Svenson v Doherty

Parties 4Lloyd Svenson has sued Deborah Doherty in this court for the money. Lloyd Svenson is the plaintiff and Deborah Doherty is the defendant. Lloyd Svenson was represented by Mr L Ellison SC and Deborah Doherty by Mr B Pluznyk of counsel. For ease of reference, and without intending any disrespect at all to the parties, I propose to refer to the plaintiff and the defendant as Lloyd and Deborah respectively and to Faye McGregor and Bruce Svenson as Faye and Bruce respectively.

Issues 5There is no evidence about any private conversations between Bruce and Faye. That is hardly surprising. Deborah challenges Lloyd to prove that any monies advanced by his uncle Bruce to her mother Faye were a loan which Faye agreed she would repay. That is an appropriate challenge because Lloyd bears the onus of proving his claim. 6If there was a loan, Deborah says that Faye's debt to Bruce arose over six years before this case was commenced so that the claim is out of time and extinguished by the law of limitations. Lloyd, on the other hand, says if the debt arose more than six years before the case started, Faye's indebtedness to Bruce was acknowledged by her within the six years, which means that the time limit was not running before that acknowledgement. 7So I have to decide whether Faye was indebted to Bruce when she died and, if so, whether Lloyd is too late in suing for that debt.

The Evidence 8Mr Ellison SC tendered as exhibits some documents of Rustemul Pty Ltd, Bruce's company, as exhibit A, an affidavit of Mark Vincent McDarra as exhibit B, an affidavit of June Yabsley as exhibit C, an affidavit of Lloyd Svenson as exhibit D, another affidavit of Mark McDarra as exhibit E, and another affidavit of Lloyd Svenson as exhibit F. Mr Pluznyk tendered cheque butts of Bruce and an affidavit of Deborah which respectively became exhibits 1 and 2. Mr McDarra and Mr Svenson were both cross-examined by Mr Pluznyk and Ms Doherty was cross-examined by Mr Ellison SC. I do not propose to summarise the evidence but will refer to it as necessary during these reasons.

Was there a debt owing by Faye to Bruce? 9Mr Pluznyk correctly points to the care that must be taken in approaching cases such as these. He drew my attention to the helpful summary of the authorities contained in Ward J's judgment in Chidiac v Maatouk [2010] NSWSC 386. Mr Pluznyk took me to various passages, including the following paragraphs which are [102] and [103] respectively of her Honour's judgment. [102] "Where claims are made against the estates of deceased persons or based on oral agreements with deceased persons, careful scrutiny is required ... The court generally looks for corroboration of those claims ..." I have omitted references to the authorities cited by her Honour in that paragraph. However, I add that her Honour quoted Isaacs J's judgment in Plunkett v Bull [1915] HCA 544; 19 CLR 544 where Isaacs J noted that it is "not that the Court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinises the evidence very carefully to see whether it is true or untrue." The second paragraph which I extract from Ward J's judgment is [103] - "Similarly, in Lewis v Lewis [2001] NSWSC 321, Hodgson J (as his Honour then was) referred to the need for caution before finding an intention to create legal relations in a family situation." 10Furthermore, Mr Pluznyk points to the absence of any direct evidence of what was said between Faye and Bruce. They were conversations some years into the marriage and between two family members. He reminded me of what was said by the Court of Appeal in Sion v NSW Trustee & Guardian [2013] NSWCA 337. Emmett JA delivered the judgment of the Court with Basten and Barrett JJA agreeing. Mr Pluznyk took me to [39 - 41] of Emmett JA's judgment. The relevant parts are these. In [39] Emmett JA said that the "more informal the circumstances in which the arrangement is made and the vaguer the terms in which the arrangement is expressed, the more likely it will be that an observer would conclude that the parties did not intend to enter into legally binding relations." His Honour had said in a previous paragraph that the "search for an intention to create contractual relations requires an objective assessment of the state of affairs between the parties, and not the identification of any uncommunicated subjective intention that either party may have had." His Honour went on to say the following at [40] - "As a matter of human experience, when family members make a promise to each other it is unlikely that they intend it to be legally binding. As a result, the law presumes that, as a matter of fact, family members do not intend to contract when they make arrangements among themselves (the presumption). The presumption applies with diminishing force the more remote the familial connection ...". I have omitted reference to authorities cited by his Honour. His Honour went on to say at [41] that the "vaguer the language of an arrangement and the greater its informality, the more difficult it will be to rebut the presumption, as it will be more likely that there was no intention to contract." 11Mr Pluznyk argues that there was no formal document to record the loan between Bruce and Faye and that cheque butts had no notation of these loans despite other butts recording loans to Bruce's company. Some of the money was apparently used to build a shed. Mr Pluznyk suggested that the shed was used for Bruce's business which Mr Pluznyk said was inconsistent with the money being a loan to Faye. Mr Pluznyk speculated about entries in Bruce's company's balance sheets and the absence in evidence of the company's tax returns. The house improvements completed with some of the funds were enjoyed by both Faye and Bruce. 12Mr Ellison SC acknowledges the force of what the authorities say about these kinds of transactions but he relies heavily on the affidavit and oral evidence of Mark McDarra, the solicitor who acted for Faye and Bruce in their affairs, including their wills. Most of Mr McDarra's evidence was unchallenged. As Mr Pluznyk pointed out, he was not in a position to challenge it because his client was not privy to most of the conversations. 13I accept Mr McDarra's evidence. He is a solicitor of over 20 years standing and knew both Bruce and Faye well. He had acted for Bruce for most of his, Mr McDarra's, professional life. He was able to supplement his recollection with contemporaneous notes and documents. 14For the following reasons I find that the monies advanced by Bruce to Faye during their lives amounted to a loan in exchange for a promise of repayment. (a)Mr McDarra observed in [4] of his affidavit filed on 3 July 2013 (exhibit B) that both "Faye and Bruce were very astute when it came to their financial affairs". Mr McDarra was in a good position to make that observation and I accept it as accurate. It is consistent with both entering into a marriage at a stage in their lives when they had been married before, had assets, a child in one case and a business in the other case. (b)When I carefully scrutinise the evidence, as I am required to do in such a case, I find corroborative evidence supporting Lloyd's assertion of a loan - (i)There is the evidence of Mr McDarra of his telephone discussion with Faye on 1 August, 2006. This was not a casual exchange of words but a solicitor taking instructions from a client and giving her advice about her will and money transactions. (ii)That conversation is supported by a fax sent by Faye to Mr McDarra which contains her specific instructions to repay Bruce. It sets out sums expended and exactly what for. The total is referred to by her as having "not been repaid to my husband" at that stage and it records her "recognition of his expenditure" on the detailed list. (iii)Then there is Mr McDarra's account of a further conversation on the same day after he received the fax from Faye. Again he is taking instructions and giving advice in his professional capacity to the wife of a very longstanding client of the practice. He made notes on the fax during that conversation and the notes refer to "the loan" and "total owing". That is in annexure B to his affidavit. (iv)Mr McDarra recalls Faye and Bruce attending his office a few days later to execute Faye's will. He recalls Bruce confirming that the funds were a loan, not a gift. It is consistent with him confirming with the other party, his instructions received earlier from Faye about her transactions with that party. (v)In his meeting with Faye some years later on 11 October 2011 Mr McDarra knew she had terminal cancer and, as he said in [21], because "I expected this to be my last meeting with Faye, I paid a great deal of attention to what she said." Again Faye explains the loan. Mr McDarra's notes record "O/S" which must mean outstanding. Then, in a meeting with Faye, Bruce and Deborah, Mr McDarra recalls Faye saying that she wants to "finally pay Bruce back the money I owe him" and that it was "very important to me". Deborah was understandably upset with her mother's condition and the purpose of the meeting. Indeed Mr McDarra recalls Deborah saying "I don't want to know about this stuff now" and in addition "Mum, I'm so sick with worry about you, I can't think about any of this stuff right now. I don't want to know about it. But okay, where do I sign?" She was referring to the signing of a Power of Attorney which was one of the purposes of the meeting. That, in my opinion, may explain Deborah's different recollection about an aspect of the transaction. There is a further conversation on the same day amongst Mr McDarra, Faye and Bruce confirming the loan, indeed explaining why they wanted it that way. (vi)I should say that I do not regard Deborah's response of "Yes" to Mr McDarra in his conversation on 13 December 2011, referred to in [34] of his affidavit which is annexure B, as an admission. It could have been simply an acknowledgement of what Mr McDarra said. (c)As Mr Pluznyk points out, there is not a loan document as such. That requires me to be cautious about finding a loan in family circumstances. But again Mr McDarra throws light on this. He recommended a loan document but for reasons his client Faye explained, she did not want one nor did she think she needed one. (d)Mr Pluznyk is also right about the cheque butts. There is no mention of the purpose of the cheques being for loan advances. This weighs in as evidence pointing against the advances being loans, especially by one so astute in his financial affairs. Other butts record loans to Bruce's business. (e)I am not troubled by some evidence that Bruce may have stored stock from his business in the shed. The evidence is not cogent. Bruce also stored stock at Brookvale and, in any event, it was an improvement to Faye's property into which Bruce and Faye both moved in 2005. The shed was an improvement which may have lasted beyond their occupancy and indeed did. Such evidence is not inconsistent with the advances to Faye being a loan. (f)I am not assisted by speculation on what an item in Bruce's company balance sheet might represent or what may have been in its tax returns. (g)The terms of cl 6 of Faye's will are consistent with a loan. They imply but do not express indebtedness. As Mr Ellison SC points out, Faye acknowledges an intention to "fully repa[y]" Bruce money spent by him "on my behalf" and the clause provides for "any unpaid balance". The clause points to an intention of Faye that she would be repaying Bruce during her life. That is consistent with a contract between them but I acknowledge it is also consistent with an informal family arrangement. Perhaps it can be said that cl 6 is not inconsistent with the arrangement being a contract of loan but does not point exclusively to that conclusion. (h)The purpose of the advances, Mr Ellison SC argues, was not for daily living expenses which would less likely come with a debt, but the purchase of an improvement to real estate, what Mr Ellison SC called "bricks and mortar". 15In my opinion the evidence points overwhelmingly to Bruce having advanced the funds to Faye in exchange for a promise that she would repay the funds either during her lifetime or from her estate on her death. I would have expected Bruce to note the cheque butts as loans but the unchallengeable accounts by Mr McDarra of what Bruce told him leave his intention in the advances abundantly clear. 16I infer that a term of the loan was that pleaded in [5] of the statement of claim, namely that the loan advances would be repaid "on demand". I doubt whether Bruce or Faye turned their minds to the circumstances in which a demand would be made during their lifetimes. In reality, it would probably be if they separated and I think Faye came close to acknowledging repayment on demand when she is reported by Mr McDarra in [8] of his affidavit which is exhibit B that she would not "be in a position to pay it all back before I die unless I sell my unit at Fairlight, or come into some money somehow."

Is recovery of the loan statute barred? 17The loan I have found was a legally binding agreement, more likely a series of agreements, between Bruce and Faye. In exchange for the advances of money, Faye promised to repay Bruce. There were contracts between them and it is based on those contracts that Lloyd, as Bruce's personal representative, is suing Deborah, as Faye's personal representative, for recovery of the money as promised by Faye. The law about the limitation period for suing on a contract is contained in s 14(1)(a) of the Limitation Act 1969 (NSW). It relevantly says - "An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed". 18The plaintiff is Lloyd. The person through whom he claims is the late Bruce. So when did the cause of action against Faye in contract first accrue to Bruce? We know that by 1 August 2006 Bruce had advanced all of the money to Faye that Lloyd is now seeking to recover. The amount is annexure A to exhibit B, which is Faye's fax to Mr McDarra of that date. That amount is the same and made up in the same way as the amount sued for in Lloyd's Statement of Claim issued on 18 March 2013. We also know that two of the advances were made by cheque by Bruce to Faye on or soon after the dates on the butts, 21 January 2005 and 26 April 2005. 19I have concluded that the loan was repayable on demand. The law is that such a debt becomes repayable on the advance of the loan. In Young v Queensland Trustees Ltd [1956] HCA 51; 99 CLR 560, the High Court of Australia, through the joint judgment of Dixon CJ, McTiernan and Taylor JJ, quoted Parke B in Norton v Ellam (1837) 2 M & W 463; 150 ER 839 as follows - "The debt which constitutes the cause of action arises instantly on the loan." 20So the limitation periods for suing on the two advances by cheque expired on or soon after 24 January 2011 and 26 April 2011. As Mr Pluznyk says, there is no evidence about when the balance of the advances were made, those which are items (c) to (i) in Faye's fax. Faye and Bruce moved into Clontarf, according to Deborah's affidavit, exhibit B, in February 2005. So I infer that the other advances were made between then and 1 August 2006. It follows that all of the causes of action had expired by 1 August 2012, over seven months before the Statement of Claim was issued. 21In these circumstances, Lloyd relies on s 54 of the Limitation Act. At this stage it is necessary only to extract subs 1. It reads - "Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation.." Lloyd says that by her wills of 10 August 2006 and 11 October 2011 Faye confirmed the cause of action so that the limitation period up till those respective confirmations did not count. 22There are problems with relying on those wills as confirmations. The claimed confirmation by the will of 11 October 2011 would not be effective for the two loans advanced by cheque. Their limitation periods had already expired before that will was made. Also, the will of 10 August 2006 was executed more than 6 years before the Statement of Claim was issued on 18 March 2013. 23But Mr Ellison SC argues that the effect of both claimed acknowledgements was to "discount" the time before each of them so that the limitation period did not commence to run until the last will was made on 11 October 2011. Each of the two acknowledgements, he says, occurred within the limitation period, original or extended. 24Mr Pluznyk responds with a number of arguments about the wills confirming the cause of action. First he seems to say there cannot be more than one confirmation. In other words, if the first will was a confirmation, then that was it. I agree with Mr Ellison SC. I do not see the basis for such a proposition. I do not see why a person cannot provide more than one confirmation of a cause of action. It seems to me that one purpose of s 54 would be just such a circumstance as this. There is an on demand debt where the creditor does not need to call in the loan for years but the debtor dies. Any acknowledgement within that period would, in my opinion, restart the limitation period afresh so that the creditor is not defeated or the debtor's estate unjustly enriched by non-payment of the debtor's debt. 25Secondly, Mr Pluznyk says that the wills do not "confirm ... the cause of actions". He says there needs to be a distinct admission of the debt. There is no reference to words such as "loan" or "debt" in the wills. I do not think a confirmation has to use the expression "cause of action". Section 54(2)(a)(i) provides that for the purposes of that section "a person confirms a cause of action if, but only if, the person: ... acknowledges, to a person having ... the cause of action, the right or title of the person to whom the acknowledgement is made". It must be remembered here that I have found an agreement between Bruce and Faye made at some stage before her will of 1 August 2006 and acknowledged by both of them to Mr McDarra. The clause in the will is not itself the agreement. Mr Ellison SC relies upon it as an acknowledgement. In that context there is no doubt in my mind that the wills are an acknowledgement by Faye of Bruce's right and title to recover the advances. 26Thirdly, Mr Pluznyk agrees that an "acknowledgement for the purposes of [s 54] must be in writing and signed by the maker" (s 54(4)), but he challenges that these wills can be acknowledgements given the following subs 5 which provides that for "the purposes of this section, a person has the benefit of a confirmation if, but only if, the confirmation is made to the person or to a person through whom the person claims". Mr Pluznyk asks rhetorically where is the evidence that any confirmation to benefit Bruce was "made to" Bruce. 27This sort of question has arisen in previous cases. Both counsel referred me to the High Court's judgment in The Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535; 38 ALR 253. The case concerned an argument that a corporation's indebtedness to a creditor was acknowledged by the corporation's balance sheet given to an officer of the creditor who was on the corporation's board. A not dissimilar issue arose in the United Kingdom in In re Compania de Electricidad de la Provincia de Buenos Aires Ltd [1980] 1 Ch 146, a case referred to by Wilson J (with whom Murphy J agreed) in Stage Club. Murphy, Aickin and Wilson JJ were in the majority in Stage Club. Financial documents as an acknowledgement were also the question in another decision of the High Court referred to by Wilson J, namely Hipworth v Mahar (1952) 87 CLR 335; [1952] ALR 633. Neither counsel took me specifically to either Hipworth or In re Compania. 28It seems to me that these authorities raise two problems for Lloyd. One is contained in Hipworth referring to the financial documents said to contain an acknowledgement. In their joint judgment Dixon CJ, Webb and Fullagar JJ said at 344 the following - "The official who receives the 'Proposal for Adjustment' is directed by s 19 of the Act to communicate it to all the creditors. Admissions contained in the proposal must be regarded as made within the intention that they shall be communicated to the creditors concerned. It seems correct, and in accord with authority, to regard them as acknowledgements given to the creditors. The case is different from that of a will or of an executor's affidavit for probate. Neither a will nor an executor's affidavit is made for the purpose, or with the intention, of its being communicated to creditors." 29The second problem is Wilson J's opinion at 566 that "it clearly emerges from the cases which I have reviewed that the absence of an intention on the part of the debtor to communicate to the creditor or his agent is immaterial so long as the document is actually delivered to him." 30The first problem is resolved, in my opinion, by the second passage I have quoted, namely Wilson J saying "the absence of an intention ... is immaterial". 31If I am wrong about that, the evidence in this case clearly demonstrates that the indebtedness of Faye to Bruce as acknowledged in her will was communicated contemporaneously to Bruce on both occasions. See the first half dozen lines of [14] in Mr McDarra's affidavit, exhibit B, and [30] in the same exhibit. 32Both Wilson J at 566 and Aickin J at 551 - 552 envisaged physical delivery for the purposes of a confirmation being "made to" a person. I think there are two answers to this. First, it is clear to me from the passages I have quoted in Mr McDarra's affidavit, exhibit B, that Bruce knew that Faye's wills contained the clause acknowledging her indebtedness to him. It is also clear that on both occasions Bruce was physically in the same room with Faye and Mr McDarra during (on 10 August 2006) or just after (on 11 October 2011) the signing of the will by Faye. I think this is more than a "deemed making of an acknowledgement to a particular person" relying on service stipulations, an argument rejected by Slade J in In re Compania de Electricidad de la Provincia de Buenos Aires. The debt was verbally acknowledged by the debtor in the exact amount to the creditor by reference to the document which had just been signed by the debtor and which document was, I infer, still physically present. I regard the confirmation as having been "made to" Bruce for the purposes of s 54(5) of the Limitation Act. 33Secondly, if I am wrong in that view, then the will was physically delivered to Mr McDarra who acted for Bruce and was therefore his agent and the delivery was therefore effected on Bruce by virtue of s 11(2)(c) of the Limitation Act. 34For those reasons I am of the opinion that although 6 years had expired before the commencement of this action, the cause of action was confirmed by Faye within that period and the action is not statute barred.

Orders 36I make the following orders: (1)Judgment for the Plaintiff against the Defendant in the sum of $100,570.00 (2)Application by the Defendant for a stay refused. (3)Stand over questions of pre judgment interest and costs to a date to be fixed.

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