Gentsis v Forty-First Advocate Management Pty Ltd [2004] VSC 398

Supreme Court of Victoria|2004-10-15|Before: Hollingworth J

Contracts - existence of contract - whether property was acquired pursuant to alleged contract. Contracts - unconscionable conduct - whether inequality of bargaining power constitutes "special disadvantage" - whether alleged "unconscionable conduct" and "special disadvantage" sufficiently contemporaneous. Equity - fiduciary obligations - whether long and close friendship sufficient to give rise to a fiduciary duty. Real property - whether option to purchase land a contract for "disposition of interest in land"- enforceability of unwritten agreement - application of section 126 Instruments Act 1958. Trusts - whether property held on express trust - validity of express trust where not "manifested and proved" in writing. Instruments Act 1958 (Vic), s 126. Property Law Act 1958 (Vic), , . (Cth), s 51AA. (Vic), s 7. (2003) 197 ALR 153, applied. ; , applied. CLR 674, applied. ; , applied. , applied. ; , cited. ; , applied. (1969) 89 WN (Pt 1) (NSW) 359, applied. ; , applied.

This proceeding arises out of a dispute between two former friends about a property situated at 329 Punt Road, Richmond, Victoria ("the property").[1] The first defendant ("Forty-First Advocate") has been the registered proprietor of the property since 1 February 2000. Forty-First Advocate is a member of the Golden Messenger Group of companies, which is owned and controlled by the second defendant, Graham Schorer.

The plaintiff, Peter Gentsis, alleges that he is entitled to the property by reason of a contract or an express or constructive trust in respect of the property. For the reasons which follow, the plaintiff's claim should be dismissed.

Mr Gentsis and his family moved to Australia from Greece when he was 10 years old. Although he spoke no English when he arrived in this country, Mr Gentsis has subsequently learned to speak the language fluently, albeit with a slight accent. After finishing his schooling at the Prahran Technical College, Mr Gentsis undertook an apprenticeship as a panel beater. He spent approximately three years as a clerk for a customs agent, before going into partnership in a panel beating business. Since then, Mr Gentsis has operated a number of different businesses including the manufacture of printing machines, car sales, an export business and a natural massage therapy business.

Mr Schorer's various companies within the Golden Messenger Group are involved in the light transport business.

Peter Gentsis and Graham Schorer first met in or about 1984. Over the following years, they developed a very close personal friendship. They socialised at each other's homes, went out socially, spoke regularly, went away on holidays together and met each other's friends, wives and girlfriends. They supported each other emotionally through many difficult periods in their respective lives.

Although Mr Gentsis and Mr Schorer knew a limited amount about each other's business affairs, they have never been in partnership or business together.

Mr Gentsis provided moral and emotional support to Mr Schorer over a number of years, during a long-running court case with Telstra. In or about 1985, during the Telstra dispute, Mr Schorer and his companies were experiencing cashflow problems. At that time, Mr Gentsis offered to lend Mr Schorer the sum of $200,000 or $250,000.[2] Although Mr Schorer thought about it for a short period of time, he declined his friend's offer of financial assistance. No agreement was reached between the parties as to the terms and conditions on which such a loan might have been made. Mr Gentsis has never lent any money to Mr Schorer or his companies.

By late 1997, Mr Gentsis' automotive export business had collapsed. He blames its decline on his former business partner, John Weekley, who had conducted the business through Ming Australia Pty Ltd ("Ming"). Although Mr Gentsis often referred in court to his "case against Ming", which he said was worth about $2 million, the simple fact is that he has never commenced any legal proceeding against Ming and concedes that any such proceeding would now be statute-barred.

Mr Gentsis first borrowed money from Mr Schorer or one of his companies in the following circumstances. Mr Gentsis' parents, Chris and Mersini Gentsis, have owned a property at 333 South Road, Brighton East ("the Brighton property") for many years. From time to time, Mr Gentsis' parents let him use the Brighton property as security for business loans. By the middle of 1999, Mr Gentsis was in serious financial difficulties and was facing bankruptcy. By early September 1999, the mortgagee of the Brighton property had served a notice of demand on Mr Gentsis' parents. In September 1999, Mr Schorer arranged for one of his companies, GM (Melbourne) Holdings Pty Ltd ("GM"), to lend Mr Gentsis the sum of approximately $314,000 ("the Brighton loan"). The Brighton loan was used to pay various creditors of Mr Gentsis and to refinance the mortgage over the Brighton property. GM eventually took a transfer of the mortgage over the Brighton property as security for the Brighton loan.[3]

In late 1999, when the parties first discussed the purchase of the property, Mr Gentsis and Mr Schorer were still very good friends. That close friendship appears to have continued until January 2003. The circumstances in which their friendship came to an end will be discussed later in these reasons for decision.

Mr Gentsis first rented the property in or about September 1998. At that time, the property was owned by Michael Burstin. Mr Gentsis applied for a permit from the City of Yarra ("the council") to operate a natural therapy and relaxation centre from the property ("the massage business"). Such a permit was granted on 12 April 1999. Whilst he was waiting for the permit to be granted, Mr Gentsis cleaned, painted and undertook certain renovation works at the property.

The massage business was run under the name "Satisfaction Therapy and Relaxation Centre." It is not clear to me whether at various times the massage business was operated by Mr Gentsis personally, or by his company, Yolland Pty Ltd ("Yolland"). A business name search of "Satisfaction Therapy & Relaxation" shows that Yolland has only been the registered proprietor of that business name since 25 January 2000. It is also not clear whether the tenant of the premises at various times was Mr Gentsis or Yolland.[4]

Mr Gentsis was unable to produce to the court any original or copy lease of the property. He did produce two unexecuted lease schedules, which are discussed later in these reasons. I am prepared to assume for the purpose of these reasons that either Mr Gentsis or Yolland was a tenant under a lease with an initial term of 12 months, with two options of three and five years respectively. There is evidence that, in May 1999, the Gentsis interests exercised the first option under such a lease. That extended lease expired in May 2002. Mr Gentsis has never sought to extend it.

During late 1999, Mr Gentsis was approached by the owner's agent and given the opportunity to purchase the property. It appears that he was very keen to do so.

After some negotiations with the vendor's agent about price and settlement date, on or about 15 October 1999, Mr Gentsis executed a contract to purchase the property for $310,000 ("the contract"). Although Mr Gentsis had tried to negotiate for a six month settlement period, that was not acceptable to the vendor and the contract provided for settlement on 15 January 2000. Mr Gentsis was very pleased to have negotiated the purchase price, as he believed that the property was worth in the vicinity of $400,000 to $500,000.[5]

The contract provided for a deposit of $15,500 to be paid by 15 October 1999. In fact, Mr Gentsis only paid an initial deposit of $2,500 on that date. It appears that he had trouble financing the balance of the deposit.

There was documentary and oral evidence before me that, in late October 1999, the contract was varied to reduce the deposit to $2,500 and the settlement date was brought forward to 15 November 1999. Mr Julian Hunt, the solicitor who acted for Mr Gentsis in relation to the purchase of the property, gave evidence that he entered into that variation on Mr Gentsis' express instructions.[6] He produced a file note of his initial instructions from Mr Gentsis on 21 October 1999, which supported his oral evidence. Correspondence between solicitors and other file notes of Mr Hunt supported Mr Hunt's version of events. Mr Gentsis vehemently denied that he had given any such instruction. The evidence is clear that the contract was in fact varied, whether or not that was done with Mr Gentsis' actual authority.[7]

Mr Schorer says that Mr Gentsis rang him in the latter part of October 1999 and told him he had an option to purchase the property for $310,000 and the value of the property was between $550,000 and $600,000. Mr Gentsis also told him that the property used to have a billboard and the rental of a billboard was worth between $18,000 and $25,000 per annum. Mr Schorer says he advised Mr Gentsis that the first thing he should do was get a sworn valuation "and that if he felt rushed to sign up for the property before he established finances, that he turn around and sign a contract subject to finance."[8] Mr Gentsis denies having had any such conversation. If Mr Schorer is correct about this conversation and its date, then Mr Gentsis did not disclose to Mr Schorer that he had already signed the contract at this stage.

Mr Schorer also says that, in that conversation in late October 1999, he advised Mr Gentsis to go and see William Hunt, as he was particularly experienced with property matters. Mr Gentsis agrees that Mr Schorer recommended at some stage that he use William Hunt as the solicitor for this purchase. Mr Hunt had acted as the solicitor for both Mr Gentsis and Mr Schorer in the past.

When Mr Gentsis did not pay the balance of the purchase price on 15 November 1999, as required by the varied contract, the vendor's solicitor served a rescission notice dated 16 November 1999. Mr Gentsis disputes that the rescission notice was valid, as he maintains that he was not in default at the time that it was served because he had never agreed to an earlier settlement. It is not necessary for me to determine the validity of the rescission notice. It is common ground that, by the time of the alleged agreement between Mr Gentsis and Mr Schorer which is at the heart of this proceeding, settlement had been postponed until January 2000. That was done on the basis that Mr Gentsis pay the balance of the initial deposit by mid December 1999; apparently he did so.

Mr Gentsis had trouble raising the finance necessary to complete the purchase. His evidence as to the steps taken by him to obtain finance was vague and lacking in detail as to names, dates or applications. He said that he contacted "Crawford's Finance I think it was called, or something - something like that" and "something Anthony. I can't remember now."[9] Julian Hunt gave evidence that, by late November 1999, Mr Gentsis had told him that a financier had initially valued the property at only $280,000, and had then increased the valuation to $310,000. Given the undisputed evidence as to Mr Gentsis' parlous financial state prior to the making of the Brighton loan only a few months earlier, and the fact that he needed to borrow the full purchase price for the property, it is hardly surprising that he might have had trouble raising finance.

Mr Schorer was in the Philippines on holidays for three weeks in November 1999. He says that in or about mid-November 1999, Mr Gentsis called him on his mobile phone and told him he had received a rescission notice on the purchase of the property. Mr Schorer says he was shocked because he was surprised that Mr Gentsis "had actually signed up for the property."[10] Mr Gentsis told him he had only paid $2,500 from the total required deposit of $15,500 and the settlement had been brought forward because of some irregularity with the deposit. "He then went on to say that he was concerned because this meant that the owner of the property could keep the deposit, and with the sale of the property, he'd be up for - the costs of reselling the property and any shortfall on the property."[11] Mr Gentsis requested a loan, to which Mr Schorer said "No." Mr Schorer says he did offer to speak to his bank manager, Shane Haanappel at the ANZ Bank, to see if he could help Mr Gentsis.

Mr Gentsis initially denied calling Mr Schorer in the Philippines, but eventually agreed that such a conversation "probably" occurred, albeit that he did not initiate it and seemed to recall little about it.[12]

Julian Hunt's file note of 29 November 1999 records that Mr Gentsis told him that he had spoken to Mr Schorer in the Philippines.

Mr Schorer says that he then telephoned Shane Haanappel and asked him to meet Mr Gentsis to see if the ANZ could finance the purchase. On 8 December 1999, Julian Hunt accompanied Mr Gentsis to a meeting with Shane Haanappel. The meeting did not go well, and the ANZ did not offer to finance Mr Gentsis' purchase.

It is common ground that, whenever it was that Mr Gentsis first asked Mr Schorer to finance the purchase of the property, Mr Schorer declined to do so. It is also common ground that, by early January 2000 at the latest, Mr Schorer and Mr Gentsis had agreed that Mr Schorer or one of his companies would purchase the property. The parties do not agree as to the basis on which Mr Schorer agreed to purchase the property. Mr Gentsis says that the property was to be purchased on trust for him. Mr Schorer denies that, and says that he reluctantly agreed to help out his friend by arranging for Forty-First Advocate to purchase the property. He says he did so because Mr Gentsis had been unable to finance the purchase himself, and faced losing his business and suffering further financial loss if he could not complete the purchase. This dispute lies at the heart of this proceeding, and the contested evidence will be discussed in detail later in these reasons.

Julian Hunt says that Mr Gentsis rang him in mid to late December 1999 and informed him that one of Mr Schorer's companies would be purchasing the property.[13] Mr Hunt attempted, unsuccessfully, to speak to Mr Schorer to find out which company would be the purchaser. It is common ground that Harry Thorpe, one of Mr Schorer's managers, provided Mr Hunt with the details of the transferee and, in due course, the settlement funds. It is not clear precisely when that happened.

Mr Hunt prepared a sale of real estate nomination form, which Mr Schorer and Mr Gentsis signed and back-dated to 17 December 1999. Mr Schorer executed an authority on behalf of Forty-First Advocate appointing Mr Gentsis as agent to enter into the contract ("the authority"). The authority was in fact executed in or about the second week of January 2000, but was back-dated to 15 October 1999; it also purported to be prospective, when it was in fact retrospective. Mr Gentsis also swore a statutory declaration, dated 17 December 1999, in which he swore that he had been appointed agent under the authority. These documents are false in several respects and were entered into in order to avoid paying double stamp duty. Mr Schorer has made a voluntary disclosure of that fact to the State Revenue Office in a letter from his solicitors dated 1 July 2003.

By a letter dated 5 January 2000, a finance broker, William Anthony & Associates Pty Ltd, informed Mr Gentsis of an offer of "$315,000 (or 65% of valuation - $500,000)" from an unnamed financier. Even assuming that a valuation of $500,000 could have been obtained, which seems doubtful, the offer was of an interest only loan at 10% fixed interest and had a fixed term. That was clearly less attractive from a financial point of view than the agreement which Mr Gentsis says he entered into with Mr Schorer. The offer said that it would take about two weeks to put the facility in place once Mr Gentsis accepted it. Mr Gentsis did not accept the offer.

Settlement occurred on 13 January 2000. Forty-First Advocate paid the full purchase price of $310,000, as well as all stamp duty, fees and disbursements. The deposit which had been paid by Mr Gentsis was subsequently repaid to him by two cheques. The first cheque, being for $13,000 and dated 28 January 2000, was paid by the vendor's solicitors. The balance of the deposit, namely $2,500, was paid to Mr Gentsis by Mr Schorer's company, GM, by cheque dated 31 January 2000.

After settlement, Mr Gentsis remained in possession of the property and continued to run the massage business.

Mr Schorer says that, prior to settlement, there was no agreement between him and Mr Gentsis as to whether, and if so on what terms, Mr Gentsis could buy the property from Forty-First Advocate. Mr Schorer says that after settlement of the property, in or about late January or early February 2000, he and Mr Gentsis agreed as follows:

(a) Mr Gentsis would have an option to purchase the property within a six month period for $360,000 plus all the costs and expenses incurred by Forty-First Advocate in purchasing the property. The sum of $360,000 represented the purchase price of $310,000, plus $50,000 as Forty-First Advocate's return on its investment and to compensate for the inconvenience of having purchased a property that it did not want;

(b) In the meantime, Mr Gentsis would pay commercial rental of $55,000 per annum. If Mr Gentsis was able to obtain income from advertising hoarding of $18,000 to $25,000 per annum, he could keep that;

Mr Schorer says that, in or about July 2000, he extended the option by a further three months due to Mr Gentsis' ill-health.[14]

Mr Schorer says that he instructed William Hunt to prepare a lease and option agreement to reflect the above arrangements. He says that he and Mr Gentsis went and saw William Hunt on several occasions in the first half of 2000 about the matter, and that he followed up on a number of occasions with Mr Hunt. He could not offer any explanation as to why Mr Hunt did not carry out his instructions, save that Mr Hunt did not seem to be his usual self and was pre-occupied with his wife's ill-health. Unfortunately, William Hunt was unable to give evidence at the trial due to medical reasons, including dementia, and his advanced age.[15] No documents were produced which either supported or rebutted the giving of such instructions.

Mr Gentsis denies entering into any such agreement as alleged by Mr Schorer. He also denies that such instructions were given to William Hunt.

It is common ground that Mr Gentsis never paid any rent to Forty-First Advocate. There is a dispute as to whether Mr Gentsis paid all of the outgoings in respect of the property. It is not necessary for me to resolve that dispute, as Forty-First Advocate is not pressing that part of its counterclaim.

On 12 February 2002, Forty-First Advocate received a letter and infringement notice dated 8 February 2002 from the council. It alleged that the premises had been operating as an illegal brothel and required Forty-First Advocate, as proprietor of the property, to immediately take steps to ensure that any such practice ceased.

Mr Schorer held discussions with officers of the council, during which it was agreed that they would work together to try to assist Mr Gentsis to relocate the massage business to another location in Richmond where he could obtain a permit to operate a licensed brothel. In a conversation at the property on 12 March 2002, Mr Schorer told Mr Gentsis about his discussions with the council. He also told Mr Gentsis that he would have to vacate the property by late September or early October 2002. Mr Schorer says that Mr Gentsis agreed to do so. Mr Gentsis says that he was coerced into agreeing to relocate by Mr Schorer and the various lawyers advising them.[16]

On 6 May 2002, the council issued an application against Forty-First Advocate, seeking to have the premises declared a proscribed brothel pursuant to s. 80(1)(b) of the Prostitution Control Act 1994. The application was returnable in the Magistrates' Court at Melbourne on 17 May 2002. At the hearing of the application, Mr Gentsis was represented by Mr G Chettle of counsel,[17] as he then was, and Forty-First Advocate was represented by Mr A Hooper QC. Although both of those counsel argued that the application had not been properly brought, Deputy Chief Magistrate Popovic allowed the application to proceed and adjourned it for hearing on 29 July 2002.

On 9 July 2002, Mr Gentsis and Forty-First Advocate jointly filed an originating motion in this court, seeking judicial review of the magistrate's decision. The council's application was stayed pending the outcome of the originating motion. The originating motion was ultimately settled in June 2003, when both Mr Gentsis and Forty-First Advocate consented to orders dismissing the originating motion with no order as to costs.

On 3 December 2002, the council issued another application against Forty-First Advocate and the occupier of the property seeking to have the property declared as a proscribed brothel.

Mr Schorer says that, late on Friday afternoon, 10 January 2003, Mr Gentsis came to his business premises at Queensberry St, North Melbourne. He says that in the course of that discussion Mr Gentsis asserted that he could remain in the property rent free for as long as he wanted and had an indefinite option to purchase the property at any time for $380,000. Mr Schorer say that he told Mr Gentsis that he was not entitled to remain on the property and did not have an option to purchase it. Mr Schorer says that Mr Gentsis then told him about how he and four or five big "bikies" had terrorised and threatened Mr Gentsis' former partner, John Weekley. He then proceeded to made threats of violence against Mr Schorer and his family. Mr Schorer says that this is when his friendship with Mr Gentsis ended.[18]

There is no dispute that, on 13 or 14 January 2003, Forty-First Advocate took possession of the property by changing the locks. Later that day, Mr Gentsis regained possession of the property from Forty-First Advocate by changing the locks. Mr Gentsis says that his friendship with Mr Schorer came to an end on this day, when he went to the property and found himself locked out.[19]

Mr Gentsis agrees that he had a discussion with Mr Schorer at the latter's North Melbourne office in which the property was discussed. However, he says that the meeting took place a few days after 13 or 14 January, not a few days before.[20] Whilst there are a number of similarities as to the content of the meeting at Mr Schorer's office, Mr Gentsis denies making any threats against Mr Schorer or his family and says the meeting ended cordially.

On 21 February 2003, Mr Gentsis lodged a caveat against the property, claiming that Forty-First Advocate "holds the whole of the land on express and/or constructive trust" for Mr Gentsis. On 24 February 2003, Mr Gentsis commenced this proceeding through his then solicitors, Pryles & Defteros.

On 7 July 2003, the council's application for a proscription order proceeded in the Melbourne Magistrates' Court. The application was not opposed by Mr Gentsis or Forty-First Advocate. Magistrate La Rosa made an order declaring the property to be a proscribed brothel for a period of six months commencing from 7 July 2003 ("the proscription order").

It is common ground that Mr Gentsis vacated the property in the first week of July 2003. Mr Gentsis says he did so on 7 July; Mr Schorer says he did so on 4 July 2003. Nothing turns on the precise date. It seems clear that his departure from the property was related to the proscription order.

On 10 July 2003, Forty-First Advocate lodged an application with the Victorian Civil and Administrative Tribunal to cancel the planning permit. Member Rickards cancelled the planning permit on 16 September 2003.

On 17 October 2003, Forty-First Advocate applied to the Magistrates' Court to rescind the proscription order, as it wanted to regain possession and use of the property following Mr Gentsis' departure. On 28 October 2003, Magistrate Hannan rescinded the proscription order. Mr Schorer did not tell Mr Gentsis that this had occurred.

Forty-First Advocate then engaged an architect and set about repairing and renovating the property. Mr Schorer attended the property on 28 January 2004. When he got there, he found that Mr Gentsis and his wife and friends had forcibly removed the locks and re-taken possession of the property. Mr Gentsis had given no prior notice of his intention to return to the property.

Forty-First Advocate applied to this court for injunctive relief, to regain possession of the property. On 29 January 2004, Kaye J ordered that Mr Gentsis and Yolland forthwith deliver up vacant possession of the property and not attempt to re-enter prior to 5 February 2004. On 5 February 2004, Hansen J extended the injunction until the hearing and determination of this proceeding or further order.

Although he had been represented by solicitors and counsel from the time of commencement of the proceeding until 27 August 2004, Mr Gentsis had no legal representation at trial. I allowed him to be assisted in presenting his case by his friend, Jim Sovolos, who appeared as a "McKenzie friend."[21] Some of Mr Gentsis' evidence might be best described as advocacy rather than testimony. In assessing Mr Gentsis' evidence, I have made allowance for the fact that he was not legally represented.

Not surprisingly, given how this dispute has destroyed their long friendship, both Mr Gentsis and Mr Schorer at times displayed strong emotions in the witness box.

Mr Gentsis was not an impressive witness. For the following reasons, I have generally preferred the evidence of Mr Schorer where it conflicts with the evidence of Mr Gentsis.

Mr Gentsis often had trouble remembering dates and details of relevant events.

Mr Gentsis was prone to exaggerate or use colourful language, especially when criticising Mr Schorer. For example, Mr Gentsis described the event in which he himself returned unannounced to the premises in January 2003, after a six month absence, and changed the locks and re-took possession by force, as "an invasion" by Mr Schorer.[22]

The following exchange occurred when Mr Gentsis was giving evidence about the sum of $50,000 which he said he offered to Mr Schorer as a "reward" for helping him with the purchase the property.

"When you say "reward", do you know whether he was going to be borrowing money [to purchase the property]? --- No, because - I knew that he had settled [his Telstra claim] for millions and millions and millions of dollars.

You are saying you didn't know whether he was going to borrow to buy this property? --- No. If, Your Honour, he offered me if I needed to do anything else that he would lend money to me at 5 per cent interest if I wanted to do anything further.

When do you say he offered that? --- That was in a bar in Elizabeth Street and Little Lonsdale Street.

So this was a different occasion? --- This is a different occasion. This is after the event, after we settled, blah blah blah blah blah. We went, after we left Mr Hunt's office one day we went around there and we had a - I think a coffee or beer together and that's - it was - he sort of threw himself at me and said if I wanted to do more things he would be more than happy to lend money to me at 5 per cent interest which was a tiny little bit less than what the going rate was at the time."[23]

Apart from the colourful language, the very suggestion that Mr Schorer wanted to "throw" even more money at Mr Gentsis after settlement of the property is utterly implausible given the uncontested evidence.[24]

Mr Gentsis repeatedly asserted that he had "very rich friends" or family who would lend him the money to buy the property for $380,000, if only Mr Schorer would let him do so.[25] There was no objective evidence of the existence of any such friends or family. Indeed, Mr Gentsis' parlous financial state for a number of years, including currently, seems somewhat at odds with their existence.

On a number of occasions, Mr Gentsis' evidence changed completely, and without any proffered explanation, when pressed in cross-examination. The following exchange in cross-examination illustrates this:

"Was any interest to be charged upon these loans? --- Never mentioned.

I put it to you that ---? --- Interest is not charged between friends.

I put it to you it was and I put it to you that it was an interest rate, a mate's rate it was so identified as as being 5 per cent; is that right? --- Well, yes it was but the interest - the going interest at the time was five or 6 per cent anyway, so what's mate's rates?

In 1999, October, it was 5 per cent - I put that to you that's nonsense? --- It was six or seven, no more.

We will perhaps come back to that? --- That's what it was.

In all events whether it was mate's rates or bank rates or whatever rates there was an interest rate of 5 per cent; is that right? --- Yes."[26]

Another such example occurred when Mr Gentsis was asked about the various applications which he had made to adjourn the trial of this proceeding. Four such opposed applications were made during the course of 2004, on a variety of medical and psychological grounds. Initially Mr Gentsis said he had only tried to adjourn the trial twice.[27] Then he conceded that four times "might be more accurate." He also initially professed ignorance of the fact that a recent application to vacate the trial date had been made.

"And then most recently, you made another application to have the trial date of today vacated, did you not? --- (No audible response)

When you say you don't know, of course you know. An application was made to vacate the trial date, is that right? --- Yes."

Mr Gentsis immediately went on to agree in some detail with Dr Pannam that the most recent adjournment application had been made on the basis of what he had told a psychologist about his parlous psychological state and his inability even to sit on a chair without pain. The most recent application was heard only a few weeks before the trial commenced, and apparently involved the Listing Master hearing evidence and viewing video footage which challenged his claim that he was suffering from various medical and psychological problems. In these circumstances, Mr Gentsis' initial professed ignorance of any recent application was implausible.

Mr Gentsis displayed a propensity to blame others for many of the things that had gone wrong in his life. He blamed his former partner for the failure of his export business and for destroying all the records relating to it. He said that all of the following solicitors who had acted for him had let him down: Simon Nixon, William and Julian Hunt and Peter Pryles. On several occasions, when talking about the circumstances in which Mr Schorer had undoubtedly come to his assistance in making the Brighton loan and purchasing the property, he said that Mr Schorer had effectively "forced himself" or "thrown himself" upon Mr Gentsis with his generosity.[28] He even blamed Mr Schorer for the fact that he, Mr Gentsis, had never commenced litigation against Ming for a claim that he said was worth $2 million.[29]

Yes, everybody's let you down? --- Well, when you're down everybody wants to kick you."[30]

I am not in a position to make any findings as to whether or not his former solicitors or business partner have in fact let Mr Gentsis down. But the consistent flavour of Mr Gentsis' evidence was that he was unwilling to accept any personal responsibility for anything that went wrong. In giving evidence, he was quick to either deny knowledge of difficult matters or else blame or criticise somebody else for what had occurred.

Mr Gentsis' attitude towards payment of debts also displayed a lack of personal responsibility, which coloured his evidence as to legal obligations. He consistently expressed the view that, notwithstanding the terms of particular contracts, he did not have to pay interest or principal unless the other person to the transaction demanded it.[31] Nor did he think he had to comply with court orders in relation to costs or security, unless somebody chased him up about it.[32]

Mr Schorer displayed obvious anger towards Mr Gentsis, particularly when describing the threats which he says Mr Gentsis made towards his family in January 2003. He often raised his voice and spoke with a degree of vehemence whilst giving evidence. Nevertheless, Mr Schorer's evidence as to names, dates and events was clear, internally consistent, detailed and plausible. His evidence was generally consistent with such contemporaneous documents as existed. His version of the relevant events is consistent with the overall impression which I formed of him as an astute businessman, who reluctantly helped out his friend in relation to two property transactions.[33] In assessing Mr Schorer's evidence, I have borne in mind the fact that he was not subject to cross-examination by a person with legal training.

Notwithstanding his obvious antipathy towards Mr Gentsis, Mr Schorer was willing to make certain concessions in favour of Mr Gentsis. For example, he conceded that Mr Gentsis had done a very good job during the 1980s in renovating a property in Toorak,[34] and that he had done an "excellent" job in painting and fixing up the property.[35] Mr Gentsis, on the other hand, did not have a good word to say about the man who, on any view of the evidence, had provided him with significant financial assistance totalling almost $650,000 over a six month period around late 1999, none of which he has repaid or paid any interest on.

The defendants called Julian Hunt as a witness, to explain the absence of his father. William Hunt could have been expected to give evidence as to whether or not he was asked by the parties to prepare the lease and option agreement alleged by Mr Schorer. Once he was in the witness box, Julian Hunt was cross-examined as to his involvement with the contract, including the rescission notice and the alleged variation. Mr Hunt's general recollection of events was generally supported by his file notes and correspondence with the vendor's solicitors and real estate agent. In cases of conflict with Mr Gentsis' evidence, I prefer that of Mr Hunt.

Both sides had foreshadowed the calling of certain additional witnesses; some of them had provided witness statements but none of them was called. The evidence of some of those witnesses could have been relevant to parts of the counterclaim which were not pursued. Some of them might have been able to give evidence to corroborate the credit of Mr Gentsis or Mr Schorer on some of the less critical aspects of the case. However, both sides agree that there was no witness to any of the key discussions between Mr Gentsis and Mr Schorer. Mr William Hunt's failure to give evidence was satisfactorily explained. In my opinion, there is no Jones v Dunkel[36] inference that might reasonably have been drawn against the defendants in favour of Mr Gentsis.

In the amended statement of claim dated 10 March 2004 ("the claim"), Mr Gentsis alleges that in about December 1999 he and Mr Schorer entered into an agreement in the following terms ("the alleged agreement"):

" (a) The second defendant would be substituted as purchaser of the property under the contract, and, either direct in his own name or through one of the second defendant's companies, would purchase the property; and (b) The second defendant, or any company through which the second defendant purchased the property, would hold the property on trust for the plaintiff; and (c) Upon the plaintiff's request, the second defendant or any company through which he purchased the property, would transfer the property to the plaintiff or at his direction to any other person; and (d) Upon such request, the plaintiff would pay to the defendant, or any company through which the property was purchased, prior to or upon such transfer: (i) the balance of the purchase price under the contract, namely $294,000; (ii) all of the costs and outgoings reasonably incurred by the second defendant (or by any such company) in respect of the purchase and retention of the property; and (iii) the sum of $50,000 as a reward for the second defendant's assistance in the acquisition of the property; (e) The plaintiff would continue to occupy the property until the property was transferred to him or until any further agreement between the parties; and (f) The plaintiff would occupy the property until any further agreement and would not pay any rent for such occupation, but would pay for all outgoings.

PARTICULARS

The agreement was partly oral and partly to be implied. Insofar as it was oral it was contained in a conversation between the plaintiff and the second defendant in Melbourne in about early December 1999. The substance of the said discussions between the plaintiff and the second defendant were to the effect alleged. Further, the plaintiff, at the time, was having difficulty in raising finance to pay the balance of the purchase price under the contract. The second defendant offered to purchase the property for the plaintiff and hold the property on trust for the plaintiff until the plaintiff resolved a legal dispute he was engaged in, or was in a position to pay the balance of the purchase price or decided to deal with the property otherwise. The second defendant said that as the plaintiff was and had been a good friend and had helped him in the past he would be pleased to help out now. The plaintiff said to the second defendant that he would accept his offer, that he wanted to reward the second defendant for his generosity and friendship in making this offer by giving him the sum of $50,000 when the plaintiff took a transfer of the property or when he sold it. Insofar as it was to be implied, it was implied from the above mentioned facts, and from the fact that the agreement was given effect to by the parties, and from such other implications of fact or law as are necessary to give the agreement business efficacy."[37]

Mr Gentsis also alleges that, by reason of these matters, at all relevant times Forty-First Advocate and/or Mr Schorer held the property on trust for Mr Gentsis ("the alleged trust"). The particulars of the alleged trust are as follows:

"The trust arises by reason of the agreement ... and from such other implications of law or fact as are necessary to give effect to the said trust."[38]

The defendants deny the existence of the alleged agreement or the alleged trust. The conflicting evidence is discussed below.

The claim then pleads that, on or about 13 January 2003, in breach of the alleged agreement and the alleged trust, Mr Schorer informed Mr Gentsis that:

(a) The property was not held on trust for Mr Gentsis' benefit;

(b) Forty-First Advocate was not obliged to transfer the property on the terms of the agreement;

(c) Mr Schorer was not prepared to cause the transfer of the property to Mr Gentsis for the sum of $310,000 plus $50,000 plus reasonable costs and outgoings;

(d) Mr Gentsis had no interest in the property, but was merely a tenant from month to month; and

(e) Forty-First Advocate was prepared to transfer the property to Mr Gentsis for the sum of about $600,000,[39]

(together "the January 2003 communications"). The last of these matters is alleged to have been said by Ron Wood, as agent for Mr Schorer and Forty-First Advocate, to Mr Gentsis on 16 January 2003. All of the other matters are alleged to have been said by Mr Schorer to Mr Gentsis in a conversation on 13 January 2003 at Mr Schorer's office. The relevant content of the January 2003 communications is largely not disputed. However, as already mentioned, the timing of the January 2003 communications, in relation to the re-taking of possession on 13 or 14 January 2003, is contested.

The key areas of dispute between Mr Gentsis and Mr Schorer regarding the alleged agreement and alleged trust concern the content and the time at which any relevant discussions occurred.

Mr Gentsis says that the alleged agreement and declaration of trust were made in late November or early December 1999, soon after Mr Schorer returned from the Philippines. He says that a meeting was held in the upstairs office of the property, at which Mr Schorer inquired as to whether Mr Gentsis had made any progress in obtaining finance for the acquisition of the property. After Mr Gentsis explained that he would be unable to obtain finance and was running out of time, Mr Schorer is alleged to have offered to purchase the property and hold it on trust for Mr Gentsis.[40] In his evidence, Mr Gentsis says that the terms of the agreement reached in that meeting included that he would pay Mr Schorer $310,000 to purchase the property plus a further sum of $50,000.[41] Until the purchase occurred, Mr Gentsis was to be responsible for the payment of all outgoings and associated expenses for the property.

As mentioned earlier, Mr Schorer gave evidence that no agreement was made prior to settlement as to the terms on which Mr Gentsis might be able to seek a transfer of the property after settlement. According to Mr Schorer, he only offered Mr Gentsis an option in late January or early February 2000, which was subsequently extended for a further three months. [42] The terms of that option are described earlier in these reasons.

Both parties agree that if Mr Gentsis wanted to purchase the property from Mr Schorer or his company, he would have to pay $50,000 on top of the price under the contract. They disagree as to who suggested that figure. Mr Gentsis says that the payment of $50,000 was offered at his insistence:

"I offered to give him money - extra money on top of [$310,000] - the $50,000 - he did not want to accept - he said to me - his exact words, 'I don't want to make $1 from you'- right. 'I could never repay you for the help you have given me', but I insisted...I would give him an extra $50,000 because it would take a year or two, maybe three before I finished my litigation with my export business as he knew."[43]

Mr Gentsis also suggested that the payment of $50,000 was for Mr Schorer's "generosity and his help".[44]

On the other hand, Mr Schorer says that he was the one who asked for the payment of the additional $50,000.

A further critical difference between the parties is the time within which Mr Gentsis' acquisition of the property had to occur. Mr Schorer gave evidence that there was a six month option, which was later extended by three months. Mr Gentsis variously said that the purchase would occur when he "was in a financial position to be able to settle";[45] or was back on his feet;[46] or had concluded his export business litigation;[47] or was asked to settle by Mr Schorer.[48]

I prefer the evidence of Mr Schorer over that of Mr Gentsis in relation to the alleged agreement and alleged trust, for several reasons. As already mentioned, I generally found Mr Schorer to be a more reliable witness than Mr Gentsis. Mr Schorer's version of events was also more plausible and more consistent with what a sensible commercial business person might be expected to have agreed.

As plaintiff, Mr Gentsis bears the onus of proving the existence of the alleged agreement and the alleged trust. I am not satisfied on the balance of probabilities that the alleged agreement or alleged trust were entered into.

Even if, contrary to the above finding, the alleged agreement was entered into, I accept the defendants' submission that it would be unenforceable at law, by virtue of the operation of section 126 of the Instruments Act 1958. Section 126 re-expresses section 4 of the statute commonly known as the Statute of Frauds.[49] It relevantly provides that:

"An action must not be brought to charge a person upon...a contract for the sale or other disposition of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note."

Mr Gentsis says that the alleged agreement entitled him to purchase the property from Forty-First Advocate once he was in a financial position to be able to settle, was back on his feet, or had concluded the Ming litigation. I leave to one side the very real problems faced by Mr Gentsis as to whether such an agreement is supported by any consideration, and whether it might be so uncertain as to be unenforceable. If the alleged agreement exists, but not the alleged trust, then it would be best characterised as an option to purchase the property.

In Goldsbrough, Mort & Co Ltd v Quinn, Isaacs J held that an option to purchase has more than a contractual operation and confers on the optionee an equitable interest in the land the subject of the agreement.[50] That decision was relied upon by the Full Court of the Supreme Court of Queensland in Jeffrey v Anderson,[51] in holding that an agreement for an option to purchase a hotel lease was within the compass of the Statute of Frauds, and was required to be in writing.

The alleged agreement, if it exists, is an option to purchase the property or, in the words of section 126, is a contract for the disposition of an interest in land. The fact that a further agreement may need to be entered into before any interest in land actually passes is no obstacle to section 126 applying.[52] As no relevant document was produced or is alleged to have existed, the alleged agreement would be unenforceable at law.

Generally, when section 126 of the Instruments Act renders a contract unenforceable at law, it is unenforceable at equity.[53] However, there are two categories of case in which a court will order specific performance despite the lack of writing: first, where the lack of writing is due to fraud or dishonesty on the part of the defendant; and secondly, where there have been sufficient acts of part performance. Mr Gentsis' pleadings did not allege either fraud or part performance. Nor is the evidence in this case sufficient to satisfy either of those matters.

The final basis on which Mr Gentsis theoretically could have, but did not, seek to prevent the application of section 126 of the Instruments Act would have been by arguing that Mr Schorer's conduct should estop him from denying the existence of a sufficient agreement.[54] In my opinion, however, the facts of the present case would not support any finding based on an equitable estoppel.

Whilst not strictly required by the pleadings or submissions to consider the issues of fraud, part performance and estoppel, I have turned my mind to them in recognition of the fact that Mr Gentsis is not legally represented.

The defendants also submitted that the alleged trust, if it exists, is not manifested or proved by writing as required by section 53(1)(b) of the Property Law Act 1958.

There is no general legal requirement of writing to create a trust. However, certain types of inter vivos trust must fulfil writing requirements imposed by statute and derived from the Statute of Frauds. The relevant section in Victoria is section 53 of Property Law Act 1958, which operates subject to section 55. Together those sections relevantly provide that:

"53(1) Subject to the provisions hereinafter contained with respect to the creation of interest in land by parol-

(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by will;

Nothing in the last two preceding sections shall-

(d) affect the operation of the law relating to part performance."

Section 53(1)(b) does not establish that the alleged trust itself must be in writing, but rather that it must be manifested and proved in writing signed by the declarant.[55] The question therefore becomes whether I can be satisfied that there is writing which sufficiently sets out the terms of the alleged trust and which evinces a clear intention by Mr Schorer on behalf of Forty-First Advocate to create a trust.[56]

When considering Western Australia's equivalent to section 53(1)(b) in Secretary, Department of Social Security v James,[57] Lee J held that the writing requirements could be satisfied by:

"[A] combination of documents capable of being read together. Any informal writing may stand as evidence of the existence of a trust including correspondence from third parties, a telegram, an affidavit or an answer to interrogatories. The date of creation of the writing is not material. It may come into existence at any time after the declaration of the trust."

In this case, there is simply no such writing which supports the existence of the alleged trust.

Mr Gentsis' pleadings did not seek to rely upon section 55, and in particular, section 55(d). In any event, on the evidence I could not make a finding of sufficient acts of part performance to prove the alleged trust.

Mr Gentsis puts his claim against the defendants on the following alternative basis. Mr Gentsis says that at all relevant times he had "trust and confidence" in Mr Schorer as a result of their long and close friendship. He then goes on to plead that, by reason of that matter, Mr Schorer owed him a fiduciary duty to:

" (a) arrange for the purchase of the property by himself or by one of his companies, and (b) thereafter hold, and ensure that any such company held, the property on trust for the plaintiff on the terms of the agreement, and (c) act honestly and in good faith in the plaintiff's interest, and (d) not to conduct himself so as to procure a financial or other advantage for himself or for any other person to the plaintiff's detriment."[58]

The indicia of a fiduciary relationship were identified in the oft-quoted passage of Mason J (as he then was) in Hospital Products Ltd v United States Surgical Corp:[59]

"The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of', and 'in the interests of', signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility."

I accept that the categories of fiduciary relationship are not closed.[60] However, the existence of a "long and close friendship", even one of some 15 years, is not sufficient to give rise to fiduciary obligations. Nor is the fact that Mr Schorer was aware that Mr Gentsis was suffering financial difficulties.

In his written submissions which were filed after the end of the trial,[61] Mr Gentsis sought to rely on a number of matters which were said to give rise to fiduciary obligations, but had not been pleaded. A number of these matters were not the subject of any evidence.[62] Others were contrary to the evidence as I have found it.[63] All the evidence in this case shows is that Mr Schorer, a long time and close friend, reluctantly assisted Mr Gentsis in relation to the considerable difficulties he had got himself into (against Mr Schorer's initial advice) in relation to the property.

Furthermore, there is nothing in the evidence in this case which might otherwise give rise to fiduciary duties on the part of Mr Schorer.

Even if some fiduciary duties were owed, it is difficult to see how the duty pleaded in paragraph 12(a) could be a fiduciary duty. In any event, there was no breach of that alleged duty; Mr Schorer did arrange for the purchase of the property by one of his companies.

It follows that Mr Gentsis' claim based on breach of fiduciary duty must fail.

Mr Gentsis makes an alternative claim based on alleged unconscionable conduct either at general law or contrary to s.7 of the Fair Trading Act 1999 (Vic) and s.51AA of the Trade Practices Act 1974 (Cth). Mr Schorer is alleged to be liable for accessorial liability under the Trade Practices Act. The relevant principles are the same under the legislation or at general law.

Mr Gentsis' claim is pleaded in the following manner. It is alleged that Mr Gentsis was, to the knowledge of Mr Schorer, in a position of special disadvantage when, in December 1999, he agreed to Mr Schorer arranging for the purchase of the property by Forty-First Advocate because:

"(a) Settlement of the purchase of the property under the contract was imminent, on about 15 January 2000; and (b) The plaintiff had not been able at that time to secure finance to complete the purchase of the property; and (c) The plaintiff trusted and had faith in the second defendant because of that past close friendship."

Somewhat curiously, the claim does not allege that any unconscionable conduct occurred in December 1999. Rather, the claim alleges that the unconscionable conduct consisted of the January 2003 communications.

In Commercial Bank of Australia Ltd v Amadio,[64] Mason J described the doctrine of unconscionability as follows:

"[A]n underlying general principle which may be invoked whenever one party by reason of some condition [or] circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party." [65]

In the recent decision in ACCC v C G Berbatis Holdings Pty Ltd,[66] the High Court approved Mason J's formulation that a "special disadvantage" is one that seriously affects the ability of an innocent party to make a judgment as to that party's own best interests. On that basis, it was held that a party in a greatly inferior bargaining position may not be suffering from a "special disadvantage" if they have the capacity to make a judgment about their own best interests.[67]

I accept that, in late December 1999, Mr Gentsis was in an inferior bargaining position with Mr Schorer in relation to Mr Schorer's involvement with the purchase of the property, due to the imminent settlement of the contract and Mr Gentsis' inability to raise finance to complete the contract. Mr Gentsis faced losing his deposit and his massage business, and possibly being sued for damages by the vendor, unless Mr Schorer rescued him financially for the second time in less than six months. I accept that Mr Schorer would have had the stronger position in any negotiations with Mr Gentsis as to the basis of Mr Schorer's involvement with the property. However, neither his inferior bargaining position nor his close friendship with Mr Schorer meant that Mr Gentsis was unable to exercise his own independent judgment about what was in his best interests. I do not accept that Mr Gentsis was in fact in any position of special disadvantage in or around December 1999.

Even if I am wrong in relation to the question of "special disadvantage", Mr Gentsis does not allege that any unconscionable act occurred in or around late December 1999, at the time of the alleged "special disadvantage." Rather, Mr Gentsis alleges that Forty-First Advocate unconscientiously exploited his "special disadvantage" by telling him some three years after the purchase that it had not been bought on the terms of the alleged agreement or the alleged trust. This allegation is fundamentally flawed in that the unconscionable conduct is said to occur at a time several years after the alleged "special disadvantage". As the authorities make clear, the alleged "special disadvantage" and unconscionable conduct must be contemporaneous.[68]

A further problem which Mr Gentsis faces is this. If I accepted Mr Gentsis' claim in relation to the alleged agreement or alleged trust, then the January 2003 communications would fall to be considered in terms of a breach of contract or breach of trust; there would be no need to consider the issue of unconscionability and the difficulties just discussed. In fact, for the reasons previously expressed, I prefer Mr Schorer's evidence and do not accept that the alleged agreement and alleged trust existed. Given those findings on the evidence, there is nothing unconscionable about the January 2003 communications.

For all of these reasons, the unconscionability claim must fail.

In the further alternative, Mr Gentsis alleges that if Forty-First Advocate is entitled to remain as the registered proprietor, then Mr Gentsis was at all material times entitled to possession of the property by reason of the lease of the property granted to him by the vendor "which remains current and which, due to the exercise of options by [him] in May 1999, expires on 5 September 2007".[69]

Although the evidence was not entirely clear, it is apparent that some sort of lease was granted by the vendor to Mr Gentsis or Yolland. No copy of the lease was ever produced to the court, despite repeated suggestions by me. I am not aware of the precise terms and conditions of any such lease. Unexecuted schedule pages were produced to the court. The first schedule shows the lessee as "Satisfaction Entertainment Services Pty Ltd"[70], a commencement date of 5 September 1998, a term of one year and two further terms of three and five years respectively. It is not clear on the evidence when the lease to which that schedule relates was entered into. The second schedule shows the lessee as Mr Gentsis and a term of three years commencing on 5 September 1999. What appears to be the second page of that schedule states that the option to renew the lease was not exercisable after 5 June 2002.

There was in evidence correspondence which confirmed that on 21 May 1999 Mr Gentsis exercised the option to renew his lease until May 2002. There is no evidence of any exercise of an option after 2002.

Mr Gentsis paid rent at the rate of $1,573 per calendar month to the vendor. He never paid any rent after settlement.

The contract, which was signed by the plaintiff, provided for vacant possession to be provided at settlement. The execution of a contract of sale does not of itself terminate any lease over the relevant property. However, in the circumstances of this case, it is hard to understand how Mr Gentsis can argue that he intended to remain a tenant under the lease with the vendor, when he was a party to a contract which indicated that vacant possession would in fact be granted.

Mr Gentsis' argument on the lease is also inconsistent with his evidence. He was adamant throughout his evidence that he was not a tenant and did not regard himself as a tenant. Rather, he regarded himself as the real owner of the property. That is why he never paid rent after settlement. That is why he did not exercise the second option, when the first one expired in 2002.

I accept the defendants' submission that, after settlement, Mr Gentsis was a bare licensee. Mr Gentsis' alternative claim to possession pursuant to a lease must fail.

By their amended defences and counterclaims dated 12 March 2004, both defendants sought damages from Mr Gentsis and Yolland for loss and damage arising out of Yolland's alleged trespass, breaches of planning law requirements and failure to deliver up possession of the property. The defendants also sought orders for the delivery up of vacant possession of the property.[71]

At the trial, Dr Pannam informed me that the defendants were not pressing their counterclaim save and insofar as they sought the removal of the caveat over the property. It was therefore not necessary for them to call certain witnesses who had provided witness statements which addressed the proscription order and other matters the subject of the counterclaim.

I propose to make orders in the following terms:

(1) The plaintiff's claim is dismissed, with costs.

(2) The Registrar of Titles is ordered pursuant to section 90(3) of the Transfer of Land Act 1958 to remove caveat no AB894576X registered on Certificate of Title Volume 10263 Folio 772.

(3) Until further order or unless with the consent of the first defendant, the plaintiff be restrained from lodging any further caveats or dealings in respect of the land described in Certificate of Title Volume 10263 Folio 772.

I will hear from the parties as to the precise form of orders and as to costs.

[1] Certificate of Title vol. 10263 folio 772.

[2] Mr Gentsis says the offer was for $250,000 (T37, T178); Mr Schorer says it was for $200,000 (T213). It is not necessary for me to make any finding as to the precise amount of the offer.

[3] GM is plaintiff, and Mr Gentsis' parents are defendants, in proceeding No 6119 of 2003 in this court. Mr Gentsis is a party to the counterclaim in that proceeding. GM is seeking possession of the Brighton property. Although much evidence was led on the topic, it is not appropriate for me to make more detailed findings of fact as to the terms and conditions of the Brighton loan, given that they are central issues in that other proceeding.

[4] The pleadings and evidence are contradictory. Para 4 of the amended statement of claim alleges that Mr Gentsis was the tenant and ran the massage business. On the other hand, the reply and defence to counterclaim admits that Yolland owned the business name and was in possession of the property. Mr Gentsis gave sometimes contradictory evidence about who was running the massage business or who the tenant was. Some of the relevant evidence is discussed below under the heading "Lease".

[5] Although there was evidence of two informal "kerb-side" valuations by real estate agents in early November 1999, valuing the property at the "high $500,000 to low $600,000 range" and "$550,000 to $600,000" respectively, there is no evidence that Mr Gentsis had obtained any such valuation prior to entering into the contract.

[6] Julian Hunt is the son of William Hunt. William Hunt had acted as Mr Gentsis' solicitor and Mr Schorer's solicitor for some years, but was unable to assist with the purchase of the property and referred the matter to his son.

[7] Julian Hunt would have had at least ostensible authority to enter into the varied contract. If it were necessary for me to resolve the conflict in evidence on the question of actual authority, I would prefer Julian Hunt's evidence to that of Mr Gentsis.

[13] T330. Mr Hunt's file note of 17 December 1999 confirms that in general terms.

[14] Mr Gentsis was bed-ridden for some months with unspecified back problems.

[15] William Hunt was 89 years old at the time of the trial. A medical report from Dr Michael Conos was tendered by the defendants. According to that report, William Hunt suffers from inter alia, cognitive decline, episodic brain syndrome and poor voice volume, which would have significantly impaired the value of his evidence at trial.

[17] He was instructed by Simon Nixon, a sole practitioner who had been engaged by Mr Gentsis.

[21] Counsel for the defendants consented to this course.

[24] By this stage, Mr Schorer's companies had lent Mr Gentsis almost $650,000 to rescue him from bankruptcy and loss of the Brighton property and the property. Even Mr Gentsis conceded that Mr Schorer had been reluctant to lend him money in respect of the property.

[31] For example at T42, T106-7, T113, T140, T166.

[33] The Brighton property and the property.

[49] A Statute for the Prevention of Frauds and Perjuries, 29 Car. II, Cap.3

[50] Goldsbrough , Mort & Co Ltd v Quinn [1910] HCA 20; (1910) 10 CLR 674 at 692 per Isaacs J. This was also the opinion of Helsham J of the Supreme Court of New South Wales in Mainline Investments Pty Ltd v Davlon Pty Ltd & Ors (1969) 89 W N (Pt 1)(NSW) 359 at 368.

[51] (1914) St. R Qd. 66 at 71 per Cooper CJ (Real and Lukin JJ concurring).

[52] Powercell v Cuzeno [2003] NSWSC 600 at [126] per Campbell J.

[53] See Meagher, Gummow and Lehane_, Equity Doctrines and Remedies_ (4th edition) at 682.

[54] See Voumard. The Sale of Land (5th edition) at para [3050]; Cuzeno Pty Ltd v Powercell Pty Ltd [1999] NSWCA 344 at [28] per Priestley JA.

[55] See, for example: Secretary, Department of Social Security v James [1990] FCA 150; (1990) 95 ALR 615, per Lee J at 622.

[56] Secretary, Department of Social Security v James [1990] FCA 150; (1990) 95 ALR 615, per Lee J at 622.

[60] Hospital Products Ltd v United States Surgical Corp [1984] HCA 64; (1984) 156 CLR 41 at 96 per Mason J.

[61] Dr Pannam QC accepted I could read these submissions, subject to also reading his written response to those further submissions.

[62] For example, there was no evidence as to Mr Schorer's education or the relative educational levels of the two men. Nor was there evidence that William Hunt ever did what Mr Schorer is alleged to have asked him to do in relation to the property.

[63] This is particularly so in relation to allegations that Mr Gentsis was somehow reliant upon Mr Schorer's advice. My clear impression is that Mr Gentsis in fact ignored his friend's sensible advice on several occasions.

[64] [1983] HCA 14; (1983) 151 CLR 447 at 461-3 per Mason J.

[65] This passage was cited with approval in ACCC v C G Berbatis (2003) 197 ALR 153 at 167 per Gummow and Hayne JJ.

[66] (2003) 197 ALR 153 at 168 per Gummow and Hayne JJ.

[67] ACCC v C G Berbatis (2003) 197 ALR 153 at 168 per Gummow and Hayne JJ.

[68] For example: Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621 at 637 per Deane J; Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461 per Mason J.

[70] Mr Gentsis said there was in fact no company of this name, that this was a business name. No evidence was produced as to whose business name this was at that time.

[71] This is something that they achieved by the orders of Kaye and Hansen JJ made on 29 January and 5 February 2004, respectively.

At a glance

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Judgment (199 paragraphs)

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Legislation Cited (24)

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