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- Unreported Judgment
J Hutchinson Pty Ltd v Burden QDC 270
DISTRICT COURT OF QUEENSLAND
J Hutchinson Pty Ltd v Burden  QDC 270
J HUTCHINSON PTY LTD ACN 009 778 330
NATHAN MICHAEL BURDEN
District Court Brisbane
21 December 2018
9 November 2018
The application is granted. The defendant pay the plaintiff $431,070.99 together with interest of $13,703.78. The defendant is ordered to pay the plaintiff’s costs of and incidental to the proceedings on the standard basis.
SUMMARY DISMISSAL, SETTLEMENT AND DISCONTINUANCE - SUMMARY DISPOSAL OF LITIGATION – SUMMARY JUDGMENT – where the plaintiff loaned money to the defendant for legal fees – where some money was loaned through the company – where there was no personal guarantee in writing – where there was an oral agreement for the loans to the defendant – where the agreement was not reduced to writing – whether the loans were personally made to the defendant – whether there is a successful defence to the claim.
Mr M Martin for the applicant
Mr M Foley for the respondent
Mills Oakley for the applicant
Cranston McEachern for the respondent
- The applicant seeks summary judgment on its claim being money lent to the defendant in the sum of $431,071.00. The applicant filed a claim and statement of claim on 31 May 2018 and the application for summary judgment was filed on 10 October 2018.
- The plaintiff is a privately owned building company. The defendant commenced employment with the company in November of 2007. By July 2015 he was in the position of project manager and his total gross remuneration, including superannuation, was $267,000 per annum.
- During 2015 his marriage broke down resulting in disputes in relation to child access and property settlement. The plaintiff was aware of these difficulties.
- In May 2016 the plaintiff agreed to the request of the defendant to change his employment agreement to a contractor agreement. The defendant established a company called Savcon Services Pty Ltd and the defendant was the sole director, secretary and shareholder of the company. Savcon was to receive his employment payments which continued at the same rate.
- On 15 September 2006 he was charged with criminal offences and he engaged HopgoodGanim to appear on his behalf. He had once again advised the plaintiff of this development. He emailed the plaintiff assuring them that he was “rock solid and fine” and that he “would like the support of Hutchies as I am now preparing to run this to ground and deliver these projects.”
- On 21 September 2016 he met with Mr Berlese, a team leader employed by the plaintiff, and requested that the company lend him money for legal fees to defend the criminal charges brought against him. Mr Berlese agreed to that request. He then emailed Mr Berlese on 21 September 2016 asking that the plaintiff either pay into the HopgoodGanim trust account the sum of either $30,000 or $50,000 immediately or should he invoice under Savcon immediately. Mr Berlese advised to generate an invoice under Savcon and he would sort it out. The defendant in his affidavit accepts that this invoice was generated to pay the legal fees required by HopgoodGanim.
- The next relevant email was on 26 November 2016 where the defendant acknowledged the debt of $50,000 and offered to enter into a proper agreement so the debt was secured. In that email he asks for “an additional $52K that he needs to pay by the end of 2016 or early 2017”.He also attached a significant number of invoices and statement for legal fees by HopgoodGanim.An invoice was subsequently sent from Savcon for $55,000 to the plaintiff.He again acknowledged the $50,000 for legal bills in an email of 5 December 2016 sent to Mr Berlese.
- The company continued to pay for the defendant’s legal fees. The defendant indicated that he would need $30,000 to defend charges due in the magistrate court on 9 February and an invoice for $33,000 was generated by Savcon on 25 January 2017.
- Savcon sent nine invoices to the plaintiff between 25 September 2016 and 29 March 2018 for a total sum including GST of $431,070.99. The first five invoices refer to work conducted at 22-28 Merivale Street, South Brisbane although it is acknowledged by the defendant in emails and his affidavit that these sums were largely used to pay his personal legal fees.Invoices dated 25 May 2017, 25 June 2017 and 15 September 2017 contained the description professional fees as per agreement. The final invoice dated 15 March 2018 contains the description professional legal fees as per agreement.Savcon was deregistered on 14 January 2018 pursuant to s 601AB of the Corporations Act 2011for failure to file tax returns. This final invoice was paid into the Savcon account although it was clearly meant for the defendant.
- The money lent for legal fees climbed to an excess of $300,000. Mr Berlese, on behalf of the plaintiff, refused any further advances and indicated that the defendant should speak with Mr Quinn the managing director of the plaintiff if he wanted any more money.
- On 23 March 2018 the defendant met with Mr Quinn asking for a further loan and Mr Quinn agreed on 24 March to provide further funding. On 26 March the defendant sent Mr Berlese an email acknowledging the debt and attached an invoice from Savcon for the final legal fees together with a table outlining all the payments made by the plaintiff towards the legal fees and the invoice numbers of the billed payments.He summarised the payments as below:
“Total bill paid to HopgoodGanim is $460,330.17, total paid is $441,654.52 with an additional $15,700 in trust (for expert fees and QC), total paid by J Hutchinson to date (3/9/2017) is $308,612.72 excl GST.The above figures do not include the current invoice.”
- The defendant ceased his employment with the plaintiff in early May 2018. The defendant then demanded payment of the money lent to him to defend his criminal proceedings.
- Pursuant to rule 292 of the Uniform Civil Procedure Rules 1999 the plaintiff will be entitled to an order of summary judgment only if the court is satisfied that:
- (a)The defendant has no real prospects of successfully defending all or a part of the plaintiff’s claim; and
- (b)There is no need for a trial of the claim or the part of the claim.
- It is accepted for the purposes of this application that issues raised in proceedings are to be determined summarily only in the clearest of cases.
- The respondent maintains that the plaintiff’s claim in this case is weak. It is submitted that this is because there are no specific terms of the contract of loan alleged. Further, it is argued, that there is no explanation as to why an alleged personal debt of over $400,000 was not reduced to writing. The plaintiff, the defendant submits, paid moneys not to the defendant but to Savcon Services Pty Ltd. It does not plead specifically any contract of personal guarantee by the defendant of liability for moneys paid to a third party namely Savcon Services Pty Ltd. There was no personal guarantee in writing and there is no balance sheet provided indicating the loan was an asset to the plaintiff.
- The defendant relied on a statement from Stage Club Ltd v Millers Hotel Pty Ltd 150 CLR 535 where Gibbs CJ said:
“Where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt.I respectfully agree with the statement of Kerr J in Surrendra Overseas Ltd v Sri Lanka (1977) 1 WLR 565 that “to acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due”.There is no acknowledgment of a debt unless there is “an admission that there is a debt . . . outstanding and unpaid.”
- With respect, the defendant seems to misunderstand the claim made here. The claim is not that he personally guaranteed a loan to the company or that he was acting as an agent of the company, the claim is that there was a direct agreement between the plaintiff and the defendant to loan money and for that money to be paid back. It was an oral agreement without terms. There was money lent and an acknowledgement of the existence of the debt as evidenced in the exhibited emails. The plaintiff was entitled to demand the money back as it has not been repaid. There is no requirement that the agreement be reduced to writing.
- The defence says that the money was paid to Savcon not to the defendant, and as such he is not obliged to pay any money back. However the defendant himself accepts that at least a portion of the money was going to legal fees to pay for his personal legal issues. There is no suggestion that HopgoodGanim were working in any capacity on legal matters for the Savcon. The email of 26 march 2018 acknowledges that the sum of $431,070.99 was paid by the plaintiff to the defendant for legal fees. There was no suggestion in that email that the payment was for the company (which by that stage had ceased to operate).
- In Berghan & Anor v Berghan QCA 236 the court examined the situation where payments made from parents to a son through his company’s account.It was used to get the company out of financial problems and for household expenses.The Court of Appeal held:
“There had been no evidence given by anyone at the time of the making of the loans that the parties had agreed that the company would be the obligor.No such distinction was drawn by the parties upon the evidence they gave.On the contrary, the outcome of the relevant conversations, found by the judge as having taken place, was that the respondent had said that he would repay. Against that the respondent’s case was not that it was the company that promised to repay but that all of the payments had been gifts.”
The fact in that case that the money was paid into the bank account of the company or even that three of the payments were called loans to make, that is, the company did not take away from the fact that the loans were personally made to the defendant.
- Given the uncontroverted evidence contained in the emails sent by the defendant and the vague assertions contained in his affidavit which do not advance an arguable defence on his part, there is, in my view no real prospects of the defendant successfully defending this claim. Judgement is entered for the plaintiff in the sum of $431,070.99 together with interest at $13,703.78.The defendant is ordered to pay the plaintiff’s costs of and incidental to the proceedings on the standard basis.
 Exhibit JRB-5: Affidavit of John Romano Berlese dated 10/10/18. Note: this email would appear to be inconsistent with the claims made by the defendant in his affidavit filed 7 November 2018 at paragraph 15.
 Affidavit of Berlese, exhibit JRB-10.
 Affidavit of Berlese, exhibit JRB-10.
 Affidavit of Berlese, exhibit JRB-11.
 Affidavit of Burden, paragraphs 17 – 20.
 Affidavit of Berlese, exhibit JRB-12.
 Affidavit of Berlese Exhibit JRB - 14
 See Deputy Commissioner of Taxation v Salcedo  2 Qd R 232.
 Stage Club Ltd v Millers Hotel Pty Ltd  150 CLR 535 at paragraph 10.
 Berghan & Anor v Berghan  QCA 236 at paragraph 33.
 Interest is calculated at the Reserve Bank of Australia pre-judgment rate from 25 May 2018 i.e. 7 days from the date of the letter demanding payment
- Published Case Name:
J Hutchinson Pty Ltd v Burden
- Shortened Case Name:
J Hutchinson Pty Ltd v Burden
 QDC 270
21 Dec 2018