[2009] HCA 27
Babic v Williams (1974) 5 BPR 11,242
Beaton v McDivitt (1985) 13 NSWLR 134
3 BPR 9,576
Blomley v Ryan (1956) 99 CLR 362
[1956] HCA 81
Bridgewater v Leahy (1998) 194 CLR 457
[1998] HCA 66
Brien v Dwyer (1978) 141 CLR 378
Source
Original judgment source is linked above.
Catchwords
[2009] HCA 27
Babic v Williams (1974) 5 BPR 11,242
Beaton v McDivitt (1985) 13 NSWLR 1343 BPR 9,576
Blomley v Ryan (1956) 99 CLR 362[1956] HCA 81
Bridgewater v Leahy (1998) 194 CLR 457[1998] HCA 66
Brien v Dwyer (1978) 141 CLR 378[1978] HCA 50
Charisteas v Charisteas (2021) 95 ALJR 824[2021] HCA 29
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447[1983] HCA 14
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337[2000] HCA 63
Knaggs v Director of Public Prosecutions (2007) 170 A Crim R 366[2007] NSWCA 83
Michael Wilson & Partners v Nicholls (2011) 244 CLR 427[2011] HCA 48
Minister for Immigration and Multicultural Affairs, ReEx parte Applicant S20/2002 (2003) 77 ALJR 1165[2020] HCA 28
R v WatsonEx parte Armstrong (1976) 136 CLR 248[1976] HCA 39
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128[2016] NSWCA 89
Thorne v Kennedy (2017) 263 CLR 85[2017] HCA 49
Tildesley v Harper (1878) 10 Ch D 393
Vakauta v Kelly (1989) 167 CLR 568
[1989] HCA 44
Webb v The Queen (1994) 181 CLR 41
Judgment (11 paragraphs)
[1]
Background
Mr Mortimer moved to Stokers Siding with his then wife and their three children in about 1990. They were divorced in about 2000. In about 2010 he remarried; his current wife is aged 44, and they have two children, aged nine and eight.
An electrician by trade, Mr Mortimer had been a company manager and chief engineer. He had been employed in Sydney as a Manager for Metro Environmental Services. When he first moved to the Northern Rivers, he worked for Holiday Inn at Surfers Paradise, and then for Dreamworld, before returning to sub-contracting electrical and air-conditioning work. He agreed, in cross-examination, that in the course of his career, he had been required to sign contracts, [38] although he said that he had only ever been involved in one real estate transaction, 30 years previously. [39]
By the time of the 2019 transaction with Mr Ah Sam, Mr Mortimer had retired. His wife was employed as a kitchen hand. He was not eligible for a pension, and was accessing his superannuation to meet expenses, including to service the mortgage on the property, which secured $230,000. He had a number of health issues: he is an insulin-dependent diabetic; he had suffered a heart attack in December 2017; and his eyesight was deteriorating. According to Mr Mortimer, he could not read; he had been told that he was blind in the right eye; if he shut his left eye, his vision was "totally blurry"; his left eye was better, but he could not read a newspaper; he could read a computer screen by enlarging the font, but not a laptop; and his glasses did not help.
Following his heart attack, Mr Mortimer became concerned and stressed about his financial situation, including the circumstances of his young family, but he did not want to sell the property. He conceived, as a solution, the proposal which he advertised on Gumtree, which would enable him to pay off the mortgage. In response to the Gumtree advertisement, he had received 37 emails and twenty telephone enquiries. There had been a number of inspections, but only one offer, at a price of $250,000, which he said he rejected because he wanted $300,000. [40]
[2]
The inspection
Mr Ah Sam - who described himself as an investor, a successful businessman who had bought and sold properties internationally (in Australia, New Zealand, and the USA), [41] and a trained teacher (with both Bachelor's and Master's degrees in Science from the University of Auckland) [42] - saw the Gumtree advertisement and contacted Mr Mortimer by telephone in January 2019, asking a number of questions to ascertain whether an inspection was worthwhile. They arranged an inspection for 17 February 2019.
On 17 February 2019, Mr Ah Sam attended the property, and Mr Mortimer accompanied him on an inspection, which occupied some hours. According to Mr Ah Sam, he and Mr Mortimer, and possibly one of Mr Mortimer's children, walked all over the property.
According to Mr Mortimer, in the course of the inspection, Mr Ah Sam asked, "Why are you doing this?", and Mr Mortimer responded, "I'm running out of money and I can't get the pension, I am getting desperate and need to do something to raise money, I still have a mortgage". Mr Ah Sam asked, "How much is the mortgage?", and Mr Mortimer replied, "$220,000".
Also according to Mr Mortimer, he told Mr Ah Sam, "I've had some legal advice and I want to form a company with each owner having one share in the company and for the company to lease the land from the owners. I was told it would be a set-up fee of about $40,000". This referred to advice which Mr Mortimer said he had received from a solicitor in Murwillumbah. He also told Mr Ah Sam that he was having eye surgery on 21 February 2019, and had had a heart attack the previous year. He said that the surgery was important because he could not really see properly, and could not read anything. Mr Ah Sam asked, "How bad is your eyesight", and Mr Mortimer responded, "I can't read and I have bleeding behind the eyes". Mr Ah Sam asked if he could still drive, and Mr Mortimer told him he was concerned because he had to have a test in March to renew his licence.
Mr Ah Sam does not deny that these things might have been said, but says that he was not taking particular notice, as his focus was on the possibility of doing a deal, rather than on Mr Mortimer's issues. [43] He agreed that at some time - possibly during the inspection on 17 February 2019 - Mr Mortimer said something to the effect that he was running out of money and had to do something. [44] He also agreed that Mr Mortimer mentioned something about his eyesight, although he maintained that he understood that the appointment on 21 February 2019 was for a check-up, not for a procedure. [45] And Mr Mortimer undoubtedly referred to transferring the property to a jointly held company, as Mr Ah Sam included such a provision in the agreement when he drafted it.
[3]
The telephone calls
Between 17 and 20 February 2019, Mr Ah Sam prepared a written agreement. Indeed, Mr Ah Sam says that he prepared two versions which were identical, except that in one the price was $200,000 and in the other it was $250,000. In addition to the price, the agreement contained a number of other terms which were not mentioned in the Gumtree advertisement, and which were prima facie disadvantageous to Mr Mortimer - in particular that settlement was deferred for twelve months, and the price was payable as to $100 on the signing of the agreement, as to $12,400 within 30 days before settlement, and the balance on settlement, while Mr Ah Sam would be entitled to occupy the second house on the property from 1 October 2019.
According to Mr Ah Sam, these terms of the agreement (including that he would occupy the second [two-bedroom] house, that the property would be transferred to a company in which they had equal shareholdings, that settlement would be in cash without a mortgage in about a year to enable him to realise assets, and that the initial deposit would be $100) were "agreed to during our discussions over several days in person and by phone". More specifically, he says that he read the agreement - omitting the price - over the phone to Mr Mortimer on 20 February 2019, and that Mr Mortimer approved it; [48] and that on the morning of 21 February 2019 he again rang Mr Mortimer to confirm that he was happy with the agreement. [49]
Mr Mortimer denied that the agreement had been read to him over the phone, [50] or that they had discussed the terms to which reference has been made. Although he agreed that he had been advised by a solicitor before he advertised the property for sale to set up a company in which each owner would have one share - a provision which was reflected in the agreement prepared by Mr Ah Sam - he denied that Mr Ah Sam had said that he would draw up an agreement. [51]
[4]
The agreement
On the morning of 21 February 2019, Mr Mortimer drove himself from Stokers Siding to the casino at Broadbeach, and arrived early at the rear entrance to the casino. Mr Mortimer says he was stressed about his imminent eye procedure, and that he was also worrying about a meeting he had arranged for the following day with Centrelink to see if he was eligible for a pension. He said that Mr Ah Sam arrived late. They found a place to eat at a restaurant in the casino. According to Mr Mortimer, they chatted about the eye procedure, and Mr Ah Sam asked if he would be able to see after the operation, to which Mr Mortimer responded that it could only help because of how poor his vision was, as he could not read anything. Mr Ah Sam suggested that he would be better off selling the whole property and buying a unit on the coast; Mr Mortimer acknowledged the advantages of that course, but said that he liked living on the land, as did his children. Mr Ah Sam also asked about the tenant, and said he would be able to help get her out of the house quickly, in less than the 90-day notice period.
According to Mr Mortimer, he was becoming anxious about getting to the hospital in time, when Mr Ah Sam "pulled out his papers", said there was no need to go to solicitors "at this point" because if they were going to work as partners they had to trust each other, and said "I am putting my trust in you that we will work together and be able to work things out and then we need to go to a solicitor". He continued, "I've done up this agreement and if you sign it you can get her [the tenant] out in 14 days". Mr Mortimer said, "I can't read anything", to which Mr Ah Sam responded, "It's what you want and what you advertised". Mr Mortimer said, "I'm not sure, I've got this operation today", and Mr Ah Sam replied, "Trust me, I won't cheat you, this will get rid of the tenant and it's what you want. If you let me stay in the caravan I will work with you to get the tenant out. I won't be able to go to the beach each day for my swim but it will be worth it for you and your family. I know how to do this, I've done it before".
According to Mr Mortimer, he asked "Can you read it to me, I can't see or read anything". Mr Ah Sam appeared to read the agreement, and said "It's an agreement between you and me, the price for the property is $300,000 as you have advertised, we are going to form a company and work together to improve the property and make this beautiful for your children" (in cross examination, Mr Mortimer maintained that Mr Ah Sam told him the price was $300,000, and that he trusted Mr Ah Sam when he told him that). [52] Mr Mortimer did not respond. Mr Ah Sam continued "It's just an agreement for us to work things out. It's just between you and me. I really want to work with you on this and I don't want you to lose this opportunity. This will help get the tenant out and it will help you get the pension, this will get you out of debt". Again, Mr Mortimer says that he did not respond. Mr Ah Sam said "You can take off the ad now and you only deal with me and you won't have other people pestering you and it will just be us working together. I really want to work with you on this project", and "I don't want you to make the mistake of getting a buyer that has to have a loan, then you are back where you are now. I am a cash buyer".
[5]
The amendment and occupation
The evidence is confusing as to Mr Ah Sam's attendances at the property after 21 February 2019, and in particular whether he did so on one or more occasions prior to moving into a caravan there on or about 4 March 2019. It seems likely that he did so on two occasions: one when he paid the deposit and made amendments to the contract, and a second when he moved some of his personal property into a container and shed.
According to Mr Mortimer, it was not until some days after his eye procedure that he was able, with the aid of a magnifying glass, to read the document, and realised that the price in it was not $300,000 but $250,000, that the document also wrongly described the property as 84,000 acres when it was 86 acres, and that it was also incorrect in some other less significant respects. [73] He was angry, and telephoned Mr Ah Sam to tell him he was not happy and that the document was not as he had represented it. In particular, he did not want to wait twelve months to get his money. Mr Ah Sam assured Mr Mortimer that he would get his money, said his money was tied up in investments, and said that he would come out so they could talk. Mr Mortimer told him not to. Mr Ah Sam called back, and when Mr Mortimer said that he did not want to deal with him anymore, he became aggressive and said they had a contract, that he would put a caveat on the property, and that Mr Mortimer would never be able to sell it. Mr Mortimer says that he panicked and allowed Mr Ah Sam to come to the property that afternoon. Mr Mortimer said he felt scared, and that he had been an "idiot" and a "failure". Whenever Mr Mortimer raised his concerns about the agreement, Mr Ah Sam would forcefully say "You've signed it. I'll sue you and you will lose everything". However, Mr Mortimer says that Mr Ah Sam then said, pleasantly, "Listen, I've got to pay my deposit and just do all the right things so get your agreement out and we will fix it up". Mr Mortimer complied, and Mr Ah Sam gave him an envelope, which he did not open. Mr Ah Sam wrote "PAID" on the agreement, and Mr Mortimer initialled it. Mr Ah Sam then wrote something else on the agreement, which he could not read, and asked that Mr Mortimer initial it too, which he did. By this time, it was fairly dark. Mr Mortimer's solicitor later opened the envelope, and found it to contain two $50 notes.
According to Mr Ah Sam, on 23 February 2019 he telephoned Mr Mortimer to say that he was coming to pay the deposit, and then went to the property and did so, which was recorded and initialled as received on the agreement; and the date for him to occupy in Special Condition 1 was changed from 1 October 2019 to 15 April 2019. [74]
[6]
Subsequent events
Mr Ah Sam says that after 15 March 2019, Mr Mortimer started calling him names and assaulting him, which Mr Mortimer denies. [84] Mr Mortimer also denies Mr Ah Sam's allegation that he hired a "hit man" to run Mr Ah Sam down. [85] According to Mr Mortimer, Mr Ah Sam has taunted him and his family, and refuses to leave. Mr Mortimer says that Mr Ah Sam has made a complete nuisance of himself, and that he has no clue what he is doing on the property: "he is doing lots of stuff but just making a mess". Mr Ah Sam maintains that his ongoing occupation of the property has been in accordance with his rights and responsibilities under the agreement, and that he has undertaken a large amount of work on the property, especially the second house, by way of improvements. [86]
At his wife's insistence, Mr Mortimer consulted a solicitor on 24 April 2019, who said that he would probably seek an apprehended violence order. Meanwhile, Mr Ah Sam made an application for apprehended violence orders against the Mortimers, which were returnable on 29 May 2019. While disputing any need for them, the Mortimers, on advice, consented to interim orders.
As has been foreshadowed, these proceedings were instituted on 26 June 2019. Relevantly, the Statement of Claim included the assertion that at the meeting at the casino on 21 February 2019, Mr Mortimer could not see clearly, that Mr Ah Sam falsely represented that the price stated in writing was $300,000, as in the Gumtree advertisement, and that Mr Mortimer was unaware of that provision, which was not read to him.
On 9 August 2019, Mr Mortimer's solicitor wrote to Mr Ah Sam, asserting that he had a bare licence to occupy and no entitlement to any recompense for any work purportedly done on the property, and that he was required to vacate by 12 August 2019, and also making an offer to attempt to resolve the matter. Mr Ah Sam responded by email on 12 August 2019, indicating he was prepared to engage in discussions, but that he would not vacate the property as it was his home, and that in the event of a court hearing he would represent himself.
On 13 August 2019, Mr Ah Sam wrote to Mr Mortimer's solicitor, indicating that he would proceed to court if a solution could not be found, as "God was on his side", he was in the right, and he had had successes in litigation against the US Government and the "Hawaii State". He warned that Mr Mortimer would be well advised to withdraw his Supreme Court action, and that he would be seeking compensation of $50,000 for his time and money in making the improvements to the property. He also suggested that he might buy Mr Mortimer's 50% interest, observing that "With his health problems, may be best to sell now before it is too late". Discussions between the parties followed, but no resolution could be found. On 15 August 2019, Mr Mortimer's solicitor reiterated that Mr Ah Sam was there under a bare licence and that he was not entitled to any compensation.
[7]
Resolution
The primary judge summarised Mr Mortimer's case on the issue of unconscionability as follows: [87]
"[41] The plaintiff submits the defendant took unconscientious advantage of his special disability, namely his 'poor to very poor vision on 21 February 2019' and 'heightened sense of anxiety' on the day. He submits the defendant knew of his weaknesses in health and financial status and gained an advantageous transaction as a result, having purported to read the agreement to the plaintiff but in terms that did not resemble the original Gumtree advertisement or the document the plaintiff actually signed (Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Blomley v Ryan (1956) 99 CLR 362; Bridgwater v Leahy (1998) 194 CLR 457).
[42] The plaintiff submits the defendant attended the meeting on 21 February as a successful businessman driving to have the contract signed by the plaintiff for an interest in land, a business venture and a place to live rent free. He submits the defendant acted rapidly in finalising the deal, reflecting his rapaciousness and the fact he had been put on notice of the plaintiff's procedure that day which would ameliorate the problems with his eyesight.
[43] The plaintiff submits the court should accept Dr Walker's evidence that the plaintiff's eyesight was poor and his reading vision was correlatively so, although not measured on 21 February 2019 (citing Dasreef v Hawchar (2011) 243 CLR 588).
[44] The plaintiff further submits the court should not accept the defendant's evidence that he did not know about the plaintiff's health and vision impairment because the plaintiff had told him about his eye impairments on 17 and 21 February 2019 and could not read their written agreement on the day it was signed."
His Honour summarised Mr Ah Sam's case relevantly as follows: [88]
"[53] The defendant submits that the 21 February 2019 agreement is binding and enforceable. He submits the parties have acted on the contract in that the plaintiff accepted the defendant's $100 deposit and let him onto the property on 5 March 2019 and the defendant has made substantial improvements to the property.
[54] He submits that the agreement was not the result of unconscionable conduct and that he did not take advantage of the plaintiff. He says he was not aware of the plaintiff's poor eyesight and believed the plaintiff was strong, healthy, smart, well-educated and financially secure. He submits he and the plaintiff were in a similar position, for example being of similar ages and work backgrounds. He also submits that the agreement is a simple document.
[55] The defendant denies that he guided the plaintiff's hand to sign the agreement and submits the signature shows no evidence of being forced or guided by him. He also submits that Dr Walker's evidence should be rejected for example because all the reports he considered (except for one concerning a meeting he had with the plaintiff on 15 February 2019) postdate 21 February 2019 and no eye test was undertaken on that date.
[56] The defendant submits that the plaintiff is attempting to kick the defendant out and take advantage of the work he did on the property, as he was required to under Special Condition 3 of the agreement."
[8]
Specific performance
Mr Mortimer's alternative case was that if there was a binding agreement, then Mr Ah Sam was in breach of essential terms of the agreement because he had not paid the amounts due under it (being the "further deposit" of $12,400 payable within 30 days before settlement, and the balance purchase money payable on settlement), and had thereby repudiated the contract, which Mr Mortimer terminated by an email sent by his solicitor to Mr Ah Sam on 16 March 2020. Having concluded that the agreement was void for unconscionability, his Honour did not have to, and did not, resolve this issue. However, the status of the contract is relevant to Mr Ah Sam's appeal from his Honour's dismissal of his cross-claim for specific performance.
It is not in dispute that Mr Ah Sam did not pay the "further deposit" by 30 January 2020 or at all, nor the balance of the purchase price by 1 March 2020. The email sent to the defendant by the plaintiff's solicitor on 16 March 2020 was relevantly as follows:
"In these proceedings you are relying on a one page agreement purporting to sell half the property at 177 Adcocks Rd Stokers Siding and form a company. This agreement had the following conditions being:
1. Initial deposit of $100. We acknowledge that amount was paid by you.
2. Further deposit of $12,400 within 30 days before settlement
3. Cash on Settlement for the balance with the settlement date being listed as "on or before 1 March 2020".
We are now 16 March 2020. You have not paid the additional deposit amount of $12,400. In NSW the payment of a deposit is a fundamental condition of a contract for the sale of real estate. We assert you have breached a fundamental term of the contract.
At 16 days past the 1 March 2020 settlement date, we believe you have breached a fundamental term of the contract by not endeavouring to arrange completion.
You will note our Statement of Claim alleges the one page document was entered into unconscionably. At the hearing we will also allege you have breached your own contract by the non-payment of the deposit and the failure to attempt to list for settlement.
It is our belief you have failed to pay the monies and list for settlement due to you being impecunious. If you disagree please advise where the funds for either the contract you are relying on are coming from or where the funds for your proposed offer are coming from."
The plaintiff's Amended Statement of Claim, of 12 June 2020 (filed 16 June 2020), relevantly inserted the following claims for relief:
"1. Declaration that the instrument entitled Real Estate and Sale Agreement purportedly between the defendant and the plaintiff bearing dated 21 February 2019 is validly terminated pursuant to the notice of the defendant dated 16 March 2020.
2. Declaration that by reason of the breaches of defendant under Real Estate and Sale Agreement dated 21 February 2020, is terminated, cancelled and of no effect."
[9]
Compensation
The question of compensation arises only if Mr Ah Sam fails on unconscionability: if the agreement stands, then he was performing work on a property of which he was a purchaser, as the agreement contemplated he would, and no question of compensation would arise. If, however, the agreement is held void for unconscionability, as in my view it rightly was, then there is a question as to whether he is entitled to compensation for his time, labour, and expenditure on the property in the interim.
As the primary judge recognised, [101] referring to what had been said by Deane J in Amadio, [102] an order setting aside a transaction on the ground of unconscionability will, in an appropriate case, be made conditional upon the party obtaining relief doing equity. In this case, Mr Ah Sam claimed that he had expended time, money, and labour on the property. As to this, his Honour said:
"[137] The plaintiff [sic, defendant/cross-claimant] claims he has spent large sums of money on the property. I do not accept that evidence. There is no proof of such except for receipts totalling some $3000. The fact that he painted the house he lived in and renewed its iron roof is minor in the scheme of things given he was living there rent free."
I would be prepared to accept that, in principle, "doing equity" required Mr Mortimer, as a condition of relief, to compensate Mr Ah Sam for any benefit which Mr Mortimer had gained under the impugned transaction. That is not necessarily the same as compensating Mr Ah Sam for all his expenditure; in the context of an unconscionable transaction, equity does not require that the defendant be compensated for all expenditure referable to the transaction, though it might require compensation to the extent that the plaintiff has benefitted from it.
There was, as the primary judge said, scant evidence of Mr Ah Sam's expenditure. Before us he referred to images, at least some of which he had provided to the primary judge, showing improvements he said he had made to the house which he occupies, the nursery, and the gardens, as well as the removal of farm rubbish. However, unexplained by further evidence, the images are of very limited evidentiary value. Moreover, there was no evidence of the critical matter, which was the extent to which his labour and expenditure had enhanced the value of the property, so as to confer a benefit on Mr Mortimer.
[10]
Conclusion
My conclusions may be summarised as follows:
The primary judge did not err in declining an adjournment and proceeding to take the evidence on 14 and 15 September 2020.
The primary judge did not err in requiring and permitting the plaintiff to further amend the Statement of Claim to bring it into conformity with the case that had been conducted, after the evidence had closed, and the amendment occasioned Mr Ah Sam no material prejudice.
Although the conduct of proceedings remotely, using imperfect technology, presented challenges for all parties, it is not apparent that it operated prejudicially to the appellant, nor that it resulted in any injustice to him.
The matters referred to by Mr Ah Sam that amount to complaints that in his Honour's final judgment the primary judge rejected Mr Ah Sam's evidence and made strong adverse findings about him do not suffice to demonstrate bias, while the complaints relating to matters that occurred during the hearing are not such that a fair-minded lay observer might reasonably have apprehended that the primary judge might not bring an impartial mind to bear on the resolution of the proceedings.
It has not been established that the primary judge was in error in concluding that the agreement was procured by unconscionable conduct on the part of Mr Ah Sam and was therefore voidable in equity. His Honour's conclusions depended on findings of disputed facts, expressly based at least in part on demeanour, where the evidence was largely word against word, given by witnesses whom his Honour heard and saw.
There was no error in his Honour's conclusion that Mr Ah Sam had not shown that any amount should be payable to him by way of compensation in the context of the agreement being avoided for unconscionability.
It follows that in my opinion the appeal should be dismissed, with costs. With that, the stay of execution of the writ for possession will lapse.
[11]
Endnotes
As alleged in the Statement of Claim, although 2020 being a leap year, 30 days before 1 March 2020 is apparently 31 January 2020.
Mortimer v Ah Sam [2020] NSWSC 1763 at [91] (Sackar J) ("Primary judgment").
Tcpt, 15 September 2020, p 64(1)-(20).
Tcpt, 8 October 2020, pp 141(43)-142(44).
Tcpt, 8 October 2020, p 145(20)-(40).
Tcpt, 8 October 2020, p 148(12)-(37).
Tcpt, 8 October 2020, pp 150(25)-151(28).
Primary judgment at [5]-[6].
(1994) 181 CLR 41 at 74 (Deane J); [1994] HCA 30.
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ), 363 [83] (Gaudron J); [2000] HCA 63; R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 256 (Barwick CJ, Gibbs, Stephen and Mason JJ); [1976] HCA 39.
See most recently Charisteas v Charisteas; [2021] HCA 29; (2021) 95 ALJR 824 at 828 [12] (Kiefel CJ, Gageler, Keane, Gordon and Gleeson JJ).
Primary judgment at [138], [156]-[157].
Muriniti v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311 at [185] (Bathurst CJ, Beazley P and White JA); Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88; (2016) 332 ALR 128 at 172 [233]-[234] (Ward JA; Basten JA and Emmett AJA agreeing); Knaggs v Director of Public Prosecutions [2007] NSWCA 83; (2007) 170 A Crim R 366 at 387 [95] (Campbell JA; Mason P and Tobias JA agreeing).
Cf, in the administrative law context, Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 at 1182 [99] (Kirby J).
See Vakauta v Kelly (1989) 167 CLR 568 at 573 (Brennan, Deane and Gaudron JJ), 579 (Dawson J), 588 (Toohey J); [1989] HCA 44; but cf Michael Wilson & Partners v Nicholls (2011) 244 CLR 427 at 446 [67] (Gummow ACJ, Hayne, Crennan and Bell JJ); [2011] HCA 48.
At [31] (Primary judgment at [5]-[6]).
Primary judgment at [35].
In the "Type of Claim" section on the cover page.
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 185 [14], 190-191 [27], 192 [30] (French CJ), 208 [81], 211 [93], 212-213 [96]-[97] (Gummow, Hayne, Crennan, Kiefel and Bell JJ); [2009] HCA 27; Tildesley v Harper (1878) 10 Ch D 393 at 397 (Bramwell LJ; Baggallay LJ agreeing), 397 (Thesiger LJ; Baggallay LJ agreeing).
Muriniti v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311
Myton Ltd v Schwab-Morris [1974] 1 All ER 326; (1974) 28 P & CR 1
Payne v City Syndicate Management Pty Ltd (Supreme Court (NSW), Holland J, 3 May 1973, unrep)
Prouten v Chapman [2021] NSWCA 207
Queensland v Masson (2020) 94 ALJR 785; [2020] HCA 28
R v Watson; Ex parte Armstrong (1976) 136 CLR 248; [1976] HCA 39
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 89
Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49
Tildesley v Harper (1878) 10 Ch D 393
Vakauta v Kelly (1989) 167 CLR 568; [1989] HCA 44
Webb v The Queen (1994) 181 CLR 41; [1994] HCA 30
Texts Cited: M Cope, Duress, Undue Influence & Unconscientious Bargains (1985, Law Book Co)
Category: Principal judgment
Parties: Julius Iulai Ah Sam (Appellant)
Christopher John Mortimer (Respondent)
Representation: Counsel:
Self-represented (Applicant)
K Tang (Respondent)
Solicitors:
Russell J Baxter Solicitor (Respondent)
File Number(s): 2021/146866
Publication restriction: N/A
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Equity Division
Citation: [2020] NSWSC 1763
Date of Decision: 9 December 2020
Before: Sackar J
File Number(s): 2019/197941
HEADNOTE
[This headnote is not to be read as part of the judgment]
The respondent advertised for a purchaser of 50% of his property for $300,000. The appellant responded and on 21 February 2019 the parties executed a one page document entitled "Real Estate Sale and Purchase Agreement" for a price of $250,000. The agreement, which was prepared by the appellant, provided for payment of an initial $100 deposit (which was paid), a further $12,400 deposit thirty days before settlement, and the balance on settlement by 1 March 2020. It also contemplated the appellant moving into a second house on the property, a company being formed to own the property (with each party having a 50% shareholding), and both parties performing work to maximise the property's value.
The appellant began residing on the property in March 2019. However, relations deteriorated, and the respondent commenced proceedings in the Supreme Court seeking a declaration that the agreement was void and of no effect, pleading that he had executed the agreement involuntarily, without knowledge of its contents, and in reliance on false and fraudulent representations by the appellant.
The transaction was not completed by 1 March 2020 nor at all, nor was $12,400 paid thirty days before that date. On 16 March 2020, the respondent's solicitors emailed the appellant asserting that he was thereby in default. An Amended Statement of Claim ("ASOC") was filed on 16 June 2020, adding a pleading that the respondent had accepted the appellant's repudiation and terminated the agreement via the email. Trespass allegations were also included. Accordingly, before the primary judge, the respondent contended for orders setting aside the agreement for unconscionability, and alternatively a declaration of valid termination, ejectment of the appellant, and damages for trespass and lost rental income. The appellant cross-claimed seeking specific performance, compensation for works undertaken by him on the property, and damages for personal injury and defamation.
The hearing commenced on 14 September 2020 via audio-visual link, due to pandemic-related constraints. At the outset, the appellant sought an adjournment because he had received a quantity of material from the respondent's lawyers in the preceding three days. This application was refused, and the primary judge proceeded to take evidence over the course of two days. The matter then resumed for submissions on 8 October 2020, at which point the primary judge raised with respondent's counsel that although the case was being conducted on the basis of unconscionability, such a claim was not explicitly pleaded. Leave was granted for a Further Amended Statement of Claim ("FASOC"), and for the appellant to respond to it, which he did.
Ultimately, the primary judge found that the agreement was procured by the appellant's unconscionable conduct, and made orders declaring the agreement void and of no effect and requiring the appellant to give up vacant possession. The appellant now appeals to this Court, challenging the finding of unconscionability, the decision to decline specific performance and compensation, the refusal of an adjournment, and the grant of leave for the FASOC. Complaint is also made that the primary judge exhibited bias, and that the appellant was prejudicially disadvantaged by having to conduct his case via audio-visual link.
Held (per Brereton JA; Basten JA and Payne JA agreeing), dismissing the appeal with costs: [1] (Basten JA), [2] (Payne JA), [3] (Brereton JA).
As to the refusal of an adjournment:
According to Mr Mortimer, in the course of the inspection Mr Ah Sam noticed the second house, and Mr Mortimer said he could not show him through it because there was a tenant, who was troublesome; he said he had received advice that he had to give the tenant a 90-day notice to eject her. Mr Ah Sam agrees that Mr Mortimer referred to having problems with the tenant. [46]
Also according to Mr Mortimer, he showed Mr Ah Sam an area where taro had been planted; Mr Ah Sam said he knew about that, as he had a farm in Hawaii where he grew taro, bananas, and mangoes. Mr Ah Sam also told Mr Mortimer that he had been a film producer and worked for the Gold Coast Council. Mr Mortimer gained the impression he was well off, observing that he drove a Mercedes Benz motor vehicle (according to Mr Ah Sam, a 1987 model). Mr Ah Sam said: "I'm an investor and a cash buyer and I want to talk to you further about some of your ideas and the property. What you must ensure you do is not take on a partner who has to borrow to become your business partner because they will need a mortgage and you will be back in the same position you are in now. I am a cash buyer. I would like to meet with you again to work out some details, do you get up the Coast?". They arranged to meet for lunch at the casino at Broadbeach on 21 February 2019, before Mr Mortimer's eye appointment that afternoon. [47]
According to Mr Mortimer, he had only an old pair of glasses, which helped him read large notices, but he could not read a paper without a magnifying glass and torch. The agreement looked to him like straight black lines on the paper. [53] He needed to get to the hospital. He believed that it was just a commitment to continue to negotiate and deal exclusively with Mr Ah Sam, to work out a plan (in cross-examination, Mr Mortimer insisted that Mr Ah Sam said they were signing the agreement to keep negotiating, and that he believed Mr Ah Sam when he told him that). [54]
According to Mr Mortimer, Mr Ah Sam put a pen in his hand and said, "Just sign, it will be OK and it will all work out". Mr Ah Sam "put his finger on the paper and put [Mr Mortimer's] hand with the pen next to his finger so I signed in the right spot. He then directed my hand and said can you date it today, 21 February. I dated it. We did this to two documents" (in cross-examination, Mr Mortimer maintained that Mr Ah Sam had to take his hand and put the pen where he was to sign). [55] Mr Ah Sam said "This is going to make you feel a lot better knowing you can get your tenant out and can get the pension". Mr Mortimer says that his mind was on getting to the hospital; he thought the document was a statement of intention and that they would have to go to a solicitor to get it formalised (in cross-examination, Mr Mortimer agreed that Mr Ah Sam did not force him to sign the agreement, and that he did so voluntarily, believing what Mr Ah Sam was telling him). [56]
Mr Ah Sam agreed that the first time he showed Mr Mortimer anything in writing was at the lunch on 21 February 2019, although he maintained that he had previously read the agreement to him, without referring to price, over the telephone. [57] Mr Ah Sam says he brought with him two versions of a proposed contract, and two copies of each version; the only difference between the versions being the price, it being $200,000 in one and $250,000 in the other. Mr Ah Sam says that he first produced the $200,000 document, and that Mr Mortimer said that he needed his glasses to read and took them out, read the document, and said "This is not going to be enough". He then asked, "So what would you accept?", and Mr Mortimer said, "I'll accept 250", so he then produced the second document (although Mr Mortimer's counsel put to Mr Ah Sam that he produced two versions of the contract on the day, to which Mr Ah Sam agreed, [58] Mr Mortimer denied that there were two documents with different prices, or that there was any reference to a price other than $300,000. [59] No copy or other objective evidence of the existence of the $200,000 document was ever produced). Mr Ah Sam said, "Are you happy with all that, do you need to see your lawyer", and Mr Mortimer responded that he had already seen a lawyer. Mr Ah Sam said, "Well, you know, I'm happy to sign it too, and, you know, we can involve lawyers later when we're ready to settle".
Mr Ah Sam says that he signed first and then pushed the document over to Mr Mortimer on the other side of the table, who signed it himself, unaided. [60] Mr Ah Sam denied saying that everything in the document was what Mr Mortimer wanted, [61] agreed that they discussed that he would work on the land, denied that the possibility of him living in the caravan was discussed at that stage, denied saying (at that stage) that he would assist in removing the troublesome tenant, and denied saying to Mr Mortimer that signing the agreement would assist him to get the pension. [62] Mr Ah Sam agreed that he knew that Mr Mortimer did not show the agreement to any lawyer before signing it. [63] He denied pointing to where Mr Mortimer was to sign the agreement, or guiding his hand to that place. [64] In cross-examination, Mr Ah Sam agreed that Mr Mortimer may well have asked him to read the document over to him on 21 February 2019, [65] although elsewhere he said that he was almost sure that he did not, "because I have already. To me why would he ask me again, I've already read it to him before we met or I did or gave it to him, he read it himself". [66] This concession significantly undermines Mr Ah Sam's evidence that Mr Mortimer read the document himself.
In his submissions to this Court, Mr Ah Sam repeatedly referred to Mr Mortimer having been able to read the menu at the restaurant. However, before the primary judge the only reference to this was in Mr Ah Sam's "Defense to Amended Statement of Claim" of 2 November 2020, in which he stated, for the first time (emphasis added):
"16. Denied. The Plaintiff was not incapacitated by reason of any special disability. He was strong and healthy when the Defendant met him on 21 February 2019. Just as he was when we met on 17 February for the site inspection.
There was no sign or evidence that the Plaintiff was sick, or have a special disability on 21 February. He also drove to the Gold Coast and back himself. He was quite capable to sign the the two copies of the Agreement voluntarily and without any hesitation or problems. The Defendant did not assist the Plaintiff to sign in any way. The Plaintiff's straight clean signatures on the Agreement right on the line, and the dates 21-2-2019 he wrote shows no sign of guidance or force. There was no evidence that he needed help with signing by himself which he did voluntarily.
Furthermore, the Plaintiff read the restaurant menu (which was in very small print, and poor lighting) without glasses, selected his meal and ate with fork and knife without any problems with his hands during our lunch after the Agreement was signed."
The suggestion that Mr Mortimer had read the menu had not been advanced at any earlier point in Mr Ah Sam's accounts; nor had it been raised with Mr Mortimer in cross-examination, although the cross-examination did challenge his evidence that he was unable to read the agreement on 21 February 2019.
Mr Mortimer then departed for the hospital, by tram, for his procedure, which was laser surgery, not just a check-up. [67] He stayed in a motel that night, and drove himself home the following day. [68] Mr Mortimer said that although he could not read during their meeting, he could drive "okay", and although he could not drive immediately after the procedure on 21 February 2019, he rested his eyes that night and drove the next day. He agreed that he had been advised by the hospital not to drive. [69]
Dr Nathan Walker is an eye specialist, and a Visiting Medical Officer at Gold Coast Hospital. [70] He reported that he had examined Mr Mortimer on 15 February 2019, after Mr Mortimer had been seen by other technicians. Although he has not seen him since, he had access to Mr Mortimer's medical records. Mr Mortimer suffered from diabetic retinopathy, his retina was bleeding, and he also had cataracts. After some procedures, his vision had improved by November 2019. [71] Based on the various measurements that had been taken, he was of opinion that as at 21 February 2019, Mr Mortimer could well have had difficulty reading. He said, "But certainly in February, certainly on the 21st his vision in his right eye was only 1 line below the top line on an eye chart, that is very poor vision in anyone's language". Dr Walker could not say categorically whether Mr Mortimer could read documents on 21 February 2019, but said that there was a correlation between distance vision (which was measured) and reading ability; that typically someone with his level of distance vision would have a moderate reading vision impairment; that Mr Mortimer certainly had reduced vision in both eyes, and would have had patchy vision, with blood in the back of his eyes obscuring some of his vision; and that there was no question his vision would have been impaired. [72]
Mr Mortimer agreed that on about 25 February 2019, Mr Ah Sam telephoned him and said he wanted to bring some things out to the property, and that Mr Mortimer said that he could put them in a container and the shed. [75] Mr Ah Sam arrived at the property with two associates and placed his goods in a shed. He says that Mr Mortimer, who was upset because of a dispute with the tenant, mentioned that Mr Ah Sam might not be able to move into the house as agreed, but said he could move into the caravan earlier. [76]
Mr Ah Sam returned to the property on or about 4 March 2019, and stayed in the caravan. [77] Mr Mortimer agreed that he allowed Mr Ah Sam to use some dishes, pans, and his bathroom and toilet when he was staying in the caravan. [78] The tenant vacated on 6 March 2019. After the mess she left behind was cleaned up, by Mr Ah Sam with assistance from Mr Mortimer, [79] on 10 March 2019 Mr Ah Sam moved into the second house, where he has continued to reside until now.
Mr Mortimer says that Mr Ah Sam bullied and threatened him to let him onto the property. [80] Mr Ah Sam denies that, to this point, Mr Mortimer had ever told him not to come onto the property, [81] or expressed any disagreement with the document he had signed, [82] or that he ever threatened to sue Mr Mortimer. [83]
His Honour expressed himself to be satisfied that the agreement was procured by unconscionable conduct on the part of Mr Ah Sam. [89] His Honour elaborated (emphasis added): [90]
"[129] But I am satisfied that the plaintiff foolishly entered so called negotiations with the defendant as a result of his Gumtree advertisement. He was ill-equipped to do so. He was unwell and had poor eyesight. I accept the plaintiff's evidence that his eyesight was compromised on 21 February. Dr Walker's views support that conclusion and I also accept the latter's evidence on that point. The plaintiff was stressed about his health, his much younger wife and family and a mortgage which he had had on the property for some time. Indeed I do not consider it to be far fetched to describe him as desperate. One further corroboration of the plaintiff's foolishness is his even driving to the medical appointment on 21 February given the condition of his eyes.
[130] Further I accept the plaintiff's evidence that on 17 February when he first met the defendant he told the defendant about his health and financial predicament. I am satisfied he told the defendant in effect that he was running out of money, could not get the pension and was getting desperate. He told the defendant he had had a heart attack the year before and was having eye surgery because he could not see properly or read anything and had bleeding behind the eyes (plaintiff's affidavit of 30 August 2019 [11]-[13]). I reject the defendant's denial that these things were said or that he was in effect not taking any interest.
[131] In my view the defendant was taking a keen interest and in my view astutely assessed how vulnerable and indeed foolish the plaintiff was. He prepared two versions of the written contract in advance of their meeting on 21 February. He drafted the terms and I do not accept his evidence that he read it out over the phone at least twice to the plaintiff before the meeting. In that regard I accept the plaintiff's denial that that occurred.
[132] The terms of the agreement were commercially improvident from the plaintiff's point of view and indeed farcical. For a deposit of a mere $100 the defendant had a year to pay the full purchase price. He was to have free accommodation which he had clearly observed during his lengthy inspection. He was under no express obligation to do anything except to undertake the entirely and one might think deliberately vague notion of doing things so that the full potential of the land could be realised.
…
[138] Although not pleaded there is scope in all the circumstances to conclude that the defendant never ever intended to make any payments other than the $100. He has acted in my view dishonourably and dishonestly in relation to the transaction. Again having observed him give his evidence I am satisfied he lied about not being at all interested in what the plaintiff was saying during their first meeting. He must in my view have summed up the plaintiff as foolish and gullible and susceptible to his charm and patter. The talk of overseas assets and a cash purchase with a man so obviously desperate as the plaintiff was a clear invitation to the plaintiff that he should feel sufficiently persuaded to accept without too much hesitation the offer over lunch. The defendant's first offer as it were provided for a 33% discount on the asking price. Both offers were in any event to be subject to the same improvident terms from the plaintiff's point of view so the defendant in a sense must have thought he could not lose either way. He clearly intended and clearly succeeded in having the plaintiff sign on the spot at lunch.
[139] The mere fact the plaintiff was as I find on the evidence prepared to sign a document he had never seen before is further confirmation of his gullibility and vulnerability. He was given no opportunity to consult a lawyer nor did he think to do so is also confirmation of his foolishness. But as the authorities point out foolishness alone is perhaps not enough. I am satisfied the defendant knowingly took advantage of the plaintiff."
As his Honour found, [91] the terms of the agreement were improvident from Mr Mortimer's perspective: in effect, for a deposit of only $100, Mr Ah Sam was allowed a year to pay the purchase price, and enjoyment of the property, including rent-free occupation of the second house, in the meantime. That improvidence must have been apparent to Mr Ah Sam, as a not inexperienced businessman. [92] This was of considerable significance in circumstances where it is common ground that Mr Mortimer's purpose was to relieve financial pressure - a purpose which would hardly be achieved if he were not to be paid for another year. These disadvantageous (to Mr Mortimer) terms were not included in the Gumtree advertisement. The only evidence that they were ever discussed is Mr Ah Sam's disputed account, and even his account does not attribute to Mr Mortimer any question of comment about them.
However, while the improvidence of a transaction may operate as a red flag, it does not of itself make a case of unconscionability. In my view, the critical question is whether, to Mr Ah Sam's knowledge on 21 February 2019, Mr Mortimer's vision was materially impaired, with the consequence that he did not know that the price stated in the document he signed was not $300,000, that settlement was deferred for twelve months, that the deposit was merely nominal, but that Mr Ah Sam would be entitled to occupation in the meantime, free of any occupation fee or interest. Otherwise, I doubt that the combination of Mr Mortimer's health and financial circumstances amounted to a sufficient "special disadvantage". However, if by reason of impairment of vision, to Mr Ah Sam's knowledge, Mr Mortimer could not ascertain that the price stated was not $300,000 as he believed, and was unaware of the other disadvantageous terms, then that would amply suffice to constitute a special disadvantage which affected his ability to safeguard his own interests.
His Honour's findings, set out above, include findings that:
1. Mr Mortimer had poor eyesight, and his vision was compromised at the meeting at the casino on 21 February 2019. [93] This involved acceptance of Mr Mortimer's evidence, supported by Dr Walker's evidence;
2. Mr Ah Sam knew that Mr Mortimer was having eye surgery because he could not see properly or read anything and had bleeding behind the eyes. [94] This involved acceptance of Mr Mortimer's account of their conversations during the inspection on 17 February 2019, and rejection of Mr Ah Sam's evidence that if these things were said, he was not paying attention; and
3. The relevant terms of the agreement had not been discussed or negotiated before the meeting at the casino. [95]
His Honour did not expressly find that Mr Ah Sam represented that the price in the contract was $300,000. However, in light of his Honour's reference to the plaintiff's submission that "the defendant knew of his weaknesses in health and financial status and gained an advantageous transaction as a result, having purported to read the agreement to the plaintiff but in terms that did not resemble the original Gumtree advertisement or the document the plaintiff actually signed", the general acceptance of Mr Mortimer's evidence, the credit findings adverse to Mr Ah Sam, and most importantly the fact that impaired vision was relevant only if Mr Mortimer did not know what was in the agreement, it should be accepted that his Honour's findings include that Mr Mortimer did not know that the document did not state the price to be $250,000 and contained the other disadvantageous terms.
On these questions the evidence was largely, though not entirely, the word of Mr Mortimer against that of Mr Ah Sam, and his Honour plainly preferred the former. His Honour's rejection of Mr Ah Sam's evidence was substantially based on demeanour: his Honour expressly referred, in this context, to "having observed him give his evidence". [96] These are therefore findings of fact made by a trial judge after hearing and seeing the witnesses, and expressly based in part on the judge's observations of Mr Ah Sam. In those circumstances, the task facing the appellant is a heavy one: it must appear that those findings are "glaringly improbable", "contrary to compelling inferences", or inconsistent with "incontrovertible facts or uncontested testimony". The principles were summarised by the High Court in Queensland v Masson: [97]
"For present purposes, it is enough to repeat the observations of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [Fox v Percy (2003) 214 CLR 118 at [26]-[29]; 77 ALJR 989] that, at least where the trial judge's decision might be affected by his or her impression about the credibility of the witness, whom the trial judge sees and hears but the appellate court does not, the appellate court must respect the attendant advantages of the trial judge. If, making proper allowance for such advantages, the appellate court concludes that an error has been shown, it is authorised and obliged to discharge its appellate duties in accordance with the statute conferring appellate jurisdiction [Warren v Coombes (1979) 142 CLR 531 at 551; 53 ALJR 293 per Gibbs A-CJ, Jacobs and Murphy JJ]. In particular cases, it may be demonstrated that the trial judge's conclusions are erroneous, despite being based upon or said to be based upon an assessment of credibility. That will be so where the trial judge's findings of fact are contrary to 'incontrovertible facts or uncontested testimony' [Fox v Percy (2003) 214 CLR 118 at [28]; 77 ALJR 989 per Gleeson CJ, Gummow and Kirby JJ], "glaringly improbable" [Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844 per Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ], or 'contrary to compelling inferences' [Chambers v Jobling (1986) 7 NSWLR 1 at 10 per Kirby P; at 20 per Samuels JA]."
Mr Ah Sam submitted that the crucial findings were contradicted by:
1. the fact that Mr Mortimer was able to accompany him on an extensive physical inspection of the property on 17 February 2019;
2. the consistent and accurate positioning of Mr Mortimer's signatures and dates on each copy of the agreement document;
3. the (asserted) fact that Mr Mortimer could read a menu at the restaurant on 21 February 2019; and
4. the fact that Mr Mortimer was able to drive himself from his home to the Gold Coast on the morning of 21 February 2019, and home the following day, and later obtain a renewal of his driving licence.
However, Mr Mortimer's ability to walk around the property on an inspection and point out its features says little about his ability to read print on paper. As to the positioning of his signatures, Mr Mortimer's evidence was that he was guided as to where to sign and date the two copies of the document. Examination of both copies reveals a slightly different position and slant of Mr Mortimer's signature, but in both cases an apparently close relationship with the line on which he was supposed to sign. This is not glaringly improbable if, as he says, he was guided where to sign and date the documents, and he could see the appearance of black lines. Mr Ah Sam's repeated submission that Mr Mortimer was able to read the menu at the restaurant was supported only by the assertion to that effect in his updated "Defense to Amended Statement of Claim" of 2 November 2020, to which Mr Mortimer had had no opportunity to respond, and which had not been put to him in cross-examination. And notwithstanding Dr Walker's explanation that there is a relationship between distant vision and reading vision, it does not follow from the circumstance that he was able to drive (if imprudently), that he was also able to read up close. Dr Walker said that Mr Mortimer's vision as at 21 February 2019 was below the criteria for a driving licence, though it improved subsequently with treatment. In those circumstances, Mr Mortimer's reckless decision to drive himself is not inconsistent with his being unable to read the document with which he was presented on 21 February 2019; nor is the subsequent improvement in his vision following treatment.
His Honour's findings derive some support from Dr Walker's evidence, which while inconclusive, points to Mr Mortimer's reading vision being compromised as at 21 February 2019. They also derive support from the undisputed fact that Mr Ah Sam knew, from the conversation in the course of the inspection on 17 February 2019, that Mr Mortimer's eyesight was poor, and that he was that day coming to the Gold Coast for a medical appointment in connection with his eye; while Mr Ah Sam claimed that he understood it merely to be a check-up, that is contradicted by the hospital records, which show that it was for laser surgery. Further support is provided by Mr Ah Sam's concession that at the casino, Mr Mortimer may well have asked him to read out the agreement. And they are supported also by the circumstance that Mr Mortimer did not point out or correct the erroneous descriptions in the agreement (including as to area), which he subsequently noticed once he was able to read it.
It might be said that, even accepting that Mr Ah Sam knew that Mr Mortimer's vision was compromised, it was a large risk to prepare documentation on the assumption that he would be entirely unable to read it and discern the provisions that had been included in it. However, that may not have been his original plan, but an opportunity that presented when it became apparent, at the casino, just how defective Mr Mortimer's vision was.
Moreover, it seems incredible that a vendor such as Mr Mortimer would express himself to be happy with an agreement when he did not know the price, as Mr Ah Sam suggests was the case when he allegedly read the agreement over to him on the telephone. And given that Mr Mortimer's motive for the transaction was to provide funds which he could apply to relieve the financial pressure he was experiencing, it would be remarkable - if he was aware of the amount of the deposit and the timeframe for settlement - that he would not at least have questioned those terms; yet not even Mr Ah Sam suggests that he did so. It also seems extraordinary that of the two documents allegedly prepared in advance by Mr Ah Sam, neither of which reflected the advertised asking price, one happened to coincide with the price which Mr Mortimer allegedly said he would accept after rejecting the amount in the first.
For those reasons, in my view it cannot be said that his Honour's essential findings were "glaringly improbable", "contrary to compelling inferences", or inconsistent with "incontrovertible facts or uncontested testimony". Indeed, more glaring improbabilities were associated with Mr Ah Sam's version, including that Mr Mortimer without question expressed himself to be happy with an agreement, when he did not know the price, and when settlement was to be deferred for a year, with a deposit of only $100.
It follows that in my opinion it has not been established that his Honour was in error in concluding that the agreement was procured by unconscionable conduct on the part of Mr Ah Sam, and was therefore voidable in equity.
In the pleading, the following relevant paragraphs were inserted:
"16. On 30 January 2020 in breach of the written agreement pleaded in paragraphs 6 and 7 above, the defendant did not pay the amount of $12,400 set out in the agreement by way of deposit or payment of the balance of the alleged sale price contained in the written agreement on 1 March 2020.
17. The plaintiff by notice in email of 16 March 2020 confirmed the defendant's repudiation of the written agreement.
18. The written agreement was terminated on 16 March 2020 by the plaintiff.
Particulars
a. Email dated 16 March 2020 from the Plaintiff's solicitor to the Defendant noting termination of the Real Estate Sale Agreement (Notice)."
The email of 16 March 2020 was equivocal, and somewhat disingenuous. At that time, Mr Mortimer was disputing that there was a binding agreement, and was seeking to have it avoided for unconscionability. If, contrary to his position, there was a binding and enforceable agreement, then from the moment the Statement of Claim was filed on 26 June 2019, he was evincing an intention not to be bound by it. The institution of proceedings for its avoidance was, on that hypothesis, repudiatory conduct on his part.
The 16 March 2020 email did not call on Mr Ah Sam to perform. No Notice to Complete was given. Mr Mortimer had no intention of settling on 1 March 2020, and on the hypothesis that there was a binding contract, the purchaser's obligation to pay the balance purchase price was interdependent with the vendor's obligation to transfer title; in circumstances where Mr Mortimer was contending that he was not bound to do so, he could not insist upon payment of the balance purchase price and could not have therefore given a valid Notice to Complete. Even if, ordinarily, non-payment of a deposit entitles the vendor to rescind out of hand without notice, [98] it is not self-evident that such a principle applies where, as here, an initial, albeit nominal, contractual deposit has been paid, time for payment of the "further deposit" was fixed by reference to the time for settlement, and the vendor was not prepared to settle.
In any event, the email did not even purport to terminate the contract. It alleged breach, but did not convey acceptance of a repudiation, let alone state that the plaintiff elected to terminate the contract. In my judgment, on the hypothesis that the agreement was not affected by unconscionability, it remained on foot following 16 March 2020. There being no evidence of any other purported termination or discharge, it remained on foot and unperformed at the time of the hearing before the primary judge.
The primary judge held that Mr Ah Sam was not, at the date of the trial, able to pay the $12,400, or the balance of the purchase money. His Honour relied on answers given by Mr Ah Sam to questions posed by his Honour during his cross-examination: [99]
"Q. … Do you have $12,400 or for that matter, $200,000 odd presently available to fully complete the sale if you're ordered to do so?
A. Well, I have to sell some assets as I said.
Q. Is the answer no, is the answer no?
A. Well not today, but if I give it time, yes, sure.
…
Q. … As of today, at least, you are in no position if ordered to do so to pay the balance of any purchase price under this agreement; that's the truth isn't it?
A. Well not today, I could get the money if given me the time, sure, because you know, as I said, we've --"
His Honour pointed out that there was no evidence to show what, if any, assets Mr Ah Sam owned or controlled. Subsequently, Mr Ah Sam forwarded material said to evidence his assets, of which his Honour said: [100]
"[134] In his document entitled 'Final Submissions for the Defendant' the defendant sets out what he asserts are his assets after I had raised the question of whether it could be said that he was ready, willing and able to complete the contract (T.122/9-41).
[135] His assets are described to consist of 'real and intellectual properties'. The first thing to observe is that there is no real property disclosed as such. What is disclosed is a description of alleged assets for which there is no value attributed, let alone attributable. Apart from bare assertions there is no evidence of precisely what the assets are, although they appear to be intellectual property rights which may on one view have no tangible value at all."
Mr Ah Sam complained that his Honour disregarded evidence of his ownership of real property in Hawaii. Mr Ah Sam provided to this Court, by email, a number of images, which he described as "photos of Hawaii farm and some USA properties, I owned". It is entirely unclear as to whether that is an assertion of current or past ownership, and of all or any of the properties. No document evidencing his title to any real property, let alone its value, was provided, nor does any appear to have been provided to the primary judge. It is not apparent that there was any material error in his Honour's statement that "there is no real property disclosed as such".
In any event, whether Mr Ah Sam has some interest in real property in Hawaii, Florida, or elsewhere is not material. What is clear is that on his own evidence, Mr Ah Sam was not, at the time of the hearing at first instance, ready, willing, and able to complete the contract. At the very least, he required a considerable period of time to realise assets if he were to be in a position to complete the purchase. In those circumstances, he was not entitled to a decree for specific performance.
On the relevant hypothesis - that the contract was not voidable for unconscionability - then, as at the hearing at first instance, it remained on foot. Mr Mortimer had not terminated it, but Mr Ah Sam was not entitled to specific performance. It remained open for Mr Mortimer to bring matters to a head, if he wished to do so, by giving a Notice to Complete - but for him to do so would have involved electing to affirm a contract which he was impugning in equity for unconscionability.
Further, as the primary judge observed, there is the offsetting factor that Mr Ah Sam has since March 2019 had, and continues to enjoy, use of the property and occupation of the second house on it, rent free. In a somewhat similar context in Beaton v McDivitt, [103] Young J (as the later Chief Judge and Judge of Appeal then was) said, "In this case, of course, there would be a lot to be said for the proposition that rent and rate free occupation of this land for seven years has already satisfied any equity that the plaintiff may have had".
In my view there was no error in his Honour's conclusion that Mr Ah Sam had not shown that any amount should be payable to him by way of compensation in the context of the agreement being avoided for unconscionability.
Tcpt, 15 September 2020, pp 74(45)-75(2).
Tcpt, 15 September 2020, p 74(37)-(38).
Tcpt, 15 September 2020, p 77(12)-(23).
Tcpt, 15 September 2020, p 78(1)-(6).
Tcpt, 15 September 2020, p 80(1)-(5).
See, eg, Tcpt, 15 September 2020, pp 83(3)-84(43).
Amadio at 474 (Deane J; Mason J and Wilson J agreeing).
Amadio at 474 (Deane J; Mason J and Wilson J agreeing).
M Cope, Duress, Undue Influence & Unconscientious Bargains (1985, Law Book Co) at [260].
Amadio at 461-462 (Mason J).
(1998) 194 CLR 457 at 479 [76] (Gaudron, Gummow and Kirby JJ); [1998] HCA 66.
(2017) 263 CLR 85 at 103 [38] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ); [2017] HCA 49.
Tcpt, 14 September 2020, p 33(11)-(27).
Tcpt, 14 September 2020, p 38(38)-(48).
Tcpt, 14 September 2020, p 14(4)-(35).
Tcpt, 15 September 2020, pp 91(31)-92(25).
Tcpt, 15 September 2020, pp 92(41)-93(2).
Tcpt, 15 September 2020, pp 107(49)-108(27).
Tcpt, 15 September 2020, p 107(29)-(49).
Tcpt, 15 September 2020, pp 103(8)-104(24), 106(22)-(25), 108(29)-(39).
Tcpt, 15 September 2020, p 98(18)-(24).
Tcpt, 15 September 2020, p 104(6)-(24).
Tcpt, 15 September 2020, p 105(5)-(11).
Tcpt, 15 September 2020, p 115(27)-(33).
Tcpt, 14 September 2020, p 31(3)-(9).
Tcpt, 14 September 2020, pp 16(34)-17(15).
Tcpt, 14 September 2020, p 31(34)-(47).
Tcpt, 14 September 2020, p 31(11)-(32).
Tcpt, 14 September 2020, p 38(3)-(26).
Tcpt, 14 September 2020, pp 33(1)-(7), 39(19)-(21).
Tcpt, 14 September 2020, p 39(9)-(25).
Tcpt, 15 September 2020, p 106(10)-(12).
Tcpt, 15 September 2020, p 104(40)-(44).
Tcpt, 14 September 2020, p 32(12)-(43).
Tcpt, 15 September 2020, pp 104(50)-105(33).
Tcpt, 15 September 2020, p 110(11)-(20).
Tcpt, 15 September 2020, p 111(19)-(22).
Tcpt, 15 September 2020, p 112(32)-(47).
Tcpt, 15 September 2020, p 113(26)-(33).
Tcpt, 15 September 2020, p 109(19)-(22).
Tcpt, 15 September 2020, p 115(8)-(16).
Tcpt, 14 September 2020, p 18(40)-(47). This is confirmed by the hospital records.
Tcpt, 14 September 2020, p 21(8)-(15).
Tcpt, 14 September 2020, p 30(33)-(44).
Tcpt, 15 September 2020, p 65(13)-(15).
Tcpt, 15 September 2020, p 81(4)-(12).
Tcpt, 15 September 2020, p 83(3)-(21).
In his affidavit he said that this was on 25 February 2019, but he appears to have conflated two attendances of Mr Ah Sam at the property, on 23 and 25 February 2019.
Tcpt, 15 September 2020, p 117(18)-(32).
Tcpt, 14 September 2020, p 24(3)-(8).
Tcpt, 15 September 2020, pp 117(38)-118(11), 119(25)-(27).
Tcpt, 15 September 2020, p 118(3)-(11).
Tcpt, 14 September 2020, p 25(5)-(17).
Tcpt, 14 September 2020, p 26(4)-(24).
Tcpt, 14 September 2020, p 41(34)-(35).
Tcpt, 15 September 2020, p 119(16)-(23).
Tcpt, 15 September 2020, p 117(40)-(48).
Tcpt, 15 September 2020, p 118(19)-(24).
Tcpt, 14 September 2020, pp 27(45)-28(17).
Tcpt, 14 September 2020, pp 28(30)-29(2).
Tcpt, 15 September 2020, pp 120(37)-121(7).
Primary judgment at [41]-[44].
Primary judgment at [53]-[56].
Primary judgment at [127].
Primary judgment at [129]-[132], [138]-[139].
Primary judgment at [132].
See Primary judgment at [136].
Primary judgment at [129].
Primary judgment at [130].
Primary judgment at [131].
Primary judgment at [138].
[2020] HCA 28; (2020) 94 ALJR 785 at 800 [78] (Kiefel CJ, Bell and Keane JJ), 812 [119] (Nettle and Gordon JJ). See most recently Prouten v Chapman [2021] NSWCA 207 at [105]-[106] (Brereton JA).
In Myton Ltd v Schwab-Morris [1974] 1 All ER 326 at 331-332 (Goulding J); (1974) 28 P & CR 1, it was held that a vendor incurs no liability under a contract until the deposit is paid, and that a vendor in that situation need not give any notice to the purchaser that he or she does not intend to perform the contract except to protect him or herself against a claim that he or she waived payment of the deposit, and may rescind without notice. However, in Payne v City Syndicate Management Pty Ltd (Supreme Court (NSW), Holland J, 3 May 1973, unrep) ("Payne") it was held that the contract is on foot, although the deposit has not been paid, and the vendor is not entitled to rescind without first giving notice of intention to do so. In Babic v Williams (1974) 5 BPR 11,242 at 11,243, Holland J, after noting those divergent views, adhered to his earlier decision in Payne. However, in Brien v Dwyer (1978) 141 CLR 378; [1978] HCA 50, Barwick CJ (at 388-389) was of the view that, in so far as these and other decisions were authority that a vendor may not rescind out of hand for failure to pay the deposit, they ought to be overruled, and Gibbs J (at 393-394) and Aickin J (at 406-407) appear to have agreed.
Tcpt, 15 September 2020, p 123(9)-(33).
Primary judgment at [134]-[135].
Primary judgment at [87]-[89].
At 480-481 (Deane J; Mason J and Wilson J agreeing).
(1985) 13 NSWLR 134 at 158 (Young J); 3 BPR 9,576.
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Decision last updated: 17 December 2021
All that occurred on 14-15 September 2020 was the taking of evidence in respect of affidavits served well beforehand. Submissions were deferred until 8 October 2020, hence the appellant had ample time to respond to the respondent's material. No injustice was occasioned: [13]-[19].
As to the audio-visual link:
Although audio-visual link technology is imperfect, the appellant has not identified how the problems encountered occasioned him any practical injustice: [20]-[22].
As to the grant of leave to amend the ASOC:
The case was always conducted on the basis of unconscionability, and the appellant was permitted to (and did) respond to the FASOC. While he also ought not to have been precluded from adducing further responsive evidence, he did not seek to do so, and he did not identify before this Court any relevant further evidence that might have been adduced, nor otherwise demonstrate any substantive injustice caused by the amendment: [23]-[36].
As to bias:
The primary judge's interventions during the appellant's questioning were not inappropriate, the complaints that the primary judge rejected the appellant's evidence and made strong adverse findings do not demonstrate bias, the allegations that the primary judge lied are misconceived, and the grant of leave to amend was consistent with the primary judge's power and duty to ensure that the pleadings reflected the real matters in issue. Accordingly, no fair-minded lay observer might reasonably have apprehended that the primary judge might not bring an impartial mind to bear on the proceedings: [37]-[62].
As to unconscionability:
The terms of the agreement, which were prepared by the appellant and differed from the respondent's advertisement, were improvident from the respondent's perspective, and this must have been apparent to the appellant, a not inexperienced businessman. The respondent was suffering from very poor eyesight, and the appellant was aware of this. The appellant is unable to surmount the high bar for overturning the primary judge's demeanour-based findings to the effect that the respondent was unable to read the agreement, was thus not aware of its disadvantageous terms, and, in particular, did not know that the price was $250,000, not $300,000. These facts constitute a sufficient special disadvantage affecting the respondent's ability to safeguard his interests as to support the finding of unconscionability: [63]-[122].
Queensland v Masson (2020) 94 ALJR 785; [2020] HCA 28; Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49; Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14; Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81, applied.
As to specific performance:
The respondent's 16 March 2020 email was equivocal and did not purport to terminate the contract. Moreover, had the agreement been enforceable, the respondent was not entitled to terminate it when he was repudiating it by contending that it was void. Accordingly, had the agreement not been affected by unconscionability, it would have remained on foot. However, the appellant was not ready, willing, and able to pay the purchase price, as on his own case he needed time to raise funds, and he was therefore not entitled to specific performance: [123]-[134].
As to compensation:
An order avoiding an agreement for unconscionability may be conditioned on the party obtaining relief doing equity, such as by paying compensation for benefits received. However, the appellant has provided insufficient probative evidence of expenditure on the property, nor of how his work has enhanced the property's value. Moreover, any equity the appellant may have is offset by his rent-free enjoyment of the property since March 2019: [135]-[140].
Beaton v McDivitt (1985) 13 NSWLR 134; 3 BPR 9,576, applied; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14, considered.