ANALYSIS
93When he wrote up the books of the plaintiff in 2011 Mr Gould Junior characterised the $227,820.71 paid to the defendant as a misapplication of the plaintiff's money. He did not, as he might have done, treat it as a repayment by the plaintiff of the company's indebtedness to Mr or Mrs Gould Senior. He did not debit it to the loan account of one or both of his parents. He did not countenance the possibility that it should be treated a part-payment by the company of its indebtedness to his parents, coupled with a voluntary gift by Mr and Mrs Gould Senior, jointly or severally, to the defendant.
94Neither on 12 April 2010 nor in the days that followed did Mr and Mrs Gould Senior, subjectively, turn their minds to a particular characterisation (vis á vis the plaintiff) of the transaction they effected when they paid out the defendant's home loan.
95In their minds, subjectively, they were entitled, vis á vis the company, to do what they did, whether the moneys paid out for the benefit of the defendant might, by others, be characterised: (a) as a payment by the plaintiff directly to the defendant; or (b) as a repayment to them jointly or severally of moneys owed by the plaintiff to them, coupled with a gift by them to the defendant.
96They both intended, and persisted in their intention, to confer a gift on the defendant. Although they genuflected in the direction of calling the transaction a "loan" in order to persuade her to be at ease in accepting their gift, it was never their intention that she repay the money. They intended it to be a gift, not a loan.
97The plaintiff contends that prevarication on the part of the defendant as to whether she would accept the money as a gift, or on the part of Mr Gould Senior as to whether it might instead be characterised as a loan, should ground a finding that any "gift" made to the defendant was, in law, incomplete. It contends, as may be accepted, that for a transaction to take complete effect as a gift both donor and donee must, in effect, intend that the transaction be a gift; the donor must intend a gift and the donee must accept it as such: May, The Law of Fraudulent and Voluntary Conveyances (3rd ed, London, 1908), ch 2, especially at pp 358-359; In Re Everett [1917] SALR 52 at 57-59.
98As against the defendant, the plaintiff bears the onus of proving the character of the payment made for her benefit on 12 April 2010: Heydon v Perpetual Executors Trustee & Agency Co (WA) Limited (1930) 45 CLR 111 at 113; Coshott v Sakic(1998) 44 NSWLR 667 at 671D-E; Motor Auction Pty Limited v John Joyce Wholesale Cars Pty Limited (1997) 138 FLR 118 at 132-133.
99More generally, the plaintiff bears the onus of proving each essential element of its case against the defendant: Currie v Dempsey (1967) 69 SR (NSW) 116 at 125. Thus, it bears the onus of proving its allegation that Mr Gould Senior acted without authority in withdrawing funds from the plaintiff's bank account, and in directing the bank to transfer those funds into the defendant's bank account. Likewise it bears the onus of proving that the defendant had actual, or constructive, notice of any lack of authority on the part of Mr Gould, and of any breach of duty (fiduciary or statutory) on his part.
100In making these observations I am mindful that, by a cross-claim, the defendant seeks declaratory relief against the plaintiff and Mr Gould Senior.
101In the absence of a competing, contrary claim to relief, an applicant for a declaration may ordinarily be taken to bear the burden of satisfying the Court of facts which (in the absence of proof of other facts) would justify a grant of that relief: Massoud v NRMA Insurance Limited (1995) 62 NSWLR 657 at 660; Blanch v British American Tobacco Australia Services Limited (2005) 62 NSWLR 653 at 655 [5] - 656 [10].
102This accords with the general proposition, which informs much learning about onus of proof, that a party making an allegation of fact generally, for reasons ultimately justified by reference to experience and considerations of fairness, bears the burden of proving that fact: JH Wigmore, Evidence in Trials at Common Law, Vol 9 [2486]; JD Heydon, Cross on Evidence (9th Australian ed, 2013), para [7060].
103Into this equation must be factored the broad, flexible, discretionary character of declaratory relief (Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582), a grant of which (for example) does not require proof of a "cause of action" in the traditional sense (Guaranty Trust Company of New York v Hannay & Company [1915] 2 KB 536 at 572), and the availability of a "reverse declaration" as a formal expression of a court's determination, without necessity of a cross-claim, that a plaintiff's claim for relief be dismissed (PW Young, Declaratory Orders (Butterworths, Sydney, 2nd ed, 1984), para [606]; Civil Procedure Act 2005 NSW, s 90; Uniform Civil Procedure Rules 2005 NSW, r 36.1).
104Where the onus of proof resides on an application for declaratory relief must, ultimately, turn on questions of substance, not mere form, and those questions may be informed by considerations of fairness, including established practice, if any.
105This is consistent with the approach taken on an assessment whether a refusal to grant a declaration operates as a final determination: A Hudson Pty Limited v Legal & General Life of Australia Limited (1985) 1 NSWLR 701 at 712C, 716D-E and 718D. The Court looks to the substantive character of the parties' contest, not merely the form of relief granted.
106In the present proceedings the defendant's cross-claim serves as a means of ensuring that, notwithstanding the plaintiff's refusal to join Mr Gould Senior as a defendant in the principal proceedings, he (and his privies in interest) can be bound by the Court's determination vis á vis the defendant.
107The cross-claim takes the form of a cross-summons, with no pleadings independent of the pleadings filed in the principal proceedings. Vis á vis the plaintiff, a grant of declaratory relief on the cross-claim is, in substance, similar to the making of a reverse declaration on the plaintiff's statement of claim.
108The presence of the defendant's cross-summons does not detract from the fact that the substantive character of the proceedings is to be found in the allegations made, and the relief claimed, by the plaintiff in its statement of claim.
109I approach my determination of the parties' factual contest on this basis; but, nevertheless, mindful of a need to approach the evidence of all members of the Gould Family, and the defendant, with special care (and independent scrutiny) because of their personal relationships; the respective ages of Mr and Mrs Gould Senior; and the fact that the defendant served as a carer for the older couple in and about, and long before, April 2010.
110A number of objective facts stand in the way of the plaintiff being able to discharge the burden of proof on the case it alleges against the defendant:
(a) Mr Gould Senior plainly believed (as he still does) that he had authority to effect the business he transacted in favour of the defendant on or about 12 April 2010.
(b) That belief was based on reasonable grounds insofar as, at least:
(i) he and his wife were directors of the plaintiff.
(ii) with the acquiescence of his son (who claims, ultimately, to have owned and controlled the plaintiff in and about April 2010) and his wife, he was authorised by the plaintiff, without limit, to operate the plaintiff's bank account and to transact business (including the payment of "wages" for the older couple and, apparently, payment of their personal expenses generally) on behalf of the plaintiff.
(iii) the plaintiff owed to each of him and his wife respectively a debt, repayable on demand, in excess of the amount he caused to be paid to the defendant's account.
(iv) as I have found, in causing money to be paid to the defendant he acted with the knowledge and approval of Mrs Gould Senior.
(c) Mr Gould Senior (as I have found, in consultation with his wife) initiated the payment of funds to the defendant.
(d) As manifested in the evidence he gave in these proceedings, and in his conduct of the proceedings as a party, in causing the disputed moneys to be paid into the defendant's bank account Mr and Mrs Gould Senior acted freely and voluntarily.
(e) There is no suggestion that, at the time Mr Gould Senior caused the disputed moneys to be paid out to the benefit of the defendant or at any other time, the plaintiff was or was likely to be insolvent.
(f) The defendant believed that all members of the Gould Family acquiesced in the payment made for her benefit.
(g) That belief was based on reasonable grounds insofar as, at least:
(i) Mr Gould Senior, at least implicitly, assured her that Mr Gould Junior was aware that the payment was to be made to her.
(ii) Mr Gould Senior and his wife had been offering, for a period in excess of a year before 12 April 2010, to provide financial assistance to her to assist her to pay off her mortgage.
(iii) The defendant had observed, over time, that Mr and Mrs Gould Senior had regular, unfettered access to funds of the plaintiff via cash withdrawals from the bank.
(iv) The defendant had observed that the plaintiff bore the name of Mr Gould Senior and, ostensibly, was a company owned and controlled by him.
(v) Mr Gould Senior had custody of the plaintiff's banking records and authority, vis á vis the bank, to effect the transfer of money that took place on 12 April 2010.
(vi) Mrs Gould Senior confirmed to her that the payment effected in her favour was intended by both the Goulds Senior to be a gift from them to her and, by that confirmation, implied that the moneys paid to her were, in substance, theirs to give.
111The fact that there is no suggestion that the plaintiff was (or was ever likely, by reason of the payment made to or for the benefit of the defendant on 12 April 2010, to be), insolvent undermines the plaintiff's contention that any authority that Mr Gould Senior had (with or without the agreement of his wife) to effect the payment was constrained by a need to have regard to the interests of creditors: Spies v The Queen (2000) 201 CLR 603 at 635 [93] - 637 [99]); RP Austin, HAJ Ford and IM Ramsay, Company Directors: Principles of Law and Corporate Governance (Lexis Nexis Butterworths, Australia, 2005), paras [7.10] and [10.3].
112Disputes about the existence, nature and extent of authority, in Mr Gould Senior (and his wife), to transact the business transacted in April 2010 can be determined within the framework of the Gould Family's arrangements for conduct of business of the plaintiff.
113The plaintiff lacks standing to assert on behalf of Mr Gould Senior (and he stridently objects to any suggestion) that the defendant exercised any form of undue influence over him in relation to the conferral of the disputed benefit upon her. The plaintiff, itself, cannot claim to have had such a relationship with the defendant as to call in aid of its case against her a presumption that she exercised undue influence over it, as a corporate identity, or over Mr Gould Senior as one of its directors. Equity generally looks to the substance, rather than merely the form, of relationships and dealings. The interposition of a corporate vehicle between an abused person and his or her abuser would be unlikely, of itself, to preclude an application of general equitable principles about undue influence or fiduciary obligations. However, the circumstances of this case do not call for an application of a presumption of undue influence against the defendant, in the interests of the plaintiff, or a finding that she owed a fiduciary obligation to the plaintiff.
114Had Mr Gould Senior himself, personally, challenged the efficacy of the transaction effected in favour of the defendant, so far as it concerned a transfer of property by him or on his account to her, I would have proceeded on the basis that the defendant (as the carer/housekeeper/bookkeeper of an elderly man from whom she received a large benefit) should be presumed to have exercised undue influence upon him to procure the benefit: Johnson v Buttress (1936) 56 CLR 113 at 133-135. However, even if a presumption of undue influence could be marshalled against her, the evidence given by Mr Gould Senior, coupled with her own, would have rebutted it.
115In the proceedings as constituted, and in the light of the evidence (including, but not limited, to the evidence of Mr Gould Senior) there is no compelling reason for characterisation of the transaction of 12 April 2010 as a misapplication of the plaintiff's money in favour of or by the defendant rather than (for example) a repayment by the plaintiff of part of its indebtedness to Mr Gould Senior, coupled with a gift of the repaid moneys by him in favour of the defendant.
116The fact that Mr Gould Junior, in 2011, caused the plaintiff's accounts to be written up as recording a debt owed to the company by the defendant, rather than recording a reduction in the loan accounts of Mr and Mrs Gould Senior (jointly or severally), is determinative of no issue in these proceedings. The accounts reflect Mr Gould Junior's case rather than prove it. They do not, on my findings, reflect the reality of what, in fact, happened in April 2010.
117Although a company's books of account may be admissible in particular circumstances (Corporations Act 2001 (Cth), ss 542, 1305-1306; Potts v Miller [1940] 64 CLR 282 at 301-305, especially 305), their probative value may depend, as here, on the circumstances in which, when, by whom, and for what purpose they have been written up. They are not, in these proceedings, particularly persuasive, let alone conclusive, of any fact in issue. The outcome of these proceedings depends upon an assessment of facts independent of the accounts of the plaintiff as written up by, or under the direction of, Mr Gould Junior in the midst of controversy leading to litigation.
118Under the practical control of Mr Gould Junior, the plaintiff insists that the money paid out to the defendant on 12 April 2010 must, up to and including the time of its receipt by the defendant, be characterised as money of the company; and that Mr Gould Senior did not (acting alone or in concert with his wife) have any authority from the company to pay the money to the defendant. In my judgement, that pitches at too high a level both the case that the defendant has to meet and her forensic challenge.
119The manner in which Mr Gould Junior allowed his parents to conduct the affairs of the plaintiff - ostensibly as their family company, paying themselves "wages" and apparently paying personal expenses at will - provides a firm foundation for a finding that Mr and Mrs Gould Senior had implied actual authority to make, on behalf of the company, the payment, to or for the benefit of the defendant, that was in fact made.
120However, although the evidence supports such a finding, adoption of it would require close analysis of the extent to which such a payment could be said to have been a payment for a company purpose. That analysis could, in its turn, require a detailed investigation of: (a) the circumstances in which (as he alleges) Mr Gould Junior came to own and control the plaintiff; (b) the nature of the business, or businesses, conducted by or in the name of the plaintiff; and (c) the course of relationships within the Gould Family, and the conduct of business of the company, over a substantial period of time.
121The defendant is entitled to contend, as she does, that a disposition of these proceedings in her favour must follow if: (a) the payment made to or for her benefit can be characterised as a payment made on the account of Mr and Mrs Gould Senior jointly or severally; and (b) Mr and Mrs Gould Senior, jointly or severally, had sufficient authority in the conduct of the affairs of the plaintiff to draw down on their loan account(s) for the purpose of funding the payment made to or for the benefit of the defendant. The plaintiff bears the onus of excluding such a case. In any event, without excluding the possibility that Mr and Mrs Gould Senior had authority to pay company funds to the defendant, I am satisfied that she has, at least, established that they had authority to draw down on their loan accounts sufficiently to make the payment made to her.
122A key factual inquiry in the proceedings is whether, on 12 April 2010, Mr Gould Senior (in particular) had, as an officer of the plaintiff, the company's authority to withdraw from the company's bank account the sum of $227,820.71 in reduction of the greater sum standing to his credit in the loan account of the company.
123In my judgement, that question should be answered in the affirmative. Mr Gould Senior was authorised by the plaintiff, vis á vis its bank, to withdraw the disputed sum; there is no suggestion that, vis á vis the bank, the transaction was irregular. He (and his wife) had regular, liberal access to funds of the plaintiff. He (and his wife) had custody of the banking records of the plaintiff, and a general authority to operate the company's bank accounts.
124Although Mr Gould Junior may have harboured private reservations about what his parents should do without his express approval, in my estimation he deliberately acquiesced in his father exercising authority, without fetters, over the disposition of company funds. Revealing in that regard is his considered statement (in the letter dated 26 July 2011 he addressed to the defendant): "You will appreciate that because of my love for my father I have permitted him to operate and act as if he were a man of substance [Emphasis added]."
125Mr Gould Junior may, privately, have harboured a hope, or an expectation, that his father would not do anything outside the ordinary course of business of the plaintiff as he may have perceived it; but he did not establish that as a limitation on his father's authority, either within the management structure of the plaintiff or with his parents personally.
126I find that Mr Gould Senior had, at least, implied actual authority (with or without the acquiescence of his wife) to effect the transaction effected in favour of the defendant, on 12 April 2010, as a part-repayment to him of the debt owed to him by the plaintiff (or, equally, as a part-repayment to him and his wife of the debts owed to them respectively by the plaintiff): Hely-Hutchinson v Brayhead Limited [1968] 1 QB 549 at 583-584, 586-587 and 592-593; Corporate Affairs Commission (NSW) v Transphere Pty Limited (No 2) (1985) 9 ACLR 1005 at 1009; Brick and Pipe Industries Limited v Occidental Life Nominees Pty Limited [1992] 2 VR 279 at 361-362.
127In the proceedings as constituted, as between the plaintiff and the defendant I am not satisfied that the sum of $227,820.71 paid into the bank account of the defendant bore, at the time of its payment into that account, the character of property of the plaintiff.
128I am minded to find, on the contrary, that it bore the character of personal property of Mr and/or Mrs Gould Senior, via a repayment to them by the plaintiff of part of a debt owed by the plaintiff to them respectively. That characterisation of the transaction is consistent with a level of actual authority which I am comfortably satisfied that Mr Gould Senior did have in the operation of the plaintiff's affairs. In their dealings with the defendant, Mr and Mrs Gould Senior spoke in terms of the transfer of money being their gift to her, not a gift of the company. Objectively, an available inference (which I am prepared to draw) is that they paid her from money drawn down from one or the other of their loan accounts with the company.
129Upon an assumption (contrary to this assessment of the evidence) that the money paid into the defendant's bank account bore at that time the character of company property, the plaintiff contends that, on a proper assessment of the evidence of Mr Gould Senior and the defendant, the transaction was, at least, a loan made by the plaintiff to the defendant, repayable on demand.
130That contention is based upon evidence, given by both Mr Gould Senior and the defendant, of protestations on her part on and after 12 April 2010 that she did not accept the gift proffered to her.
131In my judgement, the plaintiff's contention should be rejected. One needs to examine the conduct of the Goulds senior and the defendant (particularly in the period between 12 - 30 April 2010 or thereabouts) bearing in mind that, in the defendant's Thai culture (more so, perhaps, than that of Australia), a succession of refusals to accept a gift might be - and in this case was - part of the etiquette, but no mere formality, in a process of acceptance of the gift.
132Mr Gould Senior, in particular, understood that, and his understanding of it was, I infer, part of the reason why he persisted pressing upon the defendant the concept of a gift, in an active endeavour to have her accept the money as a gift. At one point or another he invited her to treat the money as a "loan" and she ostensibly acquiesced in that; but he all the while intended that it be a gift, he persevered in pressing the money upon her as a gift and, consistently with Thai cultural norms, she remained open to its characterisation as a gift.
133She remained open, also, to the possibility that, having accepted the money as a gift, she could, at a later time, independently decide to repay it. Her subsequent ongoing care for Mr Gould Senior in his estrangement from his son is an illustration of a genuine desire both to respect him and to reciprocate the kindness shown to her by the Goulds Senior.
134Her evidence, which I accept, is that she finally acquiesced in characterisation of the money as a gift when, after experiencing Mr Gould Senior's persistent overtures, she received the birthday card of 30 April 2010 addressed to her in fulsome terms by both Mr and Mrs Gould Senior.
135This evidence has the ring of truth about it when one bears in mind, not only Thai cultural norms, but also the close, quasi-family relationship between Mr and Mrs Gould Senior and the defendant.
136The defendant was no fly-by-night user of Mr and Mrs Gould Senior. Before and after the events of April 2010 she manifested a friendship and loyalty towards the Goulds inconsistent with attribution to her of the status of a manipulative fellow traveller. That friendship and loyalty, to Mr Gould Senior in particular, continued after he had, by disclosure of the gift to her, incurred the wrath of Mr Gould Junior. He lived with her for a year before moving into aged care accommodation. They remain close.
137The heaviness of Mr Gould Junior's hand in dealing with both the defendant and his father, in and following his intervention in the affairs of his parents as they intersect with those of the plaintiff, put paid to the possibility that, by an independent and voluntary decision, the defendant might, without any legal obligation to do so, undo what was done in April 2010.