Capers v PSR Refining Services PTY LTD

1. [1]

   This Judgment involves the enforcement of a debt in the sum of $640,964 USD.

2. [2]

   The plaintiff is Joe David Capers. The defendant, PSR Refining Services PTY LTD (“PSR refining”) and its Director Mr Martin Hewines were called three times outside the court. There was no appearance. The plaintiff was represented by T Smartt of counsel. On 8 August 2024 the solicitor acting for the defendant filed a notice of intention of ceasing to act.

3. [3]

   At the outset of the proceedings, counsel for the plaintiff drew my attention to an email sent to the plaintiff’s solicitor Mr Metlej dated 3 January 2025 at 5.17am

4. [4]

   By way of the statement of claim filed on the plaintiff seeks judgment for the plaintiff in the amount of USD 640,964.

5. [5]

   Mr Ed Hewines (“Mr Hewines”) manager of the defendant attached a creditors voluntary liquidation appointment package and advised that “we have appointed Worrells on 6 January 2025”

6. [6]

   On 3 February 2025 at approximately 9.15am the plaintiff’s solicitor had a telephone conversation with Mr Christopher Darin of Worrell’s where Mr Darin confirmed,

7. [7]

   Shortly stated the defendant has not gone into voluntary liquidation.

Background

1. [8]

   On 5 June 1996, PSR refining was incorporated in New South Wales.

2. [9]

   On 6 June 1996, Mr Hewines was appointed and remains one of the directors of PSR refining, together with Ms Maureen Hewines who also remains the secretary of PSR refining. Other directors were appointed and removed from time to time.

3. [10]

   On or around 26 March 2009, PSR refining by Mr Hewines emailed Mr Capers a document styled memorandum of understanding (“MOU”) in relation to a proposed 10% shareholding in PSR refining in the amount of USD 250,0002 (shareholding proposal).

4. [11]

   The MOU included an attachment being a business plan, which provided for a monthly payment to Mr Capers of USD 3,0003 and annual dividends projected for 3 years.

5. [12]

   On or around 14 April 2009, PSR refining by Mr Hewines informed Mr Capers that the shareholding proposal would not proceed. Subsequently, Mr Capers as lender and PSR refining as borrower entered into a loan agreement by which Mr Capers agreed to advance the sum of USD 250,000 with repayments to occur pursuant to the shareholding proposal (“the loan agreement”). The loan agreement was oral.

6. [13]

   At the time of entering into the loan agreement, PSR refining by Mr Hewines informed Mr Capers that he “needed money to meet obligations due at the end of this month which have already been incurred”.

7. [14]

   On 25 April 2009, Mr Capers advanced the first loan payment to PSR refining in the amount of USD 24,990 pursuant to the loan agreement. The receipt of first loan payment is admitted by the defendant.

8. [15]

   On 1 May 2009, Mr Capers advanced the second loan payment to PSR refining in the amount of USD 224,990 pursuant to the loan agreement. The receipt of the second loan payment is admitted by the defendant.

9. [16]

   As at 30 June 2012, PSR refining had recorded a loan owing to J David Capers in its balance sheet. Of note the balance sheet also records the loan owing from as early as 30 June 2011. Financial statements for the years ended 30 June 2009 and 2010 were not produced pursuant to the subpoena issued to PSR refining’s accountant.

10. [17]

    On 18 September 2012, PSR refining by Mr Hewines emailed Mr Capers admitting a debt as follows (the loan agreement admission):

11. [18]

    On 2 November 2012, PSR by Mr Hewines emailed Mr Capers which included the following (the Interest Term Admission):

12. [19]

    Also, on or around 2 November 2012, PSR refining made a payment to Mr Capers in the amount of USD 90,000 (first interest payment). That payment is admitted by the defendant.

13. [20]

    On or around 5 November 2012, PSR refining made a second payment to Mr Capers in the amount of USD 36,000 (second interest payment). That payment is admitted by the defendant.

14. [21]

    On or around 24 December 2012, PSR contends that it made payment of USD 50,000 in reduction of the principal sum due pursuant to the loan agreement (the disputed payment). Although the plaintiff does not admit receiving that payment, he does not seek that amount in these proceedings.

15. [22]

    On 13 March 2013, PSR by Mr Hewines emailed Mr Capers in relation to the payment of interest as follows (the first acknowledgement),

16. [23]

    On 8 November 2018, PSR by Mr Hewines wrote to Mr Capers and said the following (the complete acknowledgment):

17. [24]

    On 9 November 2018, Mr Capers replied and said the following,

18. [25]

    On 11 November 2018, Mr Hewines replied with a version of the acknowledgment that he signed and impressed with the seal of PSR refining (the sealed and signed complete acknowledgement):

19. [26]

    On or around 1 February 2019, PSR refining made a payment to Mr Capers in the amount of USD 36.00. This payment is admitted by the defendant. This payment will be called the first confirmation payment.

20. [27]

    On or around 1 March 2019, PSR refining made a payment to Mr Capers in the amount of USD 2,980 This payment is admitted by the defendant. This payment will be called the second confirmation payment.

21. [28]

    On 1 January 2023, Mr Capers filed his statement of claim.

22. [29]

    On 26 September 2023 the plaintiff filed an amended statement of claim (“ASOC”).

23. [30]

    On 27 October 2023 the defendant filed a defence to the plaintiff’s ASOC.

24. [31]

    There are four issues before the Court:

    1. (1)

       Did Mr Capers and PSR refining enter into a loan agreement?

    2. (2)

       Does PSR have any defence under the law of Texas, on the assumption that the law of Texas is the substantive law of the loan agreement?

    3. (3)

       If the answer to the previous two questions is no, how much does PSR refining owe under the loan agreement?

    4. (4)

       An additional issue is, is Mr Capers’ claim under the loan agreement barred by s 14 of the Limitation Act 1969 (NSW).

ISSUE 1 – Did Mr Capers and PSR enter into a loan agreement?

1. [32]

   Mr Capers and PSR refining entered into a loan agreement in April 2009.

2. [33]

   In Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2023] NSWCA 102 (“Stellar Vision”) the Court of Appeal (Bell CJ, Hammerschlag CJ in Eq and Adamson JA) summarised the legal principles relevant to whether an agreement between the parties is binding as follows,

3. [34]

   Mr Capers and PSR refining entering into a loan agreement in 2009 is the only rational explanation for why Mr Capers paid PSR refining the sum of about USD 250,000 in 2009 and why Mr Hewines emailed Mr Capers on 8 November 2018 saying that

4. [35]

   Mr Capers’ evidence as to the existence of the loan agreement is also unchallenged.

ISSUE 2 – Is there a defence under the law in Texas?

1. [36]

   The plaintiff submitted that there is no defence under the law of Texas to Mr Capers’ claim. It is uncontroversial that the defendant seeking to rely on a foreign law as a defence to the plaintiff’s claim to allege and prove that law as an “exculpatory fact”. There is no evidence in these proceedings of the law of Texas and in those circumstances the “presumption” that foreign law is the same as the law of the forum “comes into play”. Accordingly, because the law of New South Wales must be taken to be the substantive law of the contract, the defence under the law of Texas fails.

2. [37]

   The defendant in his defence to the ASOC focuses on the applicable law of the State of Texas, as business was conducted in Texas and the plaintiff was a citizen and a resident in the state of Texas.

3. [38]

   The agreement was an oral one. In the first acknowledgement written document and the complete acknowledgement written document there is no mention as to the applicable law.

4. [39]

   In Regie Nationale des Usines Renault SA v Zhang [2002] CLR 491 HCA 10, the High Court stated at [70]

5. [40]

   There is no evidence to demonstrate that the law of Texas is the applicable law.

6. [41]

   While the defendant seeks to rely upon foreign law, namely the state of Texas, he has not proved that the law of Texas as an exculpatory fact.

ISSUE 3 – What is the quantum of the debt?

1. [42]

   The quantum of the debt is USD 640,964.

2. [43]

   Mr Capers paid PSR refining the sum of USD 249,980. 38.

3. [44]

   The following table captures payments by PSR refining and interest accrual,

4. [45]

   Further to the above, Mr Capers is giving credit to the defendant for allegedly making a repayment of USD 50,000.

5. [46]

   Adding the sum of USD 440,984 to USD 249,980, and deducting USD 50,000, equals USD 640,964.

6. [47]

   I accept the plaintiff’s calculations. It is my view that the defendant owes the plaintiff USD 640,964.

Additional Issue – Is the claim statute banned?

1. [48]

   The plaintiff submits that, Mr Capers’ claim under the loan agreement is not statute-barred.

2. [49]

   Mr Capers and PSR refining entered into the loan agreement in April 2009. At the very least, the limitation period in relation to suing under the loan agreement was extended by the first acknowledgement on 13 March 2013 and the sealed and signed complete acknowledgment on 8 November 2018.

3. [50]

   Section 54 of the Limitation Act 1969 (NSW) relevantly reads,

4. [51]

   The seal and signed complete acknowledgement occurred on 8 November 2018. The proceedings are not statute barred. On 11 January 2023 the plaintiff filed his statement of claim. The statement of claim is within the requisite 6-year limitation period. I note that the defendant has not pleaded that the claim is statute barred in its defence.

5. [52]

   Mr Capers commenced these proceedings before the expiration of the six-year limitation period pursuant to s 14 of the Limitations Act 1969 (NSW).

Result

1. [53]

   The defence to the plaintiff’s amended statement of claim is hopeless. It should be dismissed. Judgment is to be entered in favour of the plaintiff against the defendant in the sum of USD 640,964.00.

Costs

1. [54]

   The plaintiff has been successful, normally costs follow the event. As the plaintiff has been successful, the defendant is to pay the plaintiff’s costs of the proceedings. Additionally, the plaintiff seeks his costs be awarded on an indemnity basis and costs be payable as a gross lump sum of $24,106.67

Indemnity costs

1. [55]

   Section 98 of the Civil Procedure Act 2005 (NSW) relevantly reads,

2. [56]

   In Oshlack v Richmond River Council (1998) 193 CLR 72, McHugh J stated at [67]

3. [57]

   The plaintiff incurred unnecessary costs in enforcing the judgment as the defendant put on a defence raising the law of the state of Texas in the United States of America without any evidence and did not appear at the hearing, the plaintiff incurred costs in meeting that allegation. In these circumstances it is my view that the defendant pays costs on an indemnity basis

Gross Lump sum basis

1. [58]

   In Bechara trading as Bechara and Company v Bates [2016] NSWCA 294 per Beazley P; Meagher JA; Payne JA at [12]-[15]

2. [59]

   The plaintiff seeks the gross lump sum of $24,106.67. This comprises of,

   1. (1)

      Solicitors Costs: $16,391.43

   2. (2)

      Counsel Fees $3,663.00

   3. (3)

      Other disbursements: $4,052.24

3. [60]

   The solicitor’s costs have been discounted by 10%.

4. [61]

   I have examined the solicitor’s costs and disbursements set out in “Ex. B” and they are appropriate.

5. [62]

   It is my view that the gross lump sum payments for costs is assessed at $24,106.67.

Judgment

1. [63]

   The defendant is to pay the plaintiff the sum of USD 640,964.00.

   1. (1)

      The defendant is to pay the plaintiff’s costs on an indemnity basis the gross lump sum of $24,106.67 AUD