151 CLR 447
Garcia v National Australia Bank Ltd [1998] HCA 48
Source
Original judgment source is linked above.
Catchwords
151 CLR 447
Garcia v National Australia Bank Ltd [1998] HCA 48
Judgment (5 paragraphs)
[1]
Nature of proceedings
The plaintiff, Hume Plasterboard Pty Limited (Hume), is a company in the business of supplying plasterboard building material. In or about 2016 it began supplying plasterboard building materials to Brilliant Interiors Pty Limited, the first defendant (Brilliant Interiors).
Hume and Brilliant Interiors entered into an agreement on 30 May 2016 for the supply of goods on credit (the credit contract). On the same date, Genade Suntsov, the second defendant (Mr Suntsov), and Xiaojuan Sun, the third defendant, (Ms Sun) executed a guarantee in which they agreed to indemnify Hume against any losses, costs, charges and expenses of any nature which it might incur as a result of any default by Brilliant Interiors. Mr Suntsov was the sole shareholder and director of Brilliant Interiors. The connection between Ms Sun and Brilliant Interiors was disputed in the proceedings.
Brilliant Interiors defaulted on its repayment to Hume. On 16 May 2018, Hume commenced proceedings against Brilliant Interiors as borrower and Mr Suntsov and Ms Sun as guarantors. On 25 June 2018, default judgment was entered against Brilliant Interiors and Mr Suntsov for $896,894.81 (inclusive of costs). On 19 September 2018, an order was made in Supreme Court proceedings 2018/246233 that Brilliant Interiors be wound up.
The judgment against Brilliant Interiors and Mr Suntsov remains outstanding. These proceedings relate to Hume's claim under the guarantee against Ms Sun.
Ms Sun admits that she signed the guarantee on 30 May 2016 but asserts unconscionable conduct pursuant to ss 20 or 21 of The Australian Consumer Law (ACL). She also relies on the general law. In her cross-claim she seeks a declaration that the guarantee, dated 30 May 2016, is void and unenforceable as against her.
Clause 2 of the credit contract between Hume and Brilliant Interiors provided:
"(a) Any amount not paid by the due date will, at the discretion of the Supplier, be subject to interest charged at 1.5% per month.
The parties agree that this amount is a genuine pre-estimate of the Supplier's damages and is not a penalty.
(b) The Customer agrees to pay all the Supplier's reasonable costs & expenses, legal costs and any expenses incurred by the Supplier in connection with recovery of amounts overdue.
…"
Relevant provisions in the guarantee included:
"1. I will indemnify the Supplier against any losses, costs, charges and expenses of any nature, which it might incur as a result of any default by the Customer or arising under this Guarantee. I agree that I will pay any stamp duty assessed on this Guarantee.
2. I will also be responsible to the Supplier for all outstanding monies due now or at any time in the future for Goods supplied by the Supplier to the Customer from time to time.
3. Both my Indemnity and my Guarantee are continuing security and will not be affected (whether or not I have notice of the following matters).
(a) If the Supplier:
(i) grants any extension of time or other indulgence to the Customer
(ii) refuses further credit to the Customer
(iii) Varies the terms of the Customer's account, or the arrangements between the Supplier and the Customer are changed in any other way (even if this increases my liability under this Guarantee and Indemnity).
…
6. This Guarantee may be withdrawn by the Guarantor, only at the expiry of fourteen (14) days from the day on which written notice of with-drawal is actually received at the Supplier's registered office by Hume Plasterboard Pty Ltd's principal Legal Officer or regional Credit Manager, but will continue in force in respect of all debt incurred up to the date of withdrawal.
…"
Ms Sun particularised the alleged unconscionable conduct in her Amended Statement of Cross-Claim as follows:
"ACL Claim
3 The purported obtaining of the guarantee was made in trade and commerce for the purposes of the Competition and Consumer Act 2010.
4 The purported obtaining of the guarantee from the Cross-Claimant was unconscionable conduct within the meaning of s20 and/or s21 of Schedule 2 of the Australian Consumer Law ("the Act").
Particulars of Unconscionable Conduct
(a) the Cross-Claimant was at a special disadvantage in the purported
dealing with the Cross Defendant in that she:
(i) Could not read or understand English;
(ii) Had no reasonable opportunity to obtain legal advice in relation to the relevant documentation;
(iii) Was not told by the Cross-Defendant that the relevant document was a guarantee; and
(iv) Was not told by the Cross-Defendant that the relevant document purported to guarantee all and any present and future obligations of Brilliant.
(b) the Cross-Defendant relied upon Genade Suntsov, the Second
Defendant to obtain the purported guarantee from the Cross Claimant.
5 As a consequence of the unconscionable conduct of the Cross-Defendant, the Cross-Claimant may suffer loss and damage in the form of a liability to indemnify the Cross-Defendant for the debts of Brilliant.
6 The Cross Claimant seeks injunctive relief pursuant to s232 of the Act and/or damages pursuant to s236 and/or s237 of the Act.
General Law Claim
7 At the time of executing the guarantee on 30 May 2016 the Cross-Claimant did not speak, read or write English.
8 At the time of executing the guarantee on 30 May 2016 the Cross-Claimant did not understand the nature of the transaction or obligation which she was entering into.
9 At no time prior to executing the guarantee on 30 May 2016 did the Cross-Claimant receive any legal advice in relation to the guarantee.
10 At no time did the Cross-Claimant receive the benefit of any monies or materials, or any other benefit at all, of the transactions between Brilliant and the Cross-Defendant.
11 At all material times from January 2016 onwards, the Cross-Claimant reposed trust and confidence in Mr Suntsov, in that:
(a) Mr Suntsov assisted the Cross-Claimant with her financial affairs from time to time: and
(b) Mr Suntsov and the Cross-Claimant were in an intimate relationship
12 At the time of approving the credit limit for Brilliant, the Cross-Defendant understood and believed that the Cross-Claimant was the wife of Mr Suntsov.
Particulars
(a) Credit Application Form, CB/40.
13 At no time prior to the Cross-Claimant executing the guarantee on 30 May 2016, or at any time thereafter, did the Cross-Defendant take any step to ensure:
(a) the effect of the guarantee has been explained by one or [sic] its employees or agents to the Cross-Claimant.
(b) the Cross-Claimant had received legal advice in relation to the guarantee; and
(b) the Cross-Claimant was aware of, and agreed to, the two increases in facility limits from $100,000 to $300,000 and from $300,000 to $800,000.
…"
The original credit contract of 30 May 2016 containing the guarantee signed by Ms Sun became Exhibit Q in the proceedings.
[2]
Factual background
Two admissions were made by Hume in the proceedings. It conceded that it did not take any steps to explain the guarantee to Ms Sun, nor did it make any inquiries as to whether a third party had done so.
Hume also admitted that at all relevant times, it believed that Ms Sun was Mr Suntsov's wife.
Although this was not formally conceded, it was not in issue in the proceedings that Ms Sun was unable to read, speak or understand English.
The parties agreed that the amount presently outstanding to Hume under the guarantee was made up of the following components:
1. $807,301.52 for the supply of goods and materials and interest calculated to 31 March 2018;
2. $138,944.32 for interest from 1 April 2018 to 15 March 2019 at a rate of 18% per annum;
3. $330.00 for search and administration fees; and
4. $770.00 for caveat lodgement charges.
In relation to the other factual matters, my findings are as follows, unless otherwise qualified.
Ms Sun was born in August 1972 in Henan Province of the People's Republic of China. She has one daughter, Ms Qing Lu (Ms Lu), who was born in December 1992. Ms Sun migrated to Australia in 2003 on a Skilled Sponsorship visa which entitled her to permanent residency. The sponsor was her elder brother who was a resident of Australia. In late 2005, Ms Sun was granted Australian citizenship and has resided in Australia since that time.
In 2006, Ms Sun purchased a unit in Bay Street, Rockdale (the Rockdale property) for $360,000. The price of the Rockdale property was funded using Ms Sun's savings, monies borrowed from her parents and a mortgage from the St George Bank in the amount of $280,000. Ms Sun was able to discharge that mortgage in June 2015.
Hume relied upon affidavits from Cindy Williams (Ms Williams) and Vilash Reddy (Mr Reddy).
Ms Williams was Hume's credit controller. On 31 May, she received a Customer Credit Application Form (Exhibit Q) completed in relation to Brilliant Interiors. Included in the application for credit was a personal guarantee and indemnity agreement dated 30 May 2016. There was no issue that this guarantee was signed by Mr Suntsov and Ms Sun. There was also photo identification of Mr Suntsov and Ms Sun in the form of their drivers' licences submitted with the application. Ms Williams was given those documents by Mr Reddy.
Following receipt of the credit contract, Ms Williams sought advice from CMSA Pty Limited (CMSA), an exterior credit reference agency, which was used by Hume to assist with the assessment of customers following receipt of a credit application form. CMSA provided a "new account summary", dated 1 June 2016. CMSA recommended approval of the application with a credit limit of up to $20,000. Included in the CMSA recommendation was a notation that a "property has been located to support guarantee". This was the Rockdale property.
Attached to the CMSA report was a title search of the Rockdale property which identified Ms Sun as the sole registered proprietor. There were no encumbrances on the title.
In evidence Ms Williams agreed that apart from receiving the report from CMSA, she did not request any further financial documents from Brilliant Interiors, Mr Suntsov or Ms Sun. No tax returns, no asset and liability statements and no bank statements were sought from either Brilliant Interiors, Mr Suntsov or Ms Sun.
Ms Williams approved a credit level for Brilliant Interiors of $100,000.
Ms Williams gave evidence of her reasons for approving that credit limit:
"We don't always rely on CMSA, as they're independent somewhat, to make decisions for our business. So I've looked at my knowledge of Gary [Mr Suntsov] which is ten plus years, my application for credit which says that Gary also owns a property with his wife. A lot of our customers do - are known to have properties in the sole name of their wife even though they may own it for "tax purposes", so it's not unusual for me to see in this instance Gary saying owned and Ms Sun saying owned and then the title coming back as just owner, Ms Sun. So I've looked at, okay, there's very little risk because Gary says he owns the property with Ms Sun. They want 200 or whatever it was; we'll give them 100 and then we monitor it very closely for the first three to six/12 months ongoing." (T.13.18)
Ms Williams gave evidence that a letter was prepared by her office, addressed to Ms Sun, confirming that an account had been opened for which Ms Sun was a guarantor and that the total credit limit was $100,000. The letter purported to have attached to it a copy of the Account Terms and Conditions and a copy of the Personal Guarantee and Indemnity Agreement. The letter set out the terms of payment.
Ms Williams had no specific recollection of her department having posted that letter to Ms Sun but gave evidence that it was her invariable practice to send such a letter to new account holders and guarantors. The letter set out in heavy type that the total credit limit was $100,000 (Court Book 71).
When asked about the mailing of the letter, the evidence was:
"Q. Did you mail it?
A. We actually - the original went with Vinnie, from my memory. When reps come in and they say it's urgent, "It's really urgent; I need an application. Once you approve it can you please give me the originals; I'll hand deliver it". So we would have prepared the originals and handed them to Vinnie but we would have mailed a copy from our office." (T.14.42)
The sending of that letter by mail was controversial. Ms Sun denied that she had received the letter. Mr Reddy agreed that he had been given the original documents, including the letter, all of which he handed over to Mr Suntsov. Ms Sun denied being given a copy of the letter by Mr Suntsov.
On about 8 June 2016, Ms Williams received an application from Brilliant Interiors for its credit limit to be increased to $300,000. This was less than a week after Ms Williams had approved the initial application for credit by Brilliant Interiors. The application received on 8 June was dated 6 June and was in the following terms:
"I Xiaojuan Sun and Genade Suntsov of Brilliant Interiors Pty Ltd accept Australia Building Centre (Hume Plasterboard) to place a Caveat on our property of Unit xxxx in Bay Street, Rockdale NSW 2216 to increase our credit limit to $300,000." (CB 78)
The application purported to be signed by Mr Suntsov and Ms Sun with the signatures bearing the date 7 June 2016. It was common ground that other than that document Ms Williams had not received any further financial information from or about Brilliant Interiors, Mr Suntsov and Ms Sun.
Ms Williams approved the application and by letter dated 10 June 2016 (in the same form as the letter of 2 June 2016) indicated that the credit limit of Brilliant Interiors had been increased to $300,000 (CB 94). Ms Sun denied that she signed the document requesting the increase in the credit limit and denied receiving the letter of 10 June 2016 advising that the increase had been granted. Mr Suntsov in his evidence said that he had forged the signature of Ms Sun on the document requesting an increase in the credit limit. Ms Williams agreed that apart from the letter of 10 June 2016 advising of the increase in the credit limit, no-one from Hume had made any attempt to contact Ms Sun directly.
A caveat was lodged in respect of the Rockdale property (Exhibit N). Hume directed a subpoena to the Land Registry Services for the production of any letter sent by it to notify Ms Sun of the lodging of the caveat. No such letter was produced. The parties were, however, able to agree that if its normal practice had been followed by Land Registry Services a pro forma letter to that effect would have been sent to Ms Sun. There was, however, no evidence that such a letter was actually sent. Ms Sun denied having received such a letter.
By email dated 9 December 2016, Mr Reddy advised Ms Williams and other senior employees from Hume that he had received a request from Brilliant Interiors for a payment plan. After some consideration the payment plan was agreed to by Hume but ultimately Brilliant Interiors failed to meet its obligations under that plan. By 28 August 2017, Brilliant Interiors was in breach of the payment plan and was well in arrears in paying for building materials supplied to it by Hume.
By email dated 5 September 2017, purporting to be signed by Mr Suntsov and Ms Sun, Brilliant Interiors requested that its credit limit be increased from $300,000 to $800,000. No investigation of Brilliant Interiors' financial affairs was carried out or requested by Ms Williams. Brilliant Interiors' account was in arrears at the time this application was received. No financial information was requested by Hume from or concerning Mr Suntsov or Ms Sun. After some discussions, on 8 September 2017 Brilliant Interiors' application to increase its credit limit to $800,000 was approved.
Ms Sun denied signing the application to increase the credit limit from $300,000 to $800,000 (CB 101). Mr Suntsov admitted that he had forged Ms Sun's signature on the application and the guarantee.
Ms Williams said that as with the previous increases in the credit level, a letter dated 8 September 2017 was mailed to Ms Sun at her Rockdale address. Ms Sun denied receiving that letter (CB 110).
By 27 April 2018, the Brilliant Interiors' account with Hume was substantially in arrears and a letter headed "Final Notice" was sent separately to Brilliant Interiors, Mr Suntsov and Ms Sun. Copies of correspondence which included an account statement were also sent. The last payment to Hume made towards goods ordered by Brilliant Interiors between June 2016 and April 2018 was made on 8 December 2017.
Ms Sun received the letter headed "Final Notice", dated 27 April 2018, which claimed $807,301.52 and advised that if payment was not made within seven days, further interest charges would be incurred amounting to $193,752.36 (CB 124). Ms Sun said that she did not receive the letter until 4 May 2018 and was initially unable to read it because of her poor English. However, she attempted to translate the letter using an application on her mobile phone. What had attracted her attention when she received the letter was the large monetary amount which featured prominently in the letter. By using that method of translation, Ms Sun was able to determine that the letter was a demand for payment.
In her first affidavit Ms Sun said:
"21 I was very confused as I had not heard of Hume Plasterboard before. I did not have any debts owing to anyone called Hume Plasterboard and I did not recall signing any document for the debt.
22 I saw on the letter that the account name was Brilliant Interiors Pty Ltd which company I never heard about. I looked up the meaning of "Plasterboard" from the dictionary finding out that it is a kind of building product. It reminded me of Gary's construction business. Gary is the only person that I know who is doing construction work. Therefore, I sent Gary a photo of the letter and called Gary to ask if he would know something about this letter. We had a conversation with words in Chinese …"
Ms Sun's evidence was that for the first time in that conversation she was told by Mr Suntsov that he had used her name as security because she owned her own apartment. The following day, Ms Sun approached several lawyers in the Hurstville area asking them to explain the letter to her. The lawyers were conveyancing lawyers and could not give her further advice about what to do but they did tell her that it seemed she had signed a guarantee which made her personally liable for a loan.
With respect to the various signatures referred to by Ms Williams in her affidavit, Ms Sun denied that any of the signatures were hers except for those on the credit contract dated 30 May 2016. Ms Sun said that she had never provided her driver's licence or a photo of her driver's licence to Mr Suntsov or to Hume for the purpose of proving her identity in relation to the documents she had signed.
At all material times, Mr Reddy was a business development manager (sales representative) employed by Hume. As part of his induction process with Hume, he undertook accounts receivable training before being able to offer applications for credit to potential customers. This was standard for all new sales representatives. Part of that training covered new applications for credit. Mr Reddy was new to this job at the time the applications were made.
In mid 2016, Mr Reddy contacted Mr Suntsov with a view to persuading him to purchase building supplies from Hume, rather than his existing suppliers, DPO and Dragon. He visited one of Mr Suntsov's building sites to assess the work which his company was doing. In the course of discussions, he provided Mr Suntsov with an application for credit. In his evidence, he said:
"Q. But you didn't see it necessary to make any inquiries about any of the financial documents?
A. No. Can I just add at that time I was still relatively new at Hume, so I didn't really - I was just taking in a credit application.
Q. And so it didn't form part of your training to take a credit application to ask for the applicant's - information about the applicant's financial position? Is that your evidence?
A. That's right, yeah. So I was necessary - just taking in the credit application, getting it filled in and then returning it back to the credit department.
Q. Do you recall on 31 May 2016 you met Mr Suntsov again at the Surry Hills site?
A. Yes.
Q. One day after you'd given him the form?
A. Yes.
Q. And that was in order to collect the form which he'd filled in?
A. Which he'd filled in, yes.
Q. Because he'd called you and told you he had that form ready to pick up?
A. Yes.
Q. When you met Mr Suntsov on 31 May he told you that his wife, he and his wife owned a property at Rockdale. Do you recall that?
A. I don't remember that. I don't remember.
Q. Is it possible that occurred?
A. Possibly, but I don't remember that.
Q. Do you recall that when you came to collect the form you were made aware that someone Mr Suntsov had informed you was his wife had also signed the guarantee form?
A. Yes, because the guarantee section was signed with his wife which is what I believed at the time." (T.26.30, T.27.4)
Mr Reddy agreed that he had made a notation on the front page of the credit application form that Mr Suntsov's wife had guaranteed the application.
By 10 September 2016, it was clear to Mr Reddy that Brilliant Interiors was in financial difficulty. The payment of its account with Hume was overdue. Hume intended to stop providing credit if the account was not paid by 20 September. By 7 December 2016, despite making some payments, Brilliant Interiors' account with Hume was overdrawn by $150,000. On 5 December 2016, Mr Reddy received a letter from Mr Suntsov suggesting a payment plan for Brilliant Interiors. Mr Reddy forwarded that letter to Ms Williams.
On 10 February 2017, Mr Reddy with Mr Perrotis, Hume's General Manager, met with Mr Suntsov at a building site in Dulwich Hill. Mr Reddy deposed that at the meeting Mr Suntsov said:
"Mr Suntsov: I'm owed money from Da Ra Constructions and Ceerose. Once they pay I can reduce the account. Don't forget my wife has guaranteed the account and you have a caveat on the property. There is no mortgage on the property and you can check that if you want to."
Following that meeting, Brilliant Interiors' account with Hume was taken off hold and supplies of building materials resumed.
By August 2017, the account of Brilliant Interiors with Hume was again in arrears and was going to be placed on hold. Mr Reddy arranged for a meeting between Mr Suntsov and Ms Williams and Mr Perrotis. The meeting was held at Hume's South Granville branch at the end of August 2017. Mr Suntsov requested that Brilliant Interiors' credit limit be increased from $300,000 to $800,000. Mr Suntsov advised that the company had sufficient contracts and ongoing work to justify such an increase.
In the course of the discussion, the following was said:
Ms Williams: "You have another guarantor on this account, not just you."
Mr Suntsov: "Yes my wife. You guys have a caveat over the property we have at Rockdale."
Ms Williams: "Will your wife agree to the increase? It's a lot of money."
Mr Suntsov: "Yes she knows the situation and is willing to support me." (CB 205-206)
Ms Williams advised that she would have to discuss the matter with "Management".
No inquiries were made by Hume as to Brilliant Interiors' present and future contracts. No investigation was made by Hume of the financial position of Brilliant Interiors nor that of either Mr Suntsov or Ms Sun. No request was made for any supporting documents relevant to Brilliant Interiors' capacity to service such an increase in its credit facility with Hume.
In September 2017, Ms Williams advised Mr Suntsov that his application had been successful and that Brilliant Interiors' credit limit had been raised to $800,000. She advised Mr Suntsov that he would need to prepare a letter requesting the increase. Mr Suntsov sent an email to that effect on 5 September 2017.
On the same day, the following conversation took place between Mr Reddy and Mr Suntsov:
Mr Reddy: "Gary I've got your letter asking for an increase in the credit limit, but it hasn't been signed by your wife. She will need to sign it."
Mr Suntsov: "I'll leave the job site now and go and see her. I'll ask her to sign the letter and make sure you get it later today." (CB 207)
Later that day, Mr Reddy received from Mr Suntsov the updated letter which purported to show Ms Sun's signature (CB 101). The updated letter was given by Mr Reddy to Hume's Accounts Receivable Department. It was common ground that no attempt was made at this time by anyone on behalf of Hume to contact Ms Sun. Mr Reddy's understanding at this time was that Ms Sun was Mr Suntsov's wife. Ms Sun denied signing that letter.
Between February and May 2018 the financial position of Brilliant Interiors continued to deteriorate. Despite promises from Mr Suntsov to make payments to reduce its indebtedness to Hume, no payments were made after December 2017.
On or about 26 April 2018, the following conversation took place between Mr Reddy and Mr Suntsov:
"Gary it's Vinnie. Sid just called me. We did not receive your payment."
Mr Suntsov: "Sorry Vinnie. I don't know what to say to you."
Mr Reddy: "I can't help you anymore."
Mr Suntsov: "I understand."
Mr Reddy: "Can I go back and tell Sid when you will be sorting this out?"
Mr Suntsov: "I can't tell you when. The builder keeps screwing me around and breaking his promise. I don't know what to tell you."
Mr Reddy: "Probably just what you said. At least is the truth."
Mr Suntsov: "What happens now?"
Reddy: "Sid will probably issue a Final Notice to the Company, yourself and the other Guarantor."
Mr Suntsov: "My wife too?"
Mr Reddy: "Yes Gary, her too. I would probably talk to her before she gets the letter. I know you have told me she supports you, but you should tell her what is going on."
Mr Suntsov: "She knows; she knows the whole thing." (CB 211)
In May 2018, Hume learned for the first time from Mr Suntsov that Brilliant Interiors was not the head contractor in respect of the various building sites to which reference had been made but was a sub-contractor. Hume proceeded to take recovery action against Brilliant Interiors, Mr Suntsov and Ms Sun.
In Ms Sun's case two affidavits were affirmed by Ms Lu. Ms Lu was not required for cross-examination.
Ms Lu was born in December 1992, migrated to Australia in 2005 and had been living in the Rockdale property since about 2009. She is an Australian citizen.
In her affidavit of 15 August 2018 she denied that the signatures under the name "Qing Lu", which appear in the Hume documents of 30 May 2016, were her signatures. She deposed that she had never seen these documents before proceedings were commenced and did not sign them. She denied that she had witnessed the signatures of Ms Sun and Mr Suntsov on those documents.
In a further affidavit, affirmed 13 May 2019, Ms Lu deposed that she first met Mr Suntsov about four years ago. It was her recollection that Ms Sun and Mr Suntsov commenced a relationship approximately three years before, and that he would come to the Rockdale property for dinner about three times a week.
Ms Sun affirmed two affidavits on 22 August 2018 and 13 May 2019. The following sets out the effect of the evidence in those affidavits.
At the time the first affidavit was sworn, Ms Sun was unemployed. However, when she took out the mortgage on the Rockdale property, she worked as a sales assistant in a Chinese gift shop and occasionally worked casual jobs for cleaning companies and as a fast food server in various restaurants and cafes. Her weekly income was about $400 from those jobs.
She and her daughter, Ms Lu, occupied one bedroom. The second bedroom was rented for $360 per week. Ms Sun paid all the expenses on the property and was able to pay out the mortgage by June 2015.
She met Mr Suntsov in mid 2010. At the time she only knew that he worked in construction and did gyprocking. After that meeting they became good friends. It was Ms Sun's understanding that Mr Suntsov was married with two daughters.
On or about 4 May 2018, she received a letter from Hume dated 27 April 2018. Because of her lack of knowledge of English she tried to translate the letter using a translation application on her mobile phone. By doing that she was able to ascertain that the letter was a demand for payment.
Ms Sun was very confused as she had not previously heard of Hume, did not have any debts owing to anyone called Hume and did not recall signing any document for the apparent debt.
Ms Sun saw on the letter that the account name was Brilliant Interiors which was a company she had not heard about. She did, however, look up the meaning of "plasterboard" and learned that it was a kind of building material. Since Mr Suntsov was the only person she knew who was associated with the building industry, she contacted him to find out whether he knew something about the letter. This led to the following conversation in the Mandarin dialect of the Chinese language.
Ms Sun: "Gary. It's Xiaojuan, I received a letter and a statement that I need to pay $807,305.52 to a company called Hume Plasterboard and the account name is Brilliant Interiors Pty Ltd. Do you know who they are?"
Mr Suntsov: "Okay Brilliant Interior Pty Ltd is my company. I took out a line of credit with Hume Plasterboard to get plaster, so I could get my last job done faster."
Ms Sun: "Okay, but why do you owe so much money?"
Mr Suntsov: "Because my last construction work did not make enough money and I didn't have enough money at the time to pay so I just needed some time to work around the issue and make some money from my current job."
Ms Sun: "Okay, you owe them the money, so why are they asking me for it?"
Mr Suntsov: "I don't have any property under my name and I couldn't get the credit amount I needed with just my name so I used your name too as security because I know you own your own apartment, but I didn't think it would affect you."
Ms Sun: "What? How could you do that? That's it's my property! It's got nothing to do with you! We're just friends!"
Mr Suntsov: "Because at the time I haven't finished the job and needed to pay wages to my employees and I need money for the suppliers. I knew I could pay it back, but I didn't want to bother you."
Ms Sun: "But why use me? Why did you put my house as security?"
Mr Suntsov: "I was nervous, if I didn't finish the job, I wouldn't make any money and I needed the supplies, otherwise the company will go bankrupt and I didn't know anyone that could help."
Ms Sun: "What about the signed guarantee part? What does that mean?"
Mr Suntsov: "To get the credit, I had to sign some documents."
Ms Sun: "What kind of documents?"
Mr Suntsov: "I had to sign them as a Guarantor and you did too."
Ms Sun: "What? But I haven't signed anything. I don't even know what this is about! Why are they saying I've signed something?"
Mr Suntsov: "Um … I did all these and didn't tell you."
Ms Sun: "What did you sign Gary? You need to show me."
Mr Suntsov: "Okay I'll come to your house tonight after work and we can talk about it."
Ms Sun: "Okay I'll see you later." (CB 318-319)
Later that evening Mr Suntsov arrived at the Rockdale property and Ms Sun related the following conversation:
Ms Sun: "What's going on Gary? What did you sign?"
Mr Suntsov: "This is contract between my company and the plasterboard supplier. I signed a Credit Application form and use that form to apply for some loan for my business. I asked you to sign that document as well but I did not tell you that that document was."
Ms Sun: "I really don't know what you're talking about."
Mr Suntsov: "Don't worry, I can pay off those debts and you will be fine…" (CB 319)
It was on the following day that Ms Sun approached several lawyers in Hurstville asking them to explain the letter to her.
Ms Sun described how it was that she came to sign the guarantee on 30 May 2016. She said that Mr Suntsov came to the Rockdale property and showed her some papers with some handwritten words on them. She observed that the top left lines had already been filled in but other lines were blank. Mr Suntsov said:
"Xiaojuan, can you help me sign on this paper."
Ms Sun: "What's this?"
Mr Suntsov: "It's a rental agreement. I've already signed this document and will need yours for reference."
Ms Sun noted that there was a house logo on the top right of the papers and thought that it might be a real estate rental agreement and that Mr Suntsov would need her signature as a reference. Ms Sun said that she had signed several references for students who had previously rented her apartment for their next rental application. She did not regard it as something serious for her to sign.
Ms Sun did not remember how many times she signed the document but she signed it where Mr Suntsov indicated on the paper. After she signed, she saw Mr Suntsov fill in the two lines below her signature with her name in Chinese and her address. After she signed those documents for Mr Suntsov she went to the kitchen to cook dinner.
Ms Sun said that although she had signed the guarantee of 30 May 2016 she did not know or understand its content at the time that she signed. She denied that she had ever provided a copy of her driver's licence to Mr Suntsov and in particular when she signed the documents on 30 May 2016. She denied ever providing her driver's licence or a photograph of her driver's licence to Mr Suntsov. She denied that she received the letter of 2 June 2016 referring to a credit limit of $100,000. She denied that she had signed the document of 6 June 2016 purporting to consent to the lodgement of a caveat over the Rockdale property. Ms Sun deposed that the signature on that document was not hers and that she had not seen that document before it was attached to the affidavit of Ms Williams.
Ms Sun denied having any knowledge of any of the dealings between Mr Suntsov and Hume. She denied that she had agreed to any increase in the credit limit granted to Mr Suntsov's company by Hume. She denied that her signature appeared on any documents executed after 30 May 2016. She denied that the signature purporting to be hers on those subsequent documents was in fact her signature. Ms Sun had no knowledge of Mr Suntsov's dealings with Hume until after these proceedings were commenced against her. Ms Sun said that at no time did she intend to be a guarantor of Mr Suntsov's company.
In her affidavit of 13 May 2019 Ms Sun elaborated on the relationship between her and Mr Suntsov. She said that since January 2016 they had been involved in a sexual relationship. She described their relationship as "not boyfriend and girlfriend but neither are we normal friends. I consider us to be somewhere in between". She deposed that Mr Suntsov used to come to her home for dinner usually three times per week and would stay each time for between three and five hours before returning to his family home. She said that every time that Mr Suntsov came to her home since January 2016 they would be intimate. On very rare occasions he would stay overnight.
Ms Sun explained her failure to detail the nature of their relationship in her earlier affidavit as follows:
"8 When I prepared my earlier affidavit I did not clearly explain this. At the time I did not want details of my extra marital affair revealed to the court as the second defendant is married with children."
Mr Suntsov affirmed affidavits on 22 August 2018 and 13 May 2019. Their contents was relied upon in the case of Ms Sun.
There is an obvious difficulty with the evidence of Mr Suntsov. On his own admission, he deliberately sought to deceive not only Hume by the production of documents which contained forged signatures, but he also deceived Ms Sun. His evidence needs to be treated with caution except where it is otherwise corroborated by documents or oral evidence. Mr Suntsov deposed that he and Ms Sun met in 2010 when he refurbished her apartment. Over a period of two or three years they became friends and on the occasions that Ms Sun returned to China, she would ask him to manage the Rockdale property and rent out the rooms. He also helped Ms Sun find tenants.
Mr Suntsov deposed that he had severe English language difficulties and could only speak limited English within the workplace. He said that he could not understand complex English writing and could only understand jargon in relation to construction materials. I do not accept this evidence. There was no suggestion in the evidence of Ms Williams or Mr Reddy that Mr Suntsov had any difficulty in communicating with them in English.
The effect of the evidence in his affidavits was as follows.
Brilliant Interiors was set up in 2011 and commenced construction work in or around 2015. Before using his own company, Mr Suntsov worked for a friend's company as a supervisor of construction work. All the workers in that company, and in his own company, were Chinese. Mr Suntsov did not have any business experience with suppliers until he set up his own company in 2015. Thereafter, he began to contact suppliers and communicate with them using his limited English skills. Hume was the second supplier with whom he did business.
He denied that Ms Sun had any role in his company. She did not even know his company's name until she received a letter from Hume.
His discussions with Mr Reddy, leading up to the supply relationship with Hume, largely reflect the information contained in Mr Reddy's affidavit. There are some differences in the words used in their conversations but both versions of events correspond with each other reasonably well.
Despite his potential unreliability, I am inclined to accept Mr Suntsov's evidence of at least one conversation with Mr Reddy when he attributed to Mr Reddy the following:
"The application would be likely to be approved if it were signed by a person who owns property under their name."
Such an observation fits with Mr Reddy's subsequent conduct and that of Hume in that they appeared to be more interested in obtaining adequate security for a loan rather than looking at the company's capacity to pay.
On 30 May 2016, Mr Suntsov went to Ms Sun's apartment at Rockdale with the executed pages of the Guarantee Agreement. His evidence was that the following conversation took place:
Ms Sun: "What's this?"
Mr Suntsov: "It's a document in relation to a rental agreement. I need a friend's signature."
Mr Suntsov pointed out where Ms Sun should sign and asked her to do so. She signed the document and he filled in her print name "Xiaojuan Sun" and her address because she could not write English. When Ms Sun went into the kitchen to cook dinner, he went to her bedroom and removed her driver's licence from her wallet. He took photos of her driver's licence and saved them onto his mobile phone. He did not inform Ms Sun of these actions.
After he left Ms Sun's home, he signed the witness section of the guarantee document using her daughter's name and forging her daughter's signature. He inserted an address which he made up.
On the same day, Mr Suntsov contacted Mr Reddy and informed him that he could pick up the completed application form the following day from the construction site in Surry Hills, where Mr Suntsov was working. On 31 May 2016, Mr Reddy came to that site and collected the application form from Mr Suntsov. Later that day, Mr Suntsov sent Mr Reddy a text message attaching the photos of his and Ms Sun's driver's licences.
In early June 2016, within one week after the initial approval of his credit application, Mr Suntsov said that he was contacted by Mr Reddy via telephone and was advised that he could increase the credit limit of his business account to $300,000. Mr Reddy's evidence was that Mr Suntsov approached him seeking an increase in the credit limit. I prefer the evidence of Mr Reddy on this issue. In respect of the document applying for a credit limit increase to $300,000 (CB 78), Mr Suntsov admitted that he signed the document and forged the signature of Ms Sun. He claimed that he could not now remember its content and even at the time did not understand the meaning of the words "place a caveat on our property". He claimed that he only learned the meaning of those words when he was preparing his affidavit with the help of his solicitors. He deposed that the language and jargon in the document were far beyond his written English capacity and that he would never have drafted such a document himself.
While I accept that Mr Suntsov may have had some assistance in drafting the document, I do not accept that having forged Ms Sun's signature he then handed over to Mr Reddy a document the meaning of which he was unaware. I am well satisfied that Mr Suntsov prepared that document and knew what it meant when he handed it over. He may have obtained some assistance from a friend in drafting it (as he said in cross-examination) but I am satisfied that at all times he knew what the document meant and that his purpose in giving the document to Mr Reddy was to increase the credit limit available to his company.
Mr Suntsov was not able to say whether Ms Williams sent the letter of 2 June 2016 or whether a copy of the letter was sent to Ms Sun. He did, however, confirm the evidence of Mr Reddy that on 2 June 2016 Mr Reddy gave him the originals. At no time did Mr Suntsov say that he gave any of those documents to Ms Sun. At no time did Ms Sun ask him questions about the letter of 2 June 2016.
Mr Suntsov accepted that as of October 2016 Brilliant Interiors owed Hume about $200,000. It was allowed to repay between $20,000 and $50,000 every month with a view to paying the entire outstanding amount within five months. However, he said that he was only able to pay the agreed instalments for two or three months.
Mr Suntsov deposed that in or about December 2016 his company's construction work in Dulwich Hill commenced and he needed plasterboard to complete the job. He said that although his account with Hume was always in arrears, it never exceeded the $300,000 limit.
Mr Suntsov deposed that in early September 2017 he went to Hume's office in Granville to discuss future supply and payment arrangements. He said that Hume agreed to increase his credit limit to $800,000. He agreed that in preparing the application for that increase he, and not Ms Sun, signed the document which was subsequently faxed to Hume (CB 101). He said that he signed both signatures and did not tell Ms Sun what he had done.
In his second affidavit of 13 May 2019, Mr Suntsov sought to clarify his relationship with Ms Sun. Since about January 2016 he and Ms Sun had been involved in a sexual relationship. In describing the relationship he used the same description as Ms Sun, i.e. they were not boyfriend and girlfriend but nor were they normal friends but something in between. He would stay at Ms Sun's apartment about three times per week for three to five hours and then return to his Penshurst home. Almost every time he went to Ms Sun's apartment, they would be intimate. He only stayed overnight at her apartment on rare occasions because he needed to return home to look after his family.
Mr Suntsov sought to explain his failure to correctly describe his relationship with Ms Sun in the earlier affidavit as follows:
"11 At the time I did not want details of my extra marital affair revealed to the court as I am married with three children."
[3]
Submissions
Hume submitted that the Court should have serious doubts about the veracity of Ms Sun's evidence because she had demonstrated a propensity to lie in order to obtain benefits, as well as a willingness to lie on oath. Hume submitted that because Ms Sun effectively carries the onus of establishing the elements of her defence and cross-claim, it was necessary for the Court to accept her evidence for her to succeed. Hume submitted that the Court could not be so satisfied given the extent to which her credibility had been damaged. Hume submitted that the Court could not be satisfied that Ms Sun was unaware that the document she signed on 30 May 2016 was a guarantee.
Hume submitted that the Court could not be satisfied that Ms Sun was a volunteer and did not receive any benefit from signing the guarantee. This was because there was compelling evidence that Ms Sun was an employee of Brilliant Interiors, or had some other connection to that company, and therefore had a financial interest in that company being successful.
In order to establish those propositions, Hume relied upon the cumulative effect of what it described as lies and inconsistencies in her evidence.
Hume submitted that a comparison of Ms Sun's first affidavit with her second affidavit made it clear that she was prepared to tell lies under oath. It submitted that in her first affidavit she was at pains to make clear that the relationship between her and Mr Suntsov was that of "a normal friend". In contrast, her second affidavit revealed that at the relevant time there was a sexual relationship between them which had been in existence from the beginning of 2016.
Hume submitted that the discrepancy between the two affidavits went further than a simple omission of a relevant detail and constituted a deliberate attempt to mislead the Court by giving false evidence under oath.
There is no doubt that the content of the first affidavit is potentially misleading in its reference to the relationship being that of a "normal friend", rather than one of intimacy. When one looks at the detail of the two affidavits it is clear that Ms Sun was not entirely frank in the first affidavit. She did not, however, seek to positively deceive the Court. Her explanation for failing to provide full details of her relationship with Mr Suntsov was an understandable one but does give rise to some reservations about the reliability of her evidence. I do not, however, regard the difference between the affidavits as amounting to a deliberate lie under oath. Rather it should be more accurately characterised as a failure to be entirely frank with the Court.
The next matter identified by Hume related to Ms Sun's application to the St George Bank for a loan to enable her to purchase the Rockdale property. Hume submitted that the circumstances surrounding that application made it clear that Ms Sun was prepared to tell lies in order to obtain a financial benefit.
In support of that proposition, Hume contrasted Ms Sun's description in the first affidavit of her employment and the income which she was earning from various jobs with the description in the loan application of her employment as that of a "Second Chef" earning $49,140 per year.
I am not prepared to make such a finding. The responses by Ms Sun in cross-examination were plausible and did not reflect badly upon her credit. She said that she told the loan broker that she was working as a kitchen hand and that he filled in the loan application form (T.40.22). She did not know what he wrote.
It should be kept in mind that the application for a loan was made in 2006. Ms Sun's knowledge of English would at that time have been even less than in 2016. As indicated in the review of evidence, it was never suggested to Ms Sun that she was able to speak, read, or understand English. Accordingly, it was not open to Hume to submit that she had filled in the loan application herself or had read and approved its content.
When she applied for the loan she was accompanied by the loan broker who had "filled in that part" of the loan application. When asked whether she had told the broker that she was earning $49,140 per year, Ms Sun replied "[t]hey didn't ask me for that; they only wanted to get the loan" (T.40.34). That response has the ring of truth. If the loan broker had included in the loan application Ms Sun's modest employment history it is most unlikely that she would have obtained such a large loan. In those circumstances, the loan broker would not have received his commission. Accordingly, it is quite plausible that without Ms Sun's knowledge or consent the loan broker completed the loan application in such a way as to ensure not only that Ms Sun obtained her loan but that he obtained his commission.
It follows that I do not consider that this evidence impacts adversely on either Ms Sun's credibility or reliability. Her observation that "they only wanted to get the loan" is, in the circumstances, quite insightful.
Hume sought to make a similar point in relation to the occasion when Ms Sun applied for a credit card with HSBC in May 2016. Hume noted that the application for the credit card (Exhibit C) gave details of Ms Sun working "fulltime" for "Brilliant Interiors" as a "Manager", having worked there for two years and five months. Hume submitted that this was either proof of her employment by Brilliant Interiors or if she was not employed by it, it was proof of her willingness to tell lies to obtain a financial advantage.
In order to better understand the flavour of the evidence, it is useful to set out what the evidence was:
"Q. Yes did Ms Sun tell the bank teller that she was employed fulltime?
A. INTERPRETER: I'm not sure - I'm not sure, but the teller asked me for that because it was very easy to make the application, because the credit limit was only $2,000, so it was very easy to get approved.
Q. So, she cannot remember whether she said she was employed fulltime?
A. INTERPRETER: That's right, I can't remember. It was very easy to get the approval.
Q. Ms Sun, did you give your employer name as Brilliant Interiors?
A. INTERPRETER: Yes, because they need an employer's information.
Q. You said you were a manager of Brilliant Interiors?
A. INTERPRETER: No, I didn't.
Q. You said you worked with Brilliant Interiors for two years and five months? Can you answer the question, Ms Sun?
A. INTERPRETER: I didn't work there.
Q. The question was is that what you told the HSB bank teller?
A. INTERPRETER: Gary, at the time, asked me to get a credit card. I said I had no - I wasn't in employment and Gary says that, "You just give them my company's information".
Q. So that's what you did?
A. INTERPRETER: Yes.
Q. You told the HSB bank teller that you earned $40,518 per year?
A. INTERPRETER: I can't remember.
Q. Ms Sun, are you saying you were quite prepared to lie about your employment in order to obtain the credit card?
A. INTERPRETER: The bank did not ask me many questions. They only ask me if I have a job and I provided the information from Gary's company. I have a good record with HSBC account." (T.42.14)
I am not satisfied on that material that it constitutes an admission as to employment of Ms Sun by Brilliant Interiors. The more likely explanation is that given by Ms Sun to the effect that Mr Suntsov wanted her to obtain a credit card which he could use. It was his suggestion that she identify his company as her employer, otherwise she would not be issued with a card. On that explanation, it is clear that Ms Sun told a lie to the bank teller which does not reflect well on her. However, the intervention of Mr Suntsov and their relationship at that time needs also to be kept in mind. She appears to have been applying for a credit card only because Mr Suntsov had asked her to do so.
Hume also relied upon the credit card application to challenge the evidence of Ms Sun to the effect that when she received the letter of 4 May 2018 from Hume and saw the name Brilliant Interiors, this was a company she had "never heard about".
When that matter was put to her, her response was plausible. The relevant exchange was:
"Q. Ms Sun, you just gave evidence before that Gary told you to say you worked for brilliant interiors to HSBC, 2016, that you could use his company details?
A. INTERPRETER: Because the name of the company is in English, like Brilliant Interiors, those English words doesn't register in my mind very long. For instance, now you mentioned this Brilliant Interiors and then after some time, I did not remember this name." (T. 43.10)
It is not unreasonable for Ms Sun in May 2018 to have no recollection of the name Brilliant Interiors if she had only used that name once in May 2016 when applying for a credit card. This is particularly so when she was not an English speaker. In the circumstances, I am not satisfied that this challenge to Ms Sun's credit has been made out. This conclusion is supported when one has regard to how Ms Sun attempted to translate the letter of May 2018 by the use of a translation application on her mobile phone.
Hume submitted that Ms Sun's evidence should not be accepted when she denied that she received the letter of 2 June 2016. It submitted that Ms Williams' evidence on this point should be preferred. In support of that proposition, Hume submitted that, despite her lack of knowledge of English, had Ms Sun received the letter of 2 June she would have been able to do what she did in relation to the letter of May 2018, i.e. use the translation application on her mobile phone to at least interpret the document in part and so make herself aware of the contents of the letter and its attachments.
I do not accept that submission. Ms Williams quite candidly conceded that she had no specific recollection of having sent the letter of 2 June 2016 but was definite in her assertion that such a letter was invariably sent when a credit arrangement was entered into with a customer. The difficulty with that confident assertion is that we know that the originals of the documents were given to Mr Reddy who in turn gave them to Mr Suntsov. In those circumstances, those persons in Ms Williams' department responsible for sending out such letters may well have considered delivery to Mr Suntsov as having the same effect as mailing the letter to Ms Sun. If, as Ms Sun asserts, Mr Suntsov had used a pretext to obtain her signature, he was most unlikely to have given her the documents which he had received from Mr Reddy and risk his deception being discovered.
In those circumstances, I am not satisfied that Ms Williams' department did in fact send the letter of 2 June 2016 by mail to Ms Sun.
Similarly, I am not satisfied that Ms Sun received the subsequent letters from Hume, which it sent each time the credit limit of Brilliant Interiors was raised, or the letter from the NSW Land Registry Services after a caveat was placed on the Rockdale property. No copy of the draft letter normally sent by NSW Land Registry Services could be found and no copy was placed before the Court.
There is, in my opinion, a strong possibility that Mr Suntsov intercepted those letters and the caveat notification. I raise that possibility because Mr Suntsov would have known that each time the credit limit was raised, notification would be sent by Hume to the affected parties, i.e. himself, Brilliant Interiors and Ms Sun. He would have been in a similar position in relation to the caveat notification. Since he would attend the Rockdale property approximately three times per week, it would have been a relatively easy matter for him to intercept those letters and their attached documents before they came to the attention of Ms Sun. Such conduct would be fully consistent with the deceit which he practised on her by covertly photographing her driver's licence, forging her signature in the credit applications to Hume and also in his application for a loan from Get Capital when he covertly photographed her Medicare card (T.62.31).
Those matters, however, can only be raised as a possibility because it was never put to Mr Suntsov that he had in fact intercepted those letters. Certainly Ms Sun was adamant that she did not receive them. I found her denials on that issue to be quite convincing.
That does not end the matter. If I am incorrect and she did receive those letters and the caveat notification, they would have meant little to her given her inability to speak, read or understand English. Just because she was able to use the translation application on her mobile phone to partially translate the letter of May 2018, does not mean that she could or even should have done so in 2016 and 2017. When considering these matters one needs to keep in mind the evidence of Ms Sun to the effect that throughout this period she was completely unaware of the way in which Mr Suntsov had involved her in the affairs of Brilliant Interiors. In those circumstances, it would not have been unreasonable for her to have simply ignored those letters as not affecting her or having been sent to her by mistake (T.56.37,64.27). The same observation can be made concerning the caveat notification letter had she received it.
Hume submitted that Ms Sun was an employee of Brilliant Interiors or, in the alternative, that she was much more involved with that company than indicated by her evidence. Apart from information provided to HSBC to obtain a credit card, Hume also relied upon Ms Sun's credit card statements (Exhibit D) when read with Brilliant Interiors' credit card statement (Exhibit P) to prove employment by Brilliant Interiors.
By means of a spreadsheet Hume submitted that the similarities in dates and places where both cards were used was substantial. Hume submitted that both cards were used repetitively at places in the vicinity of Surry Hills (which was one of Brilliant Interiors' building sites) for purchases at premises known as "Two Daughters" and "DEK Thai Pty Ltd". Similar submissions were made in relation to purchases from "Chargrill Wahroonga" and "Red Leaf Piccolo" Wahroonga. These premises were a restaurant, a fast food outlet and a coffee shop. The submission was made by Hume that "[a]s can be seen from the attached schedule Ms Sun's HSBC credit card statements have an uncanny similarity" to those of Brilliant Interiors. Hume also relied on the use of Ms Sun's HSBC credit card to make purchases from merchants such as "Bunnings" and "Rallis Timber".
Hume submitted that the use of the HSBC credit card at such locations was consistent with Ms Sun attending those building sites and performing work there for Brilliant Interiors.
Hume also relied upon the bank statements of Ms Sun which showed deposits made into her bank account by Mr Suntsov. There was an entry of 30 May 2016 of $1,100 "for labour". The amounts were substantial comprising a deposit of $5,000 on one occasion and two deposits of $1,000 on another. Hume submitted that such deposits were consistent with Ms Sun being paid for work performed by her for Brilliant Interiors.
When Mr Suntsov was asked to explain these deposits, he denied that they were for work performed for his company. In relation to the payment of $1,100 with the words "for labour" following it, Mr Suntsov said:
"No, at that time, I didn't want my wife to know that I made the payments, so I added the word "labour". (T.80.17)
In relation to the other deposits, Mr Suntsov's evidence was:
"Q. Why, Mr Suntsov, were you transferring so much money to Ms Sun?
…
INTERPRETER: Because we are in a romantic relationship, I am willing to give her some money." (T.81.3)
"Q. How frequently in that time period did you give Ms Sun sums of cash approximately $1,000?
A. INTERPRETER: I can't recall exactly how many times, but I did give her some money.
…
Q. Doing work?
A. INTERPRETER: No. I gave her money because we were in relationship and I was willing to give her the money." (T.87.21, 87.37)
When these deposits were put to Ms Sun, her evidence was:
"Q. Now, Ms Sun, you have a bank account with St George, a Freedom account and the account number of your account xxxxxx? Now, if you could turn to the second page, look at the entry 30 May, you received a payment, $1,100 from Gary Suntsov for labour?
A. INTERPRETER: I'm sorry, what is your question.
Q. I'm saying did Ms Sun receive a payment for $1,100 from Gary Suntsov on 30 May 2016 in respect of labour?
A. INTERPRETER: What labour?
Q. That payment was in respect of your work for Brilliant Interiors, wasn't it, Ms Sun?
A. INTERPRETER: I didn't provide any labour.
Q. Ms Sun, what do you say that payment is in respect of?
A. INTERPRETER: Which year is that?
Q. 2016?
A. INTERPRETER: It could be an amount of money accredited into my bank account, but not for the labour I performed." (T.48.19)
HIS HONOUR: Q. What is being put to you Mr Interpreter - what is being put to you is that this document shows that you have been receiving some money from Mr Suntsov in 2016. Can you explain that?
A. INTERPRETER: These are the money given to me by Gary.
Q. What is being put to you is that you were being given that money by Gary because you were doing work for Gary's company; that's correct or not?
A. INTERPRETER: No. I never worked for him." (T.49.8)
"HIS HONOUR: Q. Leaving aside the money you received from your nephew, are you able to say why Gary was paying you these other sums of money that Ms Hill has referred to?
A. INTERPRETER: Because we are boyfriend and girlfriend he gives me money." (T.50.6)
"Q. Ms Sun, I put it to you that those amounts are cash amounts you received from Brilliant Interiors for working for the company?
A. INTERPRETER: Which company did you mean?
Q. Brilliant Interiors?
A. INTERPRETER: No." (T.50.42)
"Q. Ms Sun, I'm going to take you to the bank statements which show cash deposits into your account and in respect of each one I put it to you that that money was paid to you by Brilliant Interiors for your services to the company. On page 2 on 21 February 2014 you deposited $800 into your bank account.
A. INTERPRETER: Yes.
Q. And that was money that Brilliant Interiors paid you?
A. INTERPRETER: Cash deposit is done by me.
Q. Yes, but the cash was given to you by Gary on behalf of Brilliant Interiors?
A. INTERPRETER: Well, he gave me money. He never told me that he paid me this money on behalf of Brilliant Interior.
Q. So this is money that Gary did give you?
A. INTERPRETER: Gary occasionally gives me money. I also make some money and also he give me some money.
…
HIS HONOUR: Which is the period February 2014.
Q. If you turn to page 9, Ms Sun.
A. INTERPRETER: You were talking about 2014?
Q. Yes.
A. INTERPRETER: During that period of time Gary didn't give me any money.
Q. Where did this money come from?
A. INTERPRETER: Before I started relationship with Gary, I also had another boyfriend.
Q. What do you mean by that?
A. INTERPRETER: What I meant was that my relationship with Gary only started around 2016 because I just realised that you were talking about something in 2014." (T.57.27, 58.4)
Ms Sun also provided an additional explanation for how she came to deposit substantial sums of money into her bank account from time to time.
"HIS HONOUR: Q. Where do you say the money came from?
A. INTERPRETER: Which year is this?
Q. The amount of $5,000 you apparently received in 2016. Where do you say that money came from?
A. INTERPRETER: Sometimes when I work as a online sales I have to change the Chinese dollars into Australian dollars.
Q. How do you say that accounts for you making a deposit of $5,000 in 2016?
A. INTERPRETER: Because I have Chinese dollars and sometimes I change from Chinese dollars; I turn them into Australian dollars.
Q. Are they Chinese dollars that you've brought with you from China or you received from China?
A. INTERPRETER: I have bank account in China in the form of Chinese dollars so I can change them and those bank accounts are linked with Australian banks, such as St George Bank so I can turn them into Australian dollars." (T.51.9)
When the totality of the evidence on the payments into Ms Sun's bank account is looked at, it is quite inconsistent with payments for work. There was no regularity in the payments. The amounts differ. The payments by Mr Suntsov were from his personal account. Most importantly, the evidence of Ms Sun and Mr Suntsov is quite consistent as to the basis on which the payments were being made. Mr Suntsov was paying Ms Sun's living expenses. Put in a somewhat old fashioned way, it is not unusual for a married man to pay the living expenses of his mistress and to provide financial gifts to her from time to time. As Ms Sun indicated in relation to the monetary deposits made into her bank account in 2014, she had a similar arrangement with an earlier boyfriend.
The further explanation provided by Ms Sun is that she had sources of income of her own, in particular a bank account in China which she could call upon and an arrangement with the Australian bank so that the monies sent from China on her behalf were paid into her account as Australian dollars. The distinction which she made was that cash deposits were made by her but bank transfers into her account came from another source (T.57.34).
The consistent explanation provided by both Ms Sun and Mr Suntsov, the amounts involved and the irregularity with which the payments into her bank account were made, are quite inconsistent with an employment or other relationship between Ms Sun and Brilliant Interiors. Significantly, the nature of the work said to be performed by Ms Sun was never identified.
I am not persuaded that the apparent correlation between the use of Ms Sun's credit card with the use of Brilliant Interiors' credit card establishes an employment or any other relationship between the company and Ms Sun. Ms Sun's evidence was that she did not drive so that it was necessary for Mr Suntsov to drive her to places such as Surry Hills or for her to find other means of transport. It is therefore not surprising that the Brilliant Interiors' credit card and that of Ms Sun was used on the same occasions at the same locations.
Many of the purchases involved small sums of money of $10 or less. It is therefore not surprising that when questioned about those purchases almost three years later, Ms Sun had little specific recollection of them. The only relatively large purchases were made from Bunnings and Rallis Timber. When Ms Sun was asked to explain those purchases she said that both she and Mr Suntsov used the HSBC credit card. That is consistent with Ms Sun's evidence that it was Mr Suntsov who asked her to obtain that credit card.
Ms Sun denied that she had made any of the purchases from Bunnings or Rallis Timber. She said that those purchases were made by Mr Suntsov (T.43.32, 43.48). When it was put to her that she had in fact made those purchases while in the employ of Brilliant Interiors she denied both propositions.
"Q. I'm suggesting to you, Ms Sun, that you made the purchase at Rallis Timber on behalf of Brilliant Interiors?
A. INTERPRETER: How could I purchase a timber for him when my English is not so good. I don't know those building materials." (T.44.39)
Mr Suntsov agreed that from time to time he used Ms Sun's HSBC credit card for his own purposes and that included making purchases from Bunnings and Rallis Timber. He said that Ms Sun was with him when he used the card. That is consistent with him providing transport on most occasions for Ms Sun.
In relation to the purchases from Bunnings and Rallis Timber, Mr Suntsov said:
"Q. Was that purchase made for construction materials for Brilliant Interiors' construction work?
A. INTERPRETER: These are electrical cables and light fittings. At the time I didn't have money, so I asked Ms Sun to lend me some money.
Q. But the cables were for Brilliant Interiors?
A. INTERPRETER: Yes." (T.88.48, 89.4)
"Q. Mr Suntsov, you will see an entry on 16 February 2017 for Rallis Timber Pty Ltd - do you see that entry?
A. INTERPRETER: Yes.
Q. For $1,383.15?
A. INTERPRETER: Yes.
…
Q. Was there another occasion when Mr Suntsov used Ms Sun's HSBC credit card to make a purchase?
A. INTERPRETER: This purchase was for Ms Sun's own home flooring." (T.89.25)
The purchases made with Ms Sun's HSBC credit card do not support Hume's proposition that Ms Sun was attending building sites at Surry Hills and Wahroonga on a regular basis consistent with employment by Brilliant Interiors. An analysis of the locations where the credit card was used show that there were purchases at Surry Hills on five days in July 2016, on three days in August 2016, on eight days in September 2016 and on two days in October 2016. There were no purchases with the credit card in December 2016 and January 2017. There were purchases on one day in February 2017 but none in March and April 2017. There were purchases on one day in May 2017 but none in June 2017. There were purchases on one day in July 2017.
In relation to Wahroonga, there were purchases on two days in February 2018 and four days in March 2018.
The capacity of those credit card records to establish an employment relationship between Ms Sun and Brilliant Interiors is further weakened if one accepts that there were occasions when Mr Suntsov used the HSBC credit card when he was not accompanied by Ms Sun.
Given that many of the purchases involved coffee and the attendance at a café or restaurant, the HSBC credit card statement is more consistent with Mr Suntsov taking Ms Sun out to lunch at locations near to a building site being used by Brilliant Interiors than establishing an employment relationship between the company and Ms Sun.
In the course of submissions, considerable scepticism was expressed by counsel for Hume concerning what was described as Ms Sun's "feigned" ignorance about where Wahroonga was. With great respect that seems to be somewhat unfair and certainly did not accord with my observation of Ms Sun while she was giving evidence. For a person with very limited knowledge of English, who does not drive a car and who lives in the Rockdale area, it is not implausible that such a person would have little knowledge of the precise location of a suburb such as Wahroonga.
Hume submitted that there are other examples of things which Ms Sun did which point to either her working for Brilliant Interiors or being involved in Brilliant Interiors. What was meant by the term "involved" was never articulated.
One of those examples was a payment made to a person called "Zhongpeng Shan" from Ms Sun's Commonwealth Bank account (Exhibit K). When cross-examined about the identity of this person, Ms Sun could not recall who he was. She said that she had asked Mr Suntsov about it and he "couldn't elaborate either" (T.61.33). Mr Suntsov's evidence about Zhongpeng Shan and Ms Sun's payment to him was:
"Q. Ms Sun, was sending you a text message to note a payment of $990 to Jong Pen Chan?
A. INTERPRETER: Yes.
Q. Who was Jong Pen Chan?
A. INTERPRETER: Mr Chan was one of the workers working for Wong Siong company.
Q. Why was Ms Sun paying one of the workers from her bank account?
A. INTERPRETER: I have nothing to do with this Mr Chan, but from memory this Mr Chan was Ms Sun's previous boyfriend. I'm sorry, Ms Sun's daughter's previous boyfriend. (T.86.12)
…
Q. Did you request that Ms Sun send you this payment detail?
A. INTERPRETER: Yes.
Q. Why?
A. INTERPRETER: Because this is money this amount, actually, Mrs Sun's daughter brought up this amount from this person" (T.86.1, T.86.29).
(There was a complaint on behalf of Ms Sun that the question had not been properly interpreted. That issue was left unresolved.)
Hume submitted that the evidence concerning this payment was contradictory and inconsistent, and involved Mr Suntsov's and Ms Sun saying different things.
I do not see how this evidence assists Hume or derogates from the case put forward on behalf of Ms Sun. The evidence of Ms Sun and that of Mr Suntsov could be readily explained and is not necessarily inconsistent. Mr Suntsov may not have remembered who this person was at the time he was speaking to Ms Sun, but subsequently either made inquiries or thought about it further and remembered who the person was. In any event, the evidence on the issue is quite vague and does not assist either side.
The evidence concerning the company Wong Siong Pty Ltd (Wong Siong) is in the same category. $5,000 was paid by Wong Siong into Ms Sun's bank account on 10 August 2016. Wong Siong had as its registered office the Rockdale property. When asked about this company, Ms Sun was unable to provide any information and said that "[y]ou have to ask Gary" (T.56-57).
When Mr Suntsov was asked about Wong Siong he described that company as his subcontractor to which Brilliant Interiors had made substantial payments, i.e. in July 2016 payments of $11,000, $40,000, $26,000 and $3,000. The bank statement for Wong Siong showed payments going to a number of individuals with Chinese names, none of which Mr Suntsov recognised. When asked to explain a payment of $5,000 by Wong Siong to Ms Sun, Mr Suntsov's evidence was:
"A. INTERPRETER: Ms Sun was planning to go back to China in September and after I paid Wong Siong the money I haven't got any cash left so I ask Wong Siong for a loan to give this money to Ms Sun.
Q. Who is it that you were asking, what person?
A. INTERPRETER: Just the person himself.
Q. Who?
A. INTERPRETER: Wong Siong." (T.85.28)
That and the bank statements was the extent of the evidence adduced in relation to the company. On the basis of that evidence, Hume submitted that the payment to Ms Sun by a company so closely associated with Brilliant Interiors should be taken as evidence of her involvement in Brilliant Interiors. Hume submitted that Mr Suntsov's evidence concerning Wong Siong Pty Ltd was inconsistent. The basis for that submission was Exhibit N which showed that payments were made in the amounts of $407.88 and $291.08 on 3 October 2016 to Hume by eftpos from the Wong Siong account. In evidence, Mr Suntsov said that he had paid cash on behalf of Brilliant Interiors for that same material. Hume submitted that this showed that Mr Suntsov had access to the funds of Wong Siong and that in all probability he controlled that company.
Had those matters been put squarely to Mr Suntsov he might have explained how that transaction proceeded and how it was that funds were taken from the Wong Siong account. On the current state of the evidence, however, the inference sought to be drawn by Hume is not available. There are too many unanswered questions and too many other possibilities to make a finding of the kind sought by Hume, i.e. that Mr Suntsov controlled Wong Siong. To do so would not involve inference but speculation.
In any event, those matters do not adversely affect Ms Sun's credibility. From her response to questions asked about that company, in all likelihood she had no idea that it had as its registered office her Rockdale property. In any event, that evidence either on its own or in combination with other evidence is incapable of establishing on balance that Ms Sun was employed by Brilliant Interiors or otherwise had a role in that company.
Hume submitted that Ms Sun's evidence as to when she signed the guarantee on 30 May 2016 she believed she was signing a reference to enable Mr Suntsov to rent premises should not be accepted. Hume submitted that Exhibit Q is in brochure form containing mainly printed material and setting out on its front page in both English and Chinese the following:
"WARNING: THIS IS AN IMPORTANT DOCUMENT. IF YOU DO NOT UNDERSTAND THIS DOCUMENT YOU SHOULD SEEK INDEPENDENT LEGAL ADVICE."
Hume submitted that when Ms Sun said that she had not looked at the front page she should not be believed.
Hume submitted that Ms Sun was a person who had applied for and obtained a mortgage from the bank, had operated several bank accounts and had applied for a credit card. Hume submitted that these transactions would have familiarised her with the appearance of a legal document and her evidence that she thought she was signing a reference letter was not believable. Hume submitted that Ms Sun would have been familiar with what a rental reference looked like, having signed such documents on behalf of students who had stayed in her apartment.
There are a number of reasons why I am not prepared to make that finding. The first and most obvious is that it fails to have any regard to the unchallenged fact that Ms Sun, at the time she signed the guarantee, was unable to read, speak or write English. She did remember what she described as a house logo on the front of the document but little else. That observation of the house-like logo tended to confirm what Mr Suntsov had told her, i.e. that this was a rental reference.
The submission also fails to take into account the form of Exhibit Q. It is by no means clear that when Mr Suntsov asked her to sign the document that he gave her any opportunity to read it or closely examine it, rather than simply placing before Ms Sun that part of the document which he wished her to sign. Given their dealings up to that point in time, there was no reason why Ms Sun would consider that Mr Suntsov was seeking to deceive her and had wrongly described the effect of the document.
Hume summarised its position in this way. The main element Ms Sun had to establish was that she did not understand the purport and effect of the guarantee. Ms Sun's evidence was so unbelievable that the Court would not be so satisfied. Hume submitted that there were so many inconsistencies in the totality of the evidence of Ms Sun and Mr Suntsov that the Court should conclude that neither Ms Sun nor Mr Suntsov had given complete and honest evidence.
Hume submitted that even if the Court was so satisfied, Ms Sun had not established that the relationship between her and Mr Suntsov was of a kind envisaged by Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395 (Garcia). Hume submitted that because it was unaware of Ms Sun's inability to understand English, Ms Sun could not bring herself within the principles set out in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; 151 CLR 447. In relation to those issues, however, Hume did concede that it had notice of and at all material times believed that Ms Sun and Mr Suntsov were in a marital relationship even though this was not the fact.
Hume submitted that Ms Sun had failed to establish that she was a volunteer. It submitted that, while she was neither a shareholder nor director of Brilliant Interiors, there was sufficient evidence to establish that she was receiving benefits from that company and from Wong Siong, which was a company so closely related to Brilliant Interiors and controlled by Mr Suntsov that payments by it should be regarded as analogous to payments by Brilliant Interiors. By parity of reasoning Hume submitted that Ms Sun had also received payments in cash and by way of electronic transfer from Mr Suntsov and that even if those payments had not been made directly by Brilliant Interiors, they were so closely associated with that company as to constitute benefits received by Ms Sun from that company.
[4]
Consideration
I have concluded that the evidence of Ms Sun should generally be accepted. She gave her evidence in a forthright manner and did not prevaricate when answering questions. For the reasons already indicated, I find her evidence to be plausible and generally truthful.
It follows from that finding that I accept the evidence of Ms Sun that when she signed the guarantee she did not understand the purport and effect of the document. I accept her evidence that she believed that what she was signing was a reference to assist Mr Suntsov in renting premises.
Apart from my acceptance of Ms Sun as a witness of truth, there are a number of other matters which lead to that conclusion. The first of those matters is the unchallenged evidence that the signature of Ms Sun's daughter, Ms Lu, was forged. The only logical candidate for such a forgery is Mr Suntsov. His evidence to that effect is confirmed by the affidavits of Ms Lu. His motivation is also obvious. Ms Lu was a student with a knowledge of English. If he had shown the document to her, she would almost certainly have understood its effect and raised the matter with Ms Sun.
Next, on the assumption that Ms Sun was a volunteer, there was no evidence of what would motivate her to sign a guarantee, which would place at risk the Rockdale property, which had been purchased with her own money and that of her family. Alternatively, if Ms Sun did understand the effect of the guarantee which she was signing why was there a subsequent need on the part of Mr Suntsov to forge her signature on later documents and covertly photograph proofs of her identity. Such inconsistency in the conduct of Mr Suntsov, which is inherent in the case put forward by Hume, was never explained. That scenario was never put to Mr Suntsov.
Finally, although on Ms Sun's evidence the conduct of Mr Suntsov was reprehensible in the extreme and would lead one to assess his evidence very carefully, it cannot be ignored that the admissions made by him in these proceedings were very much against his interest. Despite being given a warning which would have enabled him to decline to give evidence on the grounds that it might incriminate him, Mr Suntsov made very incriminating admissions. Accordingly, despite his conduct, I accept the evidence of Mr Suntsov insofar as it goes to deceit practised against Ms Sun.
There is also a logical pattern inherent in the case put forward on behalf of Ms Sun. She was a person with little, if any, understanding of the English language. In relation to the guarantee she was entirely dependent upon what she was told by Mr Suntsov. Ms Lu was not present when the document was signed and knew nothing about it. In subsequent credit applications by Brilliant Interiors, it can be inferred that Mr Suntsov was not prepared to risk obtaining further signatures from Ms Sun in case her suspicions were aroused. In that regard, his motivation in subsequently forging her signatures is clear.
The challenge by Hume to the effect that Ms Sun should have recognised that the guarantee was different to the sort of reference which she had previously signed has already been dealt with, i.e. the form of the document was such as to allow the pages to be turned in such a way as to obscure most of its content except for the place where the signature was to be placed. In addition, given Ms Sun's lack of understanding of English, there was no reason why she would have regarded that part of Exhibit Q, which she signed, as being very different from references she had previously signed.
Once it is accepted that Ms Sun was not aware of the purport and effect of the guarantee the next inquiry is whether under the general law Ms Sun is entitled to the equitable relief which she seeks by way of defence and in her cross-claim. Ms Sun relied upon the statements of principle in Garcia. There, the plurality (Gaudron, McHugh, Gummow and Hayne JJ) said:
"31 The principles applied in Yerkey v Jones do not depend upon the creditor having, at the time the guarantee is taken, notice of some unconscionable dealing between the husband as borrower and the wife as surety. Yerkey v Jones begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee. It holds, in what we have called the first kind of case, that to enforce that voluntary transaction against her when in fact she did not bring a free will to its execution would be unconscionable. It holds further, in the second kind of case, that to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport and effect to her or did not reasonably believe that its purport and effect had been explained to her by a competent, independent and disinterested stranger. And what makes it unconscionable to enforce it in the second kind of case is the combination of circumstances that: (a) in fact the surety did not understand the purport and effect of the transaction; (b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed); (c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet (d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.
32 To hold, as Yerkey v Jones did, that in those circumstances the
enforcement of the guarantee would be unconscionable represents no departure from accepted principle. Rather, it "conforms to the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct".
33 It will be seen that the analysis of the second kind of case identified in Yerkey v Jones is not one which depends upon any presumption of undue influence by the husband over the wife. As we have said, undue influence is dealt with separately and differently. Nor does the analysis depend upon identifying the husband as acting as agent for the creditor in procuring the wife's agreement to the transaction. Rather, it depends upon the surety being a volunteer and mistaken about the purport and effect of the transaction, and the creditor being taken to have appreciated that because of the trust and confidence between surety and debtor the surety may well receive from the debtor no sufficient explanation of the transaction's purport and effect. To enforce the transaction against a mistaken volunteer when the creditor, the party that seeks to take the benefit of the transaction, has not itself explained the transaction, and does not know that a third party has done so, would be unconscionable.
…
40 We consider that the only question of notice that arises is whether the creditor knew at the time of the taking of the guarantee that the surety was then married to the borrower. Other questions of notice do not intrude.
41 As is apparent from what was said in Yerkey v Jones the creditor may readily avoid the possibility that the surety will later claim not to have understood the purport and effect of the transaction that is proposed. If the creditor itself explains the transaction sufficiently, or knows that the surety has received "competent, independent and disinterested" advice from a third party, it would not be unconscionable for the creditor to enforce it against the surety even though the surety is a volunteer and it later emerges that the surety claims to have been mistaken.
42 What then of the present case? The trial judge found that the appellant did not understand the purport or effect of the transaction. She knew it was a guarantee but she thought it was a guarantee of limited overdraft accommodation to be applied only in the purchase of gold. Nor did she understand that her obligations under the guarantee were secured by the mortgage which she had given over her home. It being found that the bank took no step to explain the transaction to her and knew of no independent advice to her about it (there having been no such independent advice) the conclusion that the appellant was entitled to succeed in her claim to set the transaction aside was inevitable if she was a volunteer." (Footnotes omitted)
As can be seen from its submissions, Hume challenges two of those propositions, i.e. whether Ms Sun was a volunteer and whether the relationship between her and Mr Suntsov was such as to have caused Hume to understand that Ms Sun may repose trust and confidence in Mr Suntsov in matters of business, and therefore to have understood that he may not fully and accurately explain the purport and effect of the transaction to her.
Hume submitted that Ms Sun was not a volunteer in that she was an employee of Brilliant Interiors. There are a number of problems with that proposition. Even if there was evidence to establish such a relationship, it is not at all clear that the fact of employment would disqualify her from being a volunteer. In that regard, it is significant that in Garcia the wife was also a shareholder and director of the borrower company. That fact did not disqualify her from being a volunteer in that there was no evidence of her receiving actual benefits from signing the guarantee. The evidence in this case is to similar effect. Even if it could be proved that Ms Sun was an employee of Brilliant Interiors, there was no evidence that she obtained any direct financial benefit from signing the guarantee. The only benefit which could be identified would be allowing Brilliant Interiors to trade more profitably (at least potentially) thereby allowing Brilliant Interiors to continue paying Ms Sun for her work. In my opinion, a benefit of that kind is too remote and not that which was envisaged in Garcia.
In any event, the evidence upon which Hume relied, fell far short of establishing an employment relationship between Ms Sun and Brilliant Interiors. Significantly, it was not put to Ms Sun what duties (if any) she performed for or on behalf of Brilliant Interiors, what her role was, what her salary was, whether she received superannuation or any other matter relevant to establishing that she was an employee. The Court was in fact invited to speculate as to the existence of an employment relationship in circumstances where there was an absence of evidence as to any indicia of employment other than receipt directly from Mr Suntsov of sums of money over a period of time.
Importantly, no matters relating to the possible employment of Ms Sun were put to Mr Suntsov during his cross-examination. As a director of Brilliant Interiors, he was the only person who could have given any relevant evidence on that issue. The fact that Ms Sun received money from Mr Suntsov can otherwise be explained as set out in [131] hereof. Importantly, there is not one document in evidence demonstrating that any money was transferred from Brilliant Interiors to Ms Sun.
The limitations associated with the evidence relating to the acquisition of the HSBC credit card has already been commented on. Moreover, the purchases made using the HSBC credit card which were put to Ms Sun in cross-examination were consistent with Ms Sun being asked to obtain the credit card by Mr Suntsov. The purchase of building materials from Bunnings and Rallis Timber was explained by Mr Suntsov and in accordance with Ms Sun's evidence was consistent with him using the credit card to purchase such material. I have concluded that the proposition that Ms Sun was working on a construction site for Brilliant Interiors in some unidentified role lacks any factual foundation and I am not prepared to make such a finding.
It follows, from the above, that Ms Sun was a volunteer in the sense referred to in Garcia. She did not obtain any financial benefit by signing the guarantee.
The relationship between Mr Suntsov and Ms Sun is difficult to define other than the somewhat crude characterisation that Ms Sun was at the relevant time Mr Suntsov's mistress. The undisputed evidence was that Mr Suntsov was married with children and that he was still living at home with his family while his relationship with Ms Sun continued. The reality of their relationship, however, is irrelevant. As Garcia makes clear, the important issue is Hume's belief as to the relationship. It is common ground between the parties that it was Hume's understanding and belief that Ms Sun and Mr Suntsov were married. That belief and understanding means that Hume is to be taken to have understood that as a wife Ms Sun may repose trust and confidence in Mr Suntsov in matters of business and therefore to have understood that Mr Suntsov may not fully and accurately have explained the purport and effect of the guarantee to Ms Sun. As I read the statement of principle in Garcia, it is not the reality of the relationship which is important it is the lender's perception of it.
It follows from the above findings that Ms Sun's case comes fairly and squarely within the parameters of Garcia. Accordingly, under the general law, Ms Sun is entitled to the orders which she seeks in her defence and cross-claim.
I am also of the opinion that the facts of this matter attract the operation of ss 20 or 21 of the ACL.
Section 20 is in the following terms:
"20 Unconscionable conduct within the meaning of the unwritten law
(1) A person must not in trade or commerce engage in conduct that is unconscionable within the meaning of the unwritten law from time to time.
(2) This section does not apply to conduct that is prohibited by section 21."
Quite clearly in its terms s 20 incorporates into the ACL the unwritten law in relation to unconscionable conduct thereby extending the remedies available under the ACL to unconscionable conduct, to the extent that this concept is presently part of the common law or equitable principles recognised by the Courts. It follows that Garcia is part of the unwritten law and is incorporated into the ACL.
When considering whether or not conduct is unconscionable, a court is to first consider the matter under the ACL s 21 because s 20 only applies if s 21 does not. It is not, however, necessary to further analyse ACL s 21. If it applies, Hume's conduct is unconscionable and is prohibited. If ACL s 21 does not apply, then s 20 clearly does. Either way, Ms Sun has the benefit of the ACL.
Accordingly, the orders which I make are:
1. A declaration that the guarantee executed by Ms Sun on 30 May 2016 is void and unenforceable as against Ms Sun.
2. There should be judgment entered in favour of Ms Sun.
3. The plaintiff is to pay the costs of Ms Sun.
[5]
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Decision last updated: 18 June 2019