Cinque v Terrone

Factual Background

4. The matters the subject of this litigation have seen the disintegration of what was previously a very close relationship between the parties. As the plaintiff described it, the defendant was like a son to her.

5. There is shared adversity in the background of that relationship. This arose in circumstances where the plaintiff’s son, who was also the defendant’s friend, was murdered in 1997. The defendant provided the plaintiff with comfort and assistance at that difficult time.

6. The defendant also provided the plaintiff with assistance after the plaintiff’s husband died in 2017.

7. The plaintiff, who is now 77 years of age, has an autistic grandson who has formally been in the plaintiff’s care since late 2023, although it is clear the plaintiff also had responsibility for her grandson before that. The plaintiff’s grandson has special needs and requires care and supervision.

8. The plaintiff says that in 2021 she requested the defendant to be her grandson’s guardian after she passes away, which the defendant agreed to.

9. The defendant accepts this was the case. However, as will be seen, as time passed he developed misgivings about whether he was up to the task or prepared for that level of commitment.

10. The plaintiff says in September 2022 the defendant approached her with a request for a loan of $100,000 because of straitened financial circumstances arising out of delays experienced in completing a subdivision in a property development he was involved with, as well as financial issues with his estranged wife.

11. The defendant, on the contrary, contends the plaintiff in fact offered to help him at that time by giving him $100,000 to assist with his financial commitments. He said the plaintiff wanted to do this because the defendant had done much for her and her family over the years and she wished to give him this gift to help him. She told the defendant she could afford to do so and, says the defendant, she was clear it was not to be a loan.

12. The defendant’s account is that whilst the plaintiff insisted it was to be a gift, he did not want to feel indebted to her and only agreed to receive the money on the basis that it was a loan.

13. The plaintiff rejects out of hand the proposition that the money was intended as a gift and says it was expressly only ever a loan.

14. The plaintiff’s case is a simple one, namely the defendant has breached the loan agreement which was reached between them and is indebted to her for the principal sum and accrued interest.

15. The defendant’s case on the other hand, is that whilst he regarded the money as having been loaned to him, there was never a meeting of the minds in that respect. Although the defendant considered himself morally bound to repay the money provided to him by the plaintiff, that ultimately changed when the plaintiff, in the circumstances to which I will come, “crossed a line” by, as the defendant saw it, wishing death upon his son. At that point, with the relationship broken, the defendant took the view he would keep the money in the spirit it was given, as a gift only. He disputes the proposition that the plaintiff has any legal basis upon which to recover the funds.

16. There appears to be no serious dispute that if the defendant’s version of events is accepted, there was no meeting of the minds which would give rise to a legal obligation to repay the monies.

17. Equally, if the plaintiff’s account is accepted then the defendant is in breach of a contractual obligation to repay the loan.

The Evidence

18. There is a trail of documents which provide some insight into the dispute between the parties.

19. Historically, the defendant was familiar with the firm of solicitors who act on behalf of the plaintiff in these proceedings, they having previously prepared documents appointing the defendant as the plaintiff’s attorney pursuant to an Enduring Power of Attorney dated 15 May 2018. With that background, on 14 September 2022 the defendant wrote to Mr Gilbertson, a solicitor at that firm, attaching a form of loan agreement for review and feedback to the plaintiff prior to execution. In the body of that email the defendant said:

“FYI. I’ve asked my godmother for this loan, as my ex-wife (of only 6 months) has effectively robbed me of all my savings (via legal and court costs)”.

20. The defendant went on to outline details of the family law legal dispute he was involved in and also made reference to being in the process of selling property. He said at the end of the email:

“Once concluded and I get access to the funds, I will be immediately paying back my godmother in full”.

21. On 21 September 2022, Ms Muchiri, a senior lawyer with the plaintiff’s solicitors, sent the loan agreement with some marked up amendments to the defendant’s solicitor. Those amendments included various strike throughs, inserted a terminating date, being six months from the date the advancement was made, removed provision for repayment by instalments, and noted the principal sum was due on the terminating date. There was also the insertion of a requirement for six months of interest in the event of early repayment, and the interest rate was prescribed at 2% fixed. There were some other amendments, largely as to form, of no particular moment.

22. On 28 September 2022, the defendant responded to the plaintiff’s solicitors indicating he had no issue with the proposed changes and said:

“I’ve spoken to my godmother, my plan is to head to Newcastle sometime next week to sign the loan agreement in person with her”.

23. The plaintiff says in October 2022 she instructed her solicitors to finalise the agreement, after which it was posted to her for signing.

24. The plaintiff describes the defendant attending her home as planned to sign the agreement, however, she says she forgot to ask him to sign it.

25. Before me, the plaintiff said that on the day the loan was advanced she and the defendant met at her solicitor’s office, however the loan agreement was not signed whilst they were there. The defendant disputes attending the solicitor’s office on that day.

26. In any event, the plaintiff says she and the defendant attended the Commonwealth Bank at Charlestown on 11 October 2022 where the transfer was made. There is no dispute about that.

27. According to the plaintiff, it was her understanding the loan agreement was in place prior to making the advance. She said she did not realise it had not been signed by herself or the defendant.

28. The plaintiff said after the money was transferred the defendant went back to her house and they had something to eat, but again, as I understand her evidence, she either overlooked or did not realise the loan agreement had not been signed.

29. The defendant says after the money was transferred, he provided the plaintiff with a copy of the loan agreement for signing and return to him for signing and filing with their respective legal representatives.

30. The defendant says the plaintiff accepted the document but immediately indicated she would not be signing it, reiterating again that it was a gift.

31. Ms Muchiri, the solicitor acting for the plaintiff in relation to the loan agreement, swore an affidavit in these proceedings deposing to the fact that after the terms of the loan agreement had been agreed and finalised, the plaintiff instructed she would arrange for her and the defendant to sign the agreement, and no further work was required. This evidence suggests the plaintiff is wrong in her recollection of attending her solicitor’s office on the day the funds were transferred.

32. After the loan funds had been advanced, the plaintiff’s solicitors sent an invoice to the defendant seeking payment of their account for work done in the preparation of the loan agreement. That generated a significant amount of controversy so far as the defendant was concerned. There followed an exchange of emails in relation to that account, with the defendant’s responses being quite heated, aggressive, and at times rude.

33. It is unnecessary to recite the contents of those communications at length however, notably in an email dated 25 November 2022 the defendant, accusing the plaintiff’s solicitors of overcharging, indicated he was yet to speak to his lawyer in regard to that matter but proposed to do so shortly. At one point in the email the defendant said:

“FYI. The loan agreement was never signed. Because she trusts me with her life. So I suggest you print it off and use it for toilet paper next time you visit the bathroom.”

34. It appears from the emails before me that the defendant subsequently paid the outstanding invoice.

35. The next relevant piece of correspondence is a letter from the plaintiff’s solicitors to the defendant dated 17 April 2024 referring to the loan agreement and its terms, pointing out the principal sum had been due in April 2023, contending the defendant was in default of the agreement, and demanding payment of slightly more than $128,000 in respect of the principal sum and interest, as well as costs incurred, by reason of the defendant’s default, in the sum of $1,500.

36. By email dated 17 April 2024, the defendant responded to that letter in terms which included the following:

“With respect to the amount owing to your client, I had communicated in writing to your client that I would be depositing the loan repayment amount directly into her account today upon receipt of her banking details.

Given she has referred this matter yourselves, I advise THL of the following:

• The terms of the loan contract (attached) clearly stipulate interest payable on the loan amount as TWO PERCENT (2%) PER ANNUM.

(original emphasis)

• The entire loan period has spanned 18 months (from October 2022 to April 2024), hence the interest payable per our contract is precisely $3,000.

Upon receipt of your trust details I will make a deposit of $103,000 and will consider the matter closed.

If your client wishes to press for further monies she alleges she is owed as part of this loan contract (and legal costs associated with pursuit of these funds), she is welcome to ventilate the matter via the Court. I will of course then be relying on this response to your letter of 17 April 2024 on the issue of a costs application against your client. Wherein I intend to seek costs on an indemnity basis.

I will await your trust account details”.

37. On 19 April 2024 the defendant again wrote to the plaintiff’s solicitors complaining the plaintiff had left highly offensive messages over recent days, saying:

“I have warned her that if she continues this behaviour, I will consider not fulfilling my obligations under this alleged ‘contract’ and pay her nothing at all.

As you well understand, this alleged loan is unsecured – therefore I could create far greater headaches for her, if she chooses to continue her abusive behaviour.

You will also note that this alleged contract denoted no fixed term penalty. So I could in effect not pay out this contract indefinitely.

Then simply pay out the principal amount at some point in time, and the additional 2% interest per annum. And have complied in full with any legal obligations I may have here.”

38. On 20 April 2024 the defendant sent a further email to the plaintiff’s solicitors complaining about another abusive text message received from the plaintiff and threatening to go to the police. The defendant also dealt with an issue which was percolating in relation to the plaintiff’s claim for interest, and complained the plaintiff’s solicitors had not provided the plaintiff with proper advice, saying:

“If you do not [provide evidence that the plaintiff has been requested to stop her abusive behaviour] all correspondence herein will be used in future proceedings to demonstrate to the court that Turnbull Hill ‘Lawyers’ failed to provide sound legal advice in the best interest of their client. And instead sought to ignore such requests, and even to foment (sic) (issues with respect to the loan contract. Which you understand full well only entitles your client to $103,000 – if anything. Yet you encourage deluded thinking that she is owed $128K. This is legal malfeasance) in order to generate increased income for your organisation.”

39. On 24 April 2024 the defendant again emailed the plaintiff’s solicitors complaining about another abusive message received from the plaintiff saying:

“Her latest abusive message suggested she ‘hopes my son is murdered’. As her son was.

Her behaviour is vile, shocking and has left me speechless. Little does she realise that the more she continues this campaign of abuse, the greater the chances she will NEVER see her money.

As far as denying my accusations, this is pointless. As I have it all in writing in the form of text message exchanges.

And to be clear, all this unpleasantness started when she attempted to blackmail me with my previous commitment to act as legal guardian for her autistic grandson. After I told her I was no longer willing to do this (when she suggested she wanted more than $10K in interest), she then told me that if I withdrew from this commitment, I then owed her $130,000 instead of $110,000.

At this stage I have no intention of making any payment to your client. If this changes you will be advised accordingly.

In the interim, if she wishes to ventilate the matter via the courts, she is welcome to do so.”

40. The defendant tendered into evidence screenshots of text message exchanges between he and the plaintiff during this time in April 2024. Although they were in Italian, the contents of the texts were generally agreed in the course of evidence. The relevant details of those messages are as follows:

41. On 12 April 2024, the defendant sent a text message to the plaintiff saying:

“Don’t call me ever again. I never want to hear from you again. Now that I have come to understand how you truly think. Send me your bank details. Next Wednesday I will transfer your precious money. $110,000. That you would not have earned $10,000 in interest. You will have even profited on my shoulders.”

2. On 23 April 2024, the plaintiff sent the defendant a text message which contained a reference, which broadly, was to the effect of, “Let’s hope they kill your son like they did my poor son”.

3. The defendant says the text message sent by the plaintiff on 23 April 2024 was a turning point which led him to decide to keep the money on the basis that the plaintiff had always intended it to be a gift. His response to the plaintiff by text message was:

“You hope that someone kills my son? How do you permit yourself to write such things? All over money?”

42. The defendant gave evidence that the reason things went downhill in April 2024 was because he told the plaintiff he could not go through with his prior promise to be the guardian of her grandson. The defendant said when he decided to tell the plaintiff he could no longer comply with that promise, the thought went through his mind, “we’ll see if it’s a gift now”.

43. The defendant described the plaintiff reacting angrily and aggressively to his change of position on the guardianship of her grandson. Nonetheless, the defendant said he intended to repay the money right up until the time the plaintiff, as the defendant saw it, expressed a wish that his son would die as did hers.

44. The plaintiff described a very different scenario. She says the defendant was refusing to repay the loan, or at least being evasive about repayment, and was rude in the way he spoke to her when she raised that matter with him. The plaintiff said she then decided the defendant would not be an appropriate person to be guardian of her grandson. As a result, she says she told the defendant she did not want him to be guardian.

Resolving the Competing Accounts

45. At the end of the day, both the account of the plaintiff and that of the defendant as to the transaction being a loan or a gift could be true. There are many factual discrepancies and evidence tending to support and refute the respective versions of the facts advanced by the parties. I am therefore left to look at the surrounding evidence as well as my impressions of each party for guidance in determining whether the plaintiff has made out her case.

Some General Observations

46. The following factors generally support the conclusion the monies were intended by the plaintiff to be a gift:

47. The close familial nature of the relationship. The plaintiff described the defendant as being like a son, which whilst not necessarily rising to a presumption of advancement, nonetheless provides a credible basis for the monies being advanced by the plaintiff as a gift.

48. The loan agreement was never signed. Here the plaintiff’s evidence is problematic. She says that whilst the defendant attended her home to sign the agreement, she forgot to have him do so. The plaintiff then says when the monies were advanced, she did not realise the agreement had not been signed. Arguably there is difficulty reconciling the plaintiff positively adverting to and intending to have the document signed with later not realising it had not been signed.

49. If, as the plaintiff contends, repayment of the loan was a high priority, it is anomalous that she was not diligent to ensure the agreement was signed, nor to seek repayment until a considerable time after the loan had fallen due.

50. Given the defendant had been the driving force behind having the loan agreement prepared, it is unlikely he would have forgotten or otherwise neglected to have the agreement signed, suggesting the reason lies with the plaintiff not wanting to sign the document.

51. Alternatively, factors that might be seen as weighing generally in favour of the monies being advanced as a loan include:

52. It is unlikely the plaintiff would have actively participated in having her solicitors review and amend the loan agreement if she did not intend to provide the funds as a loan.

53. The evidence of the plaintiff’s solicitor, Ms Muchiri, whilst not tested and open to the observation that it was not supported by source material, is nonetheless consistent with the proposition that the transaction was being treated as a loan by the plaintiff.

54. The contemporaneous correspondence lends itself to the conclusion that the parties intended the arrangement to be governed by the loan agreement.

55. None of the factors outlined above are necessarily conclusive and the probative value of each is open to debate.

56. It is the matters to which I now come which have weighed most heavily in my task of deciding whether the plaintiff has established there was a loan in place.

The Breakdown of the Relationship Between the Parties

50. The controversy as to the circumstances leading to the breakdown of the relationship between the parties is of particular relevance when considering the competing accounts as to whether the monies were advanced as a gift or a loan.

51. As noted, the defendant says the relationship broke down when he changed his position in relation to the guardianship of the plaintiff’s grandson.

52. As outlined earlier, the plaintiff, on the other hand, told me when she had requested repayment of the loan funds from the defendant, he had been unpleasant and rude to her, leading her to decide she would remove him from the position as her Power of Attorney and also to conclude he was not fit to be the guardian of her grandson. Clearly that response was reflective of a dramatic change of heart on the plaintiff’s part in relation to the defendant’s character.

53. In providing detail of this event, the plaintiff described ringing the defendant on 12 April 2024 about the sale of his property, which she said triggered her demands that he repay the money she loaned him. The plaintiff said that conversation went as follows:

Plaintiff: The property has sold now; I want my money back.

Defendant: I have the money… I told you I would give you the money, just give me time…whatever you do don’t go to your solicitor, they steal money…

Plaintiff: It’s my money, I want my money back.

Defendant: Give me your bank details.

Plaintiff: No, I don’t want to give you my bank details over the phone.

Defendant: I’m very angry about this.

54. On the plaintiff’s evidence this conversation led her to contact her solicitors. Specifically, the plaintiff said she was concerned that the provision of her bank account details would enable the defendant to take further money from her. The plaintiff described how in the following days she proceeded to revoke the defendant’s appointment as her Power of Attorney which had been in place since May 2018. Then, on 17 April 2024, the plaintiff caused her solicitors to issue the letter of demand to the defendant.

55. The plaintiff denied out of hand that the defendant told her he could not go through with being the guardian of her grandson. She said based on what had occurred between her and the defendant, she considered he was no longer an appropriate person for that role.

56. The conversation which the plaintiff says led to the breakdown of their relationship appears reasonably non-confrontational, with the defendant agreeing to repay the money and wanting the plaintiff’s bank account details for that purpose. However, on the plaintiff’s account she now completely distrusted the defendant, to the extent that she was concerned he would steal money from her. On any view of it, this was a profound ground shift in the prior relationship of trust that existed between them.

57. That complete breakdown of the relationship appears quite disproportionate to the events the plaintiff described, even allowing for her evidence to me that the defendant was rude or unpleasant to her. The plaintiff may have been concerned about delay in repayment, however it does not appear she had been particularly proactive in pursuing repayment leading up to that point in time and, in any event, the defendant in requesting bank details was proposing to repay the money.

58. The defendant’s version, namely that the relationship disintegrated when he said he would no longer be the guardian of the plaintiff’s grandson, in my view, provides a far more plausible explanation for the plaintiff’s reaction. It will be recalled the defendant said in his email to the plaintiff’s solicitors on 24 April 2024 that the unpleasantness all started when the plaintiff attempted to blackmail him with his previous commitment to act as legal guardian for her autistic grandson.

59. The depth of feeling on the plaintiff’s part was driven home by her demeanour in Court. The defendant who, as I have said, was self-represented, asked the plaintiff only a few questions in cross-examination, at the end of which the plaintiff was excused. The plaintiff then started verbally abusing the defendant which, notwithstanding my direction that she desist, continued as the plaintiff left the witness box and ultimately the courtroom. These may be the reactions of someone aggrieved by the fact the defendant had not paid what she considered to be a loan given in good faith. However, whatever be the cause, the plaintiff’s apparent dislike of the defendant is clearly deep seated.

60. That level of feeling on the plaintiff’s part is reflected in the text message concerning the defendant’s son in April 2024. The way in which the relationship disintegrated, and the plaintiff’s emotional response, in my view, is more consistent with the plaintiff’s reaction to the defendant saying he would no longer be the guardian of her grandson.

61. That change of position by the defendant could have been seen by the plaintiff as the defendant going back on his word to protect her grandson after the plaintiff passed away. As I have said, I consider it more readily explains the plaintiff’s extreme reaction.

62. Whilst my conclusions as to the reliability of the plaintiff’s evidence on this point do not reflect well on her credit, this does not necessarily preclude the existence of a loan agreement. It could be, in line with the defendant’s case, that in her account as to the reasons for the breakdown of the relationship the plaintiff has sought to conceal the fact she changed her position and demanded repayment of monies which had been advanced as a gift out of anger and malice. However, it might simply demonstrate the real reason the plaintiff moved to call in the loan and sever ties with the defendant as abruptly as she did.

63. Ultimately then, the conclusions I have reached in relation to the circumstances leading to the breakdown of the relationship are a relevant, but not decisive factor in determining the issue at hand.

The Contemporaneous Communications are Decisive

64. In the circumstances, I am drawn back to the contemporaneous documents and communications for guidance in resolving the dispute. That evidence is particularly weighty because it provides an insight into the intentions of the parties as events were unfolding.

65. Here, in my view, the overwhelming inference to be drawn and the conclusion to which I have come, on the balance of probabilities, is that the monies were advanced by the plaintiff to the defendant as a loan.

66. My reasons for reaching that conclusion are as follows:

67. The very first communication from the defendant to the plaintiff’s solicitors, in the email dated 14 September 2022, commences:

“FYI. I’ve asked my godmother for this loan…”

2. Before me, the defendant contended that he was concerned to ensure a loan agreement was in place so he did not feel indebted to the plaintiff. His description of the events giving rise to the formation of this arrangement, and the fundamental platform of his case, is that the plaintiff offered to give him the money to help him, not that he asked her for a loan. However, the language used in this very first communication is not the language one would expect if the monies were a gift. It makes no sense that the defendant would say he requested a loan if in fact the funds were being gifted. Conceivably, if applying a gloss on the competing intentions, the defendant may have said he wanted to put in place a loan agreement, or even that his godmother was loaning him the money. However, I can see no reason, on the defendant’s version of events, why he would have misrepresented how the arrangement came about and said he asked for a loan when on his account he did not. I find the email of 14 September 2022 compelling evidence as to the true basis of the arrangement between the parties.
3. As noted earlier, in November 2022 the defendant also wrote to the plaintiff’s solicitors saying:

“FYI. The loan agreement was never signed. Because she trusts me with her life…”

4. In my view, the most natural reading of those words is that the plaintiff did not require the defendant to sign the loan agreement because she trusted him to repay the money. Of course, that is not a scenario either party advances, however the defendant’s wording in the heat of the exchange of correspondence in which he was involved again points strongly to the conclusion that the plaintiff intended it to be a loan.

5. In the various emails and texts in evidence from April 2024, the defendant at no time suggested the arrangement he had with the plaintiff was considered by her to have been a gift. This is something one would expect him to say once things had completely broken down between the parties, if not before. In particular, when the defendant was responding to the claim being advanced for interest, which he considered to be extortionate, he did not say there was no obligation to pay anything because it was a gift. Rather, he only questioned the quantum of interest.

6. Conceivably this may have reflected the fact the defendant still intended to repay the monies to his godmother as a matter of principle rather than obligation. However, that is a tenuous proposition given the level of feeling to be found in his correspondence. In any event, in the context of those rather heated communications, if the defendant was taking the moral high ground, one would expect him at that point to have at least mentioned the fact the monies were advanced to him by the plaintiff as a gift.

7. I note in the April 2024 correspondence with the plaintiff’s solicitors the defendant at various times refers to an “alleged” contract. However, that is equivocal in the circumstances and may simply refer to the fact the contract was not signed, as opposed to the plaintiff having gifted him the money. If he were referring to the fact the money was a gift, one would expect the defendant to describe it as such, rather than adopt a cryptic reference to an “alleged” contract.

8. The defendant’s email of 24 April 2024, sent after he received the plaintiff’s text which he saw as wishing death upon his son, is also telling in my view. On the defendant’s case, this was a turning point. Whereas he had previously intended to repay the money, he says he considered he would now retain it as the gift the plaintiff had said it was. However, in the email which the defendant sent to the plaintiff’s solicitors on 24 April 2024, he said nothing of the money having been a gift, rather, the defendant said if the plaintiff continued being abusive, she would never see her money. It is not, in my view, overly semantic to suggest that it is inconsistent with the defendant’s account to describe it as “her money”. Notably, the defendant says when he told the plaintiff he would not be guardian of her grandson he thought to himself, “we’ll see if it’s a gift now”. Overall, I consider there is no good reason why the defendant would not have stated the money was a gift in the email on 24 April 2024 if that was the case, as by then, on his account, he had decided he was going to keep the money on that basis.

9. In the circumstances, and notwithstanding the competing arguments I have outlined, I am satisfied on the balance of probabilities that the plaintiff loaned the money to the defendant on the terms set out in the loan agreement which, as noted earlier, was agreed to in final form by the defendant on 28 September 2022.

Disposition

68. Accordingly, I find the defendant liable to repay the plaintiff the sum of $100,000 pursuant to the loan agreement.

Interest

69. The loan fell due on 11 April 2023. According to the terms of the loan agreement, interest is payable on the outstanding loan balance at a fixed interest rate of 2% per annum. On that basis, I allow interest, in round terms, to the date of judgment at $5,100.

Costs

70. In the circumstances, costs will follow the event.

Orders

71. Accordingly, I make the following orders:

72. Judgment for the plaintiff in the sum of $105,100, inclusive of interest.

73. The defendant is to pay the plaintiff’s costs.

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