AKM Investments Group Pty Ltd v Grewal [2024] NSWDC 144

Catchwords: CONTRACTS – Express Terms – Oral – Loan or equity investment – Interest District Court New South Wales Medium Neutral Citation: AKM Investments Group Pty Ltd v Grewal [2024] NSWDC 144 Hearing dates: 9, 10, 11 May; 21, 22 June; 4 August 2023 Date of orders: 12 April 2024 Decision date: 12 April 2024 Jurisdiction: Civil Before: Andronos SC DCJ Decision: (1) Judgment for the plaintiffs as against the second defendant in the sum of $221,945.51, inclusive of interest. (2) Judgment for the first defendant against the plaintiffs. (3) Costs be reserved. (4) Direct the parties to liaise with each other and provide to my associate: (a) an agreed costs order; or (b) an agreed timetable for the filing and service of evidence and submissions on costs, by 26 April 2024. Catchwords: CONTRACTS – Express Terms – Oral – Loan or equity investment – Interest Legislation Cited: Civil Procedure Act 2002 (NSW), s 100 Uniform Civil Procedure Rules 2005, r 42.1 Cases Cited: Blatch v Archer [1774] 98 ER 969 at 970; ( 1774) 1 Cowp 63 Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Carapark Holdings Ltd v Commissioner of Taxation (Cth) [1967] HCA 5; (1967) 115 CLR 653 Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 Dirensson Pty Ltd v Hassan El Dirani [2019] NSWSC 617 Fox v Percy (2003) 214 CLR 118 Helton v Allen [1940] HCA 20; (1940) 63 CLR 691 Heydon v Perpetual Executors Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111 In the matter of Central Management ( NSW) Pty Ltd (in liquidation) ACN 139 989 852 [2017] NSWSC 1258 John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 Maria Saravinovksa v Krste ( Chris) Saravinovski ; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964 Moser v Ky [2021] NSWSC 1634 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd’s Rep 403 Schmierer v Taouk [2004] NSWSC 345; (2004) 207 ALR 301 Seldon v Davidson [1968] 2 All ER 755 The Nominal Defendant v Cordin [2017] NSWCA 6 Toll ( FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 Watson v Foxman (1995) 49 NSWLR 315 Category: Principal judgment Parties: AKM Investments Group Pty Ltd (first plaintiff) Gurinder Pal Singh Gaba (second plaintiff) Kamalpreet Grewal (first defendant) Tapinder Singh also known as Sippy Grewal (second defendant) Representation: Counsel: Ms K Young (plaintiffs) Ms R Wilson (defendants) Solicitors: Kaur Legal (plaintiffs) RN Legal (defendants) File Number(s): 2021/00159271 Publication restriction: Nil JUDGMENT The plaintiffs allege that an oral agreement was struck between the second plaintiff , Mr Gurinder Pal Singh Gaba , and the second defendant , Mr Tapinder Singh ( also known as Mr Sippy Grewal) , in November 2017 . Pursuant to that agreement , they say Mr Gaba caused the first plaintiff , AKM Investments Group Pty Ltd ( “ AKM ” ) , to advance the sum of $190,000 , in three tranches , to the first defendant , Mr Grewal ’ s wife, Ms Kamalpreet Grewal , on the basis that the moneys would be repaid to AKM by 31 December 2018 , together with interest calculated at 12% per annum . It is not alleged that Ms Grewal was party to, or is liable under , any loan agreement . An application to amend the Statement of C laim to include a claim against her for money had and received was proposed , but was abandoned. U ltimately , no claim for relief was pressed against her. The defendants admit the transfer of $190,000 by AKM to Ms Grewal , and admit that the transfer was pursuant to an arrangement between Mr Gaba and Mr Grewal. They deny , however, that the moneys were advanced by way of loan. Rather, they say the moneys comp r ised a capital contribution on Mr Gaba ’ s behalf to a syndicate or joint venture , loosely described in the evidence as a partnership, pursuant to which its members would re develop residential land at Lennox Street, Campbelltown, South Australia. Land was purchased by Ms Grewal in 2017 but t he venture failed and the property was sold at a loss. The failure of the venture, the defendants say, does not require Mr Grewal to indemnify the plaintiffs against any loss they have suffered by reason of their participation in it . The principal issue s in these proceedings , therefore, concern the correct characterisation of the agreement between Mr Gaba and Mr Grewal and whether any obligation to repay th e transferred moneys has arisen. For the reasons which follow, I have found that the moneys were advanced pursuant to a loan agreement between Mr Gaba and Mr Grewal , and that Mr Grewal is liable to repay the sum of $190,000 to the plaintiffs, although I have not found that it was a term of the agreement that interest at a rate of 12% per annum accrued on the loan moneys. Instead i nterest on the loan moneys accrues at c ourt rates from the date of commencement of the proceedings . Issues in dispute As indicated above, t he dispute between the parties concerns the proper characterisation of the contractual relationship between Mr Gaba , on the one hand , and Mr Grewal , on the other . The plaintiffs say: The terms of the loan agreement were: Mr Gaba would cause AKM to advance the sum of $190,000 to Ms Grewal; and The advanced moneys would be repaid, together with interest calculated at 12% per annum , on or before 31 December 2018. Mr Gaba performed his obligations under the agreement by causing AKM to advance the moneys in three tranches between 16 and 23 November 2017. The advanced moneys were not repaid by 31 December 2018, or at all. The plaintiffs demanded repayment on multiple occasions , including on 25 February 2021, without success. As the cause of action advanced by the plaintiffs is in contract only, and it is not alleged that Ms Grewal was a party to the contract, the defences are raised by Mr Grewal alone. They are summarised in the d efendants ’ written submission s ( “ DS ” ) as follows: Mr Grewal admits that $190,000 was transferred by the plaintiffs to Ms Grewal ’ s bank account in November 2017. He agrees that the moneys were transferred pursuant to an express oral agreement , but denies that the agreement was in the terms alleged by the plaintiffs. Mr Grewal says there was an express oral agreement in the following terms: The parties to the agreement were Mr Gaba, Mr Sukha Lohat , Mr Preetinder Brar ( a lso known as Gippy Brar ) , Mr Mu k esh Sapra and Mr Grewal . Mr Gaba would cause AKM to transfer $200,000 to Ms Grewal . The $200,000 would be applied to the purchase of 12 Lennox Street and its subsequent development . The shortfall between the moneys advanced by Mr Gaba and what would be required to complete the project would be raised from additional investors . 14 Lennox Street would also be acquired and the two properties would be jointly developed and sub-divided into 11 lots comprising townhouses . Mr Grewal, together with Mr Brar, would be responsible for the conduct of the Lennox Street development . The profits would be divided amongst the participants once the development had been sold. No party alleges that AKM was a contracting party. The course of evidence was not straightforward. The plaintiffs ’ evidence in chief was a perfunctory affidavit , in the nature of a verifying affidavit, filed together with the Amended Statement of Claim on 15 November 2021 . The defendants served their substantive affidavits in June 2022 and the plaintiffs served further evidence, ostensibly in reply but in reality in chief, thereafter. When the proceedings were first before me in May 2023, I gave leave for certain additional evidence to be adduced orally by Mr Grewal to which, as a matter of fairness, the plaintiffs were entitled to respond. The proceedings came back before me several weeks later, following the service of further evidence by both sides . Written and oral submissions were finally made in August 2023. Relevant principles Fact finding, credit and inferences Counsel for each party made trenchant submissions as to the credit of the other party. In the case of the plaintiffs, submissions as to credit were also made with respect to Mr Lohat , an associate of the parties with whom Mr Gaba ha d fallen out and who gave evidence for the defendants. T here was some force in the submissions made by both parties . Indeed, counsel for the plaintiffs based her submissions on a recognition that credit was a problem for both parties and the factual disputes would be best determined on the basis of the contemporaneous documentary material and inferences which could otherwise be drawn from the course of evidence. For the reasons set out below, I have largely adopted this course. T he issue before the Court , nevertheless, is whether the plaintiffs have proved their cause of action in contract . I have set out below references to authorities to which I have had reference in reaching conclusions on dispute d questions of fact. Where proof of a fact is required : “the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality” : Helton v Allen [1940] HCA 20 ; (1940) 63 CLR 691 at 712; Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 at 361. In Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55], McDougall J summarised the position as follows: A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist; Where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact ’ s existence are greater than the possibilities of its non-existence, the burden of proof on the balance of probabilities may be satisfied; Where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; A rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue ; and Ordinarily, documentary evidence, both of a primary or secondary (contemporaneous or near contemporaneous) character, in particular if unguarded or neutral in origin, ordinarily will be attributed greater probative weight than viva voce evidence ventilating a recollection of conversation, conduct, observation or perception . Where determination of critical issues involves the evaluation of oral evidence and disputed events , the process of fact finding should be informed as far as possible “ on the basis of contemporary materials, objectively established facts and the apparent logic of events ” : Fox v Percy (2003) 214 CLR 118 at [30]-[31]. Inferences may be drawn from circumstantial evidence where the whole of the facts can establish an adequate basis to infer the ultimate fact to be proved: Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 141. In Watson v Foxman (1995) 49 NSWLR 315 at 318-319, McClelland CJ stated: “… [H]uman 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.” In Maria Saravinovksa v Krste (Chris) Saravinovski ; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964, Kunc J, in enumerating relevant principles in assessing credit, stated that evidence is to be preferred which is inherently probable in the circumstances or is given by a witness against their interest. A witness who is found to have been untruthful on some issues may nevertheless be accepted on others. In Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd ’ s Rep 403, Lord Pearce discussed the credibility of honest witnesses at 431: “… though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. … And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.” I have also had regard to the well-known passage of Davies J ’ s decision in The Nominal Defendant v Cordin [2017] NSWCA 6 at [100] and following . The plaintiffs also rely on Blatch v Archer [1774] 98 ER 969 at 970 ; (1774) 1 Cowp 63. In that case, Lord Mansfield at [ 65 ] stated , “ all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted ” . Specifically, the plaintiffs say that negative inferences ought to be drawn against Mr Grewal and Mr Lohat because of their unexplained failure to produce documents sought by way of Notices to Produce and subpoen a concerning the identity of investors in the Lennox Street development and the terms on which those parties participated in the development venture. Oral contract In John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [93] to [96], Hammerschlag J (as the Chief Judge then was) observed: “[93] A binding agreement is made when a reasonable person would believe that, based on their words and behaviour, the parties intended to contract. This is an objective test, which in most cases can be administered by determining whether there has been an offer by one party to be bound on certain terms accompanied by an unqualified acceptance of that offer communicated by the other party to the offeror. See generally: Paterson, Robertson, and Duke, Principles of Contract Law , (4th ed 2011, Thomson Reuters) at [1.15] and [12.10]; J W Carter, Contract Law in Australia, (6th ed 2013, LexisNexis Butterworths) at [3.06]. [94] Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319. [95] The sensation of feeling an actual persuasion, after a contest, that an event has happened or that something exists is one which is well known and recognised by experienced trial judges for what it is. [96] [The plaintiff] has the onus of establishing the agreement for which it contends. This entails proving to the reasonable satisfaction of the Court that the words said to give rise to the agreement were actually said, and that the alleged consensus was capable of forming a binding agreement and was intended by the parties to be legally binding.” In In the matter of Central Management (NSW) Pty Ltd (in liquidation) ACN 139 989 852 [2017] NSWSC 1258 , Black J held at [16] that “ a loan agreement is not necessarily oral or written, and the existence of an agreement may be inferred from the acts and conduct of the parties ” . This is an exemplar of the objective law of contract: see Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [ 40] and Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 at [34]ff . The plaintiffs , however, contend for a more extensive principle. In her comprehensive written submissions in chief , at [75] counsel for the plaintiffs submit ted that Heydon v Perpetual Executors Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111 applies with the effect that , if the defendant s fail to establish that the moneys w e re advanced by way of gift, the Court will readily imply a loan. I do not understand Heydon to have that effect. In that case , it had been held at first instance that , where a plaintiff asserts a loan and the defendant claims moneys were provided by way of gift, the onus of proving gift lay on the defendant , who was required to go first . The High Court did not agree, finding that the burden of proving the facts in support of the causes of action lay on the plaintiff advancing those facts (at 113) . As the plaintiff could not prove the loan , the action failed. The failure of the plaintiff to prove the loan did not establish positively that there was a gift, but was simply a case of the plaintiff failing to prove its case o n the balance of probabilities. The plaintiffs also rely on the comments of White J ( a s his Honour then was) in Schmie re r v Taouk [2004] NSWSC 345; (2004) 207 ALR 301 a t [62]-[23] , in which his Honour discussed Seldon v Davidson [1968] 2 All ER 755 . In the latter case, the English Court of Appeal inferred that when a simple payment of money was proved or admitted between strangers, proof of payment imported a prima facie obligation to repay the money in the absence of circumstances from which the presumption of advancement could arise. In Schmierer , h is Honour noted that Seldon v Davidson is not the law in Australia and that it is inconsistent with Heydon . While noting that Seldon v Davidson illustrated the readiness of the law to imply a loan repayable on demand, White J expressly did not rely on it to imply a loan. Rather , his Honour decided the case by application of restitutionary principles , which are not relevant in the present case. In any event, I do not find the gift cases of any assistance because , as in the case of Moser v Ky [2021] NSWSC 1634, the starting point is that there is often a presumption of gift, which is not the case here, where it was never alleged. Accordingly, I do not accept the submission that the Court may readily imply a loan contract where an allegation of gift is negatived. In any event, b oth parties contend that there was an express oral agreement , and the issue before the Court is whether the plaintiffs have proved their cause of action on the balance of probabilities. Relevance of post-contractual conduct Both parties referred extensively to post-contractual conduct , much of which I found to be irrelevant and not helpful in determining the issues in dispute . Nevertheless, I have taken the approach that post - contractual conduct may be relevant to determining the existence and identifying the purpose or terms of a transaction: Carapa rk Holdings Ltd v Commissioner of Taxation ( Cth ) [1967] HCA 5; (1967) 115 CLR 653 at 660 , Dirensson Pty Ltd v Hassan El Dirani [2019 ] NSWSC 617 at [470]-[471] . Factual findings Parties and witnesses Mr Gaba , the second plaintiff, is a businessman with wide and varied commercial interests. He conducts his businesses through a number of cor porate entities , including AKM , which was incorporated on 18 August 2017 . At the relevant time, Mr Gaba had a practice of lending money without security and without documentation to friends and associates. The sums involved range d from the tens of thousands to the hundreds of thousands of dollars . Mr Grewal is a property developer , and ha d also worked as a project manager in the building industry, relevantly including for Adelaide Builders Pty Ltd ( “ Adelaide Builders ” ), a construction company based in Adelaide, in which the whole of the issued shares were held by Mr Brar. For a time, “ Kamal Preet ” was also a shareholder. It does not appear to be disputed that “ Kamal Preet ” was, in fact, Ms Grewal, the first defendant. From 2005 to December 2018, Mr Grewal lived in Adelaide . Ace Developers Pty Ltd ( “ Ace Developers ” ) was an Adelaide - based property developer incorporated in 2016 . Mr Grewal was the sole director and shareholder of Ace Developers at the relevant time in 2017 . Mr Sapra was, at the relevant time, a shareholder (but not a director) of AKM . He and Mr Gaba had a close professional relationship, with Mr Gaba deferring to Mr Sapra as a mark of respect, given that Mr Sapra was older than him. Mr Sapra had some involvement in the events in question in these proceedings and participated in some of the conversations deposed to by Mr Gaba and Mr Grewal . Although he had an interest in AKM, the plaintiffs do not allege that he was authorised to act for AKM in any of its dealings with Mr Grewal. Similarly, although the defendants rely on aspects of Mr Sapra ’ s evidence and allege that he , personally , was a party to the agreement set out at paragraph 8(2) above , t hey do not allege that he made any representations on behalf of AKM that bound AKM to the terms of any agreement. The obligation to cause the advance of funds was, on both parties ’ cases, Mr Gaba ’ s. On the defendants ’ case, the right to participate in any profit accrued to Mr Sapra and Mr Gaba personally. Mr Gaba and Mr Grewal met in 2017, having been introduced by Mr Lohat , a mutual friend. At some point, Mr Gaba and Mr Lohat were in business together with respect to a restaurant in Harris Park, N ew South Wales known as “ Billu ’ s ” . It is not clear when Billu ’ s started trading , as the company through which its business was allegedly conducted , AKS Hospitality & Catering Services Pty Ltd, was not incorporated until 27 November 2017 , and Mr Lohat did not become a director until January 2018 . Nevertheless, it does not appear to be in dispute that Mr Lohat introduced Mr Gaba to Mr Grewal sometime in 2017. In their various communications, many of the participants used informal terms of address for each other , either as a mark of familiarity or respect. Accordingly, care must be taken in identifying the participants to various communications and in drawing inferences as to the nature of the relationship between them. Similarly, several of the participants are referred to , in the evidence , by names other than those used in these reasons , particularly with reference to the Sikh custom of men using the surname “ Singh ” and women using the surname “ Kaur ” . Olive Grove project There were a number of property development projects in the suburbs of Adelaide in which Mr Grewal and his associates had an interest in about 2017. For present purposes, two were of particular significance: a project to acquire and redevelop property at 37 Olive Grove and 93 Brandis Road , Munno Para West, South Australia ( “ the Olive Grove project ” ) , and a project to acquire and redevelop property at 12 and 14 Lennox Street, Campbelltown, South Australia ( “ the Lennox Street project ” ). The Olive Grove project was the first in time to commence, although the period over which the two projects were conducted largely overlapped. The projects were loosely run and describe d by the participants as a “ partnership ” . It was not suggested that that description was ever understood in its strict, technical sense . Counsel for the defendants described the conduct of the projects as frankly shambolic, an assessment with which I respectfully agree. Nevertheless , the Olive Grove project, unlike the Lennox Street project, was conducted as a corporate joint venture through Sri Krishna Investors Pty Ltd ( “ Sri Krishna ” ) . The Olive Grove project commenced as a project conducted by Mr Lohat , Mr Brar and Mr Grewal. C ontracts for the acquisition of the properties were exchanged in about mid-2017 and, prior to settlement, Mr Lohat approached Mr Sapra and Mr Gaba to participate in the project . While it is not clear on the evidence, the request for their involvement appears to have been either to fund the purchase directly , to provide security that would enable finance for the purchase to be obtained , or both . While t here was no direct evidence of any transfer of funds by Mr Gaba, Mr Sapra o r AKM to Sri Krishna, the vendor , or any stakeholder in connection with the acquisition of the Olive Grove properties , a WhatsApp message from Mr Gaba on 11 May 2018 suggests that $10,000 was paid on 10 September 2017, $300,000 on 25 September 2017 , and $10,000 on 10 February 2018 . Sri Kris hna was incorporated in 2012 , and Ms Grewal and Mr Brar were appointed directors on 1 June 2017. They both ceased as directors on 1 August 2017 , when Mr Gaba was appointed director and secretary . Mr Gaba was also personally issued with 50 ordinary shares in Sri Krishna and became its sole director on that day . As at August 2017, the other investors in the Olive Grove project also held their interest through shareholdings in Sri Krishna, mostly through nominee corporate vehicles. Mr Grewal , Mr Brar and Mr Lohat held their interest in Sri Krishna through SGS Settlement Pty Ltd (in which each became a shareholder in August 2017 ) and Mr Sapra was said to hold his interest in Sri Krishna indirectly through Aryan Holdings Pty Ltd , which held shares in AKM , which ultimately held shares in Sri Krishna . It is not clear , notwithstanding the evidence of the parties ’ intention at the time, that Mr Sapra ’ s shareholding was so held – current ASIC records do not show AKM as a member of Sri Krishna until 15 March 2021. The associated parties were friendly and socially engaged with one another. There were a number of WhatsApp grou ps, set up by different members for different purposes. The WhatsApp groups were a forum for sharing information about particular projects and opportunities, and exchanging social greetings, motivational messages and jokes. Two such groups are particularly relevant to the current dispute: the Sydney Investors G roup WhatsApp group ( “ the Sydney Investors WhatsApp group ” ) and the Olive Grove WhatsApp group. The Sydney Investors WhatsApp g roup was established by Mr Bra r , who was based in Adelaide, sometime before August 2017. A reasonable inference is that it was directed to exchanging information concerning development projects in Adelaide with , and between , investors based in Sydney. Mr Lohat , Mr Grewal and other interested parties, such as Mr Abhishek Narang and Mr Rohan Narang , were participants in the Sydney Investors WhatsApp group. Significantly, neither Mr Gaba nor Mr Sapra was a member . Mr Gaba ’ s (and Mr Sapra ’ s ) non-inclusion in the Sydney Investors WhatsApp group had at least two significant consequences for the present proceedings. First, it facilitates the inference that communications in that WhatsApp group were not intended for them and that the participants thereto did not consider them among the “ Sydney Investors ” , not participant s in its dealings and that its opportunities and any obligations that flowed therefrom were not extended to them . Secondly, it had the consequence that the only means by which the plaintiffs could obtain access to its communications was by the compulsory processes of the Court, b y way of issuing subpoenas and N otices to P roduce. To the extent that there was not complete compliance with those processes, the plaintiffs contend adverse inferences ought be drawn against Mr Grewal and Mr Lohat . The Olive Grove WhatsApp group was created by Mr Lohat on 15 August 2017 . Its initial members were Mr Grewal, Mr Brar, Mr Lohat , Mr Gaba and Mr Sapra . It is a n obvious inference that this group was established and conducted as a means of communications concerning the Olive Grove project. A further inference is available that the participants in the Olive Grove project were not necessarily participants in development opportunities in South Australia generally. AKM was incorporated on 18 August 2017 in this context. Its share capital is held equally between Mr G ab a and Aryan Holdings Pty Ltd, an entity controlled by Mr Sapra . Its only director and secretary is, and has been at all times since incorporation, Mr Gaba. Mr Sapra informed the members of the Olive G rove WhatsApp group of the pending incorporation of AKM on 17 August 2017 . According to the Olive G rove WhatsApp group text file, it appears most of the Olive Grove project investors had dinner together in Glebe on about 20 August 2017 . Following that dinner, various parties, including Mr Gaba and Mr Sapra , circulated financials, presumably for the purpose of securing finance. Significantly, the parties turned their minds to the most tax effective corporate structure for the project . It was agreed that Sri Krishna would open a bank account . An application, I infer for finance for the acquisition of the Olive Grove propert ies , was submitted by late August and, according to the WhatsApp traffic, three loans were unconditionally approved on 19 September 2017 to much mutual congratulations . Mr Gaba ’ s credit history appears to have been considered decisive by some of the members of the group in securing the finance. On 3 October 2017, Sri Krishna settled on the purchase of the two lots which comprised the Olive G rove project. The property at 37 Olive Grove was purchased for $520,000 and the property at 33 Brandis R oad was purchased for $300,000. The Olive Grove project later ran into difficulties and Mr Gaba disengaged from the project , highly critical of the conduct of others, including Mr Lohat and Mr Grewal. He eventually re-engaged with the project and took it over in December 2019 . However, by the end of September 2017, Sri Krishna had secured finance and had acquired the land necessary to conduct the project. Lennox Street project The Lennox Street project did not follow the same course as the Olive Grove project. The first documented reference to the project as a commercial possibility was a WhatsApp message posted by Mr Grewal to the Sydney Investors WhatsApp group on 20 September 2017. Mr Gaba and Mr Sapra were, of course, not members of that group. On 20 September 2017, Mr Grewal posted a link to the listing for 12 Lennox Street on the realestate.com .au website with the message , “ Check out this property I found in Campbelltown SA ” . Plainly, Messrs Gaba and Sapra were not in Mr Grewal ’ s contemplation when he was seeking interest from investors with respect to 12 Lennox Street. Over the following days, there was considerable traffic on the Sydney Investors WhatsApp group concerning the possible acquisition of 12 Lennox Street , principally between Mr Grewal and Mr Abhishek Narang. On 21 September 2017 Mr Abhishek Narang asked for a feasibility report, which Mr Grewal undertook to provide. The following morning , Mr Grewal posted a pdf, the contents of which were unavailable as evidence due to the absence of any embedded files or attachments in the text file produced to the Court pursuant to the Notice to Produce dated 25 May 2023 (Exhibit P 18). Mr Grewal noted , in a further post on 22 September 2017 , that 12 Lennox Street was going to auction the following day. Ace Developers, an entity controlled by Mr Grewal, was the successful bidder at the auction of 12 Lennox Street . On 23 September 2017, Ace Developers and the vendors entered into a contract for sale under auction conditions for the property at a purchase price of $815,000. The deposit was due by Monday , 26 September 2017. Traf f ic on the Sydney Investors WhatsApp group provides an incomplete record of communications concerning the raising of the deposit, expected to be $50,000 but ultimately amounting to $40,750. The deposit was provided by Abhishek and Rohan Narang to Harris Real E state Agency, the sales agent and stakeholder, on 2 6 September 2017 . The balance due on completion was $774,250. Completion took place on 24 November 2017. The Lennox Street project was intended by Mr Grewal and the other participants , ultimately , to embrace both 12 and 14 Lennox Street, Campbelltown , as evidenced by the redevelopment plans commissioned for 12 and 14 Lennox Street on 18 October 2017 . The y first became aware of 14 Lennox Street as a commercial opportunity at the auction of 12 Lennox Street. However, n either Mr Grewal nor any other member of the Sydney Investors WhatsApp group purchased it. On 16 February 2018, Mr Rajwinder Bawa, a colleague of Mr Lohat , completed the purchase of 14 Lennox Street, Campbelltown for $730,000. This followed the service of a Notice to Complete by the vendor. Mr Bawa ’ s acquisition of 14 Lennox Street appears to have been part of the development project as there was considerable traffic on the Sydney Investors WhatsApp group in the days immediately prior concerning raising the settlement moneys in light of the service of the Notice to Complete. Subsequent communications on the Sydney Investors WhatsApp group, such as Mr Rohan Nerang ’ s 19 April 2018 post, also treated the acquisition of 14 Lennox Street as a project expense. Mr Gaba, at Mr Grewal ’ s request, transferred $99,000 to the trust account of Mr Bawa ’ s conveyancer, Budget Conveyancers, on 9 February 2018. During this period, Mr Gaba advanced other moneys by way of loan to various parties, including at Mr Grewal ’ s request. For example, on 27 October 2017, he advanced $288,000 to an account only identified to him by Mr Grewal with reference to its account number in connection with another development project at 110 Justin Road, Munno Para , South Australia. Messrs Grewal, Lohat and Brar were involved in that project. Messrs Gaba and Sapra were not. Another example was on 3 November 2017 when Mr Gaba procured AKM to lend $150,000 to Ab h ishek Narang. Accordingly, in and around this period, it may be seen that Mr Gaba was, to Mr Grewal ’ s knowledge , a lender of funds. Contested conversations According to Mr Gaba, in September 2017 he had a conversation with Mr Grewal in the following terms: “Mr Grewal: I need money to do some investments. I found a project in South Australia which seems promising. Mr Gaba: What is the project about? Mr Grewal: There’s a property in South Australia available for investment. Mr Gaba: If you want the loan, I will need to see the project to ensure my money will be returned.” Mr Gaba says he then heard nothing further from Mr Grewal. Mr Grewal denies this conversation occurred at all. He says that he did not seek a loan from Mr Gaba in relation to the Lennox Street project at any stage. Rather, he says that there had been a meeting in relation to the Olive Grove project at Adelaide Builders ’ offices at which he, Mr Lohat , Mr Brar and Mr Gaba were present. At a subsequent dinner, he and Mr Brar said to Mr Gaba that another property had become available and that Ace Developers had already signed a contract to purchase 12 Lennox Street. He went on to say that he had had discussions with the real estate agent at the time of the auction , who indicated that 14 Lennox Street might also become available so there could be a further purchase as well. According to Mr Grewal, Mr Gaba did not say anything in this conversation. The plaintiffs do not allege that this conversation comprised part of the oral contract. Its significance lies in Mr Gaba ’ s evidence that Mr Grewal approached him as a lender rather than as a participant in the Lennox Street project and that Mr Gaba sought information concerning the project in order to assess the risk of lending funds to Mr Grewal. It is likely that a conversation concerning Lennox Street took place at about this time. What its terms were is less clear. It is common ground , however, that Mr Gaba and Mr Sapra travelled to Adelaide again on about 1 or 2 November 2017 , and attended a n Olive Grove project meeting with Mr Grewal, Mr Lohat and Mr Brar at the offices of Adelaide Builders . Mr Grewal alleges that at the meeting on 1 or 2 November 2017, a n agreement was struck pursuant to which Mr Gaba agreed to invest in the Lennox Street project. Mr Grewal ’ s evidence in this regard included the following: “ So we have explained that now we have 2 lot, 12 and 14 together, and Campbelltown Council they have given a DA approval for road [row] dwellings so that, like, you can build in a row like 6, 7 townhouses together. So we proposed like a draft plan that this we can do and we have on that point on time we have a sense that we will – then they [Mr Sapra and Mr Gaba] ask is that please send us the feasibility report. ” Mr Grewal went on to say that “ so we have a explained everything with Mr G aba and [Mr Sapra ] that the same way we do this development like we are doing the Olive Grove ” . Further , Mr Grewal stated in his evidence that Mr Gaba and Mr Sapra , in summary, said words to the effect , “ We are very happy to be a part of the development. Please send us the feasibility report and we will lock the deal ” . Finally, Mr Grewal said , “ they said that after they receive the feasibility report if they have any question they will clear the question and we will go ahead ” . Mr Lohat said nothing about this meeting in his evidence. Mr Sapra said, in his evidence, that he did not recall what was said at the meeting. Mr Brar did not recall such a discussion and said further that such matters would not have been discussed in his presence. Mr Gaba denied that such words were spoken at the meeting. There were no contemporaneous records of that meeting or of what was said on that occasion . On 3 November 2017, Mr Gaba received an email, ostensibly from Mr Brar, which attached a document called “ 12 – 14 Lennox Street Campbelltown feasibility report ” . Mr Gaba denies having requested the feasibility report and said that he did not know why it had been sent to him. This would be contrary to the approach that he says that he took at the September 2017 meeting he alleges took place . On 5 November 2017 , a further document also described as “ 12 – 14 Lennox Street Campbelltown feasibility report ” was posted to the Olive Grove WhatsApp group. Later that day, Mr Sapra posted to the Olive Grove WhatsApp group “ Thanks Sippy Ji [ Mr Grewal] , tomorrow we are catching up with Sukha Ji [Mr Lohat ] to clear a few points and lock the deal ” . What the deal was and what points needed to be cleared up was not established. It is plain from Mr Sapra ’ s post that, at least as far as he was concerned, the deal had not yet been “ locked ” and there were some points outstanding. This, to my mind, indicates that whatever had been discussed at the Adelaide Builders offices meeting on 1 or 2 November 2017, there had not been final resolution of the matters at hand . The fact that Mr Grewal did not disagree with Mr Sapra ’ s post lends further support to this conclusion. In any event, to the extent that Mr Grewal bears the onus of proving this conversation, I am not satisfied that it took place in the terms alleged. Given the subsequent provision of the feasibility report, I am prepared to infer that “ the deal ” concerned Lennox Street. However , even if I were to accept Mr Grewal ’ s evidence in this regard, I am not satisfied that it forms the basis for an agreement in the terms alleged by him . On 13 November 2017, according to Mr Gaba, he and Mr Grewal met at Harcourt ’ s Sapphire in South Australia to discuss the Olive Grove project . Mr Gaba alleges, and Mr Grewal denies, that at this meeting they also discussed a loan of $190,000 to Mr Grewal, repayment terms and interest. Mr Sapra is not alleged to have been present. In his affidavit, as corrected, Mr Gaba alleges that the conversation was in the following terms: “Grewal: I had a meeting with Mukhesh [ Sapra] and a Sukkah [Lohat] last week, Olive Grove is locked in. Gaba: Sorry, I couldn’t be there. Grewal: I wanted to discuss with you another thing. I’m short on funds and the settlement is coming up for Lennox development, I need to borrow some money. I need to borrow $190,000 to settle the property. Gaba: How long do you need it for? Grewal: For one year. Gaba: That is a large sum. One year is too long for me to have my money stuck somewhere. Grewal: I can pay you interest on the loan. Gaba: I can offer you the money at 15% because one year is a long time. Grewal: Brother, can you do 10%? Gaba: 13%. Grewal: 12%. Gaba: Fine. Grewal: Can I return the interest of $24,000 at the end and when I return the $190,000 in late November, early December of next year? Gaba: That’s fine.” In his uncorrected affidavit, Mr Gaba had stated that Mr Gr e wal asked for $200,000 , but in his evidence in chief he changed the evidence in his affidavit to refer to $190,000 instead. It was submitted for the defendants that this was damaging to his credit because he appeared to have amended his evidence to accord with other material which had become available in the course of the proceedings. There is some force to the defendants ’ submissions. There are no contemporaneous records which corroborate Mr Gaba ’ s account. Mr Grewal denies the conversation. It was not established what , if anything, remained to be “ locked in ” with respect to the Olive Grove project. The proposed loan of $190,000 appears to be an oddly specific number and the interest calculation of $24,000 (being 12% per annum over 12 months) relates mathematically to a loan of $200,000, rather than $190,000. Having regard to the authorities, particularly Ng uyen v Cosmopolitan Homes and Watson v Foxman , Mr Gaba ’ s evidence alone is not sufficient to persuade me that the conversation took place in the terms alleged. Transfer of funds As the parties agree , nevertheless , on the proposition that the moneys were transferred from AKM to Ms Grewal pursuant to an express oral agreement between Mr Gaba and Mr Grewal, it is necessary to consider the whole of the relevant circumstances to establish whether or not such an agreement , and its terms , can be identified. On 16 November 2017, Mr Grewal posted a message on the Olive Grove WhatsApp group containing the bank account details of his wife, the first defendant. Shortly thereafter, Mr Sapra posted in a private WhatsApp chat with Mr Gaba “ as discussed this mor, pl transfer $150k from AKM to Kamal Preet ’ s account and confirm please ” . Mr Gaba responded , “ Bhaiya [big brother] what should be the description? Loan to Kamalpreet ? ” , to which Mr Sapra responded, “ Loan from AKM in their description and loan to Kamal Preet in ours please ” . This contemporaneous inte rnal exchange indicates that Mr Gaba and Mr Sapra agreed as to the transfer and as to the characterisation of the transfer as a loan. T his lends some support to the submission that Mr Sapra and Mr Gaba both subjectively understood that any provision of funds in connection with Lennox Street would be by way of loan. This also conforms with Mr Gaba ’ s evidence of his exchange with Mr Grewal at paragraph 77 above . However, t he sum referred to was $150,000, not $200,000 or $190,000. This casts further doubt on Mr Gaba ’ s account. Mr Gaba ’ s evidence was undercut to some extent by Mr Sapra in his oral evidence. Mr Sapra seemed to treat loans and investments as essentially interchangeable , and as accounting entries only . He said that, as a matter of accounting practice, he always recorded advances as loans . Although the moneys were advanced by AKM, he also said that the “ $100,000 wasn ’ t invested by me ” , suggesting that AKM was a vehicle used by both him and Mr Gaba , and that they would take a benefit from AKM according to their contribution to any particular project . This is consistent with the AKM accounts , which disclosed differential shareholders loans to the company from each of Mr Gaba and Mr Sapra . While it may have been Mr Sa p r a ’ s practice to treat all transfers as loans as an accounting expedient , it was not established that it was Mr Gaba ’ s. Mr Gaba then transferred $75,000 from AKM ’ s bank account to Ms Grewal ’ s bank account. In accordance with the exchange between Mr Gaba and Mr Sapra , AKM ’ s bank statement records the transfer as “ loan to Kamalpreet “ . Mr Gaba messaged Mr Grewal in the Olive Grove WhatsApp group, attaching a payment receipt in respect of the $75,000 which recorded both “ loan from AKM ” and “ loan to Kamalpreet ” . Within a few minutes Mr Gaba also messaged Mr Grewal “ Sippy Bhaji $75,000 done, balance $75,000 will do tomorrow ( bcz of limit) Thanks ” . Mr Grewal responded , “ Ok ji thanks ” . Mr Grewal did not challenge or object to that characterisation of the payments. The following day , Mr Gaba transferred a further $75,000 to Ms Grewal, similarly described as “ Loan to Kamalpreet ” in the bank transfer notation. Again, there was no challenge or objection to the description of the funds as a loan. Mr Gaba posted a payment receipt in respect of the most recent $75,000 payment on the Olive Grove WhatsApp group on 17 November 2017, which again included the notations “ Loan from AKM ” and “ Loan to Kamalpreet ” . In the same WhatsApp group he also posted the message “ Sippy Bhaji $75,000 done today ” . On 19 November 2017, Ms Grewal applied to RAMS Home Loan for a loan in the sum of $652,000 in respect of 12 Lennox Street . The application was unconditionally approved on 21 November 2017. On 23 November 2017 , Mr Gaba caused a further $40,000 to be transferred from AKM ’ s bank account to Ms Grewal ’ s bank account. There may well have been a further communication between Mr Gaba and Mr Grewal in the intervening period relating to the additional transfer . As with the earlier transfers, it was described in the transfer as a “ Loan to Kamalpreet ” . Mr Gaba sent a copy of the payment receipt to Mr Lohat , who responded with a thumbs up emoji. Mr Gaba also transferred $10,000 to Mr Lohat on that day. It was described as a “ loan ” in the transfer. As with each of these transfers, no objection was raised by any recipient to its description as a loan. The total transferred by Mr Gaba by this stage was $200,000: $190,000 was transferred to Ms Grewal ’ s account and $10,000 was transferred to Mr Lohat ’ s . Mr Gaba explained that the difference in his accounts of the 13 November 2017 conversation resulted from the fact that $10,000 of the moneys advanced were to Mr Lohat and not Ms Grewal. Other investors’ contributions The transfers to Ms Grewal occurred in the context of a number of the participants in the WhatsApp groups communicating with each other about the pending settlement on 12 Lennox Street and the need to secure funds . On 7 November 2017, Mr Abhishek Narang asked on the Sydney Investors WhatsApp group that Mr Grewal share the Lennox Street feasibility report, together with reports on a number of other projects as well. It is not clear on the evidence whether Mr Grewal did so, however, Mr Narang appears to have been a participant in the Lennox Street project . O n 23 November 2017, Mr Brar posted on the Sydney Investors WhatsApp group : “Abhishek Bhaji [praying hands emoji]. Tomorrow is settlement for Lennox Street. We have not received your share of money. As you know that we are in the final stages of the previous projects, we are already facing a cash crunch. Things like these only add to our problems and affects our working.” Later that day, Mr Lohat posted over two messages “ Abishek I have just manage to borrow 50K to cover your” … “Share”. E ach of the investors in the Lennox Street project was required to contribute his share towards the purchase of the property. I infer that the funds referred to by Mr Lohat as having been borrowed by him include the $10,000 transferred by Mr Gaba that day. That part of the funds Mr Gaba caused to be advanced by AKM, at least , may be treated as a loan. It does not, however, fall within the plaintiffs ’ claim in these proceedings. On 24 November 2017, Ms Grewal completed the purchase of 12 Lennox Street. The amount due on settlement was $774,250, $651,555 of which was drawn down from RAMS. The balance of the purchase price that was not funded by the loan from RAMS was $122,695 , which was paid by Ms Grewal . Obviously, this balance is significantly less than the $190,000 transferred by Mr Gaba from AKM to Ms Grewal between 16 and 23 November 2023 , or even the $150,000 transferred on 16 and 17 November 2017 . It is unclear how the whole of the moneys were used. Two withdrawals were made from Ms Grewal ’ s account on 23 and 24 November 2017 in the sum of $170,654.39 and $44,000 respectively , however, the bank statement does not establish the destination of those funds. Later that day, Mr Brar posted to the Olive Grove WhatsApp group that 12 Lennox S treet had settled. Both Mr Sapra and Mr Gaba offered their congratulations to the others. Mr Brar also posted to the Sydney Investors WhatsApp Group that 12 Lennox S treet had settled. Subsequent communications Much of the evidence at the hearing concerned the subsequent course of the Olive Grove and Lennox Street projects. In my opinion, that evidence is of only limited relevance in determining what had been agreed between Mr Gaba and Mr Grewal in November 2017 with respect to the characterisation of the funds transferred by Mr Gaba from AKM to Ms Grewal. On 6 December 2017 , Mr Sapra posted on the Olive G r ove WhatsApp group: “ Hi Guys, Would it be possible to complete or confirm below during our tomorrow’s visit to Adelaide? 1.Signed contracts of 288k paid for two properties ( In lieu of amount given as loan for one year). We did receive the contracts but still waiting for the signed copies for our record. 2.What’s the Sha reholding plan with Campbelltown properties? I think we have already transferred $150k. As per Sukha Ji [Mr Lohat ] another $150k is due next week, but we are not across about the way our shares will be held in these two properties? I am sure you will understand our concern and resol ve above queries . Look forward to see you tomorrow. Cheers Mukesh”. The first entry appears to refer to the loan referred to in paragraph 63 above. That loan was eventually repaid. The second paragraph appears to refer to the Lennox Street project and suggests that Mr Sapra ’ s subjective understanding , as at 6 December 2017 , was that $150,000 of the moneys advanced were to be treated as an equity investment but on terms which had not been determined and subject to further moneys to be advanced. Mr Gaba denied that there had ever been a discussion between him and Mr Sapra concerning the shareholdings in the Lennox Street project . The evidence did not establish any party ’ s response to this post , whether a visit to Adelaide took place or what was disc ussed . Other than the moneys advanced to Mr Bawa, the characterisation of which is unclear, t here was no evidence that any further moneys were advanced in connection with the Lennox Street project , and that any corporate structure was agreed or any profit share was agreed. At its highest , Mr Sapra ’ s 6 December 2017 post demonstrates his subjective understanding that arrangements had not been finalised . If that subjective understanding reflected the objective state of affairs, the evidence does not establish that there was ever a finalised arrangement for the distribution of profits from the Lennox Street project. Mr Brar, who has himself had a falling out with Mr Grewal, gave evidence that i n December 2017, he had a conversation with Mr Gaba in which Mr Gaba said , “ Sippy [Mr Grewal] asked to borrow some money from me so I gave him $200,000. Sippy mentioned there was a settlement happening for Lennox development ” . I give little weight to the evidence of that conversation . Over the course of 2017 and 2018 there was some progress and much confusion concerning the Lennox Street project and the Olive Grove project. The description of the projects as shambolic is apt , and there remain many issues of factual dispute between the various participants. It is not necessary to resolve th os e disputes for the purpose of determining the plaintiffs ’ claims in these proceedings. The overall contour of the projects was that the participants experienced difficulty in meeting their cashflow requirements and securing development consent. Ms Grewal fell into default on the RAMS home loan immediately. Ace Developers lodged a development application in respect of 12 and 14 Lennox Street and steps were taken to secure development approval for the construction of townhouses on the two lots . Difficulties were experienced throughout. As indicated above, Mr Gaba, critical of the conduct of the Olive Grove project , left the project and returned to take it over . The Lennox Street project failed and 12 Lennox Street was ultimately sold at a loss. On 3 May 2019, Mr Gaba posted a request to the Olive Grove WhatsApp group directed to Messrs Grewal, Lohat and Brar. He stated , “ Shri krishna direct debit tonight please transfer funds ” . This was referred to in the plaintiff ’ s written submissions . H owever, I am not satisfied that this was related to the Lennox Str e et project. On 11 May 2018, Mr Gaba posted to the Olive Grove WhatsApp group a message, directed to Mr Grewal, in which he set out payment details for various payments made with a request for Mr Grewal to “ pl sort this asap (already discussed a few times) ” . The details refer to “ payments done for Monoparra [sic] property ” (a total of $320,000), “ Campbelltown property ” (a total of $299,000) and “ Fixed return payments ” ($288,000). I have already referred to this post at paragraph 40 above , and have inferred that the $320,000 referred to in this post relates to the Olive G rove project. The Monoparra entries related to the Olive G rove project. The Campbelltown property entry, which related to the Lennox Street project, provides the following details: “16/11/17: $75,000 (Kamalpreet acc) 17/11/17: $75,000 (Kamalpreet acc) 23/11/17: $10,000 (Sukha acc) 23/11/17: $40,000 (Kamalpreet acc) 9/2/18: $99,000 (Bawa account) Total: $299,000”. This was similar to the treatment of the Olive Grove project entries but different to the “ Fixed return payments ” entries. The latter entries were: “27/10/17: $40,000 27/10/17: $40,000 27/10/17: $104,000 27/10/17: $104,000 Total: $288,000 (account was provided by you)”. On its face, this post suggests that Mr Gaba considered both the payments in respect of Olive Grove project and Lennox Street project to be something other than “ F ixed return payments ” . In his evidence, Mr Gaba denied that the 9 February 2018 payment was to Mr Bawa, saying that that entry was not paid into that account but that he had recorded that entry erroneously. The difference between the treatment of the Olive Grove project and the Campbelltown project sums , on the one hand, and the " F ixed return" sum s, on the other, suggests that Mr Gaba considered that only the $288,000 was to be treated as a loan , and the other two (one of which – Olive G rove – was accepted to be an equity investment) were relevantly the same. Mr Gaba ’ s explanation was that the Lennox Street payment s were different to the ” Fixed return ” payments because he knew how the Lennox Street advance would be used and it was a long term loan. The fixed return payments were for purposes unknown to him and for a shorter period. I am unable to infer from this post an admission that Mr Gaba was aware that the Lennox Street project advances were an equity investment and not a loan. Much was not explored in the evidence. It was not clear, for example, why the message was posted on 11 May 2018. Both projects were still underway and, if Mr Gaba ’ s evidence as to the term of the loan agreement is accepted, repayment was not due for another seven months. I am not satisfied that the description of the moneys paid, with nothing more, constitutes an admission as to the characterisation of the payments made. The $288,000 advance was repaid by Ace Developers on 8 November 2018. The Lennox Street project continued into 2019. On 4 October 2019, Mr Sapra set up a Campbelltown Project SA WhatsApp group. The defendants contend that this indicates that Mr Sapra and Mr Gaba ought be understood as having an equity stake in the project. Similarly, the defendants say that communications with Mr Gaba in July 2019 , concerning a policy of landlord insurance taken out in respect of 12 Lennox Street , indicate that he held an equity stake . I do not accept that this conclusion follows. A lender – even an unsecured lender – might wish to ensure that information as to the progress of a project , from which a borrower proposes to derive funds to repay the debt , is made available. Similarly, a lender may wish to ensure that the asset s comprising that project are protected. Business records Each of the parties relied on internal business records in support of their respective cases. In AKM ’ s 30 June 2018 balance sheet , a loan to Kamalpreet Kaur, whom I take to be Ms Grewal, in the sum of $190,000 is recorded as a current asset. The footer of that document is dated 30 January 2023, although nothing was made of this by the defendants. The same entry appears in each of the 2019, 2020, 2021 and 2022 accounts, also bearing the 30 January 2023 footers. It is not clear whether these statements form part of AKM ’ s statutory accounts . A loan to Ra j winder Singh, who m I take to be Mr Bawa , in the sum of $90,000 is also recorded as a current asset each year. Loans from Mr G aba and Mr Sapra to AKM are also recorded in varying amounts each year. In his account of project expenses , described as “ Deposit funding share till 28-02-2019 ” , Mr Grewal records contributions by “ Mukesh & Gaba ” as follows: "16-11-17 settlement (12 Lennox) 75,000.00 17-11-17 settlement (12 Lennox) 75,000.00 23-11-17 settlement (12 Lennox) 10,000.00 01-02-18 settlement (12 Lennox) 40,000.00 09-02-18 settlement (14 Lennox) 99,000.00 ” . The date of the $40,000 payment was accepted as inconsistent with the relevant bank records and likely an error. I have treated that sum as being the moneys transferred on 23 November 2017. To the extent the “ Deposit funding share till 28-02-2019 ” document characterises contributions as equity, I am not satisfied it does any more than record the subjective views of its author at the time of creation. The AKM balance sheets lend some support to the plaintiff ’ s claims, particularly since , on their face , they appear to be business records, but because their genesis was not the subject of evidence, and I do not place great reliance on them. Demands for repayment If the plaintiffs ’ account of the agreement is accepted, the whole of the principal of $190,000, together with interest calculated at 12% per annum , would have fallen due in early December 201 8 . There is no evidence of any written communication between the parties with respect to repayment until 25 February 2021 , and no evidence of any calculation by the plaintiffs of the interest that would be due in accordance with the loan agreement as propounded. According to Mr Gaba, in early December 2018 , he telephoned Mr Grewal several times, leaving messages for Mr Grewal to call him but those calls were not returned. This was at about the time that Mr Gaba resigned as a director of Sri Krishna, he says, because of the failure of Mr Grewal, Mr Brar and Mr Lohat to pay their share of its bills. Mr Gaba further states that, o n 4 January 2019, Mr Gaba telephoned Mr Grewal and said, “ I ’ m calling about the loan ” to which Mr Grewal responded, “ I will pay it in the next couple of days ” . There was no discussion of the interest that would have accrued . Mr Grewal denies that he ever told Mr Gaba he would repay the $190,000 . On 26 March 2019 , Mr Gaba and Mr Grewal had another telephone conversation. According to Mr Gaba, Mr Grewal said : “The project is under way and I will have the money to you very soon. The council procedure is very slow which has delayed me in returning your money but you will get your money don’t worry”. Mr Grewal denies this conversation. On 25 February 2021, the plaintiffs ’ solicitor sent a letter of demand to Ms Grewal on behalf of AKM, demanding payment of $190,000. The demand was not made on behalf of Mr Gaba and the contractual basis of the debt was not specified . No demand was made of Mr Grewal. The correct characterisation of the moneys advanced to Ms Grewal in November 2017 : loan or equity investment? On the basis of the evidence and submissions of the parties in these proceedings, I have concluded that it is more probable than not that Mr Gaba caused AKM to advance the sum of $190,000 to Ms Grewal in November 2017 pursuant to an express agreement to do so struck between him and Mr Grewal in about mid-November 2017. I c onsider that the advance was by way of loan and not as an equity contribution to the Lennox Street project. I have considered, but ultimately placed little weight on, the affidavit and oral evidence of the parties, indeed, the evidence of any of the witnesses. While I do not make any findings that any witness gave dishonest evidence, I find the recollections of each witness to be unreliable. The evidence of Mr Gaba and Mr Grewal , in particular , was vague, too easily moulded around other evidence as it emerged and gave every impression that it was infected by some degree of wishful thinking, self-interest or reconstruction. Th e evidence of Mr Lohat was similarly unreliable. I have not found it necessary to determine questions of fact by reference to the principles of Blatch v Archer , but I accept the submission that materials plainly relevant and falling within the terms of subpoenas or N otices to P roduce issued to them were not produced without adequate explanation. It was not put to Mr Bawa that his evidence was infected by any particular animus to Mr Grewal, but his evidence was of only minor import and , even accepting it in full, did not alter my assessment of the balance of probabilities. In Mr Sapra ’ s case, he appeared to be reluctant to give any evidence that might antagonise one or other party . His recollections were , at best , personal, vague and unclear. As counsel for the plaintiff submitted, and I accept, the best approach to assessing the evidence in the present case requires the Court to pay greatest regard to the contemporaneous documents and to the inherent probability of the existence or non-existence of the facts in question. Ultimately, however, the approach described by McDougall J in Nguyen v Cosmop o litan Homes requires me actually to be persuaded of the factual findings that I make , and not a mere mechanical comparison of the probabilities as between the competing accounts . First, I have had particular regard to the fact that t he payments were described in the bank transaction receipts as loan s . Th ese description s w ere not contradicted by Mr Grewal , even though he received notification of those description s at the time. The bank transaction receipts were one of the few occasions in which there was a contemporaneous record , to which both parties had acces s , in which the payments were characterised at all. They were characterised as loans and Mr Grewal did not object to that characterisation. Secondly, the surrounding circumstances as at November 2017 are most consistent with the transaction being a loan. Those circumstances include Mr Gaba ’ s role as a lender of funds to associates of the parties, including Mr Lohat and , indeed, to Mr Grewal himself . Mr Gaba was known to be a lender and Mr Grewal was a developer who needed funds for a specific project . The Lennox Street project had been initiated by Mr Grewal in September 201 7 , and the evidence did not suggest that he was considering conferring on Mr Gaba, or on Mr Sapra , a stake in that project which would provide them with a profit share. His first offer to investors to participate in the Lennox Street project was to members of the Sydney Investors WhatsApp group, which did not include Mr Gaba or Mr Sapra . The evidence did not show any communications between members of that group as to who else, if anyone, Mr Grewal could invite to participate as an equity investor in the project. Thirdly, the fact and terms of the Olive Grove project are a significant point of difference with the Lennox Street project . The Olive Grove project was conducted through a corporate entity , Sri Krishna, in which Mr Gaba held a direct interest as a shareholder. He was both a d irector and secretary of that company as well. The ownership structure of the Lennox Street project was completely different: Ms Grewal held 12 Lennox Street and neither Mr Gaba nor AKM held any ownership interest in the property , or a right to exercise control over it, as a director of a corporate landholder might . In his affidavit evidence, Mr Grewal referred to the Olive Grove project as establishing a standard practice , which had the following features: Mr Gaba, as an officer of AKM, would provide a percentage of the capital needed for the purchase of the land and its subsequent development; The shortfall in the amount of money for the project in question would be raised from additional investors who were usually acquaintances of theirs; Mr Brar and Mr Grewal would manage the investment, which included applying for development approval, “ drawing up preliminary plans, and engaging builders, surveyors and tradespeople ” ; and Once the development had been completed, the property would be sold and the profits would be divided equally. This was largely reflected in the defendants’ submissions, as set out at paragraph 8(2) above. I d o not accept that there was ever such a practice to which Mr Gaba was a party and certainly there was no such practice involving him as at November 2017. The evidence does not establish any express agreement to this effect and does not establish that any project in which Mr Gaba was involved followed this course, at least as at November 2017. The Olive Grove project had not reached its conclusion by then – indeed, the project went through a period of difficulty resulting in Mr Gaba disengaging and re-engaging with it before its conclusion well after November 2017. It does not form a sufficient basis for the establishment of a course of conduct pursuant to which any moneys advanced in November 2017 would be treated as an equity investment. The Olive Grove project is also an instructive point of comparison in that the properties the subject of that development were acquired at the same time and were subject to the same ownership. The Lennox Street project involved tw o properties acquired at different times by different purchasers. Mr Gaba advanced $99,000 in connection with the settlement of the purchase of 14 Lennox Street and, as with 12 Lennox Street, the purchaser was a natural person (Mr Bawa) and not a corporate entity in which Mr Gaba or AKM had an equity stake or held office. There does not appear to have been any discussion as to how this would be reflected in any distribution of profit share. The defendants rely on the provision of the feasibility report to Mr Gaba and Mr Sapra on 3 November 2017 , the payment of certain landlord insurance premiums , and the later creation by Mr Sapra of the Campbelltown Project SA WhatsApp group . These are either neutral facts or of marginal benefit to the defendants. Whether lending money or taking an equity stake in a project, a provide r of funds may wish to see the feasibility report to assess the likelihood of success of a project. Similarly, a creditor , as much as an equity investor , may wish to ensure that the property is insured , and to take steps through the creation of, or participation in, a targeted WhatsApp group to ensure that the project succeeds. The high point s of Mr Grewal ’ s case were the evidence of Mr Sapra and Mr Gaba ’ s WhatsApp message of 11 May 2018 . Mr Sapra was reluctant to get involved in the proceedings and was uncomfortable in the witness box in giving evidence that would assist either party. He appears to have had a more ambivalent attitude towards the characterisation of the payments than Mr Gaba. Both at the time and subsequently, Mr Sapra , at the very least , held open the possibility that the payment could be treated as an equity investment. This was, however, a subjective view expressed by him , and he did not shed any light on the actual content of the communications between the parties in November 2017. While Mr Sapra ’ s contemporaneous communications do assist the defendants, I have ultimately found that they do not defeat the plaintiffs ’ claims. This is , in part , because Mr Sapra was not alleged – by either party – to be a party to the agreement insofar as it involved the advance of any funds . The plaintiffs ’ claim is that Mr Gaba was party to a loan agreement with Mr Grewal. The defendants ’ contention , at paragraph 6 of the Defence, is that Mr Gaba , Mr Grewal and others agreed to jointly develop 12 Lennox Street , but, at paragraph 8(2)(b) above , only Mr Gaba would cause AKM to transfer the funds to Ms Grewal. While AKM was the source of funds, both parties ’ contentions have been that the relevant contractual obligation was on Mr Gaba. I have found Mr Sapra ’ s evidence , which post-dates the transfer of the funds, to be evidence of his own subjective state of mind, otherwise unreliable and too obviously overlaid with a wish to maintain good relations with all parties to be of any real assistance. Mr Sapra – as a shareholder and not a director – may or may not have been entitled to speak for AKM. He was not entitled to speak for Mr Gaba. Mr Gaba ’ s 11 May 2018 WhatsApp post also suggests that he considered the Lennox Street project advances to be an equity investment because they were characterised the same way as the Olive G rove project advances and distinguished from “ F ixed return ” payments. I do not con sider this to be a sufficient basis to treat that post as an admission that defeats the plaintiffs ’ claim, either alone or in combination with the other evidence before me. Ultimately, the contemporaneous records and the logic of events have proved to be the basis on which I have determined this question. Returning to the formulation of Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd , and the decision of Black J in In the matter of Central Management (NSW) Pty Limited , I am satisfied, on the basis of the acts and conduct of the parties in the circumstances in which the moneys were advanced, that a conversation or conversations occurred between Mr Gaba and Mr Grewal in about mid - November 2017 , in which it was agreed that Mr Gaba would cause AKM to lend to Ms Grewal moneys for the purpose of the Lennox Street project. That sum was initially $150,000, deposited in to Ms Grewal ’ s account in two tranches on 16 and 17 November 2017. A further $40,000 was required , and was likely the subject of further communications , and was deposited on 23 November 2017. Mr Grewal was the contracting party procuring the loan to Ms Grewal, who was not a party. Accordingly, he bore the obligation to ensure repayment when the loan fell due. I am not satisfied , however, that any conversation took place in the terms alleged by Mr Gaba . Nevertheless , on the basis of such of the objective facts at the time as have been established, I am satisfied that there was a conversation or conversations between Mr Gaba and Mr Grewal in which a loan was sought and agreed to. I am also not satisfied that an interest rate of 12% per annum was agreed , and I see no basis in the evidence or in principle to infer that such a term was agreed or ought be implied. Nor am I satisfied that a term of 12 months was agreed. In the absence of a finding as to express agreement as to the term of the loan or interest, the common law provides a solution . As stated in Central City Pty Ltd v Mentevento Holdings Pty Ltd , a loan made where no time for repayment is specified , creates an immediate debt by which the money is repayable immediately , without the creditor first making a demand for payment . Where the parties do not expressly fix a time for repayment, or agree that the repayment is to be conditional upon the making of a demand, implications as to such matters may be made or inferred in appropriate circumstances . In the present case, I consider the loan to be repayable by Mr Grewal on demand , or at least, if it were only repayable after a reasonable time had elapsed , that time has passed . R epayment is not contingent on any other event, such as the success of the Lennox Street project . The loan is repayable, and was repayable, relevantly, by the time proceedings were commenced. Interest The only basis on which the plaintiffs seek a contracted interest rate of 12% per annum is Mr Gaba ’ s account of the conversation of 13 November 2017. To the extent that the conversation is advanced as an express agreement as to interest, it is not supported by any contemporaneous documents. The AKM financial statements do not record interest accruing in the profit and loss statements or as an accrued asset in the balance sheets. Although not directly relevant to the arrangements between these parties, there is no evidence that Mr Gaba recorded receiv ing interest on any of the other loans that he made during this period. Accordingly, while I am prepared to infer from the surrounding circumstances that a loan agreement had been agreed as between Mr Gaba and Mr Grewal, I do not see a proper basis to infer any agreement as to the payment of interest. Accordingly, I do not find any contractual entitlement to interest, at the rate of 12% per annum or otherwise. In the absence of a contractual entitlement, in terest is discretionary and in the current circumstances, it appears appropriate to me that interest ought be payable at court rates pursuant to s 100 of the Civil Procedure Act 2002 (NSW) from the date of commencement of the proceedings , namely 3 June 2021 . Accordin gly, interest in the sum of $31,945.51 is to be awarded. Costs The plaintiffs have been successful and, as costs generally follow the event pursuant to r 42.1 of the Uniform Civil Procedure Rules 2005 , they would be entitled to their costs against the second defendant on the ordinary basis. Counsel for the plaintiffs asked me to reserve on costs . Accordingly, I will set a timetable for the parties to apply for any special costs order, allowing an opportunity for the parties first to agree on costs orders. Orders The orders of the Court, therefore , are: J udgment for the plaintiffs as against the second defendant in the sum of $ 221 , 945 . 51 , inclusive of interest . J udgment for the first defendant against the plaintiffs. Costs be reserved. Direct the parties to liaise with each other and provide to my associate : an agreed costs order ; or a n agreed timetable for the filing and service of evidence and submissions on costs , by 26 April 2024. ********** 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: 30 April 2024