Port Adelaide Power Investments Pty Limited as trustee for the Cygnatius Investment Trust v Mullins

Facts

1. These facts are established by and extracted from the affidavits tendered by the plaintiff, namely: 1. Affidavit of Edgar Martin Baltins sworn on 4 October 2018 together with exhibit "EMB-1"; 2. Affidavit of Anton Jean-Pierre Roberts sworn on 23 November 2018 together with exhibit "AR-1"; 3. Affidavit of Anton Jean-Pierre Roberts sworn on 26 July 2018; 4. Affidavit of James Robert Hodge sworn on 26 July 2018; 5. Affidavit of Anton Jean-Pierre Roberts sworn on 19 December 2018; and 6. Affidavit of James Robert Hodge sworn on 19 December 2018.
2. Mr Baltins met Mr Mullins whilst working together with a group of investors who were looking at a project to establish a fund to raise money for senior living projects. He became friends with Mr Mullins and trusted him.
3. Mr Baltins says that on 3 September 2010 he had a conversation with Mr Mullins as follows: Mullins: The other night you mentioned to the other guests at dinner that I was looking to buy a property in Queensland. I'm happy for you to know about it, but would appreciate you keeping it under wraps as I am not keen to let it become known somehow that it's our family that are looking to buy back what had been previously been our family property. Dad divorced Mum many years ago and sold the property, along with other assets. However, rather than give Mum any of the sale proceeds, Dad hid from her in an overseas bank account just before their divorce what is now well over US$30million cash. Mum never knew how well-off Dad really was, and Dad wanted to ensure that us kids got the money in the end. Dad is dying and wants to retrieve these funds while he is alive and well enough, but has asked me to help him get these funds back into Australia. To do this, I need at least $100,000 to meet fees payable to lawyers, diplomats, banks and other institutions. I feel embarrassed to ask this of you, but I was wondering whether you can help me out in any way. I only need the funds for a few weeks to finalise this last bit of the process. I'd be more than happy to pay you $500,000.00 if you can lend me the $100,000. Baltins: Now Greg, I need to know whether any of these funds were obtained illegally in any way. Mullins: Of course not. This is my Dad we're talking about. He was a very wealthy man at one time. This money arose from the sale of family assets, some of which had been in the family for several generations. Baltins: Ok. Mullins: Actually, if it would make you more comfortable, you could make the payments to the overseas parties directly. In fact, I'd prefer that. Baltins No, but let me see what I can do. I think I can raise $100,000.00. A $400,000.00 return could really help my superannuation. If I can raise the funds, I will loan it to you.
4. An email was sent by Mr Mullins on 3 September 2010 at 10.36am which stated: From: GK Mullins Sent: Friday, 3 September 2010 10:36 PM To: embaltin@bigpond.net.au Subject: Bill facility Follow Up Flag: Follow up Flag Status: Flagged Edgar, You really surprised me today. Thank you so much for the faith you have, I new [sic] you where [sic] a great man but not this great. If it is not to [sic] much can I imposed on 140,000 instead of 100,000 and give you back 700,000? That is for every 20,000 I will give 100,000. Is it possible to receive 20,000 on Monday and the remainder 120,000 on Tuesday or Wednesday? Money can be deposited in the below account. Bank:- NAB BSB:- 082-XXX Account Number:- XX-XXX-XXXX Account Name:- Gregory Mullins With regards to a trust, can I be trustee for the trust? That is Greg Mullins as trustee for The Northampton Trust? How long would it take to set up the trust? Greg Mullins
5. Mr Baltins stated that he believed that Mr Mullins was going to retrieve his father's money and that he relied on Mr Mullins' preparedness to sign a written contract about it. Mr Baltins was led to believe that the money was going to go from Mr Mullins father's overseas bank account into Mr Mullins' personal bank account.
6. On 4 September 2010, Mr Baltins forwarded a loan agreement for the first loan which was apparently returned on 5 September 2010 signed by Mr Mullins although there is no copy of the signed loan agreement in evidence before me. However, an email from Mr Mullins saying he has signed and returned the agreement is before me. Given that this claim is not based on the signing of the agreement but on the conduct (unchallenged) exhibited by Mr Mullins to induce the loan, nothing turns on this. I also note that Mr Mullins' modus operandi in respect of the next four advances involved deployment of further versions of the "Agreement" acknowledging the sum already borrowed and setting out the further sum to be advanced, signed by Mr Mullins and emailed to Mr Baltins prior to payment, in a charade of bona fides.
7. Mr Baltins transferred $140,000 to Mr Mullins' account on 6 September 2010 and confirmation was provided by Mr Mullins on 7 September 2010 that the money had been received.
8. The second loan in the sum of $70,000 took place after a series of conversations in which Mr Mullins offered the same return rate, that is, a return rate of five times the amount of the initial loan. The explanation for the need for this sum was that there was a bank fee required by the overseas bank associated with the transfer of the (then said to be) US $23,750,000 held in the United States.
9. The $70,000 was paid on 22 September 2010 by Mr Baltins into an account held by Mr Mullins. Receipt of that sum was acknowledged by email from Mr Mullins on 24 September 2010.
10. The third loan was advanced on 27 October 2010 in the sum of $15,000. Mr Baltins says this was advanced because he was told by Mr Mullins there was a further necessary fee associated with the transfer of the sum from the United States. This was set out in an email by Mr Mullins on 26 October 2010: "Edgar, Hope your holiday went well. Just to keep you up to date re "eagle has landed". There was actually more cash brought over than originally told to me. What this means is that I am 15k short of the fee charged to clear the funds. I didn't want to annoy you until you came back but I was wondering if you could spare the final amount? The bank started to count the money and found out much more was there. When they notified the US embassy the embassy told them to freeze the account until the fee was topped up. Seems silly but it what I have to work with. If you can assist with this final amount it would be good if you could transfer the 15k to my account today if possible. I have been relying on getting access to the USD for some time as you know. Talk soon Regards Greg Mullins."
11. The fourth loan was provided on 5 November 2010. Mr Baltins says it was provided in response to an email from Mr Mullins dated 4 November 2010 which outlined that the National Australia Bank required particular fees to be paid to release the funds that were purportedly held by NAB "in escrow" pending payment of the fee.
12. In support of this request, Mr Mullins forwarded to Mr Baltins an email chain which contained purported correspondence between himself and a Mr David J Russell from NAB. It is material to note that when Mr Russell was later contacted, he said he had no awareness of any such fee or arrangement. The bank records of Mr Mullins (which I will come to later) did not indicate any such fee ever being paid. Indeed the picture painted by Mr Mullins to Mr Baltins about the preposterously large sum of money in US dollars having been transported to Australia, and all the associated fees, were in my view part of an elaborate hoax constructed with the purpose of defrauding Mr Baltins from significant sums of money with the untruthful promise of significant returns. The text of the email chain reads as follows: From: GK Mullins Sent: Thursday, 4 November 2010 3:41 PM To: Edward M Baltins Subject: eagle Follow Up Flag: Follow up Flag Status: Flagged Edgar, This is just to keep you up to date. After I spoke to you yesterday I sent the NAB an email requesting an update of the account They sent back the following. I have asked my brother in-law to assist with this as it is he that will benefit from the funds as well, I can't keep asking you. I feel embarrassed that this has happened. Greg M
13. In the same email chain was the email from Mr David J Russell: From: DavidJ.Russell@nab.com.au [mailto:David.J.Russell@nab.com.au] Sent: Wednesday, 03 November 2010 3:57 PM To: Greg Mullins Subject: Re: Hi Greg, Both accounts still have a nil balance at the moment, however there is an outstanding fee of $28,962 that has to be paid before the funds will be credited to your accounts from the escrow account. When can you do this? If this can be done this week the funds will clear into your account by next Wednesday as previously discussed. Don't forget we are unable to allow you to withdraw funds from the trust account until you have given us a copy of the trust deed. Can you please have this to us by the time the funds are cleared? Cheers David Russell Bank Advisor National Australia Bank Limited
14. The fifth loan was in the sum of $90,000. The conduct engaged in to extract this last sum involved a meeting in a coffee shop on 26 November 2010 where Mr Baltins says a conversation took place as follows: Mullins: This damned whooping cough has wiped me out. I feel like shit Don't worry, I'm not contagious. Baltins: I'm sorry to hear about the whooping cough and hope you get better soon. Mullins: Don't worry about that I will, but it takes time. I felt I needed to see you in person to tell you where things are up to. The funds have arrived in Australia and are at the NAB in Canberra. However, they have indicated that they will release the funds only upon a final fee of $90,000 being paid. Baltins: What's the fee for? I thought you had worked out all these fees before the funds got here. Mullins: It reflects the process by which the funds have come into the country under diplomatic immunity. I have hired a Canadian diplomat who will be coming here to personally run the process of accepting delivery of the cash. However, they won't release the funds without a certificate of origination. To get that certificate, I need to pay the $90k fee which also reflects in part the fact that there is a lot more cash than anyone had imagined because no-one had started to count it before now. Without the certificate, I cannot deposit the funds into my bank account. Baltins: I've never heard of anything like this. Who's the diplomat? Mullins: Trust me, nor have I. His name is Doug Lynn. Well, actually, it's Carman Douglas Lynn. We've come so far and I really do need to pay this final fee. Would it help if you spoke with Doug to get more comfortable about this? Baltins: That'd help. I really do need to know that this is it and no more funds are required! No more surprise fees of any kind! Mullins: Believe me. I don't want any more fees and I'm told there is absolutely nothing further to be paid. I've spent all of my own funds before you helped me out Til get Doug to call you. Baltins: Ok.
15. Mr Baltins says that there was then a telephone call from a person who described himself as Douglas Lynn that same night at about 7.30pm which went as follows: Lynn: Thank you for taking my call. I understand Mr Greg Mullins has mentioned my name to you and told you how I am helping him. I am Doug Lynn. I am a Canadian diplomat attached to Canadian embassies throughout the EU. Greg has asked for my assistance to help him in getting his father's money back to Australia. We can short-circuit procedures because I hold a Canadian diplomatic passport. Once the bank holds a Certificate of Origination for these funds, I can use my diplomatic status to have the funds cleared as they have been sent to Australia already under my diplomatic authorisation. This will require me to attend the bank in Canberra in person. I should add that I am helping Greg in a personal capacity and not in an official Canadian capacity. Baltins: I do not understand why Greg simply cannot authorise the release of funds at the same time as the Certificate of Origination issued, but then get the funds once the bank is satisfied with it Lynn: That's a good question, but this money is all held as physical cash. The Certificate of Origination has to be issued before any part of the cash can be issued for any purpose. Also, as a matter of security, the issuing authority just won't issue such a certificate without receiving payment beforehand. Greg cannot even deposit just the fee component into a bank account for this limited purpose without the Certificate. Baltins Ok, so what other fees need to be paid? Lynn: If you are worried there are other fees that Greg might have to pay, let me put your mind at rest. This is the final fee. All other fees have been paid. This is the final step. Once the fee has been paid, I will fly to Australia to run the final process and then look forward to meeting you. Baltins Surely, you don't have to fly over for this. You could just send the Certificate of Origination by fax or email, or even registered mail. Lynn: That wouldn't work. The process requires my physical presence to accept delivery of the funds. I am the only person authorised to accept delivery. Baltins: Couldn't you authorise a local Canadian Embassy official mate of yours to simply attend. Lynn: As I said before, I'm helping Greg in a personal capacity and don't wish to involve other Embassy officials. Baltins: I'll be happy for Greg once this is over. I'll have to think about it. What documentation can you send me to confirm what you have said? Lynn: Sir, what documents there are carry diplomatic confidentiality. I have been a diplomat for many years and would not be doing this if it was not above board if that is what you are getting at. Baltins: No, that's not what I meant. Let me think about it.
16. Mr Baltins was concerned and suspicious about the suggestion made by Mr Lynn that he (Mr Lynn) was the only person who could get the funds, and that Mr Lynn could not provide any documentation to support what he was doing.
17. A further email was sent by Mr Mullins on 30 November 2010 which provided further encouragement and explanation as to why the $90,000 was required: "Edgar, Doug never came to me. It was me that engaged Doug not the other way around. I assessed his capability to successfully bring the funds into Australia no one else. He accepted the job with a carrot of 500k with only to be paid on completion. I engaged Doug not the embassy, hence Doug's reluctance to get the embassy directly involved, he is doing this job for me as an individual that is capable in working between countries. As I said to you, my old man sent the money some 29 years ago off shore to keep it from my mother, I have to manage getting it back the best and effective way I can. Now that the funds are in Australia and accepted by the authorities, I really need this to be completed. The only thing that has delayed this is the certificate of origination and the amount that is needed. The extra funds that the NAB wanted was unexpected from my end, the extra 30k that I asked you for for the certificate was a call that Doug's' colleague made as an attempt to reduce costs but backfired. The notes in the picture are all $100 bills, I personally took the photo. I have ordered a statement from the NAB, however I do not know when this will be sent to me. This could take a few days. Greg Mullins"
18. Attached to this email was a picture of what appears to be a large bundle of cash, referred to in the email as being "$100 bills".
19. Mr Mullins also executed and sent a further version of the Agreement including this further $90,000.
20. The $90,000 was advanced on 1 December 2010 and confirmed as received by Mr Mullins on 2 December 2010.
21. It was submitted by counsel for Mr Baltins that the contents of the email, together with the picture annexed, amounted to a representation that the cash money in fact had arrived in Australia and that Mr Mullins had seen it and photographed it for the benefit of Mr Baltins, to reassure him the money was "on shore". This was done in order to induce Mr Baltins to make the further $90,000 payment. I accept that submission.
22. Whilst the Transfer Request Details document evidences payment being made to Mr Mullins' NAB account at 3.07pm, there was a follow up email that night at 7.32pm from Mr Mullins to Mr Baltins pursuing the Mr Lynn line of the story: "Edgar, How are you going? Thoughts? Just had Doug on the phone he is really keen to finalise this. He wants to be here next week to complete. He has to come as it is his name that the Australian authorities have on record as the person managing the whole process from the beginning and they are expecting him to be here. Greg Mullins"
23. The fact that Mr Baltins was entirely duped and believed the scenario painted by Mr Mullins is evidenced by email exchanges on 2 December 2010. Mr Baltins emailed at 9.30pm: "Money dispatched and received by Doug? Regards, Edgar".
24. The response a couple of hours later from Mr Mullins' email account says: "Money despatched [sic]. It will take 3 days to clear the other end. He is excited".
25. It seems reasonable to infer that this development served to delay, for a few days at least, any questions being asked precipitously by Mr Baltins about where his money was. Further to this, there was an email on 14 December 2010 at 3.15pm from Mr Mullins to Mr Baltins: "Edgar, Can you please confirm the following account number? It seems to be a bit short, but Westpac may have 6 digit account numbers. I should be transferring the 1,750,000 tomorrow." This is followed by a (correct) record of the BSB and account numbers of Port Adelaide Power Investments Pty Ltd, the account held by Mr Baltins into which the money was supposed to have been deposited.
26. Later on 14 December 2010 Mr Baltins emailed Mr Mullins: "Great to hear from you. So, the eagle is circling or has it landed for sure? Yes, the account details are correct (refer attached deposit slip)."
27. Mr Baltins, having received no money on 16 December 2010, emailed Mr Mullins at 9.00am: "Nothing appears to have been deposited into the account yesterday" Mr Mullins replied soon after: "Hi, Just tried to call you. Doug is here in Australia tomorrow, he was delayed coming in. Will transfer as soon as he arrives".
28. Later in December 2010 and into January 2011, there were further representations made by "Doug", asserting that Mr Mullins had in fact spent part of the last $90,000 advanced, rather than paying the fees for the purposes alleged in Mr Mullins' email of 30 November 2010. This led to further sums of money being extracted from Mr Baltins. I do not need to refer to those in any more detail as they do not comprise part of this claim, however they evidence that Mr Baltins continued to be duped by this false scenario apparently invented by Mr Mullins and continued in combination with Mr Lynn.
29. Bank records tendered show that Mr Mullins held a number of NAB accounts. All the payments from Mr Baltins were made into a NAB account 082 067 account number 178014231. At the time of the first loan payment of $140,000, that account held a few hundred dollars. Over the ten days after payment, most of the $140,000 was withdrawn in cash or transferred by internet online transfer or tele-transfer to another NAB account. There were also two online payments, one to "Aceliving" referred to as "rent" in the sum of $4,871.43, and one titled "Tinas residence" in the sum of $5,347.
30. In respect of the $70,000 received on 22 September 2010, that too was disbursed in a short space of time by cash withdrawals. An online transfer of $10,000 to someone referred to as Henrik Alksnis, a transfer to Louis Carr Real Estate trust account regarding "21 Fernbank Avenue" and on 6 October 2010, $4,512 was paid to Supercheap Storage.
31. The $15,000 provided on 27 October 2010 was subjected to a cash withdrawal on 28 October 2010 of $10,000 and the balance was transferred to Rdm Group.
32. The 5 November 2010 payment of $35,000 was disbursed within six days by cash withdrawals and a payment again to Louis Carr Real Estate regarding 21 Fernbank Avenue in the sum of $3,910.71.
33. The 1 December 2010 payment of $90,000 was disbursed almost entirely within seven days by transfer to Mr Alksnis, a couple of internet online transfers to an unknown recipient and again to Louis Carr Real Estate regarding 21 Fernbank Avenue, as well as a large sum of $75,971.36 on 3 December 2010 by international tele-transfer.
34. The bank records show no transfer of any sums to NAB or any other bank for the asserted "money transfer expenses". The bank statements indicate that smaller items of expenditure in the period between 6 September 2010 and 1 December 2010 included restaurants, florists, Webjet (a flight company), Wotif.com (a discount accommodation and travel website), Manly Seaside Holidays, petrol, dry cleaning, AGL, Telstra and Optus bills.
35. During this period the only deposits in addition to the $350,000 paid by Mr Baltins were a couple of payments of $500 from "Susan Mullins" and a transfer of $3,800 on 10 November 2010 titled "Minc".
36. There is no evidence of any repayment being made to Mr Baltins.

Service of the statement of claim and notice to the defendant of the proceedings

1. The statement of claim was filed on 30 September 2016. According to the affidavit of Christian Roberts, personal service was effected on Mr Mullins at 62 Blackbutt Avenue, Pennant Hills on 28 November 2016. At that time Mr Mullins said "I've been declared bankrupt". A bankruptcy search conducted confirmed that Mr Mullins had been declared bankrupt on 21 February 2014.
2. The court records indicate, and the affidavit of Mr Roberts confirms, that Mr Mullins appeared before this Court on 30 January 2017. The matter was then stood over to determine what the position of the Trustee in Bankruptcy would be in relation to the proceedings.
3. On 16 March 2017 Mr Mullins wrote to the court seeking an adjournment and the matter was adjourned to 12 May 2017.
4. On 12 May 2017 counsel appeared for Mr Baltins. Mr Mullins did not appear and no communications had been received from the Trustee in Bankruptcy so the matter was adjourned to 9 June 2017.
5. In June 2017 the court was informed that steps were being taken in the Federal Circuit Court to permit the proceedings to continue pursuant to s 153(2)(b) of the Bankruptcy Act 1966 (NSW). Some further adjournments followed and attempts at service of the orders made in August were made at an address in Thornleigh but apparently Mr Mullins had moved. A bankruptcy search was conducted on 18 October 2017 as part of finalising the application to be filed in the Federal Circuit Court and this showed that Mr Mullins had been discharged from bankruptcy on 23 September 2017.
6. On 26 October 2017 counsel appeared before the Registrar for directions. Mr Mullins did not appear as he could not be located to serve notice. Orders were made by the Registrar standing the matter over to 14 December 2017 with Mr Mullins to file a Defence by 13 December 2017 and for Mr Mullins to be advised of the orders and the next listing.
7. Mr Mullins was not located. Further orders were made at the directions hearing on 14 December 2017 standing the matter over to February 2018, and extending the time for Mr Mullins to file a Defence.
8. Between February 2018 and May 2018, Mr Roberts, the solicitor for Mr Baltins, deposes to attempts made by Polo CPI to locate Mr Mullins with no success.
9. On 4 May 2018 counsel obtained orders from the court permitting the plaintiff to file an application to extend time for service of the statement of claim.
10. On 16 February 2018, Polo CPI informed Mr Baltins that they had located Mr Mullins and instructions were issued for Polo CPI to serve Mr Mullins. There were further attempts at service that were unsuccessful, including at the address of 10 Mazzer Court, Bray Park, Queensland which was the address of Mr Mullins' daughter, Christina, who it seems refused to accept service. She said that Mr Mullins did not live at the property but "does call in every so often". It is reported that she said that she had not seen him for over four weeks (as at 2 April 2018), and did not know his whereabouts. A neighbour confirmed that Mr Mullins did not live at the address. Investigators were unable to find an online presence, although contact was made with Mr Mullins' son who confirmed his understanding was that his father resided with Mr Mullins' daughter Christina at 10 Mazzer Court, Bray Park, Queensland.
11. On 19 July 2018, the Court made orders extending time for service of the statement of claim and making orders for substituted service and for service to be effected at the Bray Park, Queensland address. The statement of claim was also emailed to an email address understood to be associated with Mr Mullins, "seqld212@gmail.com." Notice was also sent via a text message to Mr Mullins on the phone number understood to be associated with him on 20 July 2018.
12. On 24 July 2018 the statement of claim was personally delivered to the Bray Park, Queensland address.
13. Orders were made by the Court on 30 November 2018 regarding service of all evidence by 30 December 2018 in accordance with the substituted service orders already granted. That was effected on 11 December 2018. It was effected by mail to the street address at Bray Park, Queensland and also to a post office box understood to be associated with Mr Mullins at Victoria Point, Queensland.
14. The evidence was also served by email to the email address understood to be associated with Mr Mullins and a text message was sent giving notice that evidence was being served. There was also evidence that personal service was effected at the Bray Park address as set out in the affidavit of James Robert Hodge sworn 19 December 2018.
15. An email dated 6 February 2019 was forwarded to Mr Mullins c/o seqld212@gmail.com, enclosing letters dated 6 February 2019, a sealed copy of the plaintiff's submissions filed on 6 February 2019 and a sealed copy of the plaintiff's memorandum of facts, issues and chronology, and requesting that Mr Mullins notify the plaintiff's solicitor as to whether he intended to appear.
16. Contact was made with the Court by Mr Mullins via the Enquiries (Shared Mailbox) from seqld212@gmail.com the day before the hearing, annexing a letter dated 11 February 2019. The letter stated that he had received an email from Roberts & Partners Lawyers "but had no copies of the documents they say that they sent". It then goes on to state that he has never resided at the Bray Park address and spends most of his time in Toowoomba at an address he fails to disclose. This indicates to me that he was well aware documents had been served at that address. Mr Mullins says that he is not represented, and sets out some detail as to his father's legacy, that Mr Baltins was "aware of his father's situation" and that "Edgar made an agreement with me that no matter what, he would be there all the way to the end but from my recollection as to how things went around Edgar pulled funding".
17. Mr Mullins then goes on to describe health issues he had and that he had been declared a bankrupt. He said: "I didn't expect or ask for his support but will gratefully accept. I accepted because this is was one part of the advice I received from other firms I approached as this suggestion maybe the best and cheapest outcome for me. At the time Edgar stopped funding he made a comment that he believed the funds belonged to several families and not me. He is correct, there do and did belong to several families and that several families would benefit, my father had six children…"
18. He also stated: "I have never been able to resolve Dad's legacy to which my health has been affected along with my relationships with my siblings and immediate family. Again, this whole matter has affected me in ways that I don't think Edgar understands. I have lost my family, friends and my fathers' legacy. Looking back on it now, perhaps I should have followed a different path as advised by other accounting firms. Even if a case of fraud was found against me, for what reason I don't know, and the right to sue me for money, I have nothing. I have attempted to gain full time employment over the years but my health has prevented it. I have lost everything. I have no assets, I have no control over any assets and I am a discharged bankrupt living on simple means with a mate. If I was able to appear this is all I would say and could say. I am not sure how to proceed from here but I have no other option but to ask the court to please deal with this matter in my absence."
19. In those circumstances, I am of the view that it was appropriate to proceed to hear and determine the matter in Mr Mullins' absence, as he was clearly aware of the nature of the claims made against him, and had decided to take no part because, amongst other things, he has no money or assets with which to pay any judgment.

Legal principles

1. Mr Baltins contends that all the representations made by Mr Mullins were untrue. The basis of fraud at common law is set out in Derry v Peek (1889) 14 App Cas 337 at 374 per Lord Hershell: "First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth or, (3) recklessly, careless whether it be true or false."
2. The evidence tendered satisfies me that the representations were made fraudulently with the sole intent of extracting money from Mr Baltins.
3. As set out in Magill v Magill (2006) 226 CLR 551 at 587-588 per Gummow, Kirby and Crennan JJ: "The modern tort of deceit will be established where a plaintiff can show five elements; first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance of the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation." (Footnotes omitted).
4. Obviously allegations of fraud are serious and the plaintiff bears the onus of proof on the balance of probabilities, however s 140(2) of the Evidence Act 1995 (NSW), applies given the nature of the claim: 140 Civil proceedings: standard of proof (1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence, and (b) the nature of the subject-matter of the proceeding, and (c) the gravity of the matters alleged.
5. As stated by Justice Johnson in Williamson v Elders Rural Services Australia Limited (No. 2) [2018] NSWSC 1986 at [122]: "Section 140(2) imports the principles in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 in requiring a court, when considering whether it is satisfied on the balance of probabilities, to take into account the gravity of the matters alleged in relation to the question: Amalgamated Television Services Pty Limited v Marsden [2002] NSWCA 419 at [61]; Palmer v Dolman [2005] NSWCA 361 at [40]-[47]. The state of reasonable satisfaction required for the purpose of making such a finding "should not be produced by inexact proofs, indefinite testimony, or indirect inferences": Briginshaw v Briginshaw at 361-362 (Dixon J)."
6. Further in Vu v New South Wales Crime Commission [2013] NSWCA 282 McColl JA (Meagher and Emmett JJA agreeing) said at [77] to [78]: "As the primary judge recognised (at [33]), the standard of proof in the circumstances was to be considered by reference to s 140(2) of the Evidence Act which relevantly requires a court hearing a civil proceeding to take the nature of the cause of action, the subject matter of the proceedings and the gravity of the matters alleged into account in deciding whether it is satisfied that a party has proved its case on the balance of probabilities. As is apparent from its language, s 140(2) reflects Dixon J's statement in Briginshaw v Briginshaw (at 362): see also Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 86 ALJR 522 (at [228]) per Heydon J; Employment Advocate v Williamson [2001] FCA 1164; (2001) 111 FCR 20 (at [65]) per Branson J (Kenny J agreeing). The mandatory considerations s 140(2) specifies reflect a legislative intention that a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence; accordingly, the more serious the consequences of what is contested in the litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466 at [30]) per Weinberg, Bennett and Rares JJ."

Decision

1. I am of the view that the evidence strongly supports an artful, elaborately constructed hoax to extract money from Mr Baltins.
2. The measure of loss comprises the sums advanced, plus interest to be calculated from the date of the respective payments.
3. Counsel for Mr Baltins identified 20 distinct false representations on which Mr Baltins relied, set out in the statement of claim.
4. The Account Fund Representation was the "facts" represented on or about 3 September 2010 about Mr Mullins' overseas bank account and his father's dying wish. I find as a matter of fact that that representation was made and it was untrue.
5. The second is the Transfer Assistance Representation made at about the same time, that the sum of $100,000 was needed to be paid to lawyers and "bankers" and that there were transfer costs. These representations were also made on 3 September 2010, referred to as the Transfer Assistance and the Cost of Transfer Representations.
6. Also on 3 September 2010 was a representation described as the Investment Return Representation where orally (and as confirmed by email on 3 September 2010), Mr Mullins represented to Mr Baltins that for every $20,000 Mr Baltins advanced, Mr Mullins would pay the sum of $100,000. I concede that representation was made and can be inferred from the express representations made in the conversation of 3 September 2010 combined with the email of 3 September 2010 bearing the subject "Bill facility".
7. It is alleged, and I accept, that by making the representation in the email regarding the intention to pay $500,000, within it was a representation that Mr Mullins would have funds available to him from which that sum could be paid. This is referred to as the Funds Availability Representation.
8. I accept that all these representations were false and that the defendant's father did not have a bank account overseas credited with the funds referred to, or at the least the funds were not truly available to Mr Mullins.
9. The Transfer Intention Representation was false and the Transfer Assistance Representation was false because the account funds did not exist and even if they did, they were not available to Mr Mullins to be transferred in the way he said. The Cost of Transfer Representation was false because the account funds did not exist and were not available to be transferred. The Funds Availability Representation was false because there were no account funds available to be transferred.
10. I find that at the time Mr Mullins made each of the false representations he knew them to be false. He made them with the intention that Mr Baltins rely upon them in order to persuade him to pay a number of cash advances. I am of the view that Mr Baltins, acting as the sole secretary and director and shareholder of Port Adelaide Power Investments Pty Ltd, relied on those false representations and suffered damage in the form of the payment by him of loan advances one to five set out in paragraphs [13] to [27] of this judgment.
11. An amended first loan request was made on 3 September 2010 and the email suggested that the amount advanced should be increased to $140,000, and that five times that amount would be repaid (a sum of $750,000). This is referred to as a $750,000 Payment Representation. In that same email was a representation of extended funds availability, that is, that the sum $700,000 could be inferred as available to pay that sum.
12. This was followed by a representation on 19 September 2010 that an additional sum was required for transfer costs. This is referred to in the statement of claim as the September Transfer Cost Representation. In an email dated 19 September 2010, with the subject heading "Update", Mr Mullins represented to Mr Baltins that the $70,000 was going to be used by him to pay transfer costs (the September Transfer Assistance Representation), and that as covered in their telephone discussion that day, Mr Mullins would pay the sum of $350,000 reflecting that $70,000 advance, i.e. the Foreign Currency Fund Representation, the September Transfer Assistance Representation, the Extended Funds Availability Representation, and the September Repayment Representation.
13. I accept that all these representations were made by Mr Mullins with the knowledge they were false and that they were made with the intention of being relied upon by Mr Baltins and that Mr Baltins acted in reliance upon those false representations to advance the $70,000 comprising the second loan.
14. To secure the third loan in October 2010, Mr Mullins represented that the account funds were a larger sum (Larger Foreign Currency Fund Representation), that there needed to be $15,000 more paid than had previously been understood (the October Transfer Cost Representation) and that that money would be used to pay the transfer costs (October Transfer Assistance Representation). These were relied upon by Mr Baltins, they were made by Mr Mullins with the knowledge that they were false and were made with the intention that they would be relied upon by Mr Baltins.
15. The October 2010 Agreement was updated to include the three advances made at that time. The Agreement represented, by the act of Mr Mullins signing and providing it that he would have the funds to repay the loan amounts by 15 November 2010, that account funds would be available by that day to repay the second and third loan amounts, and that account funds available to him would at least be sufficient to pay the amount defined as the repayment amount ie $425,000.
16. I conclude that all those representations were false and were made with the knowledge by Mr Mullins that they were false and that they were made with the intention of Mr Baltins relying upon them, and I find that Mr Baltins in fact relied upon them to make a third loan payment.
17. In respect to the fourth loan, there were Transfer Costs Representations made again. An Investment Returns Representation in the email of 5 November 2010 represented that Mr Mullins would pay to Mr Baltins as soon as he had available a total sum of $1.3 million. This November Investment Return Representation was false because the account fund was not available or did not exist. The Foreign Currency Fund referred to was false, the Larger Foreign Currency Fund Representation was false and there were no transfer costs or fees in fact payable by Mr Mullins associated with the asserted US bank account. I conclude that Mr Mullins knew that each of the representations were false and these were made with the intention that Mr Baltins would rely on them to advance funds and that Mr Baltins in fact relied upon them to advance the funds.
18. On 26 November 2010 there was a representation that the money was in fact at a NAB branch in Canberra and could be not released without payment of a further $90,000 (the November Transfer Costs and Late November Transfer Cost Representation). A further loan agreement was signed by Mr Mullins dated 30 November 2010, confirming the sums advanced and the further proposed sum and representing that repayment would be made by 10 December 2010 in accordance with the terms of the Agreement.
19. I accept that the representations were false. There was no account fund, there was no Foreign Currency Fund, there was no account with an amount of cash held at a NAB branch in Canberra, there were no transfer costs in fact payable and I find that Mr Mullins knew these representations were false, Mr Mullins knew that Mr Baltins would rely on those representations together with the November Loan Agreement to advance the further sum, and Mr Baltins relied upon these false representations to advance the further sum.
20. I conclude that the plaintiff has established his entitlement to the sum of $350,000 plus interest to be calculated from the date of payment of the five loans identified in this judgment.

Orders 1. Judgment for the plaintiff in the sum of $350,000 plus interest. 2. The defendant is to pay the plaintiff's costs of the proceedings. 3. The plaintiff provide short minutes of order to give effect to my judgment within seven days by email to the defendant and my Associate, including a schedule of calculations of interest on the advanced sums up to the date of judgment.

Amendments 01 March 2019 - Typographical errors: paragraphs [63], [65] and [68]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 March 2019