DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   The plaintiff claims ownership of certain items of property, predominantly dredging equipment, contained in two shipping containers which were delivered by the third defendant to the first defendant, acting on behalf of the second defendant, on or about the 18^th day of October 1996. The plaintiff says that the containers contained the equipment particularised in paragraph 13 of his amended claim. The plaintiff’s claim is for damages (including exemplary damages) for conversion against the first and second defendants; for damages for breach of contract and/or negligence, and exemplary damages against the third defendant; and for damages pursuant to s. 82 of the Trade Practices Act and exemplary damages against the fourth defendant.

2. [2]
   There is some common factual ground. The plaintiff and the first defendant were friends in 1994. The first defendant and his wife were also friendly with the plaintiff’s wife. The first defendant is a businessman and property developer. In 1994 he had no experience in the dredging and drilling business.

3. [3]
   The plaintiff on the other hand was a very experienced dredging and drilling operator. His company Dredging and Off-Shore Drilling Pty Ltd (DOD) had operated in this business since 1988. The plaintiff had wide experience in various dredging operations, including sand mining.

4. [4]
   The first defendant was familiar with some property in Townsville known as Laudham Park. He and the plaintiff travelled to Townsville and inspected the property and it was thought that the property had potential for sand and hard rock extraction. An option to purchase the property was taken by, or on behalf of, the first defendant but did not proceed because of potential difficulties in setting up such an operation.

5. [5]
   The plaintiff and the first defendant then became interested in a sand extraction contract operated on behalf of CSR at Blacks Weir on the Ross River in Townsville. The first defendant commenced negotiations with CSR Limited in or about early 1995 and ultimately was successful in obtaining an agreement in principle from CSR. The relevant documents are set out in pages 1 to 5 of Exhibit 30 (the agreed bundle of documents).

6. [6]
   The plan as between the first defendant and the plaintiff was that the first defendant would, in effect, provide finance and business guidance and advice, and the plaintiff would operate the dredging business and extract the sand. The business would be conducted through a company Alpha Bay Pty Ltd (Alpha Bay) arranged by the first defendant.

7. [7]
   As the volume of evidence heard and received over a two week trial attest, apart from the above brief summary, there is very little common ground between the parties to the dispute.

The dispute

8. [8]
   The plaintiff says that the arrangement between he and the first defendant was quite simple. By late 1994 he had separated from his wife and was staying on and off with the first defendant and his wife at their house at Buderim. The plaintiff’s former matrimonial home was also at Buderim. By this time the first defendant had become aware of the extent of the equipment owned and operated by DOD, and the plaintiff says the first defendant and his wife encouraged him to consider an arrangement whereby he could defeat any property settlement undertaken by his wife under the Family Law Act 1975. To this end, over a period of time, the plaintiff says that it was agreed between he and the first defendant, with the full knowledge of Mrs Schutz, that the plaintiff would transfer major items of equipment of DOD to the first defendant, to be held on trust, so that such property could then be “hidden” from his wife’s lawyers if a property settlement eventuated. The plaintiff was vague about details of this arrangement. There apparently was no consideration except that the first defendant was doing it as an act of friendship. The plaintiff also maintained that the first defendant was prepared to do it because he could see a legitimate and profitable business opportunity in a joint sand mining business with the plaintiff. The plaintiff says that a document was drawn up on the first defendant’s computer in his office at Buderim, and later placed in a filing cabinet, and that he has not seen a copy of that agreement since.

9. [9]
   The first defendant entirely disputes this evidence. His evidence is corroborated by his estranged wife. The first defendant says that the plaintiff indicated to him, and to his wife, that DOD and the plaintiff were in deep financial difficulty. The plaintiff told the first defendant and Mrs Schutz that he was in danger of losing his equipment to his financiers, Australian Guarantee Corporation. The plaintiff maintained that the equipment was worth in excess of $3 million, but if sold by mortgagee auction he would suffer a significant loss. The first defendant says that he then set out to attempt to refinance DOD’s various loans. It is common ground that he approached Esanda and that Esanda were not interested. It is also common ground that the first defendant arranged a meeting with Mr Spurling from AGC and the plaintiff to discuss the matter.

10. [10]
    The first defendant says that he and the plaintiff continued to talk. Ultimately the first defendant asked the plaintiff how much he would need to pay out the equipment leases, transport the equipment to Townsville and modify the dredging equipment for the purposes of the CSR contract at Blacks Weir. The evidence of the first defendant and his wife is that the plaintiff said “$400,000 would shit it in”. The first defendant then commenced negotiations with his bank, the National Australia Bank branch at Maroochydore, and in particular his long time manager Mr Ron Edmonds. Ultimately he was successful in obtaining a bank facility for $400,000 on the security of bills of sale over the equipment, personal guarantees of he and his wife and bills of mortgage over property owned at Buderim by his wife to support the guarantees. The bank approval letter dated 15^th of March 1995 is at page 11 of Exhibit 30.

11. [11]
    The first defendant organised the shelf company Alpha Bay to undertake the CSR contract and operate the business. That company later changed its name to Dredge Corp International Pty Ltd (the second defendant). The first defendant says that it was agreed between he and the plaintiff that Alpha Bay would purchase the equipment of DOD and would then commence the sand mining operation at Blacks Wier. As the letters set out in the agreed bundle of documents between Alpha Bay and the bank attest, it was anticipated that the CSR contract was going to be highly profitable. In fact the bank repayment schedule anticipates full repayment of the loan over a two year period.

12. [12]
    The first defendant says that he and the plaintiff further agreed orally that once the bank debt was paid off, Mrs Schutz, who held 50% of the shares in Alpha Bay, would transfer her shares to the plaintiff and be released from her guarantees, and her property would also be released under the bills of mortgage. The first defendant, and indeed his wife, confirm that she was an extremely reluctant participant in the whole arrangement. She did not want to do business with the plaintiff. She says that she was bullied into the agreement by her husband.

13. [13]
    Mrs Schutz proved to be a wise prophet. From the outset there were difficulties. The first defendant says that the plaintiff took much longer than agreed to modify the dredge and to ship all the equipment up to Townsville to begin the dredging operation. CSR became very unhappy with the lack of progress. Once dredging began the quantity of sand produced was nowhere near expectations. The venture was a loss-making enterprise from the start.

14. [14]
    Disputes arose between the plaintiff and the first defendant to which some reference will be made later in this judgment.

The Issues

15. [15]
    The plaintiff’s claim is that the property contained in the two containers was his personal property. In the second week of the trial the plaintiff obtained an assignment of cause of action from the liquidator of DOD. The plaintiff’s case, therefore, is that if I am not satisfied that the property was that of the plaintiff but of DOD, I could order that the plaintiff receive the benefit of any award that would otherwise flow to the liquidator because the issues involved in any subsequent litigation will be exactly the same. The second and, in my opinion, fundamental issue is, what was the nature of the agreement between the plaintiff and the first and second defendants and did that agreement involve the transfer of all of the dredging equipment owned by DOD as at March 1995. The resolution of that question will largely resolve the central issue in the trial and the issue of the assignment may well be ancillary.

16. [16]
    At a very early point in the trial Mr Collins, who appeared for the first and second defendants, tendered the original agreement a copy of which is reproduced at pages 15 and 16 of Exhibit 30. The agreement is in the following terms:

“AGREEMENT TO SALE & PURCHASE

Dredging & Offshore Drilling Pty Ltd ACN 010 832 363 (The Vendor) and Alphabay Pty Ltd ACN 050 408 930 (The Purchaser) hereby agree to sell and purchase the following equiptment [sic] listed in the schedule hereunder for the sum of Four Hundred Thousand Dollars ($400,000)

SCHEDULE OF PLANT & EQUIPTMENT [sic]

TRUCK:

Mack Superliner. Chassis No R 721 RS 1038, Engine No 2Y9983 1984 model

FLOAT:

 Lusty-Allison Quad. Qld Reg 780QCA, 2.5 years old

TRI-AXLE:

Haulmark 40ft. Qld Reg 031 QCM, 1978 model fully rebuilt 6 months ago.

EXCAVATOR:

Komatsu PC 220/5LC Serial No 35931, 1990 Model Swamp Tracks

LARGE DREDGE:

Engine Caterpillar 3406 B DITA (No 4TBO2146), Pumps 8/6 EEKG 8/6 EEG 4/3 SCS, Length 34 metres Width 4 metres, Cutter Suction Bucket Wheel Type, Anchor Booms and Sliding Spudding System

Age of Equiptment [sic] 2 years

MID-SIZE DREDGE:

Engine Caterpillar 3406 B DIT (No 6TBO7225), Pumps 8/6 EEG 4/3 SCS, Length 12 metres Width 4 metres, Cutter Suction Dredge

Age of Equiptment [sic] 4 years

SMALL DREDGE:

Engine Caterpillar 3208 DI, Pumps 6/4 6/5 Hydrastal Length 9 metres Width 3 metres, Cutter Suction Dredge

Age of Equiptment [sic] 6 years (total rebuild 2 years ago)

BOOSTER PUMP:

Engine Caterpillar 3406B DITA (No 6TBO9676), Pump 10/8 FFGH Skid mounted base with fuel tank. Age of equiptment [sic] 2 years

SMALL BOOSTER PUMP:

Engine Perkins 4236 (No 463478), Pump 6/4. Age of equiptment [sic] 3 years, Skid Mounted base

Engine Lister (No 69468), Pump, Vacuum System 6/3 Alis Chambers Skid mounted base with fuel tank. Age of equiptment [sic] 4 years (recently rebuilt)

PIPELINE:

3kms 250mm 1D Class 6, 1.5 kms 200mm 1D Class 6, 2x250mm Linatex flexs, 2x200mm Linatex flexs, Victrahaulic Couplings & bolts and Pontoons

GENERAL EQUIPTMENT [SIC]:

2000 litre Skid Mounted Fuel Tanks, 3 Cyclones, 1 Set Stainless Steel Dewatering Screen, Various Fittings and Pipe fittings to suit, Lincoln 275 Q Diesel Powered Welder plus various hand tools etc

The Vendor warrants that it is the owner or beneficial owner of the equiptment [sic] in the schedule above and that it will discharge any leases or chattel mortgages held by third parties over any items of equiptment [sic] contained in the schedule prior to or at the time of settlement in order to pass clear title over all of the equiptment [sic] referred to herein to the Purchaser. Settlement of this contract shall be 22^nd March 1995.”

17. [17]
    Mr Redmond objected to the receipt of that agreement into evidence on the grounds that it was an instrument chargeable with stamp duty and had not been stamped. After hearing extensive argument I ruled against the objection and admitted the agreement as Exhibit 1 upon my indication that I would provide full reasons in my judgment.

The Stamp Duty Point

18. [18]
    The plaintiff says that the agreement contained in Exhibit 1 is a fabrication and that his signature on page 2 is a forgery. This too is a very important issue in the trial as the resolution of that issue affects generally the question of the credibility of the main parties.

19. [19]
    The defendants say that the agreement sets out, in part, the business relationship agreed between the parties and forms the basis of the raising of the $400,000 loan facility from the fourth defendant. Section 4A of the Stamp Act 1894 is in these terms:

“(1) An instrument chargeable with stamp duty (whether under this Act or under any prior Act) shall not, except in criminal proceedings, be given in evidence, or be available for any purpose whatever, unless it is duly stamped.

2. (2)
   However – 

1. (a)
   When any such unstamped instrument is tendered as evidence in any court in any proceeding (except criminal proceedings) – the Judge, … of such Court may admit the same in evidence on the party producing the same in evidence for the party’s solicitor giving such security or written undertaking as may be prescribed to pay the whole or the deficiency of the stamp duty and any penalty that may be imposed; …”

20. [20]
    The defendants all submit that the agreement is not “an instrument chargeable with stamp duty”. At the start of argument Mr Collins, for the first and second defendants, informed me that if I favoured Mr Redmond’s objection his client would give the required undertaking. I was concerned during argument that by deciding this issue I could be seen, in effect, to be usurping the power of the relevant authority to assess duty payable. However, in reality all I can decide is the evidentiary objection and my ruling does not bind the Commissioner of Stamp Duties and does not go beyond this trial.

21. [21]
    To appreciate the various arguments it is necessary for me to consider the true nature of the agreement between the parties. The plaintiff’s argument essentially relies on the contention that the agreement is an unconditional contract for the sale of goods and is, therefore, chargeable with stamp duty pursuant to the Act. It is common ground that the items the subject of the agreement are goods in terms of the statement by Dixon J (as his Honour then was) in North Shore Gas Co. Ltd. v Commissioner of Stamp Duties (NSW) (1939-40) 63 CLR 52 at 67:

“… The words were understood to include all tangible moveable; that is to say they covered all chattels personal not being choses in action or indicia of title thereto”.

22. [22]
    If duty is payable, the agreement must constitute either a “conveyance or transfer” of the goods as defined in s. 49(1) of the Stamp Act 1894 (see McCaughey v Commissioner of Stamp Duties (NSW) (1914) 18 CLR 475 per Griffiths CJ at 484) or a contract or agreement for the sale of property which is not exempt by operation of s. 54(2) of the Stamp Act 1894. This in turn depends on a proper construction of the agreement dated the 17^th of March 1995. If no property vests in the second defendant  by virtue of the agreement (or instrument) itself, then s. 49(1)(a) of the Stamp Act 1894 would not apply. Similarly, if the agreement is caught by s. 54(2) of the Stamp Act 1894, duty would not be payable. Mr Redmond relies on s. 21 of the Sale of Goods Act 1896 rule 1 which states:

“… where there is an unconditional contract for the sale of goods in a deliverable state, the property in the goods passes to the buyer when the contract is made”.

23. [23]
    In my opinion the agreement is clearly conditional in its terms. It is a contract to sell and purchase which requires the performance of other obligations before title passes, for example, the release of certain securities over some of the goods. Section 20(1) of the Sale of Goods Act 1896 adopts the general rule that title passes when the parties so intend. In my opinion it is quite clear that the parties did not intend title in any goods to pass on the 17^th of March 1995. Their clear intention is that title would pass upon performance of the various obligations set out in the agreement itself. For the same reasons it is quite clear that no property vested in the second defendant after the execution of the agreement which was not vested in it before execution and, therefore, s. 49(1) does not apply to the instrument. Mr Redmond did not argue that the agreement constituted the acquisition of a business, as defined in s. 54A(7) of the Stamp Act 1894. This point was raised by Mr Lilley on behalf of the fourth defendant in his submission and adopted by Mr Collins on behalf of the first and second defendants. I agree with Mr Lilley that this agreement clearly does not constitute the acquisition of a business, despite the wide definition of that expression in the Act.

Is the agreement a fabrication?

24. [24]
    As credit is such an important issue in this trial the logical place to start is with the evidence concerning the disputed signature of the plaintiff on Exhibit 1. The first defendant and his estranged wife Kerry Schutz say that the plaintiff signed Exhibit 1 in their presence in the office in their home at Panorama Drive Buderim on the 17^th of March 1995. Mrs Schutz says that she witnessed the plaintiff’s signature at the time. The plaintiff says that he did not sign Exhibit 1 – that it does not represent the agreement he reached with the first defendant and the document is a forgery. Mr Collins tended Exhibit 1 and he, therefore, has the onus of establishing, on the balance of probabilities, that it is the agreement entered into between the parties. Mr Redmond for the plaintiff alleges that the signature of his client is a forgery and accepts that he has an evidentiary onus to satisfy me to the standard contemplated by Briginshaw v Briginshaw (1938) 60 CLR 336; see also Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, approved more recently in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 573.

25. [25]
    In support of his case the plaintiff relied on the evidence of Mr Greg Marheine, an expert forensic document examiner, who says that in his opinion the disputed signature is a forgery. The first defendant called Mr Chris Anderson, a forensic document examiner from New South Wales, who came to the opposite conclusion. The first defendant also called Ms Barbara Nicol, who was not called as an expert forensic document examiner but rather as an expert in handwriting shape and style. Her evidence, particularly as regards writing ratios, supports the evidence of Mr Anderson.

26. [26]
    The plaintiff’s attack on Exhibit 1 is not confined to the handwriting evidence. Indeed Mr Redmond in his final submissions seemed to rely only faintly on the evidence of Mr Marheine. He made a forceful submission that the very circumstances surrounding the use and movement of Exhibit 1, together with its contents, strongly suggest that it is clothed with illegitimacy. His argument had some force and cannot be lightly ignored.

27. [27]
    The first defendant said that he took Exhibit 1 to the bank and I infer that if this occurred he did so sometime between the 17^th of March 1995 and the 21^st of March 1995. Mr Lilley confirms that the document came from the bank file, however, there is a paucity of evidence from the bank on this point. The first defendant’s dealings with the bank over this whole transaction were primarily with the manager Mr Ron Edmonds. I infer that the first defendant enclosed a copy of the schedule set out at page 142 of Exhibit 30 with his letter to Mr Edmonds dated 9^th of March 1995 (page 6 Exhibit 30). This schedule replicates the list of equipment on page 1 of Exhibit 1. I also infer that the encumbrance details of equipment, set out at page 141 of Exhibit 30, was forwarded to Mr Edmonds under cover of a letter from the first defendant, dated the 13^th of March 1995, which is at page 7 of Exhibit 30.

28. [28]
    At a late stage in the trial, in fact after concluding his evidence and upon being recalled to the witness box at the start of the second week of the trial, the plaintiff gave evidence, by reference to some documents in his possession which had not previously been discovered, that a lot of the equipment set out in Exhibit 1 is misdescribed. Mr Redmond relied in his submissions on this evidence to attack the legitimacy of Exhibit 1. He submits that this is further evidence to suggest that the first defendant has fabricated the document.

29. [29]
    I find it extraordinary that this issue was not raised at the outset. The plaintiff says that this was always his position, that is that the equipment was misdescribed. He was unable to explain in any satisfactory way why it was not raised earlier. I am satisfied that he did not raise this issue with Mr Redmond or Mr Cooke until after he first gave evidence. Even if the equipment is misdescribed, in my opinion, it does not assist the plaintiff’s argument. The plaintiff could be the only possible source of the description of the equipment belonging to DOD. The first defendant had no other source. Any mistakes are, generally, in relation to quite minor details, and the actions of the plaintiff around this time, at least in relation to the Mack truck, strongly suggest to me that if the equipment is misdescribed the plaintiff is the source of such misdescription and the argument that it suggests something sinister on the part of the first defendant cannot be maintained. The plaintiff admits that he obtained the signature of Mr Alomes on the document at page 59 of Exhibit 30 and that he witnessed Mr Alomes’ signature. I infer this was a document required by the bank to ensure that Alpha Bay had title to the Mack truck, which had been owned previously by Alomes and who was selling it to DOD under some unknown arrangement. The point is that the description of the truck in that document is the same as the description in Exhibit 1, and the plaintiff, despite his intimate involvement with the document, does not suggest that he noticed anything amiss.

30. [30]
    I return now to the circumstances surrounding the alleged delivery of Exhibit 1 to the bank. The only evidence from the bank as to the sighting of Exhibit 1 by it comes from Mr Sandilands. Mr Sandilands’ evidence is of considerable significance. He was then a loans officer with the Maroochydore branch of the National Bank. His immediate superior was Mr Edmonds. He was only marginally concerned with this transaction. It is clear from other documents that another loans officer was primarily acting as assistant to Mr Edmonds in relation to this matter. However, I accept what Mr Sandilands says, he was expected to assist the manager as and when required.

31. [31]
    Mr Sandilands says that on the 21^st of March 1995 he was in his office, which cannot be seen from the street. Part of the plaintiff’s explanation for being in the bank on the 21^st of March 1995 was that he looked from the street through into an office where he could see the first defendant speaking to a bank officer and that he only entered the bank after the first defendant beckoned him in.

32. [32]
    Mr Sandilands recalls that the first defendant came into his office with the plaintiff. The first defendant introduced the plaintiff to him as the person who was selling the equipment. He says that the first defendant told him that the plaintiff, who the first defendant referred to as Peter, would sell the equipment to the first defendant and that Peter would operate the equipment. Mr Sandilands recalls seeing Exhibit 1, which he thought had been prepared by the first defendant, and he recalls noting that it was witnessed by Mrs Schutz, as this lead him to comment that it should have been witnessed by an independent person. Mr Sandilands does not recall the plaintiff saying anything. He recalls some conversation about modifying a dredge.

33. [33]
    As I have noted, the plaintiff cannot deny that he was indeed in the bank on that day because he opened a cheque account (page 57 Exhibit 30). Mr Sandilands was cross-examined and remained unmoved. He struck me as a candid, impressive, and honest witness. No reason was put to him why he would make up such evidence. His evidence strongly undermines the credibility of the plaintiff and certainly supports the first defendant to the extent that he says the agreement was in existence at that time.

34. [34]
    It is true, as Mr Redmond points out in his submissions, that the bank’s bill of sale, signed on the same day that the loan facility was obtained, does not contain the equipment set out on page 2 of Exhibit 1, only the equipment set out on page 1. This is the equipment described (with some minor variations) in the document earlier forwarded to the bank by the first defendant (page 142 Exhibit 30). It does raise questions in my mind as to the status of Exhibit 1 at that time, and certainly Mr Edmonds may have been able to allay those concerns. He was available to give evidence. I was told that he was presently the manager of a bank in Townsville. Doubts and suspicion of course can not substitute for legitimate credible evidence and I do not think that the state of the evidence allows me to draw an adverse inference against any of the defendants in terms of what is often called the rule in Jones v Dunkel (1959) 101 CLR 298. This is partly because of the view I have taken of the evidence of Mr Sandilands, who I accept as a witness of truth, and the general findings of credit to which I will refer later, and also partly because the plaintiff was well aware of the issue raised between the third defendant and the bank from November 1997 when the third party notice was issued. It was not until the week before the trial started that the plaintiff indicated that it would apply to join the National Australia Bank as a defendant. This application was made on the first day of the trial and was successful. If the bank had been a defendant the plaintiff may have been able to interrogate about the dealings of the bank with Exhibit 1. This should not be seen as an implied criticism of the plaintiff’s lawyers and especially Mr Redmond and Mr Cooke who only came into the matter in late January 2000.

35. [35]
    I will now deal with the expert evidence.

Mr Marheine

36. [36]
    Mr Marheine gave evidence for the plaintiff and his reports, dated the 14^th of August 1999 and the 4^th of February 2000, are contained in Exhibit 42. His opinion that the signature of the plaintiff on Exhibit 1 is a forgery is set out with his reasons at pages 7 to 8 of his first report. Mr Anderson is an expert forensic document examiner from New South Wales. He gave evidence for the first defendant. His report, dated the 31^st of January 2000, is Exhibit 49. Neither expert was greatly shaken in cross-examination, with the one exception in relation to Mr Marheine, which is important bearing in mind the onus. In his report Mr Anderson expressed the qualified opinion that the signature was the signature of the plaintiff. His qualifications are set out at page 5 of his report:

“The only features that have not  been accounted for on the available specimen signatures are:

1. (i)
   The tick formation commencing the initial “I”. No specimen signature has a commencing tick formation for the “I” on the left side of the staff.

2. (ii)
   The direction of the dash like movement for the second i-dot is formed from right to left on the questioned signatured. On the specimen signatures, where a dash like movement forms the i-dot the movement is from left to right.

While I do not consider these features to be fundamental differences indicating evidence of another writer, they can not be ignored and I have qualified my conclusion in recognition of this limitation. Further normal course of business signatures of Mr Williamson signed prior to March 1995 may resolve this issue.”

37. [37]
    Mr Marheine did not think the second feature concerning the direction of the movement of the i-dot was very important at all, but it is clear that the first feature identified by Mr Anderson has strongly affected Mr Marheine’s opinion that the signature is a forgery. In his second report he observed:

“It is noted that in all the specimens provided (under control) or from other documents, not one specimen signature has an introductory stroke to the letter “i” in Williamson. The absence of an introductory stroke to the letter “i” is a constant element of the signature over an extended period. The presence of the introductory stroke in the disputed signature must according to the rules of identification, be considered a fundamental difference. A fundamental difference is a significant factor in the opinion formulation process.”

38. [38]
    To be fair to Mr Marheine in his original report, at page 7, he set out in (i), (ii) and (iii) a number of features which he regarded as fundamental differences. Mr Anderson came to a contrary conclusion.

39. [39]
    In his evidence before me, by reference to the introductory stroke to the letter “i” in “Williamson”, Mr Marheine relied on an extract from the leading text on document examination, Harrison: “Suspect Documents – Their Scientific Examination” at page 343. The rule which Mr Marheine referred is set out in Mr Harrison’s chapter on the comparison of handwriting:

“The rule is simple – whatever features two specimens of handwriting may have in common, they can not be considered to be of common authorship if they display but a single consistent dissimilarity in any feature which is fundamental to the structure of the handwriting, and whose presence is not capable of reasonable explanation.

This rule must not be applied blindly. For example the dissimilarity must be present in some feature which is known to the examiner to be fundamental to the structure of the handwriting. The presence of initial strokes to some of the letters of one specimen of handwriting and their absence in the other is not fatal to an expression of opinion that they are of common authorship, for the experienced examiner is aware that many writers vary their habits with respect to their initial strokes to certain letters.”

40. [40]
    Mr Marheine acknowledged that there is a separate chapter in Harrison dealing with forged signatures and although examination techniques overlap there are fundamental differences. Indeed Harrison himself at page 374 states:

“While a person’s signature may have a great deal in common with his handwriting in general, it is, fortunately for the document examiner, set apart in many respects from the usual run of handwriting. For many people, the signature is a word in the writing of which they have had most practice and are most fluent; indeed, it is the only word the illiterate can write with any degree of confidence. The signature is also the word with which a person identifies himself, and as such will have a greater personal significance than any other word he may write. … The signature, above all others, is the word which is written automatically and without conscious thought about the mechanics of its production.”

41. [41]
    It is common ground between the experts that if this signature is a forgery it is a simulated forgery. There is no evidence of tracing. Mr Marheine did go further and say that it was partly simulated and partly freehand. In this regard it is also relevant to note Harrison’s comment at p 399:

“Mention has already been made of the fact that a genuine signature, particularly that of a practised writer, is written fluently and without conscious thought being given to the exact form of the letters, simply because of the familiarity of the writer with the task he is accomplishing. … Therefore that which is finally committed to the paper, be it either traced or simulated forgery, can not be termed “handwriting” in the normal sense of the word; it is more accurately described as a careful and painstaking “drawing” of the handwriting of another person.”

42. [42]
    Under the heading “General line of attack on forgeries which resembled the genuine signatures” at page 389, after discussing the correct approach, Harrison notes:

“In view of the foregoing facts, it is more than unscientific, it is puerile, to attack any signature as a forgery simply by stating that it exhibits some obvious feature of letter design which can not be matched in any of the genuine signatures which have been made available for examination.”

43. [43]
    In my opinion Mr Marheine has too readily transferred the so-called rule relating to handwriting to his analysis of this signature and, in particular, in relation to the feature under discussion. In cross-examination he was shown the original of a student pilot licence issued to the plaintiff on the 24^th of April 1974. Mr Marheine had had access to this document and a copy is reproduced as part of annexure A/E to his report. Surprisingly, given the emphasis he placed on this point, he made no reference to this signature in his report. He acknowledged that indeed the introductory “i” had an upstroke but he described it as a sweeping rather than a short stroke. He explained the difference by reference to the age of the signature, however, none of the signatures in the documents which he had from the same period had such a feature. Mr Anderson on the other hand did not have this document and only examined it before he gave evidence in Court. He disputed the description of “sweeping” and he was more comforted in his original opinion as this example bore positively on the qualification to which I have earlier referred. In all the circumstances I am persuaded by the evidence of Mr Anderson that the disputed signature is more probably than not that of the plaintiff. This finding of fact bears significantly on issues of credibility. I will not mention it again. I have taken it into account in my overall findings relating to credibility.

The credibility of the plaintiff

44. [44]
    A critical factor in the determination of the dispute is my assessment of the credibility of the plaintiff. There is very little support for his evidence that the agreement he reached with the first defendant in about March 1995 involved the transfer on trust of some large items of dredging equipment with the express intention of defeating a potential property claim from his estranged wife. Before dealing with specific aspects of the evidence which bear on this issue it is necessary for me to make some general observations about the plaintiff. He impressed me as an intelligent and cunning witness. An example of this is his subtle shift of ground in relation to the ownership of the property. I will refer to this in some detail later. I conclude that once he had the security of the deed of assignment from the liquidator he was more prepared to accept the obvious, that is that some of the property he claimed as his own was quite clearly, on the evidence he produced, the property of DOD. On his own evidence he is a person who was prepared to at least attempt to defraud his wife and to mislead a court. To explain how he was able to purchase this quite expensive equipment prior to the end of 1994 the plaintiff alleges that he was in preceding years in the habit of trading on his own behalf in large amounts of equipment using large quantities of cash. He accepted in cross-examination by Mr Lilley that in one year he must have earned at least $80,000 in cash from this source. He never declared any of this income for taxation purposes. There is, therefore, a complete absence of any documentary or other proof to support his claim.

45. [45]
    The first defendant says that he understood that he was purchasing all of the assets and equipment of DOD. The agreement does not specifically refer to the items of property set out in paragraph 13 of the plaintiff’s claim. On page 2 there is reference, however, to general equipment. I will now turn to some specific matters which bear on the issue of the credibility of the plaintiff.

(a)  Ownership of the property

46. [46]
    It was always the plaintiff’s case that he was the owner of the equipment set out in paragraph 13 of his claim. Paragraph 1 of the Amended Statement of Claim states:

“… The plaintiff was the owner of, and entitled to possession of the equipment”.

47. [47]
    That was his case when he gave evidence during the first week of the trial. A number of the documents he produced in evidence are clearly directed to DOD, suggesting, prima facie, that it was the company which was purchasing the property for its business. The plaintiff maintained in cross-examination that he was the owner and that if DOD’s name was on the invoice or other document which he produced supporting the purchase, that was because the supplier also dealt with the plaintiff on behalf of DOD. He insisted that he had purchased the equipment for himself, not the company, out of his reserves of cash which he carried with him. On 14^th February 2000, at the start of the second week of the trial, the plaintiff was recalled by his counsel to give further evidence about certain documents. These documents were in the main documents in the plaintiff’s possession or control not previously discovered by him. He raised a number of entirely new issues in this evidence. For example, he asserts that the equipment in Exhibit 1 is misdescribed. I have previously dealt with this evidence.

48. [48]
    At the start of the trial a number of files were produced under subpoena, including files from AGC relating to the equipment leases over some of DOD’s equipment in early 1995, and the file of the liquidator of DOD which included some cheque butts and books of account of the company. A close examination of these files by Mr Collins and his solicitor revealed some interesting coincidences. It is quite clear that a number of the items of property claimed by the plaintiff in paragraph 13 were always the property of DOD and it is simply inconceivable that the plaintiff would not have known that. When confronted with these irrefutable facts the plaintiff changed tack, conceding that the property could be, and probably was, the property of DOD. I need only refer to a number of examples of this point. Exhibit 6 which relates to item (iii) in paragraph 13 contains two invoices, one dated the 1^st of May 1991 from Versatile Farm Equipment Pty Ltd for $12,220.00, and the other being an invoice dated 30^th of September 1992 from SNS Hydraulics Fabrics for $14,151.30. Both these items are referred to in an AGC Deed of Loan and Guarantee, dated the 29^th of May 1991, and the plaintiff conceded, as he really had to, that these items, previously claimed by him as his property purchased for cash, were that of the company. At the time that he made this concession his counsel had foreshadowed an application to amend the claim to plead that any property found to be that of the company could be claimed by the plaintiff by virtue of a deed of assignment of cause of action, dated the 14^th of February 2000, given by the liquidator. That application was later granted by me. In my view the plaintiff’s change of position was yet another example of his ability to shift ground, but only when he is confronted with incontrovertible proof that his original position could not hold and only if he feels that he has otherwise provided for his interests.

(b)     The plaintiff’s conduct in relation to the equipment

49. [49]
    I am satisfied that the plaintiff’s conduct in relation to the equipment in the period leading up to the issue of these proceedings in 1996 is quite inconsistent with his evidence that the arrangement with the first defendant was merely for the first defendant to hold some of DOD’s major items of equipment on trust. The plaintiff contends that there was never a sale, and yet, when the first defendant indicated in 1996 that some of the items, including the Mack truck, would have to be sold to retire debt, the plaintiff took quite obvious steps to hide the equipment and frustrate the first defendant’s intention. I have already discussed the plaintiff’s dealings with the Mack truck in June of 1996 under item (f) commencing on page 23 of these reasons.

50. [50]
    I have also already referred to the document at page 59 of Exhibit 30. The document is in clear terms purporting to transfer title in the truck to Alpha Bay (the second defendant). If indeed there was to be no transfer of equipment one wonders why it was necessary for this document to be obtained in the first place. If, as the plaintiff says, the arrangement was for the Mack truck to be held on trust, surely he would question the first defendant, who prepared that document, as to why it was a transfer of title in the truck to the second defendant. Next there is the plaintiff’s conduct in relation to the property the subject of the 39A application determined in the Charters Towers Magistrates Court on the 28^th and 29^th of August 1996. Mr Schutz gave evidence that he received information that on the 10^th of April 1996 the plaintiff had removed the Lusty-Allison Quad, loaded with the mid-sized dredge, from the CSR site and was heading for Charters Towers. The plaintiff maintains that he was not endeavouring to hide the equipment. He says that he was taking it to the Mary River in Darwin to do some work. Not surprisingly there was no documentary evidence to support this claim although Cowley provided some support. I will deal with Cowley’s evidence later. Sergeant Lance of the Charters Towers Police received a complaint from the first defendant and the equipment was intercepted at the intersection of New Queen Road and the Flinders Highway, Charters Towers, and impounded. Sergeant Lance gave evidence in these proceedings and his statement is Exhibit 40. At the time he intercepted the equipment he was in possession of a number of documents from the first defendant, including a copy of Exhibit 1. He spoke to the plaintiff. Paragraph 6 of his statement is in these terms:

“6. Williamson informed me that both he and Schutz had been business partners and some 12 months previous when a company he owned was in financial trouble Schutz had offered to purchase the property but the sale was not completed. He informed me further that Schutz had no rightful claim to the property.”

51. [51]
    Mr Redmond did not cross-examine Sergeant Lance. I accept his evidence, which is completely at odds with the position taken by the plaintiff in his evidence.

52. [52]
    Mr DeKoch gave evidence for the first and second defendant. His evidence was that in 1995, when he worked for Warmen International at the CSR sand plant at Blacks Weir, he had a conversation with the plaintiff in which the plaintiff told him that he had sold all of his equipment to Schutz and that he, the plaintiff, was a mere employee. Mr DeKoch improved in cross-examination and was able to refer to an affidavit or letter which he prepared in 1996 at Schutz’s request, when he was first asked to recall the details of the conversation. DeKoch’s evidence, which I accept, is completely inconsistent with the evidence given before me by the plaintiff.

(c)   Was DOD in financial trouble in early 1995?

53. [53]
    This issue occupied a considerable amount of time in the trial. The evidence for the plaintiff is diametrically opposed to the evidence led from Mr and Mrs Schutz. It is an important issue because the first defendant says that this was one of the main reasons why he finally decided to come into the arrangement. The plaintiff maintains that DOD was in a good financial state and was profitable and that there was no serious financial pressure, despite what he told Sergeant Lance to the contrary on 10.4.96. In his evidence the plaintiff made much of a payment received from Peltman Collieries in late 1994, for some $120,000, to justify the position he was taking. During his evidence-in-chief in the first week of the trial he had not produced any documents to support his assertions about the financial position of DOD. When he was recalled he produced a file to support his claim. What he did not say, and what was drawn out by Mr Collins in cross-examination, was that the bank statements of DOD for this period leading up to March 1995 show a very rapid depletion of these funds over the succeeding months, strongly suggestive of a company in financial trouble. The statements indicate a number of dishonoured cheques in early 1996, a sure sign of financial difficulty. The incontrovertible evidence from the AGC files is that in late 1994/early 1995 the three accounts of DOD were seriously in arrears. The plaintiff accepts that notices of demand were issued in early 1995. I accept that the first defendant negotiated with Mr Spurling of AGC on DOD’s behalf so as to avoid repossession action. The first defendant even used some of his own money to make one payment in excess of $16,000 to keep AGC happy. The evidence from Mr Spurling and from Mr Kuusmaa from AGC strongly supports the evidence of the first defendant that the plaintiff’s company was in financial trouble in early 1995. Mr Spurling gave evidence of the meeting in early 1995 which he said was about the state of the accounts. The meeting was with the first defendant and the plaintiff. He was told that the defendant was buying into the plaintiff’s business and that they were refinancing. Again this evidence, which I accept, is completely inconsistent with the plaintiff’s evidence and is supportive of the first defendant’s assertions. At this stage the accounts were significantly overdue and were subject to review by management with a view to taking action. Mr Kuusmaa, the collection manager for AGC at the relevant time, said that over the preceding couple of years the contracts with DOD had almost always been two to four payments in arrears.

54. [54]
    I accept the evidence of the first defendant and his wife that the plaintiff and his company were in financial trouble leading up to March 1995 and that this was one of the major reasons why the first defendant was required to make the arrangements with the bank.

(d)   The property settlement allegation

55. [55]
    I have already referred to the plaintiff’s evidence that the arrangement was that major items of DOD equipment would be held on trust by Schutz with a view to the plaintiff avoiding a property settlement with his estranged wife. In my view this evidence is inherently improbable and should be rejected. As I have noted, there is not a shred of evidence to support the plaintiff’s assertions, but there is significant evidence to support those of the first defendant and his wife, as to what the arrangement really was.

56. [56]
    An acceptance of the plaintiff’s evidence would require me to believe that an astute businessman, such as the first defendant, and his very reluctant and now estranged wife would expose her valuable property at Buderim to a $400,000 debt, in circumstances in which the plaintiff was taking absolutely no risk, simply out of the goodness of his heart and to help a mate. It is a patently ridiculous proposition. I accept that Mrs Williamson was a personal friend of both Mr and Mrs Schutz. I accept the evidence of both Mr and Mrs Schutz that there is no way they would have contemplated such a proposition. The plaintiff accepted that his wife had her own wealth – in fact her guarantee supported the AGC loans to DOD. He acknowledged that she was an equal shareholder in DOD with him and I infer that she would have had some knowledge of the equipment owned by the company, if only because of her personal guarantees and her knowledge of her husband’s business. How such an arrangement could have provided any protection to the plaintiff from a property settlement application simply escapes me. Mr Collins for the first and second defendants, made a telling observation during the course of the trial. He pointed out that the plaintiff on a number of occasions in 1996, when he felt that assets were under threat from the first defendant, would take steps to “hide” the equipment from the first defendant. I agree with Mr Collins that a suggestion to hide assets is much more likely to come from the plaintiff than it is from Mr and Mrs Schutz who had absolutely nothing to gain. In my opinion the plaintiff has simply fabricated this evidence to explain the otherwise inexplicable.

(e)   The correspondence between solicitors in April 1995

57. [57]
    In the wake of the plaintiff’s attempts to remove the dredge and float in April 1995, a series of letters, starting from the 9^th of April 1996, were exchanged between Mr Gamble of AR Yates & Co, on behalf of the plaintiff, and Garland Waddington (Ken Waddington), on behalf of the first defendant. Much of this correspondence is in Exhibit 15. There is not a single reference in that document to the agreement being a forgery. Indeed some of the correspondence appears to suggest otherwise. The plaintiff contended that he was not aware of the existence of Exhibit 1 at that stage and did not find out about it until early June at a meeting in Sydney between the liquidator and the plaintiff’s barrister friend, Mr Stanton. The plaintiff’s contention that he was not aware of the document at the time of the correspondence between the solicitors in April 1995 can not stand up to scrutiny. Mr Gamble, his then solicitor, was not called to give evidence on behalf of the plaintiff, however, I am not prepared to draw an adverse inference in this regard as submitted by Mr Collins.

(f)   Answers to interrogatories

58. [58]
    Exhibit 17 contains the interrogatories delivered by the first and second defendants to the plaintiff, his answers sworn on the 28^th of July 1997 and the supplementary answers sworn on the 27^th of April 1998. Mr Collins submits that the plaintiff’s answers on the 28^th of July 1997 contain a deliberate lie.

59. [59]
    By mid-1996 the dispute between the plaintiff and the first defendant was in full swing. The mid-sized dredge and the float had been impounded by police on or about the 10^th of April 1996. On the 12^th of April 1996 the truck driven by Mr Gear with one of the containers was stopped by police at the first defendant’s instigation and both containers ultimately were then impounded at the Brambles yard at Garbutt.

60. [60]
    By mid-June 1996 the first defendant had regained control of the Mack truck. He had recovered it from the Gardiner Dymock Shed after receiving information as to its whereabouts, and arranged for a locksmith to open the truck. He then arranged for it to be stored at Townsville Heavy Haulage. The first defendant notified his insurance brokers, Lumley’s at that time. On the 30^th of June 1996 the first defendant was informed by Mr Barry Turner of Townsville Heavy Haulage that the truck had been stolen from his yard. He told the first defendant that the chain on his back yard had been cut, and despite there being many trucks with keys in the ignition, only this truck had been taken. The plaintiff says that he discovered the truck “by accident” when driving around Townsville around the 13^th of June 1996 at a marshalling yard at Stuart on the outskirts of Townsville. He says that he took possession of the truck. He was able to start it without the keys by using the air ignition. He says that he then arranged for other unnamed people to take control of the truck so that he would not know where it then was. The first defendant became involved in litigation with Lumley’s over the truck. In February 1998 Lumley’s found the truck in Warwick and retook possession.

61. [61]
    Interrogatory 4 states:

“Look at paragraph 11 of the second defendant’s counterclaim herein and by reference to each and every item of equipment referred to therein, state:

1. (a)
   Whether the piece of equipment has been in your power or possession or subject to your control;

2. (b)
   The period (by stating the first and the last day of the period) during which the piece of equipment was in your power or possession or subject to your control;

3. (c)
   Whether the piece of equipment remains in your power or control or subject to your control;

4. (d)
   If the piece of equipment is not within your power or possession or subject to your control, then state:

1. (i)
   To the best of your knowledge, what has become of the said piece of equipment?

2. (ii)
   If you have disposed of or otherwise dealt with the piece of equipment, the manner or method by which you disposed of or dealt with the piece of equipment;

3. (iii)
   If the piece of equipment has been sold, the amount received by way of funds for the sale;

4. (iv)
   If the piece of equipment has been otherwise disposed of, the consideration for that disposal;

5. (v)
   The date upon which and the location at which, you last observed each piece of equipment;

6. (vi)
   To the best of your knowledge, the present whereabouts of the piece of equipment.”

62. [62]
    In his answers sworn on the 28^th of July 1997 the plaintiff swore in answer 5(d):

“As regards item (xxiii) being the Mack Superliner truck, to the best of my knowledge that item was delivered by the first and/or second defendants or their servants or agents to the premises of Turners Heavy Haulage in Townsville and thereafter was removed from those premises by a person or persons unknown to myself. I last observed this piece of equipment when I parked it outside the premises of NQX Transport at Stuart in Townsville on the 18^th of April 1996. I have no knowledge of the present whereabouts of the piece of equipment.”

63. [63]
    I am satisfied that this answer was a deliberate untruth designed to ensure that the first defendant could not gain access to the truck.

64. [64]
    It came to the knowledge of the plaintiff that the truck had been recovered in February 1998. On the 27^th of April 1998 in his supplementary answers to interrogatories he swore:

“2. Upon a review of that affidavit, it has come to my attention that the answer to interrogatory number 4 contained in paragraph 5 of that affidavit is incorrect in part.

3. Details of the incorrect answers and the answer that was in fact correct as at the date of swearing the affidavit is as follows:-

1. (a)
   In paragraph 5(b) the third sentence which states:-

“Item (xxiii) was last subject to my control when it was taken by the first and/or second defendants and/or their servants or agents between 17^th and 21^st of June 1996 from where the vehicle was being stored in Townsville”

               should be deleted.”

65. [65]
    As I have noted, the plaintiff impressed me as a cunning and intelligent witness. The supplementary answer sworn on oath was nothing more than a cynical exercise in damage control.

(g)   The evidence of Cowley

66. [66]
    Mr Cowley gave evidence for the plaintiff. He is a close friend and an obvious admirer of the plaintiff. His evidence supported the plaintiff’s contention that when the containers were finally delivered to Brambles yard on the 12^th of April 1996 they did in fact contain the property set out in paragraph 13 of the plaintiff’s claim. Mr Cowley was able to recite from memory details of a large number of items of property which are replicated in paragraph 13 of the plaintiff’s claim. He denied any access to paragraph 13. He did not purport to rely on any document to refresh his memory. Despite his apparent excellent memory of what was in the two disputed containers he had very little recollection, as compared to that of the plaintiff, of what was in the third container. His evidence also seriously conflicts with the evidence called on behalf of the third defendant. I accept the evidence of Mr Fisher, who was the then General Manager of Brambles, and the evidence of Noel Hanson, the Operation Manager of Brambles, that in view of the dispute that existed as at the 12^th of April 1996 between the plaintiff and the first defendant, the third defendant took significant steps to secure the property. I accept that the containers were placed in a secure building and I infer that locks were placed on them. The third defendant also proceeded to weld up the holes which I find existed in only one of the containers. Mr Tsilavis gave evidence for the third defendant. He swore that on the 12^th of April he was instructed to weld up a hole in a container. I accept that he looked into the container and, contrary to the evidence of the plaintiff and Mr Cowley, it contained very little. His evidence accords with the evidence of the first defendant as to what was discovered when the containers were opened on or about the 21^st of October 1996. The evidence of Fisher, Hanson and Tsilavis is consistent; they knew the plaintiff and did not see the plaintiff in or around the Brambles yard after the 12^th of April 1996. Mr Tsilavis actually worked inside the office in the workshop at the Brambles premises at Garbutt and as such was on the premises during all working hours of the yard. I accept Mr Fisher’s evidence that at night, after business hours, the yard was secured and was protected by  a security system. Further, Mr Cowley’s evidence, commencing at page 242 lines 1-26, suggests that the packing of the containers by Cowley and the plaintiff actually took place at the Brambles yard. This is inconsistent with all the evidence and is another factor which leads me to the conclusion that Cowley’s evidence is not to be accepted.

67. [67]
    In light of the above findings, the plaintiff’s claim, which essentially depends on my acceptance of him as a reliable witness, must fail.

The counterclaim

68. [68]
    I accept the evidence of the first defendant. His evidence was supported by the available documentation. As to meetings and visits to the site in Townsville he relied upon a contemporaneous diary. Despite a careful and thorough cross-examination his credibility and reliability remains intact. I accept his evidence that the agreement between the plaintiff and DOD involved the purchase by Alpha Bay of the entirety of the dredging equipment of DOD.

69. [69]
    I accept his evidence that he relied on the description given by the plaintiff as to the equipment he was purchasing. The equipment the subject of this claim is largely equipment relating to dredging and drilling operations. I find that at no time did the plaintiff ever suggest that he was retaining title to any of the equipment or that the first defendant was not receiving title from DOD.

70. [70]
    Some of the equipment claimed by the plaintiff in paragraph 13 of the claim has never been seen by the first defendant. It is, therefore, not necessary for me to make any positive findings about the ownership of this equipment.

71. [71]
    The first defendant gave evidence, which I accept, as to what was in the containers when they were opened on or about the 21^st of October 1996 at the Readymix sand plant in Townsville.

72. [72]
    In his evidence the first defendant helpfully adopted a schedule, which became Exhibit 20 in the proceedings. In the schedule the first defendant, by reference to the item numbers in paragraph 13 of the plaintiff’s claim, has indicated whether such property was ever received by him and, if so, whether it was retained or removed at some time prior to the 21^st of October 1996. In view of my earlier findings, it is more probable than not that the plaintiff removed the equipment so identified prior to the 12^th of April 1996 when the two containers were delivered to Brambles for the last time. There is no direct evidence as to what the plaintiff did with this equipment, however, I accept the evidence of the first defendant that he received the items of equipment which are marked in Exhibit 20 as received/taken and that these items of equipment were converted by the plaintiff at some unknown time prior to the 12^th of April 1996. The schedule also contains items of equipment which were received by the first and second defendants and retained. These were the items in the containers when they were opened in October 1996.

73. [73]
    The second defendant is, therefore, entitled to succeed on its counterclaim. The first defendant gave evidence as a registered valuer and Mr Cassagrande gave expert valuation evidence on behalf of the plaintiff. The values ascribed to the various items of property by Mr Cassagrande are much higher than those claimed by the first defendant. The first defendant had the distinct advantage over Mr Cassagrande of having actually seen the equipment and its condition. Mr Cassagrande essentially relied on various invoices and receipts relating to original purchase prices to give evidence of replacement value, and, in addition, he relied on the plaintiff as to the condition of the equipment for the purposes of providing market value. In view of the findings I have made in relation to the plaintiff’s credibility, the opinions expressed by Mr Cassagrande are undermined accordingly. I prefer the valuation evidence of the first defendant and will proceed to calculate his loss on the basis of the values given by him in his evidence. I am satisfied that these items of property received by the first and second defendants but then converted by the plaintiff are caught by the description of general equipment on page 2 of Exhibit 1. It is not necessary for me to decide whether the equipment is also caught by the bank’s security.

74. [74]
    The plaintiff’s claim is dismissed. I give judgment for the second defendant against the plaintiff for damages for conversion of the following general equipment, not specifically described in Exhibit 1:

• hydraulic testing equipment/test bench
• spare parts for pumps, Linus, bowls and inpellars (Warman brand)
• 1 x Caterpillar transmission
• welding helmets
• spare parts for Caterpillar engines including starter motor, alternator and turbo (new)
• single phase electric welder
• Port-a-Power
• power leads
• 6 volt – 12 volt battery charger
• spare computer power boards (Texas brand)
• oxy gauges and hoses including Comet 3 handpiece
• high pressure fittings for air hose
• 2 x McNaught drum pumps
• oil drum pump
• 3/8 ft high-tensile lifting chains
• 2 tonne chain block
• ½ tonne chain block
• cable slings
• hydraulic hoses with end fittings

75. [75]
    There are other larger items specifically described in Exhibit 1 which form part of the counterclaim and remain subject to the bill of sale. I find that these items were also converted by the plaintiff. I find that the second defendant was entitled to immediate possession of this property as and from the 17^th of March 1995 and that the plaintiff at some unknown time prior to October 1996, has converted the property to his own use:

• Engine Caterpillar 3208 DI, 6/5 hydrastal cutter head and hydraulic winches
• Engine Caterpillar 3406 BDITA (No. 6TB09676)
• Engine Perkins 4236 (No. 463478), Pump 6/4
• Engine Lister (No. 69468), Pump, Vacuum system 6/3 Alis Chambers, Skid mounted base with fuel tank
• 3 x Cyclones
• 2 x second hand Warman gravel pumps 8/6

76. [76]
    On the basis of the evidence of the first defendant I am satisfied that at the date of conversion of the property the general equipment in the first category had a value of $11,195 and the larger equipment in the second category had a value of $28,600. The second defendant is entitled to judgment against the plaintiff for $39,795.

The third party proceedings

77. [77]
    In the light of my findings in relation to the claim and counterclaim no issue of indemnity arises. Mr Bowden did argue that even if the plaintiff failed, the third defendant was entitled to an indemnity from all the other parties. When pressed by me in argument he purported to rely on an implied right of indemnity which arises:

“when an act is done by one person at the request of another, and the act is not in itself manifestly tortious to the knowledge of the person doing it, and it turns out to be injurious to the rights of a third party, the person doing it is entitled to an indemnity from the person who requested that it should be done.” See Halsbury 4^th ed.; and see cases annotated at para 307, page 166-6.

78. [78]
    There is a similar statement in the 27^th edition of Chitty on Contracts at paragraph 29-100.

79. [79]
    Clearly I have found as a matter of fact that the actions of the third defendant in delivering up the containers to the first defendant on the authority of the fourth defendant, did not cause injury to the rights of a third party. I have determined that the containers and contents were in fact then the property of the second defendant by virtue of the agreement dated the 17^th of March 1995. (Exhibit 1). The third defendant, therefore, has no right of indemnity against the other parties by virtue of this rule. The issue of costs is another matter.

80. [80]
    It is agreed that, upon completion of these reasons for judgment, a copy will be provided to all parties to enable submissions to be prepared on the issue of costs. In light of the fact that it was the third defendant which involved the bank in the litigation, by issue of the third party notice in November 1997, it is necessary to make findings of fact which may bear on the question of costs.

81. [81]
    The factual dispute revolves largely around the proper construction of the two letters from the bank dated the 30^th of September 1996 and the 17^th of October 1996 which are referred to respectively in paragraphs 12 and 14 of the third party notice. These are the critical pleadings to be considered in the light of the evidence. Paragraphs 18 and 20 of the third party notice allege that the letters are false, misleading and deceptive, or contain negligent advice (paragraph 20).

82. [82]
    The letter dated the 30^th of September 1996 from Mr Edmonds to the third defendant is in these terms:

“Re: Dredging and Offshore Drilling Pty Ltd (in liquidation)

In the Magistrates Court at Charters Towers on 29/08/96, Mr Verra ASM found that pursuant to a contract dated 17/3/95 between our customer (Dredgecorp International Pty Ltd) and the abovementioned company, a copy of which contract is enclosed, property and certain items of equipment passed to our customer and then to the National Australia Bank Limited pursuant to the Banks’ registered bill of sale, a copy of which is enclosed.

We enclose a copy of His Worship’s reasons for judgment in that regard, for your information.

It has come to our attention that certain of the items of equipment the subject of that contract, being the items described as “General Equipment” on page 2 of the contract including the 2000 litre skid mounted fuel tanks, three cyclones, one set stainless steel dewatering screen, various fittings and pipe fittings to suit, Lincoln 275Q diesel powered welder plus various hand tools etc are contained in two cargo containers and stored at your premises.

Clearly, in terms of the contract, the Bank’s bill of sale and the findings of His Worship Mr Verra, our Bank is entitled to possession of all that general equipment.

In the circumstances, we would appreciate if you would confirm that those items of equipment are held by you so that appropriate arrangements may be made by the Bank for their collection in the immediate future.”

83. [83]
    The third defendant admits that with the letter it received a copy of Exhibit 1, a copy of the bill of sale commencing at page 29 of Exhibit 30, and a copy of the reasons for judgment of the Charters Towers Magistrate dated the 29^th of August 1996, which are reproduced at pages 138-139 of Exhibit 30.

84. [84]
    It is difficult to reconcile the pleading in paragraph 12 of the third party notice (which relates to this letter) with the evidence of Mr Fisher, the manager of the third defendant in Townsville at the relevant time. His attitude to the letter is expressed eloquently in answers to Mr Bowden at page 801 lines 1 – 20 in evidence in chief. Mr Bowden was referring to the letter of the 30^th of September 1996, and the documents contained therein:

“Did you read them?—Yes I went through them.

What did you make of them? How did you understand them?—I honestly thought “My God, what a mess” and I thought to myself, “Well, obviously there’s all these parties have got all these problems and I’m not going to do anything regardless until they sort the problem out,” and that’s the way I treated it. I thought ownership will come and I won’t release any container until that and as far as I was concerned, I was totally confused when I read it, who was right or who was wrong.

Did you in fact do anything at all about dealing with that letter?—No, I – no, I didn’t because I thought, well, if the bank or whoever is going to say they own the containers, they would bring proof to me and when that proof come, well, I would release some containers regardless of what court cases are in place and what arguments developed, which I didn’t see that I would be able to solve.

Did you seek legal advice?—No I didn’t.”

85. [85]
    I find that Mr Fisher and, therefore, the third defendant was not, and could not have been, misled by this letter. The documents provided with the letter were sufficient to enable Mr Fisher to make up his own mind. There is no doubt that the only equipment to which the Magistrate’s decision related was the Lusty-Allison float and a dredge, and Mr Fisher easily identified this (transcript page 803 lines 20-30). Mr Fisher’s response is set out above. None of the allegations contained in paragraph 12 are made out.

86. [86]
    Mr Fisher was not in Townsville when the letter dated the 17^th of October 1996 was received by the third defendant in Townsville. The letter was received by the operations manager, Mr Noel Hanson, on the 17^th of October 1996. I find that on that day the first defendant spoke to Mr Hanson at the Brambles yard and requested that the containers be delivered to the CSR yard at Douglas. Mr Hanson’s response to the first defendant was:

“I can’t do anything like that because Brambles have agreed to lock them up until someone can prove ownership.”

87. [87]
    The first defendant said he would get proof and later Mr Hanson received a fax copy of the letter dated the 17^th of October 1996 from the fourth defendant. The letter is in these terms:

“RE: DREDGING AND OFFSHORE DRILLING PTY LTD IN LIQUIDATION

DREDGECORP INTERNATIONAL PTY LTD

OUR LETTER OF 30/09/96

I hereby authorise you to deliver the 2 Cargo Containers stored at your premises to Dredgecorp International Pty Ltd at CSR’s Sand Plant at Blacks Weir Townsville, in terms of our above letter.”

88. [88]
    On receiving that letter Mr Hanson rang Mr Fisher in Brisbane and read the letter to him word for word. Mr Fisher said:

“It looks as though he’s got ownership of it – let it go.”

89. [89]
    I find that on the following day, the 18^th of October 1996, after negotiating a reduced fee for storage with Mr Hanson, the first defendant returned, paid the fee and the third defendant then released the containers to him.

90. [90]
    It is clear from the evidence that Mr Fisher relied only on the letter of the 17^th of October 1996 to satisfy himself as to ownership. In my opinion the letter does not in any way constitute proof of ownership either by the bank or by the first defendant. The attitude of Mr Fisher to the first letter is clearly articulated in the passage from his evidence-in-chief quoted above. The second letter is a mere authority. It does not assert ownership, let alone provide proof of ownership. The alleged representations contained in paragraph 14 of the third party notice are not made out. On the facts as found by me – indeed on all of the evidence led by the third defendant in support of its case – the allegation of negligence contained in paragraph 20 fails. Although it is unnecessary for me to make any finding as to why in fact the third defendant released the containers to the first defendant on the basis of the second letter from the bank, I dare say it has something to do with some of the telling answers given by Mr Hanson in response to Mr Lilley at page 822 lines 42-58.

Joinder of the third party as the fourth defendant

91. [91]
    As I have indicated the plaintiff applied at the commencement of the trial to join the bank as a defendant. After hearing lengthy oral submissions and considering such in conjunction with extensive written submissions, I permitted the joinder, but only in relation to a claim pursuant to the Trade Practices Act (1974) (“the TPA”). I did not permit the plaintiff to maintain a claim for damages for conversion against the bank. Mr Lilley for the bank, did not require me to give written reasons. The order made was one “changing…the…designation of a party…” pursuant to UCPR 74. UCPR 74(5) states:

“However, for a limitation, the proceeding against the new defendant … is taken to have started when the proceeding started against the original defendant … unless the Court otherwise orders.”

92. [92]
    The limitation point was argued by Mr Lilley at the time. He did not submit to me that UCPR 74(5) does not apply in the circumstances where a plaintiff obtains leave to join a party in respect of a claim brought pursuant to the TPA. He now submits that the plaintiff’s claim pursuant to the TPA is statute barred by virtue of the clear statutory prohibition to the bringing of an action contained in s. 82(2) of the TPA, and by reference to the comments of Toohey J in Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 562, with whom Deane J concurred at 545, where his Honour by reference to the term “subject matter” in s. 86 of the TPA said:

“ “Matter” may serve to confer jurisdiction upon the (State) Court but jurisdiction brings with it no mandate to ignore a clear statutory prohibition on the bringing of an action after a period of years.”

93. [93]
    The point has been considered on a number of occasions by the Supreme Court. In Jekos Holding Pty Ltd v Australian Horticultural Finance Pty Ltd (1994) 2 Qd.R 515 Byrne J applied Wardley in relation to a cause of action for relief under s. 87(1A) of the TPA, in holding that the claim was statute barred by virtue of s. 87(1CA), and that as the then R.S.C. O 93 rr 17 and 18 conflicted with, and so could not prevail against, s. 87(1CA) of the TPA. In Fibreglass Pool (Manufacturing) Pty Ltd v ICI Australia Pty Ltd (1998) 1 Qd.R 149 Moynihan J did not follow Jekos, although the judgment does suggest that the limitation period may not have expired, whereas in Jekos it clearly had at the time of the application.

94. [94]
    The original application to add the bank as a defendant was made by Mr Redmond pursuant to UCPR 69. Mr Lilley now refers to UCPR 69(2):

“However, the Court must not include or substitute a party after the end of a limitation period unless one of the following applies …”

95. [95]
    In making the order I did at the start of the trial I had regard to UCPR 69(2)(g):

“if for another reason the Court considers it just to include or substitute the party after the end of the limitation period.”

96. [96]
    I took the view that as the bank had been a party to the proceedings since the 11^th of November 1997, when the third defendant issued the third party notice, and as it had been given leave at a directions hearing to participate fully in the proceedings and cross-examine the witnesses of all other parties, and as no prejudice was suggested would follow to it, the order should be granted. In the alternative Mr Lilley now submits that I should “otherwise order” pursuant to UCPR 74(5) that the action is deemed to have commenced on the 7^th of February 2000, the date of the filing of the application. His argument is based on what he calls a “general bar” in UCPR 69(2) against the joinder of parties after the end of the limitation period and what he refers to as the warning in Wardley (supra.) at page 534:

“We should, however, state in the plainest terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in the interlocutory proceedings in advance of the hearing of the action, except in the clearest of case.”

97. [97]
    There is no concession by the plaintiff that the action (if commenced on 7^th February 2000) is statute barred.

98. [98]
    In Wardley (supra.) it was held that a cause of action was complete at the time of the occurrence of every fact that it was necessary for the plaintiff to prove in order to support a right to recover its money (per Moynihan J in the Fibreglass Pool case at page 51 lines 42-45). This would suggest that any cause of action against the bank on behalf of the plaintiff was complete upon delivery of the containers to the first defendant, on what the third defendant says was the authority of the bank’s letters, in October 1996. If that is so s. 82(2) would deem the action statute barred unless I otherwise ordered. I am persuaded by the reasoning and decision of Byrne J in Jekos, on the basis that his Honour was there dealing with a similar situation and found that the cause of action pursuant to the TPA was statute barred. Nothing in the written submissions received on the 21^st of February 2000 from Mr Redmond dissuades me from this view. I accede to the submission made by Mr Lilley. I find that the plaintiff’s claim against the fourth defendant pursuant to s. 82 of the TPA would otherwise fail on the basis that it is statute barred. In light of my primary findings, my decision on this point is somewhat sterile but it may have relevance in the event of a successful appeal.

99. [99]
    I direct that a copy of these undelivered reasons for judgment be delivered to counsel for each of the parties. I request counsel to provide brief written submissions on the question of costs, prior to the further mention of the matter when the costs issue will be determined by me and judgment given in terms of these reasons.

Conclusion

100. [100]
     The final result is the plaintiff has failed in his claim and costs should follow the event in the normal way. Mr Collins has submitted that his client should be entitled to costs on an indemnity basis. He submits that on the basis that the signature of Williamson on Exhibit 1 was a cynical attempt to avoid liability.

101. [101]
     As I have indicated in my reasons for judgment, I have concluded on the balance of probabilities that the plaintiff signed Exhibit 1. The allegation of forgery was an important issue in the trial and depended to a significant extent on my assessment of the competing expert opinions. For that reason, I have determined that an order under Rule 704 of the Uniform Civil Procedure Rules is not called for in the circumstances.

102. [102]
     The plaintiff will pay the costs of the first, second and third defendants of and incidental to the action including reserved costs and the costs thrown away as a result of the aborted trial on the standard basis.

103. [103]
     In my view, the third defendant has substantially failed in a factual sense to establish a case as pleaded against the third party, now fourth defendant. I do not accept the argument made by Mr Bowden that agency arises here. Agency was not pleaded. The plaintiff only sought to join the third party as a defendant at the start of the trial, and joinder was permitted on a basis which I have found would have failed in any event as being statute barred. The issues as between the third defendant and the third party/fourth defendant were of short factual compass. It was the third defendant which involved the fourth defendant in the litigation.

104. [104]
     As a consequence the fourth defendant was really compelled to sit out a two week trial with infrequent necessary participation required by Mr Lilley. I agree with him that the plaintiff’s late claim against the bank was brought about solely in reliance upon the pleadings set out in the third party notice although at a very late stage.

105. [105]
     In those circumstances, I have determined the third defendant should pay the third party/fourth defendant’s costs of and incidental to the action including reserved costs but excluding the costs thrown away as a result of the aborted trial in Townsville on the standard basis. As those costs ought fairly be borne by the plaintiff in light of my findings, they should be added to the third defendant’s costs of the action as against the plaintiff: see Johnson v Ribbins (1977) 1 All E.R. 806 at 810-811 per Goff L.J. followed by Ryan J. in Swisstex Finance Pty Ltd v Lamb (1993) 2 Qd.R. 463 at 465.

106. [106]
     As regards the aborted trial in Townsville, the transcript of the proceedings before Judge Pack indicates that the adjournment of that trial was occasioned almost entirely by the very late delivery of Mr Marheine’s report by the plaintiff which raised for the first time the direct allegation of forgery. For that reason, the plaintiff should pay the third party/fourth defendant’s costs thrown away as a result of the adjournment on the standard basis.

107. [107]
     Mr Collins has submitted that his client should be entitled to costs against the third defendant for defending the notice of contribution issued by the third defendant against his clients. He acknowledges that these costs in any event are minimal and that his submission is it should be confined to one day’s costs of the hearing. In my view, the trial would not have been shortened if the third defendant had elected not to seek contribution from the first and second defendants. For that reason, I do not accept that part of the submission made by Mr Collins.

108. [108]
     The costs of the first and second defendant to be paid by the plaintiff should include the costs of preparing the agreed bundle of documents, Exhibit 30, which was undertaken most capably by Mr Bathersby and costs of attending all directions hearings as ordered by the Court.

109. [109]
     The orders of the Court will be as follows:

1. The plaintiff’s claim against all defendants is dismissed;

2. The second defendant is entitled to judgment on its counter-claim against the plaintiff for $39,795, together with interest at the rate of 8 per cent from 7 May 1996 until the present which is calculated at 46 months at $265.30 per month, the sum of $12,203.80;

3. The plaintiff is to pay the costs of the first and second defendant of and incidental to the action and the counter-claim, including reserved costs, costs of the directions hearings, costs of preparing the agreed bundle of documents, Exhibit 30, and costs thrown away as a result of the adjournment in Townsville, such costs to be assessed on the standard basis;

4. The third defendant to pay the third party/fourth defendant’s costs of and incidental to the third party proceedings including the costs of the two week trial including reserved costs but excluding the costs thrown away as a result of the adjournment on the standard basis;

5. The plaintiff to pay the third defendant’s costs of and incidental to the action including all reserved costs and costs thrown away as a result of the adjournment, such costs to include the costs paid by the third defendant to the third party/fourth defendant as ordered above;

6. The plaintiff to pay the third party/fourth defendant’s costs thrown away as a result of the adjournment of the trial in the Townsville District Court on the standard basis.