Plaintiff v Second Defendant

Supreme Court of Victoria|2013-08-09|Before: SIFRIS J

SETTLED ACCOUNT - Loan account of director in books of company - Whether mutual debits and credits - Loan account operated as bank account of director - Balance of loan account paid to director - Whether balance agreed - Principles applicable - Settled account for period ending 30 June 2008.

SETTLED ACCOUNT - Whether leave to re-open accounts or liberty to surcharge and falsify should be granted - Leave refused - Accounts not shown to be erroneous so as to justify such leave - No fraud and no specific error established.

ESTOPPEL - Settled account - Amount paid to plaintiff in settlement of loan account - Whether plaintiff estopped from re-opening loan account.

LIMITATION OF ACTIONS - Action for account - Whether contractual or equitable - Whether statute barred - Accrual of cause of action - Limitations of Action Act 1958 (Vic) s 3(1), s (2); Wheatley v Bower [2001] WASCA 239 applied; Tito v Waddell (No 2) [1977] 1 Ch 106 not followed.

**1 Robert Frederick Jane ('Bob Jane') commenced this proceeding against Bob Jane Corporation Pty Ltd ('BJC'), the company he first established in 1962. The primary claim is for an account of all sums due to him in respect of his loan account with BJC, and "payment of all sums found to be due". As part of this claim Bob Jane specifically alleges that an amount of $540,244.86[1] should be included in his loan account as a credit. He denies that the amount was (through his loan account with BJC) a gift to his son Rodney Bruce Jane ('Rodney'), to enable Rodney to acquire a property in Dandenong ('the Dandenong property').

2 A further claim is made against Port 471 Pty Ltd ('Port 471'). Bob Jane alleges that (through his loan account with BJC) he made a loan to Port 471 in the sum of $2,402,723.73 to enable it to acquire a property situated at 471 Williamstown Road, Melbourne ('the Williamstown Road property'). According to Bob Jane the loan was repayable on demand and despite demand has not been repaid ('the Port 471 Loan').

3 BJC denies that any amount is owing to Bob Jane. It contends that the agreed balance of the loan account in the sum of $456,989 ('the Account Balance') was paid to Bob Jane on 30 June 2008 and that no other amount is owing. BJC alleges that the Account Balance represents not only an agreed amount but the correct balance of the loan account after taking into account all debits and credits over the many years in respect of which the loan account operated, effectively as the bank account of Bob Jane.

4 Further, BJC and Port 471 contend that the Port 471 Loan was repaid by Port 471 to BJC and credited to the loan account of Bob Jane.

5 It should be said at the outset that the claims now made by Bob Jane against BJC and Port 471 are inconsistent with the position he took in the Family Court of Australia in property proceedings brought by his ex-wife Laree Madonna Jane ('Laree') in December 2006 ('the Family Court Proceedings'). In the Family Court Proceedings Bob Jane swore that he did not have a loan account following payment of the Account Balance. He now seeks to resile from sworn evidence essentially on the basis that he relied on others in relation to the accuracy of his financial position, mainly because of his ill health.**

**6 In or about 1979, Bob Jane acquired total ownership of the tyre operations, Bob Jane Corporation Limited, and privatised it as Bob Jane Corporation Pty Ltd ('BJC'). Bob Jane was and remained a director of BJC until 14 January 2011.

7 In 2000 BJC declined rapidly in profitability. The ANZ bank appointed investigating accountants to determine if BJC could continue as a going concern. ANZ required BJC to sell $21.5 million worth of its assets. According to Bob Jane, in 2001 he sold a combination of personal properties owned by him and Laree and corporate assets, the proceeds of which accounted for most of the $18 million or so which went into his loan account. As part of the ANZ requirements, Bob Jane's ability to draw on the loan account was limited to $840,000 per annum.

8 The loan account was managed by Bob Jane in conjunction with BJC's finance department. Until June 2006, when Bob Jane suffered a stroke, monthly statements of the account were provided to and reviewed by Bob Jane or Laree.

9 Bob Jane used the loan account as his personal bank account. He drew extensively upon it to fund personal expenditure. In June 2005, in addition to the loan account numbered 01-999-999-6490 ('the 6490 account'), a second account numbered 01-999-999-6491 ('the 6491 account') was opened. As described by Jim Nanos, the current secretary and CFO of BJC, the loan account was split into two accounts for auditing purposes. The 6491 account was a reclassification of part of the loan account into the 'current liabilities' section of the general ledger, reflecting Bob Jane's annual personal expenditure of about $1.5 million.

10 According to the evidence of both Bob Jane and Rodney, at the end of 2001, a decision was made to remove the then CEO of BJC, Mel Hemerling. In early 2002, Rodney was appointed CEO. In mid 2002 the business had hit a low point and was involved in a significant tax dispute as well as several franchise disputes. According to Rodney, the disputes and the banking problems were resolved with the help of a new management group, and by 2005 the tyre business was again profitable.**

(ii) Transfers from the loan account the subject of this proceeding

**11 At the end of the financial year ending 30 June 2002, the loan account was in credit in the sum of $10,864,008. A number of subsequent transfers from the loan account are the basis of the Plaintiff's claims in this proceeding.

12 Between December 2005 and May 2006, $2,402,723.23 was transferred from the loan account to Port 471 as a loan for the purchase of the Willamstown Road property. There is a dispute as to whether four payments to the loan account made between March 2006 and November 2007 constituted a repayment of this loan.

13 In August and September 2006, $540,244.86, was transferred from the loan account for the purchase of the Dandenong property. The value of the property was $1,500,000. The transfer of $540,244.86 was discussed between Bob Jane and Rodney a month or two prior to Bob Jane's stroke. There is a dispute as to whether this transfer was made as a gift to Rodney, or a loan to BJC.

14 On 30 June 2008, a new NAB account (account number 82 250 6406) was opened in Bob Jane's name ('the New Account'), and $456,989 was transferred from the loan account to the New Account. There is a dispute as to whether this transfer represented payment in full and final settlement of the loan account.**

**15 In June 2006 Bob Jane suffered a stroke. Bob Jane gave evidence to the effect that although he was 'at the race track a bit', and was still the chairman and 'face' of the company, he was unable to take part in the management of BJC from June 2006.

16 Bob Jane described his condition following the stroke as 'dire', giving details of physical incapacity as well as cognitive problems and loss of memory. According to Bob Jane, the effects of the stroke were ongoing, and he continued to suffer from physical illness, mobility problems and memory loss from 2007 up to 2012, with gradual improvement. Laree also gave evidence as to Bob Jane's physical and mental frailty following the stroke, and his long process of recovery and rehabilitation.

17 Bob Jane is eighty three years old. The Court was provided with a bundle of medical documents relating to Bob Jane, including letters and reports from his GP, Dr Andrew Allan and his cardiologist, Dr Ronald Dick, as well as reports of operations he had undergone in Cabrini Hospital and physiotherapy and occupational therapy undergone at the Epworth Hospital. The medical documents relate to the years 2006 to 2012. Bob Jane in fact presented himself as being currently of ill health and initially sought an adjournment of the current proceeding on the basis, of amongst other things, his poor medical condition. The adjournment was refused.

18 No expert medical evidence was called and no special disability was pleaded by Bob Jane.**

(iv) The Family Court Proceedings, December 2006 - September 2009

**19 In November 2006 Laree initiated a separation from Bob Jane and brought proceedings in the Family Court in December 2006. The Family Court Proceedings were widely publicised.

20 For the purposes of the Family Court Proceedings, Bob Jane requested of Jim Nanos to provide him with spreadsheet summaries of the loan account. As described by Nanos, he prepared these summaries using the general ledger of the loan account together with source documents and, as necessary, inquiries of Bob Jane, Rodney and the BJC finance team. Bob Jane said that, at the time, he accepted the spreadsheets and figures provided to him by Nanos as correct and acted upon them. This included the information that the amount outstanding on the loan account in June 2008 was $456,989.

21 Concurrently with the Family Court Proceedings, proceedings were brought against Bob Jane and BJC in this Court by two companies owned by Laree and her sister ('the Franchise Proceedings'). In the course of the Family Court Proceedings, as well as the Franchise Proceedings, Bob Jane made several sworn statements with regard to the state of his loan account which are relevant to the current litigation.

22 An affidavit sworn by Bob Jane on 23 December 2008 in the Family Court Proceedings, included as an exhibit a copy of the bank statement of the New Account, indicating the transfer of the $456,989 payment to the New Account, with the narration "Loan repayment in full from BJC".

23 In a further affidavit sworn by Bob Jane in the Family Court Proceedings on 15 January 2009, he swore that no cash funds were available to him.

24 In an affidavit sworn by Bob Jane on 5 March 2009 in the Family Court Proceedings, he referred to funds 'gifted' to Rodney for the purchase of the Dandenong property.

25 A further reference to the loan account was made in a letter written to Laree on 17 July 2009, prior to settlement of the Family Court Proceedings, in which Bob Jane stated that he had no loan account and would have to sell assets or earn income to achieve spousal payments.

26 On 20 September 2009, Bob Jane and Laree entered into a Deed of Settlement in resolution of the Family Court Proceedings, the Franchise Proceedings and another two disputes. In addition to Bob Jane and Laree, signatories to the Deed of Settlement included BJC, Rodney and Alex Chung, a director and corporate affairs manager of BJC. In the Deed of Settlement, Bob Jane asserted that the loan account was fully expended.**

**27 Following the Family Court Proceedings, Bob Jane has operated the New Account on the basis that the loan account was settled.

28 Nothing further occurred regarding the loan account until 5 March 2012 when this proceeding was commenced in the County Court of Victoria in relation to a number of loans and the loan account. The claim was struck out by Ginnane J on the basis that the claims on a number of the loans were statute barred. Leave was granted to file an Amended Statement of Claim which was subsequently served and filed in this Court in September 2012.**

29 On 23 November 2012, Croft J fixed the proceedings for trial to determine six preliminary questions. The questions are as follows:

(a) Was the sum of $520,244.86[2] referred to in paragraph 8 of the Amended Statement of Claim a gift or loan?

(b) Has the sum of $2,402,723.23 referred to in paragraph 11 of the Amended Statement of Claim been repaid by Port 471 Pty Ltd?

(c) Does section 5(2) of the Limitation of Actions Act 1958 (Vic) ('the Act') apply to all actions of account so as to bar any matter which arose prior to 5 March 2006?

(i) 1 July 2001 to 30 June 2006;

(ii) 1 July 2006 to 30 June 2007; and/or

(iii) 1 July 2007 to 30 June 2008?

(e) Is the plaintiff otherwise estopped from reopening the loan account balance?

(f) If there are settled accounts and the limitation period has not expired, should the accounts be reopened or the plaintiff be given liberty to surcharge and falsify?

(d) (i) Not necessary to answer.

(ii) Not necessary to answer.

(iii) Yes.

**31 Before dealing with each of the preliminary questions, it is desirable to make some critical findings. These findings inform the answers to the preliminary questions.

32 The case put on behalf of Bob Jane was that although he received the sum of $456,989 in settlement of his loan account, and that he knew and agreed that the sum was transferred into a newly established bank account on his behalf as full settlement of his loan account, he simply accepted this amount as being the correct balance. He accepted that what his son Rodney, and other trusted advisers, had told him was the correct sum. Because he trusted them, he did not check the figure or underlying entries. Further, because of ill health, principally the effects of a stroke, he was restricted in his ability to involve himself fully in making such determination. Bob Jane agreed that he relied on this figure in the Family Court Proceedings and swore as to its accuracy without qualification. He thought it was the correct figure because it was given to him by those he trusted.

33 Bob Jane agreed that the position he now takes and the claims he makes are inconsistent with the position he took in the Family Court proceedings, but asserts that he only realised that the Account Balance was incorrect much later. Now he wants, in effect, to re-open all the accounts relating to him. Whether he can do so involves issues of fact and law.

34 In relation to the facts, I make the following findings, having considered all of the evidence -**

(a) Bob Jane was directly and fully involved in all aspects of the Family Court Proceedings, including providing instructions to his legal representatives. In particular, and during the period 2007 to June 2008, he met with his solicitors and counsel as and when required in order to prepare relevant affidavits and documents required for the Family Court Proceedings, respond to any queries or requests made by his former wife's legal representatives and enter into a comprehensive Deed of Settlement with Laree and various other parties including BJC. He was actively involved in this process, a process overwhelmingly directed to establishing with accuracy the assets and liabilities of the parties and, in particular, Bob Jane. His assets, resources and bank account (including his loan account which essentially operated as his bank account) were under intense scrutiny.

(b) Part of the process referred to in (a) above was the accuracy of the loan account. I find that Bob Jane did not simply accept the figure presented to him. He considered the amount, discussed and debated certain items and then accepted the amount as an accurate figure representing the amount owed to him by BJC. I am not suggesting that he checked every item. However, his involvement in the loan account and determining its accuracy - an important and specific aspect of the Family Court Proceedings that required analysis, consideration and, most importantly, accuracy - went well beyond simply accepting a figure from his trusted advisers without question, consideration or involvement. I find that he was sufficiently involved to the extent that he was satisfied with and indeed agreed with the accuracy of the amount standing to his credit in the books of BJC. Whether, notwithstanding having accepted and agreed with such accuracy, the amount is nonetheless incorrect (a factual matter) and if so the consequences (a legal matter) will be discussed later.

(c) I am not prepared to make any findings in relation to the state of health of Bob Jane over the relevant period and in particular during 2008 and 2009 without the assistance of expert medical evidence. I do not wish to suggest in any way that the effects and consequences of the stroke on Bob Jane were not serious. Clearly, they were and probably remain so. However, to his credit, Bob Jane is a resilient man determined to, as indeed the facts demonstrate, bounce back. The critical point, however, is the causal nexus between the stroke (or other ill health) and the ability to give instructions and understand, comprehend and make effective and informed decisions. The evidence does not establish any sufficient deficiency or difficulty in this regard. In fact, the contrary is the position. Finally, I do not regard the lay opinion evidence as in any way probative of the point.

E. Question 1: Was the sum of $540,244.86 referred to in paragraph 8 of the Amended Statement of Claim a gift or a loan?

**35 Two of the claims in this proceeding relate to transfers from the loan account. These claims may be viewed as subsumed by the loan account claim which relates to the loan account in its entirety. If the loan account is found to be a settled account, and there is no basis to reopen the settled account, this would dispose of the claims relating to the Williamstown Road property and the Dandenong property. However, the claims were pleaded and argued separately and I will deal with them individually.

36 The sum of $540,244.86 refers to the funds transferred out of the loan account for the purchase of the Dandenong property. The transfer was not documented as either a loan or a gift. Bob Jane claims that this sum was advanced to BJC as a loan and has not been repaid.

37 It was not disputed that the transfer was made following discussions between Bob Jane and Rodney. Rodney told Bob Jane that he was interested in purchasing the Dandenong property, worth $1,500,000, and that he could borrow about 70% of the funds needed from Westpac Bank. Bob Jane and Rodney agreed to the transfer from the loan account of the balance of funds required to purchase the property.

38 The Dandenong property was purchased by RF & RB Properties Trust No 2, a trust established for this purpose with BJC as its Trustee. BJC claims that the funds used were the 70% borrowed from Westpac and a loan from Rodney comprising the 'gifted' $540,244.86.

39 Counsel for the Plaintiff submitted that the transfer did not satisfy the three elements required to establish a valid gift in the absence of a deed or declaration of trust:[3]**

(a) an intention to make a gift, usually expressed by words of present gift;

(b) an intention on the part of the donee to accept the gift; and

**40 Bob Jane denies he intended the sum to be a gift to Rodney or that he used the term 'gift' regarding the loan account payment. He submitted that the words he used in the discussion, "I'll pay for it out of my loan account", reflected an intention to lend the funds. Counsel for the Plaintiff noted that, if the term 'give' had been used, the term is in any case ambiguous and can refer to either a gift or a loan.

41 Counsel for the Plaintiff also emphasised the fact that the funds were not actually transferred to Rodney. It was submitted that, in the absence of delivery, mere words of gift are insufficient to perfect the gift, and that the Courts will not complete imperfect gifts,[4] and thus, even if the $540,244.86 was intended as a gift, the gift was incomplete and imperfect. Counsel for the Plaintiff noted that the payment was made to BJC as trustee of RF & RB Properties Trust No 2, which is inconsistent with there being a gift to Rodney.

42 The Defendants submitted that Bob Jane's intention, viewed objectively, was to give the sum of $540,244.86 to Rodney as a gift and that this was evidenced by: 1) Laree's handwritten notations 'Rodney' next to the entries relating to the Dandenong property purchase on the General Ledger; 2) a sworn statement by Bob Jane in the March 2009 affidavit, that the 'balance of funds were gifted to Rodney prior to separation which I believe he used to purchase the T-mart premises in Dandenong'; and 3) the fact that Bob Jane had not referred to or acted upon the transfer of funds being a 'loan' until February 2012.

43 Rodney said that he had accepted the funds as a gift. He alleged that Bob Jane said that he would "give" him the money, and that he actually used the word 'gift'. Rodney also noted that his father was accustomed to giving gifts to him and other family members. Senior Counsel for the Defendants submitted that the gift was completed since the money ended up in Rodney's possession, albeit via a circuitous route. According to the Defendants, the funds paid to the vendor of the Dandenong property were treated as a loan from Rodney to BJC as trustee of the RF & RB Properties Trust No 2, and over time the money was repaid to Rodney.

44 Senior Counsel for the Defendants also referred to the presumption of advancement. This applies to transfers of property without consideration by a father to a child which are presumed to be made to advance the interest of the transferee.[5] The Defendants submitted that the relationship between Bob Jane and Rodney is one in which the presumption of advancement applies, and the transfer of the funds may be presumed to be a gift from father to son.

45 In my opinion, it is more probable than not that the sum of $540,244.86 was a gift from Bob Jane to Rodney and not a loan.

46 Putting to one side the specific discussion between Bob Jane and Rodney, the evidence supports Rodney's contention that the sum was a gift.

47 First, Rodney, the donee, treated the sum as a gift. Although the amount was paid directly to the vendor of the Dandenong property on behalf of the purchaser, BJC as trustee of the RF & RB Properties Trust No 2, Rodney's loan account was credited with the amount. This loan account has since been repaid.

48 I am not concerned by the flow of funds, a point emphasised by Counsel for Bob Jane. The clear effect - and as I have found intent - of the transactions from Rodney's point of view was to regard the amount required at settlement, which was to be sourced and conveniently paid in the manner aforesaid, as a loan from him to the purchaser. I do not regard the flow of funds as being inimical to the contention that the amount was a gift. It is entirely consistent with the amount being a gift. Further, as pointed out, Rodney's loan account was credited and repaid without demur. I accept the evidence of Rodney in this regard.

49 Secondly, Bob Jane, the donor, swore an affidavit on 5 March 2009, in the Family Court Proceedings. At paragraph 18(a) he said:**

The balance of the funds were gifted to Rodney prior to separation which I believe he used to purchase the T-Mart franchise in Dandenong.

**50 I accept that this accurately reflects the nature of the transaction and the agreement between father and son. I do not accept the later inconsistent evidence of Bob Jane. In his evidence before this Court, Bob Jane said that he read the page of the March 2009 affidavit on which this statement was made before signing it at the bottom. He said that he did not recognise the error at the time. However, as pointed out by Senior Counsel for BJC, this was not a matter of an accounting or mathematical calculation. Bob Jane either knew that he had given his son the money for the purchase of the Dandenong property or not. Accordingly, I reject Bob Jane's later denial.

51 Thirdly, it is more likely than not that the conversation between father and son was along the lines suggested by Rodney. His evidence that the sum was a gift is entirely plausible, is consistent with the acknowledged generosity of Bob Jane in relation to gifts to family members, and I accept it in this regard.

52 It is also contradicted by the handwritten notation 'Rodney' on the general ledger next to the entries 'Deposit for Dandenong $448,169.86', 'Dandenong Stamp Duty 490,750' and 'Dandenong Registration Fee $1,325', which Laree acknowledged that she wrote because she thought this was some sort of a transaction that related to Rodney. This notation confirms a connection between those three amounts, the purchase of the Dandenong property and Rodney, which further contradicts Bob Jane's claim that the loan was made to BJC.

53 Finally, Schedule 1 and other summaries of the loan account attribute the three Dandenong payments which total $540,245 to 'Personal payments Rodney Jane' for the financial year 2006/2007. Nanos said that he gave Bob Jane a document like Schedule 1 on 30 June 2008, Bob Jane reviewed it and agreed with the closing balance. Nanos said that the classification 'Personal Payment Rodney Jane' represents gifts made by Bob Jane to Rodney. He said that Bob Jane instructed him that the $540,245 should be classified as 'Personal Payment Rodney Jane' because the amount was a gift to Rodney. He said that having received that instruction from Bob Jane he then verified with Rodney that the amount was a gift from Bob Jane to him. I accept his evidence.

54 Accordingly, it is more probable than not that the amount represented a gift from Bob Jane to Rodney.**

F. Question 2: Has the sum of $2,402,723.23 referred to in paragraph 11 of the Amended Statement of Claim been repaid by Port 471 Pty Ltd?

**55 Bob Jane claims that Port 471 owes him the sum of $2,402,723.23 for moneys advanced from the loan account for the purpose of acquiring the Williamstown Road property. The Defendants submit that the sum has been repaid by four payments made by Port 471 to the loan account which are recorded on the general ledger. The Defendants argued that since Bob Jane relied on the general ledger entry in making his claim of $2,402,723.23, the general ledger should be considered reliable also regarding the repayments.

56 Counsel for the Plaintiff challenged generally the veracity of the entries with regard to their allocation and characterisation but made no specific argument regarding the credits arising out of the repayments.

57 In my opinion, it is unarguable that the sum of $2,402,723.23 has been repaid to Bob Jane by Port 471. The payments were made by Port 471 to BJC and credited to Bob Jane's loan account.

58 The BJC general ledger of the loan account records that:**

(1) $321,632.21 was credited to the loan account on 21 March 2006;

(2) $59,780 was credited to the loan account on 7 April 2006;

(3) $34,000 was credited to the loan account on 5 June 2006;

(4) $2,013,000 was credited to the loan account on 30 November 2007.

**59 There is no dispute that the total sum of $2,402,723.23 was paid by Port 471 to BJC and credited to Bob Jane's loan account. There is no evidence to the contrary and I accept that the amount has been repaid to BJC and, to the knowledge and with the consent of Bob Jane, credited to his loan account.

60 Two of the credits identified by Nanos, which total $381,412.21, were made prior to June 2006. Bob Jane said that before June 2006 he had a system in place to check the entries in the loan account. He said that about every month he would get from the accounts department the statement of his account which he would have to check.

61 Further, Nanos said that Bob Jane instructed him to credit the $2,013,000 to the loan account. He said that that credit was to close out and finalise any moneys owing in relation to the Williamstown Road property because that was the agreement struck between Rodney and himself. I accept this evidence. I would answer the question - yes.**

G. Question 3: Does section 5(2) of the Limitations of Actions Act 1958 (Vic) apply to all actions of account so as to bar any matter which arose prior to 5 March 2006?

**62 The Defendants claimed that as this proceeding was commenced in the County Court on 5 March 2012, the action is statute barred under s 5(2) of the Act insofar as it relates to any matter arising prior to 5 March 2006.

63 Counsel for the Plaintiff submitted that s 5(2) of the Act does not apply to the Plaintiff's claim, because it is a claim for taking of accounts in equity, not at law. In support of this contention, Counsel for the Plaintiff relied upon the decision of Megarry VC in Tito v Waddell (No 2)[6] dealing with the Limitation Act 1939 (UK) ss 2(2) and 2(7) which, it was submitted, are materially the same as s 5(2) of the Act. Megarry VC held that s 2(2) does not apply to the equitable remedy for an account and s 2(7) dos not apply so that the claim is not barred by analogy.[7]

64 Tito v Waddell was not followed by the Western Australia Court of Appeal in Wheatley v Bower & Ors ('Wheatley v Bower').[8] The Court in Wheatley v Bower referred with approval to the statement in Meagher, Gummow & Lehane (3rd ed)[9] that, according to the definition of 'action' in the limitation statute (in Victoria, s 3(1) of the Act - 'Action includes any proceeding in a court of law'),[10] the limitation 'applies to all actions of account at law or in equity'.[11] Counsel for the Plaintiff submitted that the word 'action' was a reference to a form of proceeding, one commenced by writ,[12] and that therefore, all actions were proceedings but not all proceedings were actions.[13] Whilst the Victorian Act (similarly to the UK Act in Tito v Waddell) expands the meaning of 'action' to all proceedings however so commenced, Counsel for the Plaintiff argued that this does not remove the distinction between an action for taking of accounts at law or in equity.

65 Counsel for the Plaintiff submitted further that the limitation period applies by analogy only when the same facts give rise to a claim in law and in equity, and there is the same remedy available in law and equity. It was argued that although taking of accounts is available both in law and in equity, in Bob Jane's case, there is no contract on which a taking of accounts could be founded, or a breach of contract giving rise to that remedy.[14]

66 Further, Counsel for the Plaintiff contended that Tito v Waddell should apply in this case, because it involves a claim against a person in a fiduciary position, who must account without limit of time.[15] The Plaintiff submitted that BJC owed a fiduciary duty to Bob Jane on the basis of Bob Jane's reliance upon it to conduct the loan accounts and the trust and confidence he reposed in BJC to perform that task accurately, particularly after suffering the stroke in June 2006.

67 The Defendants argued that, first on an ordinary reading, s 5(2) of the Act applies to all actions for an account at law or in equity. Secondly, any right which Bob Jane may have to an account arose out of an oral contract between Bob Jane and BJC, therefore the relief being sought is an equitable remedy to a legal right. In such a case, equity applies the limitation period, "it obeys the law".[16] Thirdly, the Defendants argued that even if the claim was brought in equity's exclusive jurisdiction, the limitation would be applied by analogy as there is analogue between the equitable claim and a legal or superior right under contract to which the limitation period applies.[17]

68 The Defendants contended that no fiduciary relationship existed between BJC and Bob Jane. Further, the Defendants submitted that, as stated in Coulthard v Discomix Club Limited, the duty to account, unlike the "true fiduciary duties of loyalty and fidelity ... even when owed by a person in a fiduciary position gives rise to a purely contractual claim, which is subject to the six-year limitation period."[18] Therefore, in any event, raising the fiduciary claim does not assist Bob Jane's case.

69 In my opinion, any matter which arose before 5 March 2006 is statute barred.

70 In Victoria, all actions for an account, at law or in equity, based on either legal or equitable liability to account, are barred six years after the accrual of a cause of action. This follows from s 5(2) of the Act and the statutory definition of 'action' contained in s 3(1) of the Act.[19]

An action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.

action includes any proceeding in a court of law.

73 In Feiglin v Ainsworth,[20] Mukhtar AsJ said:

... the plain effect of s 5(2) and the definition of 'action' means that all actions for an account, which can be brought at law or equity, and based on either a legal or equitable liability to account are barred six years after accrual of a cause of action. [21]

74 I agree with Mukhtar AsJ. In Wheatley v Bower, and after extensive reference to Tito v Waddell, Malcolm CJ said:

It is suggested in Meagher, Gummow & Lehane (3rd Ed) that in Western Australia, all actions of account, at law or in equity and based on either legal or equitable liability to account, are barred six years after the accrual of a cause of action. It is said that this follows not only from the statutory provisions themselves, but also from the statutory definition of "action" contained in the Act. The definition in s 3 of the Limitation Act is as follows:

"Action" means a civil proceeding commenced, in the Supreme Court by writ or in such other manner as may be prescribed by Rules of Court, or in a Local Court or other inferior court in the manner prescribed by or under the Act conferring jurisdiction on such court.

It follows that the complexities involved in applying the English statutes of limitation to actions of account do not apply.[22]

**75 The relevant provisions of the Victorian Act are to similar effect. I propose to follow the decision in Wheatley v Bower which I consider with respect to be correct.

76 Further and in any event, any right that Bob Jane may have to an account is properly founded on a contractual relationship. That relationship arose out of an oral contract between Bob Jane and BJC to the effect that he would have a loan account with BJC which he could draw upon from time to time to fund his living expenses. That gave rise to a debtor-creditor relationship.

77 The Amended Statement of Claim does not plead any fiduciary relationship or breach of fiduciary duty as a basis for the claim for an account. Such an allegation first appears in the last paragraph of the Plaintiff's Reply. However, BJC did not owe fiduciary duties to Bob Jane. Consequently, absent any trust, the claim for an account in equity is based on legal not equitable rights.[23] Accordingly, Bob Jane is seeking a superior remedy for a legal right and the limitation period set out in s 5(2) of the Act is in any event applicable.

78 The accrual of the cause of action for account occurs when the accounting party receives money or property in respect of which he is liable to account.[24] Relevantly, the first cause of action for an account accrued when Bob Jane's loan account was first credited. Each time that BJC received money by way of a credit to Bob Jane's loan account, a new cause of action accrued in respect of that credit.

79 This proceeding was commenced in the County Court of Victoria on 5 March 2012. Accordingly, the action for an account, insofar as it relates to any matter arising prior to 5 March 2006, is statute barred.

80 If I am wrong in relation to the notion that action includes a claim for equitable relief and the characterisation of the Plaintiff's claim as a legal right in respect of which equitable relief is claimed, I would be inclined to conclude that the claim is barred by analogy with the law and that the time period specified in the Act applies.[25] In the present case, the same facts would likewise give rise to the same claim whether at law or in equity and the same kind of relief (viz an account) is obtainable. Accordingly, equity will apply the same six year limitation period by analogy. However, for the reasons given it is not necessary to decide this point.**

**81 BJC submitted with regard to Bob Jane's claim for an account in respect of the loan account, that these were settled accounts.

82 A settled account is a statement of the accounts between two parties which is agreed to and accepted by both as correct. It is applicable where there are mutual debits and credits and the parties strike a balance and agree that balance as truly representing the financial result of their transactions.[26] Signing the account is not strictly necessary. Where the account is kept for any length of time and no objection is made the person to whom it is sent is bound by it and prevented from opening the account afterwards.[27] BJC therefore contended that it is for Bob Jane to produce evidence that the account was challenged or that there had been no settled account. In the absence of such evidence, BJC's position that the accounts are settled should, it was submitted, be accepted.[28]

83 Counsel for the Plaintiff submitted that there cannot be settled accounts unless there are mutual debits and credits between two parties and a mutually agreed balance is struck. It follows therefore that there cannot be settled accounts in the case of a bank account. Counsel contended that the plea of settled accounts therefore fails with regard to the loan account because first, it is analogous to a personal bank account, and secondly, the documents relied upon by the Defendants do not establish that there was ever a mutually agreed balance.

84 The question of whether the loan account was settled was addressed in relation to each of three periods: the period up to 30 June 2006, the period of 1 July 2006 to 30 June 2007 and the period of 1 July 2007 to 30 June 2008.

85 It is convenient to deal first with the settled account as at 30 June 2008, as if there was a settled account as at this date, it is not strictly necessary to deal with any earlier period.

86 BJC submitted that on 30 June 2008, BJC and Bob Jane settled the loan account, and that BJC paid the balance of $456,989.14 to Bob Jane. In support of this contention, BJC pointed to Bob Jane's review and agreement to the summary of the loan account as at 30 June 2008 produced by Nanos during the Family Court Proceedings.

87 Bob Jane contends that he did not 'agree' to the balance of the loan account on 30 June 2008. He emphasised his ill health and reliance upon the 'competence and honesty' of his son and his staff in providing him with the documents. Bob Jane argued that in these circumstances, there was no agreement. Counsel for Bob Jane referred to the decision of Pearson J (as he then was) in Phillips-Higgins v Harper[29] where his Lordship said:**

The real point here, to my mind, is that there was no agreement. The evidence seems to be reasonably plain that the plaintiff, when the defendant and Mr Catchpole had made their assessment of what was due to her, would be told either by Mr Catchpole or the defendant: "this is what is owing to you £100" - £168 or whatever it was. They simply informed her that that was owing to her. She was not asked to agree that it was right; she was not shown how it was arrived at; she was not asked to inspect the books or even Mr Catchpole's working papers. She was simply informed that that was the sum due to her. She believed what she was told, and in pursuance of that, she would normally draw the necessary cheque for signature by the defendant. But that was, in the minds of both parties, simply giving effect to what had gone before. It was not the making of any new agreement by the plaintiff, and to constitute a settled account there must be an agreed and settled account, and the ordinary principle of contract law applies that, unless there is an intention to agree, there is no contract. I hold that here there was no intention to agree, and therefore, no contract, and no agreed and settled account....[30]

**88 In my view, however, and unlike the case before Pearson J, Bob Jane knew of and specifically agreed to the settling of the loan account.

89 Both Rodney and Nanos said that, before this proceeding, Bob Jane did not raise with them the issue of reopening the loan account.

90 Nanos said that on 30 June 2008, Bob Jane was paid the sum of $456,989.14 to close out the remaining balance in his loan account. Nanos said when that money was paid, he understood that all moneys owing were paid out and the matter was closed. He said that the narration 'Loan repayment in full from BJC' in Bob Jane's bank statement was consistent with his understanding in relation to the payment because that was the conversation he had and the agreement that the corporation had with Bob Jane.

91 Rodney said that the closing balance of the loan account for the year ending 30 June 2008 was $456,989 and it was paid to Bob Jane in June 2008. He said that at the time his father told him that he had cleaned up his loan account with Nanos and Peter Crofts (a barrister with an accounting background who was representing Bob Jane in the matrimonial proceeding) and that he was happy that the amount owing to him was settled, sorted out and capable of being paid out to him.

92 Bob Jane agreed that the repayment of his loan account was made to the New Account.

93 Prior to this proceeding, Bob Jane accepted and believed that his loan account had been fully repaid on 30 June 2008. That position is corroborated by two documents.

94 First, it is corroborated by the letter dated 17 July 2009 to Laree in which he said:**

I have no loan account left so I will have to work out a way to sell assets and earn income to achieve these payments.

**95 Secondly, it is corroborated by the Deed of Settlement signed on 20 September 2009 by among others Bob Jane and Laree. Paragraph (z) of the Deed of Settlement says that 'The husband now asserts that the loan account is fully expended'. Laree said that at the time she understood that the loan account was zero and, absent fraud, she was giving up any right to claim anything in relation to the loan account.

96 Bob Jane said that he would not have accepted any figure that was given to him. He said that he examined the spreadsheet and he agreed that the remaining balance of $456,989 represented the financial results of his transactions with BJC.

97 Nanos said that on 30 June 2008 he met with Bob Jane at the Port Melbourne office and gave him a document like Schedule 1 which was a snapshot at that point in time. He said that the meeting occurred on that date so that they could move into a new financial year with the loan account at zero and Bob Jane having the funds to use at his own discretion, including drawing the entire amount in one day if he wished.

98 Nanos said that Bob Jane reviewed the document, scrolled through a few lines, noted a few items that he was interested in seeing, looked at the subtotal at the bottom, the closing balance and said words to the effect 'That looks good, that looks fine'. He said that Bob Jane was familiar with this type of document because they had reviewed this type of schedule many times prior to this meeting with him and also with his legal counsel in his presence.

99 Nanos said that he prepared the summary of Bob Jane's loan account as at 30 June 2008, which is Schedule 1 to the Defence. He said that Bob Jane and Rodney asked him to prepare a loan account summary that was easy to read and reflected the expenditure in a consistent way over a number of years for Bob Jane to use in his matrimonial proceeding. He said that it was also an ongoing way of getting an update of the loan account position.

100 Nanos said that he produced Schedule 1 by extracting the general ledger accounts in soft copy form and adding three columns to the spreadsheet: a financial year column, a month column and a classification column.

101 He said that he classified the transactions based on the evidence in the extracted information and where it was unclear he sought further information from his finance team who were able to pull out the source documents to assist. He said that where the information was insufficient he sought clarification from Bob Jane and Rodney. He said that in relation to transactions which took place prior to his employment with BJC (for example in 2002), if no one in the finance department was around at the time of the transaction, he would get clarification from Bob Jane and Rodney. He said that the classifications are correct because they reflect the opinion of his finance team, Bob Jane, Rodney and himself, which is the most thorough review possible.

102 Nanos said that if there was a challenge to a classification he would print out an extract of the classification and show the transactional detail that made up that amount. He said that more often than not there was a consensus once the detail was provided.

103 Nanos said that a formula was then used to interrogate the information extracted from the general ledger in relation to each classification for that financial year and it summed up the total amount of the debits and credits to reach a net position for the year.

104 Having regard to the whole of the evidence and the findings made by me in Section D hereof, it is more probable than not that Bob Jane and those acting for BJC agreed with the balance of the loan account that was to be paid to Bob Jane.

105 In these circumstances, I am of the opinion that there was a settled account as at 30 June 2008.

106 Nanos said that the general ledger shows all the debits and credits for the loan account. He said that when a debit was applied to the loan account, there would be a credit to an account in the name of BJC, which in most cases would be the bank account because money was going out to pay bills.

107 It was submitted on behalf of Bob Jane that this was not a case of mutual debits and credits because BJC kept Bob Jane's loan account and accounted to him in terms of movements in that account. It was said that this is directly analogous to the facts in Anglo-American Asphalt Co Ltd v Crowley Russell & Co Ltd ('Anglo-American')[31] where Romer J held that there was no settled account.

108 However, Anglo-American was not a case where one party kept the books of both parties, applying a credit to one party's ledger, the corresponding debit to the other party's ledger and the parties ultimately striking a balance. Rather, it was a case where a licensee assumed the obligation to keep an account of 'all matters connected with the material manufactured sold and used under the licence' and deliver a statement half yearly showing the amounts due by way of royalty. The case is therefore distinguishable on its facts.

109 In Siqueira v Noronha[32] the fact that the books were in the possession of the employer did not prevent the Privy Council finding that there was precisely the kind of 'real account stated' mentioned by Blackburn J in Laycock v Pickles.[33] In Siqueira v Noronha, an account had been running for a considerable period of time. There was an expectation that remuneration should include the consideration of commission, share of the profits or a bonus based upon the profits. The salary had never been quantified and items of debits had never been agreed. The Privy Council said that:**

... when the employment had just ceased and when the ex-servant desired to receive his proper remuneration for that whole period, it was open to the employer to investigate each and all of the items that appeared in the books to determine for himself what the remuneration should be, and certainly to determine so as to bind the other side what his share of the profits, if any should be. That was done. [34]

110 In view of the decision I have reached in relation to whether the accounts are settled accounts as at 30 June 2008 and my decision in relation to the Limitation of Actions question and the estoppel defence (below), it is unnecessary to deal with the remaining two questions in relation to settled accounts and I do not propose to do so.

I. Question 5: Is the plaintiff estopped from reopening the loan account balance?

**111 In my opinion, Bob Jane is estopped from re-opening the loan account.

112 The elements required to establish an equitable estoppel are set out in the judgment of Brennan J in Walton Stores v Maher.[35]

113 Paragraph 25 of the Defence pleads that BJC assumed that on or about 30 June 2008, Bob Jane:**

(b) accepted the remaining balance of that loan account;

and that Bob Jane induced BJC to adopt those assumptions. That pleading does not rely on or depend on a finding that there were settled accounts as alleged. It relies on a finding that Bob Jane induced BJC to adopt particular assumptions which he knew or intended BJC to rely upon to its detriment.

**114 Rodney said that at the time the loan account was paid out, his father told him that he had cleaned up his loan account with Nanos and Peter Crofts (a barrister with an accounting background who was representing Bob Jane in the matrimonial proceeding) and that he was happy that the amount owing to him was settled, sorted out and capable of being paid out to him. Rodney said that after the amount of $456,989 had been paid out on 30 June 2008, he assumed that there was nothing owing to Bob Jane and that the loan account had been settled.

115 Nanos said that when the amount of $456,989 was paid to Bob Jane, Nanos understood that that was the close of Bob Jane's loan account and all moneys were paid out and the matter was closed. He said that he understood the loan account had been repaid in full because that was the conversation he had with Bob Jane on 30 June 2008 in the Port Melbourne office and the agreement that the company had with Bob Jane.

116 Nanos said that it took him and members of his finance team several weeks to complete the summary of the loan account as at 31 March 2007. He said that from the perspective of the Chief Financial Officer of BJC, if the company was required to re-open the loan account from 1 July 2001, it would be an impossible exercise as they would not have the source documents for the older years. He said that it would be a huge task to go through almost 2,000 transactions to get a classification and then drill down into the documents, where they had them, to get further clarification.

117 In response to the suggestion made by Peter Bruce Wilkinson ('Wilkinson') an expert witness retained by Bob Jane, that 1,000 transactions could be done in two to three days, Nanos said that it was possible if he had an army of people, all the documents and the people who knew about those transactions in the room, including Bob Jane, Rodney and members of the finance team at the time.

118 In my opinion all of the elements of the estoppel are made out and I would answer the question yes.**

J. Question 6: If there are settled accounts and the limitation period has not expired, should the accounts be re-opened or the Plaintiff be given liberty to surcharge and falsify?

**119 The Plaintiff has submitted that even if it is found that there are settled accounts, in light of the disputed debits made by BJC, the accounts should be re-opened and liberty given to the Plaintiff to surcharge and falsify.

120 In my opinion, there is no basis to either surcharge or falsify the settled accounts or re-open them.

121 It has long been established that, if the accounts are treated as settled, then it is incumbent upon the Plaintiff to point out in his pleading some distinct error, and establish that error by proof before liberty is given to surcharge and falsify.

122 As Bob Jane did not plead or could not point to any specific error, it was entirely appropriate for his Counsel to effectively abandon this form of relief and contend that the accounts should be re-opened.

123 The general rule is that the Court will open the account and not merely surcharge and falsify[36] where:**

(a) the account has been shown to be erroneous to a considerable extent, both in amount and in the number of items; or

(b) fiduciary relations exist and a less considerable number of errors are shown; or

124 In Wheatley v Bower[37] Malcolm CJ put it this way:

In my opinion, the accounts in this case were not shown to be erroneous to a considerable or any extent and, although the parties were in fiduciary relations, it was not shown that there were any fraudulent omissions or insertions in the accounts, so as to justify the re-opening of any of the accounts, or to depart from the maxim that so far as limitation periods are concerned, equity follows the law.
As between partners, a settled account, namely one that is agreed between the parties, as in this case, is a good defence to an action for an account, although in special circumstances the court may re-open the accounts or give liberty to surcharge and falsify. A single important error is sufficient, if fraudulent, to justify an order to open the whole account. If it is not fraudulent the proper order is to give liberty to surcharge and falsify: Gething v Keighley (1878) 9 Ch 547 at 550. Accounts will be re-opened on the ground of fraud in spite of the existence of a stringent agreement against re-opening: Oldaker v Lavender [1833] EngR 706; (1833) 6 Sim 239; Sim v Sim (1861) 11 I Ch R 310 at 321. The mere fact that the claimant has already had an account rendered to him will not preclude him, in the absence of acquiescence, from having an account taken by the court once fraud has been established.

**125 There is little point in re-opening the settled account for the year ending 30 June 2008 for two reasons.

126 First, given my findings in relation to estoppel (a matter not embraced by the question), there is no point. If I am wrong in relation to my finding on estoppel, there is a more fundamental reason.

127 Secondly, given the (understandable) way in which the case was conducted, there has in any event been a sufficient re-opening of the account and testing and verification of the figures so as to make it most undesirable that any further enquiry be permitted or conducted. Much work was done by both Nanos on behalf of BJC and Wilkinson. Wilkinson, however, could not read part of a critical document and was unaware of a second loan account or that the loan account had a sub-account. It matters not, in the final analysis, whether there were one or two loan accounts.

128 In cross-examination, and by reference to Exhibit D4 (reconciliation spreadsheets prepared by Nanos), Wilkinson candidly conceded that a number of his conclusions were affected by these matters. In my opinion, Exhibit D4 is an important and probative document. It demonstrates to a sufficient degree that there was no error in the settled account. The analysis is penetrating and careful, and I accept it. To my mind, that is the end of the matter.**

129 Having answered each of the preliminary questions I will hear from the parties as to the appropriate form of orders, the further disposition of the case and costs.

[1] In the original pleadings, the sum transferred was noted as $520,244.86, however this was corrected during the course of the trial. All parties agreed that the transfer in question was of $540,244.86.

[2] This sum was actually $540,244.86 See n1 above.

[3] Reference was made to Nolan v Nolan [2003] VSC 121; (2003) 10 VR 626, [131].

[4] Reference was made to Lexis Nexis, Halsbury's Laws of England 5th ed, [202], [267]; Re Cole, a Bankrupt [1963] 3 WLR 621; [1964] Ch. 175, 191 (Pearson LJ).

[5] Nelson v Nelson (1995) 184 CLR 538, 547 (Deane and Gummow JJ), 600-601 (McHugh J).

[8] [2001] WASCA 293, [123] (Wheatley v Bower), Wheatley v Bower was followed in Feiglin v Ainsworth [2011] VSC 454, [32].

[9] R P Meagher, W M C Gummow and J R F Lehane, Equity Doctrines and Remedies (Butterworths, 3rd ed, 1992).

[12] Reference was made to Gobbo J in R v Day and Thomson [1985] VicRp 22; [1985] VR 261, 266. Counsel for the Plaintiff also referred to a more recent statement in R P Meagher, D Heydon and M Leeming, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (Butterworths, 4th ed, 2002), [34-005], to the effect that the wording of the statute indicates that only proceedings at law were barred.

[13] See Buckley LJ in Roberts v Battersea Metropolitan Borough (1914) 110 LT 566, 568.

[14] Reference was made to P & O Nedlloyd BV v Arab Metals Co et al [2006] EWCA Civ 1717, [2007] 1 WLR 2288, [43], [45], [47], [52] (Moore-Bick LJ).

[15] Tito v Waddell, 251, Feiglin v Ainsworth [2011] VSC 454, [32].

[16] Re Auzhair Supplies Pty Ltd (in liq) [2013] NSWSC 1; (2013) 92 ACSR 554, [62].

[18] [2000] 1 WLR 707, 728. See also Feiglin v Ainsworth [2011] VSC 454, [35] - [42].

[19] See R P Meagher, D Heydon and M Leeming, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (Butterworths, 4th ed, 2002), [34-030].

[23] Paragon Finance Plc v DB Thakerar and Co [1998] EWCA Civ 1249; [1999] 1 All ER 400, 415.

[24] Giacci v Giacci Holdings Pty Ltd [2010] WASC 349, [99]; Feiglin v Ainsworth [2011] VSC 454, [12].

[25] Knox v Gye (1872) LR 5 HL 656; see more recently Re Auzhair Supplies Pty Ltd (in liq) [2013] NSWSC 1; (2013) 92 ACSR 554 and the cases referred to therein; Paragon Finance PLC v DB Thakerar & Co [1998] EWCA Civ 1249; [1999] 1 All ER 400, 408-410; P & O Nedlloyd BV v Arab Metals Co & Ors [2006] EWCA Civ 1717; [2007] 1 WLR 2288.

[26] Anglo-American Asphalt Co Ltd v Crowley Russell & Co Ltd [1945] 2 All ER 324, 331; see also Siqueira v Noronha [1934] A.C. 332, 337 and Laycock v Pickles [1863] EngR 944; (1863) 4 B. & S. 497, 506 as to a real account stated.

[28] Wheatley v Bower [2001] WASCA 293, [34]

[29] [1954] 1 All ER 116; [1954] 1 Q.B. 411 affirmed on appeal, Phillips- Higgins v Harper [1954] 1 All ER 116; [1954] 1 QB 411 .

[33] [1863] EngR 944; (1863) 4 B & S 497; See also Camillo Tank Steamship Co Ltd v Alexandria Engineering Works [1921] 38 TLR 134, 143 (Viscount Cave).

[34] Siqueira v Noronha [1934] AC 332, 339.

[36] Williamson v Barbour (1877) 9 ChD 529, 533; Wheatley v Bower, [114].

[37] [2001] WASCA 293, [123] (Kennedy and Wallwork JJ agreed with the Chief Justice).

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