King v Brown

] NSWSC 1236 Hawkesbury Valley Developments P/L v Custom Credit Corporation Ltd (1995) NSW ConvR 55-731 King v Brown [2020] NSWSC 1010 Kowalczuk v Accom Finance (2008) 77 NSWLR 205; [2008] NSWCA 343 Miwa Pty Ltd v Siantan Properties Pty Ltd (2010) 15 BPR 28,621; [2010] NSWSC 1203 MLW Investments Pty Ltd v Tacsum Pty Ltd [2006] NSWSC 1256 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28; (2016) 90 ALJR 835 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676; [1912] HCA 9 Ringrow Pty Ltd v BP Australia Pty Ltd; Ultimate Fuel Pty Ltd v BP Australia Pty Ltd; Nader-One Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; [2005] HCA 71 State Bank v Chia (2000) 50 NSWLR 587; [2000] NSWSC 552 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52; Westpac Banking Corporation v Kingsland (1991) 26 NSWLR 700 WorkPac Pty Ltd v Rossato [2021] HCA 23 Category: Principal judgment Parties: Mr S King (Plaintiff) Mr G Brown (First Defendant) Mrs B Brown (Second Defendant) Riverpines Vineyard Pty Ltd (Third Defendant) Representation: Counsel: Mr P Newton (Plaintiff)

Solicitors: Anne McDonald Lawyers (Plaintiff) File Number(s): 2020/94610

Judgment

1. After an unsuccessful farm debt mediation, on 29 July 2020 Davies J gave judgment for Mr King for possession of land owned by Mr and Mrs Brown at Milbrodale in New South Wales, where they were growing grapes. His Honour found that the parties had entered a deed of loan in 2016 in relation to Mr and Mrs Brown's earlier borrowings of some "$794,250 (CAD 750,000)" from Mr King. Their borrowings later increased to "$2,314,093.43 (CAD 2,342,756.00)": King v Brown [2020] NSWSC 1010 at [1]-[5].
2. Riverpines Vineyard Pty Ltd, of which Mr and Mrs Brown were sole shareholders and directors, gave a guarantee under a general security agreement it had earlier entered with Mr King. On 17 April 2020 Mr King had appointed a receiver, Mr Pleash of Hall Chadwick, to Riverpines. On 11 November Mr Pleash was also appointed the receiver of the property, which Mr and Mrs Brown had not vacated, although Mr Brown still claimed that Mr King took possession on 29 July. There is no issue, however, that they vacated only in February 2021, when the Sherriff was due to evict them.
3. Davies J had ordered that Mr King be given possession of the property, despite Mr Brown having been given leave to file an amended defence in court at the initial hearing. His Honour found that nothing had been paid under the loan; the defendants had accepted that more than $2.5million was owed to Mr King; and that the defence did not plead any matter which, if proved, would provide a defence to Mr King's claim: at [16].
4. This reflected that on 1 November 2017, Mr and Mrs Brown had been obliged under cll 9(c) and (d) of their mortgage to repay the principal and interest they owed Mr King. Riverpines was under a similar obligation, being bound by the general security agreement: at [17].
5. What was then left in issue was identified by Davies J to be a determination of the amount owing under the loan because there was a dispute over whether Mr King was entitled to claim the debt in Canadian, rather that Australian dollars. Mr and Mrs Brown and Riverpines then claimed that Mr King's claim for payment in Canadian dollars overstated their debt by about $300,000: at [19].
6. On the cases advanced at the final hearing, the difference amounts to considerably less.
7. Davies J also considered that the defendants might be entitled to an accounting and have a cross claim in relation to their complaint that wine had been seized and sold at an under-value, with success on such a claim probably being offset against what was found owing on any accounting: at [20]. As well as giving judgment for possession and granting Mr King leave to issue a writ for possession His Honour also ordered another mediation.

Conclusion

1. For reasons which follow I am satisfied that the orders which Mr and Mrs Brown and Riverpines sought must be refused and orders in favour of Mr King for payment of the amount which they owe him must be made, calculated in the way that I will explain.

Why applications for further adjournment of the final hearing and leave to lead further evidence were refused.

1. The second mediation Davies J ordered also did not resolve what remained in issue between the parties, even though it must then have been apparent to Mr and Mrs Brown that they would have to repay their borrowings. Indeed, their differences continued to grow, even during the course of the final hearing.
2. The amended cross claim which had been listed for hearing did not name Mr Pleash as a party and no orders were sought against him. It sought orders for wages of $66,194 for both Mr and Mrs Brown, which they claimed they were owed having worked for Riverpines in administration, marketing, cellar door sales, packing, shipping and accounting. They also sought an order for damages "should the property be auctioned vacant and without proper furniture and an operational cellar door".
3. The amended cross claim pressed at the final hearing also did not name Mr Pleash as a party, but reinstated claims which had earlier been abandoned. Orders then sought were directed to Mr King; Hall Chadwick; the receivership and expenses incurred therein; ownership and disposal of wine; use and ownership of equipment and intellectual property; claimed wages; and aggravated damages for claimed loss of business and reputation, by not allowing Mr and Mrs Brown and Riverpines to continue to operate its business.
4. Mr and Mrs Brown also then pressed an amended motion of 20 November 2020, in which they sought other orders directed to Mr King and Mr Pleash, concerning the receivership.
5. The resumed hearing in May 2021 was also adjourned without objection during the course of the afternoon, when Mrs Brown fell ill and was advised to seek immediate admission at a hospital.
6. Mr Brown had earlier been given leave, again without objection, during the course of his final submissions, to lead various further evidence. This included photographs and videos of the property of which he had not given Mr King any prior notice and oral evidence about what was there depicted. Objections to aspects of Mr Brown's evidence were successfully taken as being unfairly prejudicial, because they were incapable of being met, the evidence having never been served, as the Court had earlier ordered and justice not permitting Mr Brown to conduct the case by ambush and surprise.

Hall Chadwick and Mr Pleash

1. It is convenient to deal next with the position of Hall Chadwick and Mr Pleash. The orders sought in the November motion were: "1. Order that first and second cross-defendants immediately cease all contact with the third cross-defendant and be enjoined from taking further deleterious action that reduces the unsecured creditors and other stake holders debt recovery prospects and rights. 2. Order first cross-defendant be directed to cease being the second cross-defendant's operative, complicit in attempting to force the claimants to agree to a mortgage debt on the property known as "Riverpines ". 3. Enjoin the cross-defendants from illegally using the first and second cross-claimant's assets for gain of the second cross-defendant to the detriment of the unsecured creditors and other stake holders. 4. Order to prohibit the second cross-defendant from making a sale of the property of "Riverpines Vineyard" without due process, transparency and public tender or auction. 5. Order to prevent Jurds Real Estate from being appointed auctioneers of the property "Riverpines Vineyard"."
2. There is no third cross defendant, but Riverpines is there named as the third cross claimant and Mr King the first cross defendant. In the cross claim then on foot, Hall Chadwick was the second cross defendant. These orders should thus be understood as being directed to Mr King and Hall Chadwick's dealings with each other, which involved Mr Pleash and Riverpines. Other orders were directed to Hall Chadwick and the receiver in the amended cross claim pursued at the final hearing.
3. There is no issue that Hall Chadwick was served with the cross claims. But it has not filed a defence, nor did it appear to defend the claims. By his defence and submissions Mr King denied that such a business name could so be sued.
4. Mr King had also put Mr and Mrs Brown and Riverpines on notice of the need to join Mr Pleash, given the orders they sought, which had also been raised before Davies J at a directions hearing. Then the need to sue either a company or a person was dealt with, as was the need to join Mr Pleash.
5. Despite this Mr Pleash has not been joined, although it was accepted that he was aware of the pleadings. The amended cross claim still named only Hall Chadwick. In July 2021 Mr Pleash swore an affidavit on which Mr King relied to defend the case Mr Brown pressed by his late served evidence.

Other Issues

1. Before the hearing Mr and Mrs Brown and Riverpines identified what they considered to be in issue to be: "1. Whether the mortgage debt is in the legal currency of Australia and amounts are calculated in Australian dollars to be converted and repaid in Canadian dollars. 2. Whether same dated documents with the same name but different calculations can be valid. 3. Whether documents not supplied or explained to the mortgagors are valid and enforceable in law. 4. Whether statements not conforming to Memorandum no. AE720944 filed pursuant to section 80A of the Real Property Act 1990 are valid legal documents. 5. Whether non deed holding debt holders of a property are free to meet with real estate companies about taking possession of and selling the property. 6. Whether unlicensed/registered money lenders are able to use coercion on mortgagors to achieve more than a threefold increase in interest rates. 7. Whether a mortgagee has the right to take assets from the company in receivership at approximately 14% of their market value and sell them to his personal benefit. 8. Whether a mortgagee has the right to devalue a property through neglect over a long period of time, thereby essentially defrauding unsecured creditors and company shareholders."
2. By the case which they finally pressed, other matters were put in issue.
3. But at the hearing there was no issue between the parties about: 1. Mr King and Mr and Mrs Brown having known each other for many years, Mr King and Mr Brown having worked together in the past and they having also owned a boat together, which they hired out through the British Virgin Islands Yacht Club; 2. Mr King, whose evidence was that he was in the business of lending money in Canada, having loaned Mr and Mrs Brown considerable funds between 2013 and 2016, including in respect of the boat, none of which they had ever paid interest on, or repaid; 3. after they retired to Australia, Mr and Mrs Brown having purchased Riverpines Vineyard in 2007, where they initially grew grapes in partnership with each other. After a dispute with Tamburlaine Wines over a grape purchase agreement, they entered an agreement with Riverpines to purchase grapes at a cost of $400,000. The first wines were made with the 2009 harvest; 4. in January 2016 Mr and Mrs Brown entered the deed of loan and a mortgage in respect of their borrowings, then totalling $794,250 (CAD 750,000). It provided for a term of 5 years, with both the principal and interest to be repaid at the end of the term, if not repaid earlier. The interest rate was 5%, reduced to 3% if paid within 14 days of the due date. The mortgage was later registered; 5. the mortgage provided for a certificate signed by Mr King which states the amount owing as at any date, or any other fact relevant to the exercise of his powers as mortgagee, to be prima facie evidence of those facts; 6. Mr and Mrs Brown later entered a deed of variation of loan when Mr King advanced further sums, the borrowings then increasing to $1,057,555 (CAD 1,000,000). They then also executed a Real Property Act Variation of Mortgage document, reflecting that agreement, which was also later registered; 7. there was a second deed of variation of loan entered on 1 November 2016, which reflected that it had been agreed that: 1. the sum advanced was increased to a total of $2,314,093.43 (CAD 2,342,756) comprising two tranches: "1 - $1,074,093.43 (CAD 1,090,976) 2 - $1,240,000 (CAD 1,251,780)" 1. the rate of interest was altered to: "Tranche 1 - 6% per annum, reduced to 4% on payment within 14 days of the dates provided by the mortgage for payment of interest. Tranche 2 - 10% per annum, reduced to 8% on payment within 14 days of the dates provided by the mortgage for payment of interest." 1. the term of the loan was shortened to 1 year ending 1 November 2017 or when the collateral was sold, whichever was the earlier; 2. interest became payable by instalments, with the first due on 1 December 2016 and thereafter monthly in arrears; 3. Mr King's approval of any sale of the property was required, he having absolute discretion to veto any sale; 4. a first registered mortgage over the property would be given by Mr and Mrs Brown; and 5. that "notwithstanding anything to the contrary, the principal sum to be repayable in Canadian funds". 1. the second tranche advanced under the second deed of variation was used to repay Mr and Mrs Brown's borrowings from the Commonwealth Bank, after which its registered mortgage was discharged; 2. the parties then also executed a second Real Property Act Variation of Mortgage document reflecting their agreement, the mortgage later being registered as a first mortgage. The amounts there specified were, however, altered in handwriting to a principal of $2,315,668.46 (CAD 2,350,403.48) and Tranche 2 - $1,241,575 (CAD 1,260,198.63). There was thus an unexplained discrepancy between the two documents the parties then signed as to the total amount of the funds which Mr King had advanced to Mr and Mrs Brown, but no issue as to the amount actually advanced; 3. Mr King also advanced further funds to pay off debts Mr and Mrs Brown owed Broke Fordwich Private Irrigation District for irrigation water, in order that two caveats it had placed on the title could be removed and the mortgage registered; 4. Mr and Mrs Brown failed to pay any monthly interest on their borrowings, nor did they repay the loan in November 2017 when it fell due. Neither did Riverpines; 5. on 10 April 2018 Mr and Mrs Brown repaid Mr King $138,000, which he acknowledged and took into account in his later calculation of what they still owed him; 6. despite later demands, neither Mr and Mrs Brown nor Riverpines repaid the balance of what they owed Mr King, with the eventual result that: 1. Mr King commenced these proceedings in March 2020; 2. Mr Pleash was appointed receiver of Riverpines in April 2020; 3. Davies J made orders for possession on 29 July 2020; 4. Mr Pleash was appointed the receiver of the property in November 2020; 5. Mr Pleash appointed Mr Mercer as viticulture manager, and Mr Napper as vineyard manager; 6. there were ongoing disagreements, including over how they were managing the property and who owned wine and other assets Mr Pleash was dealing with; and 7. Mr and Mrs Brown vacated the property in February 2021. 1. the position at the time the final hearing commenced in April 2021 was that: 1. none of what Mr King was still owed had been repaid and the property had not been sold; 2. Mr Brown and Mrs Brown had objected to Jurds real estate being appointed to auction the property, because of an earlier dispute in which they had been involved with Jurds; 3. while there had been a dispute about Mr and Mrs Brown's ownership of various equipment, some equipment was then in their possession; 4. Mr and Mrs Brown had not been paid for work they claimed they had performed on the vineyard while they remained on the property, after Mr Pleash was appointed receiver of Riverpines in April 2020 until he appointed the managers in October 2020; 5. Mr King had served certificates specifying what he was owed in April 2021, including in relation to legal expenses and the receiver's costs; and 6. Mr King had received an offer to buy the property for some $2 million, which had not been accepted. 1. there being an ongoing dispute over: 1. whether the property had been adequately maintained and the vineyard properly operated by the receiver; and 2. the ownership and sale of various wines by the receiver and Mr Brown; and 3. the ownership of certain other assets.

What is payable under the mortgage?

1. Davies J has already concluded that the case which Mr and Mrs Brown and Riverpines had pleaded by their amended defence to Mr King's claim that he was entitled to payment of both principal and interest under the mortgage, had not been established.
2. The result was that all that was left to be determined in relation to Mr King's case was how what they owed under the mortgage was to be calculated and whether he was entitled to an order for the costs which he claimed.

The validity of the mortgage

1. Despite this Mr and Mrs Brown and Riverpines pressed for rulings that the mortgage was invalid and that expenses and costs were limited to Riverpines. Such rulings may not be made.
2. The claim that the mortgage documents were not valid was inconsistent with the position which Mr and Mrs Brown and Riverpines took before Davies J, the conclusions his Honour has already reached and the orders by which they are already bound, which they have not appealed. In the result it is not open to them to now advance a claim that either the mortgage or the second variation, which both refer to what is owing in Australian and Canadian dollars and prescribe the current interest rate and term of the mortgage, are not valid.
3. That has not, in any event been established on the evidence, to which I will return.
4. The original mortgage provided for interest at 5%, reduced to 3% if paid when it fell due. The second variation provided for compound interest on the first tranche advanced at 6%, reduced to 4% and on the second tranche, such interest at 10%, reduced to 8%.
5. The amended defence admitted that the mortgage terms and conditions were changed several times, increasing interest rates and, it was claimed, making conditions more onerous and shortening the term of the mortgage in a manner that made it more difficult to pay mortgage payments: at 3(ii). Particulars of such difficulties were not provided.
6. The amended defence also referred to an offer of finance from Mr King, when he decided to pay out the Commonwealth Bank: at 3(i). It claimed that Mr and Mrs Brown understood the term would remain fixed for 5 years, but did not disclose what that understanding rested on, nor was that revealed by the evidence.
7. Before Davies J Mr and Mrs Brown and Riverpines accepted, nevertheless, that more than $2.5 million was owing to Mr King: at [16]. That amount included what was described in the second variations as the first and second tranches he had advanced, as well as unpaid interest.
8. In written submissions Mr Brown said that it was Mr King who had decided to pay out the Commonwealth mortgage, elevating him to the position of first mortgagee, but Mr Brown gave no evidence of any conversations to establish this. In any event, discharge of that mortgage cannot have happened without both the agreement and involvement of Mr and Mrs Brown.

The orders pressed

1. The orders pressed against all three defendants was for judgment: 1. under the mortgage and guarantee totalling CAD 3,147,400 or AUS $3,193,333, comprised of: 1. CAD 2,134,924 total principal advanced to Mr and Mrs Brown; 2. CAD 1,012,476 interest owing on the various amounts advanced to them from time to time, at different agreed rates, calculated to 14 April 2021; and 3. $161,586 legal costs and expenses to 14 April 2021. 1. $108,369 receiver and manager's costs and expenses to 14 April 2021; 2. $82,611.97, which it was common ground Mr King had paid in 2016 to settle Mr and Mrs Brown's debt for the unpaid irrigation costs, in order to have the two caveats lodged over the property removed, which was not secured by the mortgage or guarantee; and 3. interest under s 101(2) of the Civil Procedure Act on these sums.
2. Mr King's case was initially that these orders should be made even though he had not yet sold the property, accepting that he had obligations as mortgagee to account to Mr and Mrs Brown when the property was sold. By the time of the final hearing the property had been sold at a price about which Mr and Mrs Brown and Riverpines complained. But they did not seek to address this by further amendment of their cross claim.
3. Mr and Mrs Brown resisted the claim that what was due should be calculated in Canadian dollars, relying on what was originally agreed in the mortgage.

Are the amounts due under the mortgage payable in Australian or Canadian dollars?

1. Whether the moneys owed to Mr King under the mortgage have to be paid in Australian or Canadian dollars depends on the proper construction of the parties' agreements.

Mr King's case

1. Mr King's case was finally that: 1. the second deed of variation slightly overstated the principal sum in Tranche 1 as to the amount advanced and understated Tranche 2. These were obvious and simple mistakes which could be solved by construction, without requiring rectification, by reflecting the actual amounts advanced, which was not in issue: Miwa Pty Ltd v Siantan Properties Pty Ltd (2010) 15 BPR 28,621; [2010] NSWSC 1203 at [16]. 2. the terms of the deed of loan and mortgage, as varied, should thus be construed to reflect the amounts actually advanced, with interest payable from 26 August 2015 and the date of each subsequent advance. 3. otherwise, the construction of the parties' commercial agreements should be approached in light of the principles discussed in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [22]; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [47]; and Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16]. 4. in the result the language used, the surrounding circumstances known to the parties and the commercial purpose or objects secured by their agreements had to be considered in determining objectively, what a reasonable businessperson would have understood those terms to mean. Their contracts must also be construed as a whole, to render all terms harmonious: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36 at 110. 5. on the proper construction of cl 2 of the Second Deed of Variation of Loan and Mortgage, the "principal sum is increased to AUD $2,314,093. 2,303,214.73 (CAD$2,342,756.00 2,268,923.63) made up as follows: Tranche 1 - AUD$1,074,093.43 1,061,639.73 (CAD$1,090.976.00 1,008,725) Tranche 2 - AUD$1,240,000.00 1,241,575 (CAD$1,251,780) 1,260,198.63" 1. on the proper construction of cl 1 of Annexure A to the Second Variation of Mortgage the "the "Summary" is amended as follows: "Principal AUD $2,303,214.73 (CAD $2,268,923.63) made up as follows: Tranche 1 - AUD $1,061,639.73 (CAD $1,008,725) Tranche 2 - AUD $1,241,575 (CAD $1,260,198.63" 1. the second schedule of the Deed of Loan, as varied, should thus be construed to mean: "The mortgagor will pay to the mortgagee the principal sum, or so much thereof as shall remain unpaid on the due date (1 November 2017). The mortgagor will pay the principal and interest on the principal sum or on so much thereof as for the time being shall remain unpaid, and upon any judgment or order in which this or the preceding covenant may become merged at the higher rate of interest being 5% 6% per annum on Tranche 1 and 10% on Tranche 2 at the date of this Deed as follows, namely: - by one payment on the Due date if not repaid earlier the first interest payment computed from the date of each advance making up the total of Tranche 1 and Tranche 2 from 1 November 2016, on 1 December 2016 and thereafter interest only payments to be paid monthly in arrears." 1. while cl 6 of the memorandum of mortgage should be construed to mean: "The Mortgagor will pay to the Mortgagee the principal sums, or so much thereof as shall remain unpaid on the date of repayment shown in the summary (1 November 2017). The Mortgagor may repay the whole of the balance remaining unpaid at any time on payment of interest to the end of the then current month together with interest in addition as set out in the summary. In the meantime the Mortgagor will pay the principal and interest on the principal sums or so much thereof as for the time being shall remain unpaid, and upon any judgment or order in which this or the preceding covenant may become merged at the higher rates as follows, namely, by equal monthly payments on the day shown in the summary (1 December 2016 November 2017) each and every month in each and every year until the principal sums and interest shall be fully paid and satisfied, the first of such interest payments computed from the date of each advance making up the loan to be made on the day shown in the summary (1 December 2016 and thereafter interest only payments to be paid monthly in arrears) and compounding monthly in arrears from the date upon which the amount becomes due until payment."

The defence case

1. The defence submissions outlined the history of Mr and Mrs Brown's relationship with Mr King over some 45 years. There explained was how Mr Brown had retired to Australia after working for many years in Canada, including as a consultant to a company owned by Mr King and how Mr King had offered to lend Mr and Mrs Brown money at 3% interest for 5 years, at an unidentified time, as a loan between friends, with no contract or mortgage.
2. In May 2015 Mr King had quantified what was owing to him and Mr and Mrs Brown had agreed to secure their loan by the January 2016 mortgage, which was drawn up using Australian dollars. At an unspecified time, without consulting them, Mr King had paid out the Commonwealth Bank's first mortgage of $1,253,290, elevating him to first mortgagee. The result was that the total amount which he advanced to them, including for the sailboat, was $2,324, 329.
3. Mr and Mrs Brown also claimed, amongst many other things, that: 1. Mr King had then unilaterally imposed terms upon them, which had not been reduced to writing or agreed, including increasing the interest rate from 3% to 10%; 2. before the appointment of the manager, it was they who had acted as receiver/manager for Riverpines; 3. they had been promised a salary for this work, which was not paid despite them having worked 7 days a week for almost 6 months; 4. after appointing the receiver to Riverpines, Mr King had denuded it of saleable assets, including by passing title to its wine inventory at a price ranging from $1 to $3 per bottle. Subsequent sales had netted him a 700% profit; 5. the vineyard had been mismanaged, with the result that its value had been adversely affected, when the grapes became diseased; 6. the value of the vineyard was further devalued when Mr King closed the cellar door; and 7. Mr King had also refused offers received for the property, even one which would have paid out their debt.
4. In oral submissions Mr Brown explained that while he and Mrs Brown accepted that they had signed the second variation of mortgage, they could not understand why, on the same day, they would have signed both documents. Mrs Brown had instructed Mr Brown that she could not remember having signed the second variation of mortgage. Mr Brown accepted, however, that the signature on the document was his and did not suggest that Mrs Brown's signature had been forged. Still they argued that they should pay what they owed in Australian dollars.

Why were both the second deed of variation and the second variation to the mortgage signed?

1. The reason why both the second variation to the deed and the second variation of mortgage document were signed by the parties on the same day was obvious, given their different purposes. The deed, to give effect to the new terms which the parties had agreed and the variation, so that what had been further agreed could be registered.
2. The variation deed thus reflected the basis upon which Mr King had agreed to advance further funds, so that the Commonwealth Bank loan could be paid out. The variation of mortgage document enabled what had been agreed to be registered under the Real Property Act 1990 (NSW) provisions to which it referred, as part of the security Mr and Mrs Brown then gave Mr King over the property.
3. The two documents do not entirely accord with each other. Both reflect that Mr King advanced further amounts, albeit the figures are somewhat different. The evidence does not explain these discrepancies, but it does establish what was actually advanced, as Mr King claimed.
4. The variation of mortgage document also does not make reference to all the terms contained in the variation deed, including the repayment of the principal sum being required to be made in Canadian funds, on which Mr King relies.
5. Nevertheless, as Davies J has already found, there is no question that in 2016 when these documents were signed by the parties, Mr King advanced the further funds he had agreed to provide, described as Tranche 2. They were used to pay out Mr and Mrs Brown's borrowings from the Commonwealth Bank, with Mr King then obtaining a first registered mortgage over the property, as had been agreed, after what Mr and Mrs Brown owed the Bank was repaid and they having failed to pay for irrigation, Mr King also paying that debt, so that the two caveats could be removed from the title and the variation registered.
6. That Mr Brown and Mrs Brown were not aware of and did not agree to any of this, cannot sensibly be accepted. After all, they not only signed both documents but accepted that they also owe Mr King the further amount he paid, in order to have the caveats removed.

The proper construction of the parties' agreements

1. I have concluded that neither Mr King's case, nor the defence case, can be entirely accepted given the proper construction of their agreements.

What the parties agreed

1. The original deed of loan provided in cl 1 Definitions and interpretation: "(b)((v) Reference to an amount of money is a reference to the amount in the lawful currency of the Commonwealth of Australia."
2. The amount advanced was specified in item 1 of the first schedule to be the principal sum of $794,250.00 (CAD 750,000.00). There was no issue between the parties that the original deed thus required repayment of $794,250.00 in Australian dollars, at the end of the agreed term in August 2020. The first deed of variation increased the principal sum to "$1,057,555.00 (CAD 1,000,000.00)" and the second to a total principal sum of "AUD 2,314,093.43 (CAD 2,342,756.00)".
3. By the second variation to the deed of loan the parties also agreed, however, that "Notwithstanding anything to the contrary, the principal sum will be repayable in Canadian funds": cl 5 (c). But it did not so deal with interest.
4. Contrary to the defence case, what was agreed by the second deed of variation thus included the requirement to pay the principal which fell due to be repaid in November 2017 in Canadian dollars, irrespective of what the original mortgage otherwise provided.
5. Contrary to Mr King's case, however, what the parties did not agree in that deed of variation, or otherwise, was that the interest which fell due under the mortgage was also to be paid in Canadian dollars. The parties thus remained bound by the terms of the original mortgage in that respect. Mr and Mrs Brown were bound to continue making interest payments in Australian dollars. They were computed from the date of each advance making up respectively Tranche 1 and Tranche 2 and thereafter, interest was payable monthly in arrears.
6. It follows that the orders must reflect the obligation to pay the principal in Canadian dollars; interest and what is otherwise owed, in Australian dollars; and interest after judgment in accordance with the s 101(2) of the Civil Procedure Act.

Calculation

1. These conclusions require that the orders must be revisited.
2. Mr King is thus directed to produce draft orders which reflect these conclusions within 7 days. In the event of any disagreement about the final calculation, I will hear the parties further.

The claimed costs

1. Mr King's certificate under cl 11 of the deed of loan provided in Australian dollars: "the amount payable by Geoffrey Phillip Brown, Barbara Ann Brown and Riverpines Vineyard Pty Ltd CAN 093 689 804 under the Deed of Loan, as varied, and the Mortgage, as varied as at 14 April 2021 which I hereby demand is as follows: a. Principal CAD 2,134,924 b. Interest CAD 1,012,476 c. Legal costs & expenses paid to 14.4.2021 AUD 161,586 d. Receiver and Manager's costs and expenses paid to 14.4.2021 AUD 108,369"
2. Mr King provided a similar certificate in Canadian dollars.
3. There is no evidence that the legal and receiver's costs Mr King seeks to recover have unnecessarily or unreasonably been incurred, but he did not seek to establish an evidentiary basis for those costs. The underlying accounts which he presumably received and reflected in his certificates were thus not in evidence, or addressed in the case Mr Brown advanced.
4. To establish his right to payment of these costs Mr King relied on Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643; [1935] HCA 49. There a contractual clause which permitted a bank to dispense with proof of a customer's indebtedness, by producing a certificate which conclusively established what was owed, arose for consideration. Its operation depended on the construction of the clause in issue. It provided that a certificate "stating the balance of principal and interest due to you by the customer shall be conclusive evidence of the indebtedness at such date": at 651.
5. It was there concluded that the clause was not void and that the certificate of the officer of the bank was "conclusive upon the parties of the amount and existence of the customer's indebtedness": at 654.
6. Here cl 11 of the deed of loan and cl 14 and 21 of the memorandum of mortgage provided: "11. Certificate evidence Any certificate signed by the general manager, secretary or any director of the mortgagee specifying as at a particular date an amount owing or payable to the mortgagee under or pursuant to this deed or any collateral security or specifying any other matter of a factual nature which is relevant to any of the rights and obligations of the mortgagee under this deed or any collateral security shall be admissible in any proceedings and shall be a prima facie evidence of the matters specified. 14. Certificate Evidence A certificate signed by the Mortgagee that states the amount owing as at any date or any other fact relevant to the exercise by the Mortgagee of any powers hereunder is prima facie evidence of those facts. 21. Costs All costs, fees and expenses including legal expenses on a full indemnity basis in connection with the negotiation, preparation, execution, stamping and registration of this Mortgage, the preservation or protection of the Mortgaged Property or of the title thereto, the repair, maintenance and management of the property and the exercise of the powers of the Mortgagee on default, are payable by the Mortgagor to the Mortgagee on demand."

The amended cross claim

1. Neither the amended defence nor amended cross claim were pleaded in accordance with the requirements of the Uniform Civil Procedure Rules 2005 (NSW). They did not, for example, provide particulars of material documents, or of spoken words on which the defendants relied: r 14.9. Nor did Mr Brown's affidavits provide particulars of conversations on which he relied to establish the claims advanced.
2. The orders which the defendants finally pressed under their cross claim were provided in short minutes marked MFI 5, a copy of which are annexed. Annexure MFI 5 (3300683, pdf) Those orders included a ruling that the mortgage was invalid; that Mr and Mrs Brown were owed wages; damages for lost opportunities to sell the property at a higher price; aggravated damages for Mr King having stripped Riverpines of saleable assets; damages for legal expenses incurred to get wines back from Riverpines which it did not own; as well as damages for various unconscionable conduct, totalling $2,402,062.
3. By his 29 June 2021 affidavit, Mr Brown added to these orders, seeking further orders that: "a. The wines labelled Ascella Organic Wine be adjudged to belong to Mr. and Mr. Brown (sic). Alternatively as previously submitted, Mr and Mrs Brown be awarded the $552,062 value of the wine he seized. b. The machinery and equipment the Browns were unable to take with them from Riverpines Vineyard when Mrs. Brown was suddenly hospitalized be adjudged to be belonging to the Browns. c. Riverpines Vineyard Pty. Ltd. Be left debt free. The Plaintiff and his vassals have operated the company since 17 April 2020 and are wholly responsible for the debts incurred by the company, most of which are vineyard expenses not related to Riverpines Pty. Ltd. operations. d. The Browns be awarded punitive damages arising from Mr. Kings attempts to stop the Browns from receiving the Aged Pension, commencing any new business, accusing us of stealing wine, accusing us of stealing equipment and calling the Police."

Credibility

1. While what remained to be resolved in relation to Mr King's case depended on the proper construction of documents, the onus lies on Mr and Mrs Brown and Riverpines to establish an evidentiary basis for the orders which they seek.
2. They relied on affidavits sworn by Mr Brown, numerous documents, including documents he had created, as well as affidavits sworn by others, to meet that onus. Despite those affidavits corroborating some aspects of Mr Brown's evidence, I came to have reservations about his credibility and the reliability of his evidence.
3. I have concluded that Mr Brown's evidence must be approached with some caution and on issues which must be determined, may not be accepted without corroboration.
4. This conclusion can be explained by reference to Mr Brown's late made claim that the wine that Riverpines produced belonged to him and Mrs Brown, not their company.
5. Mr and Mrs Brown are the sole directors and shareholders of Riverpines and until Mr Pleash's appointment, its controlling mind. In his first affidavit Mr Brown did not suggest that Riverpines did not own the wine produced with grapes they had grown, or that it had ever failed to make any payments due to them for the grapes, with the result that the wine belonged to he and Mrs Brown not Riverpines. Had that been the case, it could only have been the result of steps which Mr and Mrs Brown had taken, about which Mr Brown gave no evidence. This was a claim only belatedly raised in Mr Brown's third affidavit.
6. To establish this claim Mr Brown relied on a grape sale agreement he, Mrs Brown and Riverpines had entered, after an earlier agreement with Tamburlaine wines had not been honoured. That agreement was certainly ambiguous, Mr King disputing that it provided for what Mr Brown claimed.
7. Even accepting that it provided for Mr and Mrs Brown to sell all of the grapes which they produced each year to Riverpines, that it had always failed to pay them for grapes they had supplied, with the result that they owned all wine produced, was not established. That was contrary to what was pleaded in the amended defence on which Mr and Mrs Brown and Riverpines had relied before Davies J. It was also inconsistent with other evidence and aspects of the case Mr Brown pressed.
8. At [15] of his judgment, Davies J noted that amongst the orders then sought were: "Judgement that the receivers did not act in good faith concerning the assets of Riverpines Vineyard Pty Ltd and should: a. Desist in any action to seize the equipment belonging to GP & BA Brown, and; b. Review the sales' records of Riverpines Vineyard Pty Ltd to determine the true market value of the wine inventory/ seized."

Were the agreements unconscionable?

1. The evidence does not establish that the agreements by which the parties are bound were unconscionable.
2. The evidence established that Mr and Mrs Brown had the benefit of all the money Mr King advanced to them over the years and that the only repayment they ever made was the sum which they paid him in 2018, which has been taken into account in his calculations of what they still owe him. They have also never paid any interest, despite having entered the transactions by which they acknowledged they were bound before Davies J.
3. Still Mr and Mrs Brown argued that they ought not to be ordered to repay Mr King anything, they not having provided him with a guarantee of the kind which Riverpines had given him. This submission was misguided, given that they were the borrowers.
4. Nevertheless, fairly understood this aspect of their case, pressed as it was in submissions, Mr Brown raised a claim that what they had agreed was unconscionable under the general law. No statutory provision was relied on to challenge the second variation to the deed and mortgage, to which their complaints were directed.
5. There is no question that the terms then agreed, when Mr King advanced Mr and Mrs Brown significantly more funds used to pay out their Commonwealth Bank loan, were different and indeed more onerous for Mr and Mrs Brown, than the basis on which funds had earlier been advanced to them. The interest rate was increased and became compound, the term decreased and their Commonwealth Bank borrowings were repaid, that all being of advantage to Mr King, including because of the first mortgage which he was thereafter able to register. But of itself this does not establish unconscionability.
6. One of Mr and Mrs Brown's complaints was about the size in which some parts of the documents which they signed were printed. Even if the result of this was that they did not read all or any part of the documents before they signed them, they are still bound by them. As explained in Toll (FGCT) Pty Ltd at [45]: "[45] It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it."

The evidence advanced by Mr and Mrs Brown and Riverpines

1. It is convenient at this point to explain the evidence on which the amended cross claim was advanced. In his 20 November 2020 affidavit Mr Brown explained: 1. that he and Mrs Brown became the owners of the property in 2007, under a "Walk in Walk out" agreement, subject to certain adjustments; 2. they then formed a partnership to operate the vineyard and entered into an assignment of an 11-year grape growers' agreement with Tamburlaine Wines, which Tamburlaine later sought to renegotiate and eventually defaulted on; 3. as a result, they later entered their grape purchase agreement with Riverpines "to make and sell wine with future harvests. The first wine sales by Riverpines Vineyard Pty Ltd were December 2009, two years after we purchased the property Riverpines Vineyard and the wine was made with grapes from the 2009 harvest"; 4. there was never any agreement between he and Mrs Brown and Riverpines, for the purchase of any of their equipment, the extent of the relationship between them being confined to the grape supply contract; 5. his unsuccessful attempts after April 2020 to have Mr King rescind the appointment of the receiver, evidenced by various email exchanges; 6. his belief that Hall Chadwick had stripped Riverpines of its wine inventory, the only saleable asset, which was valued at $20.50 per bottle, totalling some $552,061, but which it had turned over to Mr King at an unrealistically low value of $1 and $3 a bottle. Approximately 200 cases a month of this wine was usually sold; 7. Mr King had then sold the wine for an average price of $21.50 a bottle, achieving a personal gain of over 700% on total sales of $103,370, from 17 April to 6 October 2020; 8. that the defendants thus claimed that $552,061 should be deducted from the debt which was owed to Mr King; 9. that wine not belonging to Riverpines had also been sold, in an amount of $16,512; 10. Riverpines' expenses for its previous year of full operation without bushfires and the coronavirus were $207,000. The claimed annualized rate of expenditure after the receivership, fell into the range of $2-4million; 11. the receivership had made it difficult for Mr and Mrs Brown to sell third party wines under arm's length transactions, of which they had given notice and which they wished to pursue, without interference by the receiver, in order to commence providing compensation to other unsecured creditors, to whom they felt an obligation; 12. his belief that Hall Chadwick was complicit in Mr King's conduct towards them, unsecured creditors and shareholders of Riverpines, which was neither ethical nor moral; 13. why they sought an end to the receivership, the vineyard having been independently appraised in October 2020, on their understanding, to have a value of $3,100,000; 14. his belief that the grapevines, which has "an establishment value of approximately $20,000 an acre were seriously devalued, only being of value to a prospective purchaser who can utilise grapes produced and Australia being in a prolonged grape glut, with international markets seriously depressed, causing grape value declines"; 15. there having been previous email and verbal offers to purchase the property at values between $4.5 and $5million, including an offer from a Chinese purchaser in 2018 for $5million, which Mr King had directed them to turn down, because it was not for an immediate cash payout. There were other offers received for $4-5 million immediately before the receiver was appointed to Riverpines, which Mr King did not permit them to follow through. The result was that this offer was reduced to $2million, because their prestigious Ascella wine label had been trashed and the current legal turmoil; 16. that Hall Chadwick had harassed them over farm equipment which Riverpines did not own, this requiring an order prohibiting it from illegally using their assets for Mr King's gain and their detriment; 17. with Mr King's agreement that it was better to have them remain operating the vineyard, they had worked in good faith with the vineyard manager Mr Napper to work out details of their furniture and equipment remaining on the property, in order to have it occupied and looked after until auction to get the best result. But then Mr King demanded that they vacate within 2 weeks; 18. why they sought orders prohibiting Jurd's real estate acting on the sale, given their belief that it had demanded they vacate, in retribution for a court case over the Tamburlaine grape agreement; and 19. to "the generally acknowledged 7% reduction in sales price to be expected when a vacant property is auctioned", given that the property was to be sold bare, without an operating cellar door, rather than as a going concern.

Unconscionability not established

1. This evidence was also incapable of establishing that the mortgage was unconscionable. Nor did Mr Brown reveal how the higher interest rates and shortened term of the loan complained about in the second variation documents came to be agreed.
2. Neither the amended defence nor amended cross claim pleaded that Mr and Mrs Brown were not aware of the interest rates and term of the loan to which they undoubtedly then agreed. The cross claim refers to the interest rate tripling from an initial 1% over Canadian Prime with a 5-year term, said to be 3.4%, to 10% and with mortgage terms and conditions also changing dramatically. But what was so agreed does not establish unconscionability.
3. Before the second variation documents were signed, there was a communication from Mr King about the proposed terms, which is in different terms to what was finally contained in the documents which the parties executed. Of itself that does not establish that the documents did not reflect the parties' agreement, let alone the claimed unconscionability.
4. What was agreed explains the concessions made before Davies J about what Mr and Mrs Brown owed Mr King. On Mr Brown's own case the parties had numerous other written and oral communications which are not in evidence. They may have shed light on why the terms finally agreed were arrived at.
5. But the evidence did not establish the now claimed unconscionability.
6. What that requires is long settled. In Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447; [1983] HCA 14 at 461 Mason J explained how a party making unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, can make a contract unconscionable.
7. But that requires evidence of some condition or circumstance which places a person at special disadvantage or shows that unfair or unconscientious advantage has been taken of them: at 462. It is not every difference in bargaining power which will establish this. What has to be shown is a disabling condition or circumstance "which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party" at 462.

Mr and Mrs Brown's other claims

1. The parties' falling out, with Mr King's eventual pursuit of orders for possession, appears to have been the result of Mr and Mrs Brown's failure to pay any interest, or to repay any of the principal when it fell due, wishing instead to pursue the sale of the vineyard, while continuing to have the use of the money they were obliged to repay. Despite the case Mr Brown advanced, the evidence does not establish that they ever received offers which were capable of acceptance, or which offered them a return that they were content with, let alone that Mr King unfairly refused to agree to an offer which was capable of acceptance, by exercise of his agreed power of veto.
2. That Mr King acted unconscionably in what followed, has also not been established.

Jurds real estate

1. The basis for the objection to the appointment of Jurds was its alleged involvement in the dispute with Tamburlaine Wines after Mr and Mrs Brown purchased the property, over a grape grower's agreement, the nature of which was not sufficiently explained.
2. In his submissions Mr Brown referred to Mr King meeting "inappropriately" with Jurd's Real Estate, it having been the listing agent when he and Mrs Brown had purchased the property. He said that it "had also represented other parties to the contract which ended in protracted litigation for contract default, which occurred within months of completion and in a manner indicating premeditation".
3. The evidence did not establish a basis for these submissions, let alone for the conclusion that there was a basis for an order in relation to Jurds being appointed as agent on the sale of the property. Mr King had advised Mr Brown of his intention to appoint Jurds, an appointment to which he objected, but there was no evidence that they were ever appointed.
4. Before the hearing concluded the property was sold. Jurds was not the agent the receiver engaged. Making any orders in relation to Jurds, even if a basis for such orders was established, would thus be otiose.

The appointment of the receiver

1. In the amended defence it was claimed that the appointment of the receiver had been made to pressure Mr and Mrs Brown to settle the "unrelated mortgage debt" and to take away their potential to make income, by taking away the inventory; the property value was well over the mortgage debt; that Hall Chadwick was attempting to force them into agreement on the debt and had refused to have the administration cancelled or discharged; and that the receiver had not acted in good faith in relation to assets.
2. Mr Brown submitted that when Mr Pleash was appointed as receiver to Riverpines in April 2020, it was not losing money and had paid all of its expenses. That submission obviously paid no heed to what it owed Mr King. Further, inconsistently, later Mr Brown submitted that Riverpines had never paid he and Mrs Brown what they were owed under the grape sale agreement. The orders pressed included judgment to the effect that default under the Grape Agreement dated 31 May 2008 supersedes all agreements and that all Riverpines property wine assets remain with the property owners until paid for. Mr Brown also referred in submissions to unpaid creditors, to who he and Mrs Brown felt some responsibility.
3. Before Davies J, however, Mr King established what was owed and remained unpaid under both the mortgage and the guarantee, as Mr and Mrs Brown then accepted, subject to the disagreement over whether necessary calculations should be made in Australian or Canadian dollars. That well explained the earlier appointment of Mr Pleash as receiver of Riverpines, given the guarantee it had not honoured.
4. Riverpines never attempted, nor seemingly had the means to meet its obligations under the guarantee, with the result that its business has now been sold.
5. Mr Brown claimed that Mr King had had possession of the property since Davies J made his orders. But that ignored the steps which were pursued to evict he and Mrs Brown, until they vacated in February 2021. It was the failure to comply with Davies J's orders, or to repay what they owed, which resulted in Mr Pleash's appointment as receiver of the property and the steps he pursued, which resulted in the sale of the property.
6. The email communications between Mr Brown, Mr King and his legal representatives about matters Mr Brown was seeking to negotiate does not establish either the harassment about which he complained, or a basis for concluding that Mr King should never have appointed the receiver, either to Riverpines or the property. To the contrary, the evidence established a proper basis for the exercise of Mr King's rights.

Removal of the receiver

1. A basis for ordering his removal, about which Mr Pleash is entitled to be heard, is also not apparent.
2. Mr and Mrs Brown were free to proceed as they did, urging Mr King to end the receivership. That he was obliged to do so, or ought to have done so, has not been established.
3. The amended cross claim sought an order ending the receiver's "operative interference" as Mr King's pawn and that he has "no other legal or non-legal function in the present actions for mortgage default and property foreclosure".
4. What was meant by this is not entirely clear, but no evidentiary basis for Mr Pleash's removal has been established.
5. In Bitar Pty Ltd v Hebbel Constructions Pty Ltd (2019) 136 ACSR 71; [2019] NSWCA 38, there in the case of a court appointed receiver to a partnership, it was observed that "the reasons for removal of a receiver for cause are similar to the removal of a liquidator", referring to MLW Investments Pty Ltd v Tacsum Pty Ltd [2006] NSWSC 1256 at [27] and Domino Hire Pty Ltd v Pioneer Park Pty Ltd (2003) 21 ACLC 1330; [2003] NSWSC 496 at [58]. In MLW Investments what had to be established was identified to be illegal or unprofessional conduct by the receiver, bias, lack of independence, incompetence, or any other unfitness for office and that removal is needed "to enable the broad objective that was sought to be obtained by the appointment of the receiver in the first place to be obtained."
6. Such misconduct was not established by the evidence.
7. It is convenient at this point to deal with the notices to produce which Mr Brown served on Mr King and which he complained had been inadequately answered. That was not established. The documents could have been sought by subpoena served on Mr Pleash relating as they did, for example, to the results of the 2021 harvest, which as receiver was then within his control, but they were not.
8. Mr King's answers to the notice to produce provides no basis for any adverse inference, nor any support for the case pressed by Mr Brown.
9. I have discussed the problems with Mr Brown's belated claim that he and Mrs Brown owned the wine which the receiver sold, which was contrary to some of his own evidence. On his own evidence Mr Brown obtained wine stored elsewhere from third parties and has himself sold some wine which was in his possession. That this wine belonged to Mr Brown was not established by the way in which the wine was labelled.

Wine

1. Mr and Mrs Brown calculate that the receiver absconded with some $552,061 wine, which they claim should be deducted from what they owe Mr King. On the evidence I am also satisfied that no basis for such an order has been established.
2. I have already explained some of the problems with the claim that Mr and Mrs Brown, rather than Riverpines, own wine produced from grapes which they grew.
3. What other documents tendered were claimed to establish was somewhat difficult to follow. Some of them appear to contradict the claims which were pressed. For example, an undated document identifying Ascella wine and the quantity on hand, which ascribed bottle prices ranging from 80 cents to $4.
4. There were also documents created by Mr Brown for the period after Mr Pleash was appointed as receiver of Riverpines, while he and Mrs Brown continued the work they had previously done. A Riverpines Inventory/sales analysis 18 April 2020 to 12 October 2020, for example, identifies 400.6 cases held at various places, sold at an average selling price of $21.50 and a profit and loss statement for that period for Ascella Organic wine, shows net profit of $69,721.98 on wine sales of $103,859.69. Another such document refers to wine the receiver "seized", the document indicates "at $3 per bottle", there said to have an actual value of $21.90 per bottle.
5. But these documents do not establish that the wine did not belong to Riverpines.
6. Other documents relied on refer to wine stored elsewhere, for example at Robert Oatley Vineyard, which was seemingly controlled by Mr Brown, to whom reference is there made, which establish his access to that wine. But they also do not establish the improper sale of any wine by the receiver.
7. Other emails evidence complaints Mr Brown made to Mr King about a variety of matters, including the receiver's actions in relation to wine and steps taken to seek to resolve them, including by obtaining a valuation. They also do not establish Mr and Mrs Brown's ownership of the wine, which was valued.
8. Further, annexed to Mr Pleash's affidavit were other Riverpines' records which did not support Mr and Mrs Brown's claimed ownership of the wine. For example, tax invoices issued under the name Ascella Organic Wine in March 2020 for various wine sales. There is no evidence that this wine or the label was owned by Mr and Mrs Brown.

Other assets

1. Orders prohibiting the use of Mr and Mrs Brown's equipment and machinery, as well as various intellectual property were also sought. Their ownership was also in issue.
2. In submissions Mr Brown claimed that when he and Mrs Brown vacated the property they had a very short window, with the result that they had left some equipment and machinery behind, because Mr Napper had called police and they were then unable to get all of their assets.
3. That does not accord with the time which elapsed after Davies J made orders that they give Mr King possession, while steps were pursued to have the Sherriff evict them which Mr and Mrs Brown resisted, until they vacated in February 2021. On that evidence it appears that Mr and Mrs Brown had over 6 months to remove their assets, making it difficult to credit that they had to leave assets which they owned behind when they left.
4. What precisely they left behind, was also not clear.
5. Annexed to the amended defence was a schedule of improvements and inclusions when Mr and Mrs Brown purchased the property in 2007 as individuals. On Mr Brown's evidence they acquired Riverpines 18 months later. This schedule did not establish either what was on the property in 2021 when they left, let alone that any of it belonged to them, rather than Riverpines.
6. Annexed to Mr Pleash's affidavit were other Riverpines records, including its 30 June 2016 balance sheet, which reflected that it then owned non-current assets, plant and equipment then valued at $150,449 as well as intangible assets, patents and trademarks. There was also a 2018 depreciation schedule which specified plant and equipment then owned by Riverpines, as well as domain name searches which identified it as the owner of ascellawine.com.au and hunterecoresort.com.au domain names.
7. That accorded with a document tendered by Mr Brown, a profit and loss statement for the period 17 April to 31 October 2020, for Riverpines Vineyard Pty Ltd t/as Ascella Organic Wine, which identified total income from wine sales and accommodation revenue of $11,068.79.
8. This statement reflected that after the receiver was appointed, while Mr and Mrs Brown remained on the property, Riverpines continued to operate as a going concern, using the name Ascella Organic Wine. That no doubt accorded with their ongoing interest in the property and business being sold for the best price which could be obtained, but also does not support the conclusion that they, rather than Riverpines owned the labels under which the wines were sold.

The sale of the property

1. On Mr Brown's case, it was the result of Mrs Brown's ill health that they only vacated the property where they continued to live, in February 2021 shortly before they were to be evicted by the Sherriff, despite Davies J's orders, the employment of Mr Mercer and Mr Napper and the appointment of Mr Pleash as receiver of the property in November 2020.
2. Mr Brown complained that the property had been sold for undervalue. That was not only because it was sold for less than the valuations Mr Pleash obtained, but for less than much higher offers he and Mrs Brown claim they had received before he was appointed, which accorded with sales of other similar properties for over $4million and because they also claim, the value of the property had been adversely impacted by mismanagement.
3. In evidence is a 5 November 2020 letter sent to Mr King's solicitor by the Blaxland Investment Group, advising that they held a draft contract for sale in the name of Mr and Mrs Brown and were ready willing and able to settle on or before 27 November for $2million under an unconditional contract, which was not provided with the offer. An email later referred to a $500,000 payment being made to Mr and Mrs Brown, which had been offered "as an act of charity and compassion for their circumstances". The offer was not accepted and it was withdrawn.
4. In a separate communication from Mr Brown to Mr Hawkins of the Blaxland Investment Group, he referred to earlier written offers of $5million conditionally and $4million without conditions. They are also not in evidence. Such offers were clearly not accepted but may explain Mr King's observation that Mr Brown had not been realistic about past offers.
5. Mr Brown also referred to having received other offers in the past which had not been accepted, but they were also not in evidence.
6. Mr Brown contended on the one hand, that the valuation Mr Pleash had obtained had not taken necessary regard to the true value of the vines and on the other, that 200 tonnes of pristine grapes had been whittled down to 90, as the result of mismanagement. Mr Brown claimed in submissions that the established grapes were worth $1.6million alone, not $320,000, as the valuer had estimated.
7. Again, this is something about which expert evidence could have been called but cannot be established simply on the basis of Mr Brown's opinions.

Damages for destroying the value of the property

1. The question which arises in respect of this claim is whether by his actions Mr King failed in his duty to take on a further outlay which was reasonable, apparently necessary and prudent, in order to conserve Mr and Mrs Brown's interest, and to prevent their residual property being sacrificed.
2. Damages of $1,500,000 were pressed on the basis that Mr King's actions had destroyed any remaining vestige of value of the property as a functioning vineyard, with a cellar door with award winning wines. Amongst other things Mr Brown contended that: 1. evicting them had adversely affected the sale price, auctions of vacant properties bringing sale prices of approximately 7% less than sales of occupied lived in properties; 2. after Mr Napper had been hired by the receiver, a land appraiser Mr Smith had spent a day inspecting the property and had then advised "we found no disease"; 3. early spring was the most critical time to prevent disease, when grapes were pea sized; 4. within weeks of Mr Brown's removal from vineyard management virtually every one of the 60,000 plus grapes on the property were riddled with disease, with the result that the vineyard was trashed and that its gold medal winning chardonnay was to be made into sparkling wine and the medal winning shiraz into rose; 5. Mr King ignored what was happening, as well as Mr Brown's emailed reports and photographs; and 6. Mr King later closed the cellar door, locked the gate and erected a sign warning that trespassers would be prosecuted "sending the vineyard into freefall".
3. Mr Brown also claimed that before the receiver was appointed they had received offers for the property in the vicinity of $4-5million and that overnight, Mr King's appointment of the receiver halved its value, the vines thereby becoming a liability and the property just becoming a dirt patch.
4. They then evicted he and Mrs Brown and closed the cellar door, which had been operating 7 days a week, erected a no trespassing sign and made no effort to maintain a presentation that would obtain a reasonable price, having stripped the property of all saleable assets. This all contributing to the downward spiral of the property and the poor price for which it was eventually sold.
5. On Mr Brown's case, the only course which he and Mrs Brown were left with, Mr King having stopped them from obtaining a pension, was to take assets which they owned, being unlikely to receive anything from a combined sale of the property and the business.

The wages claims

1. The case Mr Brown advanced was that while Mr Pleash was appointed in April 2020 and Mr King took possession in July, it was not until October that Mr Mercer and Mr Napper were hired, with he and Mrs Brown continuing their work for Riverpines, as did various contractors, including the two Mr Riley's. That was work for which they claim to be entitled to be paid, calculated on a basis which it is unnecessary to explain. There is no written evidence of Mr or Mrs Brown having been employed by Mr King or Mr King agreeing to pay them the amounts claimed, or indeed any amount.
2. Mr Brown did not disclose in his affidavits what he and Mr King or Mr Pleash said to each other, which could have resulted in a right to payment for their work. Mr Brown argued, nevertheless, that the proper inference from the work they performed was that they would be paid.
3. This does not necessarily follow.
4. On Mr Brown's evidence, until Mr Mercer and Mr Napper were engaged he and Mrs Brown continued the work they had performed before the receiver was appointed, as did contractors Riverpines had engaged. He claimed that he and Mrs Brown did so because they had been asked to stay on and manage Riverpines. That seems unlikely, given Mr King's pursuit of these proceedings and how they were then defended and what was said was not revealed.
5. When Mr Pleash was appointed Mr and Mrs Brown were the sole shareholders and working directors of Riverpines, of which they were the controlling minds. There is no suggestion that they were ever in its employ or paid for their work. The appointment of the receiver removed them from day to day management of their company, but it did not remove them from their positions, or affect their shareholdings. Given what they owed Mr King under the mortgage, despite the appointment of a receiver, it was undoubtedly in their ongoing interests that Riverpines continue operating, so that a profitable sale might result. But they claim they were employed.
6. The performance of the claimed work, of itself, is not a basis on which it can be found that an employment relationship came into existence.
7. As was recently discussed in WorkPac Pty Ltd v Rossato [2021] HCA 23 at [58], employment is a contractual relationship. Parties have freedom to enter such a relationship, but that requires a meeting of minds which results in an agreement by which they intend to be bound. In this case there is no evidence which establishes that such an agreement was intended or ever came into existence between either Mr or Mrs Brown and Mr King. In fact, that was not what was finally claimed.

Other damages

1. I have explained the many complaints advanced about Mr King's conduct towards Mr and Mrs Brown, which they consider to have been unethical, immoral and unconscionable, warranting them being awarded other considerable damages.
2. That their former longstanding relationship collapsed with real animosity on both sides, at a time when Mrs Brown was unfortunately suffering considerable ill health, is apparent.
3. That Mr King acted in such a way as to entitle Mr and Mrs Brown to considerable damages for unconscionable conduct was not thereby established by any of the evidence or submissions which I have discussed. Nor was the existence of a legal basis upon which such orders could be made sought to be addressed, let alone established.
4. In the result these orders also cannot be made.

Costs

1. The usual order under the Civil Procedure Rules is that costs follow the event. In this case that is an order that the defendants pay Mr King's costs as agreed or assessed.
2. But the mortgage provides for Mr and Mrs Brown to pay Mr King's costs on an indemnity basis, as I have explained. The costs orders sought must thus be made.

Orders

1. For the reasons given I order that the amended cross claim be dismissed and Mr and Mrs Brown pay Mr King's costs of the proceedings on an indemnity basis.
2. Final orders in favour of Mr King must be formulated to reflect the calculation of what he is owed, in accordance with the conclusions I have reached. Mr King should file and serve proposed orders within 7 days.
3. The parties have liberty to approach if anything remains to be dealt with on the final calculation, given the conclusions I have reached as to how it must be undertaken. That leave should be exercised within 7 days of service of the proposed orders.

Amendments 02 September 2021 - Addition of (No.2) to Title DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 September 2021