Supreme Court New South Wales Medium Neutral Citation: Ryan Wealth Holdings Pty Ltd v L & V Tomkins Pty Ltd & Ors [2016] NSWSC 136 Hearing dates: 1, 2 and 11 February 2016 Decision date: 29 February 2016 Jurisdiction: Equity Before: White J Decision: Refer to para [95] of judgment. Catchwords: CONTRACTS — loan agreement — claim that signatures on loan agreement are forgeries rejected — agreement not properly executed — agreement ratified by the commencement of proceedings to enforce the agreement — cause of action confirmed pursuant to s 54 Limitation Act 1969 (NSW) — cause of action not barred by s 14 Limitation Act 1969 (NSW) —defendant liable to the plaintiff under the agreement; MORTAGES — agreement contains promise to execute mortgage Legislation Cited: Limitation Act 1969 (NSW) Duties Act 1997 (NSW) Civil Procedure Act 2005 (NSW) Category: Principal judgment Parties: Ryan Wealth Holdings Pty Ltd (Plaintiff) L & V Tomkins (1st Defendant) Valerie Tomkins (2nd Defendant) Andrew Bruce Tomkins (3rd Defendant) Deborah Tomkins (4th Defendant) Representation: Counsel: A C Harding – Plaintiff P Walsh – 1st and 2nd Defendants A Ogborne – 3rd and 4th Defendants Solicitors: Bruce & Stewart Lawyers (Plaintiff) Lockhart Quinn & Company (1st and 2nd Defendants) File Number(s): 2014/176670 Judgment 1. HIS HONOUR: On 12 May 2006 the plaintiff, Ryan Wealth Holdings Pty Ltd ("Ryan Wealth Holdings") paid $400,000 into the account of the first defendant, L & V Tomkins Pty Ltd ("L & V Tomkins"). (It was then called Superior Body Repairs Pty Ltd.) The moneys were used by L & V Tomkins to pay pressing debts of a related company called Cardiff Gas and Welding Supplies Pty Ltd ("Cardiff Gas"). On 9 August 2006 Ryan Wealth Holdings paid $216,795 to the Australian Tax Office to discharge a tax debt owed by L & V Tomkins. At the time that payment was made the Deputy Commissioner of Taxation had commenced winding-up proceedings against L & V Tomkins. As a result of the payment the winding-up proceedings were dismissed. 2. On 17 December 2013 the Australian Taxation Office repaid $216,795 to Ryan Wealth Holdings, but without interest. The $400,000 advance has not been repaid. 3. Ryan Wealth Holdings contends that the advances were made pursuant to two agreements: one bearing a date of 12 May 2006 and the other said to have been made in 2008. It contends that interest is payable at the rate provided for by those agreements and that pursuant to those agreements L & V Tomkins agreed to mortgage land owned by it as security for the moneys advanced. Alternatively, it seeks recovery of the moneys advanced in an action for money had and received. 4. L & V Tomkins denies having executed either of the agreements that Ryan Wealth Holdings seeks to enforce. It says that the signatures of its directors appearing on those agreements are not genuine. It also pleads that Ryan Wealth Holdings' claim is barred by the Limitation Act 1969 (NSW). 5. These proceedings were commenced on 13 June 2014. There were initially four defendants, namely, L & V Tomkins, Valerie Tomkins, Andrew Tomkins and Deborah Tomkins. 6. At all material times the shareholders of L & V Tomkins were Mr Leonard Tomkins and his wife Mrs Valerie Tomkins. At all material times to these proceedings they were also the directors of L & V Tomkins. Mr Tomkins became bankrupt in 2013 and since then Mrs Valerie Tomkins has been the sole director of L & V Tomkins. They were also the sole shareholders of Cardiff Gas. They were directors of Cardiff Gas. Their son, Andrew Tomkins, was and is a director of Cardiff Gas. He is not a shareholder of either L & V Tomkins or Cardiff Gas. Deborah Tomkins is Andrew Tomkins' wife. She is not a shareholder or director of either L & V Tomkins or Cardiff Gas. 7. The 2006 agreement that Ryan Wealth seeks to enforce was expressed to be made between L & V Tomkins, Leonard Tomkins, Andrew Tomkins and Deborah Tomkins as borrowers. Andrew and Deborah Tomkins also denied signing the 2006 agreement. 8. The 2008 agreement was expressed to supersede prior agreements. The parties to it were Ryan Wealth Holdings, L & V Tomkins, Leonard Tomkins and Valerie Tomkins. The 2008 agreement named only L & V Tomkins as a borrower. It provided that Leonard and Valerie Tomkins agreed to provide security for the debt of L & V Tomkins over a property owed by them jointly. That property had been sold before the commencement of the proceedings. The agreement was purportedly signed by Leonard and Valerie Tomkins in their own capacities and as directors of L & V Tomkins. They both denied the authenticity of the signatures. 9. The 2008 agreement, if it were ever validly executed, must have been executed after 30 June 2008. This was because it recited (inaccurately) that on 30 June 2008 Ryan Wealth Holdings had lent L & V Tomkins $787,324. In fact Ryan Wealth Holdings did not make a loan of $787,324 to L & V Tomkins on that date. That was the amount that was then owing to Ryan Wealth Holdings by L & V Tomkins pursuant to the advances made in 2006, if interest were payable as purportedly provided for in the 2006 agreement. 10. If the 2008 agreement is binding on L & V Tomkins, no defence arises under the Limitation Act. If the 2008 agreement is valid, then any liability of Andrew and Deborah Tomkins under the 2006 agreement would have been discharged because the 2008 agreement said that it superseded the 2006 agreement. 11. If the purported 2008 agreement is not binding, Ryan Wealth Holdings says that its claim either to enforce the 2006 agreement, or in an action for moneys had and received, is not barred by s 14 of the Limitation Act. It says that L & V Tomkins confirmed its cause of action or causes of action by making two payments in respect of its right or title. The first payment was a payment of $19,000 made by Cardiff Gas to Ryan Wealth Holdings on 27 June 2006. This was treated as a partial repayment by L & V Tomkins of moneys owed by it to Ryan Wealth Holdings. The second payment relied on was a payment of $24,000 by L & V Tomkins to the account of Ryan Wealth Holdings on 17 May 2011. L & V Tomkins had no liabilities to Ryan Wealth Holdings other than pursuant to the advances made by Ryan Wealth Holdings on 12 May and 9 August 2006. 12. Ryan Wealth Holdings also submits that L & V Tomkins confirmed its cause of action by a letter signed by Leonard Tomkins and Valerie Tomkins as directors of L & V Tomkins addressed to the auditor of the Ryan Holdings Retirement Fund (of which Ryan Wealth Holdings was trustee) dated 28 May 2009 confirming that as at 30 June 2008 the outstanding principal and interest owing to the Ryan Holdings Retirement Fund (of which Ryan Wealth Holdings was the trustee) from the Tomkins Unit Trust (of which L & V Tomkins was trustee) was $787,324.54, comprising principal of $616,795, and interest after giving credit for a part-payment of interest of $19,000. Leonard and Valerie Tomkins denied the authenticity of their signatures to the letter. L & V Tomkins also said that the letter was not a confirmation within the meaning of s 54 of the Limitation Act because it was not made to the creditor. 13. During the course of the hearing Ryan Wealth Holdings' claim against the third and fourth defendants, Andrew and Deborah Tomkins, was settled. They had denied signing the 2006 agreement that, if it were valid, made them joint borrowers with L & V Tomkins. They also had relied upon Limitation Act defences and had pleaded that they were discharged by the 2008 agreement. 14. The claim against Valerie Tomkins was also not pressed. This was because she was not a party to the 2006 agreement, that is, she was not also named as a borrower under the 2006 agreement. Nor did the 2008 agreement include any personal covenant on her part to be responsible for the debt of L & V Tomkins. She was only made a party to the 2008 agreement (assuming it were valid) to consent to the giving of a mortgage over a property owned by her and Leonard Tomkins to secure the debt. No such mortgage had been executed and the property had been sold before the commencement of the proceeding. Leonard Tomkins was not joined as a party because he had been made bankrupt. 15. Hence, the only claim that was ultimately pressed was the claim against L & V Tomkins. There was no dispute that L & V Tomkins was liable to Ryan Wealth Holdings for the advance made to L & V Tomkins on 12 May 2006 in an action for money had and received, subject to L & V Tomkins' defence under the Limitation Act. (The second advance of $216,975 had been repaid before proceedings were commenced.) Ryan Wealth Holdings' primary case was that its cause of action was not for moneys had and received, but for moneys lent pursuant to the 2006 and 2008 agreements, that it was entitled to interest as provided for under the 2006 or 2008 agreements, and was entitled to a mortgage over L & V Tomkins' land pursuant to what it said had been agreed under the 2006 agreement or, in any event, under the 2008 agreement, to secure the debt. 16. As will be seen, there is a real question as to whether the 2006 agreement did contain any promise by L & V Tomkins to provide such a mortgage. But the 2008 agreement did provide that promise. 17. L & V Tomkins denied the validity of both the 2006 agreement and 2008 agreement and said that the purported signatures on those agreements of Leonard and Valerie Tomkins were forgeries. In the circumstances addressed below, the originals of the 2006 and 2008 agreements were not produced. No handwriting evidence was adduced by any party. 18. L & V Tomkins, and Leonard and Valerie Tomkins, were clients of a Mr Christopher Moylan who carried on business as an accountant and financial planner in the Newcastle area. 19. The sole director of Ryan Wealth Holdings is Ms Trudy Crittle. In late 2005 or early 2006 she also became the client of Mr Moylan's. 20. Mr Alan Spicer, an accountant, was employed in Mr Moylan's businesses. 21. Ms Crittle sought advice from Mr Moylan in relation to the investment of a sum of in excess of $7 million she received from the sale of a residential property. He advised Ms Crittle to establish a self-managed superannuation fund to hold the proceeds of sale. Ryan Wealth Holdings was established as the trustee of that superannuation fund. Mr Moylan recommended that an account be opened with Macquarie Bank and an account was opened in the name of Ryan Wealth Holdings on or about 7 February 2006. From about 6 March 2006 Mr Moylan had authority to operate the account. Immediately prior to 12 May 2006 there was more than $2,800,000 in the account. 22. On 12 May 2006 $400,000 was transferred from Ryan Wealth Holdings' account to an account in the name of "Superior Body Repairs Pty Limited as trustee for the Tomkins Unit Trust Business Management Account", that is, an account of L & V Tomkins. As noted above most of the money was used to pay pressing creditors of Cardiff Gas which was then experiencing cash flow difficulties. 23. On 9 August 2006 Ryan Wealth Holdings paid $216,795 to the Australian Taxation Office that was applied in discharge of a tax debt claimed by the Deputy Commissioner of Taxation against L & V Tomkins. As noted above, the Deputy Commissioner of Taxation had commenced winding-up proceedings against L & V Tomkins. The winding-up proceedings were dismissed as a result of that payment. 24. The first agreement on which Ryan Wealth Holdings sues bears the date of 12 May 2006. The plaintiff does not contend that the agreement was entered into on that date. The agreement that the plaintiff claims was made was prepared by Turnbull Hill, Solicitors, on the instructions of Mr Moylan's firm. The draft was prepared on 12 August 2006. The agreement was backdated by Mr Spicer to 12 May 2006 because, as he said, 12 May 2006 was the date upon which the first part of the moneys were lent. 25. The agreement was called a "Facility Agreement". The original of the Facility Agreement was not produced. This was not for want of trying on the part of the plaintiff. 26. Ryan Wealth Holdings did not receive the original nor a copy of the agreement in 2006. It was not until August 2013 that Ms Crittle became concerned about the state of her financial affairs and engaged another accountant to assist her. That accountant and Ms Crittle met Mr Moylan on 15 August 2013 to ask him questions about her finances. Following that meeting she obtained searches of companies Mr Moylan told her were companies in which her money had been invested. She discovered that some were in liquidation or administration. She also discovered that Mr Moylan had been made bankrupt in about April 2013. 27. Subpoenas to Mr Moylan's trustee in bankruptcy and to the liquidator of his company did not result in the production of the original. Ms Crittle was provided with a compact disc that contained an electronic copy of a number of documents including a copy of an agreement bearing date 12 May 2006 that contains what appear to be signatures of L & V Tomkins by its directors Mr Leonard Tomkins and Mrs Valerie Tomkins, Mr Leonard Tomkins in his own right, Andrew Tomkins and Deborah Tomkins. The document was also signed for Ryan Wealth Holdings by Ms Crittle. Leonard Tomkins, Valerie Tomkins, Andrew Tomkins and Deborah Tomkins all disputed that the signatures on the documents were theirs. 28. Their signatures were purportedly witnessed by Alan Spicer. 29. The 2006 Facility Agreement commences by naming the parties. Leonard Tomkins, L & V Tomkins, Andrew Tomkins and Deborah Tomkins are name as "each a 'Borrower' and together the Borrowers". Ryan Wealth Holdings is named as the Lender. Clause 2 provides: "2. LOAN FACILITY The Lender shall make Loans drawn by the Borrower during the term of this agreement of an aggregate principal amount not at any time exceeding the relevant Commitment: (a) (conditions): upon and subject to the provisions of this Agreement; (b) (representation): in reliance upon the representations made in the representations provision; and (c) (security): in reliance upon the Security Agreements." 1. "Commitment" is defined as being "a maximum amount of $616,795". This is the sum of the $400,000 advanced on 12 May 2006 and $215,697 advanced on 9 August 2006. The latter sum was the amount required to discharge the debt owed to the Deputy Commissioner of Taxation. Mr Spicer accepted that that amount would not have been known until shortly before the proposed date of payment of the debt. The document bears a footer showing that it was prepared on Turnbull Hill's word processing system on 9 August 2006, being the date of payment. Mr Spicer ultimately accepted that he backdated the document. 2. A "Security Agreement" was defined as follows: "(a) this Agreement; (b) any Specified Charge; (c) any Guarantee; (d) any Collateral Security; and (e) any other agreement entered into by the Borrower and the Lender and nominated by the Lender as a Security Agreement." 1. "Specified Charge" was defined as follows: "'Specified Charge' means any security interest specified in Item 5 of Schedule 1 to be created by a Specified Chargor to or in favour of the Lender." 1. Item 5 of schedule 1 provided: "(Specified Charge) 1. Second registered Real Property Mortgage given by L & V Tomkins Pty Limited over property known as Lot 55 in Deposited Plan 838068; 2. Second registered Real Property Mortgage given by Andrew Bruce Tomkins and Deborah Tomkins over property known as Lot in Deposited Plan being [xxx], Clarencetown NSW; 3. Any other Security Agreement, including any real property mortgage, entered into by the Borrower and the Lender from time to time which is intended to secure the payment of the Secured Moneys." 1. Notwithstanding these terms there was no provision in the Facility Agreement that expressly provided that any Security Agreement was security for a drawing under the loan facility. 2. Clause 3.1 provided that the Lender would make the Facility available to an account nominated in an applicable Drawdown Notice. Clause 5.1 provided that the Borrower should request a Loan by the Lender under the relevant Facility by giving a Drawdown Notice to the Lender Prior to the proposed Drawdown Date for the Loan. 3. Clause 6(a) provided that the Interest Rate would be 15 per cent per annum. That was to be the rate of interest for the Interest Period, defined as one year from the initial Drawdown Date, being the date on which utilisation of part of the Facility was to occur. Clause 6(b) provided that Interest would be capitalised at the end of the Interest Period. Clause 6(c) required the Borrowers to pay all accrued interest on the Interest Payment Date, being the last day of "an" (not "the") Interest Period. 4. Clause 7.1 provided that: "7.1 Loan Facility (a) (Final Repayment): The Borrowers shall repay to the Lender in full the principal amount of the outstanding Loan on the Repayment Date, together with all accrued interest and other moneys (including any interest, fees and other costs payable pursuant to the provisions of any Security Agreement) due to the Lender under this Agreement." 1. The "Repayment Date" was one year from the date of the initial Drawdown Notice. 2. Mr Spicer confirmed that there was no Drawdown Notice. This is not surprising as the advances were made either before, or, contemporaneously with, the preparation of the document. Clause 9.5 provided: "9.5 Payable on Demand If any amount payable under this Agreement is not expressed to be payable on a specified date, that amount is payable on demand by the Lender." 1. The document included a definition of "Security Property" as follows: "'Security Property' means the present and/or future assets of the Borrower or other person subject to any Security Agreement conferring a security interest to or in favour of the Lender by way of security for the Secured Moneys." 1. Clause 11 relevantly provided: "11 REPRESENTATIONS Each of the Borrowers represents to the Lender to the best of the knowledge of each of the Borrowers that at any time during the continuance of this Agreement: (a) (security interest): the Borrower holds all its assets and Security Property free and clear of any mortgage, charge or other security interest, whether ranking in priority to, equally with or subsequent to any Security Agreement created by that Security Party, or any other adverse right or interest of any third party, except: (i) any Permitted Security; (ii) as notified to the Lender prior to execution of that Security Agreement by that Security Party; or (iii) in relation to real property, any adverse encumbrance or interest, excluding a security interest, specified in any public register prior to the date of that Security Agreement." 1. Clause 13 relevantly provided: "13. NEGATIVE UNDERTAKINGS The Borrowers shall not at any time during the continuance of this Agreement, without the prior written consent of the Lender in writing: … (b) (security interests): create any mortgage, charge or other security interest affecting or relating to any asset of the Borrower, whether ranking in priority to, pari passu with or subsequent to any Security Agreement created by that Security Party; …" 1. Clause 14.1 relevantly provided: "14.1 Default Events Specified Default Events for the purposes of this Agreement shall comprise: (a) (payment default): failure by any Security Party to pay any moneys on the due date and in the manner and currency specified in any Security Agreement; … (c) (performance default): failure by the Security Party to perform any liability under any Security Agreement (or any breach of undertaking), excluding payment default, and, in relation to any rectifiable failure in the opinion of the Lender, within seven (7) days following notice by the Lender requiring rectification; (d) (misrepresentation): non-compliance by the Security Party with or the fact of inaccuracy of any representation made or deemed to be made or repeated by the Security Party in any Security Agreement, or in any document delivered to the Lender under or in connection with any Security Agreement, which has a Material Adverse Effect; … (h) (voidable security): any Security Agreement becomes wholly or partly void, voidable or unenforceable or otherwise loses the priority which it has at or after the date of this Agreement or any authority in respect of such Security Agreement is withdrawn. … (y) (security vitiation): the termination or amendment of any governmental consent or Security Agreement, or the fact of any person excluding the Lender becoming entitled or making any claim to terminate, any Security Agreement, which has a Material Adverse Effect. …" 1. Clauses 15 and 16 provided: "15. INDEMNITY The Borrowers shall at all times, jointly and severally, indemnify the Lender upon demand against any loss, cost, charge, expense, disbursement, fee, commission, Tax, duty or other payment incurred by the Lender (or which arises from the receipt of any payment in a currency other than the currency in which it is due) resulting directly or indirectly from any default in payment of any amount due by any Security Party under any Security Agreement, including any principal, interest or cost, or any other Default Event. 16. COSTS The Borrowers shall, jointly and severally, indemnify the Lender upon demand against any cost, charge, expense, disbursement, fee commission, Tax, duty or other payment incurred by the Lender at any time in connection with: (a) (secured moneys): the Secured Moneys or any Security Agreement; (b) (security agreements): the preparation, negotiation, execution, performance or termination of, any amendment to or any consent, claim, demand or waiver given or made under, any Security Agreement; (c) (rectification): any rectification of any breach or default by any Security Party of or under any Security Agreement; (d) (security rights): any exercise or enforcement of any right conferred on the Lender under any Security Agreement or by law; (e) (security protection): any protection of any Security Agreement and/or any Security Property or legal right, title or interest of any Security Party or the Lender; (f) (insurances): any insurance relating to any Security Property; and/or (g) (agents): the engagement of any agent under any provision of any Security Agreement or in relation to any matter of concern to the Lender in connection with any Security Agreement or Security Property." 1. The parties to the 2006 loan agreement may have assumed that the "Specified Charge" referred to in schedule 1 that included a registered second mortgage over land owned by L & V Tomkins in lot 52 of DP 83068 would be security for the money lent under the 2006 agreement. But there was no clause in the 2006 agreement to that effect. 2. Immediately after the text of the document and before the provisions for execution the document stated: "EXECUTED as an agreement." There was then a provision for execution as follows: "EXECUTED by L & V TOMKINS PTY LIMITED in accordance with section 127 of the Corporations Act 2001 (Cth) by: ______________________________ Director/Secretary" 1. The names Leonard John Tomkins and Valerie Gladys Tomkins were then written in by hand immediately below what appear to be the signatures of Mr and Mrs Tomkins. 2. The execution clause then provided for the signatures of Leonard Tomkins, Andrew Tomkins and Deborah Tomkins against the notation "Signed Sealed and Delivered by Leonard John Tomkins [or Andrew Bruce Tomkins or Deborah Tomkins] in the presence of". There appear to be signatures of each of those individuals witnessed by Alan Spicer. 3. The plaintiff's solicitor produced an almost illegible copy of a form of Real Property Act mortgage containing two signatures that may have been those of Leonard and Valerie Tomkins as directors of L & V Tomkins in favour of Ryan Wealth Holdings. The mortgage was undated. It incorporated the provisions of memorandum Q880000 filed on behalf of the Registrar-General, but no other relevant provisions. The mortgage did not contain any provision that made it security for the loan the subject of the loan agreement bearing date 12 May 2006. 4. As noted above, during the course of the hearing the plaintiff's claim against Andrew Tomkins and Deborah Tomkins was settled. The claim against them was discontinued. 5. Mr Spicer gave evidence that there was a particular file in which original documents needed to be placed. He said there was a folder "per entity". He also said that he had no idea where the original document would have gone, but there would have been a copy in each file. He said that Mr Moylan's firm had a "filing lady" who filed it in their folder. No original document was produced on subpoena by the liquidator of Moylan Business Solutions, but I do not infer from that that no original document was created. 6. Mr Spicer gave evidence which I accept that Andrew Tomkins rang the office of Moylan Business Solutions and said that the business needed cash flow urgently to settle creditors and he estimated the amount to be in the vicinity of $400,000. Mr Spicer said that he was already working with the Tax Office and with Deborah Tomkins, who was the bookkeeper of Cardiff Gas, to finalise the amount owing to the Tax Office. The tax debt was owed by L & V Tomkins. 7. Mr Spicer initially said that the loan agreement was prepared "not long before May 2006". I do not accept that evidence. He ultimately resiled from it because it became clear to him in cross-examination that the document was not prepared until 9 August 2006. 8. Mr Spicer said that he spoke about the Tomkins' need for money with Chris Moylan who said: "We need to see if this money is available, and if so, have it documented and have the Tomkins' come into our office and explain to them the amount of debt that they are going to be in as a result of lending this money to them." 1. He said that such a meeting occurred in the boardroom at Moylan's Business Solutions and was attended by Len, Val and Andrew Tomkins. He was not sure if it was attended by Deborah. Later in his evidence Mr Spicer suggested that Deborah did not attend. Leonard Tomkins and Valerie Tomkins denied that they attended any meeting of any kind in the boardroom of Moylan's Business Solutions with Mr Spicer and Andrew Tomkins. They said that Andrew never attended any such meeting. However, Andrew said that he did, although he denied attending a meeting to sign loan documents. 2. It is likely that a meeting such as was described by Mr Spicer occurred. Although Leonard and Valerie Tomkins were at pains to assert that Mr Moylan handled the financial affairs of Cardiff Gas and of L & V Tomkins without reference to them, I think that is unlikely. They were directors of Cardiff Gas and of L & V Tomkins (of which they were the sole directors). Although both had retired, it is unlikely that they left all the financial management of the businesses to Mr Moylan as they claimed. They were not in the same position as Ms Crittle who left it to Mr Moylan to invest funds. Cardiff Gas was trading and both Cardiff Gas and L & V Tomkins had substantial liabilities. 3. At this time Mr Leonard Tomkins was engaged in a property development with Mr Moylan in relation to a property at Wallalong near Clarence Town. Both had a financial interest in that venture. Effectively they were joint venturers. 4. For the reasons above I have some reservations concerning the reliability of Mr Spicer's evidence. Part of his evidence was reconstructed. He worked back from the date that he placed on the facility agreement to assert that a meeting was held on 12 May 2006 where the agreement was signed. Clearly no meeting was held on that day for the purpose of signing the facility agreement. But that is not to say that a meeting was not held on or about 9 August 2006 attended by Leonard, Valerie and Andrew Tomkins and that the document was signed by at least Leonard and Valerie Tomkins at that time in the way Mr Spicer deposed. 5. Leonard and Valerie Tomkins denied this, but I did not consider either of them to be reliable witnesses. Both of them asserted that they left the financial management of L & V Tomkins and Cardiff Gas to Mr Moylan and asserted ignorance about the companies' affairs. Thus Leonard denied that he had ever heard that winding-up proceedings had been brought in 2006 by the Australian Taxation Office against L & V Tomkins, notwithstanding correspondence addressed to him from the solicitors acting for L & V Tomkins in relation to those proceedings. Leonard denied that he was aware from 2006 that Ryan Wealth Holdings had lent L & V Tomkins a large amount of money. Valerie Tomkins said the same. She claimed still to be unaware, that is, at the time of the hearing, that L & V Tomkins had received $616,795 in 2006 from Ryan Wealth Holdings. I find that evidence unbelievable, given that she is the sole director of L & V Tomkins and the evidence in this proceeding clearly demonstrates that L & V Tomkins did receive the moneys from Ryan Wealth Holdings. At the hearing L & V Tomkins, through its legal representatives, did not dispute that that was the case. Nor could they have. It beggars belief that Valerie Tomkins did not know this. 6. Both Leonard and Valerie Tomkins signed a letter addressed to the auditor of the Ryan Holdings Superannuation Fund dated 28 May 2009 confirming that the Tomkins Unit Trust (of which L & V Tomkins was trustee) was indebted to the Ryan Holdings Superannuation Fund as at 30 June 2008 in the sum of $787,324.54. They denied the authenticity of their signatures on the letter, but I do not accept their denial. 7. There is no reason that Mr Moylan or someone in his office should have forged the signatures of Leonard and Valerie Tomkins to the agreements of 2006 or 2008 or to documents signed by them acknowledging the debts owed to Ryan Wealth Holdings. L & V Tomkins was in need of the advance from Ryan Wealth Holdings. It received the money. It is much more likely that it signed the documents prepared by the solicitors, Turnbull Hill, on the instructions of L & V Tomkins' accountants, than that someone in the accountant's office forged signatures to the documents. The signatures of both Leonard and Valerie Tomkins (and Andrew and Deborah Tomkins) bear a close relationship to signatures that they acknowledged to be theirs. That does not necessarily preclude a forgery because the original documents were not produced and it is possible that genuine signatures were photocopied and the photocopies were used to place signatures in the appropriate spaces in order to produce copies. But there is no obvious motive for that course to be taken, at least in the case of the signatures of Leonard and Valerie Tomkins. Neither said that he or she would not have been prepared to sign the documents in question. There is no motive for anyone to have forged their signatures. 8. It was not suggested in cross-examination of Mr Spicer that he forged the signatures on the document or that he was aware of anybody else having done so. That is not a criticism of counsel. I doubt that such an accusation could properly have been made. But that illustrates the difficulty the Tomkins' face in asserting that their signatures were forged. 9. It is unnecessary to decide whether Andrew and Deborah Tomkins signed the 2006 loan agreement. Both denied having done so and the proceeding against them was settled. Mr Spicer ultimately did not contend that Deborah Tomkins was present at the meeting at which he said Leonard and Valerie Tomkins signed the agreement. He said that Andrew signed the agreement, something which Andrew denied. But Andrew said that he was not present for the whole of the meeting. Whether or not Andrew and Deborah Tomkins signed the agreement, I am satisfied that Leonard and Valerie did. 10. The effect of L & V Tomkins' having signed the 2006 loan agreement was that it acknowledged having borrowed $616,795. It agreed to pay interest at the rate of 15 per cent per annum to be capitalised after the first year. 11. The loan was to be repayable one year from the date of an initial drawdown notice, but there was no such notice. Accordingly, it was to be payable on demand (clause 9.5). There was no term of the 2006 agreement that provided that the "Specified Charge" (defined to include a mortgage over L & V Tomkins' real estate) was to be security for the loan. 12. The 2008 agreement was expressed to be made between Ryan Wealth Holdings, L & V Tomkins as trustee for the Tomkins Unit Trust, and Leonard Tomkins and Valerie Tomkins. The 2008 agreement recited that: "A. Tomkins requested Ryan Wealth to lend to it the sum of Seven Hundred Eight Seven Thousand Three Hundred and Twenty Four Dollars ($787,324.00) B. On 30 June 2008 Ryan Wealth loaned to Tomkins the sum of Seven Hundred Eight Seven Thousand Three Hundred and Twenty Four Dollars ($787,324.00)" 1. The "Principal Loan" was defined to mean a loan of $787,324. This was on amounts calculated to have been outstanding as at 30 June 2008 by applying an interest rate of 15 per cent per annum on outstanding balances, taking into account a part payment of interest of $19,000, on 27 June 2008, but without the interest being capitalised after the first year, that is, on 12 May 2007. Had the interest been capitalised the balance outstanding as at 30 June 2008 would have been $802,004.65. Clause 3 provided that: "3.1 On the Repayment Date, Tomkins will repay to Ryan Wealth the Principal Outstanding in the manner set out in this Agreement in full unless otherwise agreed. 3.2 Tomkins may, at any time prior to the Repayment Date, repay the whole, or any part of the Principal Outstanding." 1. There was no completed definition of "Repayment Date". The document stated: "Repayment Date means [………………..]" 1. Clause 4 provided that Tomkins would be liable to pay to Ryan Wealth interest at the Interest Rate on the Principal Outstanding until the Principal Outstanding had been repaid in full. The Interest Rate was 15 per cent per annum. Clause 4.2 provided that Tomkins could, but was not required to make regular interest payments during the term of the Agreement. L & V Tomkins was required to pay all interest due on the Repayment Date (a day that was not specified). 2. Clause 5 provided: "5.1 Ryan Wealth may secure the repayment of amounts owing to it by Tomkins under this Agreement by the registration of second mortgages over Lot 55 in Deposited Plan 838068 and Lot 7 in Strata Plan 67807. 5.2 Leonard John Tomkins and Valerie Gladys Tomkins are the registered proprietors of the above properties and hereby consent to the registration of second mortgages by Ryan Wealth." 1. In fact L & V Tomkins was the registered proprietor of Lot 55 in Deposited Plan 838068. By clause 5.1 it agreed that the land would be security for the loan and necessarily thereby agreed to execute a mortgage in registrable form over that property. 2. Under clause 6.1 Ryan Wealth Holdings could give a notice to L & V Tomkins declaring that all moneys owing under the agreement were immediately due and payable if an Event of Default occurred. An Event of Default was defined as follows: "5.1 [sic] Each of the following is an Event of Default: (a) If any amount is not paid to Ryan Wealth by Tomkins on or before the due date under this agreement and remains unpaid for a period of 28 days or more; (b) If an administrator or liquidator of Tomkins is appointed; or (c) Tomkins entering into an arrangement, compromise or composition with or assignment for the benefit of its creditors or a class of them." 1. The defendants did not submit that the consequence of the definition of Repayment Date not having been completed was that unless an Event of Default occurred L & V Tomkins was not required to repay the loan. I think L & V Tomkins was right not to make such a submission. It would be commercially absurd. In the absence of a specification of a Repayment Date it must be implied that the loan was either to be repayable on demand or within a reasonable time. Counsel for the plaintiff submitted that the loan was repayable on demand. Counsel for L & V Tomkins did not dispute this. Whether the correct implication is that the loan would be repayable on demand, or within a reasonable time, it is clear that a reasonable time for the making of a demand had expired by the time these proceedings were commenced. 2. The 2008 agreement was purportedly signed on behalf of Ryan Wealth Holdings by Ms Crittle through her attorney Mr Moylan. That power of attorney did not give Mr Moylan power to act as director of Ryan Wealth Holdings. But Ryan Wealth Holdings ratified his having done so on its filing the statement of claim in which it sought to enforce the 2008 agreement. 3. Leonard and Valerie Tomkins denied having signed the 2008 agreement. Their signatures (reproduced as a copy) were purportedly witnessed by a Ms Amanda Sweeney. She said in substance that she was familiar with the signatures of Leonard and Valerie Tomkins, having seen them sign documents on many occasions. She recognised the copy of the signatures on the agreements as theirs. She recognised her own signature. She was employed as an administrative assistant for Mr Moylan. She said that it was her invariable practice only to witness a document if the signatory signed in her presence. She could not recall any instance where she had departed from that practice and considered it unlikely that she had ever done so. I accept that evidence. Ms Sweeney said that she recalled Leonard Tomkins' having signed below the line for his signature and this being a problem. The signature to which she referred was not that of Leonard Tomkins, but that of Valerie Tomkins. I do not think this discrepancy in any material way affects the reliability of her evidence. I consider her a more reliable witness than either Leonard or Valerie Tomkins. I conclude that both Leonard and Valerie Tomkins signed the 2008 agreement as directors of L & V Tomkins. They also signed in their own right, but that is not of present relevance. 4. L & V Tomkins signed the agreement as trustee for the Tomkins Unit Trust. The trust deed was not in evidence. There was no provision in the agreement limiting L & V Tomkins' personal liability to Ryan Wealth Holdings. Whether any judgment against L & V Tomkins can be executed against the assets of the Tomkins Unit Trust is not an issue that presently arises. 5. L & V Tomkins pleaded that there was no consideration for the 2008 agreement. 6. If either or both of Andrew and Deborah Tomkins were liable under the 2006 agreement, then there was clearly consideration for the 2008 agreement because it provided by clause 9.1 that it superseded and prevailed over the terms of all prior arrangements or understandings between the parties as they related to the subject matter of the agreement. This meant that the 2006 agreement was superseded by the 2008 agreement and Andrew and Deborah Tomkins would have been discharged from the 2006 agreement if they were parties to it. But I do not think it necessary to decide whether either or both of Andrew and Deborah Tomkins were parties to the 2006 agreement. Even if they were not, Ryan Wealth Holdings provided consideration for the promises made by L & V Tomkins in the 2008 agreement. 7. Both agreements applied to the same debt. Both applied an interest rate of 15 per cent per annum. But under the 2006 agreement the interest was to be capitalised after the first year of the initial advance. The amount owing under the 2006 agreement as at 30 June 2008 was more than $787,324. The substitution of the debt of $787,324 with interest at 15 per cent per annum for the debt of $802,004.65 with interest at the same rate was consideration for the 2008 agreement. 8. Under both agreements, as I have construed the 2008 agreement, in the events that happened, the loan was repayable on demand or on the occurrence of an Event of Default (as defined). There were more Events of Default under the 2006 agreement than there were under the 2008 agreement. This was additional consideration for the 2008 agreement. 9. Accordingly, the promise by L & V Tomkins in clause 5.1 of the 2008 agreement that, "Ryan Wealth may secure the repayment of amounts owing to it by Tomkins under this agreement by the registration of second mortgages over Lot 55 in Deposited Plan 838068 and Lot 7 in Strata Plan 67807" was supported by consideration. 10. The original of the mortgage apparently executed on behalf of L & V Tomkins in favour of Ryan Wealth Holdings in folio identifier 55/838068 has not been produced, notwithstanding the plaintiff's attempts to locate documents. In any event, the document was ill-drawn and was not expressed to secure the loan. Because I have found that the 2008 agreement was entered into by L & V Tomkins and is binding on it, I accept the plaintiff's submission that it is entitled to an order in the nature of an order for specific performance of L & V Tomkins' obligation under clause 5.1 to require L & V Tomkins to execute a mortgage in registrable form in favour of Ryan Wealth Holdings over Lot 55 in Deposited Plan 838068 and do whatever might be required to be done by it to enable registration of that mortgage. The 2008 agreement wrongly stated that Leonard and Valerie Tomkins were the registered proprietors of the property in Lot 55 in Deposited Plan 838068 as well as the property in Lot 7 in Strata Plan 67807. L & V Tomkins was the registered proprietor of the land in Lot 55 in Deposited Plan 838068. The error in clause 5.2 in this regard does not affect the enforcement of L & V Tomkins' promise that its obligations could be secured by Ryan Wealth Holdings by a registered second mortgage over that property. 11. The 2008 agreement was not stamped but was admitted into evidence on the plaintiff's giving the undertaking of a party not liable (Duties Act 1997 (NSW), s 304 and Uniform Civil Procedure Rules 2005, r 31.13). Notwithstanding its admission into evidence, a mortgage or a charge is not enforceable unless duty on the mortgage or charge is paid (Duties Act, s 211). The plaintiff submitted that its application for specific performance of an agreement to give a registered mortgage is not an application to enforce the mortgage that will come into existence upon L & V Tomkins being required to perform its agreement. L & V Tomkins did not dispute this. The matter was not the subject of argument. My prima facie view is that a "mortgage" for the purposes of the Duties Act includes an equitable mortgage which in turn includes an agreement for the grant of a mortgage which is capable of specific performance. But there is a distinction between enforcing such an agreement to require the mortgagor to execute a mortgage, and an order enforcing the mortgage by granting the mortgagee a remedy. L & V Tomkins did not submit that the agreement was unenforceable because it had not been stamped. I proceed accordingly without deciding the question. 12. As the 2008 loan agreement is enforceable by the plaintiff against L & V Tomkins no question arises under the Limitation Act. 13. In case I am wrong in that conclusion I will briefly state my conclusions in respect of the issues raised under the Limitation Act so far as they concerned the 2006 agreement. 14. The plaintiff initially contended that the 2006 agreement was a deed and the relevant limitation period was 12 years, not six years. By the time of final submissions, the only extant claim was that against L & V Tomkins and that submission was rightly not pressed. 15. I accept the plaintiff's submission that even if L & V Tomkins was not bound by the 2008 agreement, its claim for a debt for moneys lent under the 2006 agreement was not barred by s 14 of the Limitation Act, nor was its alternative claim for moneys had and received barred by s 14 of the Limitation Act. This was because the payments made on 27 June 2008 and 17 May 2011 were both confirmations of the plaintiff's causes of action that postponed the running of the limitation period. Section 54 of the Limitation Act relevantly provides: "54 Confirmation (1) Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation. (2) For the purposes of this section: (a) a person confirms a cause of action if, but only if, the person: … (ii) makes, to a person having (either solely or with other persons) the cause of action, a payment in respect of the right or title of the person to whom the payment is made, (b) a confirmation of a cause of action to recover interest on principal money operates also as a confirmation of a cause of action to recover the principal money, and … (5) For the purposes of this section a person has the benefit of a confirmation if, but only if, the confirmation is made to the person or to a person through whom the person claims. (6) For the purposes of this section a person is bound by a confirmation if, but only if: (a) the person is a maker of the confirmation, …" 1. The payment of $19,000 on 27 June 2006 was made by Cardiff Gas. Cardiff Gas was the recipient of funds from L & V Tomkins that had been advanced by Ryan Wealth Holdings on 12 May 2006. The payment was made on behalf of L & V Tomkins. It was treated by L & V Tomkins and Ryan Wealth Holdings as a part-payment of interest on the loan. The repayment of $24,000 on 17 May 2011 was made directly by L & V Tomkins to Ryan Wealth Holdings. 2. Leonard and Valerie Tomkins say that they had no knowledge of these payments. They say that the payments were organised by Mr Moylan. In the case of the second payment, the funds paid into L & V Tomkins' account that were the source of the payment made on 17 May 2011 came from Mr Moylan. But it is their case that they gave Mr Moylan authority to deal with all financial matters on behalf of L & V Tomkins and Cardiff Gas. What he did on behalf of L & V Tomkins, in making a payment that was a confirmation of Ryan Wealth Holdings' causes of action, was binding on L & V Tomkins. 3. L & V Tomkins had no liability to Ryan Wealth Holdings, except in respect of the moneys advanced by Ryan Wealth Holdings to it. If, as I have found, the initial advance was made under the 2006 agreement, the payments on 27 June 2008 and 17 May 2011 were confirmation of that cause of action. That would have been the only cause of action available to Ryan Wealth Holdings. 4. If, contrary to my finding, L & V Tomkins did not make the 2006 agreement, its only liability to Ryan Wealth Holdings was in an action for moneys had and received. The payments of 27 June 2008 and 17 May 2011, were in confirmation of that cause of action. 5. That is to say, it could not be, and was not, suggested that on 27 June 2008 Cardiff Gas made a payment on behalf of L & V Tomkins to Ryan Wealth Holdings by way of gift or loan. Nor could it be suggested, nor was it suggested, that on 17 May 2011 L & V Tomkins made a payment of $24,000 to Ryan Wealth Holdings as a gift or a loan. The only other explanation for those payments was that they were made in reduction of a liability owed by L & V Tomkins to Ryan Wealth Holdings either as moneys lent, as I consider to be the case, or, if there were no loan, on account of an action for moneys had and received. Therefore, if I am wrong in my conclusion that L & V Tomkins is bound by the undated 2008 agreement, it is liable for the amount that would be owing under the 2006 agreement had it not been superseded by the 2008 agreement (which would be for a higher sum because under the 2006 agreement interest was capitalised at least after the first year), or, if it were not liable under the 2006 agreement, it would be liable on an action for money had and received and be liable to pay interest at the rates prescribed for the purposes of s 100 of the Civil Procedure Act 2005 (NSW). 6. It is unnecessary to express a view on whether the letter dated 28 May 2009 addressed to the auditor of the Ryan Holdings Retirement Fund was also a confirmation of the causes of action. 7. The plaintiff has applied the payments of $24,000 received on 17 May 2011 and $216,795 received on 17 December 2013 in reduction of interest. It is entitled to do so. L & V Tomkins appropriated the payment of $19,000 to interest, as evidenced by its letter to the auditor dated 28 May 2009. L & V Tomkins did not appropriate the payment of $216,795 from the Australian Tax Office to either principal or interest. The debt outstanding as at 29 February 2016 pursuant to the 2008 agreement, applying the interest rate of 15 per cent per annum to the principal sum of $787,324 and deducting the payments of $24,00 and $216,795 is $1,452,490.86. 8. For these reasons I make the following orders: Direct entry of judgment for the plaintiff against the first defendant in the sum of $1,452,490.86 Order that within 14 days after the plaintiff delivers to the first defendant's solicitor a form of memorandum of mortgage in respect of the land in Folio Identifier 55/838068, the first defendant duly execute such document and deliver the same to the plaintiff or as it might direct and execute any other document and do all such other things as might be necessary to be done on its part to enable the plaintiff to register the mortgage, including by producing the original certificate of title for Folio Identifier 55/838068 if it is in the first defendant's possession, custody or power or by giving its consent to the production of such certificate of title by any third party. Reserve the matter for further consideration and grant liberty to apply in respect of the enforcement of order 2. Order that the plaintiff's claims for relief against the second defendant be dismissed. 1. I will hear the parties on 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. 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: 29 February 2016