Plaintiff v Defendant

Supreme Court of Victoria|2013-12-17|Before: KYROU J

CONTRACT - Alleged oral loan agreement - Disputed advances by plaintiff to defendant - Alleged oral consulting agreement for the provision of services by defendant to plaintiff - Parties entered into an agreement which was neither the alleged loan agreement nor the alleged consulting agreement and fully performed it - Deed of Acknowledgment and Set-Off of Debt - Whether deed void for uncertainty - Whether deed liable to be set aside due to misleading conduct - Deed held to be effective according to its terms - Plaintiff's claim and defendant's counterclaim dismissed.

2 The plaintiff claims that the defendant owes him $685,847 for unpaid loan advances and interest at 20% per annum pursuant to an oral loan agreement that was made in November 2004 and which I have defined at [58] below as the 'Alleged Loan Agree[1]ent'.1 The defendant counterclaims that the plaintiff owes him $1,397,250 for work performed for him pursuant to an oral consulting agreement that was made in June 2004 and which I have defined at [61] below as the 'Alleged Consulting Agreement'. I will refer to the Alleged Loan Agreement and the Alleged Consulting Agreement as the 'Alleged Agreements'.

3 The loan advances that are the subject of the plaintiff's claim were said to be in the form of payments made to the defendant or to third parties at his direction. A schedule prepared by the plaintiff's lawyers for the purposes of this proceeding lists 140 items which are described as 'amounts advanced' under the Alleged Loan Agreement ('Schedule').[2] The defendant admits receiving the benefit of 73 of those items totalling $287,819 ('Agreed Payments')[3] but disputes the remaining 67 items totalling $398,028 ('Disputed Payments'). The defendant claims that the Agreed Payments were advances on account of amounts to be paid in due course under the Alleged Consulting Agreement.

4 On 17 December 2008, the parties signed a Deed of Acknowledgment and Set-Off of Debt whose terms are set out at [268] to [272] below ('Deed of Set-Off'). The deed included a mutual release. The plaintiff alleges that the deed is unenforceable either because it is void for uncertainty or because it is liable to be set aside due to misleading or deceptive conduct by the defendant.

5 The key issues in this proceeding are as follows:

(a) Did the parties enter into the Alleged Agreements?

(b) What loans did the plaintiff make and what work did the defendant perform?

6 For the reasons that follow, I have reached the following conclusions:

(a) The parties did not enter into either of the Alleged Agreements.

(b) In September 2004, the parties made an oral agreement whereby the defendant agreed to assist the plaintiff with his business affairs, and the plaintiff agreed to provide financial assistance to the defendant commensurate with the value of the defendant's assistance. At [63] below, I have defined that agreement as the '2004 Agreement' and have set out its details.

(d) The defendant did not engage in misleading or deceptive conduct in relation to the Deed of Set-Off and the deed is not void for uncertainty. Rather, it is effective according to its terms.

7 Accordingly, the plaintiff's claim and the defendant's counterclaim will be dismissed.

8 Many of the events that are relevant to this proceeding are not in dispute. The key factual disputes revolve around whether particular oral statements were made by the parties and the nature and effect of particular transactions.

9 The facts that are not in dispute are set out at [10] to [37] below.

10 The plaintiff is a qualified medical practitioner. After conducting a medical practice for some time, he expanded his business interests into ownership of medical centres, property development, ownership of investment properties and ownership of nightclubs. He conducted these business activities through numerous companies and trusts.

11 Prior to 2004, the defendant conducted various businesses, including property development, ownership of investment properties and the provision of educational seminars on property investment. The seminars were conducted by the defendant's company, the National Investment Institute ('NII'). In October 2003, following adverse publicity, NII and many other companies controlled by the defendant went into voluntary administration and were ultimately deregistered.

12 The parties first met around 1998 and became very close friends. In 2004, they had discussions about the provision of funds by the plaintiff to the defendant and the involvement of the defendant in the plaintiff's business dealings. The content of those discussions is disputed and is discussed later in this judgment.

13 The defendant introduced the plaintiff to a number of individuals, including Mr Lewis Janover, solicitor, Mr Colin Adno, solicitor, Mr Van Fisher, solicitor, Mr Veki Brdjanin, mortgage broker, Mr Greg Skien, mortgage broker, the late Mr Barry Taylor of B K Taylor & Co, liquidator, Mr Rod Gee, property consultant, Mr Brendan Macleod, accountant, and Mr Nicholas Porritt, former employee of NII. After being introduced to these individuals, the plaintiff had business dealings with them.

14 The 140 items in the Schedule describe advances allegedly made from approximately September 2004 until December 2006.[4] As stated at [3] above, the parties do not agree on the number of payments that were made or their nature and purpose.

15 The 73 Agreed Payments can be grouped as follows:

(a) Cheque payments and bank transfers varying from $800 to $7,000 to the defendant.[5]

(b) Cheque and cash payments, and a bank transfer, varying from $100 to $6,000 for debts owing on credit cards of the defendant or 'Mrs Kaye'.[6]

(c) Cheque payments and bank transfers varying from $2,000 to $3,000 to the Australian Securities and Investments Commission ('ASIC'), the Australian Taxation Office ('ATO')[7] and National Australia Bank at the defendant's direction.[8]

(d) Payments to service providers for amounts varying from $770 to $30,000 to discharge debts owing to them by the defendant.[9] The service providers are Mr Fisher, Mr Janover and counsel.

(e) Payments by cheque and bank transfers for amounts varying from $1,200 to $5,000 to associates of the defendant.[10] The associates are 'Sofia', 'Olia' and Mr Adrian Gurney.

(f) Payment of $884 for airfares to Noosa.[11]

(g) Payments varying from $260 to $1,300 for airfares and accommodation for a seminar in Sydney.[12]

(h) Payment of $3,900 to Mr Felix Zeldin for the defendant's rent.[13]

16 The 67 Disputed Payments can be grouped as follows:

(a) Cheque payments varying from $300 to $4,000 to the defendant.[14]

(b) Payment of debts of $2,457 and $2,233 owing on credit cards of the defendant.[15]

(c) Cheque payments and bank transfers varying from $766 to $14,539 to ASIC[16] and the ATO[17] at the defendant's direction.[18]

(d) Payments to service providers for amounts varying from $1,320 to $70,000 to discharge debts owed to them by the defendant.[19] The service providers are Mr Brdjanin, Mr Taylor, Mr Janover, Mr Adno, Mr Gee, Mr Skien, 'Milkbar', Mr Fisher, Mr Graeme Prowse of Webb Martin, tax accountant, and Mr Chris Nicodimou of CBRE, valuer.

(e) Payments by cheque and cash for amounts varying from $300 to $5,000 to associates of the defendant.[20] The associates are Mr Aziz Kheir, 'Tony', Mr Porritt, Olia and her husband.

(f) Payments varying from $137 to $1,622 for personal expenses of the defendant, namely, telephone accounts, Foxtel accounts, office supplies and linen charges.[21]

(g) Payments varying from $21 to $5,600 for travel, accommodation and meal expenses of the defendant and his associates, including expenses incurred in interstate and overseas trips jointly undertaken by the parties and their girlfriends.[22]

(h) Cash payments varying from $200 to $4,000 to the defendant.[23]

(i) Payment of $400 for medications provided by the plaintiff to the defendant.[24]

(j) Payment of $10,463 by credit card to organisations described as '21st century' and 'strawberrynet'.[25]

17 The Disputed Payments are discussed in detail later in this judgment.

18 In this judgment, 'Payment' refers to a payment that the defendant has agreed, or I have found, the plaintiff made to the defendant or to a third party at his direction.

19 On 17 February 2004, the plaintiff's trustee company, Redglenn Pty Ltd, purchased the 20% interest in the Urban Property Group held by the defendant through a corporate trustee known as X6 Co Pty Ltd ('Urban Property Group Transaction'). Prior to that transaction, the defendant was one of five investors in the Urban Property Group, which owned large parcels of land in Victoria that it proposed to develop. The transaction took place because the other investors did not want the defendant to be involved with the Urban Property Group due to adverse publicity relating to the defendant. Wisewoulds acted for the plaintiff in the transaction. In a letter of advice dated 1 March 2004, Wisewoulds stated that the plaintiff had already made a loan of $831,990 to the defendant and that the loan was recorded in a separate loan agreement.

20 In the period between the making of the Alleged Consulting Agreement in June 2004 and the signing of the Deed of Set-Off in December 2008, the defendant was involved in a number of business transactions and legal disputes to which the plaintiff was a party. The key transactions and disputes that were the subject of evidence were the 'Great Reflections Transaction', the 'Labassa Transaction', the 'LVX Transaction', 'The Loan Doctor Transaction', the 'St Kilda Sea Baths Dispute' and the 'Oppenheim Dispute'. These transactions and disputes are briefly summarised below.

21 The Great Reflections Transaction involved the acquisition of land by the plaintiff's trustee company, Great Reflections Pty Ltd, from the Urban Property Group. A parcel of land of the Urban Property Group was subdivided and companies associated with each of the group's five investors acquired what was described as a 'Superlot'. Great Reflections Pty Ltd acquired Superlot 5 in Tarneit, which was valued at $9.4 million on 19 July 2006. The defendant offered to assist in developing Superlot 5 in return for a profit share. The plaintiff accepted the offer. Heads of agreement were signed on 19 December 2006 which set out a profit-sharing arrangement. That document was not tendered in evidence. On 21 December 2006, Great Reflections Pty Ltd made an unsecured and interest-free loan of $1,123,000 to the defendant which was repayable on 21 December 2010.

22 Subsequently, the defendant informed the plaintiff that, in his opinion, Superlot 5 was worth more than $9.4 million and offered to assist in finding a buyer in return for a share in the proceeds of sale. The plaintiff agreed. On 4 December 2007, Great Reflections Pty Ltd entered into an agreement with the defendant and his mother, Bella Kukuy, as trustees of the Medinvest Superannuation Fund ('GR Agreement'), which replaced the heads of agreement. The GR Agreement recorded that the Medinvest Superannuation Fund had made a loan of $1,123,000 to Great Reflections Pty Ltd. Pursuant to the GR Agreement, Great Reflections Pty Ltd agreed that, upon the sale of Superlot 5, it would pay to the Medinvest Superannuation Fund 20% of the net proceeds of sale up to a sale price of $11 million and an additional 80% of the amount by which the net proceeds of sale exceeded $11 million.

23 On 16 November 2007, Superlot 5 was sold for $17,017,000. Pursuant to the GR Agreement, as supplemented by a clarification agreement dated 29 July 2008, prior to 17 December 2008 Great Reflections Pty Ltd paid to the Medinvest Superannuation Fund a total of $8,148,063.

24 The Labassa Transaction involved loans of approximately $385,000 to the plaintiff's company, Labassa Holdings Pty Ltd, by the defendant's trustee company, Yarrag Pty Ltd, in December 2004. Labassa Holdings Pty Ltd made loan repayments on 3 May 2005, 23 May 2005, 20 July 2005, 10 August 2006 and 11 August 2006.

25 The LVX Transaction involved the purchase of nightclubs through a company called LVX Entertainment Pty Ltd ('LVX') for the purpose of listing that company on a secondary stock exchange after the nightclubs became operational.

26 The LVX Transaction was conceived by the defendant and he was the driving force behind it. Although he was not a director, shareholder or employee of LVX, he was heavily involved in coordinating the work that was being done to acquire the nightclubs and make them operational and to prepare LVX for listing. He did not have an office at LVX's premises and conducted many meetings in his apartment.

27 The plaintiff was the sole shareholder in LVX. He was the non executive chairman, Mr Kheir was the sales manager and Mr Porritt was the compliance manager. The plaintiff's companies became lessees or sub-lessees of the properties at which the nightclubs were to be conducted and the plaintiff gave personal guarantees in relation to the leases or sub-leases. One such sub-lease was for part of the St Kilda Sea Baths.

28 In October 2006, a company that was ultimately known as Playground Concepts (Australia) Ltd ('Playground') replaced LVX[26] as the owner and operator of the nightclubs and as the company to be floated. Mr Kheir became the controlling shareholder in Playground. Although Mr Kheir's companies took over the lease arrangements for the nightclubs, the plaintiff's companies also remained liable to the lessors or sub-lessors and the plaintiff remained liable under his guarantees.

29 Playground listed on the Australian Small Scale Offerings Board ('ASSOB') in February 2008. The plaintiff owned shares in Playground at that time through PCAL Investments Pty Ltd. He subsequently sold some of those shares.

30 The Loan Doctor Transaction involved a proposal by The Loan Doctor Pty Ltd to franchise a mortgage brokering business called 'Mortgage Safe'. Mr Brdjanin was a director and the controlling shareholder of The Loan Doctor Pty Ltd and Mortgage Safe Pty Ltd. In 2005 and 2006 the plaintiff's company, Redglenn Pty Ltd, made loans exceeding $1 million to The Loan Doctor Pty Ltd. The defendant's company, Yarrag Pty Ltd, was a unitholder in the Loan Doctor Unit Trust. The franchise proposal was not successful and the plaintiff lost a large sum of money.

31 The St Kilda Sea Baths Dispute involved threatened proceedings against the plaintiff by the sub-lessor of the St Kilda Sea Baths under the guarantee the plaintiff signed in relation to the sub-lease of that property.

32 The Oppenheim Dispute involved a loan by the plaintiff from his former father-in-law, Mr Yehuda Oppenheim. After the breakdown of the plaintiff's marriage, Mr Oppenheim sought to recover the loan. Mr Adno represented the plaintiff. The dispute was settled but the plaintiff did not pay an amount due on 1 December 2006 pursuant to the settlement. The plaintiff sent some documents about the Oppenheim Dispute to the defendant in December 2006.

33 On 22 July 2006 The Age published an adverse article about the defendant's involvement with the plaintiff in the LVX Transaction.[27]

34 As stated at [4] above, the parties executed the Deed of Set-Off on 17 December 2008.

35 On 30 April 2009, the plaintiff wrote off the amount of $662,599 which included all advances said to have been made pursuant to the Alleged Loan Agreement. He claimed a tax deduction for that amount as a bad debt in his 2009 tax return.

36 The defendant has not provided to the plaintiff or any of his companies any invoice pursuant to the Alleged Consulting Agreement.

37 The defendant has not repaid to the plaintiff any of the 140 items in the Schedule.

Credibility of witnesses and Jones v Dunkel submission

38 Both parties gave evidence. The plaintiff also called Mr Macleod, who has acted as his accountant since 2005. The defendant called Mr Adno, Mr Roger Dickeson, a consultant to LVX, and Mr Geoff Berry, an expert on remuneration.

39 As the critical discussions between the parties about the Alleged Agreements and the Deed of Set-Off took place in the absence of any witness, the credibility of the parties and, to a lesser extent, the other witnesses, is critical to the outcome of this proceeding.

40 The plaintiff was an unreliable witness who was willing to depart from the truth to advance his case.

41 The plaintiff was unreliable for the following reasons. First, he adopted a cavalier attitude to his role as a witness and came to Court largely unprepared. He did not recall many documents, events or details of transactions because he did not bother to make any relevant enquiries or to read documents to refresh his memory prior to giving evidence. Secondly, the plaintiff adopted a casual attitude to record-keeping, including in relation to his dealings with the defendant. Thirdly, the plaintiff adopted a broad-brush approach to business transactions and did not always focus on, or understand, the details. This was particularly the case with complex transactions. For example, the plaintiff said that he sold all his shares in LVX to Mr Kheir for $1 and that he was not allocated any shares in Playground when in fact he held a substantial number of shares in Playground when it floated in 2008.

42 Overall, while the plaintiff purported to clearly recollect some transactions, for the most part, he did not recall precise details or confused the details of different transactions.

43 As the plaintiff's memory was unreliable, if a contemporaneous document contradicts his evidence, I gave preference to the contemporaneous document.

44 During cross-examination, the plaintiff sometimes became argumentative and non-responsive. His desire to succeed in this proceeding resulted in the giving of evidence that was not truthful, particularly in relation to the making of demands on the defendant to repay advances made to him and about the extent of the defendant's involvement in his business affairs. He made up the conversations quoted at [280] and [284] below. He stubbornly maintained his version of particular events notwithstanding the contradictory and unpersuasive nature of that version and the objective evidence that was against it.

45 However, I have not rejected all of the plaintiff's evidence. He made a number of important concessions and some of his evidence was supported by contemporaneous documents. Further, his evidence about some of the Disputed Payments was plausible because they were similar in nature to some of the Agreed Payments.

46 The defendant was an untrustworthy and unreliable witness. While his memory, attention to detail and understanding of business transactions were far superior to those of the plaintiff, he was much more evasive. He made long, repetitive speeches, reframed some of the questions in cross-examination in order to avoid them and did not hesitate to lie when it suited him.

47 The defendant spoke very rapidly when giving evidence and the level of detail he provided strongly suggests that large parts of his evidence were rehearsed. Some of his evidence was also exaggerated and grandiose. For example, he said that he read 'thousands of documents in relation to legal agreements', that he regularly worked 100 hours per week and that he gave the plaintiff legal, accounting and tax advice even though he had no qualifications in these fields and the plaintiff was being advised by lawyers, accountants and tax specialists.

48 Further, the defendant made sweeping statements which were demonstrably untrue. For example, he said that he never received cash from the plaintiff when his list of Agreed Payments includes item 67 'Payment by ... cheques 078, 079 and 080 and $100 cash to Henry Kaye to cover credit card bills.' He was reluctant to make any concessions, even on obvious issues, and rarely acknowledged any memory lapses.

49 The defendant's behaviour during cross-examination was appalling. He was arrogant, aggressive and condescending towards the plaintiff's counsel with barbs such as: '[Y]ou don't know the Tax Act'; 'That is preposterous'; '[T]hat's a fabrication'; and '[Y]ou're just trying to manipulate me.' He also accused the plaintiff of blackmail when this was not put to the plaintiff by the defendant's counsel.

50 I have not accepted the defendant's evidence about the amount of time he spent assisting the plaintiff with his business affairs or that the plaintiff had agreed to pay him any remuneration over and above the financial assistance actually provided to him by the plaintiff.

51 I have, however, accepted some of the defendant's evidence where it was supported by contemporaneous records or the known objective facts.

52 Overall, I have been very wary in accepting the evidence of either the plaintiff or the defendant. This has not been a case where I have been able to prefer the evidence of one of them on each occasion in which their evidence has conflicted. Rather, I have assessed their evidence and made findings issue by issue.

53 Mr Macleod was not a frank witness. He feigned lack of recollection when it suited him and tailored his answers to some questions to support the plaintiff's case. Mr Macleod's memory was also unreliable. For example, he could not recall whether Playground - a company of which he was the chief financial officer and a director - was floated in 2008.

54 Mr Adno was not an impartial witness. His answers included gratuitous opinions aimed at supporting the defendant's case.

55 Mr Dickeson and Mr Berry were impartial witnesses. However, Mr Dickeson's evidence was unreliable because his memory was faulty. For example, he suggested that Mr Kheir took over control of the LVX business at the end of 2007 whereas this took place in October 2006.

56 The plaintiff did not make any submissions based on Jones v Dunkel.[28] The defendant, on the other hand, submitted that the plaintiff's failure to call Mr Kheir, Mr Janover, Mr Brdjanin, Mr Prowse, Mr Gee, Mr Nicodimou and someone from Mr Taylor's office[29] warranted an inference that their evidence would not have assisted the plaintiff's case. As will become apparent, I have been able to resolve factual issues without the need to rely on inferences based on Jones v Dunkel. In any event, each of the above individuals was well known to both parties - and in some cases was better known to the defendant - such that they were not necessarily in the plaintiff's camp. The evidence of the individuals would have been relevant to the defendant's counterclaim as well as to the plaintiff's claim.

Did the parties enter into the Alleged Agreements?

57 A striking feature of this case is that both parties are seeking to recover substantial amounts of money from each other on the basis of agreements that they allegedly made in informal discussions and which they did not document. There are no contemporaneous documents which prove either of the Alleged Agreements. Some of the contemporaneous documents, however, provide context and assist in assessing the veracity of the parties' oral evidence.

58 The plaintiff gave the following evidence about the agreement that he entered into with the defendant, which I will refer to as the 'Alleged Loan Agreement':

(a) During a meeting with the defendant in September or October 2004 at a coffee shop in St Kilda or Elwood, the defendant told him that, as a result of the collapse of his companies and the refusal of his family to assist him financially, he required a line of credit of between $500,000 and $1 million for a couple of years. The defendant needed the money for his living expenses and also to pay for the costs of defending proceedings by regulators.

(b) He asked the defendant whether he could provide security and the defendant replied that he could not. However, the defendant said that he would be able to repay the amounts advanced after a couple of years with 20% interest compounding annually. He then agreed to open a line of credit up to $1 million at 20% interest per year.

(c) He and the defendant agreed that 20% interest was a fair rate for a completely unsecured loan to a person in the defendant's position.[30]

59 The plaintiff said that, after the above conversation, the defendant requested payments from time to time and he complied with the requests on the same day. He recorded each payment on a spreadsheet. The spreadsheet is discussed at [98] to [112] below.

60 The plaintiff said that he did not at any time agree to engage the defendant as a consultant for any of his businesses or to pay him any remuneration. He used the defendant from time to time to discuss his business affairs as one would discuss them with a close business friend.

61 The defendant gave the following evidence about the agreement that he entered into with the plaintiff, which I will refer to as the 'Alleged Consulting Agreement':

(a) In approximately June 2004 the plaintiff approached him about working for the plaintiff to assist him to expand his property and other business interests. The plaintiff was less experienced than the defendant in property development. The parties had two discussions about this proposal, which was that the defendant would work for the plaintiff, with the potential to work with him on specific projects. In the first discussion, the defendant told the plaintiff that he was interested but he needed cash flow and that he would think about the proposal.

(b) The defendant described the second conversation with the plaintiff as follows:

We had a subsequent conversation about what potentially I would be paid for the type of consulting services I would provide for Dr Braude. Dr Braude said to me, 'We've been friends for a long time.' We both wanted to do it. We discussed the remuneration. Dr Braude said, 'Look, I'll advance you money for your living expenses, whatever you need as long as it's reasonable and it's not too much and you'll do the work because [we] don't know the exact nature of the work. We don't know what work you'll do, what it is going to entail, how many hours it will take, we will work out exactly how much you will be paid for the consulting works later and what type of percentage you can have in various projects if it comes to that.'

(c) As he was very good friends with the plaintiff at that time, he agreed to the plaintiff's proposal. The assistance that he was to provide was focused on the plaintiff's newly acquired interest in the Urban Property Group. The plaintiff also required assistance with expanding his property portfolio and other opportunities in the hospitality industry. The parties did not agree on a specific number of hours to be worked by the defendant, or what he would charge. They agreed that he would start working and that they would discuss the matter again at a later date when they had a better idea of the work that he would be performing.

(d) He and the plaintiff discussed that the plaintiff would make advances in lieu of the consulting work that he did and that, at a later date, they would offset the advances against the consulting work. They agreed that the plaintiff would cover some of his basic living and business expenses and disbursements that he needed to pay in the course of working for the plaintiff. They never discussed the payment of interest.

62 In cross-examination the defendant agreed that, in 2004, he was under significant financial pressure arising from the collapse of his group of companies but said that his family was assisting him to cover his costs. He said that he wanted to be involved with the plaintiff as a consultant with potential for commercial opportunities. There was no loan agreement with the plaintiff and no line of credit was opened, only advances against future consulting work.

Conclusion: The parties entered into the 2004 Agreement

63 The unreliability of the parties' evidence and the absence of any witness to the Alleged Agreements or any written evidence of those agreements, makes the task of deciding the nature and scope of any agreement that they made in 2004 difficult. Nevertheless, the objective evidence about the parties' circumstances in 2004 and their conduct at that time enable me to make the following findings:

(a) At a meeting between the parties in September 2004, the defendant informed the plaintiff that his businesses had collapsed and that he needed financial assistance to meet personal living expenses and legal costs arising from the collapse of his businesses. He also said that he had extensive expertise in property investment and that he was willing to provide that expertise to the plaintiff.

(b) The defendant made the following proposal to the plaintiff:

(i) in return for assisting the plaintiff in his business dealings for two to three years, the plaintiff provide him with financial assistance from time to time on request during that period and the opportunity to have a stake in the plaintiff's business dealings where this was considered appropriate;

(ii) the financial assistance to be provided by the plaintiff take the form of payments to the defendant or to third parties at the defendant's direction for personal as well as business expenses;

(iii) the amounts to be paid by the plaintiff over the two to three year period would be commensurate with the value of the work performed by the defendant in assisting the plaintiff; and

(iv) the plaintiff would not owe any amount to the defendant for the work performed by the defendant over and above the financial assistance provided by the plaintiff and that the defendant would not be required to repay any amount of financial assistance provided by the plaintiff.

(d) The parties decided to keep their agreement informal and not to document it. They did not discuss: any basis for calculating the value of the defendant's assistance; the provision of invoices or security by the defendant to the plaintiff; or the payment of interest by the defendant to the plaintiff.

Sub-paragraph (b) above sets out what I will refer to as the '2004 Agreement'.

64 The reasons for my conclusion that the parties entered into the 2004 Agreement and did not enter into the Alleged Agreements are set out below.

65 I have concluded that the 2004 Agreement was made in September 2004 because that agreement contemplated broad equivalence between the plaintiff's financial assistance to the defendant and the value of the defendant's work for the plaintiff. It follows from this that the 2004 Agreement would have been made shortly before the first Payment by the plaintiff pursuant to the agreement. Although item 1 on the Schedule is dated 8 November 2004, the defendant has admitted that the plaintiff made a Payment of $3,900 for his rent. That is item 115 in the Schedule. According to the plaintiff's contemporaneous spreadsheet listing the payments, the rent payment was made two years prior to September 2006.

66 It follows from [65] above that the discussions between the parties that resulted in an agreement between them for the provision of financial assistance by the plaintiff and the performance of work by the defendant for the plaintiff's benefit did not take place in June 2004 as alleged by the defendant. In the light of the defendant's financial circumstances, which I discuss below, it is highly improbable that he would have waited until September or November 2004 to request a payment from the plaintiff if he had committed to performing work for the plaintiff from June 2004. Likewise, it is highly improbable that the plaintiff would have made any payments for the benefit of the defendant prior to reaching agreement with him about those payments.

67 According to the undisputed evidence, the circumstances leading up to September 2004 were as follows. The parties were very close friends. In October 2003, the defendant's key businesses collapsed and many of his companies were placed into voluntary administration. The defendant suffered adverse publicity and faced legal proceedings by regulators. The defendant agreed in evidence that, in 2004, when he had discussions with the plaintiff, he was under significant financial pressure.

68 It was also common ground that, prior to 2004, the defendant had a 20% interest in the Urban Property Group which owned large parcels of land. In early 2004, the other four investors in the Urban Property Group requested the defendant to sell his interest because, due to adverse publicity relating to the defendant, they did not want him to continue to be associated with the group. This request resulted in the Urban Property Group Transaction discussed at [19] above.

69 The above evidence supports findings that as at September 2004: the defendant's key businesses had collapsed; that business opportunities for the defendant had dried up because business partners wished to distance themselves from him; that the defendant faced substantial legal fees; and that the opportunities for the defendant to earn income as an employee or as a consultant were very limited. It was in these circumstances that he turned to the plaintiff, who continued to be a very close friend notwithstanding the problems that the defendant faced, with the proposal described at [63] above. That proposal would enable the defendant to receive payments from the plaintiff and be involved in his business activities with the potential to acquire an interest in some of those activities.

70 It was due to the above circumstances that the initiative for the 2004 Agreement came from the defendant rather than the plaintiff. The informality of the 2004 Agreement was consistent with the parties' relationship as close friends.

71 I have found that the parties agreed that neither of them would be a net debtor under the 2004 Agreement because they contemplated that during the currency of the agreement, the value of the assistance that the defendant would provide to the plaintiff would be broadly equivalent with the payments made by the plaintiff to the defendant. The 2004 Agreement was informal and flexible in nature and enabled the parties to monitor their activities pursuant to it to ensure that broad equivalence was maintained. As appears from [260] below, the parties achieved broad equivalence.

72 My finding that the parties agreed that the 2004 Agreement would operate for two to three years is borne out by the fact that the plaintiff ceased making Payments to the defendant on 6 December 2006, just over two years after the 2004 Agreement was made. As discussed at [252] below, I have concluded that any involvement that the defendant had in the plaintiff's business affairs after 6 December 2006 was in the pursuit of the defendant's own business activities and as a friend of the plaintiff rather than in accordance with any agreement for the provision of assistance by the defendant to the plaintiff in return for any remuneration.

73 I have rejected the plaintiff's evidence that the parties entered into a loan agreement under which the plaintiff made loan advances to the defendant which were to be repaid. The evidence establishes that the parties were experienced businessmen who, by September 2004, had entered into numerous contracts with other parties, including loan agreements. They or their corporate entities had also entered into formal loan agreements with each other. If the parties had intended to enter into a loan agreement requiring repayment of amounts paid by the plaintiff to the defendant, the plaintiff would have arranged for a formal loan agreement to be signed.

74 Another indication that a loan agreement was not intended is the uncertain nature of the terms of that loan agreement. In evidence, the plaintiff initially said that the payments made under the Alleged Loan Agreement would be repayable in 'a couple of years.' Later, he said that it was about two to three years.

75 I have reached the conclusion set out at [63] above on the basis of the parties' conduct at the time they said they engaged in contractual negotiations in 2004. While post-contract conduct has not informed that conclusion, it is instructive to consider whether such conduct is consistent with that conclusion.

76 If, as the plaintiff claims, he was the only creditor in the relationship and if, as the defendant maintains, the plaintiff became indebted to him for the value of his consulting services in excess of the value of the financial assistance provided by the plaintiff, each of them would have kept sufficient records that would have enabled them to ascertain at any given time the amount payable. Neither of them kept such records. They would also have sent invoices or written demands for payment. Once again, neither of them did so. Their conduct for the entire period that the plaintiff made Payments, that is, until 6 December 2006, was consistent only with an intention that neither of them would be a net debtor of the other.

77 The signing of the Deed of Set-off in December 2008 is also consistent with the parties' agreeing as part of the 2004 Agreement that there would be broad equivalence in the value of the assistance provided by the defendant to the plaintiff and the financial assistance provided by the plaintiff, and that neither of them would be a net debtor of the other.

78 It is also telling that, although substantial amounts of money were said to have been advanced to the defendant or at his direction, the only items of contemporaneous evidence that the plaintiff created to record those payments are the abbreviated entries in his spreadsheet discussed below. If, as the plaintiff claims, the parties had agreed that the payments made by him were to be repaid with substantial interest, it would have been expected that the plaintiff would have provided details of each payment to his accountant who looked after his financial records. There is no evidence that, prior to 6 December 2006, the plaintiff's accountant was provided with any documentation relating to the Alleged Loan Agreement or the advances purportedly made pursuant to it.

79 It is true that the plaintiff retained some bank statements, internet banking transfer receipts, credit card statements, emails, travel and accommodation invoices and receipts and a fee slip from a barrister's clerk. However, these records were incomplete and in most cases they did not indicate any link to the defendant, let alone to the Alleged Loan Agreement.

80 The only contemporaneous documents that expressly refer to a loan to the defendant are bank statement entries and accompanying internet banking transfer receipts relating to 13 items in the Schedule. They cover the period from 25 May 2006 until 6 December 2006 and concern items 92, 96, 97, 98, 100, 107, 113, 122, 124, 128, 133, 140 and 141. All but one of these items (item 96) constitute Agreed Payments. If, as claimed by the plaintiff, the Alleged Loan Agreement commenced in November 2004, he would have described the payments as loans from the outset rather than delaying doing so for 18 months. Further, he would have described each payment as a loan rather than applying that description to only 13 out of 140 payments.

81 I have rejected the plaintiff's evidence that the parties discussed the provision of security by the defendant to the plaintiff and that they agreed that the defendant would pay to the plaintiff either simple interest or compound interest at 20% per annum on the payments. In September 2004, the plaintiff was aware of the defendant's financial difficulties and his inability to provide security. Imposition of an obligation on the defendant to pay interest at the rate specified above would have been entirely inconsistent with the relationship between the parties at that time. In the prevailing circumstances, a close friend would not seek to impose such a severe financial burden on someone who is already under financial strain.

82 I have not accepted the plaintiff's evidence that, from early 2007, he regularly requested the defendant to repay the payments under the Alleged Loan Agreement. I find that no such requests were ever made prior to the signing of the Deed of Set-Off and that the defendant did not at any time make any promises to repay any amount.

83 I have rejected the defendant's evidence that the parties entered into a consulting agreement under which he would provide consulting services to the plaintiff and his companies in return for payment of consulting fees over and above the financial assistance provided by the plaintiff. For the reasons I have already discussed, as at September 2004, the defendant was not a very marketable individual and had few options for earning income as an employee or as a consultant. He needed the plaintiff's money and the business opportunities that the plaintiff might be able to provide more than the plaintiff needed his services. At that time, the plaintiff had considerable wealth and was involved in numerous business ventures in respect of which he was assisted by professional advisors. The defendant's businesses had recently collapsed and he was facing investigation by regulators. In these circumstances, it is difficult to see why the plaintiff would engage the defendant as a consultant if this entailed incurring financial obligations to him that exceeded those contemplated by the 2004 Agreement.

84 By September 2004, the defendant had had extensive business experience and was very familiar with various contractual documents. The extensive documentation that has been tendered in this proceeding includes numerous contracts that the defendant had signed to give effect to a multiplicity of business transactions. If, as the defendant claims, the parties entered into a consulting agreement under which he may have to provide services on a full-time basis for the plaintiff and be owed hundreds of thousands of dollars, he would have required that the parties sign a consulting agreement. This did not happen.

85 A good indication that the parties did not enter into a consulting agreement is that, even on the defendant's version of events, the parties at no stage agreed upon the basis upon which the defendant would be remunerated, the frequency of payment or the time commitment that would be required of the defendant.

86 The defendant gave evidence that the parties agreed that the defendant would start working for the plaintiff, that the plaintiff would make advances against the defendant's entitlements to remuneration under the Alleged Consulting Agreement and that they would work out the value of the defendant's work and which party was the net debtor some time in the future. Such a vague arrangement is incompatible with the formal legal documentation that the defendant tended to sign when entering into contracts under which hundreds of thousands of dollars were potentially payable to him.

87 It is also significant that, apart from not documenting the Alleged Consulting Agreement, the defendant did not keep any records of the hours spent by him in performing services for the plaintiff or any discrete documents setting out the nature of those services.

88 The defendant said that he did not need to keep records of the hours spent because he worked full-time for the plaintiff in 2005, 2006 and 2007, and part-time in 2004 and 2008. However, he conceded that when the Alleged Consulting Agreement commenced, it was unclear how many hours he would work for the plaintiff.

89 The defendant also said that he did not keep discrete documentation setting out the work performed for the plaintiff because the work was adequately identified in the numerous emails that passed between the parties. This explanation was entirely implausible. A professional consultant wishing to be paid for consulting services provided to a client needs to be able to readily identify the nature of the work performed and how many hours were spent performing that work.

90 It was not in dispute that the defendant at no time provided to the plaintiff any invoice for any of the services he provided pursuant to the Alleged Consulting Agreement. The defendant said that the parties had agreed that no invoice would be provided until all the consulting services had been completed and the parties performed a reconciliation to determine the extent to which the value of the consulting services exceeded the value of the financial assistance provided by the plaintiff.

91 Once again, this explanation was entirely unconvincing. Not only did the defendant not keep any discrete records of the work performed by him for the plaintiff and the hours that he worked, but there was no evidence that he kept a list of the payments that the plaintiff made so as to enable him to perform the reconciliation that he claims the parties agreed would be undertaken. I reject the defendant's evidence that he had conversations with the plaintiff about deferral of invoices under the Alleged Consulting Agreement and that they had a disagreement about the value of his work under that agreement.[31] I find that the defendant at no time sought remuneration from the plaintiff in respect of work performed for him over and above the financial assistance that the plaintiff provided.

92 The defendant's evidence that it was not unusual for him to render invoices for consulting services many years after the services were provided was self-serving and unpersuasive. I have also not given any weight to four invoices that were tendered in support of this evidence because they did not appear to be arms-length documents. The invoices were all dated 18 December 2009 and set out lump sum fees for entire years with only the bare description 'Consulting Services and Costs for the following years of work'. The invoices were to 'Kheir Family Trust' and 'AJK Family Trust', respectively, without any address being stated.

93 For the above reasons, the only agreement that the parties entered into concerning payments by the plaintiff for living and business expenses of the defendant and the provision of assistance by the defendant to the plaintiff in relation to his business activities, was the 2004 Agreement.

94 The parties were content to act in accordance with the 2004 Agreement while they remained friends and mutually benefited from that agreement. Once the nature of their relationship changed in 2010, they have each sought to recharacterise the nature of their business relationship.

Payments made by the plaintiff under the 2004 Agreement

95 It follows from my conclusion that the parties entered into the 2004 Agreement and did not enter into the Alleged Agreements that the Payments were made by the plaintiff pursuant to the 2004 Agreement rather than as loans under the Alleged Loan Agreement or on account of the plaintiff's obligations under the Alleged Consulting Agreement.

96 As discussed at [3] above, the defendant has agreed that he received the benefit of 73 of the items in the Schedule but disputes the remaining 67 items. The Agreed Payments total $287,819 while the Disputed Payments total $398,028. The Agreed Payments constitute 52% of the Payments by number and 42% by value.

97 Before considering the Disputed Payments, I need to address some factual issues.

98 The plaintiff relied primarily on his recollection to prove the Disputed Payments. The only directly relevant contemporaneous documents that he was able to produce were two versions of the spreadsheet referred to at [59] above, and a limited number of bank statements, internet banking transfer receipts, credit card statements, emails, travel and accommodation invoices and receipts and a fee slip from a barrister's clerk.

99 The plaintiff gave the following evidence in relation to the spreadsheet. He kept a spreadsheet on his computer and updated it every time he made a payment pursuant to the Alleged Loan Agreement. The updated entry was usually made either on the same day as the relevant payment or on the next day. He did not provide much detail on the spreadsheet because of his close friendship with the defendant. He sent the updated spreadsheet to the defendant by email every two months. At no stage did the defendant question the accuracy of the spreadsheet.

100 Two versions of the spreadsheet were tendered in evidence. The first version was of the spreadsheet as updated to 15 November 2006 which contains items 1 to 132 ('First Consolidated Spreadsheet'). The second version was of the spreadsheet as updated to 28 November 2006 which contains items 1 to 139 ('Second Consolidated Spreadsheet'). I will refer to the two versions collectively as the 'Consolidated Spreadsheets'.

101 The entries on the Consolidated Spreadsheets for the Disputed Payments are identical except for items 5, 12, 65, 116, 117, 127 and 129. The differences are set out below in those parts of the judgment that discuss those items.

102 The informal and bare nature of the spreadsheet is evident from the following extract from the First Consolidated Spreadsheet which shows the first 10 items precisely as written:

money to henry

h.kaye 8.11.04 3,000.00

amex 31.1.05 6,000.00

cba 31.1.05 6,000.00

h.kaye 31.1.05 6,000.00

31.1.05 30,000.00 mortgage safe, veky, for past debt

h kaye 2.3.05 5,000.00

h kaye visa 2.3.05 3,000.00

vias 24.03.05 5,000.00 amex

amex 24.03.05 5,000.00 visa

portsie cash 24.03.05 1,500.00 portsea

103 I accept the plaintiff's evidence that he usually recorded payments on the spreadsheet within a day after each payment was made. The brevity of the entries, the typographical errors and the inconsistent phraseology all point to the entries being made contemporaneously on different days.

104 I do not accept the plaintiff's evidence that he regularly sent the updated spreadsheet to the defendant by email and that the defendant did not question the accuracy of the spreadsheet at the time that he received it. This is primarily because of the informal nature of the 2004 Agreement and the parties' expectation that they would receive equivalent value under it. In addition, I am confident that, given that the defendant had a greater grasp of detail than the plaintiff, the defendant would have checked any spreadsheet he received from the plaintiff and would have mentioned any perceived inaccuracy.

105 There is no documentary evidence that the plaintiff provided any version of the spreadsheet to the defendant prior to 23 May 2007. In my opinion, the defendant's statement in his affidavit of 23 December 2011 that the plaintiff emailed to him 'several different spreadsheets' prior to 10 July 2007 does not assist the plaintiff. That is because the context in which that statement was made indicates that the defendant was referring to spreadsheets with various subject matters and was not referring exclusively to spreadsheets relating to payments allegedly made to him or at his direction. Further, the statement is consistent with several versions of the spreadsheet relating to those payments being emailed to the defendant between 23 May 2007 and 10 July 2007. Accordingly, I am not satisfied that the plaintiff provided the spreadsheet to the defendant prior to 23 May 2007.

106 I accept the defendant's evidence that the plaintiff visited his home on 23 May 2007 and provided him with a USB flash drive containing the Second Consolidated Spreadsheet which the defendant uploaded to his computer. I also accept the defendant's evidence that the parties discussed the contents of the Second Consolidated Spreadsheet. However, I reject the defendant's evidence that he told the plaintiff that the Second Consolidated Spreadsheet was a 'nonsense' because most of the items were inaccurate. This is because, in this proceeding, the defendant has conceded that a majority of the items (73 out of 140) are accurate.

107 It is possible that the defendant pointed out some inaccuracies in the Second Consolidated Spreadsheet to the plaintiff. However, in the light of the discussion at [110] below, it is unlikely that the contents of the Second Consolidated Spreadsheet gave rise to any strong adverse reaction by the defendant.

108 I am unable to determine why the plaintiff provided the Second Consolidated Spreadsheet to the defendant on 23 May 2007. At that time, the parties were discussing other spreadsheets relating to their business activities, including The Loan Doctor Transaction. This is apparent from an email the defendant sent to the plaintiff at 3:52pm on 23 May 2007 which discussed two spreadsheets described as 'Moneys Back to Gary Spreadsheet' and 'Loan Doctor Spreadsheet', respectively.

109 I find that neither of the spreadsheets referred to in the above email was the Second Consolidated Spreadsheet. I also find that a spreadsheet that the plaintiff emailed to the defendant on 10 July 2007 was not a revised version of the Second Consolidated Spreadsheet but a separate spreadsheet which overwhelmingly related to various commercial transactions.

110 In my opinion, the fact that the plaintiff provided the Second Consolidated Spreadsheet to the defendant on 23 May 2007 and that the parties discussed it is not a sufficient basis for concluding that the parties had entered into the Alleged Loan Agreement in 2004. That fact is consistent with the parties reviewing the Second Consolidated Spreadsheet in order to assess whether they had achieved broad equivalence between the value of the work performed by the defendant and the value of the financial assistance provided by the plaintiff. The absence of any documentary evidence that the parties discussed any version of the spreadsheet between 23 May 2007 and the signing of the Deed of Set-Off on 17 December 2008 is consistent with the parties being satisfied that they had achieved broad equivalence.

111 With some exceptions, I accept the accuracy of the Consolidated Spreadsheets. This is primarily because of the contemporaneous nature of the entries and also because the defendant has accepted the accuracy of many of the entries. As is evident from [15] and [16] above, there is considerable similarity in the nature and quantum of the Agreed Payments and the Disputed Payments.

112 The exceptions primarily concern entries which are inconsistent with other contemporaneous documents or known facts, entries which are inexplicably not supported by primary documents and entries 114, 116, 117, 118, 119, 120 and 121 which were recorded two years after these payments were said to have been made. As I have stated at [41] above, the plaintiff did not master the details of many transactions - particularly those that were complex - and his memory is unreliable. While I am satisfied that the plaintiff did not deliberately record any items on the Consolidated Spreadsheets which he believed were false, nevertheless, some of them are inaccurate.

113 The plaintiff was not able to produce any emails that he sent to the defendant attaching the spreadsheet. He gave the following evidence in relation to this. At the defendant's request, he allowed the defendant to have access to his computer to delete emails passing between him, the defendant, Mr Macleod, Mr Kheir and others such as Mr Prowse. The defendant told him that he wanted to delete the emails because he was paranoid about regulators having access to those emails. He spoke to Mr Macleod and Mr Kheir either before or after he permitted the defendant to have access to his computer and they informed him that they had also agreed to permit the defendant to delete emails on their computers.

114 Mr Macleod gave the following evidence about the missing emails. The defendant telephoned him and asked him for access to his computer to delete emails passing between the defendant and the plaintiff or Mr Kheir. He obtained permission from the plaintiff and Mr Kheir to allow the defendant to delete those emails and gave the defendant access to his computer for that purpose. In cross-examination, Mr Macleod agreed that it was a serious matter for a person to permit a third party to have access to that person's computer and that, with the benefit of hindsight, he agreed that it was ludicrous.

115 The defendant denied that he deleted any emails on either the plaintiff's computer or Mr Macleod's computer. He said: 'It didn't happen.'

116 I accept the evidence of the plaintiff and Mr Macleod that they do not have in their possession emails passing between the defendant, the plaintiff and Mr Kheir that relate to some of the events that are the subject of this proceeding. It is possible that they permitted the defendant to delete those emails. The conduct in question is so unusual that there is room for doubt as to whether the plaintiff and Mr Macleod would have made it up. In addition, a professional person in Mr Macleod's position would usually not admit a serious departure from professional standards unless the conduct was true.

117 On the other hand, the conduct in question is, objectively, bordering on the bizarre and both the plaintiff and Mr Macleod were unreliable witnesses with an obvious dislike for the defendant. While the defendant was also an unreliable witness, his denial of the conduct was consistent with the fact that he had personally retained many emails passing between himself and the plaintiff or Mr Kheir. It does not make sense that he would do so if, as the plaintiff alleged, he was concerned about possible scrutiny by regulators. It also does not make sense for the plaintiff to permit the defendant to delete emails at a time when the plaintiff believed that the defendant was in default in repaying advances made under the Alleged Loan Agreement. This is because the emails might contain evidence that could assist the plaintiff to enforce the Alleged Loan Agreement.

118 In the end, it is not necessary for me to decide whether the defendant deleted any emails from the plaintiff's and Mr Macleod's computers. What is important is that some emails from those computers were not produced because, for some reason, they are no longer available.

119 The bank statements upon which the plaintiff relied contain the date a cheque was presented, the number of the cheque and the amount of the cheque. They do not contain any details of the payee or the purpose of the payment. The plaintiff has not been able to produce cheque butts relating to any of the payments that he made by cheque.

120 The plaintiff gave evidence that he gave his cheque butts to Mr Macleod on a regular basis to enable Mr Macleod to prepare his financial statements and tax returns and that he does not know what happened to the cheque butts.

121 Mr Macleod gave evidence that he received cheque butts from the plaintiff on a regular basis. At present, he has cheque butts for 2007 and 2009 but no cheque butts for any year prior to 2007. He has searched for those cheque butts but cannot find them. He does not know what has become of them.

122 I accept the evidence of the plaintiff and Mr Macleod that the cheque butts that relate to the Disputed Payments cannot be located. While the misplacement of these important items of evidence is regrettable, there is insufficient evidence to enable me to conclude that they were deliberately destroyed or misplaced. Production of the cheque butts would potentially have been helpful to the plaintiff because they would have contained important information linking the Consolidated Spreadsheets with the bank statements and would have enabled a better understanding of the nature of the Disputed Payments.

123 I will now consider the 67 Disputed Payments by grouping similar items in the Schedule.

124 The entries for item 5 in the Consolidated Spreadsheets are '31.1.05 30,000 mortgage safe, veky, for past debt' and '31.1.05 30000 mortgage safe, veky'. The entry in the Schedule is '31/01/2005 ... 30,000.00 ... Payment by ... cheque 034 to Veki Brdjanin of Mortgage Safe at Henry Kaye's direction'.

125 The plaintiff gave evidence that the defendant told him that he owed $30,000 to Mr Brdjanin and requested the plaintiff to write a cheque for $30,000 to Mr Brdjanin in respect of some past debts.

126 The defendant gave evidence that Mr Brdjanin had never provided services to any of his businesses and that he did not instruct the plaintiff to pay the amount of $30,000 to Mr Brdjanin.

127 There is no documentary evidence that Mr Brdjanin provided any services to the plaintiff prior to 31 January 2005. As the plaintiff was introduced to Mr Brdjanin by the defendant, it is likely that Mr Brdjanin had business dealings with the defendant prior to 31 January 2005 and that the defendant was indebted to Mr Brdjanin as at that time. It is also likely that, consistent with the Consolidated Spreadsheets, the defendant asked the plaintiff to pay the outstanding debt. Accordingly, I find that item 5 is a Payment pursuant to the 2004 Agreement.

Items 10, 29, 33, 37, 65, 86, 95, 120, 130, 131 and 142: Travel, accommodation and meals

128 Items 10, 29, 33, 37, 65, 86, 95, 120, 130, 131 and 142 in the Schedule are said to be payments varying from $21 to $5,600 for travel, accommodation and meal expenses of the defendant and his associates, including expenses incurred in interstate and overseas trips jointly undertaken by the parties and their girlfriends.

129 I am satisfied that items 10, 86, 95, 130, 131 and 142 relate to holidays and entertainment that the parties undertook as friends and that the amounts claimed were paid by the plaintiff on behalf of the defendant at his request. This is because the items were recorded contemporaneously by the plaintiff in the spreadsheet and are consistent with the nature of the relationship between the parties and the nature of the 2004 Agreement. Accordingly, the items constitute Payments pursuant to the 2004 Agreement. The total of the items is $7,975.

130 I am not satisfied of the amount that was paid in respect of item 65 because of an unexplained discrepancy between the entries for that item in the Consolidated Spreadsheets. The entry in the First Consolidated Spreadsheet is '23.12.05 5,600.00 marriot hotel' whereas the entry in the Second Consolidated Spreadsheet is '23.12.05 5600 marriot on m/card to be checked exactly'. No Mastercard statement has been produced to establish what amount was paid.

131 I am not satisfied that item 120 was paid at the defendant's direction because it was recorded on the spreadsheet in September 2006 rather than contemporaneously when it was allegedly paid in September 2004. I am not prepared to accept the plaintiff's evidence that he can recollect this item because his memory is unreliable. Further, there is no documentary evidence that the plaintiff made the alleged payment.

132 I am satisfied on the basis of the defendant's evidence that items 29, 33 and 37 relate to a business trip to Thailand undertaken by the plaintiff and that the defendant accompanied the plaintiff at his invitation to provide advice and assistance. I accept the defendant's evidence because it is consistent with a contemporaneous file note prepared by the plaintiff. The file note states that expenses described as 'Tickets - $6,064.00 Accommodation: $7,900 Food etc: $3,500' were incurred in relation to a trip to Thailand with the defendant and that 80% of the expenses were for business purposes.[32] The plaintiff agreed that the file note was made to assist Mr Macleod in preparing his tax return. The items represent business expenses incurred for the benefit of the plaintiff rather than the defendant and, accordingly, do not constitute Payments pursuant to the 2004 Agreement.

Items 12, 42, 55 and 69: Payments to Mr Kheir

133 Items 12, 42, 55 and 69 in the Schedule are said to be payments of $2,000, $550, $1,500 and $900, respectively, that were made by the plaintiff to Mr Kheir in respect of debts owed by the defendant to Mr Kheir.

134 I am satisfied that items 42 and 55 constitute cash payments of $550 and $1,500 from the plaintiff to Mr Kheir at the defendant's direction in respect of debts owing by the defendant to Mr Kheir. This is because the items were recorded contemporaneously by the plaintiff in the spreadsheet. Accordingly, they constitute Payments pursuant to the 2004 Agreement. The total of the items is $2,050.

135 I am not satisfied that item 12 for $2,000 and item 69 for $900 were made pursuant to the 2004 Agreement because they are not supported by the entries in the Consolidated Spreadsheets. Those entries state '6.04.05 2,000.00 henry, cash' and '19.1.06 900 ozzie 300 by 3', respectively, whereas the corresponding entries in the Schedule state '6/04/2005 ... 2,000.00 ... Payment by ... cheque 059 to Aziz "Ozzy" Kheir at Henry Kaye's direction' and '19/01/2006 ... 900.00 ... Payment by ... cheque 087 to Aziz "Ozzy" Kheir at Henry Kaye's direction', respectively. In addition, there is an unexplained discrepancy between the Consolidated Spreadsheets in relation to item 12. The First Consolidated Spreadsheet states '6.04.05 2,000.00 henry, cash' (as above) whereas the Second Consolidated Spreadsheet states '6.04.05 2000 henry to ozzy'.

136 As the plaintiff had extensive business dealings with Mr Kheir, it is likely that the payments of $2,000 and $900 relate to transactions between them.

137 The entry for item 16 in the Consolidated Spreadsheets is: '27.5.05 25,000.00 liquidator'. The entry for item 138 in the Second Consolidated Spreadsheet is '28.11.06 52000 bary taylor'. The entries in the Schedule are '27/05/2005 ... 25,000.00 ... Payment by ... cheque 079 to Barry Taylor, liquidator, at Henry Kaye's instructions' and '28/11/2006 ... 52,000.00 ... Payment to Barry Taylor, liquidator, at Henry Kaye's direction, the payee was Barry Taylor and to the best of Braude['s] recollection the payment was made by cheque.'

138 I am satisfied that item 16 constitutes a payment of $25,000 that was made by the plaintiff to Mr Taylor's firm (B K Taylor & Co) at the defendant's direction to pay for work previously performed by Mr Taylor to liquidate companies controlled by the defendant. This is because item 16 was recorded contemporaneously in the spreadsheet and there is no evidence that Mr Taylor provided any company liquidation services for the plaintiff prior to May 2005. Accordingly, the amount of $25,000 constitutes a Payment pursuant to the 2004 Agreement.

139 I am not satisfied that a payment of $52,000 was made on 28 November 2006 by the plaintiff to Mr Taylor at the defendant's direction. That is because there is no record of such a payment in the plaintiff's bank statements.

140 Further, on 24 November 2006, B K Taylor & Co rendered a tax invoice for $51,815 to Kristol Pty Ltd (a company controlled by the plaintiff) for '[p]rofessional accounting services for the period ending 30th November 2006' and on 8 December 2006, that firm rendered a further tax invoice for $9,658 for similar services for the month of December 2006. The amount claimed for item 138 ($52,000) is remarkably similar to the invoiced amount of $51,815. I do not accept the plaintiff's evidence that the tax invoices were a sham and a mere device for B K Taylor & Co to be paid by Kristol Pty Ltd for work done not for that company but for the defendant. Even if I had accepted that evidence, the plaintiff gave evidence that the invoice was paid by Kristol Pty Ltd rather than by him personally. This payment may have given rise to obligations by the defendant to Kristol Pty Ltd but not to the plaintiff. In any event, I am not satisfied that the alleged payment of $52,000 was made by anyone at the defendant's direction.

141 The entries for items 17 and 104 in the Consolidated Spreadsheet are: '30.5.05 9,000.00 lewis kept from settlem f 305' and '10.8.06 70,000.00 from e 104 from all the apartments lewis put thru yarrag'. The corresponding entries in the Schedule are:

30/05/2005 ... 9,000.00 ... Amount withheld by Lewis Janover from settlement funds due to Braude from Apartment f305, for legal fees of Henry Kaye the payee was Lewis Janover the payment was made by Lewis Janover ... retaining funds which were otherwise due to Braude under the sale of apartment 305.

10/08/2006 ... 70,000.00 ... Settlement funds from e 104 apartments retained by Lewis Janover the payee was Lewis Janover the payment was made by Lewis Janover ... retaining funds which were otherwise due to Braude under the sale of apartment 104.

142 In relation to item 17, I am satisfied that the plaintiff instructed Mr Janover to retain $9,000 from settlement funds from the sale of apartment f 305 and to use that amount to offset debts owing by the defendant to Mr Janover. However, there was insufficient evidence that the plaintiff was the owner of apartment f 305 and that he was the beneficial owner of the settlement funds. As the plaintiff gave evidence that he used corporate entities for his property investments, it is likely that the payment of $9,000 was made on behalf of the company that sold apartment f 305 and that the plaintiff gave instructions to Mr Janover in his capacity as a director of that company.

143 Although the plaintiff said in relation to item 17 that he was selling a number of properties, including apartment f 305, at the time of the payment, and that he was the seller of that apartment, I find that he did not literally mean that he was personally the owner. The plaintiff's memory was not sufficiently robust for him to recall which properties he personally owned in May 2005. I reject the plaintiff's submission that I can infer that the parties intended that any payment by a company controlled by the plaintiff was to be treated as a payment by the plaintiff. The plaintiff had the onus of proving that each payment represented a loan advance by him.

144 The above reasoning also applies to item 104. In addition, the reference in the Consolidated Spreadsheets to 'Yarrag' supports the inference that the amount of $70,000 related to the Labassa Transaction[33] and that it was used to reduce the loan Labassa Holdings Pty Ltd owed to Yarrag Pty Ltd. This inference is supported by Mr Janover's trust ledger for the Kukuy Family Settlement Trust, which shows that on 10 August 2006 $20,798 was received from St John Real Estate for 'part payment of debt from Labassa Holdings (Yarrag)' and that on 11 August 2006 $55,983 was received from Mr Adno for the same purpose. The total of these entries is $76,781, which is broadly in line with the plaintiff's amount of $70,000.

145 It follows that I am not satisfied that items 17 or 104 are Payments made pursuant to the 2004 Agreement.

146 The entries for item 19 in the Consolidated Spreadsheets and the Schedule are '7.6.05 4,500.00 colin adno anthon robb float' and '7/06/2005 ... 4,500.00 ... Payment by ... cheque 085 to Colin Adno at the direction of Henry Kaye for legal fees'.

147 The plaintiff gave evidence that the defendant owed a debt to Mr Adno for legal services he provided to the defendant in connection with the float of a company associated with a seminar presenter, Mr Anthony Robbins. The plaintiff said that the defendant instructed him to pay $4,500 to Mr Adno in respect of that debt.

148 The defendant gave evidence that Mr Adno acted for the plaintiff's company, Gardean Pty Ltd, in the float of Empowernet International Ltd, which promoted the investment seminar business of Mr Robbins, who was a well known American seminar presenter. He said that he did not request the plaintiff to make any payment to Mr Adno.

149 Mr Adno gave evidence that he could not remember what he did in relation to the Anthony Robbins matter and whether he acted for either the plaintiff or the defendant.

150 The tendered documents include unsigned agreements prepared in 2007 in relation to Gardean Pty Ltd and its involvement as a lender to, and investor in, Empowernet International Ltd. The agreements described the address of Gardean Pty Ltd as 'care of Colin Adno & Associates'. These documents were created many months after item 19 and have not assisted me in determining whether that item is a Payment pursuant to the 2004 Agreement.

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Judgment (492 paragraphs)

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