Toumazou v Toumazou and Ors [2002] VSC 258

Toumazou v Toumazou and Ors [2002] VSC 258 - VSC 2002 case summary — Zoe

[18]

(a) The secondnamed plaintiff claims monies for loans and for alleged misrepresentations relating to loan transactions in respect of what are referred to in the pleadings as:

* the first loan to Georgiou

* the Reveneski (sic) loan

* the second loan to Georgiou

* the Tuckers Road agreement

* the Poppies Court loans

* the Panache loan

* the $30,000 loan

* the Georgiou holiday loan

* the Main Road loans

* the $70,000 loan.

(b) In the alternative these claims are put as claims for unjust enrichment;

(c) The defendants deny a variety of the alleged elements of the above transactions, but their principal defence is that the above alleged loan transactions are properly characterised as and reflect reductions of indebtedness by TVK to Larnaca and other entities associated with Georgiou. Further the execution of the mortgages by TVK evidenced and acknowledged the reconciled position of the parties at the end of the relevant transactions;

(d) The secondnamed plaintiff also makes a quantum meruit claim with respect to the alleged supply of materials for and work and labour done with respect to a house at Osset Street, Sorrento;

(e) The defendants deny (inter alia) that the materials were supplied by the secondnamed plaintiff and say they were paid for with monies to which the defendants were beneficially entitled, they deny that any work was done pursuant to any arrangement for reward, and they deny that the quantum of the claims has been established;

(f) The plaintiffs claim that the Eldale Avenue mortgages were not executed on behalf of TVK but were forged, alternatively they are void by reason of the doctrine of non est factum, further and alternatively they were procured by unconscionable conduct or procured by misleading and deceptive conduct;

(g) These allegations are denied;

(h) The plaintiffs claim that the wife and/or Georgiou and/or Georgiou's wife wrongfully caused to be lodged with the Australian Securities Commission purported resignations of the husband as a director of Grenadier and Jelena, and purported transfers of the husband's shares in Grenadier and Jelena to Georgiou. The husband asserts that the relevant documents purporting to bear his signature were forged;

(i) The matters alleged concerning the removal of the husband as a director and shareholder of Grenadier and Jelena, the alleged forgery of the mortgages and the procuring of the last mentioned loan (the "$70,000 loan") are said to have constituted a conspiracy to defraud the husband and TVK;

(j) The defendants say that the husband himself executed the relevant company documents and expressed a desire to have nothing to do with companies associated with Georgiou. They deny the alleged conspiracy to defraud.

(k) The thirdnamed defendant counterclaims the balance owing pursuant to the mortgage to Larnaca being $55,562.84 together with interest under the mortgage.

[23]

"An account stated may take either of two forms (per Jordan CJ in Commonwealth Dairy Produce Equalization Committee Ltd v McCabe (1938) 38 SR (NSW) 397 at 401). The two forms are explained by Viscount Cave in Camillo Tank Steamship Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134 at 143: 'The expression 'account stated', as Mr Jowitt pointed out in his able argument, has more than one meaning. It sometimes means a claim to payment made by one party and admitted by the other to be correct. An account stated in this sense is no more than an admission of a debt out of court, and while it is no doubt cogent evidence against the admitting party, and throws upon him the burden of proving that the debt is not due, it may, like any other admission, be shown to have been made in error. This is the plain result of the authorities, such as Perry v Attwood (6 E and B, 691) and Laycock v Pickles (4 B and S, 497). Where the transaction is of this character, it makes no difference whether the account is said to be stated or to be 'stated and agreed'; the so-called agreement is without consideration and amounts to no more than an admission. There is a second kind of account stated where the account contains items both of credit and debit, and the figures on both sides are adjusted between the parties and a balance struck. This is called by Mr Justice Blackburn, in Laycock v Pickles, supra, a 'real account stated', and he describes it as follows: 'There is a real account stated, called in old law an insimul computassent, that is to say, when several items of claim are brought into account on either side, and, being set against one another, a balance is struck, and the consideration for the payment of the balance is the discharge of the items on each side. It is then the same as if each item was paid and a discharge given for each, and in consideration of that discharge the balance was agreed to be due'.' Mr R M Jackson, in The History of Quasi-Contract in English Law (Cambridge, 1936) p.110, describes the former kind of account stated as admissions, the latter as contracts: 'The latter [he observes] should be discussed within the body of contract law, perhaps the most convenient place being in proximity to Accord and Satisfaction'."

[28]

"My ex-wife she did organise an appointment behind my back with the accountant, Anthony Pandelli, and when I went home after work she says to me we have to go to Pandelli, Pandelli need us to talk something. I went to Anthony Pandelli, the accountant, and then Anthony Pandelli, he did raise up to me and he says to me we are all agreed, Georgiou, Fraser, Anthony Pandelli, P. Pandelli, the solicitor, and David Phillip, we done some corruptions (?) and you have - we give you $300,000 and you send yourself bankrupt, you leave your place, and we give you $300,000 to send yourself - to send the company bankrupt and then Pandelli says to me I guarantee you, I'm gonna fix your papers, we can default the tax, default the bank where they borrow the money, we have done it with National Australia Bank and you got nothing to lose, and I did say no. My ex-wife, she argued, she start screaming, I'm gonna leave you, I'm gonna take the kids and I got all my family behind to back me up and then on the way home we had the kids, I had the call of Mr Georgiou, he says to me I'm here, I come home, I didn't know where you was at and I stayed with the kids until you come back. When we went back and my wife she knew - I believe she knew Georgiou, Leon Kyriacou and George Constantinou, her cousin, was there, they start forcing the issues on me, you're gonna have to do it, you have to do it, otherwise I'll divorce you and you're gonna listen what Georgiou - Georgiou was there and he put - he says to me at the end after a big fight, I was on my own, the kids they was there, I didn't want to hurt my kids, I didn't want the kids to see any argument with the mother or whatever and I stopped screaming and then Georgiou says, Leon Kyriacou is getting invalid pension and if you - you have to sign an agreement - he did give you the $100,000 over to CTS and he says to me we have to sign an agreement to take it to Pandelli to fix the accounts, which is the accountant. And that's what he put in the agreement, one agreement in front of me, and I signed the agreement but definitely there wasn't any mortgage or anything."

[38]

"When you received the money from CTS or Mr Kyriacou it was in May '95 - it was at or about that time that you had this discussion with Mr Georgiou, was it?---To do the account? Yes?---Yes, we have several occasions then he was running for money and I remember the time when he says to me, when he finish he says to me, we can't do it, we can't do everything before one year - after one year when he finish with the agreement with the bank. So that's when I say in May '95 because it was close - the agreement with Georgiou was finishing the year after he make the agreement with the bank and that's where I make the - I ask him to go to the accountant, we go take the books to the accountant because he had the books, he had the TVK accounts of Bank of Melbourne and I was asking - he had the Grenadier Tower because he was signature on the account, we have the cheques signed and everything, and he has to go there to say where this money's gone and where and put everything into the accountant to do the account and after that that's when he start, when he start his - his construction on his own house, that's when we come to argument. Then his daughter and the brain haemorrhage and then everything start - back in February, everything start back in February with all the account - all the accountant, the solicitors, and everybody was dealing and nobody give me an answer, I was running to them and everybody chasing my - I believe my ex-wife, she had the meeting - they had the meeting all of them at the hospital because Georgiou was staying in the hospital with his daughter and his wife. My ex wife, the only thing when I was seeing my ex wife, she was - I would see her when she was coming home to pick up the kids, cook and take the food to the hospital, full plates of food to feed Mr Georgiou and his family when he was in the hospital to have a meeting. And the other thing that was happening there, Georgiou given written orders to all his family, nobody can go to the hospital to visit Linda without calling Georgiou and get permission from him who is going to go to the hospital and who is not going to go. So I didn't have any - I didn't have any chance to have any conversation with him or whatever. The only thing, in February 1996 I went to Mr Pandelli and he says to me, I had the accounts, $200,000 on bills and all the borrowings was under TVK and K & V Family Trust and Mr Pandelli says to me, it's good to pay less interest, you make housing loan, which we did take a housing loan in March 1996. And as I understand now what all the evidence coming out, the housing loan it was for the bank to move in the house and do what they had to do with the mortgages. That's all I understand what the intention was from all of them. And from there on, after my ex wife leave, everybody all in the papers, putting my children, calling me at 10 o'clock at night, telling me 'You're an arsehole', sorry about my words but you did ask me and I have to say my story too and what they did to me and what I been through, telling me I'm an arsehole and I can hear Georgiou's words telling him off, I was jumping up and down so they can make me getting upset to go make a damage or do something wrong so they can get me with the police. They put me involved with the police, they done all such a things which not a human being he can go through it. We did try several occasions with the solicitor, the solicitor send in the letters, not answered of nobody and everybody was working and getting the papers. And one day on the inspection when we had with Mr Constantinou, Mr Fraser did send a letter Georgiou had the TVK books and he says he (indistinct) him for the TVK books, everything was in Georgiou's hand. From there on, Georgiou had a meeting, he was calling the tradesmen, he was calling all the people, he was pushing me off the work. I can't believe what's happening, why he done all this, a person which is totally was (indistinct) and destroy my ---"

[49]

Before turning to other matters I should deal with the alternatives to forgery and non est factum pleaded on behalf of the plaintiffs with respect to the Eldale Avenue mortgages. The plaintiffs allege that "if (which is denied) TVK did execute the mortgages, then the conduct of CTS and Larnaca in procuring the said execution was unconscionable and the mortgages ought to be set aside in equity." I do not accept this proposition. In particular I do not accept that the husband was misled as to the character of the documentation which he signed, or that the emotions occasioned by the family context of the dispute entitle TVK to avoid the documents. Insofar as it is asserted TVK should have been allowed a cooling off period and that it should have been advised to obtain its own independent legal and accounting advice, I find that there was no obligation on the defendants to provide such a cooling off period or so advise the husband in the circumstances of this case. I find that the husband was in fact provided with Exhibit 54 prior to the meeting at which the mortgage documentation was executed, and that he had the opportunity to seek independent legal and accounting advice prior to settling the account. Indeed I find that he did consult with his accountant prior to the execution of the mortgages (although that meeting was from his point of view unsatisfactory). Further I accept that the nature of the calculations contained in Exhibit 54 was not only self-evident but discussed with him prior to the execution of the mortgages. I do not accept that the circumstances of this case are analogous to those in Garcia v National Australia Bank[4]. Lastly, it is to be observed that the husband was only one director of TVK and the execution of the mortgage documents was done by agreement between all directors (and indeed shareholders). For the above reasons the claim with respect to unconscionable conduct and the further alternative claims with respect to misleading and deceptive conduct fail.

[53]

(a) There is a series of loan documents which directly corroborate the character of disputed transactions which the defendants assert (namely loans to TVK) but which are inconsistent with the plaintiffs' characterisation of such transactions. These include:

* a series of acknowledgments of receipt of loans (some signed some not signed);

* computer generated accounts of TVK which include characterisation of relevant payments as "pay loan" (Exhibit R);

* cheque butts which are annotated with the words "pay loan".

Taken on their own some of these documents might be explained as fabrications or otherwise misleading but taken together I find that they are on the balance of probabilities strongly corroborative of the defendants' case.

(b) TVK's records were written up by the husband, the wife, their eldest son (as computer operator) and Georgiou who "helped the [husband] out" (tpp.43, 60 & 61).

(c) The fact that documents relied on by the defendants do not provide a seamless record and that there are no loan arrangement documents relating to various periods of the dealings (eg the period in which Georgiou was overseas in Cyprus) does not detract from the credibility of these documents, but rather suggests they are authentic. If they are forged, one might ask why the forgeries result in an incomplete and inconsistently documented sequence.

(d) There are absolutely no documents which acknowledge the receipt of loans from TVK to Larnaca. I would not have expected sophisticated documentation but I would expect at least some handwritten receipts of the type produced in support of the defendants' case if the husband's characterisation of transactions was correct.

(e) The husband's own case is not put squarely on the basis that he kept tabs on the financial position of TVK throughout the relevant period. Indeed, he claims in part that Georgiou and the wife misrepresented to him that $100,000 was advanced to TVK pursuant to a mortgage granted over the then matrimonial home at 23 Parklands Close, Donvale. It is implicit in this claim "The Reveneski Loan Misrepresentation" referred to in the Further Amended Statement of Claim that the husband had no detailed knowledge of TVK's bank accounts for the period of over a year during which he says he made five payments. I do not find it credible that on the one hand he says he was not aware that TVK had not received $100,000 but on the other hand he claims to have a detailed recollection of TVK's continuing financial position.

(f) The evidence of Georgiou and the wife is that Georgiou produced a series of calculations of current balance as between the parties during the course of the business dealings. These have been produced to the Court and are corroborative of the course of dealings for which Georgiou contends. The husband's evidence that no such documents were produced and his failure to produce any ongoing calculations reconciling a current balance as between the parties produced during the course of the history of the dealings, are not credible. Conversely I accept the evidence of the wife that the husband kept a red manilla folder in which he filed documents which Georgiou gave to him from time to time, recording the ongoing position with respect to loans.

(g) Throughout the period of mutual business undertakings between the parties, Mr Anthony Pandelli ("Pandelli") acted as accountant for TVK, Larnaca, Grenadier, Jelena and Panache. I accept his evidence that he reconciled the accounts of these entities on an ongoing basis. Further I accept his evidence that he was never aware of any loans being made to Georgiou or his companies by the husband, the wife or TVK.

(h) I accept that in March 1996 the husband met Pandelli at the accountant's office and at the meeting the accountant endeavoured to analyse the then financial position of the company and establish the amounts that were owed by TVK to banks and other creditors. Pandelli also sought to ascertain the value of the company's assets with a view to establishing the solvency of the company. This analysis was consistent with the characterisation of transactions for which the defendants contend rather than that of the plaintiffs.

(i) Correspondence from solicitors acting for the husband in the early stages of the dispute is not consistent with his current account of loan transactions.

At a glance

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Judgment (109 paragraphs)

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Cases Cited (5)