Aloui v ANZ Banking Group & Ors [2002] QDC 8

DISTRICT COURT OF QUEENSLAND CITATION: Aloui v ANZ Banking Group [2002] QDC 008 PARTIES: ABDEL MAJID ALOUI Plaintiff -v- AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED [ACN 005 387 522] Defendant -v- RAHMAT SARSAN Third Party and ABDEL MAJID ALOUI Plaintiff -v- RAHMAT SARSAN Defendant FILE NO/S: D1332/2000 D4276/2000 DIVISION: Civil Jurisdiction PROCEEDING: ORIGINATING COURT: Brisbane DELIVERED ON: 11 February 2002 DELIVERED AT: Brisbane HEARING DATE: 14,15,16 January 2002 JUDGE: Judge Samios ORDER: CATCHWORDS: BANKS AND BANKING - CHEQUES – customer’s signature on cheques signed by third party paid by bank – customer denies gave authority to third party to sign cheques– loan agreement – implied term – court has no power to remake or amend contract BP Refinery (Western Port) Pty Ltd v Shire of Hastings -- 1 of 26 -- 2 (1977) 16 ALR 363 Hawkins v Clayton (1989-1988) 164 CLR 573 Breen v Williams (1995-1996) 186 CLR 71 Ansett Transport Industries v Commonwealth (1977) 139 CLR 54 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1992-73) 129 CLR 99 Anglia Television v Reed [1972] 1 QB 60 Hadley v Baxendale (1854) 156 ER 145 COUNSEL: Mr R Anderson for Abdel Majid Aloui Mr Hack SC for Australia and New Zealand Banking Group Limited Mr M Anderson for Rahmat Sarsan SOLICITORS: Morgan Conley for Abdel Majid Aloui Minter Ellison for Australia and New Zealand Banking Group Limited Reardon & Associates for Rahmat Sarsan [1] These are two proceedings heard together. [2] In the first proceeding in time No. D 1332 of 2000 the plaintiff Abdel Majid Aloui (Mr Aloui) claims against the Australia and New Zealand Banking Group Limited (the bank) payment of the sum of $135,025.10 being the sum of seven cheques paid by the bank and debited against Mr Aloui’s cheque account with the bank. Mr Aloui claims each of these cheques were drawn without his authority and knowledge and the signature appearing on each cheque purporting to be his signature was not written by him. Accordingly, he claims the bank had no authority to pay the cheques and to debit his account. [3] There is no dispute in these proceedings the cheques were presented for payment and debited to Mr Aloui’s account with the bank between 3 November 1999 and 25 November 1999. However, the bank claims the cheques were drawn with Mr Aloui’s authority. The bank says the authority was oral and it was comprised of conversations between Mr Aloui and one Rahmat Sarsan (Mr Sarsan) in or about -- 2 of 26 -- 3 October 1999 and November 1999, the substance of which was that Mr Aloui requested and authorised Mr Sarsan to sign the cheques. Further, the bank says if there was a breach of the mandate governing the account Mr Aloui has suffered no loss or damage by the breach of the mandate as the proceeds of the cheque payments were used for the benefit of Mr Aloui. [4] The bank has issued third party proceedings against Mr Sarsan in which the bank claims that the signatures appearing on each of the cheques purporting to be the signature of Mr Aloui were made by Mr Sarsan. Therefore, the bank claims that by presenting the cheques to the bank for payment Mr Sarsan warranted to the bank that he had authority to draw and present the cheques on behalf of Mr Aloui. Alternatively the bank alleges against Mr Sarsan that he presented the cheques for payment fraudulently. The bank says that if it is liable to Mr Aloui for any amount then that liability has arisen because of the breach by Mr Sarsan of his warranty of authority and/or his fraud. [5] Mr Sarsan admits that the signatures appearing on each cheque purporting to be the signature of Mr Aloui were made by Mr Sarsan. However, Mr Sarsan says at all material times he acted with the express authority of Mr Aloui in presenting the cheques for payment. [6] In the second proceeding in time No. D4276 of 2000 Mr Aloui claims against Mr Sarsan the sum of $135,025.10 as damages for conversion or as money had and received to the use of Mr Aloui. Further or alternatively Mr Aloui claims against Mr Sarsan that the cheque in the sum of $100,000 represents a loan by Mr Aloui to -- 3 of 26 -- 4 Mr Sarsan. By Mr Aloui’s amended statement of claim filed herein on 16 August 2001 Mr Aloui demands repayment of the loan. [7] Mr Sarsan in his defence in the second proceeding says Mr Aloui gave him express authority verbally to sign the cheques and Mr Aloui had full knowledge of Mr Sarsan signing the cheques and the purpose for which the cheques were to be used. Further, Mr Sarsan admits that Mr Aloui loaned to Mr Sarsan the sum of $100,000. However, Mr Sarsan denies Mr Aloui’s entitlement to demand repayment of the loan as Mr Sarsan says Mr Aloui breached and remains in breach of the loan agreement between Mr Aloui and Mr Sarsan. That is because Mr Sarsan says he agreed with Mr Aloui that he would have the use of the loan for 12 months. Further, that it would be interest free. Further, Mr Sarsan says Mr Aloui knew and understood that the loan moneys were to be applied by Mr Sarsan in establishing and operating Mr Sarsan’s business activities and the loan was to be used by Mr Sarsan in trade and commerce with a view to profit. Mr Sarsan claims it was an implied term of the loan agreement Mr Aloui would not interfere with, frustrate or otherwise impede or hamper his use of the loan moneys. Mr Sarsan says that Mr Aloui by claiming to the bank that the moneys standing to the credit of Mr Sarsan in his bank account were the proceeds of a forged and improperly presented and passed cheque caused the bank to freeze Mr Sarsan’s bank account and the funds held therein being the balance of the loan moneys. Therefore, Mr Sarsan says as at the date for repayment of the loan in the ordinary course the moneys held in Mr Sarsan’s bank account were frozen and remain frozen. Mr Sarsan says because of the loan agreement Mr Aloui is not entitled to require immediate repayment of the loan moneys. -- 4 of 26 -- 5 [8] In the second proceeding Mr Sarsan makes a counter claim against Mr Aloui. The counter claim is in two parts. The first part relies upon a claim by Mr Sarsan that he had an agreement with Mr Aloui that Mr Sarsan would act as Mr Aloui’s agent with respect to Mr Aloui’s personal affairs for which he would be reimbursed his out of pocket expenses and when in Brisbane be paid $1,000 per month and when required to travel overseas, interstate or whilst in transit be paid $200 per day. For so acting Mr Sarsan claims against Mr Aloui his expenses and fees. [9] The second part of the counter claim claims that by reason of the breach of the loan agreement Mr Sarsan lost profits he otherwise could have earned and incurred expenses that were wasted. [10] The particulars of the seven cheques are as follows: Date Presented Amount Cheque No. 3 November 1999 $300.00 1009 5 November 1999 $3,000.00 1010 9 November 1999 $100,000.00 1011 9 November 1999 $25,225.10 1012 9 November 1999 $500.00 1013 9 November 1999 $5,000.00 1015 25 November 1999 $1,000.00 1014 [11] Mr Aloui’s evidence was that he had known Mr Sarsan since 1994. In early September 1999 Mr Aloui went to Manilla in the Philippines. Mr Sarsan had asked to stay in Mr Aloui’s house. Mr Aloui agreed as he needed someone to look after his house. Mr Aloui had $10,000 in US in the drawer in his bedroom. He also left his cheque book for his cheque account in the desk. He had not written any cheques out himself on that cheque account. Mr Aloui did not give anybody authority to use his cheque book in any way. He specifically denied giving Mr Sarsan authority to -- 5 of 26 -- 6 sign cheques in his name. In his evidence in chief Mr Aloui’s attention was directed to a credit to his account in the sum of $181,515.24 on 8 November 1999. Mr Aloui said although he had no knowledge of that transfer he did have a term deposit with the bank. On 6 November 1999 Mr Aloui was arrested in the Philippines for an alleged rape and he was placed in jail. He remained in jail for the next 45 days. He was released on 22 December 1999 when the prosecution was dismissed. The court’s order shows that the prosecutor determined that in view of the apparent hostility of the complainant the prosecution could not prove the guilt of Mr Aloui beyond reasonable doubt, hence, the prosecution moved for the dismissal of the proceedings against Mr Aloui. [12] Further, in his evidence Mr Aloui said he spoke by telephone with Mr Sarsan on two occasions . One of those occasions was in the middle of November and the second was about three days before Mr Aloui’s release from jail. The first occasion Mr Sarsan visited Mr Aloui in jail was 11 or 12 November. Mr Aloui said that about three or four days later Mr Sarsan came to the jail and told him that a number of people involved needed money. These people included the police, the complainant, the judge and Mr Aloui’s lawyer. Mr Aloui said that the suggestion to pay these people came from Mr Sarsan. Mr Aloui said the only authorization he gave to Mr Sarsan was to get the $10,000 US that was in Mr Aloui’s house in Brisbane. Mr Aloui told Mr Sarsan to return to Australia and obtain the $10,000 US from Aloui’s house and return to the Philippines. Mr Aloui said that while he was in jail he had a meeting with a Mr Hamilton from the Australian Federal Police. Mr Hamilton’s involvement was to use cash to try and catch the persons who were corruptly involved in Mr Aloui’s prosecution. Mr Aloui said after his release and return to Australia he looked at his bank statements. He saw a $49,000 debit and -- 6 of 26 -- 7 the term deposit back to his account in the sum of $181,000. He saw the debits amounting to about $135,000. He contacted the bank manager to complain there was something wrong with his account. He then went to the police. He said he never spoke with Mr Sarson about a loan. Mr Aloui said there was no agreement to pay Mr Sarson for any assistance he may have given Mr Aloui. Mr Aloui said he did ask Mr Sarson to pay $500 to Mr Aloui’s solicitor Michael Lynch. However, Mr Aloui said he asked Mr Sarson to pay Mr Lynch $500 cash which was to be arranged by Mr Sarson showing his licence to the bank manager and in that way he would be given $500 cash. Although earlier in his evidence Mr Aloui said Mr Sarsan paid some money on account of his VISA card, later in his evidence he said he never asked Mr Sarsan to do anything about his VISA card. He did ask Mr Sarson to pay rates. He said though that the money to pay those rates was not to be obtained from his cheque account except by Mr Aloui’s authority to the bank to provide $3,000 in cash to Mr Sarsan. [13] Mr Hamilton who is a Federal Agent of the Australian Federal Police gave evidence. From January 1999 he was attached to the International Division and stationed at the Australian embassy, Manilla in the Philippines where he held the position of Attache – Police Liaison. Most of his evidence in chief was in the form of a signed statement. His statement contained his recollection of conversations he had with Mr Aloui in the jail where Mr Aloui was being held. However, he added that he was initially contacted by the consular section on 11 November 1999 and advised of Mr Sarsan’s contact with the Embassy and that his telephone number had been provided to him. Then on 12 November he received a telephone call from Mr Sarsan requesting to meet in relation to the incident with his friend Mr Aloui. He was provided by Mr Sarsan with 200,000 pesos in Philippine currency. He said the -- 7 of 26 -- 8 purpose of this was as part of a sting operation involving corrupt officials. He also said he gave Mr Sarsan advice. This advice was to leave the Philippines because he felt Mr Sarsan’s involvement in the particular inquiry at the time might complicate things and cause problems for Mr Sarsan. [14] According to Mr Hamilton at the jail Mr Aloui said that despite paying money to the police and the prison guards he was still in custody. Further, Mr Aloui was set up and that the investigating police officer had the complainant working in with him. Mr Aloui’s lawyers said he had to pay the prosecutor before the charges are finally filed in court. If he could pay the prosecutor the charges would not get filed and he could get out. The reason he could not get out despite having paid a substantial sum of money to the police was that they wanted more. This further conversation took place: “ALOUI said: Ramat came over from Australia to help me. He’s been paying Michael and the lawyer and anything else for me. He’s looking after my money and any payments. Things like that. I don’t know what I would have done without him. I said: Well whose money has that been? ALOUI said: Mine. How much have we got left? SARSAN said: Oh about 14,000 dollars ALOUI said: Are you sure? Shouldn’t we have more? SARSAN said: Look you keep paying these guys and I have to eat you know. ALOUI said: Yeah Yeah OK Look you got to help me. I can’t eat, wash or sleep here without paying. It costs me a hundred pesos to have a wash you know. I have to pay the prison warden five thousand pesos a night for a bed or else they beat me. I hate the nights here. I just have to keep paying him. I said: Well how do you get the money in here? -- 8 of 26 -- 9 ALOUI said: Ramat has been bringing it in for me.” [15] Mr Hamilton said that the sting operation came to an abrupt end. It was suspected that the undercover operative who was to handle the negotiation processes was suspected to have been compromised in some way. [16] Mr Hamilton’s evidence of the content of the conversations with Mr Aloui was not challenged by Mr Aloui. However, when Mr Aloui was cross-examined he claimed it was Mr Sarsan who told Mr Aloui what to say to Mr Hamilton. [17] When Mr Sarsan gave evidence he said he had met Mr Aloui in about 1995. He said he had spoken to Mr Aloui from about March of 1999 about obtaining a $100,000 loan for his business purposes. Mr Aloui gave him a draft agreement that had been used by Mr Aloui on a prior occasion for Mr Sarson to prepare something in like terms. Despite preparing a loan agreement it was not signed by Mr Aloui. Mr Sarsan and Mr Aloui went to Citybank on at least two occasions to inquire about a transfer of funds for the loan but it did not eventuate. [18] Mr Sarsan also said in his evidence he drew the cheque for $100,000 on Mr Aloui’s cheque account because he had a telephone conversation with Mr Aloui on 7 November 1999. In that conversation Mr Aloui said he had been arrested and was charged and he wanted Mr Sarsan to come to Manilla to help him out. He told Mr Sarsan he had to bring some money to be used for bribes. During this conversation Mr Sarsan said that it had been a long time that Mr Aloui had promised to Mr Sarsan to give him this loan and that he would do what he was asked to do but provided the loan was now forthcoming. Mr Aloui agreed that he could take the loan from the account. It was agreed there would be no interest and that it would be -- 9 of 26 -- 10 paid back in one year. Regarding the cheque for $25,225.10 in the conversations Mr Sarsan had on 7 and 8 November with Mr Aloui, Mr Aloui said he required 500,000 pesos to be paid out. Mr Sarsan converted this money to travellers cheques to be brought into the Philippines to make the payments to the police officer, the complainant and Mr Aloui’s lawyer. Mr Sarsan attended to all these payments personally. The cheque for $5,000 No. 1015 was also for money to be brought to the Philippines. Mr Sarsan said he was authorized by Mr Aloui to make out these cheques and present the cheques. The $500 cheque No. 1013 was to pay Mr Lynch, Mr Aloui’s solicitor. Mr Sarsan said he was not asked to return to the Philippines to obtain the $10,000 US from Mr Aloui’s drawer in his house. He said he did not reside in Mr Aloui’s house. He said he was authorized to pay the rates. Regarding the $3,000 cheque he said that was to repay him for a loan he had made to Mr Aloui. [19] Mr Sarsan also called Mr Day as a witness. Mr Day said he met Mr Aloui and Mr Sarsan in early 1999. He said in about April 1999 it was raised by either Mr Aloui or Mr Sarsan that they were in the market for pit props which are a length of timber. As Mr Day was involved in the mining sector he said he might be able to help. Negotiations then took place for approximately 2 ½ months. Mr Sarsan was extensively involved in the negotiations. On numerous occasions Mr Aloui was not able to articulate the specifics associated with what it was he was looking for and he would speak with Mr Sarson. He was negotiating with Mr Aloui and also with Mr Sarson. On numerous occasions he would call them in the Philippines. On one occasion he thought they were in Singapore. Many times he would ring through to Mr Aloui and Mr Aloui would pass the phone across to Mr Sarson to discuss it with -- 10 of 26 -- 11 Mr Day. On numerous occasions Mr Aloui said he was providing the funds. In the end the deal did not go through. That was at the end of June. [20] Mr Ghulam also gave evidence when called by Mr Sarsan. He is a journalist and works with the Milperra State High School as some kind of a social worker. He said in 1999 Mr Aloui showed him a paper in the Philippines that Mr Sarsan wanted to have a loan. Mr Aloui said “This is the paper and I will give him the loan. I am not interested for the interest. My mum, she is a Muslim, she is not believe in interest”. Mr Aloui said that he would give the loan to Mr Sarsan for his business. Mr Aloui said he did not want to be involved with prawn cysts. [21] Two issues that require consideration in these proceedings are:- (a) Did Mr Aloui authorise Mr Sarsan to draw the cheques by signing Mr Aloui’s signature and presenting the cheques for payment; and (b) Did the cheques go to discharge liabilities of Mr Aloui; [22] Many aspects of the evidence of Mr Aloui and Mr Sarsan are diametrically opposed. [23] Although I consider Mr Aloui had difficulty expressing himself in the English language, having listened to his evidence including his cross-examination and considering all the evidence in these proceedings I consider his difficulty with the English language is not an explanation for inconsistencies between Mr Aloui’s evidence and his case as opened and other aspects of Mr Aloui’s evidence that counsel for the bank and for Mr Sarsan submitted were adverse to Mr Aloui’s credit. -- 11 of 26 -- 12 [24] When Mr Aloui’s case was opened the court was told that Mr Aloui’s access to a telephone in jail was limited to local calls. I consider Mr Aloui’s instructions were intended by him to imply that Mr Sarsan’s claim that he received authorisation to deal with Mr Aloui’s account by telephone while Mr Sarsan was in Brisbane should not be accepted. In his evidence in chief Mr Aloui said while he could make local calls from the jail he could not make an overseas call. However, when cross- examined it emerged that Mr Aloui’s girlfriend who was visiting him every day in jail had a mobile phone which could be used to ring overseas. Also in his evidence in chief regarding telephone conversations with Mr Sarsan at first Mr Aloui said that Mr Sarsan rang him on one occasion and then he said he had two calls from Mr Sarsan. In re-examination he said he spoke with Mr Sarsan two or three times on one day, probably on 7 or 8 of November but he was not sure. [25] When Mr Aloui was cross-examined and asked was Mr Sarsan a friend he said “Not really”. However, in a letter from Mr Aloui’s solicitors Messrs Gilshenan and Luton to the bank dated 3 March 2000 in response to a number of questions asked by the bank Mr Aloui’s solicitors said “Mr Sarsan was a friend of Mr Aloui”. [26] The evidence of Mr Day and Mr Ghulam was respectively to the effect Mr Sarsan was involved with Mr Aloui in a proposed business venture and that Mr Aloui intended to loan Mr Sarsan the $100,000. According to Mr Day both Mr Aloui and Mr Sarsan were in Singapore on business and Mr Sarsan provided explanations to Mr Aloui about Mr Day’s proposals. According to Mr Ghulam when Mr Aloui said he intended to loan the $100,000 to Mr Sarsan, Mr Aloui said he was not prepared to be involved in Mr Sarsan’s proposal that involved prawn cysts. Mr Sarsan’s evidence was that prawn cysts were one of his proposed business ventures he had -- 12 of 26 -- 13 discussed with Mr Aloui. However, Mr Aloui denied in his evidence in chief he ever spoke to Mr Sarsan about prawn cysts. Although Mr Sarsan may not have been a business associate or employee or an assistant to Mr Aloui in the full sense, the evidence of Mr Day and Mr Ghulam supports a conclusion the relationship between Mr Aloui and Mr Sarsan was one in which business was discussed between the two and assistance given at least by Mr Sarsan to Mr Aloui in a business context. The matters attended to by Mr Sarsan on behalf of Mr Aloui such as the payment to Mr Aloui’s solicitor and payments on account of rates and child support, if not also the VISA card, also supports a conclusion Mr Sarsan was at least a friend, if not a very good friend of Mr Aloui. [27] I consider there is no good reason to reject the evidence of Mr Day and Mr Ghulam. While both accepted that they had lost money in trying to conclude business with Mr Aloui, I do not accept for that reason either of them would be untruthful. I was impressed with both of them as independent and truthful witnesses and I accept their evidence. [28] Further, when Mr Aloui was interviewed by Mr Hamilton at the jail I consider the contents of Mr Aloui’s conversation with Mr Hamilton supports a conclusion that Mr Sarsan was at least a friend, if not a very good friend of Mr Aloui. According to this evidence Mr Aloui asked Mr Sarson to come to the Philippines from Australia to help Mr Aloui contrary to Mr Aloui’s claim that Mr Sarsan was already travelling in that direction and that by inference he did not specifically come to help him. Further, what Mr Aloui said to Mr Hamilton shows an active involvement on the part of Mr Sarsan to assist Mr Aloui to overcome the predicament Mr Aloui was in -- 13 of 26 -- 14 at the time and that Mr Aloui trusted Mr Sarsan with his money and with the task of making payments to corrupt officials. [29] Further, Mr Aloui claimed that he did not know about the transfer of his term deposit into the account. However, in the letter from Gilshenan and Luton to the bank dated 3 March 2000 the following appears: “Mr Aloui authorised the early redemption of the term deposit as he needed the cash in the Philippines. The term deposit was redeemed by way of a facsimile from Mr Aloui to your bank before he was arrested”. Although the term deposit was redeemed after Mr Aloui’s arrest the statement in the letter that it occurred “before he was arrested” I consider is either an error or Mr Aloui instructed his then solicitors that was when the term deposit was redeemed. The important aspect of this letter is that it contradicts Mr Aloui’s denial he authorised the payment of his then term deposit into the account. [30] Mr Aloui was arrested on 6 November. He accepted in evidence that he did speak to Mr Sarsan on 7 or 8 November. He agreed that he knew the death penalty was the penalty for a conviction of rape in the Philippines. He was not having a good time in jail. His own evidence shows that demands for money were being made of him and this is evidenced by withdrawals from his account. He had to pay prison authorities for comforts in jail. The transfer of the term deposit is recorded in the bank statements as having occurred on 8th November. That was not challenged by Mr Aloui as not being accurate. I consider Mr Aloui had every reason in his circumstances as they existed at the time to authorize the transfer of the $181,515.24 into his account. I consider that is supported by the lack of any complaint by Mr Aloui when he returned to Australia about that transaction. -- 14 of 26 -- 15 Although he complained to the bank and the banking ombudsman about the specific cheques he made no complaint about the transfer of the $181,515.24. [31] It was argued by the counsel for the bank and counsel for Mr Sarsan that an answer that Mr Aloui gave during cross-examination by counsel for Mr Sarsan, Mr Aloui admitted at least that during a telephone conversation on 7 November Mr Sarsan asked for the $100,000 (see T 121/50). I do not accept that was an admission made by Mr Aloui because I consider he answered in a rhetorical way. Other answers did not clarify whether his answer was an admission that at least the loan of the $100,000 was discussed. The answers overall make it clear Mr Aloui was denying it had been agreed. [32] Further, Mr Aloui claimed that Mr Sarsan returned from the Philippines to Brisbane to obtain the $10,000 cash US and then returned with that money to the Philippines. Mr Hamilton’s evidence supports Mr Sarsan’s evidence that there was no such trip. That is because Mr Hamilton’s evidence supports Mr Sarsan’s evidence that he was in the Philippines assisting Mr Aloui having already brought with him money to assist Mr Aloui. Further, Mr Hamilton’s evidence supports Mr Sarsan’s evidence that Mr Sarsan returned to Australia late in the piece because he was advised by Mr Hamilton to do so for Mr Sarsan’s safety rather than as Mr Aloui claimed to obtain the $10,000 cash US and return to the Philippines. I consider there is no good reason not to accept Mr Hamilton’s evidence. His evidence was not challenged on important aspects of what was said by Mr Aloui. I consider Mr Hamilton to be a truthful and reliable witness. I accept his evidence. -- 15 of 26 -- 16 [33] Further, although Mr Aloui denied he authorised Mr Sarsan to draw the cheques on his account Mr Aloui accepted that Mr Sarsan did pay rates on Mr Aloui’s behalf, did pay Mr Aloui’s solicitor on his behalf, did pay child support on Mr Aloui’s behalf, did pay some money on account of Mr Aloui’s VISA card and did have some involvement at least with Mr Aloui’s concerns that he was pursuing through the Queensland Law Society. I consider this tends to show Mr Sarsan was involved in Mr Aloui’s personal affairs and trusted by Mr Aloui to at least carry out these functions for Mr Aloui. [34] Further, it was Mr Sarsan who was in the Philippines visiting Mr Aloui in jail and assisting him and it was Mr Sarsan who was making payments on Mr Aloui’s behalf to corrupt officials in the Philippines with money provided by Mr Aloui. I consider if Mr Sarsan did not have a significant relationship with Mr Aloui, Mr Sarsan would not be doing what he was doing for Mr Aloui. [35] Further, during Mr Aloui’s cross-examination it was suggested to him that Mr Sarsan gave him assistance with maintaining the grass at his house. Initially, Mr Aloui by his answers about that, would not accept that Mr Sarsan did anything towards tending to his yard. It took many questions before Mr Aloui accepted that there was some grass Mr Sarsan may have arranged to be cut at Mr Aloui’s house. [36] Further, regarding Mr Sarsan’s claim Mr Aloui’s mother would provide the money Mr Aloui said his mother had passed away in 1993. When Mr Aloui was shown a copy of a loan agreement with Mr Aloui’s mother’s name on it, Mr Aloui said he did not mention his mother to Mr Sarsan and the documents could have been taken from his files by Mr Sarsan. Further, he said the address for his mother on this -- 16 of 26 -- 17 document was an address in Switzerland and his mother never lived there. However, Mr Ghulam said Mr Aloui told him Mr Aloui’s mother would be providing the money for the loan and Mr Aloui had phoned his mother in Switzerland. [37] Consequently, I have concluded Mr Aloui was not an honest witness and was evasive when giving his evidence. I consider he deliberately attempted to distance himself from Mr Sarsan and minimize the occasions he could have spoken to Mr Sarsan by telephone. Further, Mr Aloui’s evidence is in many respects contradicted by the evidence of the witnesses Mr Hamilton, Mr Day and Mr Ghulam whose evidence I accept. The evidence of these witnesses is consistent with much of the evidence of Mr Sarsan. Mr Aloui’s evidence is also contradicted by the contents of the letter written by his then solicitors to the bank dated 3 March 3000. I do not accept Mr Sarsan told Aloui what to say to Mr Hamilton. I consider Mr Aloui was on other occasions in his evidence deliberately evasive. I have no hesitation in rejecting Mr Aloui’s evidence. [38] That does not mean I accept all of Mr Sarsan’s evidence. I accept Mr Sarsan’s evidence that Mr Aloui authorized him either expressly or by implication from the conversations he had with Mr Aloui to draw the cheques in Mr Aloui’s name and use the moneys to discharge Mr Aloui’s liabilities including the making of the loan to Mr Sarsan. I find Mr Aloui did agree to make a loan of $100,000 to Mr Sarsan for a period of one year interest free. I also find that Mr Aloui authorized Mr Sarsan to make payment for the loan from Mr Aloui’s account. -- 17 of 26 -- 18 [39] I do not consider it is against Mr Sarsan’s credit that Mr Sarsan took the opportunity despite Mr Aloui’s predicament to ask for the loan and upon the terms agreed. I consider Mr Aloui agreed to make the loan and for Mr Sarsan to draw the cheques to gain for Mr Aloui Mr Sarsan’s assistance and the means by which Mr Aloui might buy himself out of trouble. [40] I consider once Mr Aloui returned to Australia for some reason Mr Aloui changed his mind and sought the return of the money. [41] Mr Aloui claimed in these proceedings he found out after he returned to Australia that Mr Sarsan was involved in a conspiracy with Mr Sarsan’s girlfriend to cause Mr Aloui to be arrested on false charges so that Mr Sarsan could gain access to Mr Aloui’s money. I consider this allegation provides a possible motive on the part of Mr Aloui to claim he did not authorise Mr Sarsan to draw the cheques and pay the $100,000 to himself as a loan. I do not accept there is any basis for this allegation made by Mr Aloui against Mr Sarsan. I consider the allegation to be contradicted by the evidence of Mr Sarsan’s assistance to Mr Aloui in the Philipppines and Mr Ghulam’s evidence that before Mr Aloui’s arrest Mr Aloui intended to make the loan to Mr Sarsan. [42] I accept Mr Sarsan’s evidence that he had Mr Aloui’s authority to draw the cheques and make the payments from his account that were made and that he was given a loan of $100,000 by Mr Aloui for one year free of interest. I do not accept Mr Sarsan’s evidence that Mr Aloui agreed to pay Mr Sarsan $1000 per month for his services plus $200 per day when required to travel overseas, interstate or whilst in transit. Mr Sarsan said even if he had performed half an hour of services in one -- 18 of 26 -- 19 month he would be entitled to the $1000. That is evidence I am not prepared to accept. Mr Aloui impressed me as a shrewd person who was manipulative about money. While even he could be persuaded in the circumstances to agree to make a loan of $100,000 interest free for one year, I do not accept that he would agree to pay for services on the uncertain basis that the $1,000 per month or $200 per day for whatever amount of services performed by Mr Sarsan would suggest. I consider Mr Sarsan’s claim in this respect is what he may have wished to be remunerated for what he was doing for Mr Aloui. However that does not translate into an agreement. I consider Mr Sarsan was performing services for Mr Aloui to gain his grace and that in those circumstances Mr Sarsan might benefit. On the other hand I consider Mr Aloui was using Mr Sarsan for so long as Mr Sarsan was prepared to be used until the opportunity arose for Mr Sarsan to obtain the loan he had sought and discussed with Mr Aloui on many occasions before Mr Aloui’s arrest. [43] I do not consider there is any inconsistency in my accepting part of Mr Sarsan’s evidence and rejecting part of his evidence. That is because that part of his evidence I accept is supported by the circumstances Mr Aloui found himself in the Philippines and the evidence of witnesses such as Mr Hamilton, Mr Day and Mr Ghulam. [44] I find the cheques were used for Mr Aloui’s benefit. [45] Therefore, I dismiss Mr Aloui’s claim against the bank. [46] I also dismiss the bank’s claim against Mr Sarsan by way of the third party proceedings in the first proceeding. -- 19 of 26 -- 20 [47] With respect to Mr Sarsan’s counter-claim against Mr Aloui because of the findings I have made above it only remains to consider whether the loan agreement was breached and if so, whether Mr Aloui is entitled to require immediate repayment of the loan moneys and further or in the alternative whether Mr Sarsan is entitled to damages and if so what damages for the breach. [48] I find Mr Sarson did tell Mr Aloui Mr Sarsan intended to use the loan moneys for his business ventures and to make a profit. [49] Mr Sarsan claims the loan agreement was subject to an implied term that Mr Aloui would not interfere with, frustrate or otherwise impede or hamper the defendant’s use of the loan moneys. [50] It has been held:- “For a term to be implied, the following conditions (which may overlap) must be satisfied: (1) It must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract (BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 16 ALR 363, 365, 52 ALJR 20, 26). It has also been stated:- “A court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case (per Deane J Hawkins v Clayton (1987-1988) 164 CLR, 573; Breen v Williams (1995-1996) 186 CLR 71, 90-91. [51] Further, it has been said to be a general rule that a party to a contract made on the footing of a continuance of a state of things may not do anything to destroy or -- 20 of 26 -- 21 diminish that situation (per Barwick CJ Ansett Transport Industries v Commonwealth (1977) 139 CLR 54, 61). [52] In the circumstances I find the loan agreement between Mr Aloui and Mr Sarsan was subject to an implied term that Mr Aloui would not interfere with, frustrate or otherwise impede or hamper Mr Sarsan’s use of the loan moneys. [53] Further, I find Mr Aloui breached the implied term of the loan agreement by wrongly complaining to the bank that Mr Sarsan had forged his signature and presented the cheque for $100,000 without his authority. I find Mr Aloui used the bank as his means to stop Mr Aloui using any of the funds Mr Sarsan held from the transfer from Mr Aloui’s account. On the evidence I find Mr Aloui achieved his intention. [54] Although I find Mr Aloui has breached the implied term I consider the breach can not operate to extend the time agreed for repayment of the loan. A court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust (Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1972-73) 129 CLR 99, 109). [55] Therefore, in the second proceeding I give judgment for Mr Aloui against Mr Sarsan for the sum of $100,000 [56] Therefore, it remains to consider what damages (if any) Mr Sarsan is entitled to for the breach. -- 21 of 26 -- 22 [57] I accept Mr Sarsan’s evidence relevant to his claim for damages for breach of the loan agreement. [58] Mr Sarsan said because his funds were frozen he could not use the loan moneys for the full one year period agreed and he could not proceed with his planned shipments of goods. The goods were antique reproductions for which there was a good market in the U.S. There had been before the funds were frozen a shipment to the U.S. Half of the shipment went to a company called Studio 205 in Florida and the other half was to be used as samples. Mr Sarsan’s evidence was the expected profit was $70 per item. The first shipment comprised 377 items. As I understand Mr Sarsan’s evidence no complaint of loss is made with respect to this shipment. His claim was that he planned four further shipments. However, because the funds were frozen he could not pay for the next shipment and the goods were sent back to the supplier. Although there was no evidence how much money had been frozen the inference I draw from Mr Sarsan’s evidence is that what had been frozen was an amount that prevented him going on with the next shipment at least and that he had 12 months from November 1999 within which to realise his return from the next shipment to be able, with a turn around time of one and a half months, to be able to pay for the next shipment. He said he had a positive response to the first shipment and he had done all the groundwork. [59] Mr Sarsan also gave evidence of his out of pocket expenses which included airfares, accommodation and payments to an associate in the U.S. for board and lodgings and use of a vehicle. -- 22 of 26 -- 23 [60] His expenditure totalled $27,083.30. This was made up of $3,800.00 paid to Mr Gohn in the United States for board and lodging and hire of a vehicle. $9,683.40 for airline tickets, $409.90 for accommodation and $12,400.00 for $200.00 per day expenses while Mr Sarsan was in the United States going out and meeting people. [61] It was submitted by counsel for Mr Aloui Mr Sarsan had not elected whether to claim loss of profits or loss of expenditure. Therefore, it was submitted he could not recover either loss. [62] In support of this submission counsel cited Anglia Television -v- Reed (1972) 1 QB 60. I consider this case can be distinguished from the present proceedings. That decision concerned the recovery of expenditure in anticipation of a contract being entered into. It was held that the plaintiff had to elect between claiming the expenditure or loss of profits. In the present proceedings the expenditure was not in anticipation of entering into the loan agreement. The loan from the loan agreement was the source of the expenditure. [63] I consider that Mr Sarsan can recover the loss caused by the breach of the loan agreement that can reasonably be supposed was in the contemplation of the parties. [64] In Hadley -v- Baxendale (1854) 9Exch 341 at 354-355; 156 ER 145 at 151 Alderson B said: “. . . the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of the parties, at the time they made the contract, as the probable result of the breach of it.” -- 23 of 26 -- 24 [65] As Mr Sarsan told Mr Aloui that Mr Sarsan intended to use the loan monies for his business ventures and to make a profit, I find it was within the reasonable contemplation of the parties that Mr Sarsan would expend money from the loan with a view to recouping his expenditure and making a profit. [66] When the breach occurred, Mr Sarsan had expended most of the $27,083.90 I have referred to earlier and expended the balance to determine why the loan moneys were frozen. The moneys have remained frozen through the duration of the agreed term of the loan. I accept that the expenditure has been lost by Mr Sarsan. Further, as Mr Sarsan could not pay for the next shipment he lost the chance to make profits on the next shipment. [67] I consider for Mr Sarsan to have had the benefit of the expenditure it was necessary for him to have access to the loan moneys. Mr Sarsan could not go ahead with his next shipment. Therefore, the expenditure remained and has remained expended. Mr Aloui now has by his breach the entitlement to be repaid the loan. Therefore, I consider the expenditure is a loss caused by the breach of loan the agreement subject to a credit for half of the first shipment that was sold. The credit would be half of the 377 items sold for $110.00, which is a sum of $20,735.00. However, included in Mr Sarsan’s claim ought to his cost of the samples he sent to America with the first shipment. The cost of those samples is half 377 items at $40 per item. That is a sum of $7540. With respect to loss of profits though there are a number of factors I consider relevant to this claim. [68] Mr Sarsan accepted he had no enforceable agreement with anyone to purchase the goods. On the other hand there had been some success with the first shipment in -- 24 of 26 -- 25 that half was sold and the other half provided samples into the market. Mr Sarsan’s evidence was that first shipment comprised 377 and for the next shipment it was considered a net profit of $70.00 per item could be achieved as had been achieved for the first shipment. Nevertheless, I consider the success of the next shipment was uncertain. Mr Sarsan’s evidence was the next shipment was one of 377 items and was packed and ready to load. I do not consider more than one shipment can be considered for the assessment of the damages as any more shipments would depend on the success of the previous shipment. I consider there was a 25% chance of success for the next shipment returning $70 per item profit. [69] Therefore, I asses the damages as follows:- Expenditure on airfares etc $27,083.30 Plus cost of samples $7,540.00 Less credit for success of first shipment ($110.00 x ½ of 377 items) -$20,735.00 ____________ $13,888.30 Plus Loss of profits on next shipment (377 x $70 x 25%) $6,597.50 ____________ $20,485.80 [70] The parties agreed the conversion rate from United States to Australian dollars was 1.573 as at 16 February 2000 when the loan moneys were frozen. Therefore the loss is $32,224.16. [71] I give judgment for Mr Sarsan against Mr Aloui on the counter claim in the second proceeding for the sum of $32,224.16. -- 25 of 26 -- 26 [72] I will hear the parties on the question of costs. Further, I will hear Mr Aloui and Mr Sarsan on the question of what interest, if any, I ought to allow either party. -- 26 of 26 --