New South Wales Supreme Court CITATION : EUROPEAN HIRE CARS PTY LTD v ARMSTRONG [2007] NSWSC 629 HEARING DATE(S) : 12-14/06/2007 JUDGMENT DATE : 14 June 2007 JURISDICTION : EQUITY JUDGMENT OF : Bryson AJ at 1 DECISION : 1. Give judgment for the plaintiff for $4,540; 2. Order that the plaintiff pay the defendant's costs in all three courts; 3. Direct that costs be assessed on the indemnity basis; 4. Order that execution of the judgment be stayed and that execution be enforced only by setting off the amount of the judgment debt against the defendant's entitlement to costs. CATCHWORDS : WILLS, PROBATE and ADMINISTRATION - contract - claim against deceased estate - need for careful scrutiny of evidence of oral agreement allegedly made with testator - on the facts, the alleged agreement was not established on the balance of probabilities. Plunkett v Bull (1915) 19 CLR 544 Lachmi Parshad v. Maharajah Narendro Kishore Singh Bahadur LR 19 IA 9 CASES CITED : Birmingham v Renfrew (1937) 57 CLR 666 Briginshaw v Briginshaw (1938) 60 CLR 336 Browne v Dunn (1893) 6 R 67 PARTIES : European Hire Cars Pty Ltd - Pltf Kenneth John Armstrong (As Executor of the Estate of the late Patricia Anne Armstrong) - Dft FILE NUMBER(S) : SC 3211/06 and 3805/06 COUNSEL : B. Zipser - Pltf D. Fagan SC and S. Philips - Dft SOLICITORS : Beilby Poulden Costello - Pltf Horton Rhodes - Dft - 26 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON AJ 14 JUNE 2007 3211/06 AND 3805/06 EUROPEAN HIRE CARS v KENNETH JOHN ARMSTRONG (As Executor of the Estate of the Late Patricia Anne Armstrong) JUDGMENT 1 HIS HONOUR: The principal claim in these proceedings is a claim for damages or debt arising out of transactions alleged to have taken place between Mr John Galluzzo, the director and principal figure of the plaintiff, and the late Mrs Patricia Anne Armstrong who died on 10 October 2002. The defendant Mr Kenneth John Armstrong is the widower of the late Mrs Armstrong, and he obtained probate of her will on 28 February 2003. 2 He is sued in the capacity of executor and under the will he received, for practical purposes, the whole of Mrs Armstrong's assets, the value of which greatly exceeded the plaintiff's claim. He distributed the assets in the estate to himself in May 2003, but as he already had notice of the plaintiff's claim by that time he is liable to meet any debt or damages awarded to the plaintiff within the limits of the present claims. The principal claim is for $57,150.44 which is the balance of all expenditure by the plaintiff on the Mercedes Benz to which I will refer, for lease payments, registration and similar charges and the final payout, after allowing credit for $45,000 received on sale of the vehicle. The principal claim depends on an agreement or arrangement made by word of mouth between Mr Galluzzo and Mrs Armstrong. The arrangement was not recorded in writing and there is no witness other than Mr Galluzzo himself to the making or the terms of the arrangement. 3 Mr and Mrs Armstrong were estranged in 2002 and lived apart, although telephone and other communications between them continued. Mr Armstrong is not in a position to give evidence directly bearing on whether or not the arrangement was made, nor is he in a position from knowledge of his own to admit the claims. Mr Armstrong's defence went well beyond simply not admitting claims and putting the plaintiff to proof, and he has put in evidence and raised in cross-examination a number of facts and circumstances in support of an attack on acceptance by the court of Mr Galluzzo's evidence. The plaintiff bears the onus of proof on the balance of probabilities of every fact supporting its claim. 4 Judicial authority recognises the need for careful scrutiny of claims against the estate of a deceased person. The need for scrutiny does not raise the onus of proof higher than the ordinary onus of proof on the balance of probabilities. In Plunkett v Bull (1915) 19 CLR 544 at 548 Isaacs J said: Then we come to the question how far the onus of proof which lay upon the plaintiff was satisfied. She had the burden of establishing the original creation of the indebtedness of the deceased to her and undoubtedly it is established that in cases of this sort the court scrutinises very carefully a claim against the estate of a deceased person. It is not that the court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinises the evidence very carefully to see whether it is true or untrue. 5 Justice Isaacs went on to refer to Lachmi Parshad v. Maharajah Narendro Kishore Singh Bahadur LR 19 IA 9 in which Lord Morris, speaking for the Privy Council said: "In an action brought to recover money against an executor or, as in this case, the heir of a deceased person, it has always been considered necessary to establish as reasonably clear a case as the facts will admit of, to guard against danger of false claims being brought against a person who is dead and is not able to come forward and give an account for himself." 6 The prime example, referred to by Isaacs J, of difficulty for plaintiffs was failure to bring forward evidence which the plaintiff ought to have brought forward and which was available. Such failure is not a significant element in this case. However, the need for careful scrutiny does exist in the present case. 7 In Birmingham v Renfrew (1937) 57 CLR 666 at 680 Dixon J said: The question at issue upon this appeal is whether the distribution of a testator's estate is governed or controlled by an agreement said to have been made between himself and his wife who predeceased him as to their testamentary dispositions...such an agreement can be established only by clear and satisfactory evidence. It is obvious that there is a great need for caution in accepting proofs advanced in support of an agreement affecting and possibly defeating testamentary dispositions of valuable property. 8 These passages should be understood with the much fuller and more profound exposition of the standard of proof in civil cases in Briginshaw v Briginshaw (1938) 60 CLR 336 at 360, and the opinion of Dixon J at 361: The truth is that when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. 9 This is not a case such as Dixon J had under consideration at page 362 of serious allegations, inherent unlikelihood or grave consequences. It is a dispute about a sum of money which is important but not ruinous to either party and no moral delinquency is implied by a finding either way. Everything in the plaintiff's case on the principal claim depends on acceptation of Mr Galluzzo's evidence about the arrangement between himself and the late Mrs Armstrong. 10 I carefully observed Mr Galluzzo during his oral evidence, as his demeanour while giving evidence could be an important factor for decision. The cross-examination of Mr Galluzzo was in the nature of things clearly very challenging to him and at times his answers went well beyond the terms of the question or did not directly meet the question but went rather to argumentation. This is only to be expected in a severe contest. I do not think that anything I have observed about his demeanour or manner while giving evidence is of much assistance in deciding whether I should or should not accept what he says. 11 The plaintiff has business premises at Rozelle and for many years has conducted business hiring motor vehicles and chauffeur driven vehicles. The late Mrs Armstrong opened an account with the plaintiff in about 1986 when she was involved in and employed by Arlco Pty Limited, a manufacturing company of which Mr Armstrong was and is the principal. The company's manufacturing business was conducted at Rydalmere. Mrs Armstrong was a director of Arlco in which she held a third of the shares, and she was employed there. Her employment ceased on 13 September 2001. 12 Over many years from 1986 the plaintiff provided hire cars and chauffeur services to Mrs Armstrong and also on occasion to Mr Armstrong, sometimes as frequently as four times a week. There was a long standing business relationship, and a personal relationship and friendship also developed among Mrs Armstrong, Mr Galluzzo and his wife Mrs Rosita Galluzzo. There were occasional social meetings, and Mr Galluzzo himself drove Mrs Armstrong up to twenty times per year. He was aware of adverse events in her life and health and in her relationship with her husband. 13 Mr Galluzzo and Mrs Galluzzo developed a strong liking for Mrs Armstrong, felt sorry for her and assisted her when they could. From time to time she needed assistance in dealing with storm damage, in coping with needs for emotional support, in attending doctors for her own treatment and nursing homes for her parents. The relationship had a strong personal aspect. Mrs Armstrong told Mr Galluzzo of events, some of them quite distressing, in her separation from Mr Armstrong. She asked for and obtained his personal assistance after a motor accident in August 2001 when Mr Galluzzo arranged for her BMW M3 sports car to be repaired, and arranged for Mrs Armstrong to be represented by a barrister when charged with driving under the influence. From about the beginning of 2002 Mrs Armstrong spoke to Mr Galluzzo from time to time about events relating to a divorce settlement negotiations for which were proceeding between solicitors. There ultimately were no divorce, no Family Court proceedings and no divorce settlement. 14 Mr Galluzzo's evidence is to the effect that at some time after her accident in 2001 Mrs Armstrong told him that the BMW M3 car was getting too much for her and was too powerful. She also said to the effect that she thought she wanted to sell the car and asked for advice about buying a small automatic car with power steering. She did not accept his suggestion of a Toyota Echo and said, "I don't want an ordinary car. I want you to get me a better or equal car to what I had when I was with Ken. Something like a Mercedes Benz". 15 In about March or April 2002 Mr Galluzzo took Mrs Armstrong to Daimler Chrysler Mercedes Benz motor dealers in Zetland. She selected a white E200 Kompressor, a four cylinder car with automatic transmission. Mr Galluzzo gave the following account of the arrangements then made. 17. At about the same time, Mrs Armstrong said to me, 'I really want that car but I don't have the funds to purchase the car until my divorce settlement takes place. Can you buy the car on my behalf and you can transfer it into my name as soon as settlement goes through with my divorce. I will pay you back whatever it costs you with whatever I get from the settlement.' I said, 'Okay'. 16 Mr Galluzzo's evidence is that he has trusted her, trusted that what she was telling him was true, and relied on her promise to repay when her divorce settlement was finalised. 17 It is Mr Galluzzo's evidence that Mrs Armstrong said to him to the effect that she did not want the car to be kept at her home at Beecroft because she did not want Mr Armstrong to know that she had it, and Mr Galluzzo said that he could garage it at his business with his other cars and then when she needed to use it someone from the plaintiff would come and pick her up "and you can then drive the car from our garages", and Mrs Armstrong agreed. 18 Mr Galluzzo was told by someone at Daimler Chrysler Mercedes Benz that lease arrangements were available, a three year lease arrangement, monthly payments of about $1500 with a "balloon" payment of 50 per cent at the end of the three year period. He was given a copy of the proposed lease document and showed it to Mrs Armstrong, told her about the terms, and she said, "That is fine, go ahead and sign it, keep all the paperwork in your offices, get the car and I will pay you back when my divorce settlement comes through". Mr Galluzzo then completed the leasing arrangement on behalf of the plaintiff with Daimler Chrysler Mercedes Benz. This document dated 19 April 2002. Mrs Armstrong was not a party to it and is not mentioned in it. The plaintiff undertook all liability under it. The document specifies a cash price of $70,909.09, total gross costs after registration and like charges of $81,021, all of which was financed, terms charges of $13,630.62 and total amount payable $94,651.62. This was to be payable by monthly instalments and after three years by a balloon payment of $40,510.50. 19 Mr Galluzzo and Mrs Rosita Galluzzo personally guaranteed the liabilities of the plaintiff under this document. To my mind it is altogether remarkable that Mr Galluzzo undertook this obligation for his company, for himself and for his wife on the basis of personal friendship and trust, looking forward to being relieved from the large obligations undertaken and transferring ownership of the car to Mrs Armstrong at an unknown and uncertain time when "settlement goes through with my divorce", when "I will pay you back whatever it costs you with whatever I get from the settlement". And all without a scrap of written confirmation from Mrs Armstrong. 20 Although there was a history of business and personal associations extending over some years this is a remarkably large obligation to undertake on the basis of friendship, particularly in the context of there being no written confirmation that she had undertaken any obligation at all or had any connection with the Mercedes Benz or with paying the large obligations which were undertaken. 21 Parts of the context are that Mrs Armstrong was separated from her husband, that she had poor health, that she had considerable difficulties associated with that separation, including apprehended violence orders obtained by Mr Armstrong and his secretary, and had significant motoring trouble involving being charged with driving under the influence, although she had escaped conviction. 22 In human terms, the friendship to which Mr Galluzzo's evidence repeatedly referred as an explanation of the events is a completely inadequate explanation. There is no economic explanation offered and I see none. In this respect, the agreement which Mr Galluzzo's evidence would show took place was in my judgment improbable to a very marked degree. 23 I also find the arrangements for garaging the car at Rozelle and making it available to Mrs Armstrong by going to Beecroft to pick her up and transfer her to Rozelle when she wanted to drive or use the Mercedes Benz difficult to accept simply as a matter of probability. Mr Armstrong gave evidence to the effect that he had not frozen any bank accounts and that Mrs Armstrong had significant resources available to her. It is quite clear on Mr Armstrong's unchallenged evidence that Mrs Armstrong had very ample resources in April 2002, altogether enough to buy or lease a Mercedes Benz and pay for it if she wished to, and that she had no need to use credit supported by the plaintiff or by Mr and Mrs Galluzzo. 24 The Mercedes Benz had low mileage when it was leased after being used as a demonstrator and still had low mileage when Mrs Armstrong died. It was registered as a business car and was not given a hire car plate. Mrs Armstrong had no business to use a car for and Mr Galluzzo's explanation in terms of her proposing to go into the development business was feeble and unsatisfactory. There is evidence from several sources that she spoke of intending, planning or wishing to go into some development business but no evidence has shown that this ever attained any substance or that she did engage in such business, and Mr Nielsen, the person she spoke of as prospectively involved with her, had made no concrete arrangements of any kind to that effect. There is no suggestion anywhere in the evidence that Mrs Armstrong was charged for petrol, for maintaining the car or for garaging it. 25 Mr Galluzzo's evidence about the circumstances in which his company ever owned or used white motorcars in his business is not at all satisfactory. There is an ultimate ambiguity in his affidavit evidence on this subject but it is altogether clear that in his first affidavit he said that the Mercedes was not one that the plaintiff would ordinarily use. The types of vehicles the plaintiff used were larger with longer wheel bases and larger engines and "All our cars are either black or gold in colour. This has always been the case every since EHC commenced. The Mercedes was white and is a four cylinder car". 26 As he later fully and clearly acknowledged in another affidavit after a witness on behalf of the defendant had made an affidavit speaking of observing white cars on the premises and produced a photograph, Mr Galluzzo said that the plaintiff has and uses several white cars in its business as well as black cars and gold cars. This is not a matter about which he could ever have been in any doubt or had any misunderstanding as he was in control of the company's affairs. 27 This has greatly shaken confidence in Mr Galluzzo's evidence. 28 Two witnesses gave evidence that Mrs Armstrong expressed strong dislike for using or having white cars. One of these, Mrs Connelly, gave evidence of Mrs Armstrong telling her about events in which Mr Galluzzo attempted to get her to buy a Mercedes at about the time the Mercedes was leased in terms completely inconsistent with Mr Galluzzo's evidence. However a conversation with Mrs Connelly was not an occasion on which I would think of Mrs Armstrong as being on her mettle for a full or clear account of business affairs in which she was involved. Still it remains true that there is clear evidence that she expressed aversion for white cars. 29 It was claimed that various statements made by Mrs Armstrong to witnesses, none of them a full or clear explanation of dealing with a Mercedes Benz, Mr Galluzzo and others, support the plaintiff's case but I see no support in these incidental statements attributed to her. She made other statements which tended to the opposite effect. In any event, I regard it as clear that she was not a reliable person, indeed she was something of a fabulist. 30 Mr Galluzzo's evidence further shows that at about the time when the plaintiff entered into the lease arrangement Mr Phillip Peluso, who was then a driver employed by the plaintiff, expressed keen interest in buying Mrs Armstrong's BMW M3 sports car and told Mr Galluzzo of this. Mr Peluso gave oral evidence and was cross-examined and I formed the impression that he was a sincere witness on whom I could rely. 31 According to Mr Galluzzo's evidence, Mr Peluso told Mr Galluzzo of his interest in the car and was told to put a price on it which Mr Galluzzo would take to Mrs Armstrong. Mr Peluso took the car and showed it to other dealerships to establish a price and then he offered $45,000. Mr Galluzzo passed this on to Mrs Armstrong who said "That's fine. I'll take his offer. Tell him to put the money into your account and it can go towards what I owe you for the car you are getting for me". This arrangement was made about 19 April 2002 which is the date of the lease agreement. 32 Mr Peluso deposited $45,000 into the plaintiff company's account. However Mrs Armstrong ultimately decided not to sell the BMW to Mr Peluso and Mr Galluzzo caused the plaintiff to refund $45,000 to Mr Peluso about late May 2002. Mr Galluzzo says "It was my understanding that the deceased felt she could obtain a higher price for the BMW". 33 It was claimed on behalf of the plaintiff that a statement appearing in Mr Peluso's evidence about the possible application of the $45,000 towards the Mercedes Benz in some way corroborated Mr Galluzzo's evidence. I see nothing of corroboration in this passage which does not confirm any significant part of the alleged agreement. 34 I find it difficult to follow the arrangements which were made or were in the prospect of being made about Mr Peluso and his $45,000. As Mr Peluso was willing to buy the BMW from Mrs Armstrong and was willing to pay $45,000, and actually did pay that money to the plaintiff, I find it very unlikely that the transaction of purchasing the Mercedes Benz and the potential transaction of selling the BMW could not be married up in some way so as to reduce very greatly by about half the total liability under the lease. 35 In ordinary everyday reasoning and sound economics, even kitchen table economics, there was every reason for Mrs Armstrong to direct all or most of the proceeds of selling the BMW towards acquisition of the Mercedes Benz, even if she wished to retain some money out of the transactions for present purposes. It was Mr Galluzzo's evidence in answer to questions from me that it was not an object of the transaction to make money available to her in this way. In any event she clearly did not need to raise money in this way. 36 There were inconsistencies in Mr Galluzzo's evidence of whether Mrs Armstrong had resources or adequate resources. He continually recurred, in expositions of parts of the facts in terms of friendship, to needs for help which she had, saying for example at one place that she was bone dry and without resources and giving the explanation that helping her financially was the natural thing to do. However, at another place he acknowledged that she had adequate resources. His treatment of these subjects was injurious to his credibility, in my judgment. 37 Looking at the evidence before me relating to events up to the time of Mrs Armstrong's death there are so many anomalies in the events as related by Mr Galluzzo that I am not prepared to find on the balance of probabilities and applying careful scrutiny to the evidence that Mrs Armstrong and Mr Galluzzo did enter into an arrangement relating to the purchase of the Mercedes Benz under which Mrs Armstrong incurred liability to pay the outgoings relating to the Mercedes Benz and was entitled to become the owner of it. For this reason alone the plaintiff is not entitled to succeed in its principal claim. 38 Of at least equal strength as a ground for rejecting the principal claim is the fact that the condition which on Mr Galluzzo's evidence undoubtedly had to be fulfilled before Mrs Armstrong's promise to pay money and complete the sale took effect, has never been fulfilled. That is to say, she has never completed her negotiations and obtained money from her divorce settlement. 39 Reference was made in the course of argument to the principle in Browne v Dunn (1893) 6 R 67 and to the defendant's leading counsel not having confronted Mr Galluzzo with the suggestion in cross-examination that the agreement contained a condition precedent to this effect. In my view Browne v Dunn is not involved and there is no expectation of counsel that Mr Galluzzo should have been confronted in that way. 40 As alleged in the second further amended statement of claim, and in Mr Galluzzo's principal affidavit, the agreement alleged is with unmistakeable clarity one in which the promise to pay is conditional on the availability of funds from a divorce settlement. No other conclusion is rationally available about the meaning of the alleged agreement as it appears on affidavit. The pleadings do not expose this issue well as the second further amended statement of claim does not say when and how payment should have been made and when and how breach occurred. The obligation to pay is clearly denied in the notice of grounds of defence. 41 So there are, in my opinion, two bases for deciding against the principal claim. 42 A further body of material in evidence relates to events after Mrs Armstrong's death. Mr Armstrong contended for a state of facts about events after Mrs Armstrong's death which differs very significantly from the state of facts given by Mr Galluzzo in evidence. All of this body of material in my understanding is admissible because of its impact on credibility of Mr Galluzzo; the facts dealt with are relevant only in that way. 43 Mr Galluzzo said that at the funeral on 17 October 2002 he said to Mr Armstrong that he needed to discuss some matters related to Mrs Armstrong's motor vehicle, not just the BMW, the Mercedes Benz as well. Mr Armstrong replied inconclusively and there was no further discussion. Mr Armstrong denied any such conversation. 44 To me it seems understandable that matters of business were not discussed at length on that day. Any reference can only have been passing. 45 In Mr Galluzzo's evidence he went to Mr Armstrong's office premises "in or about December 2002" and delivered the BMW to him at that time. Mr Galluzzo has given different accounts in different affidavits and in oral evidence about what else he did on that occasion. There is deep ambiguity in his second affidavit and no real clarity was achieved in his oral evidence. In the first affidavit he said that on that occasion he had with him the lease agreement, the invoice from Thornleigh Auto Body Alignment Pty Limited ("Thornleigh Auto Body"), an invoice for detailing the BMW for $350 and "a quotation for rectification of the BMW". He also said that he showed Mr Armstrong the documents and told him that Mr Philip Peluso might be interested in buying her BMW: But he will probably need to do some work to the car to bring it up to standard. I organised for some panelbeaters in Thornleigh to repair the car after Tricia's last accident. That cost about $4,500. However they are not authorised BMW repairers. This is a quotation for works to the BMW for $12,000. Mr Peluso last offered $45,000 for the BMW but that was before the last accident which she had. 46 In a later affidavit Mr Galluzzo said that he gave Mr Armstrong the documents but his oral evidence leaves it in doubt whether or not he did. According to Mr Galluzzo Mr Armstrong said "Leave it with me and I will get back to you". He did not get back to Mr Galluzzo by 31 January 2003. Mr Galluzzo prepared a letter dated that day making a claim with some supporting details relating to the Mercedes Benz. He asked that Mr Armstrong refund the instalments, registration and green slip fees paid and take over the lease, and called for prompt attention. Mr Galluzzo said that he took the letter to Mr Armstrong a few days after 31 January 2003 and gave it to him and asked him to get back. Mr Armstrong said he would but did not do so. There was inconclusive correspondence, an unsatisfactory settlement offer from Mr Armstrong on 20 June 2003, some further negotiations and this litigation was commenced late in the year 2003. 47 As I earlier said, Mr Armstrong distributed the estate without paying any claim made by the plaintiff. 48 Mr Armstrong's account of events at this time is utterly different. It is difficult to see how it could be more different. It is not my concern to make findings establishing which account is true. It is my concern to address what impact, if any, adverse to Mr Galluzzo's credibility the evidence dealing with these subjects has. In Mr Armstrong's evidence the subjects discussed in October 2002 were unpaid invoices for hire car services and the need to repair the BMW M3 sports car. Mr Galluzzo told him about arrangements for repair, and said that the front suspension was badly damaged and the sump was holed. According to Mr Armstrong, Mr Galluzzo told him on 25 October 2002 that the car was in his repair shop in Alexandria. I interpose that Mr Galluzzo did not have a repair shop in Alexandria but BMV Automotives Services ("BMV Automotive") associated with Mr Mihas did. 49 This account is different from the account given by Mr Galluzzo in which the car had already been repaired by Thornleigh Auto Body and those repairs had been finished well before 24 October 2002, and that he told Mr Armstrong about it. Mr Armstrong's evidence is to the effect that on the occasion on 3 or 4 December 2002 when Mr Galluzzo delivered the BMW to Mr Armstrong's business premises at Rydalmere Mr Galluzzo gave him a tax invoice from BMV Automotive for $12,447.10 and an invoice for detailing for $350, told Mr Armstrong that he had paid these and asked to be repaid the amounts. Mr Armstrong further said that after he had had the vehicle inspected he challenged Mr Galluzzo in a telephone conversation on 10 December 2002 and asserted that the work claimed to be done was grossly overstated. Mr Galluzzo then arranged for Mr Mihas of BMV Automotive to speak to Mr Armstrong. 50 After speaking to Mr Mihas, Mr Armstrong obtained a report from the Motor Vehicle Repair Industry Authority and obtained an appointment for mediation and Mr Galluzzo contacted him again. Delivery of the letter dated 31 January 2003 followed on 7 February 2003. 51 In Mr Armstrong's evidence he first saw the lease agreement and learned of any claim relating to the Mercedes Benz on 7 February 2003 when this letter was delivered. 52 Again according to Mr Armstrong, Mr Galluzzo did not refer to the Mercedes Benz or make any claim relating to it until February. He did not produce the lease agreement for Mr Armstrong to see in December. Further, according to Mr Armstrong's evidence, he was given the document which Mr Galluzzo claimed he said was a quotation for about $12,000 but Mr Armstrong was told it was a Tax Invoice which he was asked to pay. Indeed, according to its terms, it is a Tax Invoice and plainly it is not expressed as a quotation. Mr Armstrong had a mechanic investigate the vehicle on 10 December 2003 and had the investigations carried out by the authority establishing that the work in the document referred to as the quotation had not been carried out. 53 As depicted by Mr Armstrong it was only after he had established this and made it plain that he would not be paying the amount on the Tax Invoice that Mr Galluzzo first brought forward any claim or any reference relating to the Mercedes Benz. I was asked to infer that Mr Galluzzo had been frustrated in an attempt to obtain about $12,000 by deception on the basis of a false Tax Invoice and, when so frustrated, had brought forward another claim, also false, which he had not brought forward before. According to Mr Armstrong's evidence he was not told of the Thornleigh Auto Body Invoice for $4,540 in December 2002 or in January 2003; not until June 2003. 54 The document which Mr Galluzzo says he referred to as a quotation is extremely anomalous. It does not on its face refer to itself as a quotation; it is in form a Tax Invoice appropriate to be delivered when the work referred to in it has been done and it was time to pay for it. The work referred to in it was very extensive: rebuilding the engine and other extensive work, much of which is very unlikely to be required to repair damage from running the vehicle against a median strip, or on to a median strip. The work included removing the engine and transmission assembly and replacing damaged sump, oil pump assembly, crankshaft and bearings, removing the front suspension and replacing it, replacing the engine cross member with the steering rack and lower suspension arms, removing and replacing the oil cooler, radiator assembly, air pump; much related work and supply of very expensive replacement parts: the engine sump, the crankshaft assembly, the engine bearings, the oil cooler, the radiator assembly and the steering rack assembly. 55 It would have been fraudulent to put the Tax Invoice forward as either or both an invoice for work which had been carried out or an invoice for work which it was necessary to carry out as a result of the accident in September. I suppose the sump could have been holed by hitting the median strip, but much else in the document is extremely unlikely to have been caused in that way. 56 There is no evidence either that the work had been carried out or that it was necessary to carry out it out. The evidence on affidavit and orally of Mr Mihas, the principal of BMV Automotive Services, is to the effect that Mr Galluzzo brought the car to Mr Mihas's premises about 4 November 2002, told Mr Mihas that he had bought the car and he wanted a quotation "to rebuild the engine using only new parts". Mr Mihas was of the view and said "The engine appears to be running very well. I don't know why you would want to spend money rebuilding the engine" but Mr Galluzzo said "I want the work done" and Mr Mihas prepared the quote so as to comply with his customer's requirements. He explained the form of the document as a Tax Invoice to the effect that he very rarely (Mr Mihas explained) quoted in writing at that time, that it was an error to give the document the form of a Tax Invoice and that he had not intended to suggest that he carried out the work or that it was due for payment. 57 I do not disbelieve what Mr Mihas says about this. Having seen and heard him I believe that his talents are in carrying out automotive work and not in producing paperwork and I see no reason to infer that Mr Mihas was a party to deliberately producing a misleading document with the object of getting paid for work which had not been done. I do find it strange, however, that there were intervals from Mr Galluzzo getting the BMW back on 15 or 17 October 2002, then seeking a quotation for rebuilding the engine using only new parts on 4 November, then getting what he calls the quotation three weeks later on 25 November 2002, then going to see Mr Armstrong and returning the car later, early in December 2002. I do not find the complexion which Mr Galluzzo gives to these events convincing; that is to say that he got a quote for rebuilding the engine (and much other work) with a view to persuading Mr Armstrong to put the car into suitable order to tempt Mr Peluso to renew his offer of $45,000. I do not find this convincing because I am unable to see why Mr Galluzzo gave himself so much concern about the BMW M3 Sports Car; from 17 October 2002 on he was in possession of a car which Mr Armstrong or the estate owned, and Mr Galluzzo's only discernible interest was to get back the $4,540 he had paid for its repair. The natural course for him was to unburden himself of the responsibility of looking after someone else's car and to press his claim to be paid $4,540 as soon as he could, well before the beginning of December 2002. As time ran on so did the monthly payments on the Mercedes Benz. That, too, was a situation which I would have thought required resolution long before Mr Galluzzo says he went to see Mr Armstrong early in December. 58 There are anomalies and even grounds for suspicion that Mr Galluzzo was engaged in an unsuccessful attempt to defraud Mr Armstrong of about $8,000 or $12,000 for work including rebuilding the engine and much other work on the BMW M3 car. On the other hand this is unlikely to be what Mr Galluzzo was trying to do because it could readily be seen by inspection with any sort of expertise that the work had not been carried out. It is unlikely that he would attempt to enlist Mr Mihas in a fraudulent conspiracy. In any event, that is my judgment, having seen Mr Mihas. 59 The events which happened after Mrs Armstrong's death have not demonstrated that Mr Galluzzo attempted to commit a fraud. On the other hand, his conduct was irregular, anomalous, difficult to explain, has done nothing to enhance his credibility, and has rather acted in the opposite sense. 60 Evidence of Mr Kenny, an officer of the Authority, attributes to Mr Galluzzo yet a third account of events relating to dealing with the repairs to the BMW M3 motor car. If Mr Kenny's evidence is correct, Mr Galluzzo gave an astonishingly different account to Mr Kenny, to the one which he is said by Mr Armstrong to have been given, or to the one which he says he gave. 61 Although Mr Kenny gave me a good impression as a witness, the record he spoke from was a report made on 19 March 2003 of a conversation made early in February 2003. He said he had notes, but he did not produce them. 62 I do not think that any finding adverse to Mr Galluzzo's credit should be based on the evidence of Mr Kenny and his report. I feel that something has gone amiss in Mr Kenny's process of record and report. 63 Mr Armstrong's case plainly suggested that the claim that the plaintiff had purchased the Mercedes Benz on Mrs Armstrong's behalf was a recent invention. 64 This made admissible the evidence of Mrs Angela Fichera, a secretary employed in the plaintiff's office, and Mr Galluzzo's niece. She gave evidence to the effect that Mr Galluzzo told her of the arrangement about purchasing the white Mercedes Benz on Mrs Armstrong's behalf at some time shortly after Mrs Armstrong had told Ms Fichera in or about March 2002 that Mr Galluzzo was taking her shopping for a new car at Mercedes Benz Zetland. Ms Fichera also gave evidence that the Mercedes Benz was garaged at the plaintiff's premises. 65 In cross-examination, and unresponsively, she introduced a strikingly new matter, and said that Mrs Armstrong had told Mrs Fichera herself an account of the facts which confirmed that the Mercedes Benz was bought on her behalf. I do not find this evidence, emerging as late as it did and in such an inappropriate way, at all impressive. Mrs Fichera's evidence has no real weight in my decision. 66 Evidence of Mr Armstrong, of Mrs Armstrong's doctor and of several other friends shows that Mrs Armstrong did not have a stable personality, that she received psychiatric hospital treatment in late January 2001 after an attempt to take her own life, that she had a number of other hospital admissions, some relating to alcoholism, some relating to falls, some relating to illness, that she was released from the psychiatric hospital into Mr Armstrong's care, later attempted to kill him by stabbing him and told him that she wished to kill both of them. He left the matrimonial home on 7 March 2001 for his own safety, although frequent personal contact continued, including many telephone contacts. She was dependant on alcohol, which contributed to her ill health. Mr Armstrong obtained an apprehended violence order against Mrs Armstrong on 4 December 2001, as did Ms Burton, a receptionist at Arlco. 67 It is in no way difficult to believe that Mrs Armstrong gave completely inconsistent accounts of aspects of her affairs to different people. 68 Mrs Armstrong's state of mind means that ordinary considerations of probability based on expectation of rational behaviour are not reliable for her conduct. In her circumstances it is not appropriate to place as much reliance as usually is placed on considerations of probabilities relating to behaviour in ordinary ways, with ordinary everyday reasonableness, or being reliable in dealings. 69 The difficulties are exemplified by the fact that she bought another BMW car without Mr Galluzzo knowing of it, without disposing of her BMW sports car, and without making any arrangements about use of the Mercedes Benz. She acquired the second BMW in or before July 2002. It was garaged at her home at Spring Street Beecroft. She paid almost $20,000 for this car, and had the $20,000 readily available, but after a month or two she agreed with the seller, Mr Nielsen, to reverse the sale and give the car back, leaving him indebted to her for the price. Nor is it appropriate to rely on statements which tend against accepting the plaintiff's case which Mrs Armstrong made to friends and relatives. Plainly she was very erratic and unreliable. 70 As I have earlier indicated, I am overall unable to find on the balance of probabilities that the oral agreement on which the principal claim is based was actually made, or that Mrs Armstrong and her estate have incurred any liability to the plaintiff in respect of the Mercedes Benz and the lease. I am not prepared to award any damages, debt, restitution or other remedy in respect of it. 71 It should not be said that Mr Galluzzo's evidence has been clearly shown to be false, but I do not have enough confidence in it to decide that the agreement about the Mercedes Benz has been proved to have been made. Echoing Briginshaw v Briginshaw, I do not feel on actual persuasion of its occurrence. 72 A second claim relates to a payment of $4,540 which Mr Galluzzo caused the plaintiff to make to Thornleigh Auto Body for repairs to the BMW M3 after it was damaged in or about early September 2002 when Mrs Armstrong was driving the vehicle and hit a median strip. 73 In Mr Galluzzo's evidence Mrs Armstrong telephoned him and told him that she had had an accident and hit the median strip, and that the tow trucks had taken the BMW to Thornleigh Auto Body. She asked him to see when the car was ready, to organise repairs, to find out how much it cost, and, "Can you lend me the money to repair my car as Ken" - meaning Mr Armstrong - "has frozen my account. I will pay you back from my divorce settlement". 74 Mr Galluzzo found that the repairs would cost $4,540, told Mrs Armstrong this, and she said, "Please pay that amount and get the car out of there. I will come by when it is ready to pick it up". 75 Mr Galluzzo arranged for the repairs to proceed and paid for them. The repairs were completed and paid for on about 15 October 2002, or perhaps two days later on 17 October 2002, which was the day of Mrs Armstrong's funeral. The vehicle was then taken to the plaintiff's premises at Rozelle. 76 In his defence Mr Armstrong does not admit that the estate is liable for this amount, but there was no active dispute of this claim at the hearing, and it appears clearly to me that Mrs Armstrong or her estate is liable for repayment to the plaintiff of $4,540 on a common money count, either for money lent or for money paid to her use. For these reasons I will give judgment for the plaintiff for $4,540. Before I consider whether to make any costs orders, I will give the parties an opportunity to make submissions on that subject. JUDGMENT ON COSTS 77 The plaintiff has recovered judgment for the smaller claim in respect of which there was a non admission but no true opposition from the defendant. The larger claim on which point the plaintiff failed occupied, for practical purposes, almost all the hearing time and attention and was the only part of the case which was the subject of significant evidence. 78 The substance of the matter is that the defendant has succeeded, notwithstanding the form of the judgment. The amount for which the plaintiff has succeeded is a small amount in respect of which it might quite often be the outcome that neither party recovered costs, but I should look further at the larger amount which was the true subject of debate. 79 The defendant's leading counsel asked for a general order for costs and that the costs be assessed on the indemnity basis. The costs must be large as the proceedings commenced in the Local Court, and were removed into the District Court I am told at the initiative of a member of the Local Court who felt concerns about whether the claim required the exercise of equitable jurisdiction. However, pleadings in the District Court clearly stated the claim, at least in part, as a claim for equitable remedies, and this in some way led to a further removal into this court. 80 I am not concerned to reappraise these decisions, although looking backwards I find it hard to see why they were made, as the plaintiff's claim, if correct, clearly was enforceable at Common Law against Mr Armstrong, the defendant, who had not pleaded and was not in a position to plead plene administravit praeter, as he retained all the distributable assets himself and before he appropriated them to himself he was on notice that the plaintiff had a claim. The circumstances are said to give rise to a claim for indemnity costs. 81 I have seen the file from the Local Court and I have taken notice of documents on record there. The proceedings were commenced on 9 September 2003 and on 22 December 2003 the defendant filed a statement of confession for $4,890 which he put forward in full satisfaction of the plaintiff's claim. There was no response in due time, so the Registrar disposed of the proceedings on the basis of this confession. However, many months later on 20 August 2004 the plaintiff refused to accept the amount confessed in full satisfaction and initiated proceedings to reopen the litigation, and was successful. From that early stage the plaintiff had before it the opportunity to recover more than it has been ultimately determined that it was entitled to. 82 A further matter dealt with in the general evidence is that on 20 June 2003, well before the litigation was commenced, Mr Armstrong offered Mr Galluzzo $12,000 "to forget everything" on the basis that the plaintiff kept the Mercedes Benz. This was truly a golden opportunity, but it was not taken. It represented far more than the plaintiff was entitled to. 83 I disposed of the principal claim on two bases. One was nonacceptation of the claim that an agreement was made, but the second was that the agreement as alleged, if made, was plainly on the evidence offered subject to a condition precedent to the obligation to make payment, and the condition precedent had never been fulfilled. 84 That this defence existed and was in logic irresistible ought to have been obvious to anyone who saw Mr Galluzzo's principal affidavit. The point was somewhat obscured by the form of the much amended District Court pleadings, but I am satisfied that it was there. 85 The plaintiff had a further opportunity to dispose of the proceedings when the defendant's solicitor, by a letter of 30 May 2006 which was tendered on the question of costs and marked exhibit 2, made an offer of settlement expressed to be "without prejudice save as to costs". The offer was that the defendant would pay $12,000 in full and final settlement and each party would bear all of its own costs of the proceedings. 86 In view of the matters I have already mentioned about the issues and in view of the merits of the case it was altogether wrong to a degree of delinquency for the plaintiff not to accept any of these offers, let alone the first, which was the fairest opportunity it ever received or was ever likely to receive to dispose of the claim. 87 I am a little concerned that the defendant has been represented in this relatively small matter by two counsel but I will leave whether it is appropriate to allow such costs on an indemnity costs order to consideration by the assessor. In my view the defendant should receive an order for the general costs of the proceedings in all three courts and a direction that the costs be assessed on the indemnity basis and I so order. 88 I order that execution of the judgment be stayed and that execution be enforced only by setting off the amount of the judgment debt against the defendant's entitlement to costs. 89 My orders are: 1) I give judgment for the plaintiff for $4,540. 2) I order that the plaintiff pay the defendant's costs in all three courts. 3) Direct that the costs be assessed on the indemnity basis. 4) Order that execution of the judgment be stayed and that execution be enforced only by setting off the amount of the judgment debt against the defendant's entitlement to costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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