RODNEY STEVENTON v ANGELA BELLE NEEDHAM SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY, CLARKE and MEAGHER JJA 28 May 1990, 28 May 1990 [1990] NSWCA 173 SHORT TERM LOAN — Whether funds lend to appellant personally or to private company — Oral evidence corroborated by contemporary documents — Both oral and documentary evidence going to support finding of personal loan — No support for contention of company transaction in terms "deal" and "investment". Handley JA There is before the court an appeal by a Mr Rodney Steventon from two judgmentsentered by His Honour Judge Shillington in the District Court against him, one in favour of Mrs Angela Needham for $108,209.76 and the other in favour of Mr Claudio Bettosini for $108,305.07. The two actions were heard together and both arise out of the same extraordinary transaction. Mrs Needham and Mr Bettosini met the appellant for the first time on what was probably 2 March, 1987, it may have been 3 March, 1987 at the premises of Mr Bettosini's then company Arredorama Furniture. The two plaintiffs, however, were friends and well known to each other. Mrs Needham knew a Mr John Arthur Daley who was also an old friend who practised the so-called art of numerology. This old friend had recommended the appellant Mr Steventon to Mrs Needham, as a clever businessman who was doing very good deals. Steventon had apparently telephoned Mr Daley from London asking him for money which he needed for one of his deals. Daley was unable to help at the time but referred him to Mrs Needham. Following the appellant's return from London, the meeting was arranged and Mr Steventon saw the plaintiffs at Mr Bettosini's office. The events of the meeting, which lasted about one and a half hours, were the subject of oral evidence from the two plaintiffs and from the appellant. The plaintiffs on the one hand and the appellant on the other, gave very different accounts of the meeting in their evidence. However, it was common ground that the next day Mr Bettosini received a letter from the defendant-on the letterhead of his private company which became part of Ex B and that Mr Bettosini arranged for the Swiss Bank Corporation of Lugano Switzerland to transfer US$100,000 to the main office of the Hong Kong Shanghai Bank in London for the credit of the appellant. The bank transfer is in evidence as Ex C. Each plaintiff provided half this money. Mrs Needham previously transferred her half-share to a financial institution in Lugano which acted at the time for Mr Bettosini. The plaintiffs' case is that these funds were lent to the appellant personally. The appellant's case was that the funds had either been lend to his private company, Steventon Associated Holdings (Australia) Pty Ltd or else to some mysterious body known as the World Islamic Trust by way of some investment or deal, the exact nature of which was never made clear either in evidence or in submissions to this Court. 2 UNREPORTED JUDGMENTS It was common ground between the parties that the appellant had outlined to the others a financial scheme in which he was involved which, if it came to fruition, would involve the World Islamic Trust lending the sum of US $3 billion to Toronto Dominion Bank for the period of twenty years. This money would then be on-lent at a profitable margin apparently to Southeast Asian borrowers with repayment guaranteed by the First American Bank of Commerce Limited and further guaranteed by Merrill Lynch, the well known Wall Street stockbrokers. Why these bodies needed the services of the appellant, a chiropractor who practised at Burwood, for such a transaction does not appear. The appellant explained to the two plaintiffs that he needed a sum of US$100,000 urgently to complete what was represented to be a good-faith deposit in London to establish his credentials for the deal. He said that the deal was all ready to go but would fall through if the money was not in London by the end of that week. Because the deal was potentially highly profitable he was able to, as he said and did, offer the plaintiffs a profit of $500,000 on the transaction with both their investment and the profit being returnable to them in about three weeks' time. So much, as I said, was substantially common ground. Faced with sharply conflicting evidence between the parties as to the nature of the transaction and the capacity in which the appellant was acting, His Honour had, as he said, no hesitation in accepting the evidence of the plaintiffs that it was the appellant himself who sought the finance from them. The issue at the trial as to the nature of the appellant's involvement in the transaction was essentially one of credit. As I have said, His Honour resolved that issue in favour of the plaintiffs. Indeed, because of the well-established limitations on the power of an Appellate Court to interfere with findings of fact based on credit, Mr Neil QC who appeared for the appellant did not seek to challenge His Honour's findings of primary fact. I should point out that, as indeed the trial judge recognised, the plaintiffs' oral evidence was substantially corroborated by the contemporary documents. The first is a letter dated 3 March, 1987 which was signed by the appellant himself. It was written on the letterhead of his private company, Steventon Associated Holdings Australia) Pty Ltd. However, again it was signed by the appellant personally without any qualification relating to any capacity which he had to bind the company as Managing Director or the like. The letter stated: "We confirm our discussions re the cashable bank draft which will be available to me to be picked up from Mr WM Mackay, bank officer, Remittance Department of Hong Kong Shanghai Bank, main office, London." This letter was sent to Mr Bettosini and marked for the attention of himself and the other plaintiff. In my opinion this is a most significant piece of documentary evidence prepared and signed, as it was, by the appellant himself which strongly supported the plaintiffs' case that the money was being made available to him personally. In addition, of course, the document is totally destructive, in my view, of any case that the plaintiffs' funds were being lent to or invested with the Islamic World Trust which is nowhere mentioned in the letter. The second piece of documentary evidence is the bank transfer from the Swiss Bank Corporation in Lugano to the Hong Kong Shanghai Bank Main Office London dated 9.15 am on 4 March, 1987. It is marked "for the attention of Mr WM Mackay" and the transfer of the Swiss Franc equivalent of US$100,000 is said to be "in favour of Mr Rodney EF Steventon". URJ RODNEY STEVENTON v ANGELA BELLE NEEDHAM (Handley JA) 3 Mr Bettosini gave evidence that the appellant gave him the information needed to be communicated to the Swiss Bank Corporation Lugano so that it could effect this transfer and clearly that must be correct. The information was given to Mr Bettosini by the appellant within a day or so after the critical meeting at which the finance was arranged and it provided for the funds to be transferred to an account in favour of the appellant personally. There was no suggestion that the transfer ever needed to be amended so that the money could be released in London to some entity such as the World Islamic Bank or Steventon Associated Holdings (Australia) Pty Ltd. In my opinion these two documents, one originating directly and the other indirectly, from the appellant strongly support the plaintiff' oral evidence and are quite inconsistent with the appellant's case. Again as His Honour pointed out, the evidence of Sir Francis Luton called by the appellant at the trial also corroborated the evidence of the plaintiffs. Sir Francis said that around 3 March, 1987 the appellant told him that he was borrowing from various people the US$150,000 that he needed for the transaction Moreover, in my opinion, the probabilities strongly support the plaintiffs' case. Mr Bettosini, a businessman of some experience though not in the world of international finance and banking, gave this evidence at p 89: "I did not know he had a company (referring to the appellant). You know, if he would have had a deal going through a company I would have probably looked at the matter a lot more seriously because to me it was a thing outside the normal business world. There was a relationship involved." In my opinion that evidence is entirely credible and supports the view that the transaction was between the individuals concerned and that no company was involved. Against these matters and in support of the appeal Mr Neil QC who appeared for the appellant submitted that the references in the evidence to "gamble", "deal" and "investment" established that the transaction was not, as His Honour held, a loan by the plaintiffs to the appellant but was some other form of transaction under which the appellant was not personally obligated to refund the money if the transaction fell through. In my opinion there was ample evidence to support His Honour's finding that the transaction was one of loan and the evidence of each plaintiff fully supports the conclusion that a loan was intended and discussed. The various references to "deal" and "investment" in my view are in no way inconsistent with the substance of the evidence of both plaintiffs and His Honour's conclusions. Finally, the appellant relies upon the plaintiff's failure to call a Mr Howard as a witness and we were reminded, in written submissions, of the well known decision in Jones v Dunkel (1959) 101 CLR 298. Mr Howard was a former business associate of Mr Bettosini and therefore can be said to have been in the plaintiffs' camp. However, his involvement in the transaction was casual, intermittent and peripheral. While the plaintiffs and the appellant were closetted together for the one and a half hour meeting at the premises of Arredorama Furniture, another business meeting of far more financial importance to Mr Bettosini was taking place in an adjoining room in connection with some takeover of his business. A Mr Howard was involved in that meeting and from time to time he came and interrupted the appellant and the plaintiffs in the course of their meeting in order to find out when Mr Bettosini would be able to return to the other meeting that was in progress next door. According to Mr Bettosini Mr Howard came in and 4 UNREPORTED JUDGMENTS went out and did not stay very long at any stage and in the circumstances there is no reason to suppose that he could have given evidence of any relevance or importance as to the nature of the discussions taking place between the plaintiffs and the appellant, especially when one bears in mind that almost certainly those discussions ceased while Mr Howard was in the room. In these circumstances, in my opinion, this appeal entirely fails and should be dismissed with costs. I would propose such an order. Clarke JA I agree Meagher JA I also agree. The order of the Court will be that the appeal from both judgments is dismissed with costs.