McIntosh & Anor as T'ees of the Estate of Camm (A Bankrupt) v Linke Nominees P/L

For the reasons I have set out I am not satisfied that Mr Linke's execution of the deed was induced by any misrepresentation made by or on behalf of the trustees.

The enforcement of the deed or the underlying agreement against Mr Linke is unconscionable

[131] Counsel for Mr Linke argued that an enforcement of the deed against their client would be unconscionable.

[132] In essence the defendants submit that the trustees took unconscionable advantage of the unequal bargaining terms of the parties to obtain a beneficial bargain.

[133] I am not satisfied that Mr Linke representing either himself or the company was under any particular disadvantage. He was an experienced businessman. As is plain from the transcript of the examination he was well able to protect his own interests and engage robustly in the exchanges between himself and counsel for the trustees. In my view, he was certainly not in any sense browbeaten or intimidated by the examination.

[134] Mr Linke was under no compulsion to settle with the trustees. I accept Mr McLean's evidence that the deed was explained and read to Mr Linke as it was prepared.

[135] I accept Mr McLean's evidence that on three occasions he suggested that Mr Linke seek independent advice and that on each occasion Mr Linke declined.

[136] The deed records Mr Linke's maintenance of his denial of the trustee's claim.

[137] Mr Linke's claim to have been at a disadvantage because he suffered from high blood pressure has no foundation. The transcript of the proceedings before the registrar and his evidence before me give me no doubt that whether or not he was suffering from high blood pressure, it had no effect on his ability to look after his own and the company's interests.

[138] To succeed in setting aside the deed on the grounds of unconscionability, Mr Linke must establish that Mr Linke was:

"... at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands."[12]

[139] In essence parties must meet on unequal terms and the stronger party must unfairly take advantage of the disparity in position to obtain a beneficial position.[13]

I am not satisfied either that Mr Linke was at any special disadvantage or that the trustees took unfair advantage of the situation.

The settlement arrived at was that the company would pay one half of the present value of the land in settlement of the trustee's claim. He was, in effect, paying a further amount to ensure the land was not lost, but that amount was substantially less than the amount the company stood to lose if the trustees claim was successful. Overall, it seems to me to be a prima facie reasonable compromise.

[142] The final point argued on behalf of the defendants was that the deed was merely an offer which could be terminated by the defendants at any time prior to Mr Linke receiving a copy of the document signed by the trustees.

[143] On the evidence I accept there is no support for this submission.

[144] I am satisfied that the deed was executed by the trustees on 16 May 2007.

[145] I do not accept Mr Linke's evidence that he was told by Mr Maitland on 17 May 2007 that the trustees were still considering his offer.[14]

Mr Maitland was not challenged in cross examination on his recollection of the conversation with Mr Linke on 17 May 2007. Rather, he was challenged on whether he had in fact attempted to forward a signed copy of the deed to Mr Linke by facsimile on that day or only on 18 May 2007. In the end, it does not matter. It was never suggested to Mr Maitland that Mr Linke had withdrawn from the deed on 17 May 2007. Mr Linke, when cross examined, did not assert that he had withdrawn.[15]

I am not persuaded that Mr Linke withdrew his offer to settle before he received a copy of the deed signed by the trustees.

While Mr Linke attempted to negotiate some changes to the deed on 17 May 2007, he did so in the context of an existing agreement he wished to vary in some respects. Since by that time, the deed had in fact been executed by the relevant parties, an attempt to renegotiate, unless successful, would not alter any party's rights or obligations.

[149] For the reasons I have given, I am satisfied that Mr Linke remains bound by the deed. I order Mr Linke to pay to the trustees the instalment of $500,000 due on 23 May 2007 together with interest under the deed in the sum of $52,438.35 up to and including 7 April 2008.

[150] The action against the first defendant is dismissed.

[151] I order the second defendant to pay the plaintiff's costs of the action to be assessed on an indemnity basis in accordance with clause 9 of the deed.

[152] I order the trustees to pay the first defendant's costs on the standard basis up to and including the first day of the trial. This represents the portion of the trial attributable to issues on which the first defendant succeeded.

[153] I will hear argument on any ancillary orders.

1. [1] (1875) Law Reports 7 House of Lords 869.
2. [2] [1964] 2 QB 480.
3. [3] [2004] HCA 35; (2004) 218 CLR 451 at 466.
4. [4] Norton on Deeds 2nd ed, 1928 at pp 6 - 7.
5. [5] [1999] QSC 174 (29 June 1999).
6. [6] Direct Acceptance Finance Ltd v Cumberland Furnishing Pty Ltd (1965) NSWLR 1504.
7. [7] Re National Coffee Palace Co; Ex parte Panmure (1883) 24 Ch D 367 at 371 per Brett MR at 373 per Cotton LJ, at 375 per Bowen LJ.
8. [8] Prior to the 1996 amendment, s 121 read as follows; 'Fraudulent dispositions s 121. (1) Subject to this section, a disposition of property, whether made before or after the commencement of this Act, with intent to defraud creditors, not being a disposition for valuable consideration in favour of a person who acted in good faith, is, if the person making the disposition subsequently becomes a bankrupt, void as against the trustee in the bankruptcy.

(2) Nothing in this section shall be taken to affect or prejudice the title or interest of a person who has, in good faith and for valuable consideration, purchased or acquired the property the subject of the disposition or any interest in that property.

(3) In this section, "disposition of property" includes a mortgage of property or a charge on or in respect of Property'.

1. [9] World Expo Park Pty Ltd v EFG Australia Ltd (1995) 129 ALR 685; Cannane & Wisbeck Pty Ltd v

Official Trustee in Bankruptcy as Trustee of the Bankrupt Estate of Cannane (1996) 136 ALR 406 at 416.

1. [10] PT Garuda Indonesia Ltd v Grellman [1992] FCAFC 188; (1992) 107 ALR 199.

1. [12] Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362 per Kitto J at 415.
2. [13] See Meagher, Gummow & Lehane, Equity: Doctrine & Remedies, 4th ed 2002 (Lexis Butterworths).
3. [14] Ex 18 para 93.
4. [15] See Transcript p 125 ff.