Rogers v Rogers

Summary of salient evidence

1. In about 2006, Samantha Rogers and David Rogers separated. Samantha Rogers continued to live in the Property, which had been the matrimonial home. She lived there with the three young children of the marriage. David Rogers moved into a unit situated nearby. The couple eventually divorced in 2016.
2. John Rogers lived in Thailand from 2007 until 2015. He deposed that during that time he left his financial affairs to be managed by his father, William Cyril Rogers. John Rogers deposed that he had given a power of attorney to his father, which power was not revoked until 2015. The power of attorney was not adduced in evidence.
3. There is evidence that the plaintiff's father maintained and operated an account with the ANZ Bank styled "William Cyril Rogers in trust for", and that on 21 December 2007 proceeds from the sale of a property in Coburg that had been owned by the plaintiff were deposited into the trust account (No 9093-33894). The amount deposited was $483,166.05. John Rogers deposed that from time to time his father would transfer money to him from the account for living expenses.
4. John Rogers deposed that some time between December 2007 and May 2008, he had discussions with his father and David Rogers in which it was suggested that part of his savings be invested in a commercial property in Parramatta which was said to be available for purchase. John Rogers further deposed that his father told him that if he contributed $200,000 towards the purchase cost of $600,000, the property would be let and he would receive a share of the rental. John Rogers deposed that he left the arrangements for the acquisition of the Parramatta property to his father and brother.
5. In the witness box, John Rogers stated that he was concerned to invest, not in a business, but in land. He said that he wanted to be able to sell the land if he came back to Australia. He said that he understood that he, David and Samantha would each contribute $200,000 in cash to the purchase of the property (which he referred to as "the factory") and that they were "buying it outright". He said that he believed that he had a one-third interest in the property and that he would obtain an income from it.
6. David Rogers gave evidence to the effect that an agreement was reached for the Parramatta property to be purchased by John, Samantha and himself as to a one-third interest each, and they would each be registered as proprietors. Samantha Rogers gave evidence that in or about 2007 David Rogers told her that John was going to become a one-third owner and invest $200,000. She further deposed that she always understood that John Rogers was a one-third owner of the Parramatta property.
7. On 8 May 2008 $23,000 was withdrawn from the trust account operated by the plaintiff's father. The money may have been deposited into the trust account of the solicitor who was to act on the purchase of the Parramatta property. Another $177,000 was withdrawn from the account on 13 June 2008.
8. In the meantime, on 26 May 2008, a contract to purchase the Parramatta property (Lot 8 in Strata Plan 58327) was entered into by David Rogers and Samantha Rogers as trustees for "the Rogers Investment Trust" and David Rogers as trustee for "the John Rogers Investment Trust". The purchase price was $575,000. There was evidence, which I accept, that the total acquisition costs were approximately $600,000.
9. The evidence was unclear concerning "the John Rogers Investment Trust". No constituent documents were adduced in evidence. John Rogers said that he had no recollection of any trustee arrangement with his brother for the purchase of the property, and further that he did not sign any documents at that time, including when he visited Sydney for a couple of days in the early part of 2008. David Rogers gave evidence that at about that time John Rogers signed a power of attorney in his favour. He said that he no longer had a copy of the document. John Rogers deposed that he had no recollection of ever giving his brother a power of attorney.
10. In any event, when the contract to purchase was completed in about August 2008, the title to the Parramatta property was transferred to David and Samantha Rogers as joint tenants as to a two-thirds share, and David Rogers as to a one-third share. David Rogers was not able to explain why John Rogers was not named as a proprietor. David Rogers deposed that he considered that he held the one-third share "on behalf of John".
11. The acquisition was not funded entirely by cash. Apart from the $200,000 which, it is common ground, was provided out the trust account operated by the plaintiff's father, the balance was funded by a $400,000 loan from the ANZ Bank, which took a registered mortgage over the property (AE171432).
12. John Rogers deposed that from about mid-2008 he received, in Thailand, monthly payments of $1,500 from his father, which he assumed was his share of rent from the Parramatta property. John Rogers used those monies for living expenses.
13. On 27 April 2009, $260,000 was withdrawn from the trust account operated by the plaintiff's father. The funds were transferred to an ANZ Bank account (No 9013-47407) held in the name of Mamers Investments Pty Ltd ("Mamers"). Mamers was a company within a group of companies associated with the laminating business with which David and Samantha Rogers were involved. Within about a fortnight, $210,000 of the funds were transferred into an ANZ Bank account (No 3496-71069) held in the name of another company in the group, namely, The Laminating Company (NSW) Pty Ltd ("TLC (NSW)").
14. John Rogers deposed that he did not become aware of the withdrawal of the $260,000 until his father told him "after the event". However, it seems that John Rogers then took steps to open an ANZ Bank account in his own name, and he says that he thereafter received monthly payments of $2,000 into that account.
15. David Rogers gave rather vague evidence about amounts being advanced by John Rogers in 2009 "to the companies", but accepted that $260,000 was approximately the amount lent by his brother. He denied that any loan was made to himself or Samantha Rogers personally.
16. Samantha Rogers denied that the $260,000 had been received by her or made available to her, or was subject to any direction from her. She further deposed that it was her understanding that John Rogers lent $260,000 to Mamers who on-lent part or all of the monies to TLC (NSW).
17. The laminating business experienced financial problems in 2010. David Rogers said in cross-examination that the problems emerged in about the period from February to April 2010, when three major debtors failed.
18. In the midst of these difficulties, David Rogers consulted a solicitor in Melbourne, Mr Robin Settle of Settle Legal. Mr Settle had acted as a solicitor for companies associated with David Rogers for many years.
19. On 26 July 2010 David Rogers sent an email to Mr Settle. The email was in the following terms: I have been thinking about the security of the business over the weekend and have some ideas to put forward. It seems we need to reduce the equity in our properties. This can be done as follows: John Rogers Loaned money to TLC (NSW) via mamers. Could he have a charge over the debtors of TLC (NSW). Barry already has a caveat over my property for the Capital finance from the split of the business. Samantha's parents put their house up for the purchase of North Parramatta. Could they have a charge over Sam's house. You could raise a charge over Silverwater for you [sic] fees as discussed. Could Mamers raise a charge over the debtors of TLC (NSW) for the inter-company loan. If this could happen then John could raise his claim against Queensland property. In relation to the sale of the business; the value of the stock and other assets will be about $30,000. Debtors and Creditors would stay with the TLC (NSW). Employees we plan to continue to hire will be transferred to new service company after we close down TLC (NSW). This is the only way that the balance of entitlements will stay with the old company. We will have to make arrangements with the new employees for their super etc. The email was copied to Samantha Rogers. In cross-examination, she seemed to accept that she received the email, but said that she did not recall receiving it. A handwritten note made on a copy of the email, presumably by Mr Settle, indicates that he and David Rogers discussed the matters raised in the email on 27 July 2010.
20. It is evident that at about or shortly after that time, steps were taken to establish a new entity to carry on the laminating business, and to place TLC (NSW) into liquidation.
21. The new entity was a company that changed its name on 19 August 2010 to TLC Print Finishing Pty Ltd ("Print Finishing"). Samantha Rogers and a Ms Mellisa Goding (who was associated with the family) had been appointed as directors of the company on 29 July 2010. (Samantha Rogers ceased to be a director on the same day. She gave evidence that she had no knowledge of either her appointment or removal as a director.)
22. TLC (NSW) was placed into a creditors' voluntary liquidation on 17 September 2010. I note that John Rogers was not recorded as a creditor of the company in the Report As To Affairs verified by David Rogers as a director of the company.
23. David Rogers deposed that when he sent his email of 26 July 2010 to Mr Settle he was "proposing to get as many caveats and interests recorded on the title of my home and Samantha's home as possible so that it was unattractive to creditors to enforce…". He further deposed that he instructed Mr Settle to prepare the Loan Agreement and Charge. Those instructions, which are not referred to in the email, are likely to have been given fairly soon thereafter, but prior to the liquidation of TLC (NSW).
24. The Loan Agreement and Charge, presumably prepared by Mr Settle, was expressed to be between John Rogers as Lender and David and Samantha Rogers as Borrowers. It relevantly provided: 2. The Loan 2.1 Single borrowing The Lender agrees to lend to the Borrowers and the Borrowers agree to borrow from the Lender the Loan. The Borrowers agree to execute this Deed as security for the Loan. 2.2 Maximum Accommodation The maximum total amount of financial accommodation available to the Borrower under this agreement is the Loan amount. 3. Interest Only The Loan shall be interest only. Interest shall accrue at the rate of 8.5% per annum and be paid monthly in arrears by EFT to bank accounts nominated by the Lender. If the Borrowers default in making any payment due hereunder, then penalty interest at the rate of 11% per annum shall accrue on the full balance of the Loan until the default is remedied. 4. Repayment The Borrowers agrees [sic] to repay the Loan on the Repayment Date. … 6. Charge As security from [sic] the Loan, the Borrowers hereby charge in favour of the Lender, their respective interests in the Security Properties. The Borrowers acknowledge that the Lender may lodge a caveat over the title to the Security Properties. … 8. Default The Lender may demand immediate payment of all amounts payable under this agreement, and the Borrowers must comply with that demand, if: (a) the Borrowers do not pay on time any amount due under this agreement; or (b) this agreement or the Security or a transaction in connection with either of them is or becomes (or is claimed to be) wholly or partly void, voidable or unenforceable or does not have (or is claimed not to have) the priority the Lender intended it to have ("claimed" in this paragraph means claimed by the Borrowers or anyone on behalf of them); (c) the Borrowers or either of them becomes insolvent or has any steps taken against them in a bankruptcy process. "Loan" was defined to mean $460,000. "Repayment Date" was defined to mean 30 June 2013. "Security Properties" was defined to mean the Property, another property in Ermington owned by David Rogers, and a property in Surfers Paradise co-owned by David and Samantha Rogers.
25. The execution page of the Loan Agreement and Charge indicates that the instrument was intended to be executed as an agreement by John Rogers, David Rogers and Samantha Rogers. As noted earlier, only David Rogers and Samantha Rogers executed the document.
26. Samantha Rogers deposed that she did not recall signing the document, although she conceded that the signature looked like her signature. She deposed that she had never read the document, and would not have signed it if the contents of it had been shown to her. She deposed that she was not provided with any explanation of what the document was, or given an opportunity to read it or an opportunity to obtain any independent legal advice about it. She essentially adhered to that evidence under challenge in the course of her cross-examination.
27. David Rogers deposed: At the time of signing the loan documents, I had a large of [sic] bundle of documents in my hands for Samantha to sign. I presented Samantha with the documents and pointed to her where to sign. In respect to the loan agreement and charge, I simply said to her words to the effect of 'sign here, here and here. These are just documents to protect our homes against Hermes in case there is a problem with the debt.' Samantha did not ask any questions. Samantha was not given any time to read the document nor obtain any legal advice. I did not explain any of the terms or effect of the documents to her. Each of us signed the documents and our signatures were witnessed by our office administrator.
28. The reference to "Hermes", as a creditor against whom protection was then sought, may be erroneous. David Rogers stated during his cross-examination, consistent with a number of documents in evidence, that Hermes Capital Australia Pty Ltd ("Hermes") became involved at a later stage.
29. In cross-examination, David Rogers said that from about 26 July 2010 he had some discussions with Samantha Rogers about the financial problems and "the way to fix things" and "what's got to be done". He did not accept that he explained those things to her carefully. He indicated that it was put to her that "here's all the documents, this is what we're doing". He did not think that he told Samantha that he wanted to protect John in relation to the money that he had made available; he accepted that he told her "this is what we have to do to protect everyone".
30. Following the execution of the Loan Agreement and Charge, arrangements were made by Mr Settle (and a firm of solicitors, Leonard Legal, which had offices in Sydney and Brisbane) for caveats to be lodged against the titles to the Property and the Surfers Paradise property. The caveator was in each case named as John Rogers, claiming an interest pursuant to the Loan Agreement and Charge (which was said to be dated 30 June 2010). The interest claimed in the caveat in relation to the Property (AF771208) is that of a chargee. Settle Legal and Leonard Legal purported to act for John Rogers in relation to the caveat. In circumstances where John Rogers apparently had no knowledge of the Loan Agreement and Charge, any authority to act must have come through an agent, most likely David Rogers pursuant to the power of attorney he claimed to hold. An email sent by Mr Settle to John Rogers in May 2015 indicates that the caveat had been lodged on the instructions of David Rogers.
31. Samantha Rogers gave evidence that she was unaware of the lodgment of John Rogers' caveat over the Property, and its subsequent withdrawal.
32. In about May 2011, Print Finishing entered into financing arrangements with Hermes. These arrangements included David and Samantha Rogers giving Hermes a mortgage over the Parramatta property on 3 May 2011, and Samantha Rogers giving Hermes a mortgage over the Property on the same day. Hermes required the removal of the caveats of John Rogers, in respect of both the Property and the Surfers Paradise property, before it would provide finance.
33. David Rogers deposed that at about this time he had a conversation with Mr Settle to the following effect: David Rogers: Look, we are not proceeding with the loan agreement documents and are doing a refinance with Hermes instead. We don't need the caveats anymore. I will get you to prepare a Withdrawal of Caveat over the property owned by myself and Samantha. Robin Settle: Fine just send me an email with your instructions.
34. On 4 May 2011 David Rogers sent an email to Settle Legal in the following terms: As power of attorney for my brother John Rogers I hereby instruct you to sign withdrawal of caveat over the properties owned by myself and Samantha.
35. David Rogers deposed that as a result of the Hermes finance averting "the risk", he determined that the loan security document "was not required". He gave some answers in cross-examination to the effect that the Loan Agreement and Charge was only to be used if necessary, to make John Rogers' claims over the properties "legal".
36. Withdrawal of caveat forms were duly executed by Mr Settle. The caveat in respect of the Property was withdrawn on 10 May 2011. By that time, Hermes had itself lodged a caveat in relation to the Property in respect of its interest under its unregistered mortgage.
37. There is evidence that at some stage Print Finishing began treating John Rogers as if he were an employee, even though it is plain that he never worked for the company. The evidence is unclear as to when this occurred, and the reasons for it. However, there is documentary evidence that indicates that John Rogers was paid a wage by the company of $1,000 per week between April 2013 and August 2014.
38. It seems that Print Finishing was being managed by David Rogers until he left in about late-2013. Samantha Rogers thereafter managed the company.
39. A balance sheet of Print Finishing as of June 2013 records a liability to John Rogers for a loan in the sum of about $296,000. A balance sheet as of June 2014 records the loan in the sum of about $350,000. The provenance of those entries is unclear, but the likelihood is that the entries were based upon the money that had been paid out of John Rogers' funds to Mamers (and then largely transferred on to TLC (NSW)) in 2009. As already noted, John Rogers was not recorded as a creditor of TLC (NSW) in the Report As To Affairs in September 2010. However, David Rogers stated during his cross-examination that there were "some adjustments" and "swapping things around" at that stage. It seems to me likely that around that time a loan from John Rogers was removed from the books of TLC (NSW) and placed within the books of the new entity, Print Finishing. Samantha Rogers gave evidence that she had no idea of how a loan from John Rogers came to be included in the balance sheets of Print Finishing.
40. It appears that by 2014 Print Finishing was itself facing financial difficulties. The Parramatta property was sold in March 2014 for $575,000. The proceeds were paid to Hermes which, by that time, had become the first registered mortgagee. Despite the sale, Print Finishing went into administration in September 2014 and creditors' voluntary liquidation in October 2014. The payments, or wages, that were being paid by the company to John Rogers ceased in August 2014.
41. John Rogers returned to Australia in early-2015. He deposed that he attempted "to find out what had happened to my money". He located Mr Settle. On 21 May 2015 Mr Settle sent an email to John Rogers in the following terms: As requested, attached is a copy of the Withdrawal of Caveat I signed on David's instructions as your Attorney. The caveat was originally lodged by ERA Legal in Sydney as my agent (also on David's instructions). I assume these documents are available from the NSW Land Registry if you require a copy of the original caveat. I am not otherwise authorised to provide information (or discuss the matter) unless pursuant to a Court order or with the written consent of David and Samantha. If you wish to communicate with me further, please do so in writing.
42. On 26 May 2015 Mr Settle sent another email to John Rogers. It was in the following terms: Attached is the only copy of the loan agreement I have which is undated and not signed by David as your attorney at that point. Also attached is a copy caveat lodged over a Qld property and its withdrawal and a copy of an email from David as your Attorney instructing me to withdraw the caveats. These documents are on a Laminating Company file and are the only ones I have with regards to the security position and loan. I do not have a "file" maintained for you as such.
43. On 22 June 2015 John Rogers lodged a caveat (AJ572979) over the Property claiming an interest as a chargee pursuant to the Loan Agreement and Charge. (The 2016 date of the statutory declaration in the caveat is incorrect.) That caveat remains in operation.
44. On 1 September 2015 Samantha Rogers became a bankrupt on her own petition. Mr Adam Shepard became her trustee in bankruptcy. A Report to Creditors dated 23 September 2015 refers to John Rogers' caveat, and records the amount of his claim as $460,000. Samantha Rogers is the likely source of that figure. It appears from correspondence between Mr Shepard and the solicitors acting for John Rogers that Mr Shepard did not then have a copy of the Loan Agreement and Charge. Further, Samantha Rogers conceded in cross-examination that prior to her bankruptcy Mr Settle had contacted her and provided her with a copy of the Loan Agreement and Charge which refers to a Loan of $460,000. Finally, it seems that the $460,000 figure appeared in Samantha Rogers' Statement of Affairs. It should be noted that the Report to Creditors also contains a statement that: The bankrupt advised that funds were borrowed from Mr Rogers in relation to a business loan.
45. On 19 October 2015 David Rogers became a bankrupt on his own petition. The Official Trustee in Bankruptcy became his trustee in bankruptcy.
46. The bankruptcies of Samantha and David Rogers mean that it is not open to John Rogers to seek to recover any debt said to arise from the Loan Agreement and Charge. He is confined to enforcing any rights he may have as a secured creditor to realise his security (see Bankruptcy Act 1966 (Cth), s 58(5)).

Determination

1. The first and third of the separate questions (set out at [6] above) require the Court to consider the legal effect, if any, of the Loan Agreement and Charge executed by David and Samantha Rogers. Of central significance is the question whether a binding and enforceable charge was thereby created over the Property.
2. An equitable charge may take the form either of an equitable mortgage, or of an equitable charge not by way of mortgage (see Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 at 594 per Buckley LJ, in the Court of Appeal). It was not suggested that an equitable mortgage was created in the present case. Accordingly, the issue is whether a binding and enforceable charge not by way of equitable mortgage was created.
3. The authorities establish that, whatever the form, there are certain requirements that must be met in order for an equitable charge to arise.
4. In Roberts v Investwell Pty Ltd (in liquidation) [2012] NSWCA 134 at [26] Bathurst CJ (with whom Beazley JA and Tobias AJA agreed) stated that in order to create an equitable charge it is necessary: …that property of the chargor is appropriated to the chargee for payment of a debt and the chargee has a present right to have it made available for payment of its debt. The availability of equitable remedies to enforce that right gives the chargee a proprietary interest by way of security in the property charged.
5. The Chief Justice proceeded to refer (at [27]) to the judgment of Buckley LJ in the Court of Appeal in Swiss Bank Corporation v Lloyds Bank Ltd (supra) at 594-5, including where his Lordship stated: An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or specially appropriated, to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale…
6. The Chief Justice also referred (at [27]) to the dictum of Atkin LJ in National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 at 449-450 to the following effect: "…. I think there can be no doubt that where in a transaction for value both parties evince an intention that property, existing or future, shall be made available as security for the payment of a debt, and that the creditor shall have a present right to have it made available, there is a charge, even though the present legal right which is contemplated can only be enforced at some future date, and though the creditor gets no legal right of property, either absolute or special, or any legal right to possession, but only gets a right to have the security made available by an order of the Court."
7. After referring to further authorities in which these principles have been approved or adopted, Bathurst CJ stated (at [29]): What is clear from the authorities is that for either an equitable mortgage or equitable charge to come into existence there must be an intention to create an immediate proprietary interest or immediate right of recourse to identifiable, present, or in the case of a charge, future property.
8. It is clear from these authorities that the intention of the chargor is of cardinal importance (see also Morris Finance Ltd v Free [2017] NSWSC 1417 at [30] per Ward CJ in Eq). It is also clear that an equitable charge is a proprietary interest granted by way of security, which entitles the chargee to resort to the property only for the purpose of satisfying some liability due to the chargee, whether from the person providing the security or a third party (see Re Bank of Credit and Commerce International SA (No 8) [1988] AC 214 at 226 per Lord Hoffman, cited with approval by the High Court in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liquidation) (2000) 202 CLR 588; [2000] HCA 25 at [6]).
9. David and Samantha Rogers executed the Loan Agreement and Charge and may, at least for present purposes, be assumed to have intended to become bound by its terms. The instrument is not expressed to be a deed. It is described in one place in those terms (see cl 2.1) but in other places it is referred to as merely an agreement. The execution page shows that the instrument was intended to be executed by the three named parties as an agreement. Even if a deed, the instrument was in any event never delivered by the executing parties to John Rogers.
10. By cl 2.1, the agreement includes an agreement by John Rogers as Lender to lend, and David and Samantha Rogers as Borrower to borrow, $460,000. David and Samantha Rogers further agree to execute "this Deed" as security for the said Loan. Clause 2.2 states that the maximum amount of financial accommodation available to the Borrower under "this agreement" is $460,000. By cl 3, interest is to accrue at a rate of 8.5% p.a. and be paid monthly in arrears into bank accounts nominated by the Lender. By cl 4, the Borrowers agree to repay the Loan on 30 June 2013. Clause 6 provides that as security for (not "from") the Loan, the Borrowers hereby charge in favour of the Lender their respective interests in certain properties, including the Property, and acknowledge that the Lender may lodge a caveat over the titles to the properties. Clause 8 provides that in certain circumstances of default the Lender may demand immediate payment of all amounts payable under "this agreement".
11. In my opinion, the Loan Agreement and Charge, read as a whole, concerns an agreement for the making by John Rogers of a loan of $460,000 to David and Samantha Rogers, and for such loan to be repaid on 30 June 2013, or earlier in the event of default. It does not make provision in respect of a loan that has already been made by John Rogers, whether to David and Samantha Rogers or otherwise. Had that been the intention it would have been a simple matter to instead employ language to that effect. Neither do the terms of the Loan Agreement and Charge amount to an acknowledgement by David and Samantha Rogers that they were indebted to John Rogers in the sum of $460,000 (cf Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 at [70]).
12. If the Loan Agreement and Charge had been executed by John Rogers, or if he had otherwise become bound by the instrument, a binding agreement for a loan would have been made. However, no such agreement came into existence. There was plainly no concluded agreement where, as the evidence shows, John Rogers was until 2015 completely unaware of the Loan Agreement and Charge or any transaction to the effect of that described in the instrument. The suggestion made by John Rogers, in his affidavit of 3 December 2018, that the Loan Agreement and Charge document was prepared because in about June 2010 he wanted the arrangements with David Rogers and Samantha Rogers to be "formalised", cannot be accepted. I am comfortably satisfied that the document was prepared by Mr Settle on the instructions of David Rogers who, in that regard, was acting without reference to, and without the knowledge of, John Rogers.
13. In these circumstances, no charge was created merely by the execution of the Loan Agreement and Charge by David Rogers and Samantha Rogers. Whilst cl 6 of the instrument employs the language of present grant, it cannot be said that any property was thereby made liable or specifically appropriated to the discharge of a debt or other obligation owed to John Rogers. The Loan Agreement and Charge was concerned with a liability to John Rogers that would arise from the performance of an agreement, which was never concluded, for the making of a $460,000 loan to David and Samantha Rogers. The Loan Agreement and Charge was not concerned with any liabilities that might otherwise have existed, including liabilities arising out of the use of the funds of John Rogers that had earlier been withdrawn from the trust account operated by his father.
14. It may be inferred that those funds played a role in the instructions given by David Rogers to Mr Settle for the preparation of the Loan Agreement and Charge. David Rogers wanted a document prepared that would assist his aim of getting as many caveats as possible recorded on the titles of his home and Samantha Rogers' home, so as to deter creditors from pursuing those assets. He may well have regarded a document which referred to a loan in the same amount as the demonstrable amount of funds withdrawn from the trust account as suitable for that purpose. Nevertheless, the fact remains that whatever liabilities may have been owed to John Rogers arising from the use of those funds, they were not made the subject of the Loan Agreement and Charge.
15. Even if a binding agreement had been made on the terms of the Loan Agreement and Charge, no charge would arise or at least operate until the Loan the subject of the agreement had been made (see Robertson v Grigg (1932) 47 CLR 257 at 271; Sibbles v Highfern Pty Ltd (1987) 164 CLR 214 at 222-3; cf at 228-9). Until that event occurred, John Rogers would have no present right to have the Property made available for the discharge of an obligation to repay the Loan in accordance with the terms of the Loan Agreement and Charge.
16. Before leaving this topic I should add that I accept the submission made by Samantha Rogers that at no time did she borrow any money from John Rogers. The $200,000 that was applied towards the acquisition of the Parramatta property was clearly intended to give John Rogers a proprietary interest in the property; it was not an advance in the nature of a loan. As for the $260,000, the funds were received by Mamers and largely transferred to TLC (NSW). The evidence is sparse as to the terms on which these payments were made, but there is no evidence that Samantha Rogers was a borrower of the funds or had otherwise assumed an obligation to John Rogers in relation to the repayment of the funds. The same can be said of David Rogers in this regard.
17. The circumstances in which the Loan Agreement and Charge came to be prepared and dealt with are not to the credit of David Rogers. He acted in a way calculated to mislead and deter creditors who might have legitimate claims against the properties owned personally by himself and Samantha Rogers. In furtherance of that purpose it seems that he gave instructions to Mr Settle, pursuant to a power of attorney, to lodge in the name of John Rogers caveats against the titles to the named properties, even though he knew that his brother had not executed or otherwise agreed to the Loan Agreement and Charge and was in fact entirely unaware of the transaction. Once finance from Hermes had been obtained in 2011, and it was perceived that "the risk" had been averted, David Rogers decided that the Loan Agreement and Charge was no longer required, and he arranged with Mr Settle for the caveats to be withdrawn. In cross-examination, David Rogers claimed that the Loan Agreement and Charge was intended to ensure the survival of the business and see that everyone was protected, including his brother John. However, his actions indicate that protection of his brother was not a high priority.
18. Nevertheless, and accepting that John Rogers appears to have suffered considerable financial loss as a result of the dealings with his funds, for the reasons set out above he has not established that Samantha and David Rogers are bound by the terms of the Loan Agreement and Charge, or that the Property is the subject of an equitable charge in his favour securing the repayment of any moneys. It follows that the first and third of the separate questions must be answered adversely to the plaintiff.
19. The above conclusions mean that the second separate question does not arise. I would observe, however, that the principles set forth in Garcia v National Australia Bank Ltd (supra), which derive from Yerkey v Jones (1939) 63 CLR 649, operate in the context of a transaction in which the wife seeking relief is a surety for her husband's liabilities, and one who obtained no financial benefit from the transaction (see Garcia v National Australia Bank Ltd (supra) at 408; Elkofairi v Permanent Trustee Co Ltd (2002) 11 BPR 20,841; [2002] NSWCA 413 at [41] and [92]). As recognised by counsel for Samantha Rogers, the principles could only operate in the present case to the extent that it was found that loans were made by John Rogers to David Rogers only. I have not found that any part of John Rogers' funds were advanced to David Rogers by way of loan (see at [70] above), so there is in any event no room for the operation of the principles set forth in Garcia v National Australia Bank Ltd (supra).
20. I should nonetheless state that I am satisfied that when Samantha Rogers signed the Loan Agreement and Charge, she did not understand the purport or effect of the transaction embodied in the document. In particular, I accept that she did not know that the document provided for David Rogers and herself to borrow $460,000 from John Rogers and for John Rogers to have a charge over the Property to secure repayment of the loan. I broadly accept the evidence given by David Rogers that is set out above (at [35]), save that it is likely that he spoke about creditors generally, rather than Hermes, which seems to have come into the picture at a later time. I think it is likely that David Rogers told Samantha Rogers little more than that the documents were related to the liquidation of TLC (NSW), a matter about which there had been some discussion between them, and that the documents were necessary to provide some protection for their financial positions. In the difficult and pressing circumstances that then existed, I think it is unlikely that David Rogers would have taken the trouble to provide a clear or detailed explanation of the Loan Agreement and Charge. I accept that, despite the lack of an explanation of that nature, Samantha Rogers was content to sign the document (and indeed other documents) without reading it first or asking any questions about it, accepting that it was in her financial interests to do so.

Conclusion

1. The separate questions will be answered as follows: 1. Are the First and Second Defendants bound by the terms of the agreement entitled "Loan Agreement and Charge" ("the Charge") a copy of which is annexure F to the Affidavit of the Plaintiff sworn on 3 December 2018 in these proceedings? No. 2. Is the Cross Claimant entitled to an order setting aside the operation of the Charge on the grounds pleaded in her Cross Claim? Does not arise. 3. Is the property known as 34 Maple Crescent Ermington in the State of New South Wales the subject of an equitable charge in favour of the Plaintiff securing repayment of moneys? No.
2. The plaintiff accepts that in these circumstances his proceedings should be dismissed. The Court will so order. The Court will further order that the Amended Statement of Cross-Claim be dismissed.
3. As for costs, the Court will direct that the parties confer and endeavour to seek agreement as to the appropriate orders for costs. The Court will further direct that in the event that agreement is not reached within 14 days, the parties should, within a further 7 days, serve and provide to my Associate brief written submissions on costs. The Court will then proceed to deal with that question on the papers unless any party identifies reasons why an oral hearing is necessary.

Amendments 09 April 2020 - Amendment to the cover sheet (only) 09 April 2020 - Amendment to the cover sheet - appearances (only) 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: 09 April 2020