Palenzuela v Palaje

COUNSEL : Mr M W Sneddon - Plaintiff Mr J M Atkin - First Defendant

SOLICITORS : McLaughlin & Riordan - Plaintiff S M Boyle & Co - First Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1226/07 NELIA DAVID PALENZUELA v MARIA CONCEPCION PALAJE AND ORS JUDGMENT

PRELIMINARY 1 The principal claim advanced by the plaintiff (Nelia Palenzuela) in her amended statement of claim filed on 11 February 2008 is a claim for declarations that the first defendant (Maria Palaje) guaranteed the indebtedness of the second defendant (Emily Palaje) to the plaintiff and has an equitable interest in real property of the first defendant as security for discharge of the obligation of the first defendant. This claim is a contract claim. There is, in the alternative, an estoppel claim. 2 The first defendant, by her cross-claim, claims relief under the Contracts Review Act 1980 in the event that she is found to be contractually liable as the plaintiff alleges. 3 The parties are related to one another. All are of Filipino origin. Without intending any disrespect, I shall refer to them by their first names. It is convenient to mention some matters of background. 4 Nelia immigrated to Australia in 1987 with her husband and six children. Maria immigrated in 1959 with her husband. They have five children of whom the eldest is Emily, the second defendant. Emily's de facto partner and business partner Antonio Mauceri ("Tony") is the third defendant. The second and third defendants played no part in the proceedings and claims against them were not pursued. 5 Nelia's mother and Maria's late husband were cousins. Nelia and Maria have known one another for about 50 years. 6 When Maria arrived in Australia, she and her husband rented premises first in Double Bay and later at Kensington. They bought the Kensington property in 1973. In 1986, a property at Kurnell was purchased, with Maria, her husband and Emily registered as proprietors as joint tenants. Although Emily contributed no funds towards the purchase, she was included as a joint tenant because she had agreed to live with Maria and her husband and care for them. 7 When Nelia arrived in Australia in 1987, she and her husband and their children lived with Maria and her family at the Kensington Property for three or four months rent-free until moving to a home of their own at Redfern. 8 Maria's husband died in 1991. Maria and Emily became the registered proprietors of the Kurnell property as joint tenants. 9 Since Nelia's move to Australia, she and Maria have been close friends and have stayed in regular contact. Nelia calls Maria "Tiang" (which is "Aunty"). Emily has also had regular contact with Nelia. 10 In 1992, Nelia invested money in a travel agency known as "Aussie Air World Travel" and in the same year helped Emily become involved in the business. Emily invested $10,000 in the business. 11 In early 2003, Emily opened a furniture shop in Rozelle called "Victoria Collections". Thereafter, a series of loans was made by Nelia to Emily. They are central to these proceedings. 12 I turn now to events concerning the loans made by Nelia to Emily. In early December 2003, Nelia lent Emily $1,000 to pay off a debt. Nelia says that she later told Maria about the loan. In mid December 2003, at Emily's request, Nelia lent $34,000 to help pay for stock being imported for the Rozelle shop. Again, Nelia told Maria about the loan after it had been made. Nelia says that Emily agreed to pay interest at the rate of 8% per annum on the $34,000. There is a letter of 15 December 2003 from Emily to Nelia promising to repay "within the month" - "including the $1,000 you lent me last week plus any interest you require". 13 In early April 2004, Emily asked Nelia to lend her a further $40,000 to pay for further stock. Nelia says that Maria was present when the conversation took place. The loan was made. 14 Soon after the April 2004 meeting, Nelia prepared a form of promissory note. The "borrowers" were identified as Emily and Tony and the "lender" as Nelia. The "principal amount" was stated to be $70,000 and was to be paid "within ten (15) [sic] days after the execution of this Note but no later than the 27th of April 2004". There was a provision requiring the payment of interest at the rate of 8.5% per annum. Emily signed the promissory note. Maria witnessed her signature and accepts that she was present when it was signed. The promissory note is dated 13 April 2004. 15 In July 2004, Emily and Tony participated in a furniture exhibition at Darling Harbour Convention Centre. Nelia visited the exhibition and, while there, was asked by Emily for the use of her credit card to secure the exhibition space at a cost of $3,000. Nelia obliged and was, she says, assured by Emily that she would immediately give her a cheque for that amount. A cheque was given, as promised, but it was not met on presentation. 16 Nelia says that she was again approached by Emily in late July or early August 2004, when Emily requested a loan of a further $100,000. According to Nelia, Emily said, and Maria confirmed, that they were in the process of refinancing the Kurnell property to raise the money to repay Nelia (Maria's version is that money was borrowed so that Emily could buy out Maria's interest in the property and that this happened). Emily also explained that she needed the $100,000 to clear a loan on her own residence in Pyrmont, otherwise a "liquidator" would take the property. According to Nelia, Maria explained that although the refinancing of the Kurnell property had been approved, the money would not be available in time to avert the "liquidator" proceedings. 17 Nelia said that she wanted to discuss this with her solicitor. Nelia, Maria and Emily all went in early August to the solicitor's office. Maria and Emily had stayed with Nelia at her home the night before. According to Nelia, she proceeded to suggest that she should visit her solicitor with Emily and Maria to discuss this further loan. All three of them visited the plaintiff's solicitor the next day. The solicitor advised that Nelia should not make any more loans unless she received a guarantee and mortgage. 18 After Nelia, Maria and Emily left the solicitor's office, the following occurred, according to Nelia: "After we left the Solicitors office at Blacktown I walked along the road with Maria and Emily Palaje when we had a conversation using words to the following effect: Me: 'Well what are we going to do, the Solicitor said that I will need to get a mortgage off you as security for the loan.' Emily: 'We have no time, the liquidator won't wait he wants the money now.' Me: 'What do you think Tiang? Can you guarantee this loan?' Maria Palaje, who was holding my arm as we walked up the road said to me words to the following effect:- Maria: 'Don't worry Nellie, I personally guarantee that you will get paid all of the monies that we borrowed from you. You know the property at Pyrmont is worth $800,000 and our property at Kurnell has recently been valued at around $1.2 million. That alone is more than enough to cover the loan we owe you once we get the refinance. You know that we have the properties for you to back up the loan. My Unit at Kensington has no mortgage on it and I fully own it. The title to Kensington is kept by Mr Simpson, my Solicitor. Robin lives at the Unit at Kensington. If you can help this time it will be the lat time that we will ask you for help." Me: 'If I give you a further $100,000 today, when are you going to pay it back because the bank will be charging interest on it because it is not extra money or savings I have merely lying around, it is a line of credit which is extended against my house that I am supposed to use for a deposit on a property for my son, Darwyn.' Maria: 'Don't worry about it, as soon as the money from the loan over our Kurnell property is released, I personally guarantee that it will be given back to you, it will be in about two or three weeks time.' Emily: 'Don't worry, we will be getting the money soon from the bank. I will be returning it to you plus the monies we borrowed previously with interest. The Strata Manager wants us to transfer $100,000 to his account no later than tomorrow. We need your help desperately. Please Nellie, lend us the money.' Me: 'Tiang, I am scared of using the line of credit over my home. If I lend you a further $100,000, when are you going to pay it back as the bank is charging interest. Being a pensioner, I definitely cannot afford to service the loan let alone pay the interest. But if you are guaranteeing this $100,000 as well as the previous $75,000 already advanced to Emily by putting up your properties, I am happy to do it for your Tiang.' Maria: 'Yes Nellie, as I said to you I am personally guaranteeing it against all of our properties. Nellie, don't worry I have myself loaned Emily some money, you know that we have the properties to back up the loan.' Me: 'Ok then, but just make sure you return all the monies you borrowed from me once your loan is approved.'" 19 They then went to the Commonwealth Bank where Nelia obtained a bank cheque for $94,000 in favour of Emily (there was a balance of $6,000 in cash). She had obtained funds by drawing a line of credit she had with ING Bank. There was also some money on term deposit. Nelia gave the cheque and cash to Emily. It is Nelia's evidence that a conversation occurred as follows: "Emily: 'Thank you for helping out Nellie, I won't forget it.' Maria: 'Thank you Nellie, you have been a great help to us.' Me 'That's Ok, but I just hope when you get the money you pay the full amount owed to me with interest so I can put it back on the line of credit as soon as possible.' Maria: 'Yes, I will make sure that it's paid back to you.'" 20 As time passed, Nelia became concerned that the money was not repaid. She had understood all the advances to be for a very short time only, to tide Emily over temporary problems. 21 A second promissory note was prepared by Nelia in August 2004. It is dated 4 August 2004 but may have been prepared and signed later, with the date of 4 August being inserted because that was when the additional $100,000 was advanced. Emily signed the promissory note and one of Nelia's daughters witnessed the signature. The principal sum was stated to be $175,000. Payment of that sum with interest was promised on 30 October 2004. At or about the same time, Nelia's solicitor prepared a caveat in respect of the Kurnell property and Emily signed it by way of consent and acknowledgment (it appears that Emily alone was the owner of Kurnell after May 2004). 22 Nelia continued to enquire about repayment. She deposes to a conversation between herself and Emily as follows in about mid-November 2004: "Me: 'Em, please tell me the truth. Did you or did you not get the loan over Kurnell?' Emily: 'Sorry Nel, I don't know how to tell you this. We were actually able to refinance over Kurnell. Mum transferred her share of the Kurnell property solely to my name to help get the loan through. She then insisted that she gets her share, so she took all the money from the refinance to pay her for her share of the property.' Me: 'What about me? How can I get my money back? It is not fair. You and your Mum said I can register a Caveat on that property to give me some sort of security and peace of mind. Neither of you have ever mentioned to me that she planned to sell her share to you. I don't understand.' Emily: 'Well, maybe you can talk to Mum to get her to pay you at least half of what we owe you as she would not listen to me.'" 23 By 2 May 2005, Emily had repaid $1,000. On that date, Nelia wrote to Emily enclosing a schedule showing the state of the account between them, including interest. She pointed out that the loan was meant to have been repaid in three months. She then said that the interest would have to be increased because of the interest she was paying out on her bank loan. Emily signed an acknowledgment of this. This letter followed emails of April 2005 in which Nelia pressed Emily for payment. 24 At about the same time, Nelia expressed her concerns to Maria. She deposes to a conversation between them at the Star City Casino: "Me: 'Look Tiang, up until now Emily has not paid me anything. She told me that you actually did get the loan over Kurnell and all the money went to you. I don't understand, you personally guaranteed that you would pay the monies to me, that's why I continued to lend the monies to Emily. If not for you, I would not have loaned Emily that much money. If you have received them [sic] money from the loan you were arranging, I was expecting I would be paid.' Maria: 'Yes, I know that Nellie. I am grateful for all that you have done. I am so sorry that Emily is not fulfilling her obligation to you.' Me: 'You are my hope Tiang. Now it is my turn to beg for your help. I am not getting anywhere with Emily, I want you to sign a statement saying that you have guaranteed the debt with your properties to give me some peace of mind.' Maria: 'Yes, I'm happy to do that. I have no problem with that.' Me: 'I will write something up and some and see you to get you to sign it.' Maria: 'Yes, just give me a call when it is ready and I'll sign it for you.'" 25 Nelia then prepared a typewritten document as follows: "I, Maria C Palaje, being of sane and sound mind do hereby declare that- I am the mother of Emily Palaje; On 13 April 2004, together with my daughter, Emily Palaje, we approached Nelia Palenzuela to seek her financial help; On several occasions Emily and I had to drive to Quakers Hill where Nelia lives. At times Nelia even invite us to sleep over. Nelia had always been very kind to my family. She even hlped me redeem my pawned jeweleries [sic] by lending me $3,000.00. During this time, my daughter Emily was having financial problems meeting our mortgage in our property at 126 Prince Charles Pde, Kurnell where I live, and the repayment on her investment property at Pyrmont. I know that Nelia will not refuse me any help. So that together with Emily, we induced her to go her bank and took out a total of $175,000.00 to lend to Emily; The first instance was on 13 April 2004, wherein Emily borrowed $75,000.00 from Nelia and the second instance was on 19 August 2004 when Emily borrowed $100,000.00. In both instances I was privy to the transaction. I am fully aware that Nelia agreed to lend Emily the money, because she trust and respect me and because I made a personal guarantee against whatever assets I have (personal or real), to back up the loan being sought for. I did convinced Nelia to lend the money and assured her not to worry, because Emily will return all monies owing to her within two weeks from the day my daughter, Emily receive the money. Emily and I are aware that the money Nelia took out from her bank is in fact her line of credit over her residence at 51 Torrance Crescent, Quakers Hill; Nelia expressed her concern that she has no means to pay back the money being taken out from her line of credit over her property, if Emily cannot pay on time, but I have given her my word that Emily will pay it back on time; To ensure and to erase any doubts and give her peace of mind, Emily and I suggested to her to place a CAVEAT on our property at Kurnell as security. I hereby declare this statement and the guaranty [sic] therein to be true and correct, and shall be binding upon and inure to the benefits of the parties and their heirs." 26 Nelia made attempts to contact Maria but was unsuccessful. She eventually left a voicemail on Maria's mobile phone saying that she would go to the casino in the hope of seeing her there. Nelia went to the casino and found Maria there. This was on 15 May 2005. It is Nelia's evidence that, after an apparently affectionate greeting, Nelia said that she had left several messages but Maria had not called back, to which Maria replied: "Sorry Nellie, sometimes I have trouble receiving messages on my mobile. Sorry, I just need to go to the toilet, I am sitting over there playing the poker machines. I will see you over there when I get back. I put my machine on Reserved, you know, I won't be long." 27 Nelia and her friend Alice Posada, who was with her, went to the poker machine at which Maria was sitting. Nelia deposed that a conversation occurred as follows: "Me: 'Tiang, I want you to meet my friend Alice.' Maria: 'How are you Alice.' Me: 'I am so glad that you are here, as I mentioned to you before I have brought the statement that we spoke about the other day, which you said you would sign for me. I made two copies, one for you to keep and one for me to keep.' Maria: 'Oh yes.'" 28 Nelia's evidence about events thereafter on that occasion were as follows: "I then handed Maria Palaje two copies of the document entitled 'Statement' which appears at Annexure 'D' of my Affidavit sworn on 22 January 2007. When I handed the documents to Maria I said to her words to the following effect:- Me: 'Please read it Tiang and make sure that you are happy with what it says before you sign.' Maria Palaje adjusted her reading glasses, then read the document in front of me and she then looked up at me and our conversation continued when we used words to the following effect:- Maria: 'That's fine, where do you want me to sign.' Me: 'Just above your name.' As I said these words I handed Maria Palaje a ballpoint pen I had in my handbag and we then held a conversation using words to the following effect:- Me: 'Alice is here to witness your signature.' Maria: 'That's good.' I then saw Maria Palaje sign the document where I showed her and she then passed the document back to me. I then handed the document to Alice Posada and said to her words to the following effect: 'Can you please be a witness for Maria's signature?' I then saw her sign both documents under the words 'witnessed by'. After Alice Posada signed the two documents she handed them back to me and I handed one copy to Maria Palaje. As I handed the copy of the document to Maria Palaje I said to her words to the following effect:- Me: 'That's your copy, please keep it and I will keep the other one.' Maria: 'I will talk to Emily about this matter, Nellie.' Me: 'Please do so Tiang. I don't want to bring this matter to Court as I value our relationship so much. You know that.' Maria: 'Yes I know. Emily should do something about this.' Me: 'But it's been so long Tiang. You know that I would have never given such a large sum of money to Emily without your intervention and guarantees. Your presence and assurances to me during the times that Emily was borrowing the money from me, was enough inducement for me to trust Emily and I 100% trusted your word.' Maria: 'Yes I know, Nellie. I am sorry to have put you under pressure and caused you this stress. I will surely discuss this matter with Emily very soon.'" 29 Two particular episodes are of importance. The first (and more important) is the visit to the solicitor's office and the subsequent visit to the Commonwealth Bank where Nelia advanced a further sum of $100,000 to Emily against, she says, Maria's promise to guarantee repayment. The other is the events at the casino when, according to Nelia, the acknowledgment document was freely and knowingly signed by Maria in the presence of Ms Posada. I have so far given accounts of these based almost exclusively on Nelia's evidence in chief. I now consider evidence of other witnesses and Nelia's cross-examination. 30 There is evidence about the first episode from Mr Acar, Nelia's solicitor. He confirms that Nelia, Maria and Emily visited his office. He expressed concern about seeing them all together. Nelia explained that they were related and had nothing to hide. Mr Acar therefore proceeded. He asked Emily some questions, then said to Nelia words to the effect: "Do not lend the lady any more money without obtaining a guarantee supported by a mortgage." 31 Maria's evidence is that Mr Acar said words to the effect: "I recommend that you not loan any moneys to Emily". 32 Maria further deposes that, as they left the solicitor's office, Nelia said: "The solicitor advised against it but I am not going to listen to what he said, I will lend the money to Emily, let's go to the bank before they close." 33 In her affidavit, Maria denies that she spoke to Nelia the words of guarantee and like assurance attributed to her by Nelia in her account of their conversation on the way to the bank. Maria was pressed on this in cross-examination. She said that she did not speak the relevant words, adding that she was a pensioner and had no financial strength to offer a guarantee. She had already lent $50,000 of her own money to Emily. She also denied that there was reference to the properties at Kensington and Kurnell during the conversation. She said that there was reference to Emily's Pyrmont property because that was the property threatened by the "liquidator"; as well as talk about a second property at Pyrmont owned by Emily that was ready to be sold, of which Emily said, "If everything goes through you will get paid in two months time". There was no reference to this second property in Maria's affidavit. It is pertinent to quote a substantial part of Maria's cross-examination: "Q. Okay. Emily was asking for $100,000? A. Emily, yes, that is true.

Q. You were there when that conversation was happening? A. It is her debts, not mine.

Q. You were there when Emily was asking Nellie for $100,000? A. When I went to Nellie's place Emily--

Q. Please answer my question. You were there when Emily was asking Nellie for $100,000? A. No.

Q. You say you were not there? A. Because I can't - I am sorry, but that question I can't answer 'yes' and 'no'.

Q. Why not? Were you there or were you not? A. I was there but my daughter ask me, said, 'Mum, would you like to come for a drive?' and that is why I was there. I didn't hear her ask Nellie to lend her the money.

Q. And you accept, do you not, that in relation to the $100,000 which was asked to be borrowed from Nellie, the $100,000 was in relation to a problem with the Pyrmont property? A. Please repeat the question about the Pyrmont property.

Q. Sure. You accept, do you not, that in relation to the $100,000 borrowed in August 2004 that it related to a problem to pay moneys for the Pyrmont property? A. Yes.

Q. And you accept, do you not, that by August 2004 Emily had already borrowed from Maria the sum of $70,000 odd? A. (No answer).

Q. Do you agree with that? A. You mean Emily?

Q. Emily, not you, Emily, that by August 2004 Emily had borrowed in the order of $70,000 from Nellie? A. Yes.

Q. And what was being asked was a further $100,000 on top of the 75? A. Yes. …

Q. And what I am trying to establish, madam, is simply this was the purpose of going to the Blacktown branch of the Commonwealth bank to obtain a bank cheque to pay your daughter $100,000. Was that the purpose? A. All right, yes.

Q. And in relation to the $100,000, you had stayed with Emily at Nellie's house the night before? A. Yes.

Q. And you got up in the morning and you went out to see Mr Aydin Acar at his office in Blacktown? A. Yes.

Q. And in relation to what was said during the meeting with Mr Acar, the subject matter of Mr Acar's advice in front of you and Emily and Nellie was that, 'look, don't lend this lady any more money unless you get a guarantee and security'. Do you agree with that? A. Yes.

Q. Then having that advice, you walk outside. Correct? A. (No answer).

Q. You left Mr Acar's office? A. Yes.

Q. And in leaving Mr Acar's office a conversation takes place between yourself, your daughter and Nellie in relation to what you all should do. Do you agree with that? A. Yes.

Q. And the subject matter of the conversation is that it was expressed to Nellie that there is urgency involved to get the $100,000 because of the problem with the Pyrmont property and the liquidator. Do you agree with that? A. Yes.

Q. And in relation to the urgency you would agree that Nellie expressed concern to advance a further $100,000 because she still had not been paid her 70. Do you agree with that? A. Yes.

Q. And in expressing her concern it is correct to say, is it not, that you spoke to Nellie and assured her that the debt would be guaranteed by you? A. No.

Q. Because you would accept, would you not, as the first proposition that Nellie was concerned to lend $100,000 to Emily. You agree with that? A. Yes.

Q. And you would agree, would you not, that Nellie ultimately lent $100,000 to Emily? A. (No answer).

Q. Do you agree with that? A. Yes.

Q. So whatever was said after the solicitor's office on the way to the Commonwealth bank something was said, was it not, to give comfort to Nellie to advance $100,000. Do you agree with that? A. Yes.

Q. And what I want to suggest to you is that whatever was said Nellie you know for a fact, don't you, that Nellie for a long period of time has looked up to you as a sort of mother figure? A. (No answer).

Q. Is that right? A. We have good relationship.

Q. It is not just a good relationship, when she came here from the Philippines she stayed with you. Yes? A. Yes.

Q. And you have known her in the order of about 50 years since she was a teenager. Yes? A. Yes.

Q. And in relation to knowing her, you are not simply a friend, you are also a distant relative? A. Yes, she is a relative to my husband.

Q. Quite. Your husband was the cousin of Nellie's -- A. Mother.

Q. Mother, and you would agree, would you not, that Nellie over the years took confidence in what you say? A. (No answer).

Q. Do you agree with that? A. Yes.

Q. And in relation to the - if you said you were going to do something she you know would take confidence in that? A. (No answer).

Q. And in relation to after leaving Mr Acar's office you agree, don't you, that you walked to the Commonwealth bank at Blacktown? A. (No answer).

Q. And in walking to the Commonwealth bank you held Nellie's arm. You were arm in arm, correct? A. Yes.

Q. And in being arm in arm you told her not to worry about lending Emily any more money because 'we have got properties to back up the loan, you will be okay'. Isn't that the subject of what was said? A. No, I did not say that.

HIS HONOUR: 'Say that'? WITNESS: I did not say that.

SNEDDON: Q. There was certainly talk in relation to the property though at Kurnell and its value. Yes? A. (No answer).

Q. On the way to the bank, conversation about Kurnell and what it is worth? A. I don't know because at that time we were not thinking of selling or anything.

Q. Sorry, could you repeat that? At that time you were what? A. We were not talking about the value of the Kurnell property.

Q. But what I want to suggest to you, Mrs Palaje, is simply on the way to the Commonwealth bank there was conversation concerning each of the Pyrmont property, the Kurnell property and the Kensington property. Do you agree there was some conversation about them? A. No.

Q. You disagree with that completely? A. The conversation is about the Pyrmont property because at the moment that would have been the reason why we were there, to try and save the Pyrmont property, not Kensington nor Kurnell.

Q. I accept that the purpose of going to the bank was to obtain $100,000 to pay out what you call the liquidator, is that correct? A. Yes.

Q. And in relation to the $100,000 what I am simply suggesting to you is that there was talk in relation to how the $100,000 would be repaid. Do you recall that? A. The talk about repaying is that Emily has another property, commercial property, on the ground level which was ready to be sold and Emily said that "if everything goes through you will get paid in two months time".

Q. The truth is that is an important issue, isn't it, what you have just given evidence to his Honour of just now? Do you consider that important? A. Yes, because it is true.

Q. That is not in your affidavit, is it? A. (No answer).

Q. That is not in your affidavit, is it? A. (No answer).

Q. Do you agree with that? A. No.

Q. You do not agree with that? A. (No answer).

Q. Might the witness have access to -- A. It is not in the affidavit, what I mean is it is not in the affidavit.

HIS HONOUR: Q. Where was the commercial property you were taking about? A. Pyrmont.

Q. In the same block? A. In the same block, just on the ground level.

Q. Was that a shop property? A. Yes.

SNEDDON: Q. So you say that in relation to the conversation, accepting as you do that Nellie was concerned about lending the further $100,000, you say there was no talk of either Kensington or Kurnell? A. No.

Q. Madam, I suggest there was and in fact Nellie told you that she was a pensioner and she could not afford to service a further $100,000. Do you recall that? A. No.

Q. You do not recall that? A. I know she is a pensioner.

Q. You knew she did not have $100,000 spare money to throw around, isn't that right? A. (No answer).

Q. Isn't that right? You knew she did not have a spare $100,000 to lend to Emily? A. Why she lent it, it is not me because I did not, the money is not for me, it is for Emily and I am the one being crucified here.

Q. The money was not for you, it was for your daughter? A. Yes.

Q. In respect of your daughter, you were concerned about your daughter, yes? A. Yes.

Q. And in respect of your concern about your daughter you yourself say you lent her $50,000 yourself? A. (No answer).

Q. And you were doing what you could to help your daughter out of her financial woes or problems. Yes? A. Yes.

Q. And that was also with the aid of your daughter seeking to obtain money from Nellie to help your daughter out of her financial problems. Correct? A. Yes.

Q. And in relation to assisting your daughter out of her financial problems, you told Nellie on the way to the bank that "I am personally guaranteeing the money against all other properties". Do you recall that? A. I already mentioned that I did not earlier. I said no, I did not.

Q. And the only basis upon which the $100,000 was advanced by Nellie was on the comfort of that assurance, that not only the $100,000 but all the past moneys, 175, were secured and guaranteed by you in that way? A. No, I did not, I was a pensioner. How could I guarantee?" 34 In relation to the events centred on the visit to the Commonwealth Bank, I refer also to aspects of the cross-examination of Nelia. I quote from the transcript: "Q. Is it the case then at the time, that is in August 2004, you didn't see that Mrs Palaje was entering into a legal obligation with you to pay, to guarantee Emily's debt? A. I don't know. I didn't think of any legal implications at that time because for me it was enough that Maria was there, she was telling me not to worry, 'You can lend to Emily the money and she will pay you'. She was giving me assurances all the time and guaranteeing me that Emily is going to pay the money.

Q. Yes, well, you say the word 'guaranteeing', but can I suggest to you that you are reconstructing a conversation or events that occurred in August 2004 much later, that is, you are saying, 'Maria guaranteed me the loan'? A. No.

Q. I suggest to you that you didn't use the word 'guarantee'? A. Sorry, I didn't use the word 'guaranteeing'. Maria was giving me assurances, telling me she will make sure that Emily will pay me." 35 The events at the casino were the subject of evidence of two witnesses in addition to Nelia. They are Maria and Ms Posada. 36 Maria was cross-examined about the conversation at the casino in which Nelia first raised the matter of Maria's signing a document. In answer to the question what was the document to be about, Maria said: "Well, she asked me if I could sign a statement to say that I was present when she lent the money to Emily and because I was there, I was present, I said: 'Yes, I will sign it'." 37 Maria's affidavit contains the following account of the meeting at the casino: "In the afternoon at approximately 2.30p.m. I was sitting playing the poker machines when I was approached by the Plaintiff. The Plaintiff was in company with another person. The Plaintiff came to me and said 'Hi "Tiang" (meaning Aunty), this is my friend Alice, could you just sign this paper for me as a witness that I have given Emily $100,000.00. I need your signature because I am applying to get a loan from St George Bank and my appointment is for 3.00p.m. Alice is with me because she is trying to help me get a loan from St. George Bank.' The woman who accompanied the Plaintiff known only to me as Alice, said to me words to the effect 'There is nothing to worry about, it's just to say that you witnessed Neila give the money to Emily, Neila needs the paper to give to St. George Bank.' I said to the Plaintiff words to the effect 'What is it for?' The Plaintiff then said to me words to the effect 'Only to say that you were present when I lent the money to Emily, nothing more.' I then said words to the effect 'OK I will sign it.' The Plaintiff placed in front of me a folded piece of paper still holding on to one end of the paper. I took out my pen from my hand bag and I signed the paper. I did not read the paper. Although I had my glasses with me I could not read the paper without a magnifying glass. The paper was folded in such a manner that I did not see any writing on the paper other than where I was to sign and I observed that my name had been typed on to the piece of paper. I trusted the Plaintiff and I signed the paper." 38 The relevant part of Ms Posada's affidavit is as follows: "Nelia and I then walked over to the lady she had called 'Tiang' when she said to this lady words to the following effect:- 'Tiang, I brought the papers for you to sign, here they are. I then saw Nelia take some papers out of her bag and hand these to the lady she called 'Tiang'. After I saw Nelia hand the papers to the lady named 'Tiang' I saw the lady read the documents. I saw that it took her about two or three minutes to read through the documents. During this time she was sitting on a chair in front of the poker machine. I then saw 'Tiang' finish reading the document and look up and say to Nelia words to the following effect:- 'That's fine, have you got a pen so I can sign it.' I then saw Nelia take a pen from her handbag and pass it to 'Tiang'. I then watched 'Tiang' sign both copies of the document in front of me. Nelia then turned to me and said words to the following effect:- 'Can you witness the signature for us?' Nelia then passed the documents which I had seen 'Tiang' sign to me and I then signed both copies of the document. A copy of one of the documents signed by me is annexed hereto and marked 'A'. My signature appears at the bottom left hand side of the page under the words 'witnessed by:' and the signature I saw 'Tiang' write on the document also appears on the document above my signature." 39 Various matters were traversed in cross-examination. 40 Ms Posada said that Nelia did not describe the paper or its content to Maria when she handed it over to Maria and asked her to sign. She said that two copies of one document were handed over and that Maria read the document for "maybe three minutes" and then signed it resting on her handbag as she sat at the poker machine. Ms Posada herself then signed, resting the document on her bag as she stood. Ms Posada explained that the document was folded when Nelia produced it, but was opened up before being handed to Maria. 41 Maria denied in cross-examination that she had been told by Nelia that the purpose of the document was to record what had been said in the conversation on the way to the Commonwealth Bank in August 2004. She said it had been portrayed as a statement that she was present when the money was lent to Emily. Maria also maintained that the document was at all times folded in a somewhat elaborate way (which she demonstrated) so that she could not see the contents. 42 Maria does not deny that she signed the document produced to her by Nelia. She does say, however, that her eyesight was poor at the time and that she needed a hand-held magnifying glass to read fine print (she has since had operations for cataracts). She was equivocal in her answers as to whether she could read the particular document while wearing the glasses she had at the time. She first accepted that she could because it was "the bigger print" but afterwards sought to resile from that. 43 I proceed now to an assessment of the evidence as a whole 44 Maria accepted in cross-examination the version of Mr Acar's advice given by Nelia, namely, that Nelia should not lend further money to Emily without obtaining a guarantee supported by a mortgage. After the three ladies left the solicitor's office, Emily referred to the urgency to obtain $100,000 to avoid action by "the liquidator". Maria accepts that Nelia expressed concern about lending further money. Maria agreed in cross-examination that whatever was said on the way from the solicitor's office to the bank gave "comfort" to Nelia to lend the required $100,000. Maria agreed that, based on their relationship over fifty years, Nelia took confidence in what Maria said. In cross-examination, Maria said for the first time that there had been discussion about a second property at Pyrmont owned by Emily but that the properties at Kurnell and Kensington were not mentioned. She also says that she did not say words to the effect, "I am personally guaranteeing the money against all our properties". 45 Nelia had just been advised by Mr Acar not to lend more money to Emily without getting a guarantee supported by a mortgage. It is clear that Nelia chose not to act in accordance with Mr Acar's advice. She would have understood him to be referring to a need for legal documents of guarantee and mortgage. She did not follow that course. The course she in fact took involved either a choice by her to lend only after receiving from Maria oral promises of a contractual kind in or to the effect of those stated in Nelia's affidavit; or a choice to lend after having received some lesser form of reassurance by her old and trusted friend Maria. 46 The most likely position is the last-mentioned. It is particularly noteworthy Nelia said in cross-examination that she did not "think of any legal implications at the time", that is, the time at which the visit to the Commonwealth Bank took place and the further $100,000 was advanced. For her, "it was enough that Maria was there, she was telling me not to worry, 'You can lend to Emily the money and she will pay you'" - note "she will pay you", not "I will pay you if she does not". Nelia also said that Maria "was giving me assurance all the time and guaranteeing me that Emily is going to pay the money". The concept of Maria's "guaranteeing . . . that Emily is going to pay" is readily construed as involving an expression by Maria of confidence, perhaps certainty, as to Emily's future conduct as distinct from any direct promise by Maria as to her own future conduct. 47 It seems to me clear that Nelia decided not to follow Mr Acar's advice and was content to rely on her old and trusted friend for reassurance. The reassurance, however, took the form of statements by Maria that Emily should and could be trusted and could be relied upon to pay. In the context, no great significance can be attached to the word "guarantee": a statement by Maria to the effect, "I guarantee that Emily will pay you" should, I think, be regarded in the context as a statement by Maria of her firm or certain belief that Emily would pay. 48 The same approach should, I think, be taken to such statements about property ownership as Maria made. There is a conflict in the evidence about which, if any, properties were mentioned. Whatever was said, however, was ancillary to the statements of belief that Emily would pay and were by way of illustration of financial resources to which Emily could resort or be given access. 49 It is significant that when Nelia prepared for Emily's signature the promissory note that was eventually signed and dated 4 August 2004, she did not include Maria as a party or seek to have Maria sign some collateral document. It is clear that, after the advance of the further $100,000, Nelia regarded Emily as indebted to her for a total of $175,000 and wished to have a written record of the legal liability signed and confirmed by Emily. Had there been at that point a collateral legal liability of Maria, it would have been logical for Nelia to seek also written confirmation of that legal liability signed and confirmed by Maria. But she did not. 50 It is also significant that when Nelia wrote to Emily on 2 May 2005 altering the interest rate, she did not also write to Maria. 51 In July 2005, Nelia instructed Mr Acar to commence debt recovery proceedings against Emily in the District Court. Judgment by default was ordered in January 2006. Nelia did not proceed also against Maria on the alleged guarantee, even though Maria had, only two months earlier, signed the document at the casino. 52 Nelia's evidence is that, at the casino on 15 May 2005, she said to Maria, after the document had been signed: "I don't want to bring this matter to court as I value our relationship so much." 53 Maria said, according to Nelia, that she was sorry to have put Nelia under pressure and caused her stress, then: "I will surely discuss this matter with Emily very soon." 54 The fact that, some two months later, Nelia sued Emily but not Maria is indicative of a view on her part that she did not have any claim against Maria in respect of Emily's indebtedness. 55 In the result, I am of the opinion that Nelia has failed to show that the events on the day of the visit to the Commonwealth Bank gave rise to a contractual promise given by Maria to Nelia to answer for the indebtedness of Emily. Nelia sought and was given by Maria reassurance that Maria was aware of Emily's existing indebtedness and the proposed further advance; and that Maria, as Emily's mother, was confident that Emily would pay. But there was no intention on the part of either Nelia or Maria that there should be a contractual relationship between them. 56 By 15 May 2005, Nelia had decided that she must try to obtain a written commitment from Maria. She obtained Maria's signature at the casino on that day. But the document cannot be regarded as written confirmation of any contractual commitment actually assumed by Maria in early August 2004. The words subscribed by Maria were to the effect that both the $75,000 lent in April 2004 and the $100,000 lent in August 2004 were advanced "because she [Nelia] trust and respect me [Maria] and because I made a personal guarantee against whatever assets I have (personal or real), to back up the loan being sought for". 57 There has been no suggestion in this case that such a rationale or motivation attended loans to Emily before that of August 2004. The sole assertion Nelia makes is that she was persuaded to advance the final $100,000 by promises made or assurances given to her by Maria. 58 In any event, the document signed by Maria at the casino - whether or not read and understood by her - could not of itself operate as a guarantee because any promise it contains is unsupported by consideration. There was not, at that time, any further advance, forbearance to sue or other act or forbearance of Nelia in return for which such a promise was given. On analysis, however, the document does not appear to be a vehicle by which any promise is given. It is merely a purported record of past events. 59 Counsel for Nelia established in cross-examination that Maria is in touch with Emily (her daughter) and aware of her whereabouts. Yet Emily was not called as a witness in Maria's case. It was submitted that it should therefore be assumed that any evidence Emily could have given - particularly about events and conversations on the day of the visit to the Commonwealth Bank - would have been unhelpful to Maria's case. In this particular case, the inference that Maria spoke words such as to give rise to a promise to Nelia to answer for the debts of Emily is but faintly available on the whole of Nelia's own evidence. I say this having regard particularly to her acknowledgement in cross-examination that, at the time of the conversation on the way to the Commonwealth Bank, she was not thinking of "legal implications", coupled with the several indications that she was concerned to receive reassurance from Maria of Emily's own capacity to pay. I therefore do not think that absence of evidence from Emily should form a basis for actually drawing that inference. 60 Nelia maintains, as an alternative to her claim in contract, a claim for a declaration that Maria is "estopped from resiling from the promises made to Nelia" central to the contract claim. For the reasons stated, I am not satisfied that Maria made promises about Maria's own future conduct. 61 The proceedings are dismissed with costs. **********

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