Supreme Court New South Wales Medium Neutral Citation: Glynis Carrier v John Georges & Anor [2013] NSWSC 401 Hearing dates: 27.02.13, 28.02.13, 26.03.13 Decision date: 24 April 2013 Before: Nicholas J Decision: Par 52 Catchwords: CONTRACT - duress - allegation of employee's fraud - whether employer threatened to inform police - whether express or implied contract not to prosecute - reliance on spoken words - burden of proof - whether evidence sufficient to establish duress - turns on facts - no question of principle Cases Cited: Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293 Scolio Pty Ltd v Cote (1992) Aust Contract Reports 90-013 Watson v Foxman (1995) 49 NSWLR 315 Category: Principal judgment Parties: Glynis Carrier - plaintiff John Georges - first defendant Koala Clothing Australia Pty Ltd - second defendant Representation: Counsel: G Foster - plaintiff M Condon SC/P Wallis - defendants Solicitors: Valenti & Valenti - plaintiff Price & Company - defendants File Number(s): 12/126286 Judgment 1By her second amended statement of claim filed 28 February 2013 the plaintiff claims from the defendants the sum of $240,000 as money had and received by the defendants as money paid to them under duress. The plaintiff alleges that the payment was induced by illegitimate pressure resulting from the threat by the first defendant (Georges) to the effect that if the payment was made to the account of the second defendant he would not have her brother, Mr Derek Wales (Derek), charged for stealing money from the second defendant. 2In the alternative, the plaintiff claimed recovery of the sum by way of restitution on the ground that the defendants had received payment of the sum of $521,986.62 from National Australia Bank (NAB) as compensation for the loss of the money stolen by Derek so that retention of the sum paid by her was unconscionable. However, during final submissions this claim was abandoned (T p 140). 3The claim which proceeded was pleaded in the second amended statement of claim as follows: "5. On or about the 20 May, 2009, a the 1st Defendant contacted the Plaintiff and advised her that the said DW had stolen approximately $237,000.000 from the 2nd Defendant; b the 1st Defendant threatened to report DW to the police and have DW charged; c the Plaintiff held the opinion that, should DW be charged, he would be most likely to go to gaol and might not survive, and so the Plaintiff advised the 1st Defendant she would try and see what she could do to remedy the situation in fear that, without such payment, DW would be charged and would go to gaol and might not survive; d the Plaintiff raised $240,000.00 and advised the 1st Defendant of same; e the 1st Defendant agreed not to have DW charged should $240,000.00 be paid into the account of the 2nd Defendant by the close of business of the following Friday, 22 May; f $120,000.000, being part of the said funds, were deposited into the account of the 2nd Defendant; g At all material times the Plaintiff cared for and deeply loved DW as her brother, that she found herself bound to do anything in her power to save him from Gaol." 4The claim is denied. Although it is accepted the plaintiff paid the amount to the second defendant, the defendants deny any threat to refer Derek to the police. They assert that the payment was made on behalf of her brother as repayment of the monies stolen by him. 5In summary, the plaintiff claims that in a telephone conversation on 20 May 2009 Georges informed her that Derek, then employed by the second defendant as an accountant, had stolen about $237,000.00 from the second defendant. She alleges that he told her that he would have no choice but to have Derek charged. She alleges that after that conversation she discussed the matter with her husband and they decided to pay from their joint account the sum of $240,000.00 to the second defendant. She then had a second telephone conversation with Georges in which she told him the payment would be made, whereupon he thanked her and provided details of the second defendant's bank account. On 20 May 2009 the plaintiff paid the amount of $120,000.00 to the second defendant's account, and on 21 May 2009 she made a further payment of $120,000.00. The plaintiff claims that Georges' statements coerced her to make the payments to procure his agreement not to refer the theft to police and/or to have Derek charged. 6The plaintiff and Georges gave conflicting versions of the conversations. It will be necessary to evaluate the reliability of each as a witness. In doing so, it is important to keep in mind that the relevant events took place over three and a half years ago, and that neither kept a contemporaneous diary note or other record. The evaluation of their evidence of the conversations requires an understanding of the events which preceded them, the circumstances in which they took place, and subsequent events. 7The following background matters were not controversial, and in any event, there was ample evidence of them. 8The plaintiff, a nurse, is the wife of Mr Miles Carrier, an airline pilot. She has a sister, Loretta Wales (Loretta), and a brother, Edward Wales (Edward). Her other brother, Derek, died on 4 August 2010. There was a close family relationship between them. 9The plaintiff and Loretta were aware that in about 2000 Derek had been convicted of stealing a large amount of money whilst working as an accountant in Sydney, and was sentenced to a period of detention. 10Georges is the director of the second defendant which carries on business in the clothing industry. In about 2002 he arranged for Derek to be employed by the second defendant in charge of its accounting, banking, and bookkeeping requirements. At all material times he was ignorant of Derek's prior criminal history, and Derek never disclosed it to him. The second defendant banked with NAB and St George Bank. Georges, the plaintiff, and Loretta have known each other for some years and have had a friendly relationship. In particular, Loretta, Georges and his wife met frequently on social occasions and developed a close relationship. 11In about mid May 2009 Georges was informed by an officer of NAB of the unauthorised withdrawals by Derek of substantial amounts from the second defendant's bank account. Some days later, after receiving further details from NAB, Georges confronted Derek about the thefts. He confessed to taking $237,000.00. 12On 20 May 2009, Georges had a telephone conversation with Loretta, and two telephone conversations with the plaintiff. Later that day the plaintiff deposited the sum of $120,000.00 into the second defendant's account with St George Bank. On 21 May 2009 she deposited a further sum of $120,000.00 into that account. 13On 22 May 2009 the plaintiff sent an email to the defendants in the following terms: "As per telephone discussion with you, I have deposited to Koala Clothing (John and Doreen Gorges [sic]) the sum of $120,000.00 (one hundred and twenty thousand dollars) on 20 May 2009 and $120,000.00 (one hundred and twenty thousand dollars) on 21 May 209 [sic] on behalf of my brother Derek Wales." 14On 2 September 2009 Georges reported Derek's fraud to the police at Marrickville Police Station. 15On 11 December 2009 Derek was arrested and interviewed by Detective Senior Constable Waugh. The ERISP transcript records that he had not disclosed to Georges his criminal history. He was charged on account of obtaining money by deception, and was released on bail. 16On 1 March 2010 the plaintiff sent to DSC Waugh by fax details of the payments made to the second defendant on 20 and 21 May 2009. 17On 4 March 2010 Derek was sentenced to a term of imprisonment at Kogarah Local Court. 18On about 9 March 2010 the second defendant and NAB agreed to settle the claims arising from Derek's fraudulent misappropriations by the payment to the second defendant of the sum of $523,000.00. 19On 7 June 2010 the District Court heard Derek's appeal and confirmed the sentence. The facts sheet dated 3 June 2010 prepared for the court recorded that Derek misappropriated from the second defendant's account with NAB the total amount of $521,980.62. It also recorded the following: "44 ... The accuseds' [sic] sister has paid $240,000.00 to the victim, John Georges in 2009 to compensate for loss of money taken. The victim has also been paid by the NAB compensation for the full amount of $521,980.62. Police are seeking compensation on behalf of the National Australia Bank in the amount of $281,980.62 being the total amount less the $240K given to Georges by Mr WALES' sister ..." 20On 4 August 2010 Derek died. 21By letter of 31 August 2010 to the second defendant the plaintiff's solicitor advised as follows: "We act for the abovenamed who are the sister and brother in law of the late Mr Derek Wales. We also acted for Mr Wales in relation to his sentencing in the District court. In sentencing Mr Wales, the Court made a finding of fact that the sister of Mr Wales, Glynis Carrier had restituted [sic] the sum of $240,000.00 to you. We understand that in addition to this $240,000.00, you have been further reimbursed for the whole amount by the National Australia Bank. Accordingly, you have been overpaid. Please refund the sum of $240,000.00 to us on behalf of our client within 10 days from the date hereof." 22On 20 April 2012 the statement of claim was filed. The principles 23The plaintiff's case required proof to the reasonable satisfaction of the court of two conversations on 20 May 2009 in which Georges subjected her to illegitimate pressure which induced her to make the payments to the second defendant. This required establishing that Georges threatened to have Derek charged unless the money was paid, or, in other words, the payment was made to procure the stifling of the prosecution of Derek for his offence. 24In Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 (p 46), McHugh JA (Samuels, Mahoney JJA agreeing) held that the proper approach in determining whether there has been economic duress is to ask: " ... whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress. In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104, Lord Wilberforce and Lord Simon of Glaisdale pointed out (at 634; 121): '... in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as illegitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion.' In Pao On v Lau Yiu Long [1980] AC 614, the Judicial Committee accepted (at 635) that the observations of Lord Wilberforce and Lord Simon in Barton v Armstrong were consistent with the majority judgment in that case and represented the law relating to duress." 25In Scolio Pty Ltd v Cote (1992) Aust Contract Reports 90-013, Rowland J said (p 89,328): "Although the extent to which conduct can give rise to undue pressure has been extended, my researches have not indicated any decision which would show that a threat to make a report to the police of misconduct is itself unlawful and there are cases of high authority and of long standing: see Flower v Sadler and Ward v Lloyd (1843) 7 Scott NR 499, which indicate that absent an agreement not to give information to the police, the action of a threat in circumstances where there is consideration for the doing of the act, the pressure will not be unlawful nor, in the absence of any other evidence, sufficient to establish that the respondent had no choice but to act as he did." Of the allegation that the respondent was led to believe that if payment of the monies claimed were made, or a satisfactory settlement was negotiated, then the matter would not be referred to the police, he said (p 89,329): "These are serious allegations. Not only should they be pleaded, but also there should be some evidence from the person making the allegation that the agreement or representation was in these terms, or he properly believed from the coercer that that was the case. Until the unlawful or illegitimate conduct is established by the person making the allegation, the onus of establishing that it did not contribute to the respondent's actions in executing the deed, did not arise." Ipp J said (p 89,331): " ... some other element of impropriety is needed, apart from the threat of prosecution, before there could be said to be duress resulting in the respondent becoming entitled to avoid the deed. The element that is normally sought to be established in cases of this kind is an agreement not to proceed with the prosecution. Such an agreement is illegal and is therefore void: see Kerridge v Simmonds (1906) 4 CLR 253. Further, the existence of such an agreement introduces a quality of impropriety into a transaction induced thereby so as to render it voidable for duress: see Kaufman v Gerson [1904] 1 KB 591. In this case there was no issue of illegality on the pleadings; the sole ground of defence being duress. ... I do not consider that the Court of Appeal intended in Jones v Merionethshire Permanent Benefit Building Society (supra) to lay down any rule of law to the effect that the mere threat of prosecution, coupled with the entering into of a contract, necessarily gives rise to an implied agreement not to prosecute. Ward v Lloyd (supra) and Flower v Sadler (supra) are examples of instances where threats to prosecute did not automatically result in the implication of an agreement that should the creditor's demands be met the prosecution will be stifled. Every case depends on its own circumstances." 26In Watson v Foxman (1995) 49 NSWLR 315 McLelland CJ in Eq referred to the difficulty in satisfying the onus of proof based on unconfirmed conversations. He said (pp 318, 319): "Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court 'must feel an actual persuasion of its occurrence or existence'. Such satisfaction is 'not ... attained or established independently of the nature and consequence of the fact or facts to be proved' including the 'seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding': Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration...." His Honour said (p 319) that these considerations were equally applicable to causes of action based on contract. 27The requisite "reasonable satisfaction" should not be produced "by inexact proofs, indefinite testimony, or indirect inferences" (Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 per Dixon J, p 362). 28The need for precision in a case of this kind is important because the question of what the plaintiff would reasonably understand from the statements made by Georges will depend upon proof of the words spoken. A distinction needs to be drawn between a reasonable understanding based on what Georges said and judgments or conclusions which the plaintiff may have reached as a result of her own beliefs and prejudices. It would not be reasonable to hold Georges responsible for a conclusion which is not reasonably understood to have been expressed or implied by what he said, but is the product of the latter (cf Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293 at 301). Consideration 29The threshold question in this case is whether the plaintiff has proved that the decision to make the payment was induced by pressure exerted upon her by Georges. If the answer is "Yes", the next question is whether that pressure was illegitimate in that it consisted of an unlawful threat to stifle the prosecution of Derek (Crescendo Management, p 46). The conduct alleged to give rise to undue pressure consists of statements made by Georges in two telephone conversations which took place on 20 May 2009. The determination of the questions requires close scrutiny of the relevant evidence. 30The plaintiff's evidence in chief was: T p 14, l 9 - p 15, l 4: "Q. I just ask you to take your mind back to that first conversation and tell his Honour what the context was and who said what? A. I rang Mr Georges to find out what had happened and she said "John what has Derek done?" Q. And he said? A. And he said "I have discovered money taken from my account." He didn't say which accounts and I said "how much was taken?" And he told me that day $237,000 that was proven and some cheque that were still in limbo and need to be proven 237,000 proven and other cheques that were still floating that Derek had stolen, amounts unknown. Q. And any other conversation with him? A. Well Q. That is the first telephone call? A. Yes, so after HIS HONOUR Q. Madam, you have told us that John said to you "I have discovered money taken from my account, $237,000 proven and there were some cheques that were still to come in. Now, did you reply to that in this conversation and if so what did you say and did the conversation continue? A. Yes, sorry. Q. He said, I said? A. I told him I would ring him back again. I would check with my husband and find out what we could do about that. FOSTER Q. And as a result? A. I had to telephone my husband. He lives in Malaysia, he was a Malaysian airlines pilot at that time and I had to wait until he was home. Q. You spoke to your husband you spoke a moment ago about there being two calls on or about 20 May? A. Yes. Q. Can I ask you then to address your mind to the second phone call between yourself and Mr Georges, the first defendant? A. Yes, after I called my husband, he actually told me, yes, we could take that money from our equity loan and we helped, it would increase our loan, of course, but we were willing to do that to help Derek ..." T p 15, I 21 - l 24 "Q. Can you turn your mind back to the second conversation? A. I rang John up again and told him my husband and I decided we would give him 240,000 and so then I asked him when was it due? He told me it was 22 May ..." and l 39 - 49: "Q. We will start again. You rang John, right? A. Yes. Q. I said to him, whatever you said. He said to me. Take your time? A. I told him my husband and I had agreed that we would give 240,000 to him on Derek's behalf. FOSTER Q. And did Mr Georges say anything in reply or did you say more? A. Yes, he thanked me for that and he gave me his details, bank details." T p 16, l 1 - l 14: "HIS HONOUR Q. What did he say? A. He said "Thank you very much for that Glynis, very generous of you". And I asked him what his bank what account to put it in, BSB, et cetera, and he gave me his St George account. Numbers I can't remember off hand but that is the details he gave me. And that was that. Okay. Then, sorry, that was the conversation. FOSTER Q. So is there anything else in that conversation? A. Apart from him thanking me, that was about it, I think, and giving me his bank details." and l 20 - l 50: "... So I was happy and I said as long as it Oh, sorry, can I go back to the other bit, the other bit? Q. Which other bit? A. The second part of that conversation. Q. Which conversation? A. Sorry, I had actually told him, I am not sure which part it was, but he I said is "Does that is mean you won't get my brother charged?" Does that mean that you don't have my brother charged, and he told me "He is not just my friend, he is my brother". Q. So when do you say Mr Georges said that? Which day? A. That same day, 20 May. HIS HONOUR: Let me get the sequence. Q. You tell us that he said to you "Thank you very much, very generous", and gave you his bank account details? A. Yes. Q. And it at that point you say "Does that mean you won't have my brother charged?" A. I think that was it, yes. I am confused now. I have got to get my thoughts together. When he rang me that day I rang him, sorry, to say that I would pay for it I have gone blank. I can't say without telling extra bits. I am a bit confused. Q. All we want to know is what you said to him and he said to you. Now you have told us he gave you the bank details? A. Yes." T p 17, l 1 - l 17: "Q. And as I understand it you went on to say "Does that mean you won't have my brother charged?" And then as I understand it he made some response to you? A. That's right. Q. We have not got clear what the response was? A. That is what he told me. He said "No I won't have him charged because he is not just my friend", he said "that poor skinny fellow, you know, he won't survive gaol. I would never do that to him. He is not just my friend, he is my brother", and I believed him. Q. Was that the end of the conversation on this occasion? A. Yes. Q. Was that the end of the conversation? A. Yes." T p 25, l 1 - l 6: "FOSTER Q. Did you have any concerns about what he had specifically told you about Derek having stolen money? A. Well, yes. After Derek's first offence, you don't have to be a lawyer to know" and l 14: "A. I was concerned if my brother went to gaol he would never survive." and l 30 - l 40: "Q. As a result of those concerns, what was going through your mind? A. Well, I was just petrified for Derek. I knew if he went to gaol he would never survive. So that was it, mainly. Q. And as a result of that petrification, did you make a decision? A. Yes, I did. That is when I rang my husband. He is the main breadwinner. I actually had to ring him. He lives in Malaysia. I had to actually give him a call. Thankfully, he was at home, otherwise, he would have been flying, and he, thankfully, said, "Glyn", without hesitation, he said, "We will go into our loan", and I was so grateful because it is not even his brother, you know, it is his brother in law." 31In cross-examination the plaintiff said that after the first conversation with Georges she had a telephone conversation with her husband in which they decided to make the payments. She said the decision was a joint decision to pay $240,000.00 from their joint account with HSBC Bank. She said the decision had been made then, and prior to the second telephone conversation with Georges. She then referred to the second telephone conversation with Georges on 20 May 2009 in which she asked when the money was to be paid. She said he replied as follows (T p 29, l 20 - l 21): "... he said 'The 22nd. My suppliers need to be paid otherwise I will have no choice but to have Derek charged'." 32She said she thought these words were spoken in the first conversation. The cross examination proceeded as follows: T p 30, l 5 - p 31, l 36: "Q. You know that when you gave that evidence the first time around you mentioned nothing about a threat being made? A. It wasn't a threat. I mean, he never blatantly asked me for money. He just said, you know, if that money is not paid I will have no choice but to have Derek charged. Q. Let me just understand a couple of things. You say that he never made a threat to you; is that right? A. Not really, no. He said there was no choice, so to me it was no choice. Q. You didn't regard anything he said to you on either of these conversations to be a threat; is that right? A. No, I was happy to give it to him. Q. And you were happy to give it to him because you understood that his company had been defrauded to a tune of over $200,000? A. No, because to keep my brother out of gaol. Q. And that was your own decision, wasn't it? A. That's right. Q. On this day you knew your brother had been to gaol before? A. No, home detention. Q. I apologise. And you say to his Honour you had very serious concerns about whether he would survive incarceration? A. That's right. Q. And those were views you formed quite by yourself; is that right? A. Yes. Q. And you certainly didn't understand Mr Georges to be saying: unless you pay this money I'm going to report it. There was no threat, was there? A. Well, like I said, he never blatantly asked me for money, but he did say he would have no choice but to have my brother charged. So I understood that to be pay up or else. Q. He never said that to you though, did he? A. Which what did he say? Q. He never said to you pay up or else, did he? A. No, he never did. Q. And as far as you were aware he had never sought to extort money from you, did he? A. No, but he laid it out to me that he would have no choice but to have Derek charged. So of course that meant, you know. Q. I want to suggest to you he never said those words to you, he never said anything about reporting Derek to the police? A. Well, he did. Q. Were those words of importance to you at the time? A. Yes. Q. And did you regard what he said as a matter of some particular significance to you? A. No, I just thought what a kind, generous man this man was. I mean, anybody else would have put Derek in gaol, report him straight away. But I thought giving us this option to actually pay off Derek's debt that would help my brother out of gaol. Q. Let's just go back to your earlier evidence. You agreed with me that you attempted to give to his Honour your best recollection of what was said? A. Yes. Q. And do you agree with me that you did not on that occasion say anything which referred to gaol being mentioned in that first conversation? A. No, he didn't say gaol. He said my brother charged. So I presumed it was gaol. Q. Let me ask the question more precisely. Do you agree that when you first recounted the conversation to his Honour this morning you never mentioned anything in relation to the first conversation about charges being proffered, did you? A. Well, John Georges himself told me that, that he would have no choice. Q. Can you just attend to my question. When you gave evidence the first time around this morning about this first conversation you did not refer to Mr Georges foreshadowing that charges might be proffered against Derek, did you, you didn't mention it? A. I was very nervous." T p 32, l 7 - l 11: "Q. Certainly on the 20th you didn't perceive Mr Georges was making a threat to you, did you? A. No, I thought he was a kind, generous man for giving me this option, an out." 33She agreed that her email of 22 May 2009 to Georges recorded her understanding of their discussions. 34In cross-examination she gave the following version of the second conversation: T, p 38, l 29 - l 32: "Q. How did the conversation start? A. Okay, I just told him, "John, Miles and I have agreed that we will pay the $240,000". And I said what bank and what BSB, et cetera. And that was what he gave me. And I said, "Okay, I will do my best". And I transferred money ...." and l 42 - p 39, l 1: "A. Okay. And that was then I actually said, "So, John, does that mean my brother will not be charged?" And told me, "How can I let that poor skinny fellow go to gaol?" Q. Anything else that was said? A. Then I said and he thanked me for that. Q. Was that the first time that you had broached with him, on 20 May, the possibility of Derek going to gaol? A. I think both conversations I had actually told him." T p 39, l 39 - l 41: "Q. So you say on the 20th you thought about or you assumed that if the money was paid Derek would remain in employment; is that right? A. Derek would not be charged." T p 41, l 25 - l 44: "Q. Did you tell Mr Georges in the conversation that you would pay him 240? A. I did. Q. He didn't ask you for 240, did he? A. No. He never asked me for anything. He just said Derek had told him 237 that he knows of and there were some cheques that were, you know, amounts unknown. Q. As I understand it, and you must correct me if I've got it wrong, he didn't ask you to pay any money, did he? A. No, never blatantly asked me. CONDON Q. He never impliedly asked you, did he? A. Well, to me it was an implication when he said he would have no choice but to have Derek charged, that was the implication for me. Q. You said to Mr Georges that you would top it up, correct? A. Yes." 35The plaintiff acknowledged she had a great many discussions with Loretta about the events of May 2009 which had helped and improved her recollection. She described the number of times they compared notes as "Gazillions" (T p 54). Loretta's evidence was to similar effect (T p 68). 36Also relevant was the plaintiff's evidence in cross examination as to events after May 2009. In July 2009 Derek told her Georges had found that more money had been stolen and was going to have him charged. On 11 December 2009 she learnt of Derek's arrest and paid his bail. On 1 March 2010 she sent to DSC Waugh details of the payments she had made. On 7 June 2010 she and Loretta attended the District Court as witnesses for Derek on his appeal. She read from the police facts sheet that the second defendant had been paid compensation by NAB in the amount of $521,980.62. It was this information which generated in her mind the belief that the defendant had been over compensated. Her evidence was (T p 50, l 18 - l 32): "Q. Just to understand it, and you must correct me if what I'm putting to you is not what you want me to understand, but is it your complaint that you believe that the $520,000 or $530,000 paid by the NAB was repayment of his total loss? A. That's right. Q. So that the 240 was included in that amount and that he's been doubly paid, one by you and two for the same loss by the bank? A. That's right. Q. Is that the heart of your concern? A. That's the heart, yes, definitely. Q. Was the basis of your belief what you read in the police fact sheet? Is that it? A. That's it, yes. I mean, I had nothing else to go on." 37After Derek's death she raised her concerns with her solicitor, Mr Valenti, following which the letter of 31 August 2010 was sent to the defendants. It set out the complaint she wished to make about them. She agreed that at the time she had no complaint about the arrangement made on 20 May 2009 about Derek not going to gaol, and that the only issue she had was whether Georges had been over compensated (T 52). She said she had not felt cheated when she learnt of Derek's arrest. She said (T p 49, l 5 - l 16): "Q. Is the answer to my question that as of December 2009 you were quite content for Mr Georges or his company to have the benefit of the money if it assisted in repaying the debt Derek owed the company; is that right? A. In a way I suppose, yes. Q. And your real complaint in this case is that you believe that Mr Georges has been double compensated; is that right? A. That's right. Q. And if it was not for that particular issue you would have no complaint about Mr Georges, would you? A. No." 38On a number of occasions her evidence was that she was happy to give the money to Georges on Derek's behalf because it would keep him out of gaol, and there would be less for him to repay. 39The plaintiff was not re-examined. There was no evidence of the contents of the discussion between the plaintiff and her husband which led to their decision to make the payment. Although present in court during the hearing, he was not called to give evidence. 40Georges' evidence of the conversations on 20 May 2009 conflicted with that of the plaintiff. As to the first conversation his evidence in chief was (T p 75, l 21 - p 76 l 3): "A. I rang Glynis on 20 May 2009 and I said, "Hi Glynis, this is John", she said, "Hi John, how are you?" I said, "Not very good. I am very upset". She asked me why. I said to her, "Why haven't you or any of your brothers or sisters told me about Derek stealing money from the company he worked at beforehand?" She said to me, "Oh my God, what happened?" I said, "What happened is Derek has been stealing money from my company. I have went, the last few days, to get some money out of the NAB bank and they told me that my account was fully drawn down and that Derek's been writing cheques out in his name, depositing them into his account and also that he is writing cheques out and paying his own personal bills". She then asked me, "How much has he taken?" I said to her, "He has taken, from what NAB has told me, about $230,000, but we are not quite sure of the exact figure at this stage". She asked me then, "Have you spoken to Derek? I said, "Yes, I have spoken to Derek just an hour before I called you and Derek has confessed to me, he said he has taken about $237,000 but at this stage we still don't know how much that figure is". She then said to me, "Oh my God, the whole family thought that this was behind us and that mum was getting sick all the time because of what Derek has done in the past". I then said to her, "We have been friends and family for a long time. Why hasn't anybody told me about Derek taking money from the previous company he worked at?" She said, "Well, Derek didn't want anybody to know". I then said, "I think, I don't know where we stand". I then said, "I don't know where we are going to end up. You know, my family and I, and plus the business". I said, "We don't know how much damage has been caused or done". And then, you know, "I wish somebody would have told me about Derek's past". She then said to me, "John, let me speak to my brothers and sisters and I will get back to you and we will see how we are going to either help you out, or we will have a chat to my family and I will get back to you. In the meanwhile don't worry, I will get back to you as soon as possible." 41As to the second conversation his evidence was (T p 76, l 34 - l 44): "A. She phoned me and she asked me if I was all right or okay. I said, "No, not really". She said, "Well, I have some good news for you. The whole family has decided to chip in and pay you the $237,000. But Derek also told us there is $3,000 that he owes you so we have decided to put the $240,000 together and send it to you on Derek's behalf but we can only do it in two payments. We can do one payment ASAP, immediately, and we can do the other payment in a day or two." And I said, "Thank you very much Glynis". I said, "I wish I had brothers and sisters like you." And she said, "Yes", as jokingly, "only got one". She then asked me for my account number and I have passed the account number on to my wife, to give her the details. And within a day or two, the money had come into the account." 42He adhered to this evidence in cross-examination. He denied that during the second conversation the plaintiff asked whether he would have her brother charged with fraud once the money was paid. He denied offering anything in return for the payment of $240,000.00, or that any deals were made. 43Georges said that he reported the matter to the police at the request of NAB, and provided the statement dated 25 November 2009 (Ex B) to DSC Waugh. 44Georges adhered to his evidence that he telephoned the plaintiff before he had a telephone conversation with Loretta. He denied having any conversation with Edward concerning losses from Derek's fraud. 45The versions of the conversations given by both the plaintiff and Georges rested on their recollection over several years. I preferred Georges' version, which was not undermined in cross-examination. I found it to be the more convincing as a substantially accurate account of what was said. To the extent that Georges' version differed from the plaintiff's, I find that his version should be accepted as probably correct. 46On the other hand, I was left without any confidence that the plaintiff's recollection of the content and sequence of these conversations was reliable. For example, her first account, in chief, included no statement by Georges referable to reporting Derek. Later she said that she said to him "Does this mean you won't get my brother charged?" to which he replied: "He is not just my friend. He is my brother". The plaintiff was uncertain as to which part of the second conversation these words were spoken, and candidly confessed to confusion. In cross-examination, she attributed her failure to mention it earlier to nervousness. Taken overall, her evidence lacked sufficient clarity to enable identification of the content of the conversations upon which the allegations against Georges were made. My impression was that the plaintiff's memory of the conversations was not sufficiently clear to enable actual recall of the words allegedly spoken by Georges on which her case depended. In my assessment, her recollection was the product of reconstruction, probably clouded by her many discussions with Loretta, and the lapse of time. 47Furthermore, on the assumption that Georges' version of the substance of the conversations is probably correct, in my opinion it is incapable of being reasonably understood to convey a threat, either expressly or by implication. I have not overlooked the evidence of Loretta and Edward, but find it of no assistance in deciding the crucial issues. 48In short, my conclusion is that the plaintiff failed to prove with sufficient precision the words actually spoken by Georges to enable the court to be reasonably satisfied that in the conversation he applied pressure, illegitimate or otherwise, which induced her to make the payments (Watson, pp 318 - 319; Scolio, p 89,329). I propose to dismiss the plaintiff's second amended statement of claim. 49Although this conclusion disposes of the proceedings, in deference to the submissions it is appropriate to make some observations. In my opinion the plaintiff's evidence fell far short of proving that anything said by Georges pressurised her to make the payments to procure his agreement not to refer Derek to the police or not to have him charged. She said he made no demand for money, and she did not perceive what he said to be a threat. In my opinion her evidence demonstrates that the decision to make the payments was the joint decision of herself and her husband which was made out of concern to keep Derek out of jail, in circumstances where she knew that he had previously been convicted and sentenced for stealing money. 50Furthermore, in my opinion, the plaintiff's failure to complain, although she was aware from, at latest, 11 December 2009, that Derek had been arrested and charged, was inconsistent with the existence of an arrangement or threat under which the payments were made to stifle his prosecution. She had not felt cheated to learn of the proceedings against Derek which would have been a natural reaction had payment been made under the circumstances alleged. Upon analysis the evidence supports the findings, which I make, that the plaintiff was content to make the payments to assist Derek, that she later came to the belief that Georges had been over compensated under the settlement with NAB and, but for such belief, she had no complaint against Georges. Her only demand for recovery of the $240,000 prior to commencement of these proceedings was based on this belief as evidenced in the letter to the defendants from her solicitor of 31 August 2010. Conclusion 51For the above reasons, I propose to order that the plaintiff's claims in the second amended statement of claim be dismissed. The question of costs remains outstanding. My present view is that there should be an order that the plaintiff pays the defendants' costs of these proceedings. However, failing agreement, I will afford the parties the opportunity to address me on this issue. Arrangements should be made with my associate by 5pm 1 May 2013 for the re-listing of the matter. Order 52It is ordered that the second amended statement of claim be dismissed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 April 2013