Arcaba v K & K Real Estate Pty Limited

In these proceedings the plaintiff sues the defendant for damages for breach of contract in respect of an agreement allegedly made between him and the defendant in about late November 2010 or early December 2010 whereby the plaintiff alleges that he agreed that in return for him not seeking immediate repayment of certain loan monies, the defendant would pay him the sum of $1,600,000 from the sale of properties by the defendant from its interest in a consortium that was established to develop land at a location known as Gledswood Hills (formerly known as Gregory Hills) in addition to repaying the loan monies (the Deferral Agreement).

At all material times, the defendant had an issued capital of two shares, one held by Michael Kordek Senior and one held by his wife, Maria Kordek.

The plaintiff’s case is that on the abovementioned date the Deferral Agreement was entered into in discussions between Mr Michael Kordek Snr, a director and shareholder of the defendant company and himself.

The defendant denies that the Deferral Agreement was made as alleged, or at all, but admits the making of loan agreements which involved loan funds being provided by the plaintiff via one of his corporate entities totalling $195,000 to the defendant.

The plaintiff instituted these proceedings by way of Statement of Claim filed on 15 November 2013. An Amended Statement of Claim was filed, by leave, during the hearing on 18 March 2016. In paragraphs [4]-[11] of the Statement of Claim the plaintiff pleads and particularises the making of four loan advances by him through a corporate entity controlled by him to the defendant company. The four advances amounted to the abovementioned sum of $195,000 (consisting of four loans of $100,000, $50,000, $25,000 and $20,000).

The loan agreements were express oral agreements and they were all entered into at the plaintiff’s business premises in Liverpool.

The loan agreements were negotiated by the plaintiff personally with Mr Kordek Snr acting on behalf of the defendant.

The plaintiff alleges that that the loan funds were to be applied by the defendant towards meeting legal fees and disbursements of the defendant incurred in instructing its legal representatives, Colin Biggers and Paisley (CBP), in relation to an agreement for the sale and purchase of land at Oran Park.

The plaintiff alleges that it was a term of the agreements that the defendant would repay the moneys when the legal proceedings were completed.

In relation to the Deferral Agreement, upon which the plaintiff sues, the plaintiff pleaded his claim in paragraphs [12],[13] and [14] as follows:

The plaintiff in paragraph [23] of the Statement of Claim pleaded that the defendant had denied that it has any obligation to pay the plaintiff the amount of $1,600,000 or any additional sum pursuant to the Deferral Agreement and denied the existence of such an agreement. In that respect, reference was made to a letter from the solicitors for the defendant, CBP, to the solicitors for the plaintiff, Stojanovic Solicitors, dated 2 and 4 September 2013 in which any such agreement was disputed.

In paragraph [24] of the Statement of Claim the plaintiff alleged that the defendant was in breach of the agreements in respect of each of the four loans and he also pleaded in paragraph [25] that the defendant had repudiated the Deferral Agreement which repudiation had been accepted by the plaintiff. Accordingly, the plaintiff seeks damages in respect of the alleged breach of the Deferral Agreement: at [27].

The defendant at hearing relied upon an Amended Defence filed pursuant to orders made by Registrar Bradford on 6 May 2014.

It is not necessary to discuss at this point the full details of the Amended Defence other than to say that the defendant admitted the four loan advances and stated paragraph [12] that the defendant had offered to repay the total amount of $195,000 together with interest of $4,400 on 13 November 2010. The offer was said to have been made by Mr Kordek Snr. The defendant alleged that the plaintiff declined the offer: at [12].

The defendant company alleged in its Amended Defence that Mr Kordek Snr offered to pay the sum of $125,000 verbally in early October 2010 but the plaintiff declined to accept payment in that amount: at [17].

As at the date of these proceedings were instituted, an amount of $95,000 of the loan monies had been repaid by the defendant: (Statement of Claim [15]-[19]). Upon commencement of these proceedings, the plaintiff sought repayment of the remaining $100,000. This sum was repaid by the defendant on 24 January 2014.

The defendant pleaded that it had tendered monies in repayment of the First Loan: at [18]. Details as to the repayment of $95,000 of the total $195,000 monies owed by the defendant were set out at [15]-[19] of the Statement of Claim in the following terms:

On 24 January 2014 the defendant repaid the remaining $100,000 to the plaintiff via electronic transfer from the National Australia Bank (Affidavit of Mr Kordek Snr [64] and p 144 of Exhibit MK-1).

The affidavit evidence for the plaintiff in the proceedings concerning the Deferral Agreement was given by the plaintiff in his primary affidavit sworn 5 May 2014 and two reply affidavits sworn by him on 13 February 2015 and 15 February 2016.

The defendant relied upon affidavit evidence being the affidavits of Mr Kordek Snr sworn on 30 September 2014 and 30 November 2015. The defendant also relied upon the affidavit of Mr Michael John Kordek Jnr, sworn 12 November 2015.

The plaintiff relied upon the affidavit evidence of the following witnesses: Mr Dennis Locke sworn 11 February 2015 and Mr Sasha Cubrilo sworn 13 February 2015.

Given the nature of the Deferral Agreement relied upon by the plaintiff and the multiplicity of disputed issues of fact raised in these proceedings, it is appropriate at this point to outline the nature of the plaintiff’s case and the nature of the defence to it.

As noted above, the plaintiff’s case is that in or about late November or early December 2010 he and Michael Kordek Snr, on behalf of the defendant, entered into an oral contract for deferral of repayment of loans made by the plaintiff to the defendant. The alleged consideration of the Deferral Agreement alleged by the plaintiff was said to include a payment to be made by the defendant to the plaintiff in the amount of $1,600,000 upon finalisation of the Gledswood Hills Project or the sale or other finalisation of the defendant’s interest in that project.

In the plaintiff’s case it was stated that the alleged genesis of the Deferral Agreement was the defendant’s loss in relation to the Oran Park litigation. As a result of that loss the plaintiff alleged that the defendant could not repay the $195,000 loan funds advanced in the period 4 August to 18 November 2010. In that context the plaintiff alleged that it was the defendant’s inability to repay the $195,000 that led to the parties agreeing to the Deferral Agreement.

The defendant argued that the plaintiff’s case altered from that alleged in the original Statement of Claim. In the Outline of the Defendant’s Closing Submissions it was noted that the plaintiff alleged that the defendant, through Mr Kordek Snr, agreed:

In the Outline of the Defendant’s Closing Submissions at [6] it was stated that “Mr Arcaba’s new pleaded case” asserted that the events or the circumstances which was to trigger the payment of the $1.6M had not been discussed but that they were to be implied. The defendant contended that the “belated amendment” to the Amended Statement of Claim had changed the agreement on which the plaintiff sued in an important respect, and that this undermined his credibility and his case.

The plaintiff was born on 10 August 1964 in Rijeka, Croatia. He stated in his affidavit that in 1989 he completed a degree in economics at a University in Croatia and in 1993 he completed a Diploma in Chemical Technology. In 2001, he said he established a finance brokerage business using a corporate entity known as First Class Mortgages Pty Ltd.

He said that after 2001, following the establishment of his mortgage business, his clientele mainly consisted of persons of Serbian background who were looking for home loans. He said that he referred potential buyers to Mr Kordek Snr who in turn referred clients to him in order to arrange finance.

In 2005 he began working as a broker for the Commonwealth Bank of Australia (CBA) in a business referred to as Commonwealth Bank Mortgage Innovations. He said that this was mainly involved in obtaining residential home loans for customers. His office was located in Liverpool. The plaintiff said his association with the CBA ended in or about November 2011.

In August 2012, the plaintiff purchased a franchise for a real estate agency business in Liverpool. He said in evidence that he continued to conduct both the finance brokerage business and the real estate agency business.

As at 2010, the plaintiff had for about eight years been carrying on business as a finance broker through First Class Mortgages Pty Ltd. By March 2009 another company owned by Mr Arcaba, Mortgage Café (NSW) Pty Ltd had been appointed as a broker of Commonwealth Bank of Australia Loan Products (Exhibit 1).

The plaintiff had over a number of years acquired in the course of his business arrangements with the CBA considerable experience with loan products and real property mortgages and securities and had been a money-lender for some years.

Mr Kordek Snr had been involved in broadacre developments through the defendant and other companies for over 20 years.

In his affidavit sworn 30 September 2014 he stated that he had known the plaintiff for a number of years. They had initially met socially at the Bonnyrigg Sports Club. He believed that this occurred in 2005-2006.

At that time, he said the plaintiff was working with the CBA. He said that they met regularly at the Bonnyrigg Sports Club or at the Cucina Restaurant in Liverpool.

Mr Kordek Snr said that since the late 1980s, his primary business partner had been a Dr Morven Dan. Dr Dan died on or about 1 March 2012. He and Dr Dan established a company, Kordan (Australia). Dr Dan and he purchased and developed properties through different corporate entities, including Kordan (Australia).

In about October 2009 it came to Mr Kordek Snr’s attention that a property at Oran Park was available for sale. It was unzoned but residential zoning Mr Kordek believed was going to be approved. An Expression of Interest for Oran Park was lodged soon after.

In due course, Kordan (Australia) made an improved offer for Oran Park at $5.6M. Kordan was to exchange contracts for the property on or about 8 December 2009. However, for various reasons, the process was delayed and the settlement of the property did not eventuate.

A Notice to Complete had been served by the vendor’s solicitors. Mr Kordek Snr looked for alternative partners to Dr Dan, who had lost interest in the property.

On or about 8 July 2010 the defendant’s solicitors received a Vendor’s Notice of Termination. Mr Kordek Snr sought funding from different sources and on or about 12 August 2012 the company entered into a Joint Venture deed with another company as trustee of the Oran Park Unit Trust (Joint Venture).

On 5 August 2010 the defendant commenced proceedings in this Court seeking specific performance of the sale and purchase of the Oran Park Property.

Ultimately, the defendant was unsuccessful both at first instance and in the Court of Appeal. It sought Special Leave from the High Court. Special Leave was refused on 12 November 2010. As a result of these proceedings, the defendant had been required to pay the amount of $2,228,197.69 into court. The money was not released in full until about 26 August 2011. On that date $250,000 was released to the defendant.

Against that background, Mr Kordek Snr in his affidavit sworn 30 September 2014 gave evidence as to the amounts advanced by way of loan by the plaintiff to the defendant: at [50]-[62].

Following the dismissal of the Oran Park special leave proceedings by the High Court on 12 November 2010 the plaintiff said that he telephoned the defendant on four occasions. He said he had a conversation with the plaintiff along the following lines:

A few days later, on 18 November 2010, Mr Kordek Snr said he spoke with the plaintiff at the Bonnyrigg Sports Club about repayment of the loans. He said a conversation along the following lines took place:

Mr Kordek Snr denied the conversation which the plaintiff recounted in paragraph [28] of his affidavit.

Against this background the plaintiff’s evidence and Mr Kordek Snr’s evidence in relation to the Deferral Agreement is set out below.

As noted in the plaintiff’s written submissions at [7] the crux of the proceedings was whether the conversation, in which the Deferral Agreement was alleged to have been made, in fact occurred.

It was accepted, of course, that the plaintiff had the onus of establishing the alleged oral Deferral Agreement and its terms: Watson v Foxman (1995) 49 NSWLR 315 at [318] per McLelland CJ in Eq.

It was also accepted that the Court would need to carefully consider the reliability of the evidence given by the respective witnesses in terms of both the evidence given and the manner in which it was given.

According to the plaintiff, in March 2010 Mr Kordek Snr attended his office in Liverpool. At that time the plaintiff was contracted to the Commonwealth Bank as a Mortgage Innovation Manager. He said that on that occasion the following conversation took place:

The plaintiff said a few days later Mr Kordek Snr came to his office at Liverpool and they had a conversation in the following terms:

According to the plaintiff, on the following day after that conversation he contacted a person who he knew by the name of Vic Petrovic, a solicitor from the firm, NSW Compensation Lawyers. He said he spoke to Mr Petrovic along the following lines:

The plaintiff said that after that conversation he arranged a meeting between Mr Petrovic and Mr Kordek Snr. This occurred in early April 2010 at Cucina Restaurant located across the road from his office. He said he introduced the two men and then left. He said he was not involved in any conversation between them on that occasion.

The plaintiff said that after the meeting between the two men, Mr Kordek Snr came to his office and they had the following conversation:

The plaintiff said that he then contacted Paramount Mortgage Service and referred Mr Kordek Snr to that entity. He said he was not involved in any further dealings between Paramount Mortgage Services and Mr Kordek Snr.

After this referral the plaintiff said that Michael Kordek Snr rang him and said, “I got loan approval, I want to thank you let’s go to lunch”.

The plaintiff said later that day they went to the Cucina restaurant and he had the following conversation with Michael Kordek Snr:

Following that conversation, he said they shook hands and finished their lunch.

The plaintiff said that in about late June or early July 2010, Mr Kordek Snr telephoned him and the following conversation took place:

The plaintiff in his primary affidavit sworn on 5 May 2014, set out evidence concerning the loan advances he arranged, and provided to the defendant. He said that the initial conversation concerning a loan was in or about July 2010 with Mr Kordek Snr who came to his office at Liverpool and they had a conversation as follows:

It is the plaintiff’s case that the alleged Deferral Agreement arose in the context of the Gledswood Hills Project.

Mr Kordek Snr in his affidavit sworn 30 September 2014 gave evidence as to the background to that project as follows: The project only came into existence from about December 2011. Mr Kordek Snr said he came to know of the property from discussions he had had with members of an entity, Sekisui House, that purchased a neighbouring property at Gregory Hills, but Mr Kordek Snr noted at [75] of his affidavit that before November 2011 he never referred to the project as “Gregory Hills” as distinct from “Gledswood Hills”.

Mr Kordek Snr’s evidence was that on or about 23 November 2010 a company, The Broadacre Development Company Pty Ltd, was set up (BADC). The name for BADC had originally been reserved in mid-July 2010 for the proposed Oran Park development.

On or about 29 November 2010 BADC exchanged contracts for a property that was located at 650 Camden Valley Way, Gregory Hills (soon to be known as Gledswood Hills), being properties 668 & 659 Camden Valley Way, Catherine Field. The purchases settled in or about February 2011.

In order to complete the purchase, BADC obtained a loan from NAB in the amount of approximately $3.1M.

BADC contracted as trustee of the Catherine Field Development Unit Trust. The defendant held 31 units in the unit trust. The other unit owners included a company which was referred to as Mr Petrovic’s investment vehicle, with 31 units, Lulud Pty Ltd (Mr De Lutiis’ company) with 31 units and Bella Vista Realty Pty Ltd (Mr Covington’s investment company) with 7 units. The principals contributed part of the purchase price with the balance funded by the NAB.

The defendant company exited its interest from BADC in March 2012.

In February 2014 BADC sold Gregory Hills to an entity, Tribeca.

Accordingly the above corporate entities owned the shares in BADC and Masterton Homes (Masterton) was engaged for the development of the project in November/December 2012, Masterton being a contract home builder for the joint venture. Communications between the unit holders and Masterton, it was noted in the defendant’s submissions, were copied to Messrs Petrovic, De Lutiis, Covington and Cavric (Mr Petrovic’s offsider), but they were not copied to the plaintiff. This was relied upon by the defendant as being inconsistent with the plaintiff’s contention that Mr Kordek Snr bound the defendant, K & K, to give him the value of 8 blocks in the development. The plaintiff’s allegation of a Deferral Agreement, it was submitted, would, on his account, amount to “a private side deal” without Mr Kordek Snr informing his co-principals: Outline of the Defendant’s Closing Submissions at [79].

Mr Kordek said that the defendant company had a 31% economic interest in BADC as did “Vic” (Vic Petrovic) and “Ned” (Ned Cavric). Mr Kordek said the defendant funded “Vic’s share” of the deposit paid by BADC for Gregory Hills.

The plaintiff’s affidavit evidence included reference to the making of the loan by or through him by way of a bank cheque dated 4 August 2010 for $100,000 drawn in favour of the defendant: at [21].

The plaintiff also referred to the second, third and fourth loans in [22]-[26] of his primary affidavit.

In [28]-[30] of his primary affidavit the plaintiff gave the following evidence:

The plaintiff’s evidence was that a few days after this last conversation, Mr Michael Kordek Snr telephoned him indicating that he could pay $20,000 at that time and another $25,000 in a few days. The plaintiff said he gave him banking details.

On 25 January 2011, an amount of $20,000 was deposited into the plaintiff’s ANZ bank account.

On 27 January 2011, a further amount of $25,000 was deposited into the plaintiff’s bank account.

The plaintiff then gave an account of a conversation with a Mr Nenad Cavric in his office in February 2011. He said Mr Cavric was a lawyer working with Mr Petrovic. He said on that occasion the following conversation took place:

The plaintiff then said that Mr Cavric wrote on his whiteboard and he recalled seeing names on the whiteboard and details of their shareholding in the Gledswood Hills Project. He said he did not see his name on the whiteboard, but saw the name K&K. He said he expected to see his name next to it. He said he had the following conversation with Mr Cavric:

Mr Cavric did not give evidence. The failure by the plaintiff to call him as a witness was relied upon by the defendant as a basis for a Jones v Dunkel inference.

It is noted that the plaintiff had known Mr Cavric for some time, he having worked with Mr Petrovic: Plaintiff’s First Affidavit at [32]. Mr Cavric had been closely involved in the Oran Park Project. He had an involvement with Mr Petrovic in that project and the Gregory Hills Project.

Following the meeting, the plaintiff said he met with Mr Kordek Snr either at his office or in the Cucina Restaurant and that they had the following conversation:

About this time, the plaintiff said that Mr Kordek told him that he was involved in two other projects, one in Ipswich Queensland and the other at Middleton Grange, near Liverpool. The projects were being conducted, according to the plaintiff’s account of Mr Kordek’s conversation, through Kordan (Australia) which had a 50% share.

Shortly after that conversation he said that Mr Kordek introduced him to a number of people associated with Masterton Homes.

On the plaintiff’s account of the conversation set out in paragraph [29] there was no reference as to how long the plaintiff was being asked to “wait” to receive repayment of the $195,000.

Secondly, there was no reference in the conversation as to timing of payment the amount of $1.6M, or as to the events that would trigger payment.

In submissions for the defendant it was observed that the plaintiff’s evidence established that at the time of these alleged discussions, the plaintiff had had no experience of subdivision costs and there was then no definition or feasibility plan as to what would be involved in the project if development approval was given. The defendant contended that there was no basis established whereby the plainiff could have assessed costs of the development at $100,000 per block.

Notwithstanding the above matters, the plaintiff’s evidence was that in the above discussions he said to Mr Kordek “I’m happy with your proposal, we have a deal”.

As noted above, it was after this conversation that the plaintiff said he told Mr Kordek Snr that he would appreciate having his name added to “the documents” in case he needed to use his “share” of $1.6M as security in relation to future financial transactions.

There is no reference in the plaintiff’s evidence as to what “documents” were being referred to and no statements as to how or when the “deal” would be documented.

In the absence of any reasonably contemporaneous memorandum or other record of the Deferral Agreement the plaintiff’s credibility in terms of both his truthfulness and reliability essentially became a central issue in the proceedings. Fundamental to the defendant’s defence case was the asserted inherent improbability of the plaintiff’s case which asserted that in return for his agreement to extend the time for repayment of loans totalling $195,000, the defendant through Mr Kordek Snr volunteered to pay the plaintiff a very large amount of money, namely, a $1.6M share of profits from the Gledswood Hills development project.

By any measure such an arrangement would in broad terms represent an exceptionally generous outcome to the plaintiff for his agreement to extend the loan repayment date(s). The defence case challenged the claimed agreement at a number of levels. Additional to what was contended to be the inherent implausibility of any such alleged agreement, the defendant’s case directed attention to the conduct (the relevant acts and omissions) of the plaintiff following the alleged making of the agreement sued upon – the post alleged contract conduct – which the defendant contended was inconsistent with an agreement having been made and contradictory of it.

The plaintiff was cross-examined over three days. In the course of the cross-examination a number of credibility issues were raised with him, some of which went to the plaintiff’s motivation. For the purpose of analysis, these have been separated in the discussion that follows into five categories:

The plaintiff, as noted in the Introduction above, acted as a finance broker from approximately 2001. In or about March 2005 he became an authorised representative with CBA. In the period that he acted as a CBA representative he entered into a number of loan transactions in the name of corporate entities operated by him including in particular Mortgage Café. These related to residential home loan products. Whilst an authorised representative of CBA, the plaintiff was only permitted to broker products for the bank.

In cross-examination it emerged that over a period of years, the plaintiff operated what was referred to as a ‘business model’ borrowing funds from friends or other persons which he would then on-lend in the course of his business to others: (T 61-62). Over a period of time, the plaintiff or his corporate entities fell into default and failed to repay the loans. This resulted in various lenders who had advanced loans to him, threatening to take action, or actually taking action, to recover outstanding loan monies.

The plaintiff’s difficulties were compounded, due to the fact that in a number of instances he encountered problems in recovering monies that he had advanced by way of loans from defaulting borrowers. This combination of circumstances progressively brought significant increasing financial pressures to bear upon the plaintiff over a period of years.

He was cross-examined at some length in relation to these matters. They were said to provide both an explanation and a motivation for what the defendant maintained was a “false claim” in the present proceedings: (T 40).

The plaintiff was cross-examined upon the following loan transactions:

It was part of the defendant’s case that, contrary to the plaintiff’s evidence, there had been no discussion on the subject of adding the plaintiff’s name “to the documents”. As noted above, on the plaintiff’s evidence, the conversation concerning the alleged Deferral Agreement and the statement as to his name being added “to the documents” occurred in late November 2010. On the defendant’s case, the plaintiff however failed to take any active steps to ascertain or have confirmed that his name had been added to “the documents” as he alleged Mr Kordek Snr promised. Given the amount allegedly promised by Mr Kordek Snr ($1.6M) in relation to the plaintiff agreeing to defer repayment of an amount of $195,000 the question as to why the plaintiff did not press for the Deferral Agreement to be recorded in writing was raised with the plaintiff.

In cross-examination, he was asked what he understood by his name being added to “the deeds”. The plaintiff replied:

A little later he was asked:

It was put to him that there was no reference at all to that matter in the Statement of Claim, notwithstanding that he claimed that it was an “important term”: T 139: 1-6.

He was then pressed:

In further cross-examination he was asked whether he had an understanding from his conversations with Mr Kordek Snr that “on the deeds” would require not only his agreement but also the agreement of others involved in the project, namely, Mr Petrovic, Mr De Lutiis and Mr Covington. The plaintiff replied that Mr Kordek Snr did not refer to that fact: (T 139: 45 to T 140: 10).

It is noteworthy that the plaintiff took no steps at this stage to seek any written confirmation of the Deferral Agreement, or that he would be entered in the “deeds” for the Gledswood Hills development project.

It was put to the plaintiff that his evidence concerning the entire Deferral Agreement referred to in paragraphs [12], [13] and [14] of the Statement of Claim, was a fabrication. He denied that proposition: (T 141: 20-25).

At a later point in his cross-examination, Mr Arcaba claimed that in his conversation with Mr Kordek Jnr in February 2012 he asked Mr Kordek Jnr to persuade his father to deliver on his promise: “To bring his father to me and bring his father to position that he put me on the 31 per cent in the paper together with another in his shareholding”: (T 176: 35-40).

Mr Kordek Jnr disputed and denied that there had been any conversation between him and the plaintiff to that effect. Mr Kordek Jnr’s account of his dealings with the plaintiff is discussed below.

In June 2012 the plaintiff lodged individual caveats on two titles relating to properties owned by Kordek Real Estate Pty Ltd and K & K Real Estate Pty Ltd. Copies of the caveats were included in CB1 at [246]-[249].

In Schedule 1 to the first caveat (ending in numbers 068K) the facts said to support the estate or interest claim were:

The plaintiff was cross-examined at some on the basis that the facts recorded in the caveats were inconsistent with the making of the Deferral Agreement.

On 29 June 2012 the solicitors for the two Kordek companies wrote to the plaintiff. A copy of the letter was included in CB1 at 250. The author of the letter of CBP Lawyers disputed the fact of loans for $700,000 having been made. The letter stated, “Firstly, our clients never borrowed any money from you and certainly never … advanced the amount of $750,000”.

The letter from CBP Lawyers stated that, on instructions, an amount had been invested by the plaintiff in a project at Oran Park which was unable to proceed and such monies were not by way of a loan.

It was noted that in any event, the plaintiff had been paid an amount of $95,000 of the $195,000 amount which the plaintiff originally “invested” though there was no obligation for him to do so.

It was also observed that the arrangements that the plaintiff had in respect of the Oran Park project had nothing to do with K & K Real Estate Pty Ltd or Kordeks Real Estate Pty Ltd and that the plaintiff had never advanced any funds to them.

The letter required the plaintiff to withdraw the caveats.

On 10 July 2012 the plaintiff replied to the letter from CBP. A copy of the letter of 10 July 2012 is included in CB1 at 263. The letter stated:

The plaintiff was cross-examined on the above letter by him to CCBP: at (T 207-212).

In relation to the reference to “the terms of the agreement” in the plaintiff’s letter of 10 July 2012, he was questioned on inconsistency between his statements in his letter and his evidence concerning the Deferral Agreement:

A little later, the plaintiff was further cross-examined about the agreement to which he referred in his correspondence with CBP:

A little later, he was again asked about the caveats as follows:

On the issue of the caveats the plaintiff was challenged as to the inaccuracies contained within it as follows:

The plaintiff’s attention was drawn to the fact that he had sworn statutory declarations stating, inter alia, that to the best of his knowledge the information and belief “…the caveator has a good and valid claim to the estate or interests set out in Schedule 1”. It is plain, of course, that the statutory declarations in respect of the plaintiff’s assertions as to the existence of an estate or interest in the specified properties contained deliberate falsehoods.

The plaintiff acknowledged in cross-examination that he knew what legal and equitable interests were: (T 186: 25-40) and that he had stated in the caveat that he had loaned the sum of $750,000 to the registered proprietor but admitted that in fact he had never lent either Kordek Real Estate Pty Ltd or K & K Real Estate Pty Ltd $750,000: (T 187: 5-11 and 189: 1-25).

In answer to the question how he could maintain that the statutory declaration was truthful, the plaintiff replied:

He agreed to the proposition that he had completed and lodged the caveats in order “to bring pressure to bear”: (T 192: 45-46). He was then asked:

During his cross-examination, the plaintiff was asked:

The plaintiff was asked why, as he had been talking to a lawyer (Mr Cavric) had he not sought legal action to be taken in respect of the Deferral Agreement:

The plaintiff was further questioned on this aspect:

It was part of the plaintiff’s case that Mr Kordek Snr from about March 2011 to October 2011 took steps to avoid having contact with him, including his alleged failure to answer the plaintiff’s telephone calls: Affidavit sworn 5 May 2014 at [40].

The plaintiff said that in about mid 2011 he attended the offices of NSW Compensation Lawyers at Liverpool. He said that he saw Mr Kordek Snr there and had a conversation with him in which the plaintiff claims to have said to him “I’m having a bad feeling that you have taken advantage of me, and I want to secure my $1.6M” and that Mr Kordek responded “At the moment, I am under huge pressure, but I promise you everything will be okay and you will get your money”: Affidavit 5 May 2014 at [41].

Mr Kordek Snr strongly disputed the allegation that he avoided the plaintiff during this period or that he did not answer his telephone calls.

In cross-examination, it was put to the plaintiff that between March and October 2011 there were in fact 121 phone calls from Mr Kordek Snr to him. The plaintiff simply responded that that was not true and it was impossible: (T 222: 40-50).

He agreed that he attended a lunch on 29 April 2011 in the presence of Masterton personnel. Mr Kordek Snr was also in attendance. He was asked why he did not on that occasion confront Mr Kordek Snr for avoiding him and simply asking him “where’s my money?” The plaintiff agreed that he did not say anything along those lines to him. A little later, the plaintiff said that he did not do so because he did not want to embarrass Mr Kordek Snr in front of others in attendance. When asked why he could not have taken him to one side and then raise the issue with him, he gave the following evidence:

When it was then put to him that these words were, on his account, being spoken by the man who, he claimed, had been avoiding him for a period of some two months, the plaintiff responded

Mr Kordek Snr in his affidavit sworn 30 September 2014 disputed the plaintiff’s evidence that he had avoided the plaintiff. In that respect, he stated at [101]:

In relation to email communications between Mr Kordek Snr and the plaintiff in 2011, the defendant relied upon copies of emails exhibited to Mr Kordek Snr’s first affidavit at pp 219 to 260 of exhibit MKS-1. He said that those emails related to communications with the plaintiff between March and October 2011. An examination of the individual emails in question, establishes that there was email contact between Mr Kordek Snr and the plaintiff on the following dates: 30 April 2011; 10 May 2011; 16 May 2011; 5 June 2011 email from Mr Kordek Snr to multiple persons, including to the plaintiff’s email address; and 25 July 2011 email from Mr Kordek Snr’s email address to the plaintiff’s email address.

The objective evidence as to the email correspondence directly calls into question the plaintiff’s credibility in relation to his allegation that Mr Kordek Snr had been avoiding him in the abovementioned period in that he would not answer his telephone calls and stopped coming to his office. (See also his evidence in cross-examination at T171-2 and T222.)

At a social level, I note that the plaintiff sent an email on 2 April 2011 which stated “Bonnyrigg W Eagles play home games tonight AG. APIA 7.pm. See there in Vic Petrovic box”: (CB4 at 1081).

The abovementioned luncheon held with the Masterton Homes personnel, of course, occurred in that period (29 April 2011). There is no evidence that explains why the plaintiff did not raise with Mr Kordek Snr the alleged failure to have recorded the plaintiff’s alleged entitlement to $1.6M upon the sale of Mr Kordek Snr’s interest in the Gledswood Hills Project.

When challenged as to why he failed to raise it with Mr Kordek Snr at the luncheon on 29 April 2011 “in a quiet corner”, or as it was put, ask him “Why am I not getting documents protecting my 31 per cent interest?” the plaintiff’s response at T 224: 10-16 was totally unconvincing, asserting that Mr Kordek simply responded “it’s little bit complicated now, but you don’t worry”.

In cross-examination it was put to the plaintiff that emails and text messages in relation to attending the Bonnyrigg White Eagles game and in relation to the Middleton Grange Project were said to undermine his evidence:

The plaintiff’s evidence on this aspect was dissembling and obfuscating. His evidence in further cross-examination at T 226-227 is also noted.

The background to the exchange between Mr Michael Kordek Jnr and the plaintiff (discussed below) is that between December 2011 and January 2012 Mr Kordek Snr underwent a prostate operation. Mr Kordek Snr said he was bedridden for a period. In mid March 2012 he left Australia for medical treatment in Croatia and then went to Poland to be with his wife to convalesce and recover. He remained in Poland until 6 September 2014: affidavit of Mr Kordek Snr 30 September 2014 at [89].

According to Mr Kordek Snr from about late January 2012 he had a number of conversations with the plaintiff during the course of which Mr Kordek Snr said that the plaintiff said words to the following effect:

Mr Kordek Jnr swore an affidavit in the proceedings on 30 September 2014. In it he stated that he is a director of the defendant company. His affidavit was made in response to the affidavit of the plaintiff sworn 5 May 2014.

Mr Kordek Jnr obtained his Real Estate Licence in 2004 and in 2006 graduated from the University of Sydney with a Masters of Professional Accounting.

From around 2008 he said he was the Accounts Manager of K & K and as such was responsible for recording all of the company’s financial transactions and supplying information to K & K’s accountants.

He became a director of K & K on or about 11 August 2010.

Mr Kordek Jnr set out a number of matters concerning the Oran Park Project, the Middleton Grange Project and loan advances from the plaintiff at [7]-[29] of his affidavit.

During his father’s illness he said that he moved into his father’s home/office.

At the end of January 2012 Mr Kordek Jnr said he received a call from the plaintiff. He says that they had a conversation to the following effect:

According to Mr Kordek Jnr he had previously met the plaintiff once several years before. He said he was not privy to the deal that the plaintiff had alleged existed between him and his father, although he said he was aware of the fact that there were loans obtained through the plaintiff as recorded in the books of K & K. He said that as he was not privy to all the conversations between his father and the plaintiff he thought it prudent to speak to his father about it. He then set out the conversation he had with his father at [34] of his affidavit.

On 17 February 2012 by reason of his father’s deteriorating health Mr Kordek Jnr was appointed under a General Power of Attorney.

Mr Kordek Jnr said that in February 2012 the plaintiff and he had a number of conversations and he set out the exchanges that he said took place at [36] of his affidavits. Mr Kordek Jnr’s evidence included the following:

Mr Kordek Jnr gave an account of a further communication with the plaintiff on 7 March 2012. In paragraph [37] of his affidavit he stated:

Mr Kordek Jnr set out conversations he had with the plaintiff concerning payments that had been made to him at [39]. On 17 April 2012 he caused a payment to be made to the plaintiff by direct deposit in the amount of $11,000 and on 20 April 2012 he caused a further payment to be made by direct deposit in the amount of $14,000.

Mr Kordek Jnr said that on 31 May 2012 he received a text message from the plaintiff “Please call me ASAP”. He then said that he called the plaintiff and they had a conversation to the following effect:

On 13 June 2012 Mr Kordek Jnr received another text message from the plaintiff to call him back. In paragraph [44] of his affidavit he said that he called the plaintiff and they had a conversation to the following effect:

Mr Kordek Jnr in his affidavit denied plaintiff’s evidence in his affidavit sworn 5 May 2014 to the effect that he said: “I understand the agreement that you made with my father, but do you have any proof in writing?”

He further denied that the plaintiff said to him words to the effect “I now have a bad feeling that your father tricked me and you are here asking me for proof in writing and you are just trying to protect your father and K & K”. He repeated that the plaintiff’s request was for him to exchange financial statements whereby K & K would state that it owed the plaintiff $550,000, payable in 24 months but, in return, the plaintiff would state that he owed K & K $550,000 less the balance outstanding from the monies he advanced for the Oran Park Project: affidavit at 65.

In addition to Mr Kordek Jnr’s affidavit evidence, the defendant tendered a USB flash drive containing two recorded private conversations, the first between Mr Kordek Junior and the plaintiff on 24 February 2012; and the second between Mr Kordek Senior and the plaintiff on 7 March 2012 respectively. Both conversations were recorded without the consent of the plaintiff.

The plaintiff objected to the proposed tender of the recordings and/or the transcripts of the recording upon the basis that they were illegally obtained contrary to the provisions of s 7 of the Surveillance Devices Act 2007. In essence, the defendant sought to tender the recordings so as to demonstrate that the plaintiff had said that he needed help with a serious financial problem and had sought assistance by asking Mr Kordek Junior to have his father write him a piece of paper stating that K&K owes him $550,000 payable in 24 months.

I admitted the recordings on 17 March 2016 and gave ex tempore reasons for doing so. The USB flash drive became Exhibit 12 in these proceedings and a transcript of the 24 February 2012 conversation was marked for identification as MFI 2.

The first conversation contained on the USB flash drive between Mr Kordek Junior and the plaintiff ran for approximately 52 minutes. The conversation almost exclusively consists of the plaintiff speaking to Mr Kordek Junior without interruptions or dialogue. Throughout the conversation, the plaintiff spoke in a calm tone. However, the conversation was without structure. It is often not clear to what precisely the plaintiff is referring to. I note, without seeking to extract the exact terms or words spoken in every exchange unless otherwise indicated, the following points arising from the recorded conversation:

The USB flash drive also contained a recorded telephone conversation between Mr Kordek Senior and the plaintiff on 7 March 2012. It appears that the recording does not begin until after the conversation had already commenced. The recording runs for approximately three minutes. In contrast to the previous recorded conversation, the plaintiff sounded to be quite agitated during this telephone call. The plaintiff is recorded as saying, “…I am expecting that we can do something together that you keep your word to help me but it is not happen [sic] what can I do, should I kill myself?” The plaintiff told Mr Kordek Senior that he wants to meet him in person and that he could be at his place in 45 minutes but Mr Kordek Senior declined saying, “It’s not the right time, you know, it’s not the right time. I ring you, I ring you because I remember you always be my friend, always was, always will be, and only a situation causing this problem, right? And you know, I feel so bad, you got no idea. You know my son he said to me, ‘Look Milorad ringing me, you know what can I say, I don’t know the situation and I can’t say nothing and only you can talk to Arcaba’. I promise him I ring you, I ring you now, but I have to talk to you again afterwards not now”. The plaintiff responded, “We have to do something, do you understand? Because it’s a huge thing, I can be mentally gone, I can be gone…arrangements and deals between you and me it’s gone…” Mr Kordek Senior said that he was ill and could not speak at the moment but that they would speak tomorrow”.

I was impressed with Mr Kordek Jnr. He appeared to be a straightforward witness and was not shown to have been unreliable. The plaintiff’s request to Mr Kordek Jnr was instead directed to obtaining a piece of paper from Mr Kordek Jnr that falsely represented that Mr Kordek Snr and/or the defendant owed him $550,000 in order to mislead creditors. The fact as I find it to be, that the plaintiff sought to enlist Mr Kordek Snr and Mr Kordek Jnr in a proposed deception upon the plaintiff’s creditors reveals a preparedness in the plaintiff to resort to unprincipled, indeed dishonest, measures in order to deceive or mislead them.

The plaintiff’s dishonesty in that respect, together with the making of false statements in his statutory declaration in support of the caveats discussed above indicates the need for extreme caution in undertaking a consideration of his evidence on other matters, in particular his evidence concerning the alleged Deferral Agreement itself.

Mr Locke swore an affidavit on 11 February 2015. He was cross-examined on 16 March 2016 at T 258-276, and re-examined T 276-278.

He said he met the plaintiff and Mr Kordek Snr in 2010. He had been introduced to Mr Kordek by Mr David Masterton, the CEO of Masterton Homes in respect of a development site at Middleton Grange.

Masterton Homes was involved in the Middleton Grange development providing house and land packages for the development.

He said that the plaintiff was provided with an office by Masterton Homes at its Warwick Farm premises which the plaintiff used on weekends to see potential customers for loans.

He said that in late 2010 or early 2011 he attended a lunch at the Cucina Restaurant. The plaintiff and Mr Kordek Snr were present as well as Mr Masterton and a Mr Bob Heymel, sales manager for Masterton Homes and four or five other persons. They were all sitting at a long table. Mr Kordek Snr was sitting on the opposite side of the table to his right. The plaintiff was sitting opposite him and was next to Mr Kordek Snr.

He said the discussions mainly took place in relation to the Middleton Grange Project. He said he saw the plaintiff and Mr Kordek Snr speaking to each other and he said he heard the words “Gregory Hills”.

Mr Locke was aware of the proposed development of Gregory Hills. He said that after he heard the words “Gregory Hills” he heard Mr Kordek say to the plaintiff words to the effect of “Don’t worry Milorad, you still have those eight blocks at Gregory Hills” at [15].

He said the tone of Mr Kordek’s voice appeared to be gruff and slightly raised. He said he did not hear the plaintiff saying anything in reply, nor did he hear any further discussions concerning Gregory Hills.

Mr Locke, in cross-examination, said that the lunch on 29 April 2011 lasted for about two and a half hours and there were many topics of conversation including in particular the Middleton Grange Development. It was put to him that at the luncheon the Gregory Hills Project was mentioned on more than one occasion. He said that could have been the case.

It was put to him in cross-examination that he was mistaken as to his recollection as set out in paragraph [15] of his affidavit. He disagreed. He said he was unaware of the fact that the claim made by the plaintiff was not for eight blocks of land but a claim for $1.6M.

He said that he had first been asked to recall the conversation at the luncheon “way after the event”: (T 275: 30-35). He later stated that would have been probably three or four months later.

Mr Cubrilo swore an affidavit on 13 February 2015 which was read in the proceedings.

He was cross-examined at T 322-345 and re-examined at T 345.

Mr Cubrilo stated that he had known the plaintiff for approximately 15 years. He met him through the Bonnyrigg Serbian Club and the Bonnyrigg White Eagles Soccer Club. He also had a business relationship with him involving a refinancing of a property that he bought in West Hoxton some five to six years prior to swearing him affidavit.

Mr Cubrilo stated that he recalled some time after Masterton Homes became involved at Middleton Grange he saw the plaintiff and Mr Kordek (an apparent reference to Mr Kordek Snr) at the Bonnyrigg Serbian Club. He said the conversation was in the following words:

Mr Cubrilo said at [7] the reference to “same deal” was that Mr Kordek would allow friends to obtain a block of land in his development and they could build a house and would not have to pay for the land until the house was completed.

Mr Cubrilo’s evidence was that he was first asked to recall the conversation referred to in him affidavit “probably a year ago”: (T 340: 43-45). It was put to him that his account in paragraph [6] of his affidavit was incorrect. He maintained that it was correct.

He agreed in cross-examination that he knew that the plaintiff had borrowed money from Mr Cubrilo’s parents. When it was put to him that the loan involved an amount of $150,000 he said he was not sure of the exact figure. When he was asked if the plaintiff had explained to him that it would be good for him to give evidence because if he won the case then he would be able to pay his parents back, he responded “No”: (T 344: 10-20).

Reference has already been made above to aspects of Mr Kordek Snr’s evidence.

As has been noted, Mr Kordek Snr swore two affidavits in the proceedings, the first on 30 September 2014, the second on 20 November 2015. He was cross-examined at T 375-439 and re-examined at 439-441.

The cross-examination commenced with background material including Mr Kordek Snr’s relationship with Dr Dan and the projects undertaken between them: (T 375-383); the Oran Park Project: (384-391); the plaintiff’s introduction of Mr Vic Petrovic to Mr Kordek Snr: (T 394-395); loan monies advanced by the plaintiff: (T 398-400); and events in October and November 2010: (T 401-413).

It was put to him in cross-examination that, following the loss of the Oran Park case, K & K had no more money and could not repay monies advanced by the plaintiff. Mr Kordek denied that that was then the position: (T 411: 5-12). As discussed below, this is a matter addressed in the affidavit evidence of Mr Kordek Jnr.

Mr Kordek Snr also denied that he told the plaintiff that he was looking at another project at Gledswood Hills with Vic Petrovic and other partners and that it was a big project and that K & K would have a 31% share in it. Mr Kordek Snr denied the factual proposition asserted in the question: T 411: 1‑25. It was put to him:

It was put to him that there was a discussion in which he said he was expecting at least $300,000 per block. He denied that he had said that to the plaintiff: (T 411: 45-50 to T 412: 1-10).

It was put that the plaintiff said to him:

He agreed that following January 2011 the plaintiff spoke to him and wanted some money at that time: (T 412: 40-50).

Mr Kordek Snr was then cross-examined about amounts of money that he paid to the plaintiff: (T 412: 40 to T 413: 30). It was then put to him:

He was cross-examined as to the Christmas lunch that took place in 2010. It was put to him that the plaintiff spoke with the plaintiff at the lunch on the subject of “eight blocks”. Mr Kordek denied that he spoke to him on that subject: (T 413: 45-50).

Mr Kordek Snr’s evidence was that Mr Locke had “got it all muddled up, that he started dealing with him in March 2011 but he was giving evidence about something that happened in 2010”: (T 414: 10-20).

He was asked whether he recollected something being said as to the plaintiff getting eight blocks of land at Gregory Hills at the lunch attended by Mr Locke. Mr Kordek Snr said that he absolutely did not say that: (T 414: 15-25). He denied saying “Don’t worry, Milorad, you still have those eight blocks at Gregory Hills”: (T 415: 45-50).

Mr McGrath, for the plaintiff, put to Mr Kordek Snr the evidence given by Mr Cubrilo as having heard him say in the course of the luncheon, “Don’t worry, Milorad has eight blocks in Gregory Hills and you can get one of them under the same deal”. Mr Kordek Snr said that he had never said that either to Mr Cubrilo, to the plaintiff or to anybody: (T 419: 30-35).

It was put to Mr Kordek Snr in cross-examination that his obligation was in fact to give the plaintiff $1.6M. Mr Kordek Snr rejected the proposition: (T 419: 35-40).

It was further put to him that he talked about eight blocks because he was expecting at that time to put through the subdivision following the development approval and to receive eight blocks for the plaintiff as part of:

He said he did not recall having said anything to Mr Cubrilo about the plaintiff having any interest in Gregory Hills: (T 420: 10-20).

He also denied in early 2011 speaking to the plaintiff at the Bonnyrigg Sports Club concerning a claim to interest or payment of money: (T 420: 15-30).

It was put to Mr Kordek Snr that the plaintiff had said to him that he knew he wasn’t entitled to his $1.6M “yet” but that the plaintiff owed $700,000 to Mr and Mrs Miller and to “Peta”. Any such conversation was denied by Mr Kordek Snr: (T 420: 30-40). It was then put that Mr Kordek Snr had said to the plaintiff words to the effect that: “…you couldn’t do that (a reference to paying him $1.6M at that stage) but that you might be able to manage half a million or $550,000”. Mr Kordek Snr responded “I never said that, sir”: (T 421: 4‑5).

It was then put that the plaintiff asked him for a piece of paper but Mr Kordek Snr responded that he did not ask for a piece of paper at that point in time. At a different point in time he said he did, later in the year 2011 at the end of the year going into January 2012, but at the time suggested in question he had not asked him for a piece of paper. He said that the plaintiff commenced to tell him his “real woes” and “all his problems”: (T 421: 5-20).

Mr Kordek Snr agreed that he plaintiff started asking for help in January 2011. The reference to the year 2011 it appears, was intended to have been a reference to January 2012: see (T 421).

Mr Kordek Snr was again cross-examined on discussions said to have taken place in approximately late November 2010 between the plaintiff and himself. It was put to him that he and the plaintiff had said that he had reached an agreement with the plaintiff as to $1.6M. Mr Kordek Snr rejected the proposition. He said there had been no such discussion: (T 422: 45 to T 423: 5).

It was put to Mr Kordek Snr that at the meeting in approximately late November 2010 Mr Kordek Snr had said to the plaintiff “for your comfort I will tell my business partners to add your name to the documents”. Mr Kordek Snr denied saying that: (T 423: 20-26).

He also rejected the proposition that the plaintiff had said to him at this time that he would appreciate having his name on the documents as he may need to use his share, the $1.6M, as security in any future financial transaction. (T 423: 25-35).

He rejected the proposition that there was a request made by the plaintiff in early January (the question implied 2011) to have proof of his “involvement in Gledswood Hills” and that he would be getting $1.6M from the project or that he said that he would “…do something about that”. Mr Kordek Snr said that the conversation did not occur: (T 423: 35-45)

Mr Kordek Snr rejected the proposition that the plaintiff came to him and said that Mr Cavric had put on a whiteboard the shares held in the Gledswood Hills Project but that his name was not included in the list and that Mr Cavric told the plaintiff to speak to Mr Kordek Snr: (T 426: 40-50).

Mr Kordek Snr said that he had had “hundreds of conversations” with the plaintiff in or about February 2011 but that “…never once did he mention anything about being put on any deeds”: (T 428: 1-5).

Mr Kordek Snr also rejected the proposition that in February 2011:

Mr Kordek Snr responded that it was of no consequence to him but that he had recorded in his books the loans that had been made by the plaintiff.

He again rejected the proposition that the plaintiff was seeking “a piece of paper” in respect of any interest in the Gledswood Hills Project: (T 429: 30-50).

It was put to Mr Kordek Snr that he had told the plaintiff that he was included as part of the 31% share K & K had in the Gledswood Hills Project. Mr Kordek Snr rejected that proposition: (T 430: 15-20). He also rejected that he said to the plaintiff that he should not worry about having the alleged interest in the 31% share documented. He denied that the plaintiff had told him that he trusted him and that his word was enough: (T 430: 20-35).

Mr Kordek Snr was then cross-examined in specific aspects of his own affidavit evidence at 434-439.

I closely observed Mr Kordek Snr during the course of his oral evidence. He, on a number of occasions, answered questions put to him in cross-examination with lengthy narrative statements which required me to intervene and direct him to confine himself to answering the questions put to him. At times he resumed his tendency to make long narrative statements requiring further directions being given to him. I have, of course, given close consideration to the question as to whether or not Mr Kordek Snr was deliberately obfuscating when at times he gave such lengthy answers. In that respect, I gained the clear impression that Mr Kordek Snr became excitable or emotional rather than setting out to obfuscate or deceive. I do not consider that his at times excitable and lengthy statements support a conclusion adverse to his credibility in terms of his truthfulness. I have rather assessed his evidence upon the substantive matters addressed in his affidavit evidence and oral evidence in evaluating his credibility in terms of both reliability and truthfulness. Overall I consider that he should be accepted as a credible witness.

The plaintiff relied upon written submissions dated 4 April 2016. These were supplemented with oral submissions at T 481-495. The plaintiff’s written submissions helpfully set out the argument and contentions advanced on behalf of the plaintiff.

The plaintiff’s case on the Amended Statement of Claim filed in Court on 18 March 2016 was based upon an alleged oral agreement which was said to have been subject to an implied term as to the time when the amount of $1,600,000 would become payable (i.e. on finalisation of the Gledswood Hills Project or the sale or other finalisation of the defendant’s interest in that project). The plaintiff had alleged that the oral contract was repudiated by the defendant, such repudiation having been accepted by the plaintiff.

The legal principles that guide a determination as to whether or not parties intended to enter into a contract and, if so, on what terms, were addressed in the plaintiff’s written submissions.

It was submitted for the plaintiff that the required objective determination as to the making of a contract involves a consideration, not only of the language used, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction, but not the participant’s subjective beliefs: at [11].

Reference was made in the submissions to authority for the proposition that it is both appropriate and necessary to have regard to the commercial circumstances surrounding the exchange of the relevant communications and, in particular, to the subject matter of those communications: Allen v Carbone (1975) 132 CLR 528 at 531-2; [1975] HCA 14.

In the present case, the “key areas” were stated to include the surrounding circumstances at the material time and the purpose and the object of the transaction objectively assessed in the light of such circumstances.

Reliance was placed upon alleged “admissions” made by Mr Kordek Snr: at [13]. I will return to this aspect below.

The plaintiff’s written submissions set out the background and surrounding circumstances in November and December 2010. I do not here reproduce those submissions, although I have carefully read and considered the matters set out in those paragraphs: at [19]-[22].

The submissions addressed the history of the four loans, dates and amounts, and circumstances in which each of the loans were made by the plaintiff: at [23]-[29]. Reference was also made to the evidence concerning the Oran Park Project, ultimately sold to a third party on 16 November 2010.

The plaintiff’s written submissions referred to the evidence of Mr Kordek Jnr in his two affidavits (CB 1 at 128-144; 144 – with exhibits at 145 to 289; CB 2 at 279-600; and CB 3 at 601-632). Reference was made to Mr Kordek Jnr’s evidence that the first that he had heard of an oral agreement whereby K & K (the defendant) would pay $1,600,000 from proceeds of which 31% interest in the Gledswood Hills Project was the initial letter from Stojanovic Solicitors dated 29 August 2013.

The plaintiff’s submissions contended that Mr Kordek Jnr did not mention that he had made a recording of a conversations between the plaintiff and his father but that he had given an account of the conversation between him and the plaintiff “…that was more coherent and less favourable to Milorad Arcaba than the actual recording of part of that conversation” at [35].

At [36]-[39] submissions were made on behalf of the plaintiff as to Mr Kordek Jnr’s evidence in the defendant’s case which was said to be evidence directed at supporting the financial position of the defendant at the time of the alleged making of the Deferral Agreement. That evidence, it was noted, was directed to establishing that the defendant was sufficiently secure at that time, the defendant’s case being that having regard to such evidence, it was unlikely that he would have entered into an agreement on such generous terms: at [36].

However, it was submitted that Mr Kordek Jnr admitted in cross-examination that he had not prepared the accounts of the defendant and was unable to explain why the Oran Park debt of some $5,500,000 did not appear as a liability in those accounts. It was also submitted that he did not understand the balance sheet of 30 June 2010 that was attached to his affidavit. Reference was made to a graph that had been produced by Mr Kordek Jnr as to “available funds” and relied upon this in his evidence to say that the defendant did have available funds to repay the $100,000 balance due to the plaintiff at the time the plaintiff lodged the caveats. The graph, it was noted, covered the relevant period and it was submitted it supported the plaintiff’s argument that the defendant had very little cash at the relevant time.

It was submitted that Mr Kordek Jnr confirmed that the income of the defendant in the year ended 30 June 2009 was a little over $18,000 and in the year ended 30 June 2010 a little over $19,000. Mr Kordek had claimed that the difficulty concerning the defendant’s funds being tied up in the Raceview and Middle Grange projects at the relevant time did not matter, as the defendant had lent more than $2 million to Kordan (Australia). The submission for the plaintiff, however, was that that this money had been spent on acquiring the Raceview property in Queensland and would not have been available: at [38].

It was submitted that Mr Kordek Jnr’s evidence did not assist the defendant: at [39].

In relation to the position of the plaintiff as at the time of the alleged making of the Deferral Agreement, it was acknowledged that he also needed money in the second half of November and December 2010: at [40]. Reference was made to the plaintiff’s affidavit evidence which included him saying to Mr Kordek Snr “What is the solution, I need money as well”: at [28]-[29]. The cross-examination, it was submitted, did not challenge this but simply pressed the plaintiff to confirm it and that after some “confused exchanges” the plaintiff provided the confirmation.

It was submitted that the circumstances of the parties in or about November and December 2010 were such that each of them had an urgent need for money: at [41].

It was noted that the plaintiff’s work brought him into contact with a lot of people in the property industry in south western Sydney and that the CBA and Masterton Homes formed a “major part of his plans for Gledswood Hills”. Each of those entities had contact with him and it was submitted that it would have been “…a very difficult situation for the defendant if Milorad Arcaba had taken legal advice and issued a statutory demand to wind it up”: at [42].

It was noted that Mr Kordek Snr stated “I can’t sound like a bum with no money”: CB3 at 723. The submission proceeded that, objectively, there was every reason for Mr Kordek Snr to do whatever he could to persuade the plaintiff to wait for his money: at [43].

By contrast, the plaintiff’s submissions continued, these circumstances are inconsistent with Mr Kordek Snr’s evidence in which he said he offered to pay $200,000 to Mr Arcaba on 13 November 2010 (CB2 at 302 [63]-[65]) and having received a response on 14 November 2010 that rather than returning the funds, the plaintiff wanted to give the defendant another $800,000: (CB2 at 302 [67]).

A number of submissions were made in relation to “the Deferral Agreement”: at [45]-[58]. They include the following:

Reliance was placed upon the affidavit evidence “…of the preliminary telephone conversation and of the conversation in late November or early December 2010 in which the Deferral Agreement was made”: at [47]. The alleged content of the conversation was extracted into paragraph [48] of the plaintiff’s written submissions.

I have, of course, carefully read all of the submissions in that respect but do not reproduce the full terms of them into this judgment. In relation to the direct conflict of evidence between the plaintiff and Mr Kordek Snr as to whether there was a Deferral Agreement conversation, it was acknowledged that the onus of proof in that respect of course, fell upon the plaintiff. In that respect reference was made to the observations in Watson v Foxman, supra, at 318. That, of course, was a case involving the application of principles in the assessment of evidence in a case involving civil proceedings in which allegations were made of misleading or deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth).

However, that said, the approach in Polon in the assessment of spoken words and whether they were misleading are, I accept, of assistance in the resolution of the conflict as to the central facts in the present case. In Watson v Foxman McClelland CJ in Eq cautioned as to the relatively subtle influences that can flow from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Additionally, as his Honour noted, human 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 process of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious considerations of what should have been said or could have been said. As McClelland CJ in Eq in Watson v Foxman stated:

I accept, of course, the submissions made at [46] of the plaintiff’s written submissions as to the need for careful consideration to be given to the reliability of evidence given by the respective witnesses, bearing in mind the inherent risks involved in making findings of fact based on demeanour of witnesses, that is, the danger of too readily drawing conclusions about truthfulness and reliability based solely or mainly upon the appearance of witnesses as they give evidence.

In the plaintiff’s written submissions a number of matters in relation to the reliability of the plaintiff were identified, in that respect in particular, in [49]-[58] of the defendant’s written submissions.

The matters to be taken into account were said to include the following:

The cross-examination on the lastmentioned matters did not reveal any meaningful inconsistences: at [49]-[50].

It was noted that the critical conversation occupied very little of the plaintiff’s cross-examination and that on the second day there was cross-examination on the pleading of the Statement of Claim in relation to the Deferral Agreement and that this appeared to be the focus of the questions: at [51].

The plaintiff’s account of the “critical” conversation between him and Mr Kordek Snr is said to have included reference by Mr Kordek Snr to his intention to carry out a project at Gledswood Hills and yet the name Gledswood Hills was adopted later in time (the area had previously been known as Gregory Hills and was changed to Gledswood Hills at the end of 2011, i.e. well after the alleged critical conversation). In the plaintiff’s submissions, this alleged discrepancy was said to be explicable by virtue of the fact that the name Gledswood had been associated with the land and the area since the 1880s: at [53].

The written submissions frankly and properly conceded that there were aspects of the plaintiff’s evidence which had not been included in his affidavit evidence: see, for example, at [50].

Reference was made to the plaintiff’s cross-examination at [54] of the plaintiff’s written submissions. The following matters were noted:

As to the event upon which payment under the Deferral Agreement would fall due, it was noted that the plaintiff’s evidence that he had in fact discussed that aspect with Mr Kordek Snr was evidence that the plaintiff had only given in cross-examination. It was noted that the cross-examiner had pressed the plaintiff on why the evidence as to the timing or event that would trigger the payment of the $1.6M had not been referred to in his affidavit evidence: at [56]. The plaintiff did not give any direct explanation for the omission. The submission for the plaintiff in this respect was:

It was submitted that the cross-examination of the plaintiff on the Deferral Agreement conversation would not lead the Court to doubt his evidence: at [57].

Specific submissions were made in respect of the evidence of Mr Locke: at [59]-[67] and of Mr Cubrilo at [68]-[73]. I do not here reproduce all of the submissions contained in those paragraphs. I have of course read and considered all of the material in those paragraphs.

In summary, the submission was that the Court would accept the evidence of both Mr Locke and Mr Cubrilo in relation to statements they each claimed were heard by them. The submission made in relation to the evidence of these two witnesses was in the following terms:

It was submitted that Mr Locke was cross-examined on matters of marginal, if any, relevance and that the cross-examiner put to him that he was mistaken and did not hear the words that he said he heard spoken by Mr Kordek Snr at the luncheon (i.e. “Don’t worry Milorad, you still have those eight blocks at Gregory Hills”). Mr Locke disagreed. It was submitted that no basis for a formal challenge to Mr Locke’s evidence was advanced in the cross-examination.

It was observed that no suggestion was made to Mr Locke that that he was other than a partial witness: at [65]. It was contended that the “admission” attested to by Mr Locke is utterly inconsistent with Mr Kordek Snr’s explanation that nothing happened. It was submitted that the “admission” clearly pointed to at least some aspects of the Deferral Agreement having occurred. It was argued that there was no other reasonable explanation for what Mr Kordek Snr said.

It was submitted that the evidence of Mr Locke should be accepted in its entirety. It was further submitted that based on this evidence, the Court should prefer the plaintiff’s account of the Deferral Agreement conversation over Mr Kordek Snr’s claim that there had been no such conversation: at [67].

It was submitted for the plaintiff that Mr Cubrilo was another independent witness who heard a similar “admission” made by Mr Kordek Snr at the Bonnyrigg Sports Club that was inconsistent with Mr Kordek Snr’s claims: at [68].

It was noted although that Mr Cubrilo was cross-examined at some length about the Middleton Grange Project the relevance of this line of questioning was unclear. Mr Cubrilo stated that the reference to “the same deal” was based upon an arrangement Mr Kordek Snr had entered into with a Mr Veljovic some 25 years before.

It was submitted that the alleged statement made by Mr Kordek Snr as to the plaintiff having eight blocks in Gregory Hills was inconsistent with Mr Kordek Snr’s claim that the Deferral Agreement never happened. It was submitted that Mr Cubrilo had good reason for asking and noting what was said by Mr Kordek Snr at the time, as he was interested in obtaining a block of land in Gregory Hills on favourable terms.

It was submitted that the evidence of Mr Cubrilo should be accepted. It provided a reason for preferring the account of the plaintiff concerning the making of the Deferral Agreement over the claim by Mr Kordek Snr that nothing occurred: Plaintiff’s Written Submissions at [72].

In relation to Mr Kordek Snr’s evidence, it was contended that he refused to engage with the process of cross-examination and attempted to lecture and chide rather than answer questions. When directed to answer questions directly, he apologised but did not change his approach: at [74].

In relation to the occasion about which Mr Locke gave evidence, Mr Kordek Snr stated that Mr Locke had “got it all muddled up”. However, it was stated that he admitted that he talked about Gregory Hills but denied that he had referred to eight blocks: at [75]. It was noted that Mr Kordek Snr also denied that he said anything about eight blocks in front of Mr Cubrilo. It was submitted there does not appear to be any reasonable explanation as to why Mr Cubrilo might say such a thing if it were not true. It was submitted that Mr Kordek Snr’s explanations are not sufficient to explain the evidence of Mr Locke and Mr Cubrilo.

The submission was that the Court would make findings of fact favourable to the plaintiff in terms set out at [77].

In terms of legal analysis a number of submissions were made at [79]-[89]. In summary it was submitted that the Court should find that the alleged Deferral Agreement conversation occurred and gave rise to a binding contract between the plaintiff and the defendant. To that end, it was submitted all the elements of a conventional contract were present: at [80].

It was additionally submitted that the terms of the loan were sufficiently certain to be enforceable. There was consideration provided on both sides (the defendant promising to pay $1,600,000 and the plaintiff agreeing to defer repayment of monies due to him) and the alleged agreement was a business contract which was given effect to, in part, by the parties. It was submitted that it is clear that there was an objective intention to be bound by the agreement.

Finally, it was submitted that the contract was subject of an anticipatory breach of a repudiatory nature which was accepted by the plaintiff.

Submissions were also made in relation to particular principles that apply in determining the assessment of damages at the time for due performance of the alleged agreement: at [87]-[89].

The defendant relied upon two sets of written submissions. The first was the Outline of the Defendant’s Closing Submissions. The second was the Defendant’s Response to Points Arising out of the Plaintiff’s Written Submissions of 4 April 2016.

In the first set of written submissions a number of matters were raised as to the pleaded case on the Deferral Agreement at [5]-[6]. It was noted that the alleged genesis of the agreement was the defendant’s loss in the Oran Park litigation. In that respect it was said that as a result of the loss, the plaintiff asserted that the defendant could not repay the $195,000 that he, the plaintiff, had advanced in the period 4 August to 18 November 2010.

The central allegation relied upon was reproduced at [5.3] of the defendant’s written submissions.

It was noted at [5.4] that the plaintiff pleaded by an amended term of the alleged Agreement, that the defendant would pay the amount of $1.6M when the Gledswood Hills Project was finalised and/or the defendant’s interest in the project was finalised or sold.

It was noted that the plaintiff’s case had been that, though the time and circumstances triggering the payment of the $1.6M were never discussed, such a term was to be implied.

However, although not referred to in his affidavits, the plaintiff gave oral evidence in cross-examination in which he contended that the events upon which payment of the $1.6M was payable were in fact discussed between Mr Kordek Snr and himself when the Deferral Agreement was made. In that respect, as earlier noted, the plaintiff’s written submissions at [56] adverted to what was contended amounted to “direct evidence” of the term as to the time of payment of the $1.6M.

The fact that such a term was not included in either of the plaintiff’s affidavits, and was not the subject of any written record, it was submitted for the defendant, raises the question as to whether or not ultimately the evidence supports an express or an implied term as alleged (in the alternative) in the Amended Statement of Claim.

The defendant relied upon the contractual principle that subsequent conduct of a party can be examined to assist in the resolution of the question as to whether a contract was made at an earlier date. A number of decisions were cited in aid of the submission including the High Court’s decision in Allen v Carbone, supra, at 532-3.

The defendant submitted that when the conduct of the plaintiff is examined in the present case it is clear that:

The reason or explanation for the absence of such conduct by the plaintiff, it was submitted, is the fact that no Deferral Agreement had been entered into.

The defendant submitted that, as the plaintiff relied upon conversations to establish the contract, there is a need to establish the alleged Deferral Agreement with a degree of precision that enables the Court to be satisfied as to the existence of an Agreement as claimed and as to the terms of such agreement: at [23].

It was submitted that on the plaintiff’s own evidence, the Court could not be satisfied of the conversations relied upon to establish the Deferral Agreement.

The defendant contended that the evidence establishes that the plaintiff was not a witness of truth. Reliance was placed upon evidence directly concerning the Deferral Agreement to support this submission as well as evidence in relation to what were termed the less immediate matters set out in Schedule 1 to the defendant’s written submissions.

The defendant, in particular, also relied upon the absence of any contemporaneous corroborating documents or other witness evidence that makes good the terms of the alleged Deferral Agreement. In the absence of such evidence it was submitted that the plaintiff’s evidence should be rejected and on that basis, his case fails: at [27].

It was submitted that in a case such as this, the plaintiff’s credibility is central. Both logic and objective facts, it was stated, were inconsistent with the existence of the agreement for which the plaintiff contends.

It was the defendant’s submission that the plaintiff had not discharged the onus of proof in respect of the alleged Deferral Agreement. In support the defendant relied upon evidence in various segments or categories.

At the outset it was noted that the defendant had made clear that it came to meet the pleaded case and no other case: (T 6, 34-35; T 7, 13-17; and T 7, 36-37). However, the plaintiff sought to amend his pleaded case. His case in that respect was as follows:

The defendant’s submission was that the plaintiff had changed his case from being a wholly oral express contract, to one which was partly express and partly implied. It was submitted that this change in the pleaded case was significant because the verified pleadings of the plaintiff asserted that the circumstances triggering the payment of the $1.6M had never been discussed and was to be implied. The submission in this respect was: “…This belated amendment changes the agreement on which Mr Arcaba sues in an important respect, thereby undermining Mr Arcaba’s case and his credibility.”: Closing Submissions at [6].

The defendant’s closing submissions addressed accepted principles in determining a claim based upon an alleged express oral agreement where there exists no contemporaneous documentary evidence in relation to the alleged agreement.

In that respect, the following were noted:

The relevant case law authorities establish that subsequent conduct can be examined to assist in the resolution as to whether a contract was made at an earlier date. The “conduct” includes communications between the parties in dispute: the relevant authorities were referred to at [19] of the defendant’s closing written submissions.

In the application of those principles in the present case, it was noted:

It was submitted that the reason for this is because the parties did not enter into the Deferral Agreement. It was further submitted indeed that the conduct and communications between the parties are wholly inconsistent with the existence of any agreement.

In this respect, conversations relied upon by the plaintiff to support his claim in contract set out in his affidavit evidence, it was submitted, did not occur. It was submitted that Mr Kordek Snr’s evidence was not shaken on that point.

Given that the contract claim in the proceedings is based on conversations alleged to have occurred, the plaintiff, it was noted, was required to prove the words that were spoken in order to establish the Deferral Agreement and to do so with a degree of precision such that the Court can be satisfied as to both the existence and the terms of the Agreement to the civil standard.

Reliance was placed upon what was termed in the defendant’s submissions “Mr Arcaba’s linguistic manner and style” when considered in the context of the formal setting of the airing of the proceedings as well as, as recorded in the conversation of 24 February 2012 between him and Mr Kordek Jnr (an informal setting) makes clear, so it was argued, that Mr Arcaba did not communicate in the manner that is set out and is recorded at CB 1, 27-29. It was submitted that the language, and manner and tone as to the “critical conversations” and others in the affidavits, “are not those of Mr Arcaba”: at [24].

Accordingly, it was submitted that on Mr Arcaba’s own evidence, the Court could not be satisfied of the conversations relied upon by him to establish the Deferral Agreement. In addition, it was to be taken into account Mr Kordek Snr’s denial that such conversations ever took place.

It was submitted that the Court would need to consider the credit of the parties’ witnesses, in particular that of the plaintiff who carries the evidentiary burden. The submission was that the overwhelming evidence is that the plaintiff is not a witness of truth: at [26]. It was said, as noted above, that this was clear by evidence which bears directly on the Deferral Agreement, as well as evidence in relation to what were termed “less immediate matters” (referred to in Schedule 1 to the defendant’s submissions).

It was accepted that truthfulness and reliability is not to be assessed solely from the demeanour of witnesses. Contemporaneous objective facts and “apparent logical events” it was submitted has just as important a role to play: at [28]. It was submitted in this case that both logic and the objective facts were inconsistent with the existence of the agreement for which the plaintiff contends.

The submission was that there was no agreement between the plaintiff and the defendant whereby the defendant granted or conferred upon the plaintiff an entitlement to $1.6M, whether on the pleaded terms or otherwise: at [30].

It was submitted that an analysis of the evidence establishes that the plaintiff’s evidence produces no less than seven very different accounts of the agreement. Five of these accounts, it was said, arise out of the plaintiff’s witness evidence, documents he created or the recorded conversation of 24 February 2012. A further two accounts are the accounts given by the witnesses Messrs Cubrilo and Locke. The evidence of the latter two witnesses it was said was led to corroborate the plaintiff’s evidence but it was submitted that the evidence did not support the plaintiff’s case: at [31].

The defendant’s written submissions then identified the different versions or accounts of the alleged Deferral Agreement based on the evidence in the plaintiff’s case.

Whilst I do not here set out the detailed points in relation to what was said to be versions 1 to 7 (at [32]-[76.4]) of the Outline of the Defendant’s Closing Submissions, I have of course carefully considered the submissions and will refer to many of the matters therein discussed in the Consideration section of this judgment. That said, there are specific matters which the defendant identifies in paragraph [32] of the Outline of the Defendant’s Closing Submissions relate to particular matters said to be objective facts that are inconsistent with the alleged oral agreement relied upon by the plaintiff. They include the following:

In addition to the above matters, the defendant relied upon the inconsistency in the plaintiff’s pleaded case in which initially he sought to allege in paragraph 14A to the Amended Statement of Claim, that the basis for the timing and circumstances of payment were not discussed but were to be implied. However, in cross-examination he claimed that the timing issue was discussed: at [33] and [34].

Finally in relation to the submissions made as to “Version 1” set out in [32] of the closing submissions, it was noted that the plaintiff gave an account of a “whiteboard” conversation that he had with Mr Cavric in February 2011. However, Mr Cavric, who was subpoenaed to give evidence, was not called to give evidence and an adverse inference should be drawn against the plaintiff that Mr Cavric’s evidence would not assist him: at [36].

Submissions were also made on behalf of the defendant in relation to what was termed “Version 2: The recorded meeting between Mr Kordek Jnr and Mr Arcaba…” It was contended that the “extraordinary demands” made by the plaintiff upon Mr Kordek Jnr described or referred to his alleged agreement with the defendant in six ways during the course of one lengthy conversation. It is said that it was significant that during the conversation the plaintiff did not assert the agreement on which he sues, nor called for its performance: at [38]. These aspects will be dealt with below.

Included in the claimed six iterations of the alleged Agreement when the plaintiff met with Mr Kordek Jnr in January 2012 (paragraphs [40]-[54] of the Defendant’s Closing Submissions) reference was made to a number of matters that will be discussed in the ‘Consideration’ below.

In relation to what was termed “Version 3: The caveatable interest…” the defendant’s submission was that the lodging of the caveats by the plaintiff establishes that he was “…an untruthful witness or one who is reckless with his account of the salient events; either way, this Court ought not to accept his evidence”: at [61].

It was submitted that the caveats were:

It was also submitted that the caveats bear no resemblance to the Deferral Agreement on which the plaintiff sues in these proceedings: Closing Submissions at [60].

The defendant submitted that in the correspondence written by the plaintiff in his communications with CBP Lawyers over the caveats, nothing was mentioned by the plaintiff in his letter about an interest (monetary or in realty) in the Gledwood Hills Project. It was submitted that the letter does not support the plaintiff’s case. It was noted that when confronted with this during cross-examination, the plaintiff could not explain why there had been no assertion in the letter of the terms of the Deferral Agreement or their non-performance: at [63].

In relation to what was termed “Version 6: The Cubrilo Account,” there was a reference to an alleged statement attributed to Mr Kordek Snr to the effect that the plaintiff had an interest in eight lots (distinguished from the claimed value of eight lots). It was submitted on behalf of the defendant that what Mr Kordek Snr is asserted to have said is open to a number of interpretations including:

The submission for the plaintiff was that whatever the correct interpretation of the conversation which Mr Cubrilo accounts, it was not the agreement which the plaintiff pleads or which he deals with in his affidavit evidence: at [71].

It was further submitted that Mr Cubrilo is not a witness on whom the Court can rely. In that respect:

In relation to the evidence of Mr Locke in which he stated that Mr Kordek Snr said “Don’t worry, Milorad. You still have those eight blocks at Gregory Hills” the defendant accepted that Mr Locke was an impartial witness and did his best to give accurate evidence: at [75]. However it was submitted that his evidence did not assist the plaintiff’s case for the following reasons:

The defendant submitted that the repayment of the four loan advances is not unequivocal conduct that supports the existence of the Deferral Agreement. It is equally plausible with and without the Deferral Agreement. Accordingly, it does not assist the plaintiff’s case: at [77].

It was submitted that the plaintiff was repeatedly asked by the Court and during cross-examination why he did not write a letter of demand asserting the existence of the Deferral Agreement and its non-performance. He could not provide an added explanation for so simple a step: at [78].

The Gregory Hills joint venture involved a number of interested parties, including Messrs Petrovic, De Lutiis, Covington and Kordek Snr, through their corporate vehicles as unit holders in the trust. The corporate vehicles owned shares in BADC. There was open and transparent communications with Masterton Homes in November/December 2010. These were not copied to the plaintiff. It was submitted this was inconsistent with the manner in which the plaintiff contends that Mr Kordek Snr bound the defendant to give him the value of eight blocks of the development: at [79].

It was further noted that the joint venturers of BADC mortgaged the Gregory Hills property to NAB to secure loan funding for the purchase. The joint venturers also gave corporate guarantees. It was submitted it was inherently implausible that an experienced developer knowing that BADC needed funding to complete the purchase and the need to provide security to the funder would “dilute its interest” in the project for the benefit of another, and yet not require that other (the plaintiff) to provide security to the NAB: at [80].

It was additionally submitted that the commerciality of the transaction for which the plaintiff contended, was one that converted $195,000 loan to $1.795M, an extraordinary multiple of 9. Further, it was submitted that the plaintiff was guaranteed $1.6M irrespective of the ultimate sale value of the lots or the associated costs of development. It was noted that this was in circumstances where the defendant had a net asset position of just under $7M as at 30 June 2010 and access to cash exceeding $1.2M in November 2010 (CB2 at 584; and CB 3 at 610-613). The submission for the defendant was that this was a commercially improvident transaction in the extreme and one that was unlikely that an experienced property developer such as Mr Kordek Snr would agree to: at [81].

It was submitted that the plaintiff’s “wholly inconsistent conduct post the alleged agreement of late November 2010 and the objective facts eviscerate Mr Arcaba’s case”: at [83].

It was the defendant’s submission that it was the plaintiff’s unpaid debts

It was submitted by the defendant that the proceedings should be dismissed with costs.

The defendant also relied upon the document entitled “The Defendant’s response to points arising out of the Plaintiff’s Written Submissions of 4 April 2016”. I do not here reproduce all of the points therein made, other than to note:

In accordance with accepted principles, in a case such as the present where a party seeks to rely upon spoken words as a foundation for a cause of action based on contract, the conversation must be proven to the reasonable satisfaction of the Court and that any consensus reached was capable of forming a binding contract.

As earlier discussed, it has been observed that in cases involving reliance upon words spoken in the context of an alleged cause of action, in many cases (but not all) human memory of what was said in conversation is fallible for a variety of reasons, as observed by McLelland CJ in Eq in Watson v Foxman, supra. Ordinarily the fallibility of memory increases with the passage of time, particularly where dispute and litigation intervene, and the processes of memory are overlaid by perceptions of self-interest or conscious consideration of what could or should have been said.

The proceedings were conducted by the plaintiff largely upon the basis of the single factual issue as to the alleged making of the Deferral Agreement, as pleaded that:

The determination as to whether or not the alleged Deferral Agreement was made, in circumstances in which no contemporaneous documentation to confirm it was made, has necessitated reliance by both parties on oral evidence and a significant volume of material in order to prove or disprove the alleged oral agreement.

Whilst ultimately the issue in the proceedings requires an assessment of the credibility of key witnesses, in particular of the plaintiff and Mr Kordek Snr, a large amount of the evidence was directed to proof of ancillary or collateral events and circumstances that were claimed as either confirming or negating and consistent or inconsistent with the making of the Deferral Agreement.

Whilst regard has been given to considerations of demeanour of the plaintiff, Mr Kordek Snr and Mr Kordek Jnr in giving evidence, the ultimate determination of the central issue largely depends upon the evidence given by each of them with regard to the central factual issue as to the alleged making of the oral Deferral Agreement and also to the collateral events and circumstances referred to the preceding paragraph.

Particular factual matters that have been the subject of consideration include the following:

It was common ground that prior to 29 August 2013 (the date of a letter of demand from Stojanovic Solicitors) no note, memorandum, email or correspondence was made by either party concerning the Deferral Agreement or its terms. It was part of the defendant’s case that the plaintiff was a person who had familiarity with lending practices, finance brokerage and loan securities. With business experience of that kind the defendant argued, and as I accept, had the defendant in fact agreed to pay such a substantial amount of money to the plaintiff ($1.6M) it would be expected that the plaintiff would require or insist upon it being evidenced it in some formal way such as a written contract or note, memorandum or correspondence.

Whilst the plaintiff and Mr Kordek Snr communicated from time to time by email, there are no emails or correspondence by or on behalf of the plaintiff before 29 August 2013 asserting or referring to the Deferral Agreement.

Accordingly, the letter from Stojanovic solicitors dated 29 August 2013, addressed to The Manager, K & K Real Estate, represents the first communication approximately two years and nine months after the alleged Deferral Agreement was alleged to have been made asserting its occurrence or existence.

The letter referred to instructions to the effect that Mr Kordek Snr on behalf of the defendant informed the plaintiff that his company had lost the court case concerning the Oran Park land. At p 2 of the letter it was stated that, following that information (without referring to any particular date), in accordance with Mr Stojanovic’s instructions a further oral agreement was entered into by his client, the plaintiff, with the defendant.

The terms of the agreement, as asserted in Mr Stojanovic’s letter was:

It may be noted that there was no reference here to any terms that specified the event or circumstance in which the sum of $1.6M would become payable. That was a matter, as earlier noted, that arose in the course of the hearing on an application on behalf of the plaintiffs to amend the Statement of Claim to allege that the event or events upon which payment would become due under the alleged Deferral Agreement was the subject of either an implied or express term.

Accordingly, the absence of any record, note or memorandum of the Deferral Agreement in or about November 2010 or in the period of two years nine months thereafter by the plaintiff, an experienced businessman, is to be assessed in the absence of any satisfactory explanation for not having recorded the alleged oral agreement.

As extracted above, in paragraph [29] of his affidavit sworn 5 May 2014, the plaintiff set out the conversation he alleges took place in late November 2010 with Mr Kordek Snr which he contended constituted the Deferral Agreement.

On the plaintiff’s own evidence at paragraph [30] of his abovementioned affidavit, he said that he was having “some financial difficulties” and needed money to pay some of his creditors. He said he asked Mr Kordek Snr for “something in writing” as proof of his involvement in the Gledswood Hills Project and that he would be receiving $1.6M.

The plaintiff’s evidence was that he later Mr Kordek Snr told him “It’s too complicated with so many parties involved. You are included as part of the 31% share in K & K. You have my word and you should not have to worry about that”.

A part of the rationale, according to the plaintiff’s evidence at [29] of his affidavit, sworn 5 May 2014, was to have his interest documented in the project, so that he could use his “share” or interest as a form of security. Though being pressed by his creditors there is no satisfactory explanation as to why the plaintiff did not take steps to create a written record of the Deferral Agreement and insist or require Mr Kordek Snr’s acknowledgement of a contractual obligation to pay him $1.6M.

The fact that he did not is remarkable given the amount of money allegedly promised, his pressing financial circumstances and that the at the outset of he requested documentary evidence of the agreement so that he could use it to show to his creditors so as to reassure or placate them. Against that background, the plaintiff, in my assessment, failed to advance a believable explanation as to why he failed to insist that Mr Kordek Snr fulfil his alleged undertaking to have his interest documented. His evidence that Mr Kordek Snr deflected him by simply saying that, in effect, it was all too complex does not in my opinion provide or constitute a cogent or believable explanation.

In addition to the plaintiff’s failure to insist or pursue some form of written record or memorandum of the Deferral Agreement, his conduct in other respects raises a number of issues which go directly to his credibility concerning the alleged Deferral Agreement.

Whatever trust the plaintiff may have had in Mr Kordek Snr prior to June 2012, it became clear that that trust had dissipated or at least had begun to dissipate by the time he decided to caveat Kordek Properties (those of Kordek Real Estate Pty Ltd and K & K Real Estate Pty Ltd) in respect of monies ($750,000) which he claimed (wrongly) that he had loaned to the two companies, each of which was a registered proprietor of the land specified in the caveats. In other words, by June 2012 when he lodged the caveats, the trust he claimed that he had previously had in Mr Kordek Snr appears to have well and truly run its course. As earlier discussed, the plaintiff accepted in evidence that the facts stated in Schedule 1 to each of the caveats as supporting the estate or interest in the land described, were incorrect.

Following the letter dated 29 June 2012 from CBP denying that their clients ever borrowed the amount of $750,000, the plaintiff’s reply dated 10 July 2012 asserted that the terms of his agreement with Mr Kordek Snr were “…that, in return for the loan of $195,000, K & K Real Estate would ensure that I would receive $750,000 when it was in funds or within two years at the latest”.

The plaintiff’s above reply letter to CBP does not refer to the alleged Deferral Agreement, but to an asserted agreement that, in return, he would receive $750,000 on the terms stated.

In the fourth paragraph to the plaintiff’s reply letter to CBP, dated 10 July 2012, the plaintiff specifically stated that in return for the loan of $195,000, K & K Real Estate would receive an amount of money, namely, “…that I would receive $750,000 when it was in funds or within two years at the latest”. There was no reference to any agreement to pay an amount of $1.6M.

In the context of these proceedings the omission of any reference by the plaintiff in his letter of 10 July 2012 to the alleged Deferral Agreement, is significant.

On the basis of the plaintiff’s evidence in cross-examination as to his financial position in 2012, it is apparent that not only had he lost trust in Mr Kordek Snr but he was also under serious financial pressure from his creditors. On the evidence it may be seen that his phone call to Mr Kordek Jnr at the end of the January 2012 in which he sought financial support was driven by his serious financial position at that time.

As discussed above, Mr Arcaba told Mr Kordek Jnr in his call to him at that time, that he needed help “…with a serious financial problem I have”: Affidavit of Mr Kordek Jnr sworn 30 September 2014 at [32]. In that telephone call he told Mr Kordek Jnr that he owed a lot of money to some people and he did not have enough money to pay them back. His request was:

I have earlier indicated that I generally accept Mr Kordek Jnr’s evidence including in particular his evidence in relation to his recollection of this telephone call. The absence of any reference by the plaintiff in the telephone call to the Deferral Agreement or that the defendant was allegedly indebted to him bears directly, of course, upon the issue as to whether or not a Deferral Agreement was made as the plaintiff claimed. The amount of $550,000 referred to in the telephone call by the plaintiff was not said to have related to the Deferral Agreement or to any agreement. The fact that he wanted a piece of paper to say that that $550,000 was payable in 24 months confirms other evidence that the plaintiff’s financial position was in fact at a critical stage and that he was seeking to establish a false position to represent to creditors. In the latter respect, the request by the plaintiff to Mr Kordek Jnr in the telephone call reflects badly upon the plaintiff, in effect, in seeking Mr Kordek Jnr’s assistance in devising a stratagem that would falsely represent to creditors that K & K owed him a significant amount of money.

In relation to the conversation that Mr Kordek Jnr said he had with the plaintiff in February 2012 (at [36] of his affidavit) on Mr Kordek Jnr’s account of the conversation, which I accept, the plaintiff did not assert the making of a promise by his father, Mr Kordek Snr that he would be paid $1.6M for extending the loans amounting to $195,000. His request once again was for a piece of paper stating that the defendant owed him $550,000 payable in 24 months. Again, in seeking Mr Kordek Jnr’s cooperation, he was seeking to enlist his support to establish a deceptive and false stratagem when the defendant company was not in fact indebted to him for $550,000.

In summary, the request made by the plaintiff to Mr Kordek Jnr does not support and in many respects is materially inconsistent with the making of the alleged Deferral Agreement. Although at the time it appears on the evidence that the plaintiff had access to legal advice, no formal demand was made in 2012 of the defendant to honour any agreement and certainly not the alleged Deferral Agreement. This was despite his apparent loss of trust in Mr Kordek Snr and what appears through the 2012 to have been a deteriorating financial position for the plaintiff.

As discussed above, the plaintiff sought leave at the hearing of the proceedings to amend the Statement of Claim to rely in the alternative upon an implied term as to the event or events that would trigger the claimed obligation of the defendant to pay the amount of $1.6M under the alleged Deferral Agreement: Amended Statement of Claim dated 17 March 2016 at [13] and [14].

Amongst the many inconsistencies in the plaintiff’s evidence, was his assertion as stated above, that there was an express agreement between Mr Kordek Snr and himself that the amount of $1.6M was to be paid upon a specified event, namely, either the finalisation of the Gledswood Hills Project or the sale of the defendant’s share in the project.

On a significant matter such as this, it is difficult to accept that, not having previously given evidence in his affidavits of an agreement as to the events that would ‘trigger’ the payment of $1.6M, that the plaintiff, in the course of his cross-examination, gave evidence that he and Mr Kordek Snr discussed the events that would enable him to receive the benefit of $1.6M. It appears that he had not given instructions to his lawyers when his primary affidavit sworn 5 May 2014 was prepared that there had been any express agreement as to such an event or events that would trigger the alleged obligation to pay under the alleged Deferral Agreement.

The evidence of the plaintiff in the course of his cross-examination, to the effect that he and Mr Kordek Snr had in fact addressed and discussed the events or conditions upon which $1.6M became payable, had every appearance of evidence being manufactured in order to meet a perceived or potential weakness in his case.

During the course of the lengthy cross-examination of the plaintiff, I had an extensive opportunity to assess the plaintiff. Whilst making allowance for his less than perfect command of the English language, I was nonetheless left with the strong impression that he was both an unreliable witness and one who was prepared to adapt the evidence to meet the case which he sought to make out against the defendant.

The evidence concerning the plaintiff’s strategic use of the caveats to bring financial pressure to bear upon the Kordek interests and his preparedness to enlist Mr Kordek Snr and Mr Kordek Jnr in a strategic and misleading strategy to hold off creditors constitutes evidence of that in doing so he was prepared to act in a less than honest and straight-forward manner if to do so would work to serve or advance his interests.

In relation to the evidence of Mr Locke and Mr Cubrilo relied upon by the plaintiff in support of his cause of action, as earlier noted, the submission on his behalf properly acknowledged that neither what was heard by Mr Locke or Mr Cubrilo definitely supports the Deferral Agreement in terms, however, it was suggested that it was some evidence probative of an agreement of some kind involving the provision of eight blocks from the Gledswood Hills development.

Accepting the evidence of both witnesses as to what they said they heard, their evidence did not provide the full conversational context in which the words were spoken. Whether or not at some point, Mr Kordek Snr and the plaintiff had discussed the subject of blocks of land in the development and if so whether any were to be acquired by or provided to the plaintiff, the evidence does not establish whether any such discussions were contractual in nature. In summary, the evidence of the two witnesses, in my opinion, cannot be considered to be determinative of the alleged oral agreement upon which the plaintiff relied in these proceedings.

The approach to be taken in a case such as the present, as earlier indicated, requires a close examination of the evidence in order to determine whether or not the evidence of an oral agreement is precise and cogent enough to warrant an affirmative finding. In Brooker v Friend & Brooker & Anor [2006] NSWCA 385, McColl JA observed at [134]:

In Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302, Hammerschlag J observed:

See also Campbell v Campbell [2015] NSWSC 784 (Sackar J) at [73]-[79].

Having considered the evidence and the detailed submissions made on behalf of the plaintiff and the defendant, I am firmly of the view that the plaintiff has not discharged the onus of proof that he carries in these proceedings. I do not consider that the alleged Deferral Agreement was made through discussions between himself and Mr Kordek Snr or at all.

That is sufficient to dispose of the proceedings. However, in deference to the submissions made, I accept the further submission made on behalf of the defendant that it was incumbent upon the plaintiff to prove that the Gledswood Hills Project had been completed or alternatively that the defendant’s share in the project had been sold and that neither such circumstances or contingencies were proved to have arisen.

As indicated above, the plaintiff in cross-examination was charged with having manufactured or fabricated a false claim against the defendant in these proceedings. On the basis and for the reasons stated in this judgment, the plaintiff has failed to discharge the onus of proof in relation to the alleged Deferral Agreement. On that basis, the claim must fail. It is unnecessary for the purposes of the disposition of this case to make any adverse findings against the plaintiff in relation to the issue raised in cross-examination that he has fabricated the claim. In particular, a finding to that effect could only be made in accordance with the Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 standard. It being unnecessary to make any finding in that respect, I do not do so.

Accordingly, I propose to make the following orders: