RIMMER v BOURKE

CATCHWORDS : Possession of land - dispute as to payment of interest

Conveyancing Act 1919 LEGISLATION CITED : Real Property Act 1900 (NSW)

Bovill v Endle [1896] 1 Ch 648 Fitzgerald's Trustee v Mellersh [1892] 1 Ch 385 Four-Maids Ltd v Dudley Marshall (Properties) Limited [1957] Ch 317 CASES CITED : Hyde Management Services Pty Ltd v FAI Insurances Ltd (1979) 24 ALR 435 SEAA Enterprises Pty Ltd v Figgins Holdings Pty Ltd [1998] 2 VR 90 Teevan v Smith (1882) 20 Ch D 724 Twentieth Century Banking Corporation Limited v Wilkinson [1977] Ch 99

PATRICIA OUIDA RIMMER (Plaintiff)

v PARTIES : JOHN GILES BOURKE (Defendant)

M Stirling (Plaintiff) COUNSEL : S Bell (Defendant)

Carneys Lawyers (Plaintiff) SOLICITORS : Webster O'Halloran & Associates (Defendant)

[2005] NSWSC 205 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11829 OF 2002 PATRICIA OUIDA RIMMER (Plaintiff)

JUDGMENT (Possession of land - dispute as to payment of interest) 1 The plaintiff's claim as ultimately formulated is pleaded in a Further Amended Statement of Claim filed in Court on 3 February 2005. The first day of the hearing of the action was 17 August 2004. 2 It is a claim for possession of certain real property. The defendant mortgagor is still in possession. Essentially the contest between the parties is whether or not there has been default in the payment of interest. From the point of view of the plaintiff there has, from the point of view of the defendant there has not, and indeed it is contended that there has been an overpayment of interest. This extraordinarily protracted piece of litigation was complicated by reference to various other transactions between the parties to which recourse had to be taken by each side as an aid to the determination of the fairly simple issue to which I have already referred. 3 For the resolution of this action, I have been provided with thorough and valuable written submissions which I propose freely to adopt and adapt. The submissions from each side have been accompanied by tables which purport to represent, from each side's perspective, the allocation of moneys in connection with all relevant transactions between the parties. Needless to say, at the end of the day, the plaintiff's table seeks to establish a default; the defendant's table an overpayment. 4 Perhaps it is not surprising, given that the relevant transaction took place in December 1991, that the recollection of each of the plaintiff and the defendant was by no means perfect; it is perhaps not surprising that the record-keeping of each party was imperfect. Further, it must be stated that my task as the finder of fact was made the more difficult by each of the plaintiff and the defendant not being the easiest of witnesses in terms of their oral testimony, each being prone to depart from responsive answers. 5 Ultimately, bearing in mind on whom the onus lies in respect of the several assertions, the outcome will depend upon the weighing of the evidence, the view I formed, to which I have already referred, as to the witness giving it (whether by affidavit or, more pertinently, orally) and the reaching of a conclusion on the probabilities and plausibility of each side's case. 6 On 4 February 2005 the defendant, Bourke, paid into Court $100,000, being the principal sum under the relevant mortgage. 7 The plaintiff, Mrs Rimmer (Rimmer), seeks an order for possession of what is known as the Binnaway property, owned by the defendant (Bourke). She seeks judgment for the principal sum of $100,000 together with the amount of interest found to be unpaid under the mortgage given by Bourke to Rimmer over the Binnaway property on 13 December 1991. 8 The evidence in the proceedings, in addition to exhibits tendered and the oral evidence of the plaintiff and the defendant, was constituted, in the usual way, by affidavits. Those of the plaintiff were sworn 6 September 2002, 13 November 2002, 3 March 2003, 10 November 2004 and 18 February 2005; there were of course annexures and exhibits. There was an affidavit of the plaintiff's solicitor Stephen John Booth, sworn 13 November 2002, with its annexures A - D and exhibits SJB 1 and 2. Mr Bourke swore affidavits on 20 September 2002, 18 March 2004, 28 January 2005 and 11 February 2005. It must be noted also that within the affidavit material as annexures are affidavits sworn in other proceedings between these parties. 9 It safely can be stated that some matters are not in dispute. That Rimmer advanced Bourke the sum of $100,000 on or about 13 December 1991: this is admitted in the Defence filed on 8 October 2003. The applicable rate of interest under the mortgage was 13 per cent and 16 per cent in the event of default. This is disclosed in cl 4 of the mortgage on page 2 of annexure A to the Rimmer affidavit sworn 6 September 2002. The mortgage did not specify a date for repayment of the principal. Save for the payment into Court on 4 February 2005, the principal sum of $100,000 has not been repaid to the plaintiff. That Rimmer has served demands on Bourke, dated 19 April 2002 and 21 May 2002, is not in issue, although their legal efficacy is. 10 The mortgage and memorandum relating to Binnaway are annexures A and B to the Rimmer affidavit of 6 September 2002. Clause 6 of the memorandum provides that in the event of default on the due payment of interest in the principal sum due under the mortgage would become immediately due and payable on demand. The mortgage did not specify the date by which the principal was to be repaid. 11 This "omission" gives rise to an intractable question of fact, or one that is almost so. It is contended for the defendant that clearly the parties must have had some discussion as to when the principal was to be repaid. In his affidavit of 20 September 2002 (paragraph 6), the defendant deposes to Mrs Rimmer having said to him words to the effect that 'you could use the principal as long as you want'. Mrs Rimmer says the term of the mortgage was not discussed (her affidavit of 13 November 2002, paragraph 4). In evidence as exhibit 15 is Mrs Rimmer's 1997 will, in which she forgives Mr Bourke any debt owed to her. First, the ordinary precondition for the forgiveness has not occurred. Mrs Rimmer was living proof of that during the protracted hearing. Second, the will has been revoked by a later will. 12 The problem here is that whilst the probabilities would compel the conclusion that something must have been said by someone as to the term of the mortgage left blank in the document, I am in no position to come to a view one way or the other as to what in fact was more likely than not to have been said and by whom. 13 The plaintiff submits that in relation to a general law mortgage: "the mortgage deed may, either expressly or by implication, give the mortgagor the right to possession until default, but unless it does so the mortgagee is, in the absence of any statutory restriction on the exercise of his power, entitled to take possession before the ink is dry on the mortgage" - per Harman J, Four-Maids Ltd v Dudley Marshall (Properties) Limited [1957] Ch 317 at 320.

This proposition stated by Harman J was repeated with approval, as I understand it, by Brooking JA in SEAA Enterprises Pty Ltd v Figgins Holdings Pty Ltd [1998] 2 VR 90 at 94.25. 14 It is argued for the plaintiff that if a date is set in the mortgage, it does not operate as a provision requiring repayment on that date; it operates merely to prevent the mortgagor redeeming before that date: Teevan v Smith (1882) 20 Ch D 724 at 729; Twentieth Century Banking Corporation Limited v Wilkinson [1977] Ch 99; Hyde Management Services Pty Ltd v FAI Insurances Ltd (1979) 24 ALR 435. The setting of a date did not, in the absence of a further covenant, prevent the mortgagee calling in the mortgage moneys before that date. 15 If no time is fixed for repayment, the plaintiff submits, the mortgagor can repay the mortgage at any time. No date being fixed for repayment of the principal, the mortgage is repayable on demand. The plaintiff is criticised by the defendant for reproducing a statement from the Australian edition of Fisher & Lightwood's Law of Mortgage (1995) at p 80, paragraph 312. When one reads the learned editor's commentary on the law antecedent to that simple statement, it does not stand alone, in my view, and represents an ample and available conclusion for the authors to state in that context. The statement is described, for the plaintiff, as an application of the ordinary rule that a debtor must seek out his creditor and pay, and "the mortgagee is in a position without formal demand to call in and sue for the debt" at any time: Coote on Mortgages (9th ed, 1927) at pp 731-2; see also Fitzgerald's Trustee v Mellersh [1892] 1 Ch 385 at 389 per Chitty J; c.f. Bovill v Endle [1896] 1 Ch 648 (these cases are useful guides, as to the former, to an equitable mortgage by deposit, and as to the latter, to a right in the mortgagee who makes a demand by entering into possession). 16 As has already been stated, demands for repayment under the mortgage were by letter dated 19 April 2002 (being annexure D to Rimmer's affidavit of 6 September 2002) and pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) by Notice dated 21 May 2002 (annexure H). I permitted a very late amendment to the Further Amended Ordinary Statement of Claim to correct the date of the letter of demand from 22 to 19 April 2002. 17 Section 57(3) of the Real Property Act 1900 states as follows: " 57 Procedure on default … (3) A notice referred to in subsection (2) complies with this subsection if: (a) it specifies that it is a notice pursuant to section 57 (2) (b) of the Real Property Act 1900 (b) it requires the mortgagor, charger or covenant charger on whom it is served: (i) to observe, except in relation to any time expressed in the covenant, agreement or condition for its observance, the covenant, agreement or condition in respect of the observance of which the mortgagor, charger or covenant charger made default, or (ii) as the case may be, to pay the principal, interest, annuity, rent-charge or other money in respect of the payment of which the mortgagor, charger or covenant charger made default, (c) if the costs and expenses of preparing and serving the notice are to be demanded, it requires payment of a reasonable amount for those costs and expenses and specifies the amount, and (d) it notifies the mortgagor, charger or covenant charger that, unless the requirements of the notice are complied with within one month after service of the notice (or, where some other period exceeding one month is limited by the mortgage, charge or judgment for remedying the default referred to in the notice, within that other period after service of the notice), it is proposed to exercise a power of sale in respect of the land mortgaged or charged." 18 I am satisfied that the plaintiff made a proper and, if necessary, reasonable demand. I am satisfied that the Notice complies with this section in relation to the requirements as to what is to be specified in the Notice, the demands to be made and which in fact were made relating to principal and interest payments sought by way of costs and expenses being reasonable and the requirement under s 57(3)(d) of notice of the exercise of the power of sale. 19 For the reasons that constitute the principal matter in issue between the parties, Bourke did not respond to the demands and was therefore in default, whereupon the plaintiff became entitled under cl 6 of the memorandum to exercise the statutory powers under the Real Property Act and the Conveyancing Act, including of course the right to bring proceedings for the recovery of possession under s 60 of the Real Property Act. 20 The parties are not in dispute about the principal not being repaid under the mortgage (otherwise than by payment into Court). The central issue in the proceedings is the extent to which Bourke has paid interest under the mortgage since the advance was made on 13 December 1991. 21 The plaintiff's course of submissions is the one I propose to follow. Rimmer's evidence is in paragraphs 6, 7 and 8 of her affidavit sworn 10 November 2004 and in exhibit "B". Exhibit B is a document that represents amendments made to what was an exhibit to an affidavit of Mrs Rimmer, namely "PR 12". It is to some extent evidence, and to some extent a submission document. It is complex in all its manifestations, purporting to represent payments, their source and their allocation in the various transactions. As I understand it, it founds certain tables relied upon by the plaintiff as setting out for various periods, to which I will come shortly, the amount of arrears under the Binnaway mortgage. Those tables themselves are the subject of amendment in submissions which continued until 1 March 2005. 22 It is desirable to clarify that in addition to the Binnaway transaction, which is the mortgage, the subject of this action, "Windbid" is referable to what the plaintiff says is an advance of $190,000 by her to a company called Windbid on 9 August 1994; "Poswan" is a reference to an investment of $93,000 by KJ Rimmer Pty Ltd in Poswan, another company, on 28 and 1 October 1993. Insofar as there is reference made in the documents to which I have referred, namely exhibit B, PR 12 and various tables, to "Normanhurst", that is a reference to an advance of $100,000 made by KJ Rimmer Pty Ltd to Oaktwig Pty Ltd, a company associated with the defendant in April 1991, which was secured by the property owned by Oaktwig at Normanhurst. 23 In any event, each time Rimmer received a payment, it was banked into one of two KJ Rimmer accounts. Records do not exist for either party in relation to the period up until July 1992 and the plaintiff does not seek to establish any default before July of that year. 24 By reference to exhibit B in the form that it was at the time of tender, various amounts are shown as representing the extent of default for various periods. The first period was July to December 1992, and I will note that the sum initially claimed was $3,416.70. The next period was the 1993 calendar year: $6,868.02. For the 1994 calendar year: $5,601.43. Between 2 December 1994 and 21 October 2002, no interest was paid, leaving a default each year to the extent of $16,000. Finally, since the payment of $200,186 on 21 October 2002 (which discharged $171,000 of the Windbid principal and $29,186 of interest pursuant to a judgment of Windeyer J on 5 August 2002 in Windbid v KJ Rimmer), the plaintiff concedes that the payments by Windbid or Bourke to KJ Rimmer may be allocated to the Binnaway account. 25 The defendant asserts that he paid the interest due under the mortgage and "frequently in advance" (paragraph 8 of Bourke's affidavit sworn 20 September 2002). From 9 August 1994, it is asserted that it was agreed between the parties that payments of $800 per week were to be made by Windbid to KJ Rimmer (under an agreement between those companies made on 8 August 1994) and those payments would also serve to discharge Bourke's personal obligation to pay $250 interest per week under the Binnaway mortgage. It is further asserted for the defendant that Binnaway was a "preferred" creditor, thus enabling Bourke to allocate more than $250 of the $800 payments made under Windbid to KJ Rimmer. Five of what is known in the proceedings as "Poswan" payments made to KJ Rimmer between 29 December 1997 and 15 July 1999 totalling $6,030.80 should be allocated to Binnaway. Finally, since October 2002, payments in various amounts ($800, $183, $250 and $1000) have discharged his interest obligations under the Binnaway mortgage. That those payments were in discharge of interest obligations to Binnaway are not in dispute. 26 Throughout the cross-examination of the defendant, counsel for the plaintiff sought to obtain the defendant's agreement as to what in fact was in issue between the parties in this litigation. It was an appropriate exercise on counsel's part, though not necessarily met with the answers he desired. In the end, however, I accept the analysis of the plaintiff as to the four areas of contention. 27 Was there an agreement between the plaintiff and defendant in August 1994 that the $800 weekly payments to be made by Windbid to KJ Rimmer would also discharge the personal obligation of the defendant to pay interest to Rimmer under the Binnaway mortgage? Was there an agreement between Rimmer and Bourke that the Binnaway mortgage interest payments were "preferred" or had priority by comparison to the position of Rimmer under the Windbid agreement? Or, as it is put, in other words, where Bourke has allocated an amount greater than $250 (usually $500 and sometimes $800 of the $800 weekly Windbid payments) to the Binnaway account, should those surplus amounts be allocated as Binnaway interest payments? Where the defendant allocated payments by Poswan to KJ Rimmer to the Binnaway accounts, should such payments be allocated as Binnaway interest payments? Finally, taking into account all payments found to be on account of Binnaway interest, does the total sum satisfy the obligation that Bourke has had to pay interest under the mortgage? 28 I also accept the approach adopted by the plaintiff as to the examination of the dispute as to payments of interest under the Binnaway mortgage being considered in respect of four periods. The first of those periods is between 12 December 1991 (the date of the Binnaway mortgage) and 9 August 1994 (the date of the KJ Rimmer / Windbid agreement). The second period is between 10 August 1994 and 5 July 1995 (being the date of the first payment entry in annexure A to the defendant's affidavit sworn 18 March 2004). Annexure A is what the defendant then (as at 18 March 2004) asserted to be a schedule of payments that he had caused to be made in respect of the Binnaway mortgage from 6 July 1995 to 20 December 2003. The third period is 6 July 1995 to 21 October 2002 (being the date when Windbid paid KJ Rimmer $200,186 under the statutory demand pursuant to the judgment of Windeyer J referred to above). The final period is between 21 October 2002 and February 2005, in relation to which the plaintiff concedes that all payments proved in this period are to be allocated to the Binnaway interest account. 29 As to the first period (12 December 1991 - 9 August 1994): the only issue is whether the defendant made sufficient payments to satisfy the payment of $13,000 per annum, or $16,000 at the default rate. Whilst the plaintiff does not seek to establish a default prior to July 1992, it is her position that a default by the defendant is established immediately in July 1992, as the monthly payments of interest, calculated on the basis of $13,000 per year, were $1,083.33, yet Bourke made only five payments in the six-month period of July to December 1992, each in the sum of $916.66. 30 On the probabilities Bourke was in default to the extent of varying amounts for the years 1992, 1993 and for the period 1 January - 9 August 1994, those varying amounts were arrived at by reference to pp 2 and 3 of exhibit B and Mrs Rimmer's affidavit evidence (10 November 2004). The defendant asserts that there have been payments made, but no evidence in support has been provided. The plaintiff has taken into account all the payments which Bourke claims were made in respect to the period, and that is set out in a document which is exhibit D. The document was provided by the defendant's solicitors to the plaintiff's solicitors in 2002, and sets out payments made between 24 December 1992 and 22 June 1995. 31 The written submissions of the plaintiff, to the extent that they contain tables that are amended that lead to the calculation of what the plaintiff says is due, I will have marked as MFI 4. I will have marked as MFI 5 the amended tables that accompanied supplementary submissions from Mr Stirling of counsel for the plaintiff on 25 February. MFI 6 will be the defendant's response to the plaintiff's submissions of 25 February 2005. The amended submissions of the defendant / cross-claimant will be marked MFI 7 by reason of the tables attached thereto, prepared by Mr S Bell of counsel for the defendant. 32 At the end of the day, for the first period just referred to, by reference to MFI 5, the amount claimed for the period is $13,898.47. 33 As to the second period, 10 August 1994 - 5 July 1995: the defendant's position is, by reference to annexure A to his affidavit sworn 18 March 2004, that the interest due under the Binnaway mortgage was being paid within the $800 weekly Windbid payments. The first question was whether there was an agreement reached between the parties, and secondly, even if there was, whether Windbid / Bourke made sufficient $800 payments in the period to satisfy the obligation under the Binnaway mortgage. 34 Exhibit A in the proceedings is one of the most contentious, and indeed unusual, documents in the case. On its face, it is described as a joint-venture agreement between Windbid Pty Ltd and KJ Rimmer Pty Ltd. It bears the signature of the defendant as the director and secretary of Windbid and on its face is said to have been signed on 23 June 1994. In its preamble, it states "the parties have held discussions and it is agreed that…". 35 The plaintiff's evidence is to the effect that she had a series of discussions with the defendant in the few months leading up to 8 August 1994 (paragraph 19 of her affidavit of 10 November 2004). She says she was prepared to invest $200,000 and that the defendant promised a return of weekly payments in the sum of $800. Further, she says she borrowed a sum of $200,000 at 10 per cent in order to be able to effect the investment, and that after various financial and legal expenses were taken into account, she was in a position to invest $190,000. That sum Bourke was prepared to accept and indeed to treat as an investment of $200,000. He would issue 200,000 shares (paragraph 21 of the affidavit referred to at T8.54 and T21.28). 36 It is tolerably clear that the defendant was prepared to concede in cross-examination that $190,000 was to be invested by KJ Rimmer (although with a rider to the effect that $175,000 was to be applied to Windbid and $15,000 to Poswan) and agreed here that he was not prepared to let the Windbid investment fall through simply because of KJ Rimmer's investment being $190,000 rather than $200,000 (T8.54 and T21.28). I am prepared to accept that the plaintiff was concerned to have some documentation reflecting what had been agreed before she in fact advanced the sum of $190,000, not an inconsiderable amount of money. I accept that more probably than not the defendant said he would provide a written document and made a request of the plaintiff that she make a cheque payable to him for $100,000, and a further cheque payable to Poswan for $90,000. The plaintiff's evidence was that Bourke wrote exhibit A in her presence and "there is no doubt in my mind that the document was created earlier on 8 August 1994, the same day that the cheques for $190,000 were provided to Bourke". Mrs Rimmer said that each of the points in exhibit A were discussed, and it accurately reflected the discussions which she had had with the defendant. 37 It is argued for the plaintiff that there are varying accounts of the Windbid "arrangement" and exhibit A in the evidence of the defendant. In an affidavit sworn 24 July 2002 in the Equity proceedings, the defendant said in paragraph 5: "5. The said sum of $175,000 was advanced in separate amounts to Winbid Pty Ltd by KJ Rimmer Pty Ltd during the financial year 1994-1995. At the time of the first advance in or about August 1994 Mrs Rimmer said "I am not getting enough interest at the bank. If I put my funds with Windbid Pty Ltd as long as I get $800 per week interest for all the funds I am investing, I will be prepared to leave my money in the Company." I said "All right. The $800 will need to include the $250 per week already being paid for the secured funds (meaning an existing mortgage of $100,000)". Mrs Rimmer said "Yes, a total of $800 per week". Thereafter Windbid Pty Ltd has paid $800 per week to KJ Rimmer Pty Ltd and is continuing to make such payments. I believe that, although the interest payments being paid were equivalent to a high interest rate, the fact that funds were being lent to the Company on an unsecured basis for an indefinite term made the payments not unreasonable in the circumstances." 38 In his affidavit of 20 September 2002, the defendant said (paragraph 11): "11. I continued my business relationship with Mrs Rimmer as an architect involving the development of her property and in or about June 1994 I had a further conversation with her concerning her investments. Mrs Rimmer said to me words to the effect "I am still not getting a reasonable interest rate on money I have with the Advance Bank". I said words to the effect "I have an interest in a Company called Windbid Pty Limited ("Windbid") which owns a caravan park at Wilberforce which is in need of working capital. Would you be interested in investing in it?" Mrs Rimmer replied in words to the effect "I need to get $800.00 per week to cover my living expenses. I can't get that through the Bank". I said words to the effect "The Company needs $175,000. If you were to invest $175,000 in Windbid it would pay you interest of $550.00 per week which is about 16%, which, together with what I am paying you on the Binnaway mortgage, would be $800.00 per week." Mrs Rimmer replied in words to the effect "I will see if my solicitor says that is all right". Over the next few weeks Mrs Rimmer and I attended the office of her solicitor, Mr David Thompson, and Mrs Rimmer advanced $175,000 to Windbid. Thereafter Windbid has paid Mrs Rimmer (via her Company KJ Rimmer Pty Limited) $550.00 per week interest on account of such advance and continues to do so which is usually paid as part of a cheque for $800.00 per week which includes $250.00 per week on account of the Binnaway mortgage interest."

In his affidavit sworn 28 January 2005, the defendant said (at paragraphs 12 - 14): "12. I do recall a conversation I had with Mrs Rimmer in or about June 1994 about investing $200,000 in Windbid. I do not recall the detail of the conversation. I do recall drafting the document titled Joint Venture Agreement being exhibit "PR7" dated 23 June 1994. The document was drafted on the day it was dated not in August 1994. My recollection was that it was a proposal for Mrs Rimmer to invest in Windbid. She did not sign the document. I recall speaking with Mr Peen who was a director and shareholder of Windbid in 1994 and he did not agree to the proposal. I informed Mrs Rimmer prior to August 1994. 13. I do recall assisting Mrs Rimmer to obtain a loan via a mortgage broker. We had a later conversation when I made a reference to Windbid needing the sum of $175,000.00 rather than $200,000.00…" 14. In my first affidavit I deposed to a conversation with Mrs Rimmer. I now recall that the conversation deposed by me was in fact two conversations. The first conversation was in respect of Mrs Rimmer investing $200,000.00 in Windbid as per the proposal in exhibit 'PR 7' and the second was in respect of $175,000.00 loan to Windbid some time after the first conversation".

39 The defendant bears the burden of proving on the balance of probabilities that he had paid the interest, and indeed paid more than he was required to pay. 40 I accept as quite plausible Mrs Rimmer's evidence that the arrangement she made with Windbid was a "stand alone" deal and that she requested the defendant to write down what it was that had been agreed upon at the time she provided him with the cheques for $190,000 (see paragraphs 18 - 22 of her affidavit sworn 10 November 2004 and her evidence at T8.54 and T9.18). The plaintiff did not accept any suggestion that the Binnaway interest payments were tied into the Windbid agreement. For the plaintiff it was legitimately, in my view, asked why was it that the defendant did not insist on his account of the final agreement being recorded in writing? The plaintiff cannot be criticised for her position being that what the agreement was, as finally reached between her and Bourke, was then recorded in writing. 41 There is inconsistency in the affidavit evidence cited above in the defendant's position. In his affidavit of 24 July 2002, the defendant states that there were discussions in August 1994, to the effect that $175,000 would be advanced on a return of $800 per week (inclusive of the Binnaway interest payments). In his affidavit of 20 September 2002, the defendant states that the conversations took place in June 1994, in which KJ Rimmer agreed to invest $175,000 at 16 per cent, and that the total return would be $800 per week inclusive of Binnaway interest. In the January 2005 affidavit, the defendant states that he recalled a conversation with the plaintiff in or about June 1994 about investing $200,000 in Windbid, but that he did not "recall the detail of the conversation". He goes onto say that there was a later conversation about the lesser sum of $175,000 being needed by Windbid. 42 The defendant, I find, in agreement with that which was advanced for the plaintiff, conceded that the negotiations in relation to the Windbid agreement were at an infant stage in June; he could offer no explanation as to why either of the parties would want a written "joint-venture agreement", at such an early stage in negotiations, or why the document as written by him contained no such words as "draft" or "proposal"; why the document (if it was either a draft or a proposal) contained such clear language to the contrary, namely that the parties had held discussions and "it is agreed that"; or why he did not state to the plaintiff that they should wait until the agreement was finalised before recording it in writing. 43 I am persuaded that more probably not that the agreement of 23 June 1995 was performed according to its terms. The primary obligation of Rimmer as an investor to put up the investment money, and of the recipient Windbid to pay the agreed return in fact occurred. There is no suggestion that KJ Rimmer defaulted in its obligations under the agreement, so in the end all that is left is the defendant's assertion that there might have been some obligations under the Windbid agreement that "Windbid" did not perform. That is an extraordinary position for the defendant to take. Mr Bourke had no satisfactory answer as to why it was that, in the context of the document being a draft, the parties would not reduce the agreement to writing when it was finally reached. He stated "I didn't particularly want a document" (T120.21) and "I didn't see a need for a document" (T120.27). For the five-month period of August - December 1994, Mr Bourke continued to pay the precise amount of Binnaway interest (that he had been paying prior to August 1994), despite his insistence that the $800 weekly payment to be made under the Windbid agreement included the Binnaway interest payments. This occurred in the period immediately following the creation of the Windbid agreement and at the same time that he was making payments under it. 44 The evidence as to the issue of 200,000 shares to KJ Rimmer on 8 August 1994 (annexure to the affidavit of the plaintiff sworn 20 November 2004), without any intention of honouring the document, at a time when Windbid had 100 issued shares and without telling his fellow shareholder Peen about it, was extraordinary and quite unconvincing. 45 The defendant's position, as the plaintiff submits, requires acceptance of the proposition that Mr Bourke was offering a return of $40,000 on an investment of $200,000 as at 23 June 1994 (being a net return to the plaintiff of 10 per cent as she had borrowed the investment moneys at 10 per cent) but the plaintiff agreeing to the same return for an investment of $275,000 by early August 1994, and acceptance of the suggestion of the plaintiff receiving an unreasonably high return ($41,000 on $200,000) being misconceived, because the plaintiff borrowed the investment at 10 per cent. Mr Bourke knew that that was the case. I am not prepared to accept these propositions in support of the defendant's position. 46 In such a case as this, with the difficulties attendant upon poor record-keeping and the view one has to form about each of the litigants giving evidence, in the end I have concluded that Mr Bourke has failed to satisfy me that more probably than not there was any agreement to the effect that the payments under the Windbid agreement included Binnaway interest. Therefore, in accordance with the amended table for the period of 10 August 1994 to 5 July 1995 as set out in MFI 4, I find the amount due to be $10,295.58. 47 The next relevant period is 6 July 1995 to 21 October 2002. In paragraph 46 hereof I have indicated my finding that the defendant has failed to satisfy me that the so-called Windbid agreement included Binnaway interest payments. The next issue is whether the Binnaway "preference" payments, whatever sum, should be allocated to Binnaway, and further, whether the five Poswan payments made to KJ Rimmer between 29 December 1997 and 15 July 1999 should be allocated to Binnaway. 48 The plaintiff relies upon the assertion as to the preferential payments as being "new", and thus a matter that requires circumspection at the very least in terms of its acceptance. There is no express pleading of it, nor material in any affidavit by Mr Bourke, thus none by Mrs Rimmer. I add that Mr Bourke appears not to have deposed to any such arrangement in his affidavit material in the Windbid v KJ Rimmer statutory demand proceedings before Windeyer J. As to that, the testimony given before me by the defendant was as follows (at T230.1): "Q. What I suggest to you is that when you put before Justice Windeyer in the statutory demand proceeding at no stage did you say in that proceeding in your affidavit evidence or your oral evidence that more than $250 per week out of the $800 Windbid payments were going off to some other person, Mrs Rimmer, on account of a Binnaway mortgage. You never put that before Justice Windeyer, did you? A. Never put it in that form, no.

Q. At all though in any form or any suggestion of it? A. No.

Q. It was never put before the court in that proceeding because it had a different purpose in that proceeding and that was to show that you had been making Windbid payments; whereas in this proceeding you are trying to show that you have been making Binnaway payments; that is right, isn't it? A. Yes.

Q. And you know very well that if you put evidence that Windbid against KJ Rimmer statutory demand set aside proceeding to the effect that more money out of the $800 was going to Binnaway than the $250, that would have had a consequence that you had paid less money under your Windbid agreement, wouldn't it? A. If we did put a fuller argument, the overview of the whole situation, I think we would have come out without paying as much money, but we did not choose to go into that detail and unfortunately the judge just looked at the document on the face value of it, because we did not raise enough objection to it. We did not take a point of law on whether it was a proper document or agreement and the judge just accepted that was the document to look at. I think if the judge looked at whether that document would stand up as an argument, it would be able to justify that that agreement was not the agreement between the parties and was purely what was argued at the time." 49 His evidence before me I do not find to establish an agreement to the effect asserted by him. It is at best a reconstructed understanding on his part - what he said at T147.34-48 was: "Q. Did you have a discussion with Mrs Rimmer about the fact that the Binnaway payments were to be a priority? A. Yes.

Q. When did that happen? A. Every time we discussed money we would talk about the overview of the whole situation, where we were going with the investment, what was the likely outcome, and paying back the Binnaway mortgage at that time she said she didn't want the money paid back because she had no relatives or people she wanted to leave the money to, she was happy to leave the money in, and her will, as I understood it she told me she changed her will to reflect that. I didn't feel pressured by her at any time to pay back the principal. She never asked for it until 2001." 50 He said at T152.47-153.3: "Q. What was happening at the end of Windbid, because it had the obligation to pay 550 and you personally had the obligation to pay the 250 on Binnaway, what was happening there? A. I always had an understanding with Mrs Rimmer and I believed that she understood that the mortgage would be paid out of the payments no matter what and that the 250 a week was the priority, to pay that mortgage. The other agreement was based to a large extent on the performance of Windbid and the fact that we were looking to acquire the shares from Peen and looking to probably develop the property and the management and then refine the management and then sell that asset to give a return back to the shareholders." 51 As far as I am concerned, the exercise upon which Mr Bourke embarked in this regard was reconstruction as at 2002. He in effect conceded this (T228.4-12): "Q. Let us go back to Annexure A. You see the second payment there listed on 20 July 1995, we have a Windbid cheque of $800. You pay $300 to Windbid, and $500 to Binnaway. On what basis did you do that? A. To get the total of more than the $13,000 on the Binnaway mortgage.

Q. That is precisely right. A. Yes."

He said at T228.58-229.13: "Q. I am suggesting to you, Mr Bourke, you only increased these Binnaway payments as you have them from $250 to up to either $500 or $800 when you prepared Annexure A to your affidavit sworn on 20 September 2002? A. Yes. In the sense of what you are saying the presentation of the spreadsheet and the getting to the exact amounts, that was done after the event. But each time I wrote a cheque I was aware I was paying the Binnaway mortgage. I would not have gone through all that time without paying the Binnaway mortgage and certainly that was never raised with me, that there was a problem paying the Binnaway mortgage. As long as there was $800 a week that covered the Binnaway mortgage and it covered other returns." 52 I cannot accept Mr Bourke's attempts to establish the agreement which he asserted. The significant thing was a concession that he only made the decision to make the allocations of more than $250 out of the $800 payments when he prepared the relevant schedule in September 2002. As is submitted for the plaintiff, that is a very different state of affairs to there having been in existence an agreement between the parties that Binnaway was in some way to be "preferred" or given priority. I find against the defendant on this aspect. 53 In this same period (6 July 1995 - 21 October 2002), the defendant's position is that five payments were made by Poswan to KJ Rimmer in the sum of $6,030.80, which should be allocated as Binnaway interest payments (see annexure A to his affidavit of 18 March 2004). It is the plaintiff's position that those payments were referable to the KJ Rimmer / Poswan account. The odd thing is that only five of the 20 payments made by Poswan to KJ Rimmer are said to be allocated to Binnaway's interest liability. 54 The plaintiff argues that the answer lies in the fact that the defendant only needed five of those Poswan payments to be added to the $800 weekly Windbid payments to achieve the figure that would represent payment of interest on the Binnaway account. Otherwise, there is no logical reason why five of the payments should be allocated to that end, and the other 14 not. 55 Mrs Rimmer's evidence is that in October 1997, KJ Rimmer agreed to purchase Peen's 15 per cent shareholding in Windbid for $100,000 (the agreement is annexure A to the Bourke affidavit of 28 January 2005). Further, Bourke agreed (on behalf of Poswan) to make payments to KJ Rimmer each month against the KJ Rimmer / Poswan account on condition that Rimmer used the money to purchase Peen's 15 per cent shareholding in Windbid (paragraphs 14 - 17 of the plaintiff's affidavit of 10 November 2004). 56 In relation to the 20 payments Poswan made, often by using Windbid cheques between 27 October 1997 and 19 July 1999 totalling $31,175.98, these moneys were in fact paid by KJ Rimmer to Peen and also applied against the KJ Rimmer / Poswan account (Rimmer's affidavit of 10 November 2004, paragraph 16). 57 Mr Bourke was by no means confident in his evidence in this area (T236.15-35): "Q. I suggest that at the time KJ Rimmer agreed to purchase Peen's 15 per cent Windbid shareholding, you had a side agreement on behalf of Poswan with KJ Rimmer that you would make monthly payments each month, which Mrs Rimmer was required to pass onto Peen. Do you agree with that? A. I do not recall that.

Q. You are not disputing it though? That is what I want to understand. Are you disputing that? A. I just do not have any memory of that.

Q. Mrs Rimmer says that was the agreement and I suggest to you if you look at page 8 of Exhibit B starting 1 November 1997 and then going over to page 9 and page 10 and into page 11 at the 19 July 1999, that Poswan made all of those payments to KJ Rimmer, which KJ Rimmer was obliged to reduce off its $93,000 investment made in Poswan back in 1993. Do you agree with that? A. I do not have any memory of that. Agreeing to that or having that agreement." 58 At T237, Mr Bourke said (lines 42-48): "Q. I was putting squarely to you that Poswan was making those 20 payments between November 1997 and July 1999 and that they were made by Poswan on its KJ Rimmer account, and you did not dispute it? A. I do not dispute Poswan made payments to Kj Rimmer. The amounts seem to be consistent in both tables. The purpose of the payments is the issue, I guess."

At T239.11-17, Mr Bourke said: "Q. You only made this decision to allocate these Poswan payments made to KJ Rimmer, but to allocate them to Binnaway in 2002, didn't you? A. Yes. In this list that is correct, but did not make the decision to allocate money to - the agreement made earlier was that the Binnaway mortgage would continue to be paid from various accounts, so that was always paid." 59 Ultimately, I find that he really conceded that he was not in a position to deny that the financing arrangement as contended by Mrs Rimmer had in fact occurred. He said (at T240.41 - T241.9): "Q. Our position, it has got a bit of complexity to it but I want to take you through the steps. We say that Peen was going to get out of Windbid his 15 per cent shareholding he was going to sell? A. Yes.

Q. And you suggested to us that we buy it? A. Yes.

Q. And we were happy with that but we did not have any money and you suggested to us all right, if I pay you under the Poswan account to KJ Rimmer, leaving aside who drew the cheques, whether Homeplan or whoever, I will pay you back on my $93,000 investment in KJ Rimmer - gets the money if you go across and buy 15 per cent Windbid shareholding? A. I cannot recall that happening. You persistently say it happened. I cannot remember it happening.

Q. Are you denying that it happened? A. I am not in a position to deny it. I have not got any evidence of it happening other than what you are saying. I do not recall an agreement between Poswan and Windbid to pay money on the basis I thought Mrs Rimmer bought the shares of its own accord, and had an agreement with Mrs Rimmer to do so. And I do not remember that Mrs Rimmer, KJ Rimmer and Windbid having an agreement." 60 The whole of this area (the third period) represented Mr Bourke's position at its least acceptable and its least reliable. I accept that amended calculation in MFI 5 of the Rimmer claim for this period at $115,923.60. 61 As to the period between 29 October 2002 and February 2005, KJ Rimmer served a statutory demand on Windbid in June 2002 for a sum in excess of $370,000. The judgment of Windeyer J discloses a finding that there was no dispute that at least $175,000 had been loaned by KJ Rimmer to Windbid; and of that sum, $4,000 had been repaid, leaving outstanding principal of $171,000; and that at least the sum of $29,186 in interest was outstanding at the date of judgment. 62 On 21 October 2002, Windbid paid KJ Rimmer the sum of $200,186. There is agreement between the parties, as I understand it, that such payment must be applied by KJ Rimmer against its Windbid account. Mrs Rimmer concedes that all payments made by Windbid between 21 October 2002 and the date of these proceedings are to be applied to the Binnaway interest account. 63 I have read the supplementary submissions of Mr Stirling and the additional submissions from Mr Bell. The former is, I gather, to be in anticipation of the latter, which seeks to increase the sum paid by way of Binnaway interest. On weighing the matter, I am simply not persuaded that that allowance should be made, and the sum due under amended Table 4 for the period 22 October 2002 - 17 February 2005 is $9,941.20. 64 Thus the amount owing to Mrs Rimmer is made up of the principal $100,000 plus a total of interest for the four periods of $150,058.85, totalling $250,058.85. 65 Further, pursuant to cl 5 of the memorandum to the mortgage, the defendant is obliged to pay the plaintiff's costs on a solicitor / client basis. 66 The formal orders are:

1. Judgment for the plaintiff in the sum of $250,058.85.
2. Judgment for possession of the land being part of the property named "Killara", situated at Binnaway NSW, being the whole of the land comprised in Certificates of Title Folio Identifier 45/753368 and 48/753368.
3. I grant leave to the plaintiff to issue a writ for possession.
4. The writ of possession is to lie in the Registry for a period of 28 days from today.
5. I order the defendant to pay the plaintiff's costs on a solicitor / client basis.
6. I order payment out to the solicitors for the plaintiff, in pro tanto satisfaction of the judgment debt, of the sum paid into Court of $100,000.
7. I dismiss the Cross Claim.
8. I order the return of the exhibits. **********

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