Singh v AKM Investments Group Pty Ltd

Court of Appeal (NSW)|2024-10-30|Before: Bell CJ, Gleeson JA, Stern JA

Background Facts

The following summary of the background facts is taken from the unchallenged findings of the primary judge.
Mr Grewal was, in 2017, a property developer and sole director of Ace Developers Pty Ltd (Ace). He lived in Adelaide from 2005 to December 2018. His wife, Ms Grewal, was referred to in documents as "Kamal Preet" or Kamal Preet Kaur. Mr Gaba was, in 2017, a businessman with wide and varied commercial interests, who conducted his businesses through a number of corporate entities, including AKM. The shares in AKM, which was incorporated on 18 August 2017, were held equally by Mr Gaba and Aryan Holdings Pty Ltd, an entity controlled by Mr Mukesh Sapra, an associate of Mr Gaba. Mr Gaba was the sole director of AKM.
The commercial relationship between Mr Gaba and Mr Grewal commenced in about August 2017 with a property development project in South Australia, referred to as the Olive Grove project. This project was conducted through a corporate joint venture, Sri Krishna Investors Pty Ltd (Sri Krishna), as the intended investment and development vehicle. The project concerned the acquisition and development of property at Munno Para West, a suburb in northern Adelaide.
The initial participants in the Olive Grove project were Mr Grewal and two of his associates, Mr Sukha Lohat and Mr Preetinder Brar. Prior to the completion of the purchase of the Olive Grove development properties, Mr Lohat approached Mr Gaba to participate in the project. On 1 August 2017, Mr Gaba was issued with shares in Sri Krishna and became its sole director and secretary. On 15 August 2017, Mr Lohat created the Olive Grove WhatsApp group; its initial members were Mr Grewal, Mr Brar, Mr Lohat, Mr Gaba and Mr Sapra. His Honour inferred that this group was established and conducted as a means of communication concerning the Olive Grove project and the participants in that project were not necessarily participants in development opportunities in South Australia generally: at [48].

The primary judge's reasons

The primary judge correctly identified the issue in dispute as the proper characterisation of the contractual relationship between Mr Gaba and Mr Grewal: at [7]. That was in circumstances where, as his Honour noted, Mr Grewal admitted that $190,000 was transferred by the plaintiffs to Mr Grewal's bank account in November 2017, and Mr Grewal agreed that the monies were transferred pursuant to an express oral agreement, but denied that the agreement was in the terms alleged by the plaintiffs: at [8].
There is no dispute as to the legal principles stated by the primary judge at [11]-[28], which included at [15]: Where determination of critical issues involves the evaluation of oral evidence and disputed events, the process of fact finding should be informed as far as possible "on the basis of contemporary materials, objectively established facts and the apparent logic of events": Fox v Percy (2003) 214 CLR 118 at [30]-[31]. Inferences may be drawn from circumstantial evidence where the whole of the facts can establish an adequate basis to infer the ultimate fact to be proved: Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 141.
With respect to the disputed September 2017 conversation, the primary judge found that it is likely that a conversation concerning the Lennox Street project took place at about this time, but what its terms were is less clear: at [67].
With respect to the disputed 13 November 2017 conversation which Mr Gaba alleged, and Mr Grewal denied, that they also discussed a loan of $190,000 to Mr Grewal, repayment terms and interest, the primary judge found that "Mr Gaba's evidence alone is not sufficient to persuade me that the conversation took place in the terms alleged": at [80].
The primary judge noted that the parties agreed that as the monies were transferred from AKM to Ms Grewal pursuant to an express oral agreement between Mr Gaba and Mr Grewal, it was necessary to consider the whole of the relevant circumstances to establish whether or not such an agreement, and its terms, can be identified: at [81].
The primary judge referred to the evidence of the transfers which Mr Gaba caused AKM to make to Ms Grewal's bank account on 16 and on 17 November 2017, and noted that Mr Grewal did not challenge or object to the characterisation of these payments in the payment receipts sent by Mr Gaba to Mr Grewal in the Olive Grove WhatsApp group as "Loan to Kamal Preet" and "Loan from AKM": at [86], [87].
The primary judge found that there may well have been further communications between Mr Gaba and Mr Grewal in the intervening period relating to the additional transfer of $40,000 on 23 November 2017, which was also described in the payment receipt as "Loan to Kamal Preet" and that Mr Lohat had responded with a thumbs up emoji: at [89].
The primary judge found that evidence of subsequent communications concerning the course of the Olive Grove and Lennox Street projects was of only limited relevance in determining what had been agreed between Mr Gaba and Mr Grewal in November 2017 with respect to the character of the funds transferred by Mr Gaba from AKM to Ms Grewal: at [97]. It is not necessary to refer to the detail, other than to note that his Honour accepted that the description of both the Lennox Street project and the Olive Grove project as "shambolic" was apt: at [102].
The primary judge referred to each party's internal business records (at [113]-[117]), and noted that: 1. although AKM's balance sheet for the year ended 30 June 2018 recorded a loan to Kamal Preet Kaur, being Ms Grewal, in the sum of $190,000 as a current asset and the same entry appeared in the accounts for the years ended 30 June 2019, 2020, 2021 and 2022, not much reliance could be placed on the accounts because their genesis was not explained in the evidence: at [114]; and 2. to the extent that Mr Grewal's document styled "Deposit funding share till 28-02-2019", characterised contributions by "Mukesh & Gaba" to the Lennox Street project as equity, this was nothing more than the subjective views of its author at the time of creation: at [115].
Having referred to the inferences to be drawn from the WhatsApp messages, the surrounding circumstances, the parties' business records and subsequent communications, the primary judge concluded at [122]: On the basis of the evidence and submissions of the parties in these proceedings, I have concluded that it is more probable than not that Mr Gaba caused AKM to advance the sum of $190,000 to Ms Grewal in November 2017 pursuant to an express agreement to do so struck between him and Mr Grewal in about mid-November 2017. I consider that the advance was by way of loan and not as an equity contribution to the Lennox Street project.
The primary judge explained that he considered, but ultimately placed little weight on the affidavit and oral evidence of the parties, or indeed the evidence of any of the witnesses. Although he did not make any findings that any witness gave dishonest evidence, his Honour found the recollections of each witness to be unreliable: at [123].
The primary judge accepted at [127] that: … the best approach to assessing the evidence in the present case requires the Court to pay greatest regard to the contemporaneous documents and to the inherent probability of the existence or non-existence of the facts in question. Ultimately, however, the approach described by McDougall J in Nguyen v Cosmopolitan Homes requires me actually to be persuaded of the factual findings that I make, and not a mere mechanical comparison of the probabilities as between the competing accounts.
The evidence to which the primary judge had particular regard included: 1. that the payments were described in the bank transaction receipts as loans and these descriptions were not contradicted by Mr Grewal at the time: [128]; 2. the surrounding circumstances as at November 2017 including Mr Gaba's role as a lender of funds to associates including Mr Lohat and Mr Grewal, Mr Gaba's reputation as a lender, and Mr Grewal's invitation to other investors but not Mr Gaba to participate in a joint venture in relation to the Lennox Street project: [129]; 3. the fact that the Olive Grove project in which Mr Gaba contributed as an equity investor, was run completely differently so could be juxtaposed from the Lennox Street project on multiple bases: [130]-[133].
The primary judge's dispositive reasons were stated at [139] and [141]: Ultimately, the contemporaneous records and the logic of events have proved to be the basis on which I have determined this question. … I am satisfied, on the basis of the acts and conduct of the parties in the circumstances in which the moneys were advanced, that a conversation or conversations occurred between Mr Gaba and Mr Grewal in about mid-November 2017, in which it was agreed that Mr Gaba would cause AKM to lend to Ms Grewal moneys for the purpose of the Lennox Street project. That sum was initially $150,000, deposited into Ms Grewal's account in two tranches on 16 and 17 November 2017. A further $40,000 was required, and was likely the subject of further communications, and was deposited on 23 November 2017. (Emphasis added.) … I am not satisfied, however, that any conversation took place in the terms alleged by Mr Gaba. Nevertheless, on the basis of such of the objective facts at the time as have been established, I am satisfied that there was a conversation or conversations between Mr Gaba and Mr Grewal in which a loan was sought and agreed to.
However, the primary judge was not satisfied that the parties agreed on a 12 per cent interest rate or a loan term: at [142]. The judge said that "[i]n the absence of a finding as to express agreement as to the term of the loan or interest, the common law provides a solution", being "an immediate debt by which the money is repayable immediately", and that the loan was repayable, relevantly, by the time the proceedings commenced: [143]-[144]. The judge awarded prejudgment interest at court rates under s 100 of the Civil Procedure Act 2005 (NSW) from that date, being 3 June 2021 (at [148]).

Issue on appeal

The single ground of appeal is: The learned primary judge erred because he found the respondents' case made out, and gave judgment for them, in circumstances where: a. the respondents' case was that there had been an oral loan agreement and that the advances that the first respondent had made to the appellant's wife, were loans; but b. his Honour did not make findings about what had been said by the parties to each other about the advances prior to the advances being made; and c. his Honour was therefore not actually persuaded about the facts that the respondents were required to prove to establish their case.
It is said that the plaintiffs did not prove their case to the requisite standard, and that the primary judge "vault[ed] over his fact-finding task, rather than being 'actually persuaded' … of the facts that made up the respondents' cause of action". Reference was made to Helton v Allen (1940) 63 CLR 691 at 712; [1940] HCA 20 where Dixon, Evatt and McTiernan JJ referred to what Dixon J said in Briginshaw v Briginshaw (1938) 60 CLR 366 at 361; [1938] HCA 34; Watson v Foxman (1995) 49 NSWLR 315 at 319; and John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94].
It is said that each element of a cause of action must be proved to the "reasonable satisfaction" of the Court, and this requires that the Court "must feel an actual persuasion of its occurrence or existence", which is not produced "by inexact proofs, inexact testimony or indirect inferences".
It is said that the primary judge was not persuaded in this sense, given that his Honour could not be satisfied as to what Mr Grewal and Mr Gaba had actually said to each other in the purported formation of a contract. It is also said that the primary judge, having noted that he was "not satisfied … that any conversation took place in the terms alleged by Mr Gaba" ([141]), ought to have held that the plaintiffs' burden was not discharged.

Decision

The argument on appeal challenged the primary judge's approach to the fact-finding task in circumstances where the judge was not satisfied as to the reliability of the evidence of Mr Gaba and Mr Grewal, and the other witnesses.
The starting point is the civil standard of proof prescribed by s 140 of the Evidence Act 1995 (NSW) which says: 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.
Although neither party referred to s 140, or what is meant by the state of "satisfaction" as that word is used in s 140(1) (see the discussion in S Odgers, Uniform Evidence Law, (19th ed, Lawbook Co, 2024) at [EA.140.60]), it is appropriate to proceed on the basis that "actual persuasion" of the occurrence or existence of a fact in issue is required under s 140. That is for two reasons. First, there is no challenge to the primary judge's acceptance at [127] that proof of the plaintiffs' cause of action required that the judge actually be persuaded of the factual findings made, and not a mere mechanical comparison of the probabilities as between the competing accounts, referring to Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55] (McDougall J).
Second, that approach is consistent with authorities that have assumed or held that s 140 requires "actual persuasion" of the occurrence or existence of the fact in issue: see, for example, Morley v Australian Securities & Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140 at [750], [753], where the Court (Spigelman CJ, Beazley and Giles JJA) said: References in the authorities to "actual persuasion" should be understood as equivalent to the state of "satisfaction", as that word is used in s 140. It should not be understood as requiring a subjective "belief". Sir Richard Eggleston in Evidence, Proof and Probability (1983, 2nd ed) Weidenfeld and Nicolson, London, 1983, at 132-133 substituted, perhaps tentatively, the word "belief" for Dixon J's actual language. This transposition by Sir Richard was accepted in the Australian Law Reform Commission Report No 26: Interim Evidence AGPS, Canberra, 1985, Vol 1 at [474], [995], [998]; Vol 2 at [286]-[287]. However, "persuasion" is not equivalent to "belief". It was deployed by Dixon J as equivalent to "satisfaction", and in the latter form has been given statutory effect. … In order to be satisfied on the balance of probabilities, within the meaning of s 140, the tribunal of fact must reach an affirmative conclusion, or a definite conclusion, or an actual persuasion. This state of mind turns on the cogency of the evidence adduced before it. ...
Consistently with that view, in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; (2023) 97 ALJR 857, Kiefel CJ, Gageler and Jagot JJ referred at [60] to "the state of 'actual persuasion' which was required before a fact may be found", citing Briginshaw at 361.
It is not in doubt in this case that the parties reached a consensus as to their agreement and its subject matter which was binding on them, and there is no ambiguity as to the parties. It was admitted on the pleadings and acknowledged in Mr Grewal's written submissions at trial that $190,000 was transferred to Ms Grewal pursuant to an express oral agreement between Mr Grewal and Mr Gaba relating to 12 Lennox Street.
The fact in issue was the oral terms of that agreement which bore on the character of the payments made by AKM to Ms Grewal's bank account totalling $190,000. In this regard, the consideration referred to in s 140(2)(b) of the Evidence Act is of significance. The nature of the subject-matter of the proceeding was a money claim and, as indicated, the only issue was the characterisation of an admitted agreement: was it a loan to Mr Grewal, or an investment by Mr Gaba in the acquisition and development of 12 Lennox Street.
John Holland involved the anterior issue of whether a binding agreement was concluded between the parties in circumstances where discussions in a telephone conference were relied upon as varying the terms of their written agreement. That was the context in which Hammerschlag J said at [94] that proof of the plaintiffs' cause of action based on a contract, required that "the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence". By contrast, the present case involved an admitted oral agreement between the parties; there was no dispute as to the occurrence of the conversation between Mr Gaba and Mr Grewal; the dispute concerned the character of that agreement.
It is said that his Honour had to be persuaded about the words which were spoken in the disputed conversation between Mr Gaba and Mr Grewal on 13 November 2017, but the submission stopped short of asserting that his Honour had to make a finding as to the precise words spoken. That concession was appropriate. Further and importantly, his Honour's finding at [141] (see [37] above) that he was satisfied that there was a conversation or conversations between Mr Gaba and Mr Grewal in which a loan was sought and agreed to, was a finding expressing a conclusion on the evidence.
On a fair reading of his Honour's reasons, it should be accepted that the judge felt an actual persuasion that Mr Grewal said words which conveyed to Mr Gaba, or would have conveyed to a reasonable person in Mr Gaba's position, that Mr Grewal was asking for a loan and Mr Gaba said words which conveyed to Mr Grewal, or would have conveyed to a reasonable person in Mr Grewal's position, that he agreed to that request: John Holland at [101]. Similarly, the findings by his Honour that he was not satisfied that the parties agreed on a 12 per cent interest rate or a loan term of 12 months were findings expressing a conclusion on the evidence.
It is said that the primary judge erred because he drew indirect inferences rather than direct inferences about the words which were spoken. I do not agree. The finding by his Honour at [141] had regard to direct inferences from contemporaneous documents, the objective facts and the surrounding circumstances. There was no error in his Honour's approach to the fact-finding task relying upon inferences from that other evidence.
Taken together, the description of the payments in the contemporaneous bank transaction receipts as loans, and the absence of contradiction by Mr Grewal who received notification of those descriptions at the time, was powerful contemporaneous evidence from which it was well open to draw an inference, as his Honour did, that there was a conversation or conversations between Mr Gaba and Mr Grewal in mid-November 2017 during which a loan was sought and agreed to.
But the evidence from which such an inference could be drawn did not stop there. As his Honour found, the surrounding circumstances as of November 2017 also supported the drawing of that inference, relevantly: 1. the Lennox Street project was initiated by Mr Grewal in September 2017, but the evidence did not suggest that Mr Grewal was considering offering a stake in that project to Mr Gaba or Mr Sapra, which would provide them with a profit share. Indeed, they were not included in the first offer to investors to participate in the Lennox Street project as they were not members of the Sydney Investors' WhatsApp group; 2. there was no evidence of any communication between the members of the Sydney Investors' WhatsApp group as to who else, if anyone, Mr Grewal could invite to participate as an equity investor in the project; and 3. Mr Gaba was known to be a lender, and Mr Grewal was the developer who needed funds for a specific project, and Mr Gaba had previously been a lender of funds to associates of the parties, including Mr Lohat and indeed, Mr Grewal himself.
In addition, as his Honour found at [130], the inference that the transaction was a loan, was also to be drawn from the fact and terms of the Olive Grove project which were significantly different to the Lennox Street project in two respects.
First, the Olive Street project was conducted through a corporate entity, Sri Krishna, in which Mr Gaba held a direct interest as shareholder and director and secretary of that company, whereas the ownership structure of the Lennox Street project was completely different as Ms Grewal held 12 Lennox Street and neither Mr Gaba, nor AKM, held any ownership interest in that property, or a right to exercise control over it, as a director of a corporate land owner might.
Second, the properties the subject of the Olive Grove project were acquired at the same time and were subject to the same ownership, whereas the Lennox Street project involved two properties acquired at different times by different purchasers: Ms Grewal on 24 November 2017 in respect of 12 Lennox Street, and Mr Bawa on 16 February 2018 in respect of 14 Lennox Street: at [133]. Further and importantly, there was no evidence of any discussion with Mr Grewal as to how Mr Gaba or AKM's alleged equity investment in the Lennox Street project would be reflected in any distribution of profit share: at [133].
The contention that the primary judge erred in finding that there was a conversation or conversations between Mr Gaba and Mr Grewal in mid-November 2017 in which a loan was sought and agreed to, initially in the amount of $150,000, and subsequently a further $40,000, must be rejected.

Conclusion and orders

For the above reasons, the appeal has failed. There is no reason why costs should not follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.
I propose the following orders: 1. Appeal dismissed. 2. Appellant to pay the respondents' costs of the appeal.
STERN JA: I agree with Gleeson JA.

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: 13 November 2024

Solicitors: Jake McKinley Law (Appellant) Kaur Legal (Respondents) File Number(s): 2024/172176 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2024] NSWDC 144 Date of Decision: 12 April 2024 Before: Andronos SC DCJ File Number(s): 2021/159271

HEADNOTE [This headnote is not to be read as part of the judgment] In November 2017, Mr Tapinder Singh (also known as Mr Sippy Grewal) made an oral agreement with Mr Gurinder Pal Singh Gaba, pursuant to which Mr Gaba caused AKM Investments Group Pty Ltd ("AKM"), a company of which Mr Gaba was sole director, to advance in total $190,000 to Mr Grewal's wife, Ms Kamalpreet Grewal. In the underlying proceedings, AKM and Mr Gaba sought repayment of that amount plus interest calculated at 12% per annum, as they contended that the parties had agreed on a loan in those terms for 12 months. Mr Grewal contended that the agreement was that the money be advanced as a capital contribution by Mr Gaba towards a joint venture pursuant to which the parties would develop residential land at Lennox Street, Campbelltown, South Australia ("the Lennox Street project"). It was common ground that the parties had made an oral agreement for the transfer of $190,000 by the plaintiffs to Ms Grewal to purchase a property at Lennox Street. The question was whether the agreement was for a loan to Mr Grewal or a capital investment in a joint venture with Mr Grewal and others. The primary judge placed little weight on the parties' oral and affidavit evidence, finding their recollections to each be unreliable. His Honour primarily had regard to contemporaneous evidence including WhatsApp messages and business records, the surrounding circumstances as at November 2017, and the fact that the payments of monies were described in bank transaction receipts as loans and these descriptions were not contradicted by Mr Grewal at the time. His Honour concluded that the monies were advanced pursuant to a loan agreement and that Mr Grewal was liable to repay the sum of $190,000 to the plaintiffs. His Honour was not satisfied as to the rate of interest or loan term as contended by Mr Gaba. His Honour awarded prejudgment interest at court rates from the commencement of the proceedings. On appeal, Mr Grewal argued that the plaintiffs did not prove their case to the requisite standard, and that the primary judge erred in giving judgment for the plaintiffs in circumstances where the judge was not actually persuaded about what Mr Grewal and Mr Gaba had said to each other as to the terms of their agreement. The Court held (Gleeson JA, Bell CJ and Stern JA agreeing), dismissing the appeal: 1. It was not in doubt that the parties reached a consensus as to their agreement and its subject matter which was binding on them, and there was no ambiguity as to the parties: at [48]. 2. Contrary to Mr Grewal's submission, the primary judge's satisfaction that there was a conversation or conversations between Mr Gaba and Mr Grewal in November 2017 during which a loan was agreed upon was a finding expressing a conclusion on the evidence: at [51]. 3. There was no error in the primary judge's approach to fact-finding, relying on inferences from the evidence including the combination of the bank transaction receipts and Mr Grewal's lack of contradiction, contemporaneous WhatsApp messages, and the surrounding circumstances regarding the parties' relationship at the time, relevantly, the fact and terms of another project (involving a capital contribution by Mr Gaba) which were significantly different from the Lennox Street project: at [53]-[59]. 4. Helton v Allen (1940) 63 CLR 691; [1940] HCA 20; John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451; GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; (2023) 97 ALJR 857, referred to.

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