Chaudhary v Chaudhary

Judgment

1. Without intending any disrespect to any party, I will refer to them, for the sake of clarity, by their preferred given name. The proceedings arise out of the breakdown of the marriage of the first and second defendants, Adrian and Justine. Vincent, the plaintiff, is Adrian's father, and Justine's former father-in-law. Vincent helped Adrian and Justine to buy their matrimonial home situated at XXXXXXXXX, XXXXXXX, New South Wales (Certificate of title auto console 8364-124, ("the property"). All up, $1,200,000 of the money of Vincent, and his wife Sareeta, was made available so Adrian and Justine could buy the property. A further $400,000 was raised by Adrian and Justine by a loan from Westpac Banking Corporation secured by a registered first mortgage. The central question in the case is on what basis did Vincent provide the funds for Adrian and Justine to buy the property. Vincent says he provided a loan secured by an, initially unregistered, second mortgage. Adrian agrees with this. Vincent alleges a default in the terms of the mortgage and seeks judgment for possession. Alternatively, he seeks an order for judicial sale of the property under s 66G Conveyancing Act 1919 (NSW). It is notable and of significance in the particular circumstances of this case that Vincent makes no claim for the mortgage debt.
2. Justine says that the money was a gift to her and Adrian. If she is wrong about that she says the loan arrangement was an unjust contract which should be set aside under Contracts Review Act 1980 (NSW); alternatively, it should be set aside because it offends the principles of equity discussed in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 474; further, or in the alternative, Justine says that Vincent is estopped from denying the advance was a gift.
3. I have decided that the advance of $1,200,000 by Vincent was intended by him to be a gift, but a gift for Adrian only, and not for Justine. The mortgage was a legal device to attempt to quarantine the money from the jurisdiction of the Family Court of Australia in the event of the breakdown of the marriage of Adrian and Justine, as has occurred. I am satisfied that the (now registered) second mortgage secures nothing. Justine's agreement to the mortgage is an unjust contract because the purpose of the mortgage was to deprive her not only of any right to relief against Adrian's share of the matrimonial home under the terms of the Family Law Act 1975 (Cth), but also, in its express terms, of her right to possession arising from her title as a tenant-in-common without the provision of any tangible benefit in return. The mortgage should be set aside. I am not persuaded that Justine has made out an entitlement for equitable relief. To be clear Vincent is entitled to neither possession nor an order for judicial sale. What follows are my reasons for this decision.

Preliminary consideration

1. The events central to the resolution of the case occurred in November and December 2004. Since then, Adrian and Justine's marriage broke down in 2013 (the eventuality about which, in prospect, Vincent was concerned). A decree nisi was pronounced on 17 July 2014 which became absolute on 18 August 2014. There are currently proceedings for custody and a property settlement pending in the Family Court of Australia. I formed the distinct impression that these considerations affected and to some extent distorted the perceptions of Adrian, Justine and, to a lesser extent, Vincent of these central events.
2. In addition there is, of course, the natural effect of the effluxion of time on the reliability of human memory. Although the acquisition of a home may be a single, and happy, event in one's life, there are natural difficulties in accurately recalling even significant details surrounding that acquisition so long after the event, especially after the intervention of other, doubtless, unhappy and upsetting events.
3. I did not form the impression that any of the parties were deliberately attempting in any way to mislead, but these considerations I have mentioned affected the reliability of their evidence which leads me to prefer inferences that may be drawn from those facts which are undisputed, contemporaneous documents, to the extent they appear reliable from their context, and the apparent logic of events.
4. On the same point, Mr Ashurst SC, who appeared with Mr Docker for the plaintiff, reminded me of the oft-cited dictum of McClelland CJ in Eq from Watson v Foxman (1995) 49 NSWLR 315 at 318 - 9. Senior counsel directed this to the evidence of Justine in relation to her claim under the Contracts Review Act. But I think it has wider application here. I will quote it in part only (page 319): "Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consider­ation of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience." I accept that this passage is apposite to much of the evidence in the present case.

Background facts

1. Vincent, Adrian and their daughter and sister respectively, Ranika, are chartered accountants. They are all engaged in a successful practise based on Sydney's inner western rim. The practise was founded by Vincent and through his industry and acumen he had built up not inconsiderable personal wealth.
2. Adrian and Justine formed a relationship at a time which is not made clear to me by the evidence I have heard. By June or July 1999 they were living together and had decided to purchase an apartment in Darlinghurst. Mr John Fordham, solicitor, acted for them on the transaction. Mr Fordham, who swore an affidavit and gave evidence before me, and Vincent, by the time of the hearing, had known each other, and been professionally associated, for in excess of 20 years. Whatever social relationship they enjoyed, Mr Fordham was obviously a trusted professional advisor.
3. The Darlinghurst apartment was acquired by Adrian and Justine as tenants in common, apportioned strictly in accordance with their actual financial contributions. Adrian's tenancy was as to seven-tenths and Justine's as to three-tenths. Prior to the exchange of contracts on the Darlinghurst apartment, which occurred on 5 July 1999, Adrian and Justine entered into a "co-habitation agreement" drafted by Mr Fordham, for the purpose of s 47 De Facto Relationships Act 1984 (NSW), now named Property (Relationships) Act (1984) (NSW). In the recitals to the agreement, Adrian is described as having "substantial investments and superannuation" and "anticipation of substantial potential inheritances". Adrian's disclosed assets included an investment property at Eastwood, a "fifty per cent share" in what I take to be a family investment company, and a late model European car. Justine's disclosed assets include a parcel of shares in a former public utility and an older European car.
4. I am taking time over this document because it seems significant that from very early on in their relationship, Adrian evinced an attitude of not permitting affairs of the heart to cloud his judgment about financial matters. As time went on this attitude became more, not less, ingrained.
5. The terms of the agreement included the following: "4. The parties agree that any inheritances received by them in the future shall be their sole and unencumbered property. 5. The parties agree that all assets acquired by them in the future shall be owned by them jointly in equal shares. 6. Each of the parties shall remain the sole owner of their current assets and future personal items owned by them." [Emphasis added.] Justine and Adrian received independent legal advice in compliance with s 47(1)(d).
6. Adrian and Justine married on 4 October 2003. In expectation of their marriage, they had, on 20 January 2003, entered into a pre-nuptial financial agreement under s 90B Family Law Act 1975 (Cth). (See ss 90G and 90K of that Act.)
7. Although not dealt with in great detail, it is apparent from the evidence that was lead that during the course of their relationship, including as at the date of their marriage, there was a great disparity in the respective financial positions of Adrian and Justine. Adrian was an affluent young professional with the prospect of not inconsiderable inherited wealth. Justine was of significantly more modest means. At this time she had recently opened her own recruitment consultancy. I would infer that her prospects of inheritance fell into the same category.
8. Remaining conscious as I am that the terms of the financial agreement should not be taken out of context, there are certain provisions I will highlight because they are significant pointers to the intentions of Vincent and Adrian, so far as the latter's intentions and motivations are relevant, in providing the $1,200,000 advance.
9. The financial agreement is Annexure D to Adrian's affidavit affirmed on 11 December 2015 (CB 98). It contains terms, dealing with the proposed division of property and assets in the event of the breakdown of their marriage. Clause 32 provides that each party shall retain their separate property (listed in Schedules 1 and 2 of the agreement) as their own property absolutely. An element of tracing is involved where the value of separate property is realised and used to secure another property; that separate property ownership is to be realised by way of a percentage return on the net sale price (cl 32.3).
10. "Adrian's separate property" includes: "5.1 the property, liabilities and financial resources in Schedule 1; 5.2. any property acquired by Adrian by way of an increment to the property and financial resources in Schedule 1 or in substitution for the property and financial resources in Schedule 1; 5.3 any property, moneys or jewellery gifted or advanced after the date of this Agreement to Adrian by his parents, including by way of cash payment or direct contribution to the purchase price of, or reduction of any loan outstanding in respect of, any property of the parties; 5.4 any property acquired by Adrian by way of an increment to the property and financial resources referred to in Clause 5.3 and 5.5 (eg: interest on, or dividends from, those assets), or substitution for the property and financial resources referred to in Clauses 5.3 and 5.5 (eg: using any savings inherited to purchase shares): 5.5 any property which is received or acquired by Adrian by way of inheritance(s), including but not limited to all personal effects and jewellery;"
11. Justine is also so defined at cl 6. From the schedules of the financial agreement as at the date of execution, Adrian's net assets totalled $757,000; Justine's assets totalled $500; and their joint net assets totalled $240,649. Principally, this is the East Sydney apartment and the schedule records their respective interest as 70 per cent and 30 per cent. At this time, Adrian's income from his professional work was said to be $50,000 per annum and Justine was said to be earning $32,000 per annum (clauses 16 and 17).
12. "Joint property" is defined as "all of the property, resources and interests of Adrian and/or Justine which are not Adrian's separate property and/or Justine's separate property, including as joint property the assets and liabilities described in Schedule 3" (cl 7). Clause 33.1 provides that "any joint property of the parties shall be divided equally" along with any attached liabilities.
13. It would appear that the property falls within the definition of clause 7 and that consequently, clause 33.1 is the relevant clause in the Agreement. However, clause 39 also bears upon this question: "39. It is within the contemplation of the parties that Adrian may, in the future, receive from his parents, Vincent and Sareeta Chaudhary, during their lifetime, or consequent upon their death, by way of gift and/or inheritance, substantial property… Adrian shall remain exclusively entitled during the marriage and in the event of its breakdown, to any property so gifted to him, and, to the full extent that they may constitute "property" and/or "financial resources" for the purposes of the Act."

The acquisition of the former matrimonial home

1. After their marriage and in the early part of 2004, Justine and Adrian started to look for a family home. I infer that their intention was to preserve their existing assets; the purchase was not to be financed by realising their equity or the equity of Adrian in any existing asset. Although Justine had a preference for living in the eastern suburbs, Adrian had a strong desire to reside in the inner west, close to his family home and practice. I accept the evidence of Adrian and Vincent that properties in Balmain were considered and Vincent inspected them with Justine and Adrian.
2. The property came to Justine and Adrian's attention in or around late October 2004, shortly before it was due to go to auction on 6 November 2004. As we are now entering the territory of hotly disputed fact, it is necessary for me to continue the narrative referring to the competing evidence of each of the parties and other witnesses.
3. Justine and Adrian first noticed the property one night when they were driving to Vincent and Sareeta's home for dinner. They both agreed that they were interested in the property and that they should go and inspect it. They subsequently inspected the property together the following Saturday, and discussed attending the auction scheduled for 6 November 2004 (Justine's affidavit sworn 14 October 2015, [10]-[15]; CB 76).
4. Vincent and Adrian say that following this inspection there was a discussion about the property on 3 November 2004 when Adrian and Justine attended the regular family dinner at the home of Vincent and Sareeta. Adrian and Justine told Vincent that they were very interested in the property. Adrian and Vincent say that all three inspected the property the following day when Vincent floated an option of purchasing the property with them and agreed to commence the process of applying for a loan on their behalf (Vincent's affidavit sworn 4 August 2015 at [14]-[15], CB 45; Adrian's affidavit sworn 11 December 2015 at [14], CB 65.) There were further discussions between Vincent and Adrian following this inspection and prior to the auction about the upcoming auction.
5. Justine denies attending any inspection of the property prior to the auction with Vincent, or any discussions with the Chaudhary family about financing it prior to the auction: Justine's affidavit sworn 14 October 2015: [15], [26]; CB 76-77. Justine claims that from the outset of her relationship with Adrian, the latter, Vincent, Sareeta and Ranika did not openly discuss financial matters in her presence. At the regular weekly family dinners she said that they always excluded her from discussions about financial matters (Justine's affidavit sworn 14 October 2015, [27]-[28]; CB 77). Specifically, she denies being part of a conversation about the property on 3 November, and denies attending an inspection with Vincent and Adrian. She gave evidence that from her first discussions with Adrian about the property, he was evasive about whether and how they could afford the property (Justine's affidavit sworn 14 October 2015, [13]; CB 76)
6. On her account, the day of the auction was the first time she visited the property with the Chaudhary family. That they were to attend was not known to her prior to the auction; and that even on that day, she was excluded her from any financial discussions: Justine's affidavit sworn 14 October 2015, at [16] - [18]; CB 76. She was surprised when Adrian registered and bid for the property. When it was knocked down, she did not know how the deposit was paid or how they could afford the rest: at [19] - [22]; CB 76-77. She asked Adrian about this, and he replied that Vincent was making a gift to them of $1,200,000. Adrian explained that his sister Ranika and her husband had similarly received a gift of a large sum of money upon their marriage, which they used to purchase a pub: at [25]; CB 77)
7. Vincent and Adrian join issue with Justine's account of the auction and the conversation that followed. They maintain that Justine was not excluded from financial discussions, including those about the proposed purchase of the property. They further dispute that the alleged discussion between Adrian and Justine after the auction about the money being a gift. Adrian denied saying that a similar gift had been given to Ranika on the occasion of her wedding. Both say that Vincent made no such gift.
8. Ranika corroborates Adrian and Vincent's account. She says that she and her partner did not receive money from Vincent on the occasion of their wedding to assist in purchasing a pub or property (Ranika's affidavit, sworn 30 April 2016 at [6]). It was her evidence that she had received financial assistance from her parents by way of a loan to purchase a property, the current debt standing at $720,000: at [12]. After the breakdown of her marriage, she purchased a property from her father valued at $1,100,000; she took out a loan from Westpac for $600,000, with the remainder of $500,000 a loan from her parents. She paid stamp duty on the value of the property being $1,100,000 (148.37-3T; 149.14T). This "loan" was not formalised by way of a loan agreement or mortgage (149.19T- 22T). There is no evidence that she had ever made any repayment.
9. On balance, I prefer the general thrust of the evidence of Vincent and Adrian, corroborated as it is, in substance, by Ranika. I interpolate that the fact that Ranika had not received a large parcel of money from her parents as a gift on her marriage does not mean that Adrian did not say that Vincent was making a gift of $1,200,000 for the purchase of the property. He probably did not say it was a gift for them. More likely he simply said that it was gift from Vincent. After all, the prospect of such a gift was real enough throughout the whole of their relationship given that it is expressly mentioned in both the cohabitation agreement and the financial agreement. Indeed, I infer that quarantining any such gift from the pool of assets available to be divided between Adrian and Justine on any breakdown of their relationship and subsequent marriage was a primary motivation for Adrian in propounding those agreements. As I have said, and I am well satisfied, Adrian had very firm views that this should not be allowed to occur.
10. The considerations I have mentioned in the immediately preceding paragraph do not mean that Adrian did not say something about a gift to Ranika by way of explanation in answering Justine's questions. Possibly Justine misunderstood what he said, misconstrued it, or has subconsciously reconstructed it through the prism of the breakdown of their marriage. Either way, what he may have said about Ranika is not of central importance.
11. I find it improbable that there would have been no discussion about the property at the regular family dinner either when Justine and Adrian first saw it or after they had inspected it. Even if Justine was excluded from discussions about Chaudhary family finances, which I consider likely, there is no reason to suppose that she would be excluded from specific discussions about the property and I find that she was not.
12. I accept her evidence that she did not inspect the property with Adrian and Vincent on 4 November 2004. She was then working in her own consultancy and Vincent and Adrian worked together at their accounting practice, which was not far from the property. They must have taken many opportunities to discuss family business and finances at the office with Ranika. It is easy to see them slipping away for another inspection on the Thursday before making any final decisions about whether to bid at the auction on Saturday. This probably happened.
13. I was quite impressed with Vincent. He impressed me as a reasonable, responsible and respectable accountant and family man. I have no doubt that he was very prepared to help his children financially or otherwise according to his ability. I am persuaded that when the property was discussed he did offer to help financially. Probably, initially he had not worked out the best way of providing the assistance he had in mind. I am persuaded that he had in mind a figure of up to $1,200,000 from the start, possibly even before Justine and Adrian had set their hearts on this particular property. He may even have floated the idea of buying it with them. He said a number of times in evidence that had Adrian and Justine been unable to raise finance he would have bought it himself, I infer, to provide it as their home. I have no doubt that given his contacts with the bank, he did say he would help Justine and Adrian raise a loan for the balance of the purchase price.
14. Whatever uncertainty Vincent had initially about how he would help, I am satisfied by the time of the auction, he had decided that it would be a gift. He had not thought out all of the ramifications of this decision. From a subsequent conversation with Adrian which I deal with below (39-40) he was well aware of the terms of the financial agreement about gifts inter vivos and was probably relying upon them when he decided to make it a gift. That is to say, it was a gift for Adrian and the terms of the financial agreement would keep the wealth in the Chaudhary family. That it was a gift is supported by the indisputable fact that when the property was knocked down, notwithstanding his provision of a cheque for the deposit in the sum of $153,000 the contract was made in the name of Adrian and Justine only as purchasers. There is nothing in the evidence that persuades me that there was any intention on Vincent's part to create a trust of any kind, as Mr Ashurst SC argues, whether a resulting trust, or the so called Quistclose trust, a particularly English departure from equitable orthodoxy: see Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 at [51] per Campbell JA with Meagher and Barrett JJA agreeing; Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 102 ALR 681; 30 FCR 491 at 500, 502 per Gummow J).

The application for finance-Vincent's statutory declaration and shifting intention

1. As he promised, Vincent sounded out his contacts at the bank about a loan for Justine and Adrian for the balance of funds necessary to complete the purchase over and above his intended gift of $1,200,000. It is, to some extent, important to bear in mind, as Mr Eardley of counsel who appeared for Justine argues, that as Justine and Adrian were not disposing of any other assets to acquire the property the effect of the argument that the funds from Vincent were a loan was that the proposal would have required that the bank approve a loan in circumstances where borrowers seeking a home loan were borrowing from various sources about 106% of the purchase price, a proposition unlikely to be palatable to a retail bank back in 2004 even assuming, as I accept, that Vincent was a valued customer: see Mr Fordham, 59.25T.
2. To some extent Vincent parried questions about that topic, preferring to say that if such a thing were a problem he would have bought the property himself: (27.25-40T; 22.20-23.10T). Obviously he was confident that if necessary the bank would lend him the money and the purchase would be completed. Nonetheless, it is significant that when he spoke to Mr Shane Gasperini, a contact and associate at the bank, he informed him that, that he would be providing $1,200,000 as a gift. Mr Gasperini said that the bank would need evidence to that effect in the form of a statutory declaration which, as I understand Vincent's evidence, Mr Gasperini drafted.
3. Vincent made the statutory declaration on 10 November 2004, only 4 days after the auction (Annexure E to Justine's affidavit; CB 124). It is in the following terms: " - I/We have made a gift of $1,200,000 (one million two hundred thousand dollars); To Adrian ….. & Justine ….. of (address omitted); These funds are to assist with the purchase of a property at (address omitted); I confirm the said gift is not repayable at any time." From Annexure "C" to Justine's affidavit (CB 126.20) it is clear that the statutory declaration was in the hands of the bank by 15 November 2004. I think it also important to record as another example of the Watson v Foxman phenomenon that there is no mention whatsoever of the statutory declaration in Vincent's first affidavit, and accordingly no mention of any formed intention then, or otherwise, to make a gift. He first mentions it in his second affidavit sworn on 10 December 2015 which responds to Justine's affidavit of 14 October 2015. In his second affidavit (at [13]; CB 55) he says that when he signed a statutory declaration he had intended to make a gift, but that he "did not tell Adrian or Justine about my decision" and Justine's evidence is that he never discussed with her that he intended to make a gift (130.10T).
4. It was his evidence that he had not decided on what basis he was going to provide the monies at the auction or when he signed the deposit cheque (32.35-38T). His plan was to delay making a decision about it until the time came to finalise the settlement; when he made the statutory declaration characterising the money as a gift was an accurate account of his present intentions: 44.10T; 46.35-47.35T.
5. Vincent said that he changed his mind about the gift following a conversation with friends, including Mr Gasperini, at lunch on Friday, 12 November 2004. This is two days after he had made the declaration at Mr Gasperini's request. This conversation received only a passing reference (at [18]; CB 46) of Vincent's first affidavit where Vincent relays a conversation he had with Adrian, in Justine's absence presumably, sometime on the weekend of 13 and 14 November 2004. He expanded on that oblique reference at [14] - [16] of the second affidavit (CB 55-56). His account is that he told his friends he was "going to help [Adrian and Justine] out by giving" the funds for the purchase of the property [Emphasis added.] He said one friend asked whether he had thought about what would happen to the money if the marriage broke down "and their assets … are divided between them". Another said "the money … should be secured in some way" in case the marriage breaks down. Until these things were said he had not contemplated that possibility.
6. Vincent says (in his first affidavit at [18]; CB 46 - 7) that in their conversation on the weekend of 13 or 14 November, Adrian raised the topic of "the mechanics of how you're advancing the money". It is surprising that they did not discuss it at work, but Adrian said he "had a busy week". Adrian raised the need for "a level of protection". His father asked if he was "worried about anything" and Adrian answered "no not really". But the latter explained that he and Justine "already have agreements in place for your assets in my name". Vincent did not express any surprise about this, but simply said "aren't those agreements enough". To which Adrian replied "who knows?" Vincent made passing reference to the discussion at lunch and said "perhaps the advance should be treated as a loan" (my emphasis). At [22] of his affidavit of 11 December 2015 (CB 57), Adrian says he has read Vincent's affidavit and recalls a conversation to that effect.

Other contemporaneous documents

1. Mr Eardley did not cross-examine either Vincent or Adrian directly to challenge their account of this conversation. However, he did seek to contradict it by cross-examining by reference to the loan application and other documents, which were inconsistent with it. The chronology of these documents is significant. It will be recalled that Vincent's statutory declaration was made on 10 November 2004. The loan application for the balance of funds necessary to complete the purchase was signed by Adrian and Justine on 10 November 2004; by their mortgage broker on 11 November 2004; and submitted to the bank on that latter day (Annexure C to Justine's affidavit; CB 131 - 139). The application (CB 136) stated, "$1,200,000 - (up to) gift from father - Stat Declaration enclosed". It also contained an endorsement by the broker "refer submission/memo enclosed" (CB 137). The memo from the mortgage broker (Annexure "D" Justine's affidavit; CB 140) detailed the following: "Background: Applicants are existing clients with investment property loans. They now wish to move from his parents' house where they live to their own home. To assist them in the purchase his father will be giving them up to $1.2 mil towards the purchase. We enclose a stat dec from him stating the funds are non- repayable gift."
2. From the Bank's internal documents relating to the application (Annexure C Justine's affidavit; CB 125 - 130) it is clear that the Bank considered the application on the basis that the sum of $1,200,000 was a gift. The bank officer assessing the application on 15 November 2004 made the following notation: "Contribution to come from family gift of $1.2 mil - non repayable with stat dec held." After the receipt of some additional information verifying the income of Adrian and Justine, an unconditional "approval" was faxed to the mortgage broker on 17 November 2004.
3. I will jump ahead to record here that the file was reviewed by another bank officer on 8 December 2004 in anticipation of settlement. That officer made the following record (CB 130): "Declaration acceptable. … note the declaration has been executed incorrectly - witness has not completed full name, address etc neither has declarant - please ensure this is completed before settlement." When one looks at the statutory declaration (CB 124) again in the light of this evidence one notices that Vincent's full name has been printed under what appears to be his signature, and the witness has also printed his name and his post-nominals "JP" together with his mobile telephone number. Considering the documents as a whole, I infer that these details were added in response to the second bank officer's request sometime after 8 December 2004 and prior to settlement which occurred at 2 pm on 13 December 2004 (CB 150). I am satisfied that by adding these endorsements and re-submitting the statutory declaration to the Bank at that time, Vincent was confirming his intention to provide his (and Sareeta's) funds as a gift.

Fixed not shifting intention

1. I fully accept that it is not unknown for bank customers to lie to the bank in loan applications. Regrettably it seems a common enough phenomenon, at least if some of the business of this Court is anything to go by. Indeed, Adrian was cross-examined as to credit to suggest that he may have mislead the bank when providing material relevant to a previous loan application in 2002 which I confess caused me to have some doubts about his sincerity as a witness. However, given his profession and given the favourable view I formed of Vincent, I conclude that the information provided to the bank for this loan by both of them at various times was a true statement of their intentions.
2. I accept there was a discussion between father and son, from which Justine was excluded, probably on the weekend of 12 and 13 November, about how best to protect the family fortune from the effect of any future breakdown in the marriage of Justine and Adrian, however unlikely that may have seemed at that time. These were men of financial prudence. Their discussion may have been prompted by the realistic views expressed by Vincent's companions at lunch on the Friday. I do not accept, however, that the conversation was precisely in the terms recounted by Vincent; not because he was being dishonest, but, as I have said more than once, it is in my view extremely unlikely that he would have such an accurate recall of the actual content of the conversation 11 years later, especially when his perception would have been affected by the occurrence of the contingency he had tried to safeguard against.
3. Adrian had already taken steps himself, as I have emphasised, to protect the Chaudhary family wealth, most recently by entering into the financial agreement. I repeat, I am satisfied that Vincent must have been aware of this given their closeness as father and son; as professional partners; and as co-investors through the family's investment companies. Prompted by the comments of Vincent's luncheon companions, they probably did consider whether the financial agreement was enough, and came up with the answer, "who knows?" Being as I have said, men of financial prudence, I think they probably hit upon a "belt and braces" solution where the financial agreement was the "belt" and a "mortgage" would be the "braces". This seems to me to accord best with the undisputed facts, the contemporaneous documents, and the apparent logic of events. After all, Vincent had every confidence in Adrian and no concern that he would throw the family's fortune away. The problem was his marriage or rather the risk of it irretrievably breaking down. This risk was obvious to Adrian. In cross-examination Vincent said he gave Mr Fordham instructions to prepare the mortgage documents to "protect my money" (40.35T). When pressed about this, it was obvious he was having some difficulty, understandably, recalling the precise conversation he had with his solicitor. He repeated that "mortgage documents should be drawn to protect my money" (40.15T).
4. Protecting money, is of course, the object of a mortgage. It protects a lender against the risk that the debtor will be unable, or unwilling, to repay. When pressed again, Vincent could not remember anything else he may have said (41.20T). I then asked the following questions (40.21- 28T): "Q. Protect your money from what? A. From ‑ protect‑‑ Q. What was the risk you needed protection against? A. In case there is a marriage break up or something of that nature my money is not taken into account for their benefit."
5. Although Vincent referred to "their benefit", I rather understood him in context to mean so the money is not taken into account as their "joint" property for division between them. In other words, his purpose was to keep the money in the Chaudhary family if there was a breakdown in the marriage.

Justine's understanding

1. Although Justine denies it (Justine's affidavit [35]; 129.50 - 131.10T), I think there must have been a conversation much like the one recounted at [19] of Vincent's affidavit when Justine was informed of what Vincent and Adrian had decided to do. Again, I think it improbable that it proceeded quite as set out. I accept she must have appreciated that there was going to be a mortgage but no indebtedness would be incurred by her. To the extent to which any weight can be placed upon the words attributed to the various participants in the conversation, and I am of the view that they carry some weight, Adrian identified a need for "a level of protection … if something happens between Justine and me, I want your money returned to you". And Vincent indicated that he was not "concerned about making a return on the money", as the majority of lenders are. His concern was "if anything happens between the two of you and the house has to be sold, I will call on the loan which can be paid back from the sale" [Emphasis added.] Again, this is consistent with Vincent being happy to give the money, provided it did not pass out of Chaudhary family control in the event of a divorce.
2. I appreciate Adrian is said to have said he wanted the money to go back to his father if there was a divorce. In the events which have occurred, his father has made no serious attempt to recoup the money nor has he made any attempt to repay it. Interest has never been demanded. On Vincent's account, Justine's main concern was that she did not incur any indebtedness which she could not herself repay. Again, this is probably about correct. By then Justine must have been used to, at least Adrian's, determination to keep Chaudhary wealth out of her hands. His attitude was "what belongs to me and my family, belongs to me and my family and not to you".

Mr Fordham instructed

1. It is uncontroversial that soon after the auction, probably on or about 8 November 2014, Adrian telephoned Mr Fordham to instruct him to act on the purchase. In the letter dated 19 November 2004 (Annexure E, Adrian's Affidavit 11 December 2015; CB 141), Mr Fordham wrote seeking instructions as to "how [Justine and Adrian] wished to hold the property". Interestingly he made reference to cl 32 of the Financial Agreement (see [16] - [17] above). Clearly his concern was with the separate property of Adrian and Justine remaining separate property "absolutely" and the other having "no right, claim, title or interest" in that separate property. It will be recalled that Adrian's separate property was defined as extending to "inheritances" and cl 39 contemplated the receipt of gifts inter vivos by Adrian from his parents. In such a case Adrian remained "exclusively entitled" to the proceeds of the gift.
2. Vincent spoke with Mr Fordham instructing him to prepare the mortgage documents sometime after his conversation with Adrian on 12 or 13 November 2004 when their agreed stratagem was struck. His instructions were confirmed in writing by letter dated 25 November 2004 (Annexure F to Affidavit of Vincent sworn 4 August 2015; CB 143) Its terms are instructive: "I wish to advise that I will be lending to Adrian and Justine $1,200,000.00 to assist in the purchase of [the property]. I will take out a second mortgage on the property and the funds will be at call with the interest rate set at the six month term deposit rate at Westpac bank. Should I pass away and I have not called upon any or all of the loan then it is my desire to discharge the mortgage and the monies will be considered a gift to form part of Adrian's inheritance from me. Please advise if these instructions are satisfactory. Call to discuss any issues you care to raise." It should be recorded there was never any call, and as I have said nor was any notice ever given that interest would be charged. The third paragraph is significant in expressing what I regard on the whole of the evidence as Vincent's actual intent. Vincent's letter was written on his accounting firm's letterhead. When one considers the terms of the mortgage (see [61]-[62] below), it is clear that there must have been a further conversation with Mr Fordham when somebody, either Vincent or Adrian, provided more detailed instructions on the precise terms of the proposed mortgage.
3. Adrian and Justine also wrote to Mr Fordham the same day on the accountant firm's letterhead, probably in response to Mr Fordham's earlier letter. The letter referred to the Westpac loan of $400,000 and identified the money to be provided by Vincent as a "loan". Importantly, Mr Fordham was instructed that the title of the property would be held as tenants in common, with Adrian having 87.5 per cent and Justine 12.5 per cent. These proportions were calculated by attributing the whole of the monies provided by Vincent to Adrian as though they were a contribution by him alone to the purchase price. The $400,000 to be provided by the Bank's loan was divided equally between them. The letter concluded saying, in part, "this is as per our agreement". Clearly this is a reference to the financial agreement. What was being done was in accordance with the agreement if one treated the money from Vincent as a gift to Adrian alone as contemplated by cl 39. This is an important circumstance.

Further findings about intent

1. Vincent's case is that by 25 November 2004, by reference to these letters, no relevant parties were under any apprehension that the sum was anything other than a loan. He denied in evidence then having an intention that the funds he was providing were "going to be a gift to Justine" (21.30T). He denied that he always intended that they were "going to be a gift" (21.40T). For the reasons I am giving, I accept that he never intended to make a gift to Justine, but I reject that he did not intend to make a gift at all. He always intended to make a gift to Adrian, but for Adrian's benefit alone.
2. I have already recorded that Justine denied being at a meeting with Vincent and Adrian where a mortgage was discussed. She also denied ever seeing Mr Fordham's letter of 19 November 2004, pointing out that it was addressed to Adrian's work post office box address. She denied reading the letter from her and Adrian to Mr Fordham on 25 November 2004 (Justine's Affidavit at [38]; CB 79). She points out that it too is on the practice's letterhead and says that she was regularly presented with documents by Adrian for her signature without the opportunity or encouragement to read them. This evidence is of some importance her case under the Contracts Review Act because she says that when she attended Mr Fordham's office to sign legal documents for the purchase she was presented with the mortgage to Vincent for the first time and as a fait accompli, causing her considerable distress. I detail this evidence below.
3. One may accept that Adrian often presented documents for Justine's signature with little, or only perfunctory, explanation and at the same time reject Justine's evidence about signing the letter of 25 November 2004. I have already found that she was party to a conversation when she was informed of Vincent and Adrian's stratagem to protect the gift Vincent was making to Adrian in the event of a breakdown in Adrian and Justine's marriage. Their approach was consistent with the terms of the financial agreement; and the terms of the mortgage were broadly consistent with the intent expressed in the agreement. The stratagem had been arrived at previously by Adrian and Vincent in Justine's absence. I accept that it was more or less presented to her as a fait accompli but at the meeting at Vincent and Sareeta's home before the letters of 25 November 2004 were drafted and signed, rather than in Mr Fordham's office. I accept that having satisfied herself from the assurances of Vincent and Adrian that she would not be incurring any additional liability not contemplated by the financial agreement, she was accepting of it. She was not of course told that the purpose of what I have called the stratagem was to quarantine the advance from any claim she may make in the event of the breakdown of her marriage to Adrian; nor that would she be subject to Vincent's exercise of a power of sale. All that was mentioned was what would happen if the house had to be sold in the event of a marriage breakdown: Vincent's first affidavit [19], CB 48.
4. On 1 December 2004, Vincent provided a cheque to the value of $69, 642 to cover the stamp duty on the purchase. On the same day, Vincent and Justine signed the Westpac mortgage, judging by the signature of the witnesses, probably at the mortgage brokers' office (Annexure H to Adrian's affidavit sworn 11 December 2015; CB 144-5).

The meeting at Mr Fordham's office

1. Vincent's mortgage bears the date 13 December 2004, which is the date of the settlement. However, Mr Fordham explained in his evidence, which I accept, that it was his practice to date mortgages which he witnessed for the day of settlement (62.10-20T). The meeting with his clients to sign the documents would usually occur some days prior to settlement. Adrian's evidence is that the mortgage was signed on 13 December 2004, but he was probably mistaken (119.50-120.25T). I prefer the evidence of Mr Fordham about his practice. Annexure I to Adrian's affidavit ([29]; CB 147) is a borrower's acknowledgment signed by Justine, witnessed by Mr Fordham and dated 7 December 2004. This was signed as one of the bank's requirements. There is no evidence that Adrian and Justine attended Mr Fordham's office more than once to sign documents for the purchase and I find that 7 December 2004 is probably the date on which they did so. I think it worth recording here that in answer to a question "Are you satisfied that you will receive a direct benefit from this loan?" Justine answered, "yes" and explained (the endorsement is probably in Mr Fordham's hand) "the purchase and loan are structured on legal advice and in accordance with a pre-nuptial agreement." [Emphasis added.] The loan is the bank loan.
2. Although I have rejected much of Justine's evidence about when she first learned about the proposed mortgage, it is necessary to set out her evidence about these matters in some detail. As I have found, she was not "ambushed" (my word) with the mortgage at Mr Fordham's office. Much of her recollection, it follows, cannot be logically or plausibly correct. I put this down also to the phenomenon described by McClelland CJ in Eq in Watson v Foxman.
3. Justine's evidence was that she was informed of the meeting the previous evening by Adrian and told she was needed at Mr Fordham's officer to sign some paperwork. She gave evidence that she did not ask any questions aside from when this was to occur. She explained this at [45] of her affidavit (CB 80): "I said "When?", He said "Tomorrow". I did not ask him any other questions I was in the habit of doing what he asked. In fact if I did ask him anything he would reply in such a way as to make me feel stupid. As I did not like being put down I had learnt not to ask too much. Adrian had handled the whole interaction with the solicitor up to this point." There is no reason to suppose that this is not correct.
4. Her evidence was that it was not until she was at Mr Fordham's office that she was informed that the $1,200,000.00 was a loan to be secured by way of a mortgage, that this was purpose of the meeting and her signature was required on the mortgage. On her account, she expressed great surprise and an unwillingness to sign the mortgage documents, but was forced and pressured by Adrian to the point of tears to sign the document. She did not read the document at that time. After signing the document, her evidence was that she immediately left the room, in tears (Justine's affidavit at [48]; CB 81). I do not accept that this is an accurate or reliable account.
5. This is a convenient point to interpolate the terms of the mortgage as drafted by Mr Fordham. The mortgage which much later became registered dealing number AI229855 bears date 13 December 2004 (Annexure L, Vincent's first affidavit; CB 151-2) and contains the following express covenants: "1. The mortgagor Adrian Bikram Chaudhary will pay to the Mortgagee the principle sum of One million two hundred thousand ($1, 200, 000.00) or so much thereof as shall remain unpaid, on demand. 2. Notwithstanding anything hereinafter contained the Mortgagor shall be entitled to discharge this mortgage at any time during the term of the Mortgage by the payment of a. Interest due to the next due date for payment; b. Payment of any outstanding amounts due under this mortgage; c. The principal sum then outstanding and the Mortgagee shall accept such sum in such time in full discharge of the Mortgagor's obligation under this security. 3. The Mortgagor will observe the provisions set forth in the Memorandum filed in the Registrar General's Office as Number Q860000 which provisions are deemed to be incorporated herein…. 5. The parties acknowledge that the co-borrower Justine Meredith Williams-Chaudhary shall have no personal liability under this security and her liability shall be limited to the right of the lender to exercise a power of sale in respect of the property secured under this mortgage." Only Adrian is described as the mortgagor, and Justine is described, curiously in the circumstances, as the co-borrower when in fact even on a literal reading she borrowed nothing.
6. The Memorandum, referred to in covenant 3 is Annexure M of Vincent's first affidavit (CB 84), inter alia, makes the following material provisions: "6. Upon default being made in payment at the respective times and in the manner shown in the mortgage of the principal sum or any part thereof, or of the interest thereon or any part thereof, or upon default being made in the observance or performance of any of the covenants contained herein or in the mortgage or implied therein by the Real Property Act, 1900, or the Conveyancing Act, 1919, the mortgage shall… be at liberty to exercise all or any of the powers of a mortgage under the said Acts immediately upon or at any time after default as hereinbefore mentioned, subject however to compliance with any requirements of the said Acts in respect of the exercise of such powers. If at any time default shall be made in the due payment of the interest on any of the days when the same respectively shall become payable or within the time thereafter mentioned in the schedule to the mortgage, or, if the power of sale given to the mortgagee under either of the said Acts shall become exercisable, then the principal sum shall immediately become due and the mortgagor will thereafter pay the same on demand…. 11. All powers, rights and remedies implied in favour of or conferred upon mortgagees by the Conveyancing Act, 1919, or the Real Property Act, 1900, shall be in enlargement and not in curtailment of the powers, rights and remedies conferred by these presents,"
7. Justine's evidence was strongly contested by Adrian who provided a different account of the signing of the mortgage document. On his evidence, some time prior to the signing of the mortgage in Mr Fordham's office, he had a conversation with Justine about the nature of the mortgage, specifically that they would need to go to Mr Fordham's office to sign it; and that he alone would be liable to pay back the money if anything was to happen to their relationship. He says he reminded Justine of what Vincent had said about the effect of the mortgage (Affidavit of Adrian sworn 11 December 2015 at [25]; CB 68). His evidence about the meeting in Mr Fordham's office was that there was a conversation among the three of them where Mr Fordham explained the effect of the mortgage, specifically that Justine would not be liable to repay the loan, and rather that her liability was limited to Vincent's power of sale of the property if the loan is not paid or the repayments not met in accordance with the mortgage. He further recommended that each of them obtain independent financial advice, which both of them declined needing (at [26]). He denied Justine's account, particularly in respect of the pressure she said had been placed upon her, her emotional distress and position of vulnerability in terms of her understanding of what was occurring (at [55] and [57]; CB 72).
8. Mr Fordham gave evidence by affidavit sworn on 9 December 2015 and was cross-examined on its contents. At the time he swore his affidavit he was aged 74 and "reduced" to part-time work as a consultant. He had been practising law since 1964, that is, for over 50 years. I must say I was greatly impressed with him. From the content of his legal work in evidence and from his bearing and demeanour in the witness box, he struck me as the very model of a conscientious and intelligent suburban solicitor.
9. Understandably Mr Fordham does not have a specific memory of every detail of the meeting and did not make a file note, as it was not his practice to make such a note after every meeting, only where "controversy or significant matter" arose. But he explained his usual practice as follows: "…based on my usual practice I believe that I would have explained the terms of the Mortgage to Justine at that meeting. It is not and has never been my usual practice to have a client sign a document without explaining the effect of the document to them. I have no recollection of Adrian exhibiting any menacing body language at that meeting. If, at that meeting, Justine cried or Adrian exhibited menacing body language, I believe that I would have recalled those events as they would have been unusual events to take place during a meeting with clients of mine and I believe I would have made a file note…in accordance with my usual practice of making file notes when a significant or controversial matter occurs. Moreover, if Justine acted in the way she describes, I would have reported it to Vincent and not allowed her to sign the Mortgage." (affidavit of John Stanley Fordham affirmed 9 December 2015, at [7]; CB 60).
10. Mr Fordham had no memory of advising Justine to seek independent financial advice, and acknowledged the possibility that he did not give such a recommendation, due her limited scope of liability under the mortgage he didnot think it necessary: at [9]; 54.40-55.5T, CB 61. He did not think it necessary that either obtain independent legal advice (54.20-35T).
11. Mr Fordham had not seen the statutory declaration of 10 November 2004 until it was shown to him in cross-examination (56.5T). He did not have a recollection of Vincent telling him that he intended to make a gift, explaining it was "so long ago" (56.10T). Mr Fordham was sure he had not received instructions that Vincent intended to make a gift. He said, "otherwise I wouldn't have done the mortgage" (60.20T).
12. I am inclined to accept Justine's account that Adrian only mentioned the appointment with Mr Fordham the night before in preference to Adrian's account that he had discussed it sometime previously and had gone over the conversation with Vincent yet again. I am rather inclined to think that Justine's account of Adrian expecting her to go along with him in matters financial was probably correct. At the same time, I do not accept, as I have said more than once, that she was "ambushed" with the mortgage or that she became distressed and visibly so, that she was pressured by Adrian to sign, or that she had to withdraw to the waiting room. I have reached these conclusions not so much on the basis of Adrian's evidence, which I think is probably correct in this regard, but because of Mr Fordham's evidence. I am well satisfied that a solicitor of his experience and integrity would not have allowed any client in the state Justine says she was in to sign an important legal document. Had such a thing occurred, I am persuaded that Mr Fordham would have refused to let her sign and would have made a detailed file note of such an unusual occurrence. Moreover, as I have said the borrower's acknowledgment was probably signed by Justine on the same day. It reflected what I find to be the understanding of Mr Fordham on the one hand, and Adrian and Justine on the other, that the financial arrangements for the purchase were structured so as to reflect the pre-nuptial agreement including that funds provided by Vincent (and Sareeta) would be for the benefit of Adrian and not Justine; each of them understood this.
13. It is not surprising in an intergenerational re-arrangement of family wealth that one solicitor would act for all members of the family, unless some particular circumstance alerted the solicitor to an actual conflict of interest. Here, there is a subtle matter which I think may have been overlooked. This relates to the circumstance that, notwithstanding that Justine was not to benefit from the funds provided by Vincent, she promised, in effect, that she would be bound by Adrian's default in respect of the exercise of Vincent's power of sale. This was a significant infringement of her right to possession as a tenant in common.

Settlement

1. The settlement of the Property was finalised on 13 December 2004 with cheques from the bank totalling $400,000.00 and $977,714.42 in bank cheques provided by Vincent drawn on his funds. Adrian and Justine became registered proprietors as tenants-in-common; Adrian as to a 875/1000th share; and Justine a 125/1000th share (Annexure I to Vincent's first affidavit; CB 147). The Westpac mortgage was registered on 20 December 2004. Vincent's was not. While the evidence of Vincent and Adrian was that from mid-November 2004 the $1,200,000.00 was always considered to be a loan secured by a mortgage, it was not until 2013, after the breakdown of the marriage that the mortgage registered.

Delay in the registration of Vincent's Mortgage

1. As late as 13 April 2005 there was a discussion between Mr Fordham and Adrian Chaudhary about Vincent's mortgage. Adrian very belatedly then provided a cheque for the stamp duty and registration (Annexures G, H and I Justine's affidavit; CB 157-160). There was a fine due to the Office of State Revenue which Mr Fordham paid. Adrian reimbursed him on 15 April. On the same day he, not Vincent, instructed Mr Fordham not to lodge the mortgage documents for registration but to leave them on file, until a decision was made within the next 3 or 4 months to either: "(a) Send it off to the [bank] for consent and registration (b) or alternatively lodge a caveat to protect his father's interest." (Annexure J, Justine's affidavit; CB 161)
2. Having heard nothing for a further 2 years, Mr Fordham wrote to Adrian on 27 April 2007 asking him to arrange for Vincent to contact him "so that [he could] finish the file" (Annexure J toJustine's affidavit, CB 162). Mr Fordham said in evidence that he had never been told the advance was gift and he was concerned "that there was a million dollars handed out with no real security" (60.20T; 58.30T). He also thought it possible that Vincent "was of the understanding that…when you give money to your children you may never see it again" (60.15T).
3. Adrian obviously passed the message on to Vincent because the latter attended Mr Fordham's office to discuss the matter on 8 May 2007. Vincent obviously instructed his solicitor to take no action. Mr Fordham confirmed the content of their discussion by letter to Vincent dated 11 May 2007 as follows (Annexure L to Justine's affidavit, CB 163): "The present position is: 1. The mortgage in the form I provided has been completed and has been stamped. 2. The mortgage has not been lodged for registration, nor has a caveat been entered on the title to protect your position" As discussed you need to consider whether you wish to protect your substantial advance of $1.2 m by lodging a caveat or registering the mortgage, but either action will, of course, potentially put the current lenders to Adrian and Justine on notice of this borrowing and may cause them certain financial difficulties. I have had the benefit of perusing the pre-nuptial agreement and that document provides for an equal division of the assets acquired by the parties after June 2000 but prior assets remained in the names of the parties and family inheritances remain with the party who received it. This property is, of course, jointly owned and on the decease of either party the other will be the absolute recipient of the property, subject to its liabilities. Unless I hear from you with other directions I will take the view that you will take the risk of leaving the mortgage unregistered, notwithstanding the substantial loan that you have made."
4. Mr Fordham was mistaken in his recollection that the property was owned as joint tenants, as Adrian pointed out in an email dated 15 May 2007. Adrian was well aware of the legal ramifications of a tenancy-in-common. Adrian's email is set out below (Annexure L to Justine's affidavit, CB 163): "John From memory my title to my home is 87.5% me and 12.5 % my wife. Does that not mean that my will dictates where my portion goes and that is an extra layer of protection to Dad's mortgage OR is it a joint asset of mine and my wife and the mortgage is the protection for Dads money only and not the asset."
5. By letter dated 21 May 2007 from Mr Fordham addressed to Vincent, Mr Fordham responded to Adrian's inquiry (Annexure L): "I refer to my letter to you of 11 May, 2007 and note that I have an error in paragraph 5. The house property is owned as to 87.5% for Adrian and 12.5% for Justine which is a tenancy in common and the property will be transmitted in accordance with their Wills and/or of course, if it should ever happen, Family Law Orders."
6. I find these subsequent communications among Vincent, Adrian and Mr Fordham are evidence relevant to the state of mind of each of Vincent and Adrian and therefore probative of the question whether Vincent intended to make a gift. Their relevance operates at a number of levels. First, the views of Adrian and Vincent are interchangeable indicating they were of one mind about the purpose of the transaction. Secondly, they re-inforce the view I had formed from other evidence referred to above that their concern, and therefore Vincent's concern, was about quarantining the gift from claims by Justine under the Family Law Act in the event of a marriage breakdown. This is most clearly seen in: (a) Vincent, a successful man of business, not taking legal advice to secure his "loan" in a conventional way; and (b) the interesting distinction Adrian draws between "protecting [Vincent's] money only and [protecting] the asset." The asset being the property that had been acquired as contemplated by the financial agreement rather than the principal sum advanced by Vincent as a "loan" and in respect of which no interest was then payable or ever claimed. Thirdly, Mr Fordham, like a good and conscientious solicitor, was concerned to see what he had been instructed was a loan effectively secured in some conventional way. Had he been told it was a gift I infer that he would not have been so troubled by Vincent's apparent laissez faire attitude. Fourthly, Vincent's attitude is made explicable by the consideration that the mortgage was for protection against the risk of marriage breakdown not the conventional risk faced by a lender of financial failure. Vincent was happy to take that latter risk which he probably considered very remote. It simply was not relevant to the stratagem that he and Adrian had come up with. Finally for what it may be worth by his reference to "Family Law Orders" I infer that Mr Fordham had his doubts about whether the various arrangements would be effective in the event of the breakdown of the marriage.

Breakdown of the marriage and the demand for repayment

1. On 9 July 2013 Adrian commenced proceedings in the Federal Circuit Court in respect of the Property and custody of his and Justine's two children, which was subsequently transferred to the Family Court.
2. It was only 5 months Later that year, and after Vincent became aware that the marriage of Adrian and Justine "was ending" that he gave instructions for the registration of the mortgage, which occurred on 11 December 2013 ( [20] and Annexure D Vincent's affidavit sworn 4 August 2015).
3. A demand for the immediate repayment of the $ 1,200,000.00 was issued on 3 January 2014 to Adrian Chaudhary (Annexure N Vincent's affidavit sworn 4 August 2015; CB 169). There is no evidence that Adrian made any attempt whatsoever either to re-pay the money or come to an accommodation with his father. There is no evidence that Vincent sought to recover the "debt" except by way of these proceedings for possession; it is not as though Adrian is a man of straw.
4. A mere five days later, on 8 January 2014 notice pursuant to s 57(2)(b) of the Real Property Act was issued to both Adrian and Justine by Vincent in the following terms: "WHEREAS: A. On 13 December 2004 you mortgage certain property particulars of which are set out in the Schedule below ("the Property") to Vincent Jeet Chaudhary ("Vincent Chaudhary") by mortgage registered no. AI229855 ("the Mortgage"). B. Pursuant to the Mortgage, Adrian Bikram Chaudhary ("Adrian Chaudhary") agreed to pay to Vincent Chaudhary on demand the principal sum of $ 1, 200,000.00 ("Principal Sum") or so much thereof as shall remain unpaid. C. A default occurred under the Mortgage when Adrian Chaudhary failed to pay the Principal Sum when demanded by Vincent Chaudhary pursuant to a demand dated 3 January 2014 ("Default"). AND WHEREAS SUCH DEFAULT CONTINUES TAKE NOTICE THAT: 1. Vincent Chaudhary hereby demands that the Default be [sic] remedied by payment of the Principal Sum. 2. Unless you comply with the requirements of this notice within one (1) month after service of this notice upon you Vincent Chaudhary proposes to exercise his power of sale over the Property. 3. By issuing this notice, Vincent Chaudhary does not: (a) waive any other rights he may have under the Mortgage or otherwise; or (b) restrict his ability to fake any other enforcement action under the Mortgage before the expiry of this notice. 4. This is a notice pursuant to Section 57(2)(b) of the Real Property Act 1900. SCHEDULE The land contained in Certificate of Title Auto Consol 8634-124 also known as 10 Park Avenue Drummoyne in the State of new South Wales together with all improvements erected on that land. DATED 8 January 2014" (Annexure O to the affidavit of Vincent Jeet Chaudhary sworn 4 August 2015). It is significant that, notwithstanding the express terms of the mortgage and the assurances Vincent and Adrian said they gave Justine about her position, in its terms, the notice calls upon Justine to remedy Adrian's default. No notice was purportedly given to Justine under s 57 Real Property Act requiring her compliance with her "covenant" in respect of Vincent's "power of sale".
5. Adrian and Justine were divorced on 17 July 2014, with the order taking effect 18 August 2014.
6. Presumably the bank consented to the registration of the second mortgage and produced the certificate of title for that purpose. Adrian also referred to the advance as a loan in a statement of financial position provided after the divorce (Exhibit A). Interestingly he estimated that he owed $750,000.00 in interest although there is no evidence Vincent ever gave notice that interest would be charge in accordance with the terms of the mortgage.

Finding about Vincent's intention

1. For the reasons fully rehearsed above, when Vincent advanced the $1,200,000 he intended to make a gift to Adrian, and when he received the benefit of the advance, Adrian intended to accept it as a gift. I will not attempt to summarise my reasons expressed above for reaching this conclusion, but salient factors include: Adrian's contemplation from the beginning of his relationship with Justine that he was likely to receive a substantial gift or transfer of wealth from his parents during his lifetime, finding expression in both the cohabitation agreement and financial agreement; Vincent's ready offer to help to purchase a home in a fixed amount he clearly already had in mind; following on from the previous point, adopting the form of the mortgage was an afterthought rather than an integral part of the decision to advance funds to help with the purchase; the clear statements of both Vincent and Adrian, both members of the profession of chartered accounting, to the bank that the advance was a gift; the consideration that these statements were made by or on behalf of both of them, more than once during the currency of the conveyancing transaction; the consideration that their principle concern was to protect that portion of the family wealth invested in the property from a claim by Justine in the event of a marriage breakdown; my finding that the sole purpose of the mortgage arrangement was to provide an extra level of protection over and above that that may have been provided by the financial agreement; the fact that Vincent was content that the advance should be treated as part of Adrian's inheritance should the former die prematurely; the consideration that he was content not to take legal advice to register the mortgage or protect it with a caveat until after the marriage broke down and he was convinced it "was ending"; Adrian's concern that the total arrangement be "structured" in accordance with the financial agreement supported by the mortgage to protect the asset and not just the money; and the consideration that they decided to treat the advance as a mortgage. This last matter strongly suggests that they decided to deal with the advance as a loan only as a matter of form, not substance, to give effect to their stated purpose of obtaining extra protection against the risk of dissipation of the family wealth in a divorce settlement.
2. I accept that not one of these factors on its own would be decisive or conclusive evidence of intention. Each of them could doubtless be explained in a way consistent with the transaction being a loan supported by a mortgage in form as well as substance. However, taking them all together, I am convinced that the finding I have made is the correct one.

The claim for possession

1. Given this finding, much of the legal argument advanced on behalf of the plaintiff falls away. I was taken in detail through the learned judgment of Dodds-Streeton J in Nolan v Nolan (2003) 10 VR 627; [2003] VSC 121 dealing with the essential elements for a valid gift at common law (eg 647[131]). That case deals with a gift of choses in possession, three valuable works of art. With respect, I am not so sure that her Honour's analysis is entirely apt to the circumstances of this case where what was given was a gift of a large sum of money by way of a number of cheques to finance different aspects of the purchase of real property. It is artificial to treat the cheques themselves as choses in possession. What was given were the funds against which the cheques were drawn. On settlement the cheques provided by Vincent where bank cheques, in conformity with the invariable conveyancing practice. But it is not necessary to analyse these matters further as I have found that Vincent had the relevant donative intention; Adrian had the intention of accepting the gift, at least so long as it could be protected from his wife; and there was constructive delivery in as much as handing the cheques over to third parties enabled Adrian to acquire an 875/1000 share of the property upon registration of the transfer. And further, he took possession of the property as he was entitled to do. He could not have done so without the funds advanced by his father. The advance had the character of a gift. Accordingly, there is no debt due from either Adrian or Justine for which the property was intended to be security.
2. Even though the advance was a gift and not a loan, upon registration of Vincent's mortgage by force of law he acquired the interest, or statutory charge, described in the mortgage: ss 41 and 42 Real Property Act. As it was put in Provident Capital Ltd v Printy [2008] NSWCA 180 at [30]: "…upon registration [of the mortgage] the land becomes charged as security for the debt secured by the mortgage, regardless of any form of invalidity which may afflict the mortgage under the general law. Accordingly, the fact that no debt exists to be secured by the mortgage, because the covenant is ineffective under the general law, is a factor which must be put to one side. The mortgagee has a statutory right, as against the land, to recover the debt if not paid in accordance with the requirements of the mortgage."
3. On the other hand, in Perpetual Trustees Victoria Ltd v English [2010] NSWCA; 14 BPR 27,339 at [68], it was held: "…if as a matter of construction, the mortgage does not take effect as a security over the land in relation to a claimed debt or obligation, registration of the mortgage will not entitle the mortgagee to exercise remedies, such as the power of sale, to enforce any such claimed debt or obligation"
4. As in this case I have found there was no loan to Adrian, "he could not be in default by not repaying the loan and, therefore, [Vincent] was not entitled to possession": Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745; 12 BPR 22, 281 at [23] - [24]. This is because Vincent's title to bring proceedings for possession depends upon s 60 Real Property Act 1900 which requires proof of default, in this case failure to re-payment principal sum. He seeks to prove relevant default by reference to s 57(2) Real Property Act, and in particular by proof of non-compliance with a notice under s 57(2)(b). But if there has been no loan, there can be no default and the s 57(2) power is improperly invoked: Provident Capital v Printy at [48]; see also Perpetual Trustees Victoria Ltd v English at [90]. Vincent is not entitled to possession against Justine.
5. In arriving at these conclusions I have borne in mind the primacy of the principle that when a person signs a document, knowing it to be a legal document, affecting an interest in property, she or he is bound by the act of signing; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [47]. I have sought to construe the mortgage document, however, in the context in which it was made, by reference to the surrounding circumstances known to all parties, and having regard to its purpose to conclude that the expression "the principle sum" in Annexure A to the mortgage is not to be construed as creating a debt (CB 152).
6. I have also borne in mind that Adrian has not filed a defence and is therefore taken to have admitted all the facts necessary to entitle Vincent to possession. Moreover, by his counsel, Mr B L Jones, he consents to the relief sought by Vincent. Given their commonality, indeed, on my findings, identity, of interest in the proceedings and in effect their common cause against Justine, I am justified on the findings I have made in not giving effect to those circumstances which may in a different case be decisive.

Justine's claim under the Contracts Review Act

1. Lest I am wrong in my decision on Vincent's claim for possession it is necessary to consider Justine's cross-claim. If she is bound by the terms of the mortgage, as a mortgage, she seeks to have it set aside either under the Contracts Review Act 1980 (NSW) or according to the principles of equity.
2. The starting point is s 7 Contracts Review Act which empowers the Court to grant specified relief "where the Court finds a contract or a provision in the contract to have been unjust in the circumstances relating to the contract at the time it was made". The powers conferred by s 7 may only be exercised "if the Court considers it just to do so and for the purpose of avoiding as far as practicable an unjust consequence or result." Section 8 confers power to grant ancillary relief where a decision or order of the type specified in s 7 is made. Ancillary relief extends to "the payment of money (whether or not by way of compensation) to a party to the contract".
3. Section 9 of the Act sets out the matters to be considered by the Court. First amongst these is the public interest. The Court is to have regard "to all the circumstances of the case, including such consequences or results as those arising in the event of" compliance with the contract or non compliance with the contract. Section 9(2) sets out mandatory considerations that must be taken into account "to the extent that they are relevant to the circumstances".
4. It is well established that the application of the principal provision, s 7, "involves a two stage inquiry: first, was the contract unjust; secondly what if any orders should be made": Perpetual Trustee Co Limited v Khoshaba [2006] NSWCA 41 at [34] per Spigelman CJ (Handley and Basten JJA agreeing). The first step is a finding of fact "albeit one involving a broadly based value judgment" Khoshaba at [39]. The second question involves an exercise of discretion. Section 9(5) is instructive: "In determining whether it is just to grant relief in respect of contract or provision of a contract which is found to be unjust, 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."
5. Little guidance is likely to be provided by previous decisions. As Spigelman CJ said in Khoshaba at [73]: Where the Court has to apply a standard as general as what is "unjust", it cannot be confined by such reasons as if they were rules. Naturally the "value judgment" called for involves community standards. Another way of putting this is that the value judgment involved in the first question requires the application of a normative standard by reference to the evident purpose of the Act.
6. Where a value judgment is called for, it should not be taken to be "at large". The normative standards or considerations involved "must be derived from legal principle". In a statutory regime like the present "the primary task of the Court is to apply the legislative norms to be found" in the legislation: Travel Compensation Fund v Tambree (t/as R Tambree & Associates (2004) 224 CLR 627; ) [2005] HCA 69 at [29]
7. To put it another way, the normative standards are to be ascertained "by reference to the statutory subject, scope and purpose" of the relevant legislation: Allianz Australia Insurance Limited v GSF Australia Pty Ltd (2005) 221 CLR 568 at 597 [99]; Tambree at 644 [49] per Gummow and Hayne JJ.
8. Section 4 of the Act contains the following definition: "Unjust includes unconscionable, harsh or oppressive, and injustice shall be construed in a corresponding manner." The definition is accordingly inclusive rather than exhaustive. The judgment of McHugh J in West v AGC (Advances) Limited (1986) 5 NSWLR 610 at 620 - 1 remains influential notwithstanding, perhaps, changing social and commercial conditions over the best part of 3 decades since it was decided. In part his Honour said: "…..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." This statement is relevant in the present case. It is unnecessary to consider any distinction between "substantive injustice" and "procedural injustice". Obviously, the same contract may be seen to be unjust on a consideration of both elements.

The Contract was Unjust

1. The relevant contract is the arrangement made later in November 2004 between Vincent and Adrian on the one hand, and Justine on the other after the discussion between Vincent and Adrian in her absence on 13 or 14 November 2004. The substance of the contract was the agreement that Vincent's gift to Adrian would be protected by a mortgage to which Justine would be a party, and the mortgage itself.
2. I bear firmly in mind that the question is whether the contract was unjust in the circumstances relating to the contract at the time it was made. In deciding that question I have regard to the provisions of s 9 and, in particular, the public interest. I also bear in mind that I am entitled to 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. Not all of the matters referred to in s 9(2) are relevant to the circumstances of this case. I have concluded that the contract was unjust essentially for the reason that it required Justine to forego her right to possession of the property as a tenant in common if Vincent and Adrian chose to trigger the legal requirements for the exercise of a power of sale in the event of a breakdown in her marriage to Adrian. In those circumstances, even assuming the advance was a loan to Adrian only, requiring Justine to give up valuable proprietary rights was not reasonably necessary for the protection of the legitimate interests of either Vincent or Adrian. In fact, that provision was completely unreasonable because its purpose was to dispossess Justine in the event of a breakdown in the marriage at a time, given her comparative economic disadvantage, when she was likely to be most vulnerable because of her status as a homemaker and a mother.
4. Moreover, that this was the consequence of her agreement to what was proposed by Vincent and Adrian was not explained to her by them. Indeed, they told her that the purpose of the arrangement was to repay Vincent "if the property had to be sold" as a consequence of the divorce. As subsequent events showed that contingency has not yet been, and may never be, fulfilled. Rather, Vincent and Adrian have elected to attempt to dispossess her to preserve the asset, or the present value of Adrian's interest in it, for their benefit which is in the circumstances inimical to hers. I stress that this was the purpose from the outset.
5. Nor, with respect to Mr Fordham, was she given independent legal advice about this particular effect of the terms of the mortgage which she signed. And it follows from what I have said that the legal and practical effect of the provisions of the contract were not accurately explained to Justine by either Vincent or Adrian who were well aware of them given that this was their own solution to their dilemma about how to advance money to Adrian and at the same time protect the interest and property it generated from Justine. They well knew what they were doing but they did not disclose it to her.
6. I also accept that in financial matters Justine was subordinate to Adrian at the time the contract was made. Although she probably satisfied herself that she would not be personally liable to repay Vincent she did not fully appreciate all of the ramifications of what was proposed. To that extent, there was material inequality in bargaining power between the parties to the contract. In the domestic setting in which the contract was made she deferred to her husband, an affluent chartered accountant and, probably to a much lesser extent, her then father-in-law. For the same reasons the actual provisions of the mortgage were not the subject of any negotiation, nor was it feasible for her to negotiate any alteration of the terms. It is unrealistic in the circumstances to suppose that she could have rejected the provisions, given that their practical effect was not made clear to her.
7. It is said that the contract was not unjust because without it Justine would not have had the opportunity to live, and advantage of living, in the beautiful home which she desired. And there may be some advantage in that. But in my judgment that advantage is very greatly outweighed by what she gave up, that is, the right to possession appurtenant to her interest in the property. In effect, she was a tenant at will as Vincent and Adrian could trigger her dispossession by the mere issue of demands and notices which Vincent had no expectation would be paid and Adrian had no apparent intention of honouring. Just as importantly, she was not given the choice.
8. I appreciate that Justine's case was that the contract was unjust because she had been told that the advance was a gift to both her and Adrian. I have rejected that argument. Nonetheless, and even assuming a loan to Adrian, and in that event, I am satisfied from her standpoint the contract would have been unjust.
9. There is an alternative basis on which the mortgage itself was unjust in the circumstances at the time it was made. In the circumstances as I have found them actually to be, there was no debt to be secured by a mortgage. There was a gift to Adrian. In those particular circumstances, it was entirely unjust that she was required to sign the mortgage and to empower Vincent and Adrian to attempt to deprive her of her right to possession by the purported exercise of a statutory power of sale.
10. In the circumstances as I have found them to be, it is appropriate to make an order terminating the effect of the mortgage under s 7(1)(d) of the Act and an order under s 8 and schedule 1 for its discharge.

Equitable relief

1. I am not satisfied that Justine has made out a claim for equitable relief in accordance with the principles discussed in Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447 at 474 - 5. It follows from what I have found that I am satisfied that the contract is relevantly unfair. Certainly, I am convinced that the consideration moving from Vincent and Adrian to procure Justine's agreement to the terms of the mortgage was completely inadequate. However, I am not satisfied that the disadvantages Justine laboured under, as I have previously discussed, constituted a "special disability". Nor am I satisfied that, despite the unreasonableness of the arrangements, Vincent and Adrian made unconscientious use of their superior position in the sense of deliberately taking advantage of Justine. Justine was at a disadvantage, but not a serious disadvantage in the sense discussed in the authorities.
2. I am not satisfied that Justine has demonstrated the requirements for a proprietary estoppel. Such a claim fails at the very outset. On my findings there was never any representation of the prospect of a benefit for her by way of acquisition of an interest in the property beyond that referable to her actual financial contribution and certainly not from Vincent. Nor has it been shown that she materially changed her position in reliance upon such a representation.

Vincent's Alternative claim under s 66G Conveyancing Act 1919

1. Vincent, in the alternative, claims an order appointing trustees for sale under s 66G Conveyancing Act 1919 (NSW). He argues that he is an "incumbrancer" of the interest of the first defendant, who is a tenant in common entitled to possession and is accordingly a co-owner within the meaning of s 66F and entitled to make application under s 66G. The factual basis upon which this alternative claim is advanced is the premise that the mortgage secures a debt only against Adrian's share in the property. On the findings I have made, the mortgage secures no debt. Vincent advanced the funds by way of a gift. In the circumstances, Vincent is not an incumbrancer. Had there been a debt owed by Adrian to him, Vincent seems to more obviously have been an incumbrancee as defined by s 7 of the Act, being a person entitled to require payment under an incumbrance.
2. I appreciate that an order was made under s 66G in Perpetual Trustees v English. The Court of Appeal provisionally accepted, largely on the basis of admissions in the pleading inconsistent with the construction of the mortgage arrived at by the Court, that a "mortgagee" may, on an appropriate amendment to its pleadings, be entitled to the appointment of trustees for sale. The matter was not finally determined because the other co-owner was entitled to an opportunity to consider whether she objected to the appointment of trustees. The relevant co-owner of whose interest the mortgagee was said to be an incumbrancer was a person who had forged mortgage documentation which was ineffective to secure the claimed debt. This is a vastly different situation.
3. Absent authority, I would have difficulty coming to the conclusion, when one has regard to the definitions of incumbrance and incumbrancee in s 7 of the Conveyancing Act that "incumbrancer" in s 66F meant "mortgagee". However, this was the argument rejected by Bryson J (as his Honour then was) in Australia and New Zealand Banking Group v Scott [1993] 6 BPR 13, 217. Incumbrancer is not itself a defined term. Bryson J concluded "incumbrancer" refers to the person having the benefit of a mortgage or charge. Hodgson J (as his Honour then was) came to the same conclusion in National Commercial Banking Corporation Australia Ltd v Hedley (1984) 3 BPR 9477. Had there been a loan to Adrian, I accept, therefore, that Vincent would have been an incumbrancer within the meaning of s 66F.
4. Williams v Legg (1993) 29 NSWLR 687 establishes the Court has a discretion, albeit a very limited one, to refuse to make an order under s 66G. The Court (Handley, Sheller and Cripps JJA) said at 693: "For present purposes in describing the ambit of the discretion it is sufficient to say that it enables the court to refuse an order for sale where the order would be inconsistent with some proprietary right, or some contractual or fiduciary obligation."
5. Assuming a loan in favour of Adrian rendering Vincent an incumbrancer, the only matter which might activate a discretion to refuse an order is the consideration that the question of the property rights, inter se, of Adrian and Justine is currently before the Family Court of Australia, which court has a broad jurisdiction and ample power to reassign the property rights of parties to a marriage. Delay until those proceedings were finalised would not be necessarily detrimental to Vincent's interests: given the period of 12 years that has elapsed since the "loan" was advanced anyway, for most of which Vincent took no step to protect his interest, or seek repayment; the great inflation of Sydney property values in that period of time including in the inner west; and the consideration that Vincent has chosen never to charge interest on this "loan". These factors lead me to conclude that it would be proper to refuse an order for the appointment of trustees for sale now and until the proceedings in the Family Court are finalised. I am of the view that there would be no particular prejudice to Vincent in awaiting the outcome of those proceedings, in the particular circumstances of this case, before recovery of his "debt". He is unlikely to lose money in the meantime.

Orders

1. My orders are: 1. Declare the advance of $1,200,000 from the plaintiff was a gift to the first defendant only; not a gift to the second defendant; and not a loan; 2. Refuse the plaintiff's claim for an order for possession; 3. Refuse the plaintiff's claim for an order under s 66G Conveyancing Act 1919; 4. Under s 7(1)(d) Contracts Review Act 1980 order that the plaintiff, first defendant and, if necessary for its legal effect, the second defendant execute a discharge of mortgage registered dealing no. XXXXXX dated 13 December 2004; 5. Under s 8 schedule 1 Contracts Review Act 1980 the plaintiff, first defendant and second defendant are to take all steps necessary on the part of each of them to procure the registration of the discharge of mortgage referred to in order 5 on the Register maintained under s 31B Real Property Act 1900, for the purposes of that Act; 6. Liberty to apply for further orders or directions necessary to give effect to these orders; 7. The plaintiff to pay the second defendant's costs of the proceedings.

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