Balagiannis v Balagiannis

Judgment

1. MEAGHER JA: By a Deed of Assignment dated 9 July 2018, which recited that the first respondent Nicolas Balagiannis had agreed to do so, he assigned to his daughters Mary Balagiannis and Angelique Balagiannis, the first and second appellants, in equal shares and for no consideration, the debt owed to him by the second respondent Reserve Hotels Pty Ltd (RHPL) in its then capacity as trustee of the NBF Trust. At that time, the indebtedness of RHPL was in excess of $18.5 million. The primary judge referred to Nicolas as NB, his wife Susan as SB, Angelique as AB, Mary as MB, and Mary's husband Dimitri Kentrotis as DK. In these reasons those principal protagonists are referred to by their given names, as they have been by the parties in their written and oral submissions.
2. In proceedings commenced in the Equity Division, Mary and Angelique sought orders for the appointment of a receiver and manager to RHPL and a declaration that the appointment of the third respondent (Sydney Hotel Management Pty Ltd (SHML)) as trustee of the NBF Trust was invalid. This appeal is not concerned with the determination of those claims. By their cross-claim in those proceedings, Nicolas, RHPL and SHML sought an order under the Contracts Review Act 1980 (NSW), s 7(1)(b) declaring the Deed of Assignment void. The primary judge (Black J) upheld that cross-claim (In the matter of Reserve Hotels Pty Limited [2021] NSWSC 376). Mary and Angelique appeal from the orders giving effect to that judgment (orders 1 to 4 made in In the matter of Reserve Hotels Pty Limited [2021] NSWSC 487).

Overview

1. Section 7(1) of the Contracts Review Act provides: 7 Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following - (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract … …
2. A contract may be unjust, for the purposes of s 7(1), in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both (West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620 per McHugh JA).
3. The parties proceeded in the court below, and in this appeal, on the basis that the Deed of Assignment was a "contract" within the meaning of the Contracts Review Act. The authority cited in support of that proposition is the decision of McLelland J in Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 at 149: There is another submission relating to the application of the Contracts Review Act with which I should deal, namely the defendants' submission that the expression "contract" in the Act does not include a deed. There is in my view no warrant for any such limitation in the terms or the evident policy of the Act. The expression "contract" is apt to include both a simple contract and a contract under seal. It is conceivable that there may be deeds which are not contracts, but in my opinion any deed whereby an obligation is undertaken by a party thereto would be a 'contract' within the meaning of the Act. That the expression "contract" is not used in the Act in any restricted sense is illustrated by the circumstance that it is clearly intended to include a dealing within the meaning of the Real Property Act 1900: see s 19, and the definition of "land instrument" in the Contracts Review Act, s 4(1).
4. In doing so, the parties implicitly accepted that the obligation recited in the Deed that Nicolas would assign the debt to his daughters for no consideration was one which the law would enforce when made under seal. The only remaining executory promise was that of further assurance. Section 14 of the Act provides that the Court may grant relief "in relation to a contract notwithstanding that the contract has been fully executed".
5. The grounds of appeal in the amended notice of appeal which are pressed (grounds 1(a)-(f) and 2(a)-(c)) challenge the primary judge's conclusion at J[111] that the contract was "unjust in the circumstances relating to the contract at the time it was made": 111. I am comfortably satisfied that the profoundly disadvantageous effects of the DoA to NB, SB and RHPL and to the NBF Trust in its dealings with NAB, the lack of any attempt to bring them to NB's attention or identify the desirability of his seeking independent advice which would have disclosed those effects, and the circumstances in which it was prepared and executed, makes it unjust in the circumstances at the time they were made. Grounds 1(a)-(f) challenge findings as to unjust or disadvantageous consequences or effects of the assignment, and grounds 2(a)-(c) findings concerning the way in which the Deed was made.
6. Before turning to consider those grounds, it is necessary to summarise the relevant circumstances as they were in June 2018, and then the events leading to the execution of the Deed of Assignment.

The relevant circumstances as at June 2018

1. Nicolas was born and grew up in Greece. He moved to Australia in about 1965, married Susan in 1975, and they had two daughters, Angelique (born in 1978) and Mary (born in 1981). Mary married Dimitri in January 2015. In 1993, Nicolas and his wife purchased a house in Vaucluse, which continued to be their main place of residence in 2017 and 2018.
2. Nicolas owned a two-story apartment in Athens and, since about 1997, had regularly stayed there from March and after during the southern hemisphere winter. The Deed of Assignment was executed by Nicolas on 9 July 2018 in that apartment.
3. Nicolas was the sole shareholder and effective controller of RHPL, which in turn was trustee of the NBF Trust. The eligible beneficiaries of that discretionary trust included Nicolas, his wife Susan and their children. The principal assets of that trust were land and buildings in central Sydney from which two substantial hotels traded under the names "Mr B's" and "Chamberlain Hotel", and two further hotel businesses operated from leased premises (J[28]). Nicolas had capitalised the NBF Trust in 1998 by making loans to RHPL from his 50% share (approximately $70 million) of the sale proceeds of an earlier partnership business. As at 30 June 2018, that Trust Debt was approximately $18.5 million.
4. Corporate entities and other discretionary trusts controlled by Nicolas also owned apartments, townhouses and farmlands in Greece, as well as an interest in a Greek casino.
5. RHPL's principal financing facility was with National Australia Bank (NAB) and as at 30 June 2018, the amount owing and secured was $45.625 million. Under the bank's finance agreement, RHPL undertook not to transfer or otherwise dispose of any asset other than by a Permitted Disposal (cl 9(h)), which relevantly described a sale or transfer for "market consideration" and "on arm's length terms" made with the bank's written consent. It also undertook not to incur indebtedness above $1 million without the bank's prior written consent (cl 8.1(w)).
6. Since 1997 Nicolas and his immediate family members (Susan, Mary, Angelique and, much later, Dimitri) used the RHPL bank account as a cash advance facility for payment of their living and other expenses. Moneys paid to them or at their direction were treated as payments made by RHPL in reduction of Nicolas' loan account (J[28], [51]).
7. In February 2018, Nicolas and Susan signed wills and a Memorandum of Wishes, which recorded that they "intended and agreed" that there should not be any substantial variations to the provisions of those wills unless and until both agreed in writing as to the terms of any such variation (J[32]). That memorandum also recorded that it was their "overriding intention" in respect of the assets of the various discretionary trusts, including the NBF Trust, that their trustees take all reasonable steps "in order to maintain and protect them". That estate planning was undertaken with the assistance of a firm of chartered accountants, William Buck, the managing director of which was a Mr Hatzistergos, and the legal firm McCabes Lawyers, later McCabe Curwood, the principals of which included Mr Terry McCabe.
8. An earlier email from Mr Mills of William Buck dated 18 July 2017 records Nicolas' instructions to Mr Hatzistergos as to the "main points" he sought to achieve from the estate planning exercise as including that he "maintain the assets (rather than sell them)" (J[32]).
9. By his will dated 23 February 2018, Nicolas appointed his daughters Angelique and Mary as executors, left his interest in the family home to his wife Susan for life and then to his daughters, and declared a trust for Susan of his rights, entitlements and interests in any loans up to the value of $6 million which remained owing directly and personally to him by the NBF Trust. The appointment of his daughters as executors also conferred on them the power of appointment under the NBF Trust, and he declared a trust for Mary and Angelique in respect of the residue of his estate (J[32]). The Memorandum of Wishes also contained an agreement that "the assignment to Sue of a loan of up to $6 million owing to Nick by the NBF Trust, is sufficient to support her lifestyle and to meet any unforeseen circumstances".
10. In mid-2008, Nicolas commenced a relationship with a married woman (referred to by the primary judge as "I") who lived in Athens and gave birth to a son (referred to as "B") in March 2009. As the primary judge noted, "[f]or a significant period, NB believed it was likely that B was his son and a paternity test conducted in 2011 appeared to support that belief. A later paternity test indicates that that is likely not the case, although that question need not be resolved in these proceedings" (J[30]). The position as at early 2018 was that whilst there remained some doubt about it, Nicolas believed it likely that B was his son.
11. In early 2018, Nicolas disclosed in confidence to Dimitri that he was having an extra-marital affair with I, who claimed he had fathered a child with her. (Susan's evidence was that she believed that Nicolas had had "many affairs" during the marriage, although she had not directly confronted him about them.) He also disclosed that he was planning to divorce Susan to "sort it out" (J[33]). At the same time he asked Dimitri not to tell Susan, Mary or Angelique about that matter because he wanted to tell them when he was ready.
12. After March 2018, Dimitri disclosed that information to "several family members and advisers" (J[35]). In early June he disclosed it to Mr McCabe, Mary and Angelique, and Nicolas' nephew Arthur Balayannis, who worked for RHPL, including as general manager from March 2012 (J[23], [39]). Those disclosures were made in the context of Dimitri, as found by the primary judge, "initiating steps to protect his or his and [Mary's] financial position which were not prompted by any then wish by [Nicolas] to take such steps" (J[35]).

The drafting of the Deed of Assignment

1. Mary's summary of what followed was that "in or around June 2018, together with Dimitri, I organised the preparation of the Deed of Assignment, whereby my father would transfer a loan … owed to him by RHPL to myself and Angelique in equal shares. This was organised in advance of a planned family holiday to Greece" (J[36]). That holiday involved Mary and Dimitri arriving in Athens on 24 June 2018 and departing on 10 July, shortly before Susan was to arrive on 14 July. Angelique was in New York and not expected in Greece. That being the position made it necessary, if the Deed were to be effective from the time it was executed by Nicolas, that it first be executed by Angelique. As matters turned out, a copy of the Deed was signed by Angelique in New York on about 24 June and then couriered to Athens, arriving in late June.
2. That Deed was drafted by Ms Kavadas, a solicitor with Charlesworth Josem Partners, a firm of lawyers in Melbourne which had previously acted for Nicolas.
3. Dimitri had first approached Mr McCabe in early June with a view to protecting "his or his and [Mary's] financial position" (J[35]). The exchange of correspondence with that firm between 16 and 18 June and Dimitri's email to Ms Kavadas on 17 June are set out below.
4. By his 16 June 2018 email to Mr McCabe, Dimitri advised (J[41]): Please keep this email private and confidential. Can your firm prepare paperwork that will give [Nicolas] the option to make the girls appointors of the Trust from when [Nicolas] signs it rather than only having it occur after his passing. Also can you prepare paperwork for [Nicolas] giving a power of attorney for everything to do with Australia that could also start from when [Nicolas] signs it. The reason I am asking for the paperwork is that Mary is hopefully going to Greece in the next 10 days to see her father and we believe [Nicolas] will discuss it with [Susan] as soon as she arrives to Greece and we as a family want to be prepared with paperwork so he isn't pressured later not to give items. It is our opinion and from what people overseas are relaying to us that [Nicolas] is basically a victim of entrapment and now being pressured by people overseas to get married immediately and also not to take lifesaving medication for his lung disease as the new doctor they recommended says he has nothing… In discussions with my father-in-law he has indicated to me that he will most likely give everything according to his will now rather than later even if it means paying capital gains tax and we can then sort out anything from then on. Is it possible to have something for me and my wife by this Tuesday please. If your [sic] too busy let me know as we understand it's all last minute so we can make other arrangements. Nicolas denied that he had any such discussions with Dimitri. The primary judge accepted that evidence, and also found that the "references to entrapment, pressure from people overseas and lifesaving medication were all false" (J[41]). Those findings are not challenged.
5. Mr McCabe responded on 18 June 2018 (J[42]): As you will probably understand we have ethical rules which means that we can only prepare these documents if we receive clear unambiguous direct instructions from [Nicolas] and we can satisfy ourselves that he has full understanding and capacity in relation to the proposed documents. Would it be possible to arrange a teleconference with [Nicolas] so that we can have a discussion with him on these matters.
6. The primary judge found that Mr McCabe's requirement that any instructions be confirmed directly with Nicolas "appears to have brought [Dimitri's] engagement of his firm to prepare those documents to an immediate halt and to have prompted [Dimitri] then to engage Ms Kavadas" (J[43]).
7. By an email dated 17 June 2018, Dimitri advised Ms Kavadas (J[43]): I spoke to [Nicolas] last night and he would like me to proceed with arranging certain items to help the family out here in Australia. Can you please make sure that your colleague contacts Rasika [an accountant] first thing in the morning to arrange the paperwork for my father-in-law to sign over the remaining amount of his personal loan I think it's approximately $25 million he has left with [RHPL] according to Arthur [Balayannis] last week to be gifted to my wife Mary out of love and affection from now so we don't have any future issues with it.
8. The primary judge accepted Nicolas' evidence that he was not aware of these emails and that he did not give any instructions to Dimitri to engage either of the law firms (J[43]). In addition to rejecting Dimitri's evidence that the change of solicitor was made at Nicolas' request, the primary judge found that it reflected Dimitri's "wish to avoid Mr McCabe's seeking to confirm the instructions he had given directly with [Nicolas] and that his hope was that Ms Kavadas would not think to do so", as occurred (J[44]). His Honour concluded that Dimitri "falsely represented to Ms Kavadas that he had acted with [Nicolas'] knowledge and authority" and that at least Mary knew that [Dimitri] did not have her father's authority to approach the firm Charlesworth Josem Partners, or Ms Kavadas (J[45]). None of these findings is challenged.

The execution of the Deed of Assignment

1. The Deed of Assignment was executed by Nicolas at some time between 4pm and 6pm on 9 July 2018, which was in the middle of the night Sydney time (approximately 11pm to 1am). In Nicolas' version of events there was the following exchange on his being asked to sign the document "immediately" (J[52]): Mary / Dimitri: You have no assets in your name in Australia except the debt that the Trust owes you. We are concerned that [B's] mum will make a claim against your assets. To protect your money from any claim, we want you to sign this document immediately to sign the debt over to Angeliki and me (Mary). Transfer it to Angeliki and me (Mary) in 50/50 shares so that [B's] mum cannot make any claim to it. [Nicolas]: ok I will sign it.
2. Mary's evidence was that the following conversation occurred (J[55]): Mary: Dad, I'm concerned that [B's] mum is going to try to take our pubs in Australia. We prepared a document for you to sign that will transfer the money you are owed by the business, to me and Angelique and protect our family business. [Mary handed Nicolas the Deed of Assignment] [Nicolas]: Absolutely, the pubs are yours anyway, of course I will sign.
3. Dimitri gave quite different evidence of this exchange. The primary judge rejected his version of events (J[58]). Dimitri also maintained that when he and Mary arrived in Greece in late June 2018, he had handed versions of the Deed and some powers of attorney to Nicolas who indicated he would talk about them when he was ready (J[48]). That evidence was also rejected.
4. The primary judge did not resolve whether the conversation was in the terms given by Nicolas or in the "somewhat different terms" given by Mary (J[57]). However he noted that each version indicated "the brevity of the conversation, and the lack of any [express] recognition of the legal or commercial effect" of the Deed (J[53]).
5. His Honour accepted Nicolas' evidence that he did not understand the significance of the document to his legal rights and that he "always believed that [he] controlled the NBF Trust completely and as managing director had control of all financial decisions" (J[53]). In cross-examination, Nicolas accepted that he understood the loan would be transferred into his daughters' names, his thinking being that "by doing this it would mean that nobody else can touch it" because his daughters were "safe hands" to look after the debt (J[54]).
6. Finally, the primary judge observed of the conversation which Mary maintained had occurred (J[57]): … Even if a conversation occurred in the terms to which MB referred, it misstated the commercial effect of the DoA, which was not to "protect" the family business but to expose it to the risk (which subsequently eventuated) that it might face a call by MB and AB for payment of an amount that it could not pay without the forced sale of a substantial asset, and the consequential risk of appointment of a receiver by MB or AB or by NAB to the NBF Trust's assets (as occurred). That conversation also indicates a misunderstanding of the effect of the transaction on NB's part, since the proposition that the "pubs are yours anyway" did not support the assignment of the separate Trust Debt to MB and AB or recognise the several disadvantages arising from the transaction to which I refer below.
7. Whilst noting that Nicolas' "motivation" was ultimately not material to the findings he made, the primary judge observed (J[53]) that Nicolas' belief that he should show his daughters that he "loved them" was likely to have been part of his motivation, "even if asset protection also had some part" (J[53]).

The primary judge's reasoning

1. Section 9 of the Contracts Review Act provides that in determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court "shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising" in the event of compliance or non-compliance with any or all of the provisions of the contract (s 9(1)). The matters to which the Court "shall have regard" include, to the extent they are relevant to those circumstances, the matters in paras (a) to (l) of s 9(2).
2. In determining whether a contract or a provision of a contract is unjust, the Court "shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made" (s 9(4)). However, in determining whether it is just to grant relief in accordance with s 7(1), the Court may "have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made" (s 9(5)).
3. There was no issue as to the way in which the evaluative exercise called for by ss 7 and 9 was to be undertaken, except in one respect, namely whether the primary judge was correct to have regard to a disadvantage suffered by Susan, as distinct from Nicolas, when assessing the unjustness of the Deed for Nicolas. The primary judge (at J[100]) extracted Allsop P's often cited explanation of the evaluative process in Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7]: The broad evaluation of unjustness under the Contracts Review Act 1980, s 4, s 7 and s 9 involves the normative evaluation of the totality of relevant circumstances. Inevitably minds may differ as to conclusions about such questions. Also, it is often not fruitful to compare other cases with the particular circumstances at hand, lest one be deflected from an appropriate overall assessment by focus on particular aspects relevant to any such comparison. Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances.
4. In assessing Nicolas' ability fairly to look after his own interests when presented with the Deed of Assignment in the early evening of 9 July 2018, the primary judge found that Nicolas was "plainly an intelligent witness, who had an understandable pride in his business achievements, but [who] also frankly acknowledged areas in which investments in Greece had been less successful" (J[20]). However, as the primary judge there and later emphasised (J[94]), Nicolas' substantial experience in making business judgments did not necessarily fit him to deal with the transaction as presented to him in a family context. At the same time the evidence was that, if the Deed had been prepared on Nicolas' instructions, its subject matter and likely consequences for him would have been explained at the time those instructions were taken, particularly in circumstances where Nicolas had earlier in the same year taken and acted on estate planning advice which included the execution of mutual wills by him and Susan.
5. As for the circumstances of the meeting at which Nicolas signed the Deed, the primary judge did not accept Nicolas' evidence that Mary and Dimitri "confront[ed]" him about his extra-marital affair, or that he was "under great emotional distress at the time" (J[86]). However, his Honour was satisfied that "the atmosphere was tense and that [Nicolas] was then under considerable stress and was deeply embarrassed by the affair". The primary judge also described the circumstances of Nicolas' signing at J[106] as being "in an informal setting, in circumstances of family stress and [Nicolas'] regret over the affair, and where apparent urgency arose from [Mary and Dimitri's] departure the next day".
6. Having identified the relevant statutory provisions and principles, the primary judge addressed the matters specified in s 9(2) to the extent that he considered them relevant to the circumstances of this case (J[101]). The grounds of appeal are addressed to his Honour's findings with respect to those matters, which are summarised below. The circumstances on which the primary judge particularly relied engaged paras (a), (c), (d), (h), (i) and (j) of s 9(2).
7. As to paras (a) and (c), which respectively concern whether or not there was any material inequality in bargaining power between the parties to the contract, and whether or not it was reasonably practicable for Nicolas to reject any of the provisions of the contract, his Honour concluded at J[102]: … [In relation to para (a)] I am not satisfied that [any material inequality in bargaining power] was established in the present case. Although MB and DK arranged matters so as to take NB by surprise, and create[d] a degree of urgency in addressing matters by reason of their departure from Greece the next day, it is plain that NB was a very experienced businessman who was generally capable of protecting his own interests, … I find that his ability to do so was less in a family than in a business context. … [In relation to para (c)] I give greater weight to the fact that the lack of notice given to NB that the issue of an assignment would be raised, the family context and the sense of urgency created by MB's and DK's departure the next day seems to have significantly impaired NB's ability to reject the DoA in its entirety.
8. As to para (d), which is whether or not any of the provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, his Honour concluded at J[104]: It seems to me that the terms of the DoA at least imposed an unreasonable burden on NB so far as they defeated his attempt to provide for SB by mutual wills, by causing the ademption of the gift to her under his will, and MB and AB had no legitimate interest in obtaining an immediate assignment to them of the amount that would otherwise have been left to SB under NB's will.
9. As to para (h), which is whether or not independent legal or other expert advice was obtained, his Honour concluded at J[106]: … Plainly, it was not, and the circumstances in which MB and DK sought to have the DoA executed - in an informal setting, in circumstances of family stress and NB's regret over the affair, and where apparent urgency arose from their departure the next day - made it less likely that NB would seek such advice. … here, it seems to me that the situational factors significantly reduced the likelihood that NB would delay or take steps to protects his interests, and the approach adopted by MB and DK was calculated to have that result.
10. As to para (i), which is whether the provisions of the contract and their legal and practical effect were accurately explained by any person and whether or not the party understood the provisions and their effect, the primary judge concluded at J[107]: … It is plain that the DoA had substantial and highly disadvantageous legal and practical impacts on NB, and to a lesser extent SB, and on RHPL and the NBF Trust, and no attempt was made by MB or DK to explain them or encourage NB to take advice about them. It is plain that NB did not understand them, as his response to Mr Hatzistergos' later identification of his concerns makes clear. I give substantial weight to this matter.
11. The primary judge accepted Mr Hatzistergos' evidence of a telephone conversation he had with Nicolas in early August 2018. His Honour treated that conversation as providing "strong contemporaneous evidence" as to Nicolas' lack of understanding of the transaction implemented by the Deed (J[63]). That evidence included the following response (J[62]) from Nicolas to Mr Hatzistergos' statement that as a result of the assignment the daughters could call on the loan in circumstances where "the NBF Trust does not have the liquidity to pay that amount. You would need to sell assets": NB: I didn't realise that. The family asked me to sign it to protect my money from the woman I had an affair with in Greece. I didn't think it had any legal effect. It is a family arrangement - it would only come into effect if the woman made a claim to my money.
12. Finally, as to para (j), which is whether any unfair tactics were exerted on or used against the party seeking relief, his Honour concluded at J[109]: … DK adopted highly unfair tactics in falsely representing that he had NB's authority to prepare the DoA and associated documents, and that can be taken into account where he purported to act for NB in doing so and where MB was at least aware that NB had not authorised these documents to be prepared. MB also adopted unfair tactics in delaying raising the matter, with the result that an artificial urgency would be created by her departure from Greece on the next day.
13. Section 9(2)(j) in terms directs attention to unfair tactics exerted on or used against the party seeking relief (i) by any other party to the contract, or (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract. On this basis, it was not and could not be suggested that Dimitri's conduct was not to be taken into account.

Grounds 1(a)-(b) - Materiality of Trust Debt to Nicolas' liquidity

1. At J[51], in describing the significance of the Trust Debt, the primary judge said: It is, however, clear that the Trust Debt represented a substantial liquid asset; that [Nicolas] and his family had previously paid ordinary living expenses by causing RHPL to make repayments against the Trust Debt as needed; that he would no longer have access to that debt for that purpose after it was assigned to MB and AB; and that other assets were largely in the nature of less liquid hotel properties, hotel businesses or real property.
2. These grounds contend that the primary judge could not logically or reliably make findings as to the significance of the Trust Debt to the maintenance of Nicolas' liquidity without having regard to the nature and extent of his overall wealth, held directly or controlled via a discretionary trust or corporate entity (ground 1(a)); or as to the relative materiality of that debt to Nicolas' liquidity without taking into account that repayment of that debt was tied to the performance of the underlying hotel businesses (ground 1(b)).
3. In so contending, these grounds focus on questions of relative and overall materiality which the finding at J[51], reasonably understood, does not address.
4. The primary judge's description of the debt as a "substantial liquid asset" of Nicolas focusses on it (or more precisely, repayments of the debt) being an ongoing and readily available source of cash for payment of living and other expenses. There is no doubt but that the amount involved was substantial. In the twelve months ending 30 June 2018 the debt was reduced by approximately $2.5 million (J[28]). The evidence indicates that most if not all of that reduction was explained by payments made in accordance with this arrangement.
5. Whilst the loan was the source of such cash repayments, and had been since 1997, it was described in RHPL's balance sheet as a non-current liability of the NBF Trust, and it was not at all a controversial fact that if a call were made for repayment, it could not be repaid by RHPL "without the forced sale of a substantial asset" (J[57]). In this context his Honour's reference to a "substantial liquid asset" was not describing the debt as a liquid asset in the sense that it could readily be converted to cash. It was describing it as an ongoing source of cash for the purpose of paying living expenses and outgoings.
6. It is also plain that the primary judge, in so describing the debt, was not using the adjective "substantial" in any relative sense which addressed its significance in the context of Nicolas' overall financial position. That is apparent from the primary judge's earlier statement in J[51] that Nicolas had "significant assets" in Australia and Greece and that he was unable to make any assessment of his net asset position held directly or through controlled entities. Nor was it necessary for the primary judge to consider the extent to which the trust's hotel businesses were likely to continue to generate revenues so as to permit the family "cash advance" facility to continue. The evidence was that it had been operating since 1997. For these reasons, grounds 1(a) and 1(b) are not made out. The position was, as the respondents submit, that a debt in excess of $18.5 million was a "substantial" asset and "liquid", understood in the sense described above.
7. Neither of these grounds addresses the principal legal and practical impact which the Deed of Assignment had from Nicolas' perspective. As legal and beneficial owners of the debt, Mary and Angelique could call for its repayment at any time (it not being contended that it was repayable other than on demand). In that event, the likelihood (at least) was that the NBF Trust could not repay without the sale of a substantial asset. Such action carried with it the risk of appointment of a receiver by NAB to the NBF Trust's assets (J[57]). That action might follow in the event of such a proposed sale, which would be in breach of the undertaking in cl 9(h) of the NAB's finance facility, as was Mr Hatzistergos' evidence. That outcome - the sale of a substantial asset of the NBF Trust - was contrary to Nicolas' fundamental desire that during his lifetime those assets would be "maintained" rather than sold (J[32]). Thus as the primary judge observed at J[57], the assignment of the Trust Debt exposed the NBF Trust to the risk of a call for repayment requiring a forced sale of a substantial asset. In doing so, as Mr Hatzistergos also explained (J[62]), it gave Mary (and Dimitri) a degree of practical control over the disposition of the trust's assets.

Ground 1(c) - Nicolas' continuing access to Trust Debt for payment of expenses

1. At J[51], the primary judge included as a consequence or result of the assignment that Nicolas would no longer have access to the Trust Debt as a source for payment of his living expenses. Ground 1(c) is that the primary judge erred in so concluding, without taking into account that following the assignment the payment practice in fact continued for some time.
2. The respondents make two answers to this ground. Each should be accepted. First, as they point out, the assessment of whether the contract was "unjust" is to be made "in the circumstances relating to the contract at the time it was made" (s 9(1)). At that time, the result of the assignment was that Nicolas lost control of the Trust Debt and whether his or any other member of his family's living expenses would be paid as they had previously. More significantly, he lost the right to require or defer repayment. Those consequences of the assignment were immediate.
3. Secondly, that the entrenched practice continued after 9 July 2018 was explained, at least in part, by the fact that Nicolas retained de facto control of the Trust Debt because he did not understand, or later accept, that the effect of the assignment was to transfer control of the debt to his daughters. During that period, his daughters effectively acquiesced in his doing so. Though the payment practice continued after the Deed was executed, the daughters had the power to call for repayment and it remained a foreseeable consequence of the assignment that they might exercise that power, as they eventually did in July 2020 (J[153]).
4. Separately, the appellants contend that there could be no "unjust" result or consequence in Nicolas gifting the loan account to his daughters, at least insofar as it was already being used as a source for the ongoing payment of family expenses, including their own. This submission was put slightly differently, and more broadly, in oral argument. First, the "gift" of the loan, in circumstances where it was Nicolas' intention that on his death his daughters should inherit his wealth (including the hotel properties and businesses), was said to accomplish inter vivos what he had already "decided to achieve post mortem". Secondly, it was said that Nicolas' statement that "the pubs are yours anyway" (J[55]) was consistent with his intention being that the daughters should enjoy the benefit of the Trust Debt (and access to the cash which was generated by its repayment) immediately.
5. The primary judge dealt with the first way this argument was put at J[94]. It did not follow that because Nicolas always planned to give his wealth to his children on his death that he also planned to transfer control of his substantial business assets to them during his lifetime, or to do so in a manner that exposed the hotel businesses to the sale of significant assets or default in the Trust's arrangements with its secured lender.
6. The second way this argument was put is dealt with by the primary judge at J[37] and [57]. The subject matter of the Deed of Assignment was not the hotel businesses. It was the debt which, if called, could force a sale of a substantial asset of those businesses, and result in an outcome which Nicolas did not intend - that those businesses not be maintained during his lifetime - and one which was inconsistent with his intention that they receive the benefit of those businesses by way of testamentary gift.
7. Thus the consequence of the assignment was to produce an outcome which was not consistent with Nicolas' intentions as to what should occur during his lifetime, and he did not appreciate that consequence because, as his Honour found, his understanding was that notwithstanding that the Trust Debt was to be transferred into his daughters' names, he retained effective control "completely" (J[53], [63]).
8. For these reasons, ground 1(c) is not made out.

Grounds 1(d)-(e) - The effects of the assignment on Susan

1. These grounds challenge the primary judge's finding that the Deed of Assignment had a "profoundly disadvantageous effect" on Susan (J[111]) because his Honour left out of account that she had subsequently approved of and assented to the Deed of Assignment (ground 1(d)); and because his Honour also left out of account that the estate plan put in place in early 2018 had been rendered practically redundant by the time of the assignment because Nicolas believed he had an ex-nuptial child and planned to divorce his wife (ground 1(e)). If that was Nicolas' plan, any property settlement in their favour would necessarily and, irrespective of the assignment, have required the revision of his will of 23 February 2018. That was in part because of the operation of Succession Act 2006 (NSW), s 13(1)(a), which provides that in the event of a divorce the disposition in favour of Susan would be taken as revoked.
2. There is a preliminary question which arises, although not expressly raised by the grounds of appeal. It is whether, in considering the consequences or results of the assignment, the relevant matter to be considered in determining whether the contract is unjust is their detrimental outcome for Nicolas by reason of any detriment to Susan, rather than their detrimental outcome for Susan. In oral argument, senior counsel for the appellants submitted that it was "quite extraneous to take into account directly - I do stress directly - supposed disadvantage to [Susan]".
3. It should be noted at the outset that whilst the primary judge did take into account - albeit "to a lesser extent" - the legal and practical impacts of the Deed on Susan (J[107], [111]), his Honour also concluded (at J[104]) that the terms of the assignment "at least imposed an unreasonable burden on [Nicolas] so far as they defeated his attempt to provide for [Susan] by mutual wills, by causing the ademption of the gift to her under his will".
4. In West v AGC (Advances) Ltd at 620, McHugh JA stated that the effect of ss 7 and 9 is that a contract may be unjust in the circumstances existing when it was made "because of the way it operates in relation to the claimant or because of the way in which it was made or both" (emphasis added). That statement has been cited with approval and applied on many occasions, including by the Full Federal Court in Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199; [2015] FCAFC 50 at [348]; the Full Court of the Supreme Court of Western Australia in Shannon v Permanent Custodians Limited [2020] WASCA 198 at [167]; and by this Court in Superannuation and Corporate Services Pty Ltd v Turner [2020] NSWCA 246 at [49].
5. The powers conferred on the Court by s 7(1) in the event that it has made a finding that a contract or a provision of a contract was unjust are to be exercised "for the purpose of avoiding so far as practicable an unjust consequence or result", which may be achieved by refusing to enforce any or all of the provisions, or declaring the contract to be void in whole or in part, or making an order varying any provision of the contract in whole or in part. The relief addressed to avoiding the unjust consequence or result is directed to the application of any or all of the provisions of the contract upon the party seeking relief. It would follow that if a particular provision has no direct or indirect consequence or effect in relation to the party claiming relief, it is not capable of resulting in unjustness to which the Act is directed. It follows in my view that disadvantageous effects of the assignment on Susan which did not have any material consequence or result for Nicolas were not relevant to determining whether the contract or a provision of the contract was unjust at the time it was made.
6. Putting this question aside, ground 1(d) may be dealt with shortly. The primary judge made no finding that the conversation in which Susan is said to have approved the Deed of Assignment in fact occurred (see J[13]). It was said to have happened in July or August 2018. Nicolas did not recall and did not believe he had such an exchange with Susan. In cross-examination Susan initially said she had no recollection of such a conversation, and then sought to maintain that she did recall what was said in her affidavit. The primary judge did not accept that evidence (J[13]).
7. Assuming that the conversation did occur, Susan's approval was not shown to have been given with a full awareness of the relevant disadvantage to her, being the ademption of the bequest in Nicolas' will. Her evidence in cross-examination suggests she was not aware of that effect of the assignment. Accordingly, the premise of ground 1(d) - that Susan subsequently approved of the assignment notwithstanding its effect on Nicolas' will - is not made out.
8. Finally, this ground does not address the disadvantage to Nicolas as recognised by the primary judge at J[104] in the frustration of his attempt to provide for his wife by mutual wills. Whilst it remained uncertain at the time the Deed was made whether Nicolas would divorce his wife, giving rise to a need to revisit his earlier will, the execution of the Deed necessarily had that consequence, and irrespective of whether Nicolas proceeded with any plan to divorce.
9. Ground 1(e) raises two further matters which are said to have had the consequence that the assignment was not disadvantageous to Susan, notwithstanding the ademption of the proposed bequest. For the reasons given above, the question whether a result of the assignment was disadvantageous to Susan, as distinct from Nicolas, was not relevant.
10. First, it is said that if Nicolas planned to make provision for his ex-nuptial child and divorce Susan, the divorce and property settlement would have required revision of the estate planning undertaken in early 2018, especially in the light of Succession Act, s 13(1)(a). That is correct. However, the position remained that the assignment necessarily required the revision of that estate planning, in circumstances where Nicolas was not aware of that fact and had taken no advice which would have brought it to his attention. This outcome involved consequences which were disadvantageous from the perspective of Nicolas and accordingly relevant to be considered.
11. Secondly, it is said that Nicolas' financial position was such that, from Susan's perspective, there were other valuable assets from which at least an equivalent bequest or provision could have been made. That may well be correct. However, the effect of the assignment was to require that the mutual wills be revisited and the question of estate planning addressed again.
12. Ultimately, it is not necessary to consider ground 1(e) because the primary judge erred in taking any disadvantage to Susan into account. However, his Honour did take the ademption of Susan's bequest into account from Nicolas' perspective (J[104]) and that is not the subject of any ground of appeal.

Ground 1(f) - Circumstances justifying a finding that assignment was unjust

1. This ground sets out the circumstances by reference to which it is contended the primary judge "ought to have found" the Deed of Assignment was not unjust, and erred in not doing so. It emphasises as persuasive in the evaluation of unjustness that the assignment was made by a document "in relatively straightforward terms" (J[51]) by a person who was "plainly intelligent" (J[20]) and a "very experienced businessman" (J[102]); involved a gift to his daughters to whom it was intended the Trust Debt and control of the underlying assets were to pass on his death; and was made to protect one of the assets in Nicolas' name from any claim by his ex-nuptial son and that child's mother.
2. Having regard to the subject matter of grounds 2(a), (b) and (c), the appellants' contention that in all the relevant circumstances the assignment was not unjust must also be considered in light of the outcome of the appeals on those grounds. What follows identifies findings and conclusions of the primary judge which are not challenged in the appeal, and not included in the matters referred to in ground 1(f).
3. Those matters do not include or address the circumstances in which Dimitri secured the preparation of the Deed of Assignment for execution by Nicolas without his authority, which the primary judge held were directed to avoiding his having any opportunity to take legal or other advice before doing so; or the circumstances in which the Deed was presented to Nicolas for execution on 9 July. Those circumstances include the "situational factors" which the primary judge found resulted in Nicolas not appreciating the legal and practical consequences of his executing the Deed. As described by the primary judge, those factors include: the lack of advance notice that the issue of assignment would be raised; the informal family setting in which that occurred; Nicolas' regret over his affair, and the stress it produced as between Nicolas and his daughters; and the sense of urgency created by the request that it be signed immediately and on the day before Mary and Dimitri were leaving for Australia. Whether the primary judge erred in inferring that this delay created an appearance of urgency in the mind of Nicolas is the subject of ground 2(a) which, for the reasons that follow, should be rejected.
4. Finally, the matters said to support ground 1(f) do not include the primary judge's findings as to Nicolas' understanding when he executed the document. That finding was that he did not understand that its immediate legal effect and consequence was that his daughters had unconditional and unqualified control of his loan to the NBF Trust (J[53], [54], [63]). Those effects or consequences would have become known to Nicolas had he received advice of the kind referred to by Mr McCabe in his email of 18 June 2018 (J[42]); and the primary judge held that the ultimate effect of the advice which Nicolas would have received from "any competent legal or accounting adviser" was that he should not sign the Deed (J[25]).
5. Whether the primary judge erred in finding that Nicolas did not understand the legal and substantial commercial effects of the assignment is challenged by ground 2(b); and whether the primary judge erred in finding that the assignment was unjust, including because Angelique and Mary did not take any steps to raise with him the need for independent advice, is the subject of ground 2(c). For the reasons which follow, each of those grounds should be dismissed.
6. In their argument in support of ground 1(f), the appellants also emphasised the "fundamental" significance of the assignment as effecting a gift by a father to his daughters where it was said that the assignment "merely" accelerated his stated intention to make testamentary gifts of the hotel business and other assets to them. In this context it was said that in any "normative evaluation" there was no unjustness in such a generous gift from a wealthy father to his daughters where the gift was driven by affection, and motivated "in part" by a desire for "asset protection" (J[53]). The characterisation of the assignment as merely involving the acceleration of an aspect of Nicolas' overarching testamentary intention does not take account of what Nicolas intended should happen during his lifetime, which is dealt with at [59], [60] and [62] above.
7. As to the significance of any "asset protection" motive, the appellants contended in oral argument that where the intention of the assignment was to "thwart a claim" sought to be made against the assignor, it could not render it unjust not to receive advice that it might not work or might have been done more effectively. Whatever the merits of this argument, it cannot be put against Nicolas. From his perspective, the unjustness arose in circumstances where on the evening of 9 July he was presented with a proposed assignment of which he had no prior knowledge. In no real sense did he have any opportunity to consider and reject or adopt the merits of the suggested "asset protection" reason for undertaking the assignment. His was not a considered course of conduct directed to thwarting any "just claim against him, enforceable against his assets". Rather, as the primary judge held, the circumstances in which the Deed was produced were intended to and did significantly reduce the likelihood that Nicolas would "delay or take steps to protect his interests" (J[106]).
8. The circumstances relied on in support of ground 1(f) do not justify a conclusion that the primary judge erred in finding that the assignment was unjust. Ground 1(f) is not made out.

Ground 2(a) - Did delay create appearance of urgency in decision to execute Deed?

1. This ground challenges the finding at J[10] that the delay in the presentation of the Deed for execution by Nicolas created from his perspective an appearance of urgency in the making of his decision whether to execute the document.
2. The chronology of principal events bears repeating. The Deed of Assignment was procured without Nicolas' prior knowledge or instructions. It was available for execution from about 22 June 2018, executed by Angelique in New York on 24 June and sent by courier to Athens, where it arrived in late June. Mary and Dimitri arrived in Athens on 24 June and stayed in an apartment in the same building as Nicolas' apartment (J[47]).
3. Dimitri's evidence that he had handed copies of the Deed to Nicolas on his arrival in late June was rejected (J[48]). The document was presented to Nicolas in the early evening of 9 July, which was in the middle of the night in Sydney, and the day before Mary and Dimitri were to return to Australia. The primary judge accepted Nicolas' evidence that he was asked to sign it immediately (J[56]).
4. A question for the primary judge was whether the delay in the production of the document created from Nicolas' perspective an appearance of urgency. One relevant matter was whether Mary and Dimitri's delay in presenting the document was calculated to have that consequence.
5. The primary judge found that Dimitri and Mary delayed in presenting the Deed for execution with the intention of creating an appearance of urgency, that ultimately being directed to the outcome that Nicolas would execute the document immediately and without receiving any independent advice (J[10], [106]).
6. The circumstances supporting that finding included that in the course of having the Deed prepared, Dimitri: made false statements to Mr McCabe (J[41]); changed solicitors to retain Ms Kavadas "to avoid Mr McCabe's seeking to confirm the instructions given directly with [Nicolas] and [hoping] that Ms Kavadas would not think to do so" (J[44]); falsely represented to her that he was acting with Nicolas' knowledge and authority in getting the document drawn up (J[45]); and asserted but was not believed about his having handed versions of the Deed to Nicolas in late June 2018 (J[48]). At J[109], his Honour held that Mary was aware that Nicolas had not authorised the documents to be prepared, and participated in the conduct directed to delaying the raising of the matter with Nicolas. None of these adverse findings as to Dimitri's or Mary's conduct, or the inference as to their overarching intention to delay and cause a sense of urgency, is challenged.
7. In the face of those findings, the further finding that their delay created a sense of urgency in Nicolas was no more than a finding that the conduct of Dimitri and Mary had the effect it was calculated to have.
8. In support of this ground, it was also said that the primary judge's reasons do not address the "unchallenged" evidence of Dimitri's sister Maria, who was present when Nicolas signed the Deed, that Nicolas signed in a "very casual and relaxed atmosphere", looked at each page of the document briefly and then proceeded to sign. That is not correct. The primary judge considered that evidence at J[18] and [95], and was justified in according it limited weight.
9. For these reasons, the primary judge did not err in making the finding challenged by ground 2(a).

Ground 2(b) - Whether Nicolas understood legal and substantial commercial effects of assignment

1. This ground challenges the primary judge's findings at J[53], [54], [57] and [63] that Nicolas did not understand the significance of the assignment to his legal rights or its likely commercial consequences.
2. As the respondents submit, that finding plainly involved an evaluation of Nicolas' credibility. It follows in relation to the challenge to the finding that whilst this Court is obliged to conduct a real review of the evidence, it must do so making due allowance for the advantages of the trial judge in seeing and hearing Nicolas give his evidence (Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]).
3. In seeking to have this Court depart from the finding, the appellants do not contend that the primary judge's findings as to Nicolas' state of mind are inconsistent with any "incontrovertible facts or uncontested testimony" or that they are "glaringly improbable" (cf Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29]). Indeed they are, as the primary judge found, corroborated by the unchallenged evidence of Mr Hatzistergos, whom the primary judge described as a "plainly credible and convincing witness" (J[63]).
4. Rather, it is said that because the reasons Nicolas wanted "asset protection" included to avoid I and B making claims to his loan account, which "entailed risk to his control of the underlying trust assets by a call on the loan account", it followed that he ought also have been aware that the assignment of the Trust Debt could involve the same risk.
5. In dealing with this argument, it is not necessary to consider the correctness of its underlying premise because the evidence shows, and the primary judge's finding was, that Nicolas did not understand that the practical effect of the assignment would be that Angelique and Mary could call upon the trustee for repayment of the debt, and thereby trigger the sale of significant trust assets (J[53], [54], [62]).
6. Accordingly, the only argument made in support of ground 2(b) must be rejected, making it unnecessary to consider the other evidence and probabilities which supported the primary judge's finding.

Ground 2(c) - Error in finding assignment unjust because need for independent advice not raised with Nicolas

1. This ground is that the primary judge erred in finding that the respects in which the assignment was unjust included that the appellants did not take any steps to raise with Nicolas at the time the Deed was presented any need for him to obtain independent legal and/or financial advice.
2. The written argument suggests that the primary judge's reasoning "cast an onus" on Angelique and Mary to take steps to raise the need for independent advice. That submission does not fairly characterise the effect of his Honour's reasoning. The primary judge's overall evaluation of the assignment as being unjust was based on a number of specific factual findings as to the circumstances leading to, and of the execution of the Deed, as well as the "situational factors", making it less likely that Nicolas would seek advice, which were the result of conduct on the part of Dimitri and Mary.
3. This occurred in circumstances where a wealthy man in Nicolas' position might reasonably have been expected to take some advice before undertaking a transaction such as that presented to him. That being the position is readily apparent from Mr McCabe's response to Dimitri's email of 16 June 2018 that in acting for Nicolas he would require "clear unambiguous direct instructions" and that he (Mr McCabe) be satisfied that Nicolas had "full understanding and capacity" in relation to the proposed documents. The primary judge found that Dimitri's conduct in dealing with Mr McCabe and Ms Kavadas was directed to avoiding that outcome (J[44]).
4. The suggestion that there was no evidence that the lawyers who drafted the Deed "were not promptly contactable by Nicolas, including from his home in Athens" is unfounded. As appears above, the meeting at which the document was produced for immediate execution occurred in the early evening of 9 July, at a time when no solicitor in Sydney would have been available.
5. In the light of these findings, the primary judge was justified in concluding at J[106] that "the situational factors significantly reduced the likelihood that [Nicolas] would delay or take steps to protect his interests". His Honour then dismissed the submission that Nicolas could nevertheless have sought legal advice if he thought it was necessary as "at best artificial and at worst unreal". I agree. Nicolas' understanding, which the primary judge accepted, did not include that his daughters could by calling the loan force the sale of assets, or that the assignment affected his testamentary bequest to Susan. On the face of it, there was no obvious reason to obtain advice, as his exchange with Mr Hatzistergos confirmed.
6. The fact that Dimitri's, and accordingly the appellants', conduct was directed to minimising the prospect that Nicolas would receive independent advice before executing the Deed implicitly acknowledged that it was reasonable to expect that he should have independent advice as to the Deed's legal and commercial consequences.
7. In the circumstances it was well-open to the primary judge to conclude that the contract was unjust in part because the appellants, having conducted themselves as described above, did not raise with Nicolas the need or opportunity for independent advice.
8. It follows that ground 2(c) is not made out.

Conclusion

1. The primary judge's conclusion at J[107] and [111] that the assignment had "substantial and highly disadvantageous legal and practical impacts on NB, and to a lesser extent SB, and on RHPL and the NBF Trust", is not materially affected by putting aside the direct impact of the assignment on Susan and having regard to its indirect consequences for Nicolas due to the repudiation of the mutual wills and ademption of the proposed bequest.
2. His Honour did not err in concluding that the Deed of Assignment was unjust in the circumstances existing when it was made. In the result, the appeal should be dismissed with costs.
3. BRERETON JA: I have had the great benefit of reading in draft the judgment to be delivered by Meagher JA, with which I entirely agree.
4. In proceedings for relief under the Contracts Review Act 1980 (NSW), s 7, there are two stages. The first is whether the contract was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9. This is a conclusion of fact, albeit of one of ultimate fact involving a broadly based value judgment. [1] The second stage, which only arises if the first is resolved in the affirmative, is what if any orders should be made; this involves the exercise of a judicial discretion. [2] In this appeal, only the primary judge's conclusion at the first stage was challenged; there was no challenge to his Honour's discretionary decision to grant relief if the conclusion that the contract was unjust were upheld.
5. In West v AGC (Advances) Ltd, [3] McHugh JA (as he then was) explained that circumstances of unfairness in a contract may be substantive or procedural: substantive unfairness pertaining to the harshness of the terms imposed, and procedural unfairness pertaining to the manner in which the contract was negotiated and formed. His Honour explained: Under s 7(1) a contract may be unjust in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both. Thus a contractual provision may be unjust simply because it imposes an unreasonable burden on the claimant when it was not reasonably necessary for the protection of the legitimate interests of the party seeking to enforce the provision: cf s 9(2)(d). In other cases the contract may not be unjust per se but may be unjust because in the circumstances the claimant did not have the capacity or opportunity to make an informed or real choice as to whether he should enter into the contract: cf s 9(2)(a), 9(2)(e), 9(2)(f), 9(2)(g), 9(2)(i), 9(2)(j). More often, it will be a combination of the operation of the contract and the manner in which it was made that renders the contract or one of its provisions unjust in the circumstances. Thus a contract may be unjust under the Act because its terms, consequences or effects are unjust. This is substantive injustice. Or a contract may be unjust because of the unfairness of the methods used to make it. This is procedural injustice. Most unjust contracts will be the product of both procedural and substantive injustice.
6. Accordingly, an unjust contract is usually, though not invariably, the product of the combination of substantive and procedural unfairness.
7. In this case, the assignment of an asset of in excess of $18.5 million, coupled with the loss of control of the Trust Debt and with it of the underlying assets, for no consideration and no material benefit, was plainly substantively unfair. The manner in which it was procured - most notably by the unfair tactics employed by Dimitri to deprive Nicolas of the legal advice that he would otherwise have received, and also by the creation of an atmosphere of urgency surrounding the execution of the Deed of Assignment - was procedurally unfair. Substantive and procedural unfairness combined to result in a contract that was unjust in the circumstances in which it was made.
8. I agree with the orders proposed by Meagher JA.
9. McCALLUM JA: I agree with Meagher JA.

Endnotes

1. Antonovic v Volker (1986) 7 NSWLR 151 at 154-155 (Samuels JA, Kirby P agreeing); Beneficial Finance Corporation Limited v Karavas (1991) 23 NSWLR 256 at 270E (Samuels JA); Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41 at [34]-[40] (Spigelman CJ), [106]-[111] (Basten JA).
2. Khoshaba, [34]-[36] (Spigelman CJ), [109] (Basten JA).
3. (1986) 5 NSWLR 610. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 February 2022