Nagamuthu v Shanmugarajah

BELL ACJ: After a trial in the District Court of New South Wales, Norton SC DCJ (the primary judge) entered a verdict and judgment in the sum of $100,000 together with costs in favour of the plaintiff, Mr Charles Rajaratnam Shanmugarajah, whom I shall hereafter refer to as the Respondent.

The Respondent succeeded on a claim made as a common money count for monies had and received, with the primary judge finding that there was at least $100,000 owing to the Respondent by Mr Nagendran Nagamuthu, the Defendant in the proceedings below and whom I shall hereafter refer to as the Appellant. Her Honour held, using the language of, albeit not referring to, the decision in Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516; [2001] HCA 68 at [83]-[89] (Roxborough) and the cases there cited, that it would be unjust for the Appellant to retain the $100,000 and that it should be repaid to the Respondent. At [83] of her judgment, the primary judge had identified the basis of the action as “in restitution or unjust enrichment”.

A number of other claims made by the Respondent were rejected. There is no cross appeal in respect of those claims.

Central to the outcome at first instance and the appeal to this Court was her Honour’s finding that at least $100,000 was owed by the Appellant to the Respondent. Although the Respondent had given affidavit evidence setting out the basis for his claim, the primary judge indicated that she was not prepared to accept his evidence as accurate, “unless it [was] corroborated by some other evidence”. Again, no challenge was made to that aspect of her Honour’s reasoning.

Parenthetically it may be noted that the primary judge was not prepared to find that the Appellant’s evidence was accurate or reliable, describing him as “one of the most evasive witnesses” she had ever heard give evidence and some of his explanations in the witness box as “extraordinary”. She described the Respondent as being “less evasive” in his evidence than the Appellant.

Plainly enough, the primary judge ultimately found that the Respondent’s claim to be owed at least $100,000 by the Appellant was corroborated by other evidence, hence the verdict and judgment in his favour.

The gravamen of the Appellant’s case on appeal is that what the primary judge relied upon as the corroborating evidence was not, in fact, corroborative.

To consider the strength of that attack, and the nature and quality of the corroborative evidence relied upon by the primary judge, it is first essential to set out the context in which the claim of indebtedness was said to arise.

Both the Appellant and the Respondent who were of Sri Lankan Tamil ethnicity were participants in a series of what are known as “seetus”. The primary judge noted that it was accepted by both parties that seetus are relatively common amongst Sri Lankan people, both in Australia and in Sri Lanka. At [12], her Honour described a seetu as involving:

The Respondent gave the following description of a seetu in his principal affidavit:

The Respondent also said in his evidence that participation in a seetu was “a very good way to save money and make it grow if you do not need the money at the time.”

The following illustration of a $10,000 seetu was provided by the Appellant:

The institution of a seetu may thus be considered in one sense to be a form of microfinance involving a periodic, usually monthly, pooling of capital contributions over the life of a seetu, with the extent of the capital contributions capped by the nominated value of the seetu divided by the number of participants in it. Participation in a seetu may variously serve the purposes of a form of saving, a source of emergency funds or an investment.

The question of whether or not this institution falls within the definition of a managed investment scheme or other financial product requiring a licence and compliance with regulatory requirements was not raised defensively in the pleadings, nor in argument. An argument that it was illegal under the Unlawful Gambling Act 1998 (NSW) was made at first instance but did not succeed and was not pursued on appeal. Had it been, questions involving illegality and Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25 may have arisen.

It was common ground that the Respondent participated in a series of seetus organised by the Appellant. The primary judge noted, however, that there were no written records of the formation of the seetus in which the Respondent participated, nor of members’ bids or payments. Her Honour further noted that there were no written seetu agreements, loan agreements or actual receipts in evidence or relied upon.

The only contemporaneous documents tendered in evidence, and referred to and accepted by the primary judge as corroborative evidence, were:

In essence, the Respondent’s claim for monies had and received and, in particular, the debt claimed to be owing to him, arose out of his participation in a $120,000 seetu of which, as was accepted by his counsel, the Appellant was the organiser. As will be seen below, according to the Respondent’s evidence, the debt claimed took into account adjustments for amounts owing by the Respondent to the Appellant under another seetu or other seetus.

In his affidavit, the Respondent stated that, from April 2012 until October 2014, he had paid around $95,000 towards a $120,000 seetu and that, as far as he was aware, that seetu ended in November 2014. Evidently, the Respondent was the final participant in that seetu, not having previously bid and, as such, would stand to gain $120,000, being the unreduced total of the pool in the last month or round of the seetu.

The difference of $25,000 between his net contributions to the pool in previous rounds of $95,000, and the amount owed to him in the final round, represented the return from his participation in the seetu over the course of its life.

As noted in [4] above, the primary judge indicated that she was not prepared to accept the Respondent’s evidence as accurate “unless it [was] corroborated by some other evidence”.

In Doney v R (1990) 171 CLR 207 at 211; [1990] HCA 51 (Doney), the High Court outlined the essence of corroborative evidence as that which "'confirms', 'supports' or 'strengthens' other evidence in the sense that it 'renders [that] other evidence more probable'". The Court continued:

In Peacock v R (1911) 13 CLR 619 at 638; [1911] HCA 66, Griffith CJ observed:

It is necessary to set out paras 27 and 28 of the Respondent’s principal affidavit, as this is relevantly the “other evidence” rendered more “probable” by the corroborative evidence, to use the language of Doney:

At [85] of her judgment, the primary judge said:

Copies of two of the three post-it notes which were in the Respondent’s possession but created by the Appellant, the first copy being of side B of the two-sided note, are reproduced below.

The Respondent submitted that the date (28/10/14) on the first of these post-it notes was around the time the $120,000 seetu ended. This emerges from the Respondent’s affidavit evidence (see [23] above). The second post-it note shows a starting figure of “$120,000”, which is consistent with it being referable to the $120,000 seetu.

When viewed in conjunction with extracts from the transcript considered below, the Respondent submitted that the primary judge was correct to find that the first post-it note was “in effect an IOU”, in the sense that it was a contemporaneous documentary admission of the Appellant’s indebtedness to the Respondent in relation to the $120,000 seetu.

The “recorded conversations” referred to by the primary judge in the passage set out at [24] above were between the Appellant and the Respondent and were translated from Tamil and transcribed. The first such conversation lasted for over 40 minutes. I consider key aspects of it in the following section of this judgment.

Completing the identification of the corroborating evidence relied upon by the primary judge, her Honour also noted at [86] that:

The relevant evidence of Ms Rajaratnam, the Respondent’s wife, to which the primary judge referred, appears to have been para 23 of her affidavit, as it was this paragraph that the primary judge extracted in [33] of her judgment. Paragraph 23 of Ms Rajaratnam’s affidavit was in the following terms:

It is to be noted that the Respondent’s wife also said at para 27 of her affidavit that she visited the Appellant’s house twice with her husband “to discuss repayment of our money but [the Appellant] always promised to pay soon with interest.”

As I have noted at [7] above, the thrust of the Appellant’s attack on the judgment is that what her Honour considered to be corroborating evidence either did not have that character at all, or else was not sufficiently corroborative to justify the acceptance of the Respondent’s evidence.

In my opinion, the post-it notes and the translated transcript of the recorded conversations, albeit disjointed and at times difficult to follow (as the primary judge observed), nevertheless provided powerful corroboration of the Respondent’s claim to be owed at least $100,000 by the Appellant as a result of his participation in seetus organised by the Appellant.

The transcript is not the easiest document to follow, given that it contains gaps where the recording was either insufficiently audible, or the words spoken insufficiently decipherable by the translator and transcriber. It was not in issue, however, that the recording was of the Appellant and the Respondent, and the words attributed to each of them respectively in the transcript were correctly so attributed.

In his written submission, counsel for the Appellant was critical of the primary judge extracting small portions of the conversation to sustain her conclusions. The transcript of the conversations runs for almost 50 pages and it is difficult, otherwise than by reading it as a whole in the context of an understanding of the operation of seetus, to point to pellucidly clear passages. For that reason, it has been necessary to set out below fairly significant tranches of the transcribed conversations, followed by an explanation of what I have gleaned from them.

The first point to emerge from the transcript of the principal and longer conversation, not put in issue by the Appellant, was that the Respondent was a participant in a series of seetus organised by the Appellant.

In the opening phase of their discussion, the Appellant referred to monies evidently owing to him by third parties from their participation in seetus. In respect of one such participant, the Appellant said:

A little later in the conversation, the Appellant said that he was “the one who [was] suffering” and that “[i]t will become tight”. From this and other references, it is evident that the Appellant was experiencing cash flow tightness and that participants in seetus organised by him were either not honouring, or were delaying in honouring their payment obligations under the seetus. He went on to tell the Respondent, however, that “[i]n about two months there will be a solution to all [of] the problems …”.

Approximately 20 minutes into the conversation, the Appellant said:

The conversation then continued, with the Appellant doing most of the talking and continuing to speak of various people whom he said owed him money in connection with various seetus. In respect of one such person, the Respondent observed “[h]e was your trustworthy person!”.

It is also clear from various statements in the transcript that the Appellant was showing the Respondent entries in certain books or records in the Appellant’s possession. Thus, for example, he said: “I will show the month before that. Have a look”. There are also entries where the Respondent is telling the Appellant to “look”, “look here” and is evidently pointing to figures in those records. Another part of the transcript records the Appellant saying: “Look here. Have a look how many people are on the account!... Have a look here! … Have you seen who are the people that are on the account?”. This last question seems to have been directed to the Respondent, with a view to impressing him as to the Appellant’s “book”.

About 35 minutes into the conversation, after discussing the status of a particular creditor called “Samy” who was evidently a shop owner or was at least running a shop, the following exchange occurred:

A number of observations may be made about this passage of the conversation.

First, it is apparent how broken or incomplete the transcription is.

Secondly, and notwithstanding the first point, it is clear that the Appellant acknowledges that he and the Respondent had written something down – identified only in the transcript as “Yours” – and that the Respondent had kept that which was written down. Further, the statement “Get it to have a look” implies that the Respondent did not have “it” with him at the time of the conversation. The next portion of the exchange really involves the Respondent asking the Appellant if he had what was referred to as “it” - namely the information the Appellant had told him to get in order to have a look at – “written down”. The Appellant responded using the words “It is here”, evidently identifying an entry in the books or records that he had referred to and which he had invited the Respondent to “look at” earlier in the conversation.

Thirdly, the conversation turns to what is evidently a discussion of monthly interest. Discussion of and reference to monthly interest only makes sense if a principal amount is outstanding.

Fourthly, the question “how many lakhs for you?” asked by the Appellant to the Respondent makes it clear that a large amount (also referred to as “big money”) was owed to the Respondent. The Respondent sought to recall the amount as being one lakh, (which is 100,000 units, as has been seen) and “five thousand and something or six thousand something”. The Appellant then filled in the “something” as “seventy three”. Pausing here, it may be noted that a figure of 105,773 appears on one of the post-it notes (see [25] above).

Fifthly, and returning to the excerpt from the transcript of the conversation set out above, the Appellant then says, immediately after the discussion of amounts of money and interest, “I will give … leaving this Tuesday … next Tuesday … I will give about fifty.” In context, and given that a lakh represents 100,000 units, the figure of 50 must be taken to be 50,000.

The Respondent’s response – “If you give that will be a great help” – makes it clear that the Appellant was speaking in this conversation of giving the fifty to the Respondent. The context of the conversation, moreover, is clearly a discussion of amounts owing to the Respondent under a seetu and the reference to “a great help” is a reference to the Respondent’s desire to put down a deposit for a house in Sydney. The reference to “fifty” in this context was plainly to $50,000.

The next part of the exchange, where the Respondent asks – “The rest when will you give?” – reinforces the preceding exchange, making it clear that the “fifty” was only part of the total sum that the Appellant was to give to the Respondent. The Appellant’s response “little by little” contains an acknowledgement of indebtedness and an indication as to how he proposed to meet the debt.

Some 40 minutes into the conversation, there is another significant entry. The Appellant stated – “[t]he interest to be given to you three thousand one hundred and seventy three. Is it?” – which the Respondent confirmed as the correct amount. The amount $3,173 is 3% of $105,766 and is the closest dollar figure to $105,773 which, as I have already noted, was a figure which appeared on one of the post-it notes and which can also be related to the broken figure mentioned earlier in the conversation between the Appellant and the Respondent to which I have referred at [42] above. The figure of 3% interest was also mentioned by the Respondent in [28] of his affidavit, extracted at [23] above.

Later still in the conversation, at about the 48 minute mark, the Appellant said to the Respondent, “All your money is standing in here”, apparently referring to an incomplete seetu. The appellant then said, “[i]f it was pumped, I would have called you then and given you fifty, sixty …”. Again one sees an acknowledgement of debt and cash flow issues confronting the Appellant.

The transcript of another much shorter conversation was also in evidence which records the Respondent, in increasingly desperate tones and threatening a hunger strike, pleading for his money. The Appellant’s response is telling – not that he was not indebted but asking the Respondent “do you believe that I will not give?”

As I have indicated above, and as a review of the transcript and post-it notes shows, the material relied upon by the primary judge and which I have considered above was corroborative of the Respondent’s affidavit evidence. It was admissible evidence, implicating the Appellant in relation to a matter in respect of which the primary judge had indicated she required corroboration. Such evidence “need not replicate the evidence to be corroborated, but it must tend to connect the person against whom it is given with the alleged act”: J D Heydon, Cross on Evidence, (10th ed, 2015, LexisNexis Australia) at [15165].

In the course of argument, counsel for the Appellant submitted, by reference to Doney, that the corroborative evidence must not only be consistent with what was required to be corroborated (and he accepted that much of the evidence relied upon by the Respondent had that character) but that the corroborative evidence also had to “connect” the Appellant with an indebtedness to the Respondent. So much may be accepted, and, in my opinion, such a connection was clearly established even though Doney suggests that a “tendency” to connect would be sufficient.

In DPP v Kilbourne [1973] AC 729 at 750 (Kilbourne), Lord Reid said:

At one point in his argument, counsel for the Appellant submitted that evidence could not be corroborative unless that evidence would itself prove the fact in issue. That submission must be rejected. It borders on a contradiction in terms and is inconsistent with both Doney and the passage from Kilbourne cited above. As was said in Doney at 211:

It should also be remembered, as was also confirmed in Doney at 211 in the passage cited at [21] above, that corroboration may be in the form of circumstantial evidence. Moreover, there may be a number of pieces of corroborative evidence (as in the present case) which, when pieced together, provide powerful confirmation, support or strength for the evidence needing to be corroborated. It is a mistake simply to analyse each piece of corroborating evidence individually and independently, as the Appellant tended to do in submissions.

In the present case, for example, the nature and provenance of the post-it notes was revealed by the transcript of the conversations. Those conversations linked, through their reference to interest payments in the sum of $3,173, to the sum of $105,773 written on the back of one of the post-it notes which, as I have explained at [51] above, was approximately 3% of this figure.

Additionally, the very fact that the Respondent had in his possession and produced to the Court the post-it notes in the writing of the Appellant, which included as a starting figure a sum of 120,000 (coinciding with the seetu under or in respect of which the debt was said to arise), contributed powerfully to a state of satisfaction, on the balance of probabilities, that an amount of at least $100,000 was owing by the Appellant to the Respondent.

Insofar as an attack was made on the primary judge’s reliance on the evidence of the Respondent’s wife (see [29]-[31] above), it is plain that the primary judge relied principally on the post-it notes and the transcript to supply the necessary corroboration. The evidence of the Respondent’s wife was not decisive.

In relation to the wife’s evidence referred to at [30] above, the Appellant’s complaint was that this was second-hand hearsay, derived from the Respondent himself, whom the primary judge found to be an unreliable historian absent corroboration. It was therefore put that this aspect of the evidence of the Respondent’s wife was not corroborative. There is some force to that argument and that portion of her evidence was of little weight. That part of the wife’s evidence referred to at [31] above, however, carried more weight, as it did not derive directly from the Respondent, but was evidently based upon the wife’s own observations. Although it was expressed in a rolled up form, it was evidently admitted without objection and provided some limited corroboration of the Respondent’s account.

For these reasons, this aspect of the Appellant’s appeal should not succeed.

In addition to the attack on what the primary judge held to be corroborative evidence, the Appellant complained that “[t]he trial judge failed to distinguish between a contract which was unenforceable and a contract which was not proved.”

At para 51 of his written submissions, the Appellant put that:

The short answer to this complaint, in my opinion, arises from what I am satisfied was, and what the primary judge held to be, the Appellant’s admissions of indebtedness to the Respondent. That is the source of the obligation to make restitution, as the cases referred to by Gummow J in Roxborough make plain.

It should be noted that there was a faint attempt by counsel for the Appellant in his reply submissions to raise questions as to the capacity in which his client operated and conducted the seetus and, in particular, whether the Appellant was in truth simply a ministerial agent for collection of monies (see J Edelman and E Bant, Unjust Enrichment (2nd ed, 2016, Hart Publishing) at 381-385) and had not assumed obligations of a kind that could be enforced through an action for restitution.

This argument did not fall within the terms of the Notice of Appeal, was not explored at trial and, in my opinion, based upon my review of the transcribed conversations between the parties analysed above, was wholly lacking in merit.

For the foregoing reasons the appeal should be dismissed with costs.

MEAGHER JA: I agree with Bell ACJ.

BARRETT AJA: I agree with Bell ACJ.