Menniti v Invincible[2003] QDC 32

DISTRICT COURT OF QUEENSLAND

REASONS FOR JUDGMENT

1. [1]
   The two defendants are husband and wife and at one time operated a restaurant called Io Ti Amo at Southbank, Brisbane. The restaurant was operated by a company Io Ti Amo Pty Ltd which would seem to have come into existence on or about 7 February 1992 at which time the male defendant was both principal executive officer and director of the company and the female defendant a director and secretary. It is not without significance in these proceedings that the female defendant ceased to be a director and secretary of the company from 14 December 1998.

2. [2]
   The plaintiff and his wife would seem to have been very close personal friends of both defendants over a very long period of time. The male plaintiff is godfather to one of the defendants’ children. Somewhat sadly the present dispute arises out of that close friendship. While there has been a falling out between the plaintiff and the male defendant arising out of the dispute there was clearly a backdrop of personal sadness both towards and on the part of the female defendant. I should point out that I did not hear from the plaintiff’s wife but this is a case where close personal friendship between two families of Italian extraction looms large. It is one of those uncommon cases where I regret that the court has to become involved in order to resolve their differences.

3. [3]
   The dispute dates back to 1999 and indirectly arises out of the redevelopment of Southbank in central Brisbane which severely affected the patronage of various businesses operating in the Southbank area to the point where they became simply unviable. There was well publicised litigation between a number of the operators of such businesses and the Corporation operating Southbank to which reference was made in the course of these proceedings.

4. [4]
   I am satisfied that the difficulties being encountered by the defendants’ restaurant business and the existence of the litigation were the topic of frequent discussion between the parties particularly between the plaintiff and the male defendant but also involving the female defendant who had less involvement in the decision making of the business.

5. [5]
   It seems that on an earlier occasion in perhaps the early 1990s the defendants got a loan of some $70,000 from the male plaintiff which according to the male plaintiff was “repaid with a little bit of effort”. By 1999, however, the position of the defendants was much more desperate and on 1 July 1999 the male defendant contacted the plaintiff to request urgently a loan of $100,000. The defendants had business debts presumably related to their restaurant business. There is some dispute as to where the conversation occurred. In the end result I prefer the plaintiff’s version but it does not really seem to matter. The version of the conversation as recounted by the plaintiff was as follows:

“He wanted a $100,000 then and that day.  It seemed to be rather urgent, and he said – I said I was bit tight for money because I actually the needed the money to finish one of my projects, and he insisted.  He said I’ll pay you back within one to three months. … I decided to give him the money as long as I get it back at least three months time … I said I could give him $80,000 today but he really needed $100.  I says, I can’t.  You’ll have to wait a couple of weeks, for the other 20.”

6. [6]
   The plaintiff and the male defendant went to the plaintiff’s bank which was the National Bank at Bowen Hills where he had a bank cheque in the amount of $80,000 prepared in favour of V. (Vincenzo) Invincible. The cheque was made out in that name at the male defendant’s request.

7. [7]
   The remaining $20,000 was not advanced until August. I might mention that in giving the abovementioned account in evidence in chief the plaintiff made no mention of any discussion about interest and I would not be satisfied on the balance of probabilities that any such discussion on that topic occurred at that point of time. I am satisfied, however, that there was discussion about repayment within a timeframe of one to three months. It would also seem that there was ongoing discussion between the plaintiff and the male defendant about the litigation involving Southbank and an expectation on the part of the male defendant that this litigation would be resolved within a short period of time yielding the necessary funds to make the repayment. It seems that the male defendant was therefore confident of being able to meet the plaintiff’s one to three months’ repayment timetable. Having regard to the personal friendship underlying the loan there was obviously some latitude in the timing of the repayment. This was borne out by subsequent events.

8. [8]
   On 12 July 1999 the plaintiff attended, as he would seem to have done on numerous occasions, at the defendants’ restaurant. The male defendant provided him with an acknowledgement of the loan of $100,000 – only $80,000 of which had then been paid – in the following terms:

“We hereby certify receipt of $100,000 from yourself which is to be repaid at a time when funds are available from successful settlement of current litigation.

To secure this advance we agree to your registering a fixed and floating charge over Io Ti Amo Pty Ltd.”

9. [9]
   The acknowledgment purported to be signed by both the male and female defendants. There was some dispute about the signing of the female defendant. The plaintiff inclined to the view that he took the document out to her at her home for signature while conceding the possibility that it might have been signed by her at the restaurant. The male defendant said in evidence that he telephoned the female defendant to request that she come into the restaurant to sign in her capacity as a director of Io Ti Amo Pty Ltd but that family commitments prevented her from so doing and that she requested him to sign on her behalf. This he did although there is no indication on the face of the document which is Ex 1 that he was signing on her behalf or as a director. Nor were these features drawn to the attention of the plaintiff.

10. [10]
    I might say that the signature of the female defendant which appears on Ex 1 bears only the most superficial resemblance to that of the female defendant which appears on the debenture which is part of Ex 8. Probably the account given by the male defendant of signing his wife’s signature without drawing that fact to the attention of the plaintiff is correct. The plaintiff is probably mistaken in his recollection of taking the document out to the defendants’ residence to have it signed.

11. [11]
    The document Ex 1 was prepared at the restaurant by the male defendant’s manageress. On the same day an ASIC form headed “Notification of Details of a Charge was prepared and was signed by the male defendant. That document purported to give the plaintiff a fixed and floating charge over the assets of Io Ti Amo Pty Ltd. That document was stamped on the following day, 13 July 1999 and shortly thereafter provided to the plaintiff. For whatever reason the charge was never registered. While the acknowledgement, Ex 1, plainly suggests that the plaintiff had the obligation to register the charge the plaintiff seems to suggest in his evidence that that task was undertaken by the male defendant and not in fact carried out. For the purposes of this litigation it does not really seem to matter. It did, however, have serious consequences in that plaintiff’s later attempt to prove as a secured creditor in the liquidation of Io Ti Amo Pty Ltd was unsuccessful because of the failure to register. It seems from the affidavit of Jinette Muller sworn on 18 March 2003 on behalf of the official liquidator that there would have been funds received from the Southbank litigation sufficient to make the repayment if the plaintiff had been a secured creditor. Unsecured creditors of the company, however, are likely to receive a payment of something like one cent in the dollar.

12. [12]
    The male defendant continued to press for the remaining $20,000 and on 16 August 1999 the plaintiff drew $20,000 out of one of his business accounts with the National Bank at Hamilton. A copy of that cheque which is made in favour of Io Ti Amo and dated 16 August 1999 is Ex 7. It was filled out in favour of that payee at the request of the male defendant.

13. [13]
    What then followed was that the plaintiff kept in contact with the male defendant requesting repayment of his $100,000. The male plaintiff suggested that he had expectations of a payment of $1,000,000 or thereabouts from the Southbank litigation. Without notice to the plaintiff the defendants put the company into voluntary administration, on 13 December 2000 following resolution of the legal proceedings between the company and Southbank Corporation. That resulted in the closure of the restaurant business. The plaintiff heard of that closure “along the grapevine”. He gave the following account:

“… I just heard it secondhand from someone.  I said, “I don’t believe that,” and I went around and had a look. It was closed, and then I tried to get in touch with Enzo with quite a lot of difficulty on the phone – ‘cause I – and did get in touch with him and he said – I said, “What’s going on” Do you know what I mean?  He says, “Don’t worry you’ll get your money, I’ll pay you.”  He said, “Don’t worry about it,” he says “I am paying you personally so just wait a bit longer, we’ve got a settlement and you’ll get your money.”

The plaintiff also asked the female defendant and got the following response:

“She said, “Don’t worry, Enzo’s going to pay you.”  She – she guaranteed, “There’s nothing to be worried about ‘cause we’re paying you,” …

14. [14]
    Ms Muller gave evidence by telephone to the effect that the Southbank proceedings produced a sum of $213,061.50 to the liquidator from the solicitor’s trust account.

15. [15]
    I accept the plaintiff’s account of the abovementioned conversations. I also accept that the Notice of Charge dated 12 July 1999 was prepared by or on behalf of the male defendant rather than the plaintiff, although, as I have already mentioned, this seems to be of little consequence as far as the court proceedings are concerned. I am satisfied that the $100,000 was advanced to the defendants personally to be used by them in whatever way they considered appropriate but in all likelihood to attempt to keep the restaurant business afloat despite its serious difficulties. I am satisfied that there was no mention of lending the money to the company as distinct from the defendants in person. Neither cheque was made out to the company. The male defendant’s account that he signed Ex 1 on behalf of himself and his wife in his capacity as a director of the company does not bear examination. The document itself makes no mention of the company name or ACN. His account that he attempted to summon his wife to the restaurant to sign in her capacity as a director is simply unbelievable. There is no reference on the document to the defendants signing in their capacities as directors. In any event Ex 10 which is an ASIC search of the company reveals that the female defendant ceased being a director and secretary of the company on 14 December 1998, some seven months prior to these events. The male defendant claims not to have known of this fact. He claims to have given some instructions to his accountant but not to have been aware of the fact that those instructions had been carried out. I very much doubt that that was the case. I am quite satisfied that on 12 July 1999 he was not the least concerned about his wife signing Ex 1 in her capacity as a director of the company nor was he signing in that capacity.

16. [16]
    The plaintiff’s counsel has referred me to a decision of the Full Court in Aitkin Transport Pty Ltd v Voysey (1990) 1 Qd R 510 and particularly the passages in the leading judgment of Kelly SPJ at p 515,516.  It was suggested that some comments made in the Full Court decision in Parsons and Rochella v Vance Appeal 7/1984 – unrep. by the Chief Justice and by McPherson J (as he then was) would seem to suggest an onus on the part of the defendant to “displace the prima facie inference that he is the one liable on the contract.”  Such an onus is not supported by the decision of the Court of Appeal in the “Santa Carina” [1977] 1 Lloyd’s Rep 478 at 483 in the judgment of Roskill L J.

17. [17]
    The present case, however, does not fall to be decided on fine issues of onus of proof. While the plaintiff in the present instance might have been a somewhat prolix witness showing some sense of grievance at the course of events he was nonetheless an accurate and truthful witness as far as the events surrounding the loan were concerned. He is borne out by the contemporary documents. The only point on which I reject his evidence is that concerning interest. I am not satisfied that at the time of the original agreement there was any mention made of interest. This is much more likely to be the result of afterthought on his part when events dragged on and he was held out of his money.

18. [18]
    Mr Barbi, who appeared on behalf of the defendants, submitted that the repayment of the loan was dependent upon the successful settlement of the Southbank litigation. It was submitted that the litigation yielded a figure slightly in excess of $200,000 whereas there had been an expectation of a return in excess of $1000,000. This was, it was said, not a successful settlement and therefore pursuant to Ex 1 there is no obligation to pay.

19. [19]
    The answer to this submission is that Ex 1 does not encapsulate the original agreement. It is an acknowledgement made in the then expectation that the Southbank litigation would be successfully completed within the one to three months period mentioned by the plaintiff. It is not necessary to resolve the somewhat intriguing question as to whether a return of $200,000 amounted to a “successful settlement” but Mr Barbi’s submission has an air of desperation about it.

20. [20]
    I give judgment for the plaintiff against the defendants in the sum of $100,000. Unless otherwise persuaded I would propose to order that interest be paid on that sum of 10% per annum from 1 October 1999 to today’s date with costs to be assessed.