$300,000 Transfer Between Friends: A Generous Gift or a Binding Loan with 20% Interest?

Based on the authentic Australian judicial case Kempe v Grine [2025] NSWDC 227, this article disassembles the Court’s judgment process regarding evidence and law. It transforms complex judicial reasoning into clear, understandable key point analyses, helping readers identify the core of the dispute, understand the judgment logic, make more rational litigation choices, and providing case resources for practical research to readers of all backgrounds.

Chapter 1: Case Overview and Core Disputes

Basic Information

• Court of Hearing: District Court of New South Wales
• Presiding Judge: Gibson DCJ
• Cause of Action: Breach of Contract (Loan Agreement)
• Judgment Date: 23 June 2025

Core Keywords

• Keyword 1: Authentic Judgment Case
• Keyword 2: Loan Agreement
• Keyword 3: Gift versus Loan
• Keyword 4: Witness Credibility
• Keyword 5: Contractual Interest Rate
• Keyword 6: Documentary Evidence

Background

This case revolves around a significant financial transaction between two individuals. The Plaintiff, navigating a difficult period in her life following a divorce, advanced the entirety of her property settlement—$300,000—to the Defendant, a friend and business owner. The funds were intended to support the Defendant’s business, “Happi Chicken”. Subsequently, a fundamental disagreement arose regarding the nature of this transaction: the Plaintiff asserted it was a formal loan with specific repayment and interest terms, while the Defendant contended it was a gift, or alternatively, that any loan agreement was never finalised or was later varied on much less onerous terms.

Core Disputes and Claims

The central legal questions before the Court were:
1. Was the $300,000 transfer a loan or a gift?
2. If it was a loan, was there a binding contract on the terms of the draft agreement prepared by the Defendant’s accountant, which stipulated a 20% per annum interest rate?
3. Were the terms of the original agreement, if any, subsequently varied by the parties’ conduct or a later agreement?

The Plaintiff sought the full repayment of the principal amount of $300,000 plus accrued interest at the contractual rate of 20%, less payments already made. The Defendant denied that any money was due, or in the alternative, argued that a much smaller sum was owed.

Chapter 2: Origin of the Case

In 2018, the Plaintiff was facing significant personal upheaval. She was finalising a difficult divorce, which resulted in her receiving a property settlement of $300,000—the entirety of her assets. Compounding her emotional distress was the recent passing of her brother, who had been residing with the Defendant prior to his death.

The Defendant, an elected Councillor and business owner, operated a food business named “Happi Chicken”. After a proposed business partnership with another individual collapsed in late 2018, the Defendant found herself in need of funds to pay outstanding bills and expand her business with a new shop. Knowing the Plaintiff had recently received her settlement funds, the Defendant approached her, initially seeking a loan of $120,000.

Discussions evolved, with the Defendant suggesting that “gifting the money would be better”. However, the Plaintiff was firm, stating she would only proceed if a formal contract was drawn up. The Defendant agreed and tasked her accountant at the time, Mr Cyril Quek (who was also the Plaintiff’s brother-in-law, despite a poor relationship between him and the Plaintiff), to prepare a loan agreement.

On 30 November 2018, the Plaintiff transferred the $300,000 into her own cheque account in readiness. On 1 December, she purchased a bank cheque for the full amount in the Defendant’s name. The following day, 2 December 2018, the Defendant emailed the draft loan agreement to the Plaintiff. Later that day, the Plaintiff met the Defendant and Mr Quek at the Defendant’s home. The Plaintiff reviewed a printed copy of the agreement, confirmed it matched the emailed draft, and, according to her testimony, both parties signed the document. The Plaintiff then handed over the $300,000 bank cheque, expecting to receive a signed copy of the contract from the Defendant’s solicitor, which never materialised. This sequence of events laid the foundation for the ensuing legal battle.

Chapter 3: Key Evidence and Core Disputes

The outcome of this case hinged on the Court’s assessment of competing evidence, pitting the Plaintiff’s contemporaneous documents against the Defendant’s largely undocumented oral claims.

Plaintiff’s Main Evidence and Arguments

• The Draft Loan Agreement: The email from the Defendant to the Plaintiff on 2 December 2018, attaching the draft agreement prepared by the Defendant’s own accountant. This document explicitly detailed the loan amount ($300,000), the term (repayable 1 December 2022), the security, and the interest rate (20% per annum, or $5,000 per month).
• Text Messages: Exchanges between the parties on 30 November 2018 where the Defendant confirmed her accountant was “doing a contract”.
• Bank Records: The Plaintiff produced a copy of the $300,000 bank cheque and statements showing its withdrawal, proving the transfer of funds.
• Post-Contractual Conduct: The Plaintiff gave evidence that the Defendant made 15 weekly cash payments immediately following the transaction, in amounts approximating the interest stipulated in the agreement. This conduct was argued to be an acknowledgement of the loan’s terms.

Defendant’s Main Evidence and Arguments

• Denial of Agreement: The Defendant denied ever signing or formally agreeing to the loan contract, framing the transaction as a gift or, alternatively, an informal arrangement with different terms.
• Accountants’ Testimony: The Defendant relied heavily on the evidence of her subsequent accountants, Ms Linda Day and her daughter Jasmine Day, who claimed the 20% interest rate was “ridiculous” and that discussions were held to vary the terms to a 5% interest rate. They also produced an “amortization schedule” suggesting no money was owed.
• Lost Documents: The Defendant claimed that most of her documentary evidence, including banking records, was destroyed in a house fire in October 2021, explaining her inability to produce contradictory records.

Core Dispute Points

• The Binding Nature of the Agreement: Was the agreement, even if unsigned by the Defendant, binding through the parties’ conduct? The Plaintiff’s act of handing over the cheque after receiving the draft, and the Defendant’s acceptance of the funds and subsequent initial payments, were central to this issue.
• Credibility of Witnesses: The case became a direct contest of credibility. The Court had to decide between the Plaintiff’s consistent narrative, supported by documents, and the Defendant’s account, which was supported by two witnesses whose credibility was severely challenged.
• The Alleged Variation: The Defendant failed to produce any written evidence—no revised contract, no email, no text message—to support her claim that the interest rate was varied from 20% to 5%.

Chapter 4: Statements in Affidavits

The affidavits filed in this case presented two irreconcilable versions of events. The Plaintiff’s affidavit provided a clear, chronological account that aligned perfectly with the documentary evidence she tendered. Her narrative of the loan request, the insistence on a contract, the receipt of the draft agreement, the signing, and the handover of funds formed a coherent and logical sequence.

In stark contrast, the evidence from the Defendant’s side was plagued by inconsistencies and credibility issues that the Court found deeply troubling. The most significant issue arose from the affidavits of the accountants, Linda Day and Jasmine Day. During cross-examination, it was revealed that their affidavits were, in large parts, word-for-word identical. Ms Linda Day attempted to explain this extraordinary coincidence by claiming that as mother and daughter, they “thought alike” and had “similar mindsets”.

The Court unequivocally rejected this explanation. The identical nature of the affidavits was seen not as a coincidence but as evidence of collaboration in the creation of their evidence, suggesting it was a prepared script rather than an independent recollection of events. This severely undermined their credibility from the outset and cast a shadow over the entirety of the Defendant’s case, which relied so heavily on their testimony to challenge the written agreement.

Chapter 5: Court Orders

Prior to the final hearing, the matter was prepared for trial in accordance with the standard procedures of the District Court. The parties were directed to file and serve their evidence in the form of affidavits, and the matter was set down for a three-day hearing from 2 to 4 June 2025, with a further day for submissions on 13 June 2025. The Court ultimately delivered its final judgment and orders on 23 June 2025.

Chapter 6: Hearing Scene: Ultimate Showdown of Evidence and Logic

The trial was a forensic examination of credibility. The cross-examination of the Defendant’s key witnesses, accountants Linda and Jasmine Day, proved to be a turning point.

Ms Linda Day’s testimony unravelled under scrutiny. Despite her affidavit and oral evidence attacking the 20% interest rate as “ridiculous” and a “money laundering position,” she was confronted with a crucial email she had sent to the Defendant’s solicitor, Ms McAllister, on 1 February 2019. In that email, Ms Day acknowledged that interest rates for “higher end unsecured commercial finance” could be as high as 16.84%, a figure much closer to 20% than the 5% she claimed was the only acceptable rate. This email directly contradicted her aggressive critique of the contract’s terms in court.

Even more damaging was her claim that she had never actually seen the loan agreement drafted by Mr Quek. She asserted her knowledge of its terms came only from what she was told. The Presiding Judge, Gibson DCJ, directly challenged the plausibility of this claim.

HER HONOUR
Q. How could you possibly give advice to your client without seeing the document?
A. We had been given advice by the man who drew it up.
Q. That’s all you had?
A. That’s all we had, and the interest rate was basically preposterous.

This admission was fatal. It established that her expert opinion and the amortization schedule she created were based on second-hand information and her own assumptions, not a professional analysis of the actual contractual document. The Court concluded her evidence was designed to assist the Defendant’s case at the expense of the truth.

Furthermore, the Defendant failed to call her solicitor, Ms McAllister, who was involved in early discussions and correspondence about the agreement. The Court determined that her evidence would have been crucial. In her absence, the Court drew a Jones v Dunkel inference, concluding that Ms McAllister’s testimony would not have assisted the Defendant’s case. This failure, combined with the discredited evidence of the accountants, left the Defendant’s position without any credible support.

Chapter 7: Final Judgment of the Court

Having comprehensively rejected the evidence of the Defendant and her witnesses, Her Honour Gibson DCJ found in favour of the Plaintiff. The Court made the following orders:

1. Judgment for the Plaintiff for the sum of $593,666.21.
2. The Defendant to pay the Plaintiff’s costs.
3. Liberty to apply in relation to interest and costs.

Chapter 8: In-depth Analysis of the Judgment: How Law and Evidence Lay the Foundation for Victory

The Court’s decision provides a masterclass in the judicial assessment of evidence, particularly where formal documentation is challenged by oral testimony.

Special Analysis

The jurisprudential value of this case lies not in creating new law, but in its powerful affirmation of a foundational legal principle: contemporaneous documentary evidence will almost always outweigh later, self-serving, and uncorroborated oral testimony. The judgment serves as a stark reminder that courts are adept at piercing through narratives constructed for litigation, especially when they are contradicted by the parties’ own records created at the time of the actual transaction.

Judgment Points

• Rejection of “Cut and Paste” Evidence: The Court’s outright rejection of the identical affidavits from two key witnesses highlights the critical importance of independent testimony. The finding that they had worked from a “script” rendered their evidence entirely useless to the Defendant’s case.
• Jones v Dunkel Inference: The failure to call the solicitor, a key player in the aftermath of the agreement, was a significant strategic error. The Court’s willingness to draw an adverse inference demonstrates that parties cannot selectively present evidence and expect gaps to be ignored.
• Post-Contractual Conduct as Affirmation: The Defendant’s initial weekly payments, which aligned with the 20% interest rate, were treated by the Court as conduct affirming the existence and terms of the loan agreement, as per the principles in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153.

Legal Basis

The judgment was founded on basic principles of contract law. The Court found that an agreement was reached on the terms set out in the draft document. The email from the Defendant attaching the draft constituted the offer, and the Plaintiff’s acceptance was evidenced by her providing the $300,000 cheque. Even if the contract was not signed by the Defendant, their conduct demonstrated they were proceeding on the basis of its terms, creating a binding agreement (PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd [2007] VSCA 310).

Evidence Chain

The Plaintiff’s victory was built on an unbreakable evidentiary chain:
1. Text Messages: Confirmed a contract was being prepared.
2. Defendant’s Email: Delivered the contractual offer.
3. Bank Cheque: Showed the Plaintiff acted on the offer and provided consideration.
4. Initial Cash Repayments: The Defendant’s conduct acknowledged the debt and its terms.

This chain stood in stark contrast to the Defendant’s evidence, which was a series of unsupported assertions.

Judicial Original Quotation

In assessing the credibility of Ms Linda Day and her evidence, the Court was unequivocal. Her testimony about the identical affidavits and her attempts to explain the coincidence were particularly damning. Her Honour’s dismissal of her evidence was total.

Linda Day presented as a witness who is determined to achieve success for the defendant in this litigation at the expense of the truth… I am comfortably satisfied that this schedule is false from beginning to end and that Linda Day prepared it to help the defendant, knowing that many of the entries were based on speculation at best and that some of them (such as the $400 per week and the interest rate of 5%) were false.

This finding completely dismantled the evidentiary foundation of the Defendant’s case, leaving her claims without any credible support.

Analysis of the Losing Party’s Failure

The Defendant’s case failed for several critical reasons:
1. Absence of Corroborating Evidence: She could not produce a single document to support her claim of a gift or a variation to the loan terms. The claim of documents being lost in a fire was insufficient without any secondary evidence or credible testimony.
2. Reliance on Discredited Witnesses: Her entire challenge to the contract rested on the testimony of two accountants whom the Judge found to be unreliable, collaborative in their evidence, and untruthful.
3. Failure to Call a Key Witness: The decision not to call her solicitor to give evidence led to a powerful adverse inference that her testimony would have been unhelpful.
4. Inherent Implausibility: The argument that the Plaintiff would gift her entire life savings to a friend, without any documentation, was considered inherently improbable by the Court.

Implications

1. Document Everything, Especially with Friends and Family: This case is a painful lesson that informal financial arrangements, even based on trust, can lead to disaster. Always insist on a clear, written, and signed agreement for any significant loan.
2. Contemporaneous Records are Gold: Emails, text messages, and notes created at the time of an event are incredibly powerful evidence. They provide an unvarnished record that is difficult to dispute later.
3. Credibility is Everything in Court: A witness’s honesty, consistency, and demeanour are paramount. Presenting witnesses who are found to be untruthful or to have colluded can destroy an entire case.
4. Be Careful Who Prepares Your Contract: The loan agreement was drafted by the Defendant’s own representative. It is very difficult to later argue that terms you yourself proposed are unfair or unconscionable.
5. A Loan is Not an Investment: The contract gave the Plaintiff an option to convert the loan to a 35% share in the business, which she did not exercise. It is crucial to understand the difference between lending money to a business and buying equity in it.

Q&A Session

• 1. Why did the Court enforce the 20% interest rate, which seems very high?
  The Court’s role is not to decide if a deal was “good” or “bad,” but whether it was legally agreed upon. The 20% rate was a term proposed by the Defendant’s own accountant in the draft agreement. The Defendant offered these terms, and the Plaintiff accepted. Without evidence of duress, unconscionable conduct, or a statutory prohibition (which the Defendant’s solicitor vaguely and incorrectly alleged), the Court will enforce the terms the parties agreed to.

• 2. Could the Defendant have succeeded if her documents hadn’t been “lost in a fire”?
  It is possible, but unlikely without strong evidence. To succeed, she would have needed to produce clear evidence that contradicted the Plaintiff’s documents—for example, a later, signed agreement showing a 5% interest rate, or text messages where the Plaintiff explicitly agreed the money was a gift. Simply claiming documents were lost, without any other form of proof, is a weak position, as courts are often sceptical of such convenient explanations.

• 3. What was the biggest mistake the Defendant made?
  Her biggest mistake was relying on the oral testimony of witnesses who were ultimately found to be incredible, instead of creating and preserving documentary evidence to support her position at the time the arrangements were allegedly changed. Presenting witnesses whose affidavits were identical and whose testimony was contradicted by their own emails was a catastrophic error that destroyed her credibility before the Court.

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[Appendix: Reference for Comparable Case Judgments and Practical Guidelines]

1. Practical Positioning of This Case

• Case Subtype: Personal Loan Agreement Dispute
• Judgment Nature Definition: Final Judgment

2. Self-examination of Core Statutory Elements

This case falls within the categories of Civil Litigation and Commercial Law. The key legal tests are derived from common law principles of contract.

④ Commercial Law and Corporate Law

• Core Test (Contract Formation): The Court implicitly applied this test and found all elements present.
  • Offer: The Defendant, via her accountant, provided the draft loan agreement to the Plaintiff by email.
  • Acceptance: The Plaintiff accepted the offer by her conduct—providing the $300,000 bank cheque after reviewing the agreement.
  • Consideration: The Plaintiff provided $300,000 to the Defendant, and the Defendant promised to repay it with interest.
  • Intention to create legal relations: The insistence on and preparation of a formal “Loan Agreement” demonstrated a clear intention to be legally bound, distinguishing it from a purely social arrangement.

⑨ Civil Litigation and Dispute Resolution

• Core Test (Burden and Standard of Proof): The Plaintiff, as the party asserting the contract, had the burden of proving its existence and terms. She had to do this on the “balance of probabilities” (i.e., that it was more likely than not that her version of events was true). She successfully discharged this burden through her consistent testimony and strong documentary evidence.
• Core Test (Evidence): The judgment is a textbook example of the assessment of evidence. The Court weighed the probative value of the Plaintiff’s contemporaneous documents (emails, texts) against the Defendant’s oral evidence and found the documents to be far more reliable. The credibility of the Defendant’s witnesses was assessed as extremely low, rendering their testimony of little to no value.

3. Equitable Remedies and Alternative Claims

While this case was decided on contractual principles, equitable doctrines could have been relevant in a different factual scenario.

If dealing with [Civil / Commercial / Property / Family / Estate] matters:

• Promissory / Proprietary Estoppel: If there had been no formal contract, but the Defendant had made a clear promise of repayment with interest, and the Plaintiff had relied on that promise to her detriment (by handing over her life savings), the Plaintiff could have potentially argued that the Defendant was “estopped” from denying the loan. In this case, however, the Court found a binding contract existed, making an estoppel claim unnecessary.
• Unjust Enrichment / Constructive Trust: If the Defendant had successfully argued the contract was invalid for some technical reason, the Plaintiff could have made an alternative claim in unjust enrichment. This would argue that the Defendant had been enriched at the Plaintiff’s expense (by receiving $300,000) and that it would be unjust for her to retain that benefit without repaying it.

4. Access Thresholds and Exceptional Circumstances

• Regular Thresholds: The primary threshold in contract law is the limitation period. In New South Wales, under the Limitation Act 1969 (NSW), an action for breach of contract must generally be commenced within six years from the date the cause of action accrues. Here, the loan was repayable on 1 December 2022. The proceedings, filed in 2024, were well within the limitation period.

5. Guidelines for Judicial and Legal Citation

• Citation Angle: It is recommended to cite Kempe v Grine in legal submissions or debates involving:
  • The assessment of witness credibility where oral testimony conflicts with contemporaneous documents.
  • The negative impact of presenting “cut and paste” or collaborative witness affidavits.
  • The application of a Jones v Dunkel adverse inference where a relevant and available witness is not called.
  • The use of post-contractual conduct to affirm the terms of a disputed agreement.
• Citation Method:
  • As Positive Support: When your matter involves clear documentary evidence being challenged by unsubstantiated oral claims, citing this authority can strengthen your argument that the documents should be preferred.
  • As a Distinguishing Reference: If an opposing party is relying solely on oral testimony, you can cite this case to highlight the risks and unreliability of such evidence when uncorroborated.

Conclusion

This judgment powerfully illustrates that in the eyes of the law, actions and records from the past speak far louder than words crafted for the present. A clear documentary trail is the strongest shield in any financial dispute.

Everyone needs to understand the law and see the world through the lens of law. The in-depth analysis of this authentic judgment is intended to help everyone gradually establish a new legal mindset: True self-protection stems from the early understanding and mastery of legal rules.

Disclaimer

This article is based on the study and analysis of the public judgment of the District Court of New South Wales (Kempe v Grine [2025] NSWDC 227), aimed at promoting legal research and public understanding. The citation of relevant judgment content is limited to the scope of fair dealing for the purposes of legal research, comment, and information sharing.

The analysis, structural arrangement, and expression of views contained in this article are the original content of the author, and the copyright belongs to the author and this platform. This article does not constitute legal advice, nor should it be regarded as legal advice for any specific situation.

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