This is an action in debt and for possession of land. The plaintiff relies upon a deed of loan made on 11 January 2017 by which the defendant acknowledged a debt of $52,766 repayable no later than 30 June 2018 and bearing interest at 8% compounding monthly. No part of the principal or interest has been paid and the amount due at today's date is alleged to be $69,289.49 inclusive of interest. The plaintiff claims that the debt is secured by a mortgage over residential property located in the settlement of Arakoon on Trial Bay.
The defendant is the registered proprietor of the Arakoon property and there is clear evidence that he signed a mortgage on 11 January 2017. This was intended by the parties to be registered as a second mortgage behind an existing first mortgage in favour of St George Bank. By 6 March 2017 the plaintiff's solicitor had secured the consent of the Bank to registration of the subject mortgage behind the Bank's own encumbrance. On that date the plaintiff's solicitor sent the document to his agent in Sydney for registration. He was advised on 14 March 2017 that registration had been effected.
The registered second mortgage is in evidence. The standard mortgage proforma on which the document has been drawn contains the following words:
[The mortgagor] mortgages to the mortgagee all the mortgagor's estate and interest in the above land, and covenants with the mortgagee that the provisions set out in the annexure and/or memorandum specified below are incorporated in this mortgage:
annexure hereto;
memorandum filed pursuant to s 80A Real Property Act 1900.
The plaintiff's solicitor caused the proforma mortgage to be completed by having typed into the blank space adjacent to the word "annexure" the words "not required". He caused there to be typed into the blank space next to the word "memorandum" the identifier "No. Q860000". As is well known, memorandum number Q860000 contains a generic set of mortgage terms but does not state the amount of debt or other liability secured by a mortgage. As there was no annexure to the mortgage and no other instrument creating a debt liability is referred to in the mortgage, the instrument is not expressed to secure any specified liability of the defendant.
The legal principles concerning a mortgage instrument which suffers from this defect have been considered in a number of cases that I discussed in McLeod v McLeod [2019] NSWSC 804 at [94]-[110]. The consequence of the mortgage document having been completed in the way that it was is that it is not an effective security. It cannot be enforced in these proceedings by an order that the mortgagor, being the defendant, deliver up possession of his land to the plaintiff as sought by the statement of claim. That is sufficient to dispose of the claim for possession of the land. It is also the case that the plaintiff's solicitors did not serve a notice in accordance with s 57(2)(b) of the Real Property Act 1900 (NSW) prior to commencing these proceedings for possession. Mr Chan of counsel who appears for the plaintiff has conceded that in the absence of service of a s 57(2)(b) notice, the mortgage, even if it were valid, could not be enforced.
Accordingly, on the evidence that is before me, the only questions that are to be determined are whether the deed of loan of 11 January 2017 is enforceable, and if so, what if any debt is owed under it. Should the plaintiff be successful on that aspect of her case, then she would be entitled to judgment for the amount of principal and interest earlier referred to.
In the defence the defendant disputes the enforceability of the deed of loan on a plea of non est factum. He has filed a cross-claim for relief against the deed and the mortgage under the Contracts Review Act 1980 (NSW). In submissions filed shortly before the commencement of the hearing the defendant abandoned his defence of non est factum. The defendant has now admitted that his signature has been affixed to the deed and that this occurred in the plaintiff's solicitor's office on the date that the deed bears. The deed therefore stands as a binding transaction and is sufficient alone to substantiate the defendant's liability unless he can justify a grant of relief under the Contracts Review Act.
The grounds upon which the defendant seeks to invoke the Contracts Review Act are such that it is necessary for me to assess conflicting evidence concerning whether the money referred to in the deed and claimed by the plaintiff ever was advanced by her to the defendant. The defendant has denied that he received loan advances. This has become an issue relevant to whether Contracts Review Act relief ought to be granted.
The defendant asserts that when he signed the deed and the mortgage the nature of the documents was not explained to him. He says that he did not examine the documents before signing or inquire what they were or what their effect would be. The defendant did not receive independent legal advice with respect to the documents.
The defendant's cross-claim pleads that the deed of loan was unjust in the circumstances at the time it was entered into within the meaning of the Contracts Review Act having regard to circumstances alleged at pars 3-20. Relying upon the written and oral submissions of the defendant's counsel, I identify the essential allegations as follows. It is asserted that injustice arises, first, from the defendant having signed both documents with a lack of understanding of their effect. Secondly, it is said that the defendant has poor eyesight and physical infirmities and that he was unwell on the day of signing, with the consequence that he was at a disadvantage with respect to making a sound judgment to protect his interests in relation to the documents. Thirdly, the defendant alleges that he was emotionally attached to, or affected by, the plaintiff and that this, combined with her presence at the time of signing, contributed to him not being able to make a sound decision about executing the documents presented to him by her solicitor. These first three points are characterised in the defendant's submissions as aspects of "procedural injustice".
The defendant also relies upon what he terms "substantial injustice". This is said to have arisen from the circumstance that he did not have the means to repay the loan under the deed and that there was a high likelihood of default, having regard to the 18 months' term of the lending. The defendant was 61 years old at the time of signing and was on a disability support pension from the Department of Social Security of the Commonwealth. He says that during the term of the loan he would have been unable to refinance it by resort to a commercial lender and that the transactions of 11 March 2017 therefore exposed him to a high risk of losing his home under the mortgage.
Although I have held that the mortgage is ineffectual and cannot be enforced, these arguments still have to be addressed with respect to the deed of loan. The deed contained a provision that the defendant would grant to the plaintiff a mortgage over his residential property at Arakoon: see cl 4.1. Consequently, although the mortgage that has been executed is defective the defendant remains exposed to the risk that his agreement to grant a mortgage will be enforced, for example, by a an order for judicial sale; see King Investments Solutions v Hussain [2005] NSWSC 1076. Also, he faces the possibilities of an application by the plaintiff for rectification of the mortgage to refer to the deed of loan or an application for specific performance of cl 4.1 of the deed, by the delivery up of an executed registrable mortgage.
Further, in the circumstances of the defendant's inability to repay the debt within 18 months, irrespective of any security over his property the deed exposes the defendant to the risk of default and entry of judgment, followed by enforcement of a judgment pursuant to a writ of execution. One way or another, the defendant's home, which appears to be his only significant asset, has been put at risk by him entering into the deed.
Another alleged aspect of injustice of the transactions of 11 January 2017, for the purposes of the Contracts Review Act, is the interest rate of 8% compounding monthly that was provided for in cl 5. The defendant submits that this is "relatively high" and that it contributes to substantive injustice of the transaction. The relief sought under the Act is an order setting aside the deed of loan. The defendant submits that the plaintiff should be left to recover, without security, so much of the debt as she may prove if her evidence prevails over the defendant's denials. He submits that the plaintiff should have no more interest on the debt than would be payable at rates prescribed under the Civil Liability Act 2005 (NSW).
The issues thus raised require that I should make findings of fact in relation to the financial relationship between the parties in some detail. It is also necessary that I address the defendant's contentions regarding their personal and social relationship.
[2]
The relationship and dealings between the parties
The defendant has resided in his property at Arakoon since 1996. The plaintiff met him in September 2009 when she commenced to reside nearby in South West Rocks. The two became friends from late 2009 and the friendship continued until about September 2016. According to the plaintiff's evidence, which I found generally reliable and which I accept, her relationship with the defendant was briefly romantic for two or three months in late 2009 and early 2010, but thereafter was in the nature of a close friendship.
The defendant is a house painter by trade. In the years with which this case is concerned, at least up to 2017, he derived some income from painting contracts, in addition to his pension. The plaintiff is an interior decorator and a teacher's aide. The plaintiff assisted the defendant with his painting contracts from time to time. The defendant sometimes drove her to Kempsey for her work. They dined together at the defendant's house on two or three evenings each week.
I accept the plaintiff's evidence that in April 2010 the defendant told her that he was in default with respect to payments due under his first mortgage to St George Bank and that the plaintiff made a gift to him of $10,000 to assist with this. The gift was paid to the defendant on 22 April 2010.
On 19 March 2011 the defendant was very badly assaulted in his own home by a neighbour, Mr Gary Maxwell. Arising from that incident Mr Maxwell was charged with assault occasioning grievous bodily harm and was convicted on his plea of guilty in May 2012. The defendant commenced an action against Mr Maxwell for damages in the District Court. The plaintiff assisted the defendant with correspondence and other dealings with lawyers in relation to the Court proceedings arising from the assault. She attended some of the defendant's meetings with his solicitors regarding the civil proceedings for damages.
From a few months after the assault, when the defendant had physically recovered, the plaintiff from time to time worked cooperatively with him on painting contracts. She prepared colour schemes and the defendant performed the trade work. The plaintiff was not paid by the defendant for her assistance to him.
The close friendship and shared activities as described were ongoing in early 2013. I accept the plaintiff's evidence that on 1 March 2013 the defendant told her that he had fallen behind in mortgage payments and asked if he could borrow $3,700. He said he would repay the plaintiff as soon as he recovered compensation from Mr Maxwell. The plaintiff agreed and paid over the advance in cash. It was her habit to keep sums of cash at her house. She is unable to recall whether she had $3,700 on hand as at 1 March 2013 or whether she had to draw it from a bank or credit union account, or a combination of the two. This same uncertainty about the manner in which cash was put together applies equally to the plaintiff's subsequent advances to the defendant.
With respect to the first advance of $3,700 the plaintiff wrote the following on the top of a sheet of paper, which has become p 1 of Ex 1 in these proceedings: "Borrowed the sum of $3,700 from Jennie Cass on 1/3/2013. To be paid in full on settlement with Gary Maxwell." Under those words the plaintiff wrote the defendant's name and her own name and both of them signed in the presence of each other. The defendant disputes that he requested a loan from the plaintiff, either in early March 2013 or at any time. He has deposed that he does not recall receiving the $3,700 and that he first saw the writing on Ex 1 when it was annexed to the plaintiff's affidavit of 21 November 2019 filed in these proceedings.
The defendant has however admitted on affidavit that his signature appears under the words written on Ex 1 that I have quoted above. He also admits that his signature appears in various other places on that document, to which I will refer. The defendant has deposed as follows in an affidavit sworn 8 January 2020:
I can't explain why my signatures appear on that page or on other pages of [Ex 1] other than to say I signed numerous letters and documents handed to me by the plaintiff during the course of proceedings against Maxwell and his wife.
The defendant's affidavit evidence with respect to the sums that the plaintiff says she from time to time advanced to him, commencing with the $3,700 on 1 March 2013, is in the form of non-admissions. He does not in terms deny that he received the money or that he signed the acknowledgement for the first $3,700 or the other parts of Ex 1. It was not put to the plaintiff in cross-examination that she was mistaken or untruthful about the advances or the placement of the defendant's signature on the document adjacent to the recording of the amounts. The Court has been given no reason to doubt that the plaintiff advanced this first $3,700 and the subsequent amounts, or to doubt that the defendant's signature appears by way of acknowledgement that he had received the money.
With respect to this first advance the plaintiff has said that she intended the words, "To be paid in full on settlement with Gary Maxwell" to mean that she would be paid when the defendant received money from Mr Maxwell. Independently of that subjective intention, I would construe those words as objectively conveying that meaning when used as they are here between lay people. I do not construe the words as meaning that if no settlement should occur the debt need not be repaid. Rather, the event of settlement sets an outer limit for the time of repayment. In any event, because the first advance of $3,700 became merged in the total of all amounts advanced over the subsequent 3½ years, which was then recorded in the deed of loan, the meaning of the words that I have just quoted is not critical to the outcome of the case.
The plaintiff has deposed that the defendant asked to borrow further sums on dates between March and July 2013 and that she advanced those in cash and wrote them out on p 1 of Ex 1, with the dates on which the payments were made. She also wrote down the running total, progressively. This came to $8,550 at the end of p 1 of Ex 1, against which is the date 6 July 2013. Exhibit 1 is a copy of the original handwritten record. Page 2 of exhibit is a copy of the reverse of p 1 in the original. In the top half of p 2 there is recorded a further payment of $1,450 on 5 September 2013. That brought the total to $10,000, which was carried forward to p 3.
More payments and dates are recorded on p 3, bringing the total to $21,300 by May 2014. The defendant signed the bottom of p 3. The total was carried forward onto the lower half of p 2 of the exhibit. More dates and amounts are recorded there, bringing the running total to $27,650. That amount was carried forward onto p 5 of Ex 1 and so the process continues through to a total of $52,766 as at 1 September 2016.
Each page of Ex 1 except p 2 has been signed by the defendant at least once. Page 1 is signed in two places. The absence of a signature on p 2 is not significant because the carried forward amounts are reflected on other pages that are signed. I have no hesitation in accepting the plaintiff's evidence that these entries on Ex 1 are a contemporaneous record of amounts that she advanced on the dates given. She has deposed and I accept that all but two of them were in cash; the remaining two were by electronic funds transfer.
The document bears every appearance of being a genuine record maintained by a private non-professional person, such as the plaintiff, recording a running debt as between her and her friend. There are corrections made to some of the entries. In various runs of dates the entries have been completed in the same pen and then the pen changes. This is clearly apparent from Ex 1 because it is a colour photocopy of the original. The plaintiff has acknowledged two relatively small credits amounting to a total of $2,150 and these appear on Ex 1. If the document were simply a fabrication and the plaintiff had dishonestly invented the defendant's alleged debt to her, one would not expect to see credits and one would not expect to see the sort of corrections and informality that are apparent on Ex 1.
No suggestion was put to the plaintiff that she fabricated this document. She was questioned to some extent about the lack of correspondence between amounts and dates on the exhibit and, on the other hand, the amounts of withdrawals from her bank and credit union accounts. I accept her evidence that the non-correlation is explained by the circumstance that she kept cash on hand. From time to time she advanced cash that was already in her possession and then withdrew money from one of her accounts later. On other occasions she said that she was aware in advance of the amount that was the defendant wanted to borrow and she drew out enough to cover the advance, either alone or taken together with sums that she already held. In that way, a withdrawal may have proceeded an advanced by some interval of days.
Against the degree of detail that is shown in the plaintiff's evidence and the authenticity of her written record in Ex 1, the defendant has offered nothing but bare denial. The plaintiff says that frequently the amounts that she was asked for were said by the defendant to be necessary to cover his mortgage payments or other outgoings. The defendant has not tendered any evidence in an endeavour to show that he had independent means, that he was able to cover his outgoings without resort to the plaintiff. He has not provided any objective basis upon which the Court would doubt what the plaintiff says about the advances that she made. I dismiss his uncorroborated denials.
On 20 February 2014 the defendant recovered judgment against Mr Maxwell in the District Court for $120,000 damages and a costs order for $20,000. He petitioned for Mr Maxwell's bankruptcy. A sequestration order was made on 19 September 2014. In about late 2015 or early 2016 the plaintiff accompanied the defendant to a consultation with Mr Brown, solicitor, at the offices of a firm in Parramatta. Advice was sought on the possibility of having set aside Mr Maxwell's transfer of his half interest in a residential property to his wife. This transfer had been effected before he was declared bankrupt and purported to have been made pursuant to a matrimonial property settlement dated 12 October 2012.
The defendant received correspondence from Mr Brown following the consultation and showed it to the plaintiff. The plaintiff understood the effect of the solicitor's advice to be that the trustee in bankruptcy could take proceedings to try to have Mr Maxwell's transfer to his wife set aside but that the legal fees would be in the order of $40,000 and that, in order to go ahead, the defendant would have to sign a funding agreement and grant a second mortgage over his home in favour of Mr Brown's law firm to secure payment of the fees. The plaintiff discussed this with the defendant and told her, "I'm not putting my house up."
The defendant asked the plaintiff to lend him $40,000 for the legal fees. The plaintiff told him she was not prepared to do that and encouraged him to grant the mortgage to the firm of solicitors and sign the funding agreement. The defendant took no action in this respect. By September 2016, the plaintiff had become concerned that if the defendant did not pursue the course upon which Mr Brown had advised, he would not recover anything under his judgment for damages for the assault and he would, therefore, never have the money to repay the plaintiff.
At the end of September 2016 the plaintiff said to the defendant:
I've told you I'm not willing to lend you another $40,000. If you want to fight your legal case properly you should sell your house, pay out the mortgage and me and have the money to pay your solicitor.
The plaintiff has deposed that the defendant became very angry at this proposition and said he would never sell his house. He said he would find another solicitor to run the case against Mr Maxwell for free. It appears that the friendship between the plaintiff and the defendant was at an end from that point.
On 3 December 2016 the plaintiff arranged to meet with the defendant to discuss repayment of the money that he owed her. She told him that in her view he could not afford to keep his house and that he would have lost it years before if she had not provided him with financial assistance. She pointed out that his house repayments were barely keeping up with interest and that he was not reducing the principal by any more than $5,000 a year. The conversation concluded with the plaintiff saying to the defendant, "Are you going to pay me back?" to which the defendant did not reply. However, after the plaintiff had returned home following this unfruitful conversation there was a voice message on her phone in which the defendant said, "You will get your money. I just need to work things out."
The defendant disputes the plaintiff's version of these conversations in late September 2016 and early December of that year. His affidavit deposes merely that he denies the facts that the plaintiff has stated. To the extent that he has deposed to an alternative version of parts of these conversations find his evidence unconvincing. He has asserted, with respect to the conversation in early December 2016 that, when the plaintiff suggested he should sell his house, she also proposed that he should move in with her. The plaintiff flatly denies this and says that she never had any intention of cohabiting with the defendant. The defendant also claims that he said to the plaintiff words to the effect, "We have to resolve Gary Maxwell first."
I accept the plaintiff's version of these conversations. They make logical sense in the circumstances as they stood in late December 2016. I find Mr Fisher's contention that there was talk of the parties commencing to live together at that time highly improbable. It is apparent from the surrounding circumstances that the indebtedness of the defendant and his unwillingness to take the only steps available to him to repay the plaintiff caused considerable tension between the parties at this stage.
Wherever the defendant's account of events and conversations in late 2016 and early January 2017 is in conflict with the plaintiff's evidence, I prefer her version. The defendant's credibility generally is damaged by his persistent non-admission of the advances he received and his dispute about the authenticity of Ex 1. Given his signatures on that document and his lack of any alternative explanation for having signed, I find it clear that he acknowledged the receipts of money from the plaintiff on this contemporaneous document and that his failure to accept its authenticity and purpose reveals him. He is a self-serving witness who makes statements on oath to serve his own ends rather than to convey the truth.
On 5 December 2016, two days after the conversation referred to at [37] above, the plaintiff hand delivered a letter to the defendant by placing it under his front door. It read as follows:
Thank you for meeting with me on Saturday evening. I received your later voice message, "You'll get your money. Just working things out."
The letter continued with a reminder of how much had been loaned: the sum of $52,766 was expressly stated. The plaintiff pointed out that this did not include the $10,000 of which she had originally made a gift in April 2010. The letter concluded with a request that the money be repaid within 60 days, which would be by 5 February 2017. The plaintiff wrote that she might commence legal action after that if she had not received payment.
According to the plaintiff, the defendant met with her soon thereafter and said there was no way he could repay in 60 days. The plaintiff replied that she would be willing to extend her loan for another 18 months if a proper loan agreement was drawn up but that she would want there to be 8% interest. According to the plaintiff, the defendant responded by saying, "All right then, you're in the driver's seat". The plaintiff told him she would arrange for appropriate documents to be prepared by a solicitor in Port Macquarie.
I accept that evidence from the plaintiff. She did arrange with Mr Lawton, a solicitor in Port Macquarie, to prepare the deed of loan and the mortgage. This had occurred by early in the second week of January 2017. Mr Lawton arranged for the documents to be ready for execution on 11 January 2017. As soon as that had been arranged, the plaintiff told the defendant that she had booked an appointment to have the loan documents signed on that day.
The defendant denies that this was said. He claims, at par 52 of his affidavit, that the plaintiff said to him, "I have made arrangements with a solicitor in Port Macquarie to talk about our concerns". The defendant has deposed to the following understanding of this alleged statement:
I thought the plaintiff was referring to a discussion regarding the Maxwell case with a solicitor acting as a neutral party to assist us to resolve what I understood to be my moral obligation to give some recompense to the plaintiff for the assistance she had given me in correspondence and dealing with solicitors throughout the Maxwell case. Otherwise, I would not have agreed to attend.
I reject the defendant's evidence that his conversation with the plaintiff about meeting the solicitor was in the terms he deposes, or that he had any such understanding. The defendant's account of what he thought he would be meeting with the solicitor for is incoherent. In oral evidence he attempted to explain this by asserting that he had had conversations with the plaintiff from time to time in which she said that work she was doing to assist him would, if she charged for it, "cost you a small fortune". He said that he went to see the solicitor to discuss what seemed to be the correct procedure "through a non-biased third party".
This makes no sense in the context of the relationship between these parties. They were both mature adults. If it was considered in January 2017 that the plaintiff was entitled to some payment for work that she had done for the benefit of the defendant, it is undoubted that they would have had some discussion about what the amount might be as to rates and how many hours had been worked and the like. The defendant does not depose to any such conversation. The idea that they would suddenly, out of the blue, go and talk to a solicitor about such a proposition is absurd and unbelievable.
On the other hand, the plaintiff's account that she was, at this date, concerned about ensuring that she had proper formalities for repayment is both understandable and credible. The situation had, on an objective analysis, clearly reached the point where the plaintiff was at serious risk of never recovering the significant amount of money that she had loaned to the defendant. In circumstances where he would not take steps to put himself in funds to repay her it was natural that she should seek to have the loan documented and secured.
There is a similar discord between the evidence of the plaintiff and the defendant respectively as to what conversation took place in the car on the way to Port Macquarie on 11 January 2017. The plaintiff says that she told the defendant her solicitor thought the best way to document the position was to have a loan agreement and a second mortgage as security. The defendant denies such a conversation but I accept the plaintiff's evidence. The defendant has consistently denied matters that are both probable and/or supported by contemporaneous documents and surrounding events. He has advanced foolish and untenable explanations and answers to the plaintiff's evidence. He is not creditworthy.
Both the plaintiff's evidence is that upon her attending with the defendant at Mr Lawton's office he produced the deed of loan and the mortgage and explained the effect of these documents to the defendant. Mr Lawton has given evidence to the same effect. He and the plaintiff have both deposed that Mr Lawton informed the defendant that it was open to him to have another independent lawyer to review the documents in the defendant's interest, and that the defendant simply said, "I just want to sign it and go". Both the plaintiff and Mr Lawton have deposed that the latter insisted upon going through an explanation of the documents, and did so, although the defendant was, throughout this explanation, impatient and dismissive, and said words to the effect, "I know what a mortgage is, I don't want it explained. I just want to go".
In his affidavit Mr Lawton summarised the effect of this meeting in the following terms:
The defendant then [that is, at the completion of Mr Lawton's explanation of the documents] signed the mortgage. After signing both documents, the defendant left. The appointment lasted approximately 15 minutes. Throughout the appointment, the defendant remained somewhat hostile towards me. His answers and questions were abrupt. The defendant had no difficulty in asserting himself. He made it very clear what he was prepared to do and that he did not want to listen to anything I said.
My concern was to make sure that he understood what he was signing, and to impress upon him that he could get legal advice if he wished to do so. The defendant indicated his understanding of the loan terms and the effect of the mortgage on several occasions. He expressly declined to seek legal advice. The defendant expressed repeatedly that he did not wish to read the documents or have them explained in further detail. I insisted on explaining the terms of the deed over his objections, and he indicated that he understood those.
The defendant gave evidence, both on affidavit and orally, that he had no idea what he was signing; that the documents were not explained to him; that they were placed in front of him for execution by Mr Lawton, who simply turned up the lower half of the various pages that required execution and directed the defendant to sign without even revealing the contents of the pages and without any oral explanation.
The defendant asserts that he was unwell at the time of this meeting. He said that he felt like vomiting and stated repeatedly that he felt unwell and just wanted to leave the meeting. The evidence of the plaintiff and of Mr Lawton is entirely inconsistent with this. They heard no such complaints of ill health and saw no symptoms. The defendant agreed that he did not consult a doctor with respect to whatever was affecting him on the day. He asserts that he was a nervous wreck after leaving the meeting. I find this completely inexplicable and incredible. There is nothing about the meeting that could rationally have led to him having been reduced to any such state.
In his affidavit at para 55(d), the defendant has deposed:
I was feeling stressed, anxious and upset with what had happened to my relationship with the plaintiff, and while I was in Mr Lawton's office, I felt that I was going to throw up and the only way to get out of there quickly was to sign the documents.
I give no credence to that evidence. Mr Lawton was not cross-examined to suggest that he had acted in the manner described by the defendant during the attendance for execution of the documents. If what the defendant describes occurred, it would have constituted a serious breach of the duties of a solicitor. It would have involved Mr Lawton participating in a fraud upon the defendant by procuring him to execute documents where he had no concept of what he was undertaking. In order to accept the defendant's evidence on that I would have to have heard Mr Lawton cross-examined about it and to hear what response he would make to such a suggestion. It was not put to him that he had mis-conducted himself in this manner. There is nothing in the surrounding circumstances, or in the evidence of the plaintiff, or in the manner in which Mr Lawton gave evidence during the limited cross-examination that was undertaken, to suggest that his affidavit evidence is untruthful or that he would have behaved in the reprehensible manner that the defendant attributes to him.
In these circumstances, I have no doubt that the full amount of the debt claimed by the plaintiff as at 11 January 2017 was owing and that there was no unfairness to the defendant for the purposes of the Contracts Review Act in the plaintiff procuring the defendant's execution of the deed of loan. The deed is not appropriately worded to record a loan that had already been made. It is expressed in a manner suitable to an advance and that was about to be made upon the signing of the instrument. Notwithstanding that, its terms are by no means repressive or unfair to the defendant, having regard to the existing debt. With the benefit of knowledge of surrounding circumstances the deed is amenable to a construction that renders it suitable to its purpose.
The interest rate is, as the defendant's counsel has submitted, relatively high. However, it is relevant that half of the amount of the debt had been advanced by June 2014. If one considers the period during which the plaintiff had not been charged interest on her advances, one may approximate the amount of interest foregone as interest on the full amount of over 52,000 for 2½ years up to January 2017. Overall, the plaintiff may be viewed as having had the benefit of this amount for a substantial period without interest and then for a period with interest at the relatively high rate of 8% compounding monthly. Averaging out, the interest aspect of the transaction was not unfair.
The plaintiff was in a position to have demanded repayment of the whole sum forthwith as at January 2017. By the deed of loan she extended time for repayment by a fixed period of 18 months, thus, making a significant concession to the defendant. The agreement to provide a mortgage was a reasonable term. It did not render the deed unfair in any respect. I draw that conclusion without reliance on the circumstance that, as it happens, the particular mortgage instrument that has been signed is ineffective. I proceed on the assumption that the defendant may yet be held to a charge over his property on the basis of his agreement, in cl 4.1, to grant a mortgage; or as a result of rectification of the mortgage instrument.
The defendant was not subjected to any unfairness by being required to give security. He already owed the money. His only asset was the house at Arakoon. At any time the plaintiff could have entered judgment, probably by summary application in a court of competent jurisdiction. Upon judgment being obtained, the plaintiff would have been entitled to have the house sold under a writ of execution. The defendant was in no worse case by giving mortgage security.
As earlier noted the defendant has claimed that he was unwell on the day. He also says that he had poor eyesight, that he was on medication, and that he was affected by his personal relationship with the plaintiff. I do not accept that any aspect of his medical condition resulted in any "procedural unfairness", as it has been termed by the defendant's counsel. I do not accept that there was anything in the personal relationship between the parties that placed any pressure upon the defendant or denied him the opportunity to do justice to himself on the date of execution of the instruments. His proposition that the transactions were unfair because of lack of understanding of what had taken place is, in my view, amply rebutted by the evidence of Mr Lawton that he gave full explanation.
I accept Mr Lawton's evidence that on 15 March 2017 he sent a letter to the defendant advising him of the registration of the second mortgage and enclosing his earlier letter of 11 January 2017, which he had by inadvertence omitted to send. In the belatedly delivered letter of 11 January 2017 the essential details of the transaction were recorded, namely, the amount of the debt, the interest rate, and the term. The sending of these documents in March 2017 did not result in any protest, shock, or surprise from the defendant.
In early May 2018 the plaintiff hand delivered to the defendant at his home a letter reminding him that the loan was due to be repaid on 30 June and supplying her bank details for the transfer. The plaintiff has deposed that when she handed this letter to the defendant he said something to the effect, "Well, I'm still working on it." Another letter was sent to him on 29 May to similar effect. There is no evidence that the defendant responded to either of these warnings of his imminent liability by suggesting that he had been duped into signing something that he did not understand or that he was not indebted. The defendant's response to the first of these letters and silence in relation to the second are implicit admissions of the underlying debt and of his knowledge of the deed by which he had committed to repay it within 18 months from 11 January 2017.
For all of these reasons, I am satisfied that there has not been shown any injustice for the purpose of the Contracts Review Act. There is no basis for granting relief with respect to the deed of loan. It is fully enforceable. Accordingly, there will be judgment for the plaintiff for the debt she claims.
[3]
Orders
1. Judgment for the plaintiff against the defendant in the sum of $69,289.49.
2. Leave granted to the plaintiff to apply for any ancillary order that may be necessary for the purpose of enforcing the judgment.
3. Costs are reserved.
4. Leave is granted to the plaintiff to forward to the Associate to Fagan J a minute of any further orders that may be sought with respect to amendment of the plaintiff's case and/or with respect to further conduct of the proceedings and with respect to costs.
5. It is directed that the form of any proposed orders and submissions in support of them should be received in chambers no later than 5pm on Tuesday, 16 June 2020.
6. Is directed that the defendant submit by email to the Associate any proposed orders together with any written submissions on any of the issues raised by the plaintiff's counsel by no later than 5pm on Wednesday, 17 June 2020.
7. The proceedings are relisted before Fagan J at 9.30am on Thursday, 18 June.
[4]
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: 15 June 2020