Voce v Deloraine

Judgment - EX TEMPORE 1This is an action for the recovery, in debt, of four payments totalling $171,600 said by the plaintiff to have been made to, or at the direction of, her son ("Garry"), now deceased, by way of loans. 2Garry died intestate on 29 May 2010, aged about 49 years. Letters of administration in respect of his estate were granted to the defendant (Garry's de facto spouse) by this Court on 7 March 2011. 3The defendant disputes the entitlements claimed by the plaintiff. 4There is no dispute that the plaintiff paid out from her own funds to, or at the request of, Garry the following amounts: first, a sum of $130,000 paid on 23 August 2002; secondly, a sum of $23,000 paid on 22 November 2002; thirdly, a sum of $6,600 paid on 6 October 2006; and, fourthly, a sum of $12,000 paid on 4 December 2009. 5The first two payments were made to Garry by means of deposits into his mortgage loan account with the Commonwealth Bank. That account related to a loan taken out by Garry, from the Bank, to fund his purchase in early 2002 of two parcels of land at Lake Munmorah. 6I note the destination of these payments for the particular purpose of recording a formal notation that the claims of the plaintiff which I have been asked to determine are limited to common law claims for the recovery of debt. The plaintiff has not advanced any claim to an entitlement in equity or to an interest in the Lake Munmorah land. 7The third of the four payments was made by way of a deposit into the account of a party unrelated to any person involved in these proceedings. The evidence suggests that that party was a supplier to Garry's business as a fencing contractor. 8The fourth payment was made to Garry personally. He may have, shortly thereafter, made a deposit into a bank account; but the plaintiff's case is that her payment was made to Garry personally. 9The defendant contends: first, that each of the four payments was intended to be, and should be characterised as, a gift; secondly, that, if the payments or any of them should be characterised as loans, nevertheless none of them was made with the intention of creating, or affecting, legal relations between mother and son; and, thirdly, that, if they were intended to give rise to legal relations, any indebtedness arising from the first two payments has been extinguished by the operation of ss 14 and 63 of the Limitation Act 1969 (NSW). 10These proceedings were commenced on 21 October 2011 and, as a matter of chronology, the first two payments were made outside the six year limitation period for which s 14 provides in relation to an action in debt. 11The only issue for determination on the limitation question is whether, if the first two payments were to be correctly characterised as loans, they were repayable "on demand". If they were loans repayable on demand, any cause of action the plaintiff has in respect of them arose at the time the loans were made: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566; Haller v Ayre [2005] 2 Qd R 410 at 415. The plaintiff contends, however, that the alleged loans were made on terms that they would be repaid not "on demand", but at some indefinite time ("when jobs finish and I get some money...") or, in the event, on Garry's death. 12The plaintiff accepts that she bears the onus of proving that the payments upon which she sues should be characterised as "loans" rather than as "gifts": Heydon v Perpetual Executors Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111 at 113; Coshott v Sakic (1998) 44 NSWLR 667 at 671E. 13Neither side of the record has sought to rely on any presumption arising from the nature of the relationship between mother and son. 14There is no evidence of any agreement for the payment of interest and, insofar as the plaintiff seeks to recover interest on Garry's alleged indebtedness, she confines her claim to one of prejudgment interest under the general provisions of the Civil Procedure Act 2005 (NSW), s 100. 15Evidence was given at the trial of the proceedings by the plaintiff, a friend of the family (Mr C B Nichols) and the defendant. All three were cross-examined. I am satisfied that all of them endeavoured to give their evidence honestly and to the best of their ability. In recording that observation, I acknowledge the caution required of a judge in resolving disputes of fact in which a critical witness (in this case, Garry) is dead: Plunkett v Bull (1915) 19 CLR 544 at 548-549. 16I also note that, with the passage of time and a degree of personal frailty, the plaintiff's memory of events failed her on more than one occasion during the course of her cross-examination. 17I do not regard any deficiencies in her evidence arising from a lapse of memory as decisive of the questions I have to decide. That is because: first, as counsel for the defendant fairly conceded, there is no dispute between the parties that the four payments upon which the plaintiff bases her action were made on the dates asserted by her and they were made out of funds owned by her; secondly, each of the four payments is corroborated to some extent (but not fully) by bank records; and, thirdly, although there is a direct conflict between the plaintiff and the defendant about the circumstances in which the fourth payment arose, a resolution of that conflict in favour of the plaintiff is not critical to the plaintiff's claim. 18In relation to that transaction (the fourth payment), for completeness I do, however, record that I accept the evidence of the defendant that she did not ask the plaintiff, on behalf of Garry, to make the payment. On the other hand, I also accept the plaintiff's evidence that she spoke to Garry personally; that he personally communicated his request for the money paid out by her on that occasion; and that the plaintiff, Garry and Mr Nichols attended banks to facilitate the payment. Mr Nichols' evidence, which I accept, goes some way to corroboration of the plaintiff. 19A major hurdle for the plaintiff - indeed a fatal one - is the question whether any of the transactions the subject of the four payments was accompanied by an intention to create, or affect, legal relations. In my assessment there was no such intention, and I so find. 20I approach this question without reference to any presumption; but, rather, treating the question as one of fact, to be determined on the whole of the evidence: Ermogenous v Greek Orthodox Community of SA Inc. (2002) 209 CLR 95 at 105-106. Cf. Balfour v Balfour [1919] 2KB 571; Jones v Padavatton [1969] 1 WLR 328 at 331H-332B, 332G-333A, 336D-H and 337E-F. 21My finding as to the absence of the requisite intention to create, or affect, legal relations is based upon the plaintiff's own evidence and objective, surrounding circumstances. Garry was the plaintiff's only surviving child. His brother, tragically, died before any of the events with which these proceedings are concerned. On her own admission, the plaintiff treated Garry with indulgence, out of an abundance of love: "...because he was my son and I loved him, I would always give in [to his requests for money] and continue to lend him money". 22In the course of her oral evidence, she disclosed that Garry had a drug habit, which possibly provides a partial explanation for her approach to dealing with him. 23Significant also was her evidence that her arrangements with Garry were entirely informal - neither reduced to writing nor the subject of legal advice - and she never contemplated taking, or threatening to take, legal action against Garry during his lifetime. Garry was "family" and it would not be appropriate to threaten legal action against "family". 24The absence of any agreement, or expectation, about the payment of interest is consistent with the absence of any intention to create or affect legal relations. 25I have said enough, at this point, to conclude that the plaintiff's action must fail. Even if (in the abstract) characterised as "loans" rather than "gifts", there was no intention that the moneys paid out would be recoverable by legal action. They may have been "debts of honour" between family members; but, in the eyes of the law, they were equivalent to gifts. 26For completeness I record my conclusion that, if properly characterised as actionable "loans", the first two "loans" were repayable on demand and, accordingly, extinguished by the operation of ss 14 and 63 of the Limitation Act. Even on the plaintiff's evidence there was no agreement between the parties inconsistent with the moneys the subject of the loan or loans being repayable on demand: Ogilvie v Adams [1981] VR 1041 at 1043. 27All things considered, the plaintiff's action must be dismissed. In recording that conclusion I note that although the proceedings were commenced by summons the parties subsequently filed pleadings. The plaintiff filed a statement of claim on 2 March 2012 and the defendant filed a defence on 28 May 2012. My attention has not been drawn to any order requiring the proceedings to proceed by way of pleadings but, in the event, nothing turns on that. The formal order most appropriate is simply that the proceedings be dismissed.