; [1935] HCA 35 at 173–174 (Rich, Dixon, Evatt and McTiernan JJ). Accordingly, I will treat the payments between 2011 and 2023 as being paid towards interest.
The Defendants raise a time bar against the claim. I reject this defence for a number of reasons:
I find that that the monies paid by the Deceased to the Defendants were part of a single loan. This finding is based on four secondary findings:
(a) I am not inclined to find that each time money was paid by the Deceased it was done so pursuant to a separate discussion or agreement. This was not the Defendants’ evidence; (b) the payment of money over a number of years was made on a running account basis; (c) according to the Second Defendant, when the Deceased demanded repayment in 2010, he sought repayment of the whole not repayment of one or more of a series of separate agreements; and (d) interest payments (as per my above findings) were made on the totality of the funds advanced.
the Defendants continued to make payments in reduction of the loan until 2023;
accepting that the loan was repayable on demand and that time commenced for the purposes of the Limitation Act 1969 (NSW) (the Limitation Act) from the date of the Deceased’s first payment, the Defendants’ repayments to the Deceased from 2010 amounted to confirmation under s 54(2) of the Limitation Act (see also: Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535 at 542 (Gibbs CJ)).
The Defendant submits that if the Plaintiffs wish to rely on s 54 of the Limitation Act in answer to its time bar defence, it must establish:
who made each payment;
in respect of which debts; and
whether any confirmation binds all Defendants.
As to (1), the Defendants point to the Second Defendant’s evidence that the payments were made by the Third Defendant. That is not entirely accurate. The evidence shows that the Second Defendant would organise for payments to be made by the Third Defendant as it was more actively trading in 2010 than the Fourth Defendant. The issue is not who made the repayments but who owed the debt. I have found that all four Defendants were debtors. Which of these parties in fact repaid the money is immaterial. As between the Defendants, the payor may have a right of contribution against the other debtors, but insofar as payment by one debtor relieves the others of liability, because such payment has been made, in substance, on the other debtors’ behalf and for their benefit, it is not necessary for the Plaintiffs to determine the identity of the payor. This addresses arguments (1) and (3).
Argument (2) is already resolved. I have found the existence of a single debt comprising all money outstanding to the Deceased (and now the Plaintiffs).
No limitation defence arises.
In accordance with the foregoing reasons, I have determined the list of issues at [12] above in the following fashion:
What funds were transferred by the Deceased to the Defendants? The amount of funds transferred by the Deceased was $753,032.62. However, the Plaintiffs are claiming a slightly lesser amount of $746,072.62: [134]
Were the funds transferred by the Deceased to the Defendants advanced by way of loan? Yes, as a single loan: [97], [143(1)]
If there was a loan, or loans, what were the terms of repayment, including whether interest was payable and, if so, at what rate? The term of the loan was repayable on demand: [106]–[107] Whilst I accept that there was some agreement as to the payment of interest, I am unable to find that that agreement was for 10% per annum and, as such, the Plaintiffs’ claim for contractual interest fails: [119]–[120]
Whether the payments were made by the Defendants in reduction of any principal and/or interest.
(a) The repayments made between 2005 and 2008 were principal: [133]. (b) The 2009 repayments were interest: [136]. (c) Repayments from 2011 to 2023 were interest: [142].
Accordingly, I make the following orders:
Judgment for the Plaintiffs in the amount of $746,072.62.
Pre-judgment interest pursuant to s 100 CPA to be calculated from 29 March 2023.
The Defendants pay the Plaintiffs’ costs of the proceedings.
**********
Redactions at [3].
Notley
Huang
(1918) 25 CLR 215
(1935) 53 CLR 163
(1990) 19 NSWLR 574
(1979) 2 NSWLR 449
(1930) 45 CLR 111
(1975) 132 CLR 671
(1991) 171 CLR 657
(1981) 150 CLR 535