District Court New South Wales Medium Neutral Citation: Willis v Jamieson [2013] NSWDC 100 Decision date: 11 March 2013 Before: Cogswell SC DCJ Decision: Verdict and judgment for the plaintiff against the defendant for $345,672.86. Catchwords: CIVIL LAW - Contract - terms of contract - whether transaction a loan or investment in a joint venture? Evidence -parole evidence rule - written contract between parties entitled "Loan Agreement" - defendant claimed loan agreement did not express true intent of parties -defendant relied on correspondence pre-dating and since loan agreement entered - evidence consistent with parties entering loan agreement. Procedure - pleadings - leave to file amended statement of claim - defendant on notice as to nature of claim - cross-claim - set-off not allowed- no evidence of agreement that defendant to be paid for work he did - abuse of process of court - not abuse of process for plaintiff to bring proceedings in circumstances where defendant claims lack of assets and income to meet any debt - plaintiff does not have to accept defendant's assertions of his financial standing. Cases Cited: Hoyt's Proprietary Limited v Spencer (1919) 27 CLR 133. Category: Principal judgment Parties: Deborah Willis (Plaintiff) Raymond Fredrick Jamieson (Defendant) Representation: Counsel: W R Potter (Plaintiff) Mr Jamieson in person (Defendant) File Number(s): DC 2011/265576 Judgment 1In this case Deborah Willis has sued Raymond Jamieson for $200,000. She claims that she lent that money to him. He denies that he owes her any money. His main defence is that the money was not a loan but an investment in a joint venture between them, which failed. So the main issue I have to decide is whether the legal arrangement between them was a loan from one to the other or a joint business venture. 2Ms Willis was represented by Mr W R Potter of counsel and Mr Jamieson represented himself. 3Mr Jamieson, in his final address, confirmed that the point of "key relevance" was "whether or not you feel it was a joint venture or whether you feel it was a loan and the matters leading up to that." Mr Jamieson, with respect, was quite correct in pointing out that issue which emerged as the key issue. There are a number of other issues which I have to decide, including an amendment of the statement of claim and I will come to them in due course. 4I return now to the principal issue. When judges decide cases they are often interested in any documents that the parties exchanged before their arrangements became contentious. Personal recollections of events and conversations can be affected by the passage of time and tainted by the falling out between them. 5In this case there are a number of important documents which passed between Deborah Willis and Raymond Jamieson before the case started. The main document is a written contract between them. It is this document that Deborah Willis relies on in her claim. It is entitled "Loan Agreement" and is signed by both Deborah Willis and Raymond Jamieson in the presence of witnesses. It records that Raymond Jamieson "has applied to the lender for a loan" and that Deborah Willis (the lender) "has approved a loan for the amount set out". That amount was $180,000 which she promised to advance and which she did in fact advance. 6Mr Jamieson acknowledges that he received the $180,000 but claims that it was not a loan but an investment in a joint venture between him and Ms Willis. 7Returning to the loan agreement, it goes on to say that Mr Jamieson "shall pay to the lender interest on the principal sum". What is called the "loan termination date" is specified as being six months from the date of the advance of the money "or such other date as agreed between the parties". Mr Jamieson accepted, during his evidence when being cross-examined by Mr Potter, that he and Ms Willis had not agreed on any "other date". The loan agreement goes on to provide that the "principal sum shall be repaid to the lender on the loan termination date". 8This loan agreement is a strong starting point for Deborah Willis' claim. What then is Mr Jamieson's defence? He acknowledged in evidence that he had signed the loan agreement and sent it to Deborah Willis. His main defence, as I said, is that the money was advanced as an investment by Deborah Willis into a joint venture between them. 9The joint venture concerned an enterprise running seminars and venues for those seminars. Mr Jamieson says he was very stressed at the time of signing the loan agreement and that now he realises it does not express the true intention between him and Deborah Willis. It should have been a joint venture agreement, not a loan agreement. He points to cl 8 of the loan agreement which refers to development work on the security property. The loan was secured, which would enable that property to be revalued and refinanced "paying out the existing property mortgages and the joint venture funds". 10There are a number of problems with Mr Jamieson's defence. First, in my opinion, the passing reference in cl 8 to "joint venture funds" does not overturn the plain wording of the rest of the agreement. That plain wording points in unambiguous terms to a loan, not a joint venture. 11The next problem is one pointed out by Mr Potter in his written submissions which became MFI13. He points to what the law calls the parol evidence rule. That is a rule of evidence that suggests that where the parties have agreed on a document which constitutes a valid and effective contract between them, then no evidence outside that document should be admissible in the case. Mr Potter refers to what the High Court of Australia said in Hoyt's Proprietary Limited v Spencer (1919) 27 CLR 133 and a passage in the judgment of Isaacs J, as his Honour then was, at 143. I think that submission is right in this case. There is clearly a signed and agreed contract between the parties and I would regard any evidence other than that contract to be inadmissible. 12But, putting aside for argument's sake the parol evidence rule, let me examine Mr Jamieson's contention that the true intention between him and Ms Willis at the time was a joint venture agreement and not a loan. This is where I again find it helpful to look at documents which passed between Deborah Willis and Raymond Jamieson before the case started. Like the loan agreement, these documents do not help Mr Jamieson. 13Mr Jamieson points to an email he says he received from Ms Willis dated 18 December 2006. Ms Willis denies even sending it. To what extent does it support Mr Jamieson's contention that the true intention was a joint venture? Well it does to some extent. Its heading is "Private Joint Venture Funding Agreement" and it refers to "an investment in a joint venture in the amount of $180,000". But it goes on to say that the "investment will be returned to the investor in six months (or otherwise agreed by the parties) from original drawdown date of the investment loan". It describes the transfer of funds as "the investment loan". It makes provision for default. A default is a failure to pay interest in time or the failure or delay of "repayment after a period of approximately six months...without sound reason or further agreement between the parties". It makes provision for the investor to "choose to commence recovery action by sending letters requesting payment of the amount due". So that document talks about an investment but provides for its repayment and makes failure to do so a default. It is apparently a draft document with provision to complete some of the terms. As evidence of a joint intention to enter into a joint venture agreement and not a loan, in my opinion, it does not assist Mr Jamieson. 14There are two other documents which predate the loan agreement which, I should have said, was entered into on 31 January 2007. One is exhibit 2. That is a document which Mr Jamieson claims that Ms Willis sent to him by fax on 16 November 2006. It refers to a "confirmation of $180,000 contribution to joint venture". It refers to "working capital for our joint venture in the coming year". As I said, Ms Willis denies ever sending that document to Mr Jamieson. I do not need to resolve that issue, even if it is the case that she sent the document. In my opinion, it has clearly been replaced by the specific terms of the signed agreement of 31 January 2007. 15The other document which preceded the formation of the agreement between Mr Jamieson and Ms Willis is an email from Deborah Willis to Ray Jamieson dated 30 October 2006. In that email he sets out his personal financial circumstances and the context is clearly how much money he needs. He says in the email that he is "short (so far) of $185,000. I would be happy with $180,000 to get me through the short term - up to a maximum of six months." He says that on "refinance, I would repay the whole amount to you". That email to, my mind, is more consistent with the intention being a loan rather than an investment between the parties. 16In correspondence since the loan agreement, there are once again references to a business investment. In an email which Mr Jamieson sent to Deborah Willis about two years after the loan, on 7 January 2009, he refers to "the business venture failing" and he asserts that the "loan went when the business went and there's nothing I can do to change that". He says the "loan was for a joint venture you asked for and it has been lost when the business failed and the house repossessed". 17However a few months later, on 2 April 2009, Mr Jamieson wrote a letter to Ms Willis referring to "the loan you've made to my company". The letter is written on the letterhead of Executive Mastermind Program Pty Ltd and Ray Jamieson is pictured and described on the letterhead as a director. He goes on to say that the company has no assets and would not be in a position "to repay the loan amount of $200,000 and overdue interest payments". That document raises two issues. One is it points again to a loan arrangement rather than a joint venture. Secondly it suggests that the contractual arrangements were not between Deborah Willis and Ray Jamieson but between her and his company. In fact there is a third acknowledgement in the email as well, it acknowledges that the amount owing is $200,000, a matter which I will come to in due course. 18The arrangement between the parties, in my opinion, was clearly one between the plaintiff and the defendant in this case, namely between Deborah Willis and Ray Jamieson. That is clear from the terms of the agreement upon which Ms Willis sues in these proceedings. 19In an email dated 30 May 2011 Mr Jamieson acknowledges receipt from Ms Willis of a "loan schedule" and adds that "it's good to know where I stand with it". In addition he goes on to say in that email the following: "I have repeatedly stated that I will honour the loan and my commitment is total." He concludes the letter by saying that "my commitment to the agreement is total". That correspondence comes from him and not from his company and is clearly inconsistent with the assertion that it is a joint venture agreement and entirely consistent with the contract between the parties being a loan. 20In a letter dated 26 June 2011 from Mr Jamieson to Ms Willis he refers to the loan but adds that the agreement was "for me to make interest only repayments with a lump sum reduction proviso". Whatever that phrase "lump sum reduction proviso" means, it is to my mind not consistent with the provision in the agreement which was made some four-and-a-half years previously. 21To my mind at this stage Ms Willis has made out her claim in contract for $180,000 against Mr Jamieson but I should also look at some additional matters which have been raised by Mr Jamieson and also a matter raised by Mr Potter so far as the amendment of the statement of claim is concerned. 22The case was started by Deborah Willis when she filed a statement of claim on 17 August 2011. Mr Jamieson filed a defence on 10 January 2012. On the last day of the case Mr Potter applied to me to amend his client's statement of claim. The amendment was in effect to add a claim for an additional loan of $20,000 which had not been provided for in the original statement of claim although, as Mr Potter pointed out, the original statement of claim made a claim for a principal sum of $200,000. 23Mr Jamieson opposed the application to amend the statement of claim. Mr Potter pointed to the affidavit sworn by his client on 11 July 2012 and served on Mr Jamieson. In paras 23 and following that affidavit sets out in clear terms what is called the fourth loan of $20,000. In addition, Mr Jamieson in his affidavit sworn on 15 August 2012 in para 24 acknowledges receipt of the amount of $20,000. In fact he says that he asked Ms Willis to "advance me $20,000 to complete the studio". He says that he added, in his conversation, that he had "paid the interest payments for February and March as agreed". That discussion, he said, occurred about March 2007. He says that Ms Willis agreed to advance the money. It is common ground that the money was in fact advanced. 24Mr Potter argues that although he applied to amend his client's statement of claim at a very late stage, Mr Jamieson was in fact on notice of the additional amount of $20,000 and had in fact addressed that issue in his own affidavit. 25Mr Jamieson pointed out that the statement of claim should have contained the correct information in the first place. There had been plenty of time to make this amendment after the affidavits had been filed. The onus was on Ms Willis, he said, to make the statement of claim as accurate and true as possible. He described the statement of claim as "seriously flawed from the start". He pointed to a significant increase in the amount claimed and to the amendment being a "cheap solution" to a flawed document filed in the first place. It should have been correctly prepared before it was filed. 26There is some force in what Mr Jamieson says, although the original claim was for $200,000. It is a significant error in the original statement of claim for it not to set out the basis of a claim for a significant amount of money. 27Nevertheless I propose to allow the amendment. The reason is mainly that the issue came up in July last year when Mr Jamieson was on notice of the nature of the claim. Secondly, the original claim was for $200,000. Thirdly, Mr Jamieson met the claim and spoke of it in terms of an advance in his affidavit in reply. 28Accordingly I propose to grant leave to the plaintiff to file in court exhibit VDB which is the proposed amended statement of claim and I have sealed VDB and noted that it is filed in court by leave and dated today. 29I should turn to some of the other matters which Mr Jamieson has raised in defence of the claim made against him. In his defence he asserts that the statement of claim specified the wrong address for service when Ms Willis knew his real address. It sounds as though that assertion was quite correct and it is odd that attempts were made to serve it at the wrong address. Ms Willis did explain that she had given the information to her solicitor. It caused some inconvenience to Mr Jamieson but it is not, in my opinion, a defence to the claim. The matter has now been sorted out and the case heard. 30Mr Jamieson points to a provision in the agreement to the effect that the law of Queensland is to govern the contract. He says that the case has been brought in the wrong jurisdiction. I do not accept that argument. Ms Willis, being a resident of New South Wales, is entitled to sue in this Court. I have jurisdiction to hear the case. The law I apply according to the agreement is the law of Queensland. I accept Mr Potter's submission that there is no significant difference between the relevant law in Queensland and in New South Wales. 31In his defence Mr Jamieson refers to the clause in the agreement which refers to refinancing. I have dealt with that already. 32Mr Jamieson also asserts that the loan agreement is apparently incomplete. I think he has a point there. There is a schedule which has 10 items and in the agreement itself there is a reference to item 12 of the schedule. Clause 3.1(a) of the terms and conditions of the loan agreement provides for interest to be paid on the principal sum "in the manner set out in item twelve of the schedule". That, to my mind, would not affect the liability which is clearly established by the signed terms of the agreement which are before me in evidence for Mr Jamieson to repay the $180,000 plus interest. 33Nor would it, in my opinion, affect his principal defence which is that it is an investment rather than a loan. It is unlikely, in my opinion, that such a term would be contained in a schedule without being referred to in the terms and conditions. 34Mr Jamieson refers to the loan termination date being six months from the date of the advance "or such other date as agreed between the parties". As I said, Mr Jamieson accepted in cross-examination that no other date had occurred. Therefore, in my opinion, the default had occurred. 35Mr Jamieson asserts that Ms Willis "has perjured herself in her affidavit". That is a serious allegation to make. The burden is on Mr Jamieson to prove it. The standard is high. I do not accept that assertion. The assertion concerns his address for service and calculation of interest and such matters. I repeat, I do not accept the assertion. 36I do not regard the reference in the agreement to s 257 of the Property Law Act as being relevant to any question of liability. In his address to me Mr Jamieson dealt with a number of matters which are referred to in his defence and which I have already rejected. 37One issue which was not raised in the pleadings but was raised in the affidavits was a defence by Mr Jamieson which appears to be by way of setoff. By that I mean he claims that he is owed money by Ms Willis which can reduce any debt owed by him to her. He claims that he did some work on her farm in Taree at her request. He has valued that work and says that it should reduce any indebtedness to her. So far as that is concerned, I accept Mr Potter's argument that there does not appear to be evidence of an agreement between Mr Jamieson and Ms Willis that he would be paid for the work. Even if there was such an agreement, it would be a separate agreement and not by way of setoff for the money owing under the principal contract. I agree with Mr Potter that it would be a separate contract which would need to be pleaded and proved. 38There is a question about the amount of $20,000 which is referred to in the affidavits as the fourth loan. This is the amount which brings to $200,000 the amount which Ms Willis says she is owed above the $180,000 referred to in the loan agreement. It is not referred to in the loan agreement. However, as I said earlier, it is referred to in the correspondence between Mr Jamieson and Ms Willis. He himself referred to an amount of $200,000 in an email which I referred to earlier. In addition, Mr Jamieson acknowledged the fact that the money had been advanced and the discussion which surrounded that advance. I accept Mr Potter's submission and I would infer that that advance was, in the circumstances, made on the same terms and conditions as the $180,000. It is, as Mr Potter says in his written submission, the term "most obvious to the parties, at the time of the contract" as that governing the existing loan. 39I therefore regard Ms Willis' claim against Mr Jamieson as made out. In my opinion, she has established two contracts between her and him. Under one of them he owes her $180,000 and under the other $20,000. The evidence is, in my opinion, clearly consistent with those arrangements between the parties amounting to a loan and not an investment in a joint venture which failed. 40I therefore find a verdict for the plaintiff in these proceedings. 41In his submissions a number of times Mr Jamieson made reference to the motivation for Ms Willis bringing this claim against him. He referred to information given to Ms Willis to the effect that he had little or no assets and very limited income to meet any debt. A question arises whether it is an abuse of process to bring such proceedings. I do not regard it as an abuse of process for Ms Willis to bring these proceedings. There is no need for a plaintiff to accept a defendant's assertions of his or her financial standing. In addition, of course, it is always a possibility that a potential defendant could come into some further funds to make a judgment debt payable. HIS HONOUR: Now I have dealt with that. Mr Jamieson I think the case was started by statement of claim on 17 August '11. I do note what you say but it is not something that I would comment on apart from what I have already said in my reasons. Is there anything else that you want to say? DEFENDANT: Your Honour as I said you have made your decision and you have handed down your judgment but it seems evident to me that I've been out manoeuvred by someone who has vast experience in this having had two previous partners who she has obtained funds from in large sums. HIS HONOUR: I am going to stop you there. It is not the time to give further evidence or make further arguments on the main point, but I am just wondering whether there is anything you want to say about the damages calculation. DEFENDANT: If she's started her plaint when the breach had occurred it would have been a much more reasonable situation and all I can say she's got a very hollow victory. HIS HONOUR: That is noted. 42I enter verdict and judgment for the plaintiff against the defendant for the sum of $345,672.86. PROCEEDINGS FROM 12.17PM TO 12.28PM RELATING TO COSTS RECORDED BUT NOT TRANSCRIBED 43I make an order that the defendant is to pay the plaintiff's costs assessed on an ordinary basis up to 15 February 2013 and assessed on an indemnity basis from 16 February 2013. HIS HONOUR: Anything else Mr Potter? POTTER: No your Honour. HIS HONOUR: What about you Mr Jamieson? DEFENDANT: No your Honour. HIS HONOUR: So I have entered verdict and judgment against you for $345,672.86 plus costs on an ordinary basis up to 15 February 2013 and on an indemnity basis from 16 February 2013. ********** 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: 03 July 2013