Sergio Andres Chocron v Mina Onkoud

Sergio Andres Chocron v Mina Onkoud - [2019] NSWSC 1823 - NSWSC 2018 case summary — Zoe

Overview

The plaintiff, Sergio Chocron, seeks possession of real property in North Parramatta which was the former matrimonial home of his brother, Fabian Chocron, and Fabian Chocron's estranged wife, Mina Onkoud, the defendant in these proceedings. Fabian Chocron and Mina Onkoud are the registered proprietors of that property as tenants in common in equal shares. Although these proceedings arise in the context of pending Family Court proceedings in both Australia and Argentina, both parties agreed that it was appropriate for the plaintiff's claim to be determined in this Court.
By statement of claim filed on 15 May 2017, Sergio Chocron seeks the following relief: 1. Judgment for the plaintiff for possession of the land comprised in Lot xx on xx being the land situated at xx and known as xx; 2. Judgment for the plaintiff against the defendant for $134,140.13 (and interest of $11,622.42, making the amount sought $145,762.55); 3. The defendant sign the Mortgage document included at Annexure B of the Deed of Mortgage dated 1 December 2010; 4. The defendant pay the plaintiff's costs.
The property in question is a residential house with two separate entrances and living spaces. It was valued at $1.34 million in September 2017. It will hereafter be referred to as "the Property".
The basis of the plaintiff's claim is a Deed of Mortgage dated 1 December 2010 entered into between the plaintiff and the defendant. The plaintiff contends that the Deed was validly executed and that funds totalling an amount of $107,500.00 were advanced by him to Ms Onkoud pursuant to the Deed.
A defence was filed on 23 June 2017, an amended defence was filed on 25 July 2017 and a further amended defence was filed on 29 November 2018. In addition, a cross-claim was filed on 29 November 2018 in which Ms Onkoud sought, inter alia, a declaration that the Deed of Mortgage purported to be signed in counterparts by her and Sergio Chocron on 1 December 2010 did not create any agreement between them.
Ms Onkoud contends that the Deed is a "sham" contract created and procured by Sergio Chocron and Fabian Chocron in order to give the appearance of a loan between Sergio Chocron and Ms Onkoud when none had actually occurred. She also contended that her signature was procured by deceit, that the Deed did not conform to the requirements set out in s 38(1) of the Conveyancing Act 1919 (NSW) and thus was not a valid counterpart Deed, and also that there was no performance of the Deed as all transactions were between Fabian Chocron and Sergio Chocron, not herself and Sergio Chocron.
At the hearing it was submitted by counsel that the resolution of this matter turned very much on my factual findings. Nearly all of the factual matters were in dispute and covered a time period from 2007 until 2017.
It was submitted in final written submissions that the three central factual issues in dispute were: 1. Did Ms Onkoud and Sergio Chocron execute a valid Deed of Mortgage on or around 1 December 2010 for the purpose of Sergio Chocron advancing Ms Onkoud a loan of $107,500? 2. Were funds totalling an amount of $107,500 advanced by Sergio Chocron to Ms Onkoud pursuant to the Deed of Mortgage over the period 12 November to 3 December 2010? 3. If so, were those funds repaid to Sergio Chocron?

[3]

The evidence

The plaintiff relied upon the following evidence: 1. His two affidavits dated 1 November 2017 (with Exhibit "SAC-1") and 2 July 2018 (with Exhibit "SAC-2"); 2. The affidavit of Fabian Ernesto Chocron dated 5 July 2018 (with Exhibit "FEC-1"); 3. The affidavit of translator Yasmin Abdi dated 25 July 2018 (with Exhibit "YA-1"); 4. The affidavit of interpreter Cintia Lee affirmed 10 December 2018; 5. The affidavit of Lisa Cox sworn 4 December 2018 (the plaintiff's solicitor); and, 6. The affidavit of Lisa Jane Church affirmed 7 December 2018 (an employed solicitor with Clamenz Lawyers in 2010/2011).
The documentary evidence contained in two tender bundles of material include transfer documents, various email correspondence, Land and Property information, property valuation reports, bank documents, Deed documents and bank statements. Additional evidence included a withdrawal of caveat obtained from the Land and Property Management Authority dated 25 November 2013, a screen shot of a spreadsheet calculation prepared by the plaintiff and a Disbursement Authority and Acknowledgement from Credit Union Australia dated 5 November 2010.
The defendant relied upon the following evidence: 1. Her three affidavits dated 30 November 2018 (with annexures), 25 December 2017 (with annexures) and 10 December 2018; and 2. The affidavit of Mona Youssef dated 10 December 2018 (her solicitor) prepared in relation to their efforts to obtain the original Deed of Mortgage documents from the plaintiff's lawyers.
Ms Onkoud's additional documentary evidence included Movement Details for Sergio Chocron, ANZ Bank statements for Sergio Chocron, ANZ Bank statements for Ms Onkoud, Westpac records for Sergio Chocron, internet printouts for IT Bizolutions, Credit Union Australia documents and a copy of WhatsApp messages.
Only three witnesses were required for cross-examination. Sergio Chocron gave evidence on 10, 11 and 12 December 2018, Fabian Chocron gave evidence on 11 and 12 December 2018 and Ms Onkoud gave evidence on 6 February 2019. Sergio Chocron is a citizen of Argentina and flew to Australia to give his evidence. Fabian Chocron gave evidence by way of audio visual link from Argentian and Ms Onkoud gave evidence in court.
After the evidence was finished the proceedings were adjourned for written submissions to be filed. Those submissions were filed by 17 April 2019.

[5]

Background

Ms Onkoud was born in Morocco and came to Australia in 1997. She has a Bachelor of Information Technology. She became an Australian citizen in 2003. Fabian Chocron was born and educated in Argentina and travelled to Australia in 2002. He is a dual Australian/Argentinian citizen. The couple met in Sydney in 2005. Their first son was born on 15 December 2006 and they married in 2007. Ms Onkoud and Fabian Chocron's second child was born in July 2010.
When Fabian Chocron and Ms Onkoud first met, she was working for Australian Hearing, which was a Commonwealth Government Agency. She earned approximately $50,000 per annum. At that time Fabian Chocron was the sole director of a company IT Bizolutions. He and his brother Sergio Chocron were the shareholders. This company was an IT consulting company which performed software design and developed in-house application systems. One of the major clients of IT Bizolutions was a company named NCSS. According to an Australian Securities and Investments Commission (ASIC) extract of 29 November 2018, IT Bizolutions was registered on 20 February 2003 and deregistered on 17 April 2017.
Ms Onkoud also worked for IT Bizolutions as a contractor from 2006 until about October 2012 whilst still employed by Australian Hearing. She was on maternity leave from Australian Hearing from 2010 until she resigned in August 2012. After that time she was employed in IT Bizolutions as an employee. Her work involved research for database applications, applications installations and general information technology tasks.
Fabian Chocron's financial arrangements were somewhat complicated. Apart from his business he also had set up a family trust with his two siblings named the Marroquito Unit Trust. The three unit holders were Fabian Chocron, Sergio Chocron and their sister Viviana. Ms Onkoud was not a unit holder of this family trust. The trust was governed by a trustee company called Marroquito Properties Pty Limited. Fabian Chocron owned 100% of shares of that company and was its sole director. There was also evidence that Fabian Chocron had another family trust described as "Ocean 14" but there was very little evidence about this trust adduced at the hearing.

[6]

Purchase of the Property

In 2007 Fabian Chocron and Ms Onkoud were residing together in rented accommodation with their baby. At that time the Property the subject of these proceedings was owned by Gerard McShane, who was a friend of Fabian Chocron. Mr McShane approached Fabian Chocron with an offer to purchase 50% of his property from him. Fabian Chocron purchased 50% of the Property from Mr McShane in 2007. Thereafter the two men owned the Property as tenants in common. They both carried a loan with the St George Bank in the amount of approximately $244,000 each. Thereafter Fabian Chocron, Ms Onkoud and their baby lived in one half of the Property and Mr McShane lived in the other half.
There was a factual dispute about the contribution each the Fabian Chocron and Ms Onkoud made to the deposit for the purchase of the Property. Ms Onkoud's evidence was that she had saved approximately $30,000 from her work at Australian Hearing, and this was put towards the deposit for the 2007 purchase, with about $80,000 coming from Fabian Chocron. Fabian Chocron disputed this; he stated that Ms Onkoud only contributed approximately $10,000 to the mortgage and relied on bank records showing she had as little as $11,000 in her account in July 2007. I have had regard to Ms Onkoud's bank records. As at the end of February 2007 she had $23,648.04 in her account, which was reduced to $40 by the end of the year. This suggests that her share of the deposit was greater than Fabian Chocron suggested. In any event, it seems to me that the contribution made by each of them to the Property is a matter for the Family Court proceedings and I do not need to resolve this factual issue for present purposes. The only relevance of this evidence is that it goes to Ms Onkoud's belief in her entitlement to a share in the Property or to be on a Title.
On 18 December 2008, Fabian Chocron purchased the remaining 50% of the Property from Mr McShane. The existing loan was discharged and a new loan from Westpac in the amount of $548,000 was obtained. From that date Fabian Chocron was the sole registered proprietor of the Property.

[7]

Background of 2010 refinancing

It appeared to be common ground between Fabian Chocron and Ms Onkoud that after 2008 she was very keen for her name to be on the title of the Property and spoke to her husband about this on numerous occasions.
By 2010 Ms Onkoud was on maternity leave after the birth of their second son and the couple was carrying a large mortgage. The family lived in one half of the Property and the other half of the house was rented out for income. Fabian Chocron's evidence was that by mid-2010 they were under financial pressure and needed more funds. His evidence was that he and Ms Onkoud went to a number of banks and "last resort" lenders. When these options did not appear attractive (because of the high rates) he approached his brother Sergio Chocron as a "last resort" lender. Fabian Chocron's evidence was that Sergio Chocron would not ask as many questions as a bank because he was family. Sergio Chocron was willing to loan money he had held in an Australian bank account. Ms Onkoud disputed that the couple was under any financial pressure at that time.
On 27 October 2010, Fabian Chocron wrote an email to his then lawyer Daniel Clark at Clamenz Lawyers in which he described a "plan" for re-financing the Property. As at the date of this email, the mortgage with Westpac amounted to $527,000. He wrote that he wished to refinance with Credit Union Australia ("CUA") with a loan of $500,000. He wished to split this loan in half, along with the ownership of the Property, as a tenancy in common, for "asset protection reasons". That is, he proposed to transfer 50% of the Property into Ms Onkoud's name and create two debts rather than the one to Westpac. The two debts would be in the amounts of $315,000 and $375,000, the latter being "in Ms Onkoud's name" and the former in his name.
In this email Fabian Chocron expressed that Ms Onkoud's portion of the debt (of $375,000) would be financed by a loan from Sergio Chocron, a loan from the Marroquito Unit Trust with the balance being owed to the CUA.
The plaintiff's case is that what was proposed in this email was what subsequently took place. That is, Fabian Chocron sold half of the Property to Ms Onkoud for consideration of $375,000 and Ms Onkoud funded that $375,000 debt by taking out three loans: 1. Part of the joint mortgage from CUA (the first ranked mortgage). Fabian Chocron proposed that $137,000 of the amount owed to the CUA would be the responsibility of Ms Onkoud alone (I pause here to note that it was never explained in the evidence how Ms Onkoud was liable for this portion of the joint mortgage of $512,000. No documents supported Ms Onkoud having this separate liability to Fabian Chocron); 2. A $130,500 mortgage to the Marroquito Unit Trust (second ranked); and, 3. A $107,500 mortgage to Fabian Chocron's brother Sergio Chocron in the amount of $107,500 (third ranked).
It is the validity of this third ranked mortgage to Sergio Chocron which has given rise to these proceedings. Ms Onkoud contends that half of the Property was transferred to her without any need for her to pay anything to Fabian Chocron in the context of refinancing. That is, at no time was she aware that she was taking on any debt as part of this transfer to her.

[8]

Events in November 2010

On 3 November 2010, both Fabian Chocron and Ms Onkoud signed a Transfer of "one half share" of the Property from Fabian Chocron to Ms Onkoud. The document reflects that both of their signatures were witnessed by Lisa Potter, who was at that time a solicitor at Clamenz Lawyers where Mr O'Brien, Fabian Chocron's solicitor, was a principal. In this document it is clearly stated that the transfer of half of the title from Fabian Chocron to Ms Onkoud was in receipt of consideration of $375,000.
On 5 November 2010, Ms Onkoud and Fabian Chocron signed an offer of loan contract with CUA. The purpose of the joint loan was stated to be refinancing of the Westpac loan. The funds to be made available for that purpose by CUA were $512,000.
On 8 November 2010, a joint CUA account (ending in "340") was opened in the names of Ms Onkoud and Fabian Chocron for the purpose of the refinancing with CUA. The couple held two Prime Access Accounts with CUA: one ending in 340, of which they each had a $10 share, and in respect of which one set of statements was issued in Ms Onkoud's name and the other in joint names. The other CUA account ended in "980" and was also in their joint names.
In addition to these two CUA accounts, Ms Onkoud held an ANZ Bank account into which her earnings were paid until 2011 and an E-Trade account in her name. Her evidence was that Fabian Chocron and his accountant had set up her E-trade account and that Fabian Chocron controlled it. Fabian Chocron denied this. He also denied that he carried out any transactions on her E-trade account.
There was also an E-trade account set up in their joint names called "Ocean 14" as stated above. There was some evidence that there was another Family Trust called "Ocean 14" but Ms Onkoud was not a part of that Trust.
Sergio Chocron's evidence was that he had spoken with Ms Onkoud and agreed to loan her the money. From 12 November 2010 he began transferring $5,000 a day into Ms Onkoud and Fabian Chocron's joint CUA account ending in 340. The daily limit for such a transfer was $5,000. He stated that Ms Onkoud had told him that she needed the $107,500 by 5 December 2010. Ms Onkoud denied this. The November transfers were as follows: 1. On 12 November 2010, $5 was transferred; 2. On 15 November 2010, $4,995 was transferred; 3. On 16 November 2010, $5,000 was transferred; 4. On 17 November 2010, $5,000 was transferred; 5. On 18 November 2010, $5,000 was transferred.
Sergio Chocron's evidence was that after 18 November 2010, Ms Onkoud told him she had an E-trade account with the ANZ Bank where transfers of funds could be received via BPay and there was no limit to how much could be transferred per day. Ms Onkoud denied this.
On 24 November 2010, CUA issued a $512,000 mortgage in the names of both Fabian Chocron and Ms Onkoud.
On 26 November, Ms Onkoud had $130,530.25 in her ANZ account, the bulk of which was described as being a loan from the Marroquito Unit Trust.
On 1 December 2010, three events occurred: 1. The CUA deposited an amount of $512,000 in the joint CUA account; 2. An amount of $527,209.17 was withdrawn from the couple's joint account and transferred to Westpac to pay out the previous mortgage (It would appear that just over $15,000 of this had come from the $20,000 transferred by Sergio Chocron between 12 and 18 November 2010); and, 3. A Deed was purportedly signed by Ms Onkoud in the office of Clamenz Lawyers in relation to the loan of $107,500 from Sergio Chocron to Ms Onkoud.
On 3 December 2010, Sergio Chocron transferred the remaining $87,500 of the loan to Ms Onkoud's E-trade account (that is, $107,500 less the $20,000 he had previously transferred in November). That amount was subsequently transferred to Ms Onkoud's personal ANZ Progress Saver Account.
On 9 December 2010, Ms Onkoud became the registered owner of half of the Property. Also on that day Ms Potter signed a caveat in favour of Sergio Chocron on Ms Onkoud's interest in the Property.
On 16 December, Fabian Chocron and Ms Onkoud attended the ANZ Bank at Parramatta together and $375,000 was transferred from Ms Onkoud's ANZ account to the couple's joint account. Fabian Chocron's evidence was that Ms Onkoud used her card to transfer this amount to him in consideration for the transfer of 50% of the Property from him to her. Ms Onkoud's evidence was that Fabian Chocron had said to her that he needed to take some money he had deposited in her account from an E-trade account. Her evidence was that she believed the money was to be transferred into the trust fund. The bank records show that the $87,500 and the other amounts withdrawn were used to pay of IT Bizolutions company debts and make payments into the Marroquito Unit Trust.
On 20 December 2010, two caveats were lodged at the Land Title's Office; one in relation to Sergio Chocron's loan and one in relation to the loan by the Marroquito Unit Trust. A copy of the former, but not the latter, was in evidence.

[9]

The background to the above refinancing

There was a significant factual dispute about the circumstances of the execution of the Deed of Mortgage associated with the loan from Sergio Chocron to Ms Onkoud.
The evidence of Fabian Chocron and Sergio Chocron was that it was Fabian Chocron's idea to secure a loan from Sergio Chocron. Although Sergio Chocron made no mention in any of his affidavits to any conversations ever taking place between he and Ms Onkoud about any loan from him, in cross-examination he stated that he had had conversations with her about this loan.
Sergio Chocron, Fabian Chocron and Ms Onkoud all gave different reasons for the loan. Fabian Chocron's evidence was that his business was in trouble and he needed to re-finance. Ms Onkoud's evidence was that re-financing was for asset protection and to get her name on the title. Sergio Chocron's evidence was that the purpose of his loan to Ms Onkoud was to complement the main mortgage that she was taking out in order to purchase half of the Property.
Sergio Chocron's evidence was that on or around 1 December 2010 he signed several identical counterparts of the Deed of Mortgage prepared by Clamenz Lawyers while he was in Buenos Aires. This was witnessed by his wife. He thought it was strange that he was signing four or five different copies as this was not the legal procedure in Argentina. He could not recall whether he returned copies of the Deed to Australia by mail or by a private company. In any event, he arranged for the signed and witnessed counterparts to be sent to Clamenz Lawyers.
Sergio Chocron's evidence was that he did not have a lawyer in relation to this Deed and simply received the copies of the Deed from Clamenz, signed them and returned them. He denied that the Deed of Mortgage had been prepared by Clamenz Lawyers on his behalf. His evidence was that it been prepared on behalf of Ms Onkoud.
Fabian Chocron's evidence was that he was not the person who sought advice and instructed Clamenz Lawyers to prepare the Deed either. He could not remember if it was he who contacted Clamenz Lawyers about this and then later stated that if he did contact them it was only because Ms Onkoud had asked him to do so. Ms Onkoud denied this.
It was the plaintiff's case that the Deed was signed by Ms Onkoud at the offices of Clamenz Lawyers on 1 December 2010. Ms Onkoud disputed this. Fabian Chocron's evidence was that he went with Ms Onkoud to Clamenz Lawyers on 1 December 2010 for her to sign the Deed but, beyond that, he gave no evidence of what actually happened that day. Fabian Chocron denied knowing what was in the Deed but later accepted that he knew in general terms what was in it.
Ms Onkoud's evidence was that the only time she ever went to a meeting at Clamenz Lawyers was in April 2010, not December 2010. Her evidence was that at that time Fabian Chocron told her that they needed to protect their assets and sign some documents with Daniel Clark at Clamenz Lawyers for that purpose. She explained that the reason for this was that two or three days previously the IT Bizolutions system had been hacked into by NCSS and there was potential litigation about this. Her evidence was that the only other people in the room were solicitors Daniel Clark and Brian Morris as well as Sergio Chocron and Fabian Chocron.
Ms Onkoud's evidence was on this day in April 2010 Mr Clark told her to sign a document and said to her words to the effect of "there is no need to read it in detail because everything has already been organised as per your husband's instructions. This is to protect the family assets". She stated that although she signed the document she did not read it or note that the heading of it was "Deed of Mortgage". She did this because she trusted her husband stating "we were in a marriage". She believed her husband when he told her this was for asset preservation. Her evidence was that she had signed many documents when Fabian Chocron asked her to.
Ms Onkoud's evidence was that the first time she saw the signature page actually attached to the whole Deed was after these proceedings commenced. She did not recall Ms Potter being in the room at the time she signed the document although she did recall Ms Potter going to the Land Titles Office with her later.
Both Fabian Chocron and Sergio Chocron accepted that Sergio Chocron was in Sydney visiting Fabian Chocron and Ms Onkoud in April 2010 but both denied being at any meeting at Clamenz Lawyers in April 2010. Fabian Chocron agreed that during this visit in April 2010 Sergio Chocron did go to the city with him. However, he denied visiting Clamenz Lawyers with Sergio Chocron and Ms Onkoud in relation to the Deed in 2010. He was also doubtful as to whether he had ever visited Clamenz Lawyers with Sergio Chocron. He also denied giving instructions to Clamenz Lawyers to file a caveat in relation to Sergio Chocron's mortgage.
Sergio Chocron agreed that he had stayed at Ms Onkoud's and Fabian Chocron's house during April 2010 but he did not recall a visit to the lawyers during that visit. His evidence was that he went to the lawyers in 2011 during another visit to Sydney. He denied ever being present at a meeting at that law firm and ever meeting Daniel Clark.
To summarise, on Ms Onkoud's version, both Sergio Chocron and Fabian Chocron were present when she signed the document. Sergio Chocron's evidence was that he was never present at any signing. Fabian Chocron was silent on any details of the meeting on 1 December 2010, although he stated that he was present that day.
On Ms Onkoud's version Daniel Clark, solicitor, was present. Next to Ms Onkoud's signature is that of a solicitor, Ms Potter (now Mrs Church). Ms Potter's evidence was that the signature and printed name on the Deed was hers but she had no recollection of the circumstances surrounding its execution. She deposed that she was with Clamenz Lawyers as a solicitor from about August 2010 until around June 2011. She was provided with a copy of the Deed on 28 November 2018. Her evidence did not go so far as to state that she witnessed Ms Onkoud signing the document due to her lack of memory of the events that day.
There was no affidavit evidence of Mr Clark before the court as to the signing of the Deed.
Putting to one side for the moment whose version is to be accepted I note that there were a number of copies of the Deed in evidence. All were in the same terms but were in varying states of execution. Only one of the four versions in evidence had been signed by both Ms Onkoud and Sergio Chocron. I am prepared to accept that this fourth version is the relevant Deed for the purpose of these proceedings. The copies in evidence were as follows: 1. A Deed dated 1 December 2010, signed only by Ms Onkoud, with her signature witnessed by Fabian Chocron stamped by the Office of State Revenue. Sergio Chocron's signature does not appear on this version. This Deed was exhibited to Sergio Chocron's affidavit dated 1 November 2017 and Ms Onkoud's affidavits dated 25 December 2017 and 30 November 2018; 2. A Deed dated 1 December 2010, signed only by Ms Onkoud, with no witness to her signature and also stamped by the Office of State Revenue. This Deed was annexed to Ms Onkoud's affidavits dated 25 December 2017 and 30 November 2018; 3. A Deed dated 1 December 2010, signed only by Sergio Chocron and witnessed by his wife, and initialled "SC" on every page. This Deed was exhibited to Sergio Chocron's affidavit dated 1 November 2017 and annexed to Ms Onkoud's affidavits dated 25 December 2017 and 30 November 2018; 4. A Deed dated 1 December 2010 signed by Ms Onkoud, with her signature witnessed by Lisa Potter and by Sergio Chocron with his signature witnessed by his wife and initials "SC" on every page. This Deed was annexed to the affidavit of Lisa Church (formerly Lisa Potter) dated 7 December 2018.

[10]

The terms of the Deed

As stated above, the recitals and clauses of the different versions of the Deed were identical; only the execution differed. Some of the relevant recitals and clauses can be summarised as follows.
Recital A stated that Ms Onkoud wishes to borrow from Sergio Chocron an amount of $107,500 to be used for the part payment of the purchase of a fifty per cent interest (50%) in the Property. Recital B stated that Sergio Chocron has agreed to loan Ms Onkoud $107,500 in accordance with and subject to the terms of this Deed. Recital C stated that Ms Onkoud agreed to repay the loan facility in accordance with and subject to the terms of the Deed. Recital D stated that to secure the loan, the "Client" has agreed to provide a mortgage over the Property up to a limit of $107,500. The parties acknowledged that this mortgage will rank third behind the mortgage held by CUA and the second mortgage held by the Marroquito Properties Pty Ltd as trustee of Marroquito Unit Trust. Recital E stated that the purpose of the Deed is to document the loan and to provide a mortgage as security.
Under Clauses 2.1. 2.2 and 2.3, Sergio Chocron agreed to lend Ms Onkoud the sum of $107,500, repayable in full 12 months after written notice and at a rate of 7 percent per annum. Clause 2.4 provided that interest accrued each day on each amount due but unpaid at a rate of eight percent per annum. Clause 2.5 provided for the method of payment, with clause 2.5 (b) stating that a written statement by Sergio Chocron as to any amount due under this Agreement was sufficient evidence of that amount unless Ms Onkoud proved it wrong. Clauses 3.1 and 3.2 indicated that Ms Onkoud consented to the lodgement of a caveat in respect of the mortgage and that the mortgage was limited only to her interest in the Property.
Clause 4.2 provided that both parties warranted that they had read the terms of the Deed (Clause 4.2(a)) and had taken independent legal advice or been given the opportunity to take legal advice as to the terms, nature, effect and extent of the Deed (Clause 4.2(b)). Both parties also warranted that they had not made any promise, representation or inducement or been a party to any conduct, material to the entry into the Deed other than was set out in the Deed (Clause 4.2(c)). Both parties indicated that they were aware that the other party was relying upon this warranty in executing this Deed (Clause 4.2(e)).
Clauses 6.9 and 6.10 read: "Clause 6.9 (Further assurances): Each party must do or cause to be done all things necessary or reasonably desirable to give full effect to this Deed and the transactions contemplated by it (including, but not limited to, the execution of documents). Clause 6.10 (Counterparts): This Deed may be executed in any number of counterparts and all counterparts taken together will constitute one document. The parties to this Deed agree that they will provide original executed counterparts via post to each other within seven (7) days of the execution of the Deed."
Attached to the Deed was Memorandum Q8600, Clause 5 of which provided that Ms Onkoud as the mortgagor was liable in respect of costs and expenses incurred by Sergio Chocron as the mortgagee in the event of default, all of which were repayable until the principal money was paid back. Clause 6 provides that in the event of default on repayments of the principal or interest, Sergio Chocron was entitled as the mortgagee to exercise all of his rights under the Conveyancing Act and Real Property Act 1900 (NSW).

[11]

The move to Argentina in 2014

In January 2014, Fabian Chocron and Ms Onkoud moved from Sydney to Buenos Aires. Prior to their departure Sergio Chocron agreed that the caveat on the Property could be withdrawn. His evidence was that this was so that Fabian Chocron could re-finance. There was no evidence of any re-financing actually taking place at or after that time. Records show that the caveat was withdrawn on 22 November 2013 (at the same time as the caveat placed by Marroquito Unit Trust).
Sergio Chocron's evidence was that, as with all matters pertaining to his loan to Ms Onkoud, he discussed the removal of the caveat with her first before speaking to Fabian Chocron about it. Ms Onkoud's evidence was that she did not recall lodging the Withdrawal of Caveat but agreed that her signature was on the form and it was her telephone number. She also accepted that she had initialled a handwritten change at the top of the paper.
There was a factual dispute on the evidence as to how long the couple intended to stay in Argentina. Fabian Chocron's evidence was that he had received "specialist medical evidence" that being close to extended family would be beneficial for the development of their oldest son who suffered from a mixed speech delay disorder and they would be staying for a minimum period of a year. Ms Onkoud's evidence was that they were only going for one year before returning to Australia.
Both Sergio Chocron and Fabian Chocron gave evidence that prior to the family moving to Buenos Aires, Fabian Chocron had asked Sergio Chocron to help furnish and prepare an apartment for him, Ms Onkoud and the children to live in when they arrived in Buenos Aires. Both of them gave evidence that Sergio Chocron purchased a large number of items including a car, white goods and groceries for Fabian Chocron and Ms Onkoud. It was common ground that Sergio Chocron arranged for the purchase of the items described by him. The affidavit of Yasmin Abdi annexed a number of receipts for household goods and a motor vehicle, which were in Spanish and had been translated into English. It also included some emails between Fabian Chocron and Sergio Chocron that had been translated which support the fact that such an arrangement had been made to buy groceries and other items.
Ms Onkoud accepted in her evidence that Sergio Chocron had arranged to furnish the family's apartment but stated that Fabian Chocron had sent Sergio Chocron money in advance for that purpose. She indicated that she and Fabian Chocron had an account in Uruguay and the money had come from that account. This evidence emerged for the first time in cross-examination and there was no documentary evidence to support it. I shall return to my factual finding in relation to this issue further below.
Fabian Chocron's evidence was that he and Ms Onkoud were not able to open a bank account in Argentina and nor were they able to transfer funds from Australia so Sergio Chocron loaned Fabian Chocron funds in cash during 2014 to pay for matters such as private school enrolment, apartment rent and medical care.
Fabian Chocron's evidence was that he did not really "think our finances through" before arriving in Argentina and "had not appreciated how complex and expensive it would be to organise funds". Ms Onkoud was not able to open a bank account until she received a document Nacional de Identidad ("DNI"). Although Fabian Chocron had a DNI and had successfully opened a bank account by March 2014, he decided that it was impracticable to transfer funds from Australia to Argentina because of the paperwork involved and also because of the inflation in Argentina and the exchange rate.
Sergio Chocron claims that $152,456.18 was spent by him on Fabian Chocron and Ms Onkoud's behalf, including cash payments during 2014. Those figures were as follows: 1. Cash advances of $112,514.74; 2. American Express payments of $9,176.79; 3. Motor vehicle purchase of $28,624.10; 4. Other payments of $2,149.55.
Sergio Chocron had no bank or other documentary records to support his proposition that he provided Fabian Chocron with monthly advances of cash. Despite this, he deposed to providing cash to him as follows (amount in pesos): 1. In March 2014, $28,500 was provided; 2. In April 2014, $31,000 was provided; 3. In May 2014, $38,300 was provided; 4. In June 2014, $38,500 was provided; 5. In July 2014, $39,000 was provided; 6. In August 2014, $37,500 was provided; 7. In September 2014, $40,000 was provided; 8. In October 2014, $40,000 was provided; 9. In November 2014, $100,000 as well as US $50,000.
The above amounts were in pesos and, by way of application of the relevant exchange rate as at 2014, were equivalent to an amount of $112,514.74 in Australian Dollars.
Sergio Chocron gave evidence that he and his brother loaned each other money when necessary and any transfers described as loans in the bank records are not referable to the loan the subject of these proceedings. He also gave evidence that when he paid back the amounts advanced he would describe it as "loan from Fabian Chocron" or "Paying off loan".

[12]

Bank Transfers between Sergio Chocron and Fabian Chocron

Putting to one side any bank accounts he might have had in Argentina, Sergio Chocron held bank accounts in Australia. He had two with St George, a Power Saver Account and a Complete Freedom Account, as well as a Progress Saver Account with the ANZ Bank. The bank records in evidence showed a large number of transfers between Fabian Chocron and Sergio Chocron from 2010 until 2015. Sergio Chocron's evidence was that there were five categories of transactions between himself and Fabian Chocron. 1. "Round robin" transfers between he and Fabian Chocron to save on account fees ($2,001 each month); 2. Transactions relating to the loan with Ms Onkoud; 3. Interest payments from Ms Onkoud; 4. Personal loans between he and Fabian Chocron unrelated to the loan to Ms Onkoud; and, 5. Repayments by Fabian Chocron of a "separate" loan between the two men (the cash advances and other expenses in 2014).
Bank statements for the joint account ending in 340 (sent to Ms Onkoud) for the period from July 2013 to July 2017 showed recurring monthly payments of the amounts of $2,000 or $2,001 and $20 or $19.95 from or to Sergio Chocron. The amount of $4,412 appeared on her statement regularly (statements provided were for the period from July 2013 to July 2017). Similarly, Bank statements for the joint account ending in 340 for the period from November 2010 to July 2017 show recurring monthly payments of the amounts of $2,001 and $15.00, or $20.00 or $25.00 from Sergio Chocron and the amount of $2,000 or $2,001 and $19.95 or $20.00 or $21.00 or $25.00 to Sergio Chocron.
Bank statement for the account ending in 980 for the period January to July 2017 showed transfers to Sergio Chocron on 10, 21, 25, 26 and 27 February 2017 in the amounts of $2,332, $5,000, $4,250, $4,250 and 4,250 respectively.
The evidence of both Fabian Chocron and Sergio Chocron is that the transfer of $2,001 per month occurred to avoid bank fees. Although it was submitted on behalf of Ms Onkoud that this was suspicious, there does not seem to be any other reason why a "round robin" of this same amount would be transferred between the accounts and I am prepared to accept this explanation.
Sergio Chocron identified transfers from Fabian Chocron which he asserted was interest on the loan to Ms Onkoud. All of the "interest" payments were made from the joint account and were as follows: 1. On 29 June 2012 Sergio Chocron's St George records show a transfer for interest on the loan in the amount of 3,000.00. This entry is described as "2nd Year Mina int"; 2. On 29 June 2012 Sergio Chocron's ANZ records show a transfer in the amount of $4,525. This entry is described as "FROM CHOCRON F INT 2nd YEAR MINA"; 3. On 28 June 2013 Sergio Chocron's ANZ records show a transfer of $3,010.00. This entry is described as "CHOCRON F MINA HALF INTEREST"; 4. In October 2013 Sergio Chocron's ANZ records show a transfer on 25 October in the amount of $4,000.00 (described as "FROM ONKOUD TOSERGIO"), and transfers on 28 October in the amounts of $1,433.00 (described as "FROM ONKOUD FROMFABIAN CHOCRON), $1,840.00 (described as "FROM ONKOUD TO SERGIO ANZ"), $2,475.00 (described as "FROM ONKOUD TO SERGIO ANZ").and $2,500.00 (described as "FROM ONKOUD MONTHLY TR SERGIOA").
In relation to these transfers Sergio Chocron gave evidence that the 2012 payment was six months after the due date because Ms Onkoud was on maternity leave. He explained that Ms Onkoud held back withholding tax in 2013, which was the reason why he received $6,020 rather than the $7,525 owed to him that year. In relation to the 2014 payment, there was an overpayment of $790 which was not explained.
In his evidence Sergio Chocron accepted that he did not know who was making these interest payments; Fabian Chocron or Ms Onkoud. His evidence was that he did not care who paid it as a long as it was paid.
Ms Onkoud's evidence about these "interest" payments was that there were so many transfers between the bank accounts of Sergio Chocron and Fabian Chocron that she was not always aware of all of them. When she asked her husband why he was transferring money to Sergio Chocron he said words to the effect of "I'm just helping my brother because he is going through financial issues."
Both the plaintiff and the defendant produced summaries of all of the transfers between the CUA Joint account and Sergio Chocron in March, November and December 2014 totalling $157,500. Sergio Chocron's calculation was that there was a net transfer from the CUA joint account to him of $152,465.18 whereas Ms Onkoud calculation was that the amount was $163,155. I shall return to the issue of these payments below.

[13]

The marriage breakdown in Argentina

It was common ground that Ms Onkoud and Fabian Chocron faced marital difficulties after they moved to Buenos Aires.
In July/August 2014, Ms Onkoud travelled with her children to France and Morocco to see her family. Shortly after she returned her evidence is that problems emerged in her relationship with Fabian Chocron when he informed her that they would not be going back to Australia. Their personal conflict started when Fabian Chocron took away the children's passports, their birth certificates and their marriage certificate. Following the engagement of a lawyer on her part in Buenos Aires, an agreement was negotiated for Fabian Chocron to return the documents and for them to stay a little longer and jointly make a decision in relation to the children. In 2015, Fabian Chocron travelled to Australia without her. Ms Onkoud's evidence was that he refused to let her and the children go with her.
At around the time that Fabian Chocron took the children's passports (a fact he did not deny), Sergio Chocron gave evidence that he started sending emails to Ms Onkoud about her debt to him. He produced a series of emails said to record communications between him and Ms Onkoud in late 2014 and 2015 about the loan. The authenticity of these emails was challenged by Ms Onkoud.
These emails are dated between 16 December 2014 and 22 October 2015 and are sent between Sergio Chocron's IT Bizolutions email address to Ms Onkoud at an address described as mina_onkoud@itbizolutions.com.au.
Sergio Chocron's evidence was that he had been helping Fabian Chocron and Ms Onkoud in 2014 and was "a little bit tired" of being "the lender of last resort". He knew Ms Onkoud had no way to pay the debt as she was not working. He said he emailed her to ensure that he had correspondence of his version of events. His evidence was: "[s]o I started writing these emails just to have a kind of proof, let's call it, or just to remind Ms Onkoud that there is a debt that some day it should be paid".
Sergio Chocron accepted in his evidence that he frequently saw Ms Onkoud at school and family events but stated that he thought the loan was a business issue and he wanted to keep the family relationship separate. Sergio Chocron disagreed with the suggestion that he could not prove that the emails were written by Ms Onkoud (rather than Fabian Chocron). He stated that he had had several conversations with Ms Onkoud in Buenos Aires about the emails and that Ms Onkoud was very much aware of them. He denied that the emails had been concocted between Fabian Chocron and himself.
Sergio Chocron gave a number of explanations as to how these emails were created.
His first version was that he created a PDF document of the emails in order for it to be sent to his lawyers.
His second version was that he prepared the emails before his lawyers were retained. As an explanation as to why he did not just forward the email to his lawyer, he stated: "…it was not done at the same time, because I kept these files before I even start talking with, with Lisa or with my lawyer regarding the, the deed of mortgage, okay. So I just - it was not done for her."
His third version was that he kept the PDF files before he started talking to his lawyer and his lawyer requested the emails. He explained that he wanted to have it ready to use "when it's necessary".
He agreed to editing the emails to the extent that he changed the form to make them "appear more organised and that additional spaces between lines of text". He could not explain why a "To" field at the top of the emails of 7 and 20 December 2016 had been removed. When it was put to him that he had no explanation he replied, "[n]o, I don't - I don't have any explanation".
Sergio Chocron agreed that he forwarded emails to himself and that once the forward email function is activated it would allow for the content of the email and that by forwarding emails to himself he could have changed anything in the content of the email. Despite this, although he agreed that he had changed the form of the emails, he denied that he had changed the content. He explained that he wanted to make them look more orderly to use when necessary and he had them ready to use when he filed his claim a few months later. He stated: "What I did is: I took a conversation and I might have forwarded it first or not. I believe - I don't remember, but what I did was put it orderly, just to have it not spaces like whatever and I saved all these emails in PDF - in two different PDF files. Now, once I filed the claim that was a few months after that, I already had the files because I had the files in my computer for just the file to use when it's necessary."
Although Sergio Chocron asserted that the language in the emails was similar to Ms Onkoud's language style, he accepted that Fabian Chocron would be familiar with that style as well. The emails were in English.
Fabian Chocron agreed that he was the registered person of the domain name IT Bizolutions. In 2003 he had set up a few emails connected with IT Bizolutions with Optus.net. The domain for IT Bizolutions, (IT Bizolutions.com.au), was purchased and installed. The domain then moved to a hosting company in Canada and many years later the domain moved to another hosting company based in both Canada and Australia. He agreed that he still owned the domain of IT Bizolutions.com.au but denied that as an owner of the company he was the only person who could create work email addresses. He agreed that his father had an IT Bizolutions.com.au email address but denied that it was he that set it up him stating that everybody had access and that it could have been one of the contractors, Ms Onkoud or himself.
The evidence of Fabian Chocron and Sergio Chocron is that IT Bizolutions ceased trading on a date before June 2015 and that during the period of these alleged emails Sergio Chocron was not working for the company and neither was Ms Onkoud.
Ms Onkoud's evidence is that she never had the email address. She did not set it up nor did she ever use it. Although she did some contract work for IT Bizolutions from 2006 and received payments from the company, she always used her Hotmail address as it was not her role to ever liaise with clients. She did work from home doing whatever Fabian Chocron needed her to do. An example of her using her Hotmail address for work in evidence before me is an email from Rohan Brown at NCSS on 21 October 2011 at her Hotmail address. Her evidence was that she did not receive these emails from Sergio Chocron nor did she write the responses. She contended that they must have been written between the plaintiff and Fabian Chocron.
I do not propose to extract all of the emails: the sense of them can be gleaned from only extracting a few. The emails have a subject line as "Re: Repayment missed?" 1. An email dated 23 December 2014 at 11:34am is as follows: "Mina I understand, please keep me informed as soon as you know when the money will be coming my way, Regards Sergio Chocron" 1. On 29 December 2014 at 10:39am there is a purported reply from Ms Onkoud to Sergio Chocron: "Sergio, I understand, please keep me informed as soon as you know when the money will be coming my way, Will do!! Mina"
An email dated 16 December 2014 at 12:33pm has a heading "Payment missed?" and states the following: "Mina I haven't received yet the $7,525 mortgage payment due on 01/12/2014; please ensure you send me the transfer details once you have effected the payment, Regards Sergio Chocron"
A response on 19 December 2014 at 10:31pm with a heading "Re:Payment missed?" was as follows: "Sergio, I may not be able to transfer until next year, I apologise for not letting you now in advanced,[sic] I will try solve it by February '15 Regards Mina"

[16]

Ms Onkoud's version: she had no knowledge of the Deed

I am unable to accept Ms Onkoud's contention that she knew absolutely nothing about the loan. Although she came across as an intelligent and confident witness, the hostility she felt towards her estranged husband and his brother was at times barely concealed. She made a number of gratuitous comments such as that she had trusted her husband, not knowing she was a "target". She adhered to her assertion that this was a scheme, (involving at least two solicitors), conjured up in 2010, in order to disadvantage her on some date in the future.
A number of contemporaneous documents contradict her version that she knew as little as she now contends that she did about the 2010 refinancing. Five documents in particular are problematic for her version of events: the 27 October 2010 email (which was emailed to her), the Transfer document (which she signed), the Deed (which she signed) the withdrawal of caveat (which she signed) and her bank records (which show both this loan amount and the loan from the Marroquito Unit Trust going into her account). I shall deal with these issues in turn.
First, the 27 October 2010 email from Fabian Chocron to his solicitor Mr O'Brien clearly sets out what he wished to do to re-finance the Property. Ms Onkoud's evidence was that she was forwarded this email on 3 November 2010, that she did not read it at that time and that she "trusted" her husband. Her evidence was that she had "a lot of responsibility at home at the time".
I do not accept that if Fabian Chocron had intended to keep her completely "in the dark" he would have sent her a copy of this email. Her evidence that she did not read it is not to the point. The fact remains that he informed her of what he proposed to do.
Second, the Transfer document was signed by both Ms Onkoud and Fabian Chocron and their signatures were witnessed by Ms Potter. This document was signed on 3 November 2010. It clearly states that Fabian Chocron was transferring his half interest in the Property to Ms Onkoud in exchange for consideration of $370,000. Ms Onkoud did not suggest that this document was false. Nor did she deny signing it. Her evidence was that she was very keen for her name to be on the title of the Property. In those circumstances it is difficult to accept that she would not have read the Transfer document to make sure that was in fact the effect of the document.
Third, Ms Onkoud's signature appears on three different counterparts to the Deed before me (see above at [58]): on a copy on which Fabian Chocron is said to have witnessed her signature (but does not have Sergio Chocron's signature), on one in which Ms Potter is said to have witnessed her signature (which also bears Sergio Chocron's signature) and on one which bears Ms Onkoud's signature alone. Ms Onkoud gave no explanation as to how her signature appeared on more than version; her evidence was that she signed one document in April 2010 but that would not explain her signatures on these three counterparts. Although she also gave evidence that she signed many documents for Fabian Chocron when she was asked to do so, this does not explain these three different versions of the Deed.
It is somewhat curious that if Sergio Chocron signed four or five copies of the Deed in Buenos Aires and sent them to Clamenz Lawyers why it was that Ms Onkoud would have signed one copy signed by Sergio Chocron and also a copy not signed by Sergio Chocron if she, in fact, signed these copies on the same day.
Ms Onkoud's evidence was that she was asked to sign a document in April 2010. The fact that the persons she says were present on that date differed to those apparently present on 1 December 2010 leaves open the possibility that she may well have signed a document on that day; it is just unlikely to have been the Deed.
A difficulty for Mr Onkoud's assertion that she signed the Deed in April 2010 and not 1 December 2010 is the timing of the signing of the other relevant documents. Ms Onkoud has the Deed being signed before the 27 October 2010 email, which means it had been signed before the refinancing had been arranged. A date of 1 December 2010 is close in time to all of the other relevant documents including the transfer of half of the Property to Ms Onkoud, the caveat, the transfer of moneys and the loan with the CUA
Ms Onkoud submitted that Ms Potter (now known as Mrs Church) gave no evidence as to the circumstances of witnessing the defendant's signature or in fact that she even did do so. It was submitted that Ms Potter's affidavit is "carefully worded by acknowledging her signature but not that she witnessed the Defendant's signature". The fact that Ms Potter could not remember the details of signing the document does not (by itself) lead me to conclude that she did not witness the Deed. Ms Potter was not required for cross-examination by the defendant. I am not satisfied that there is a basis for me to find that she placed her signature next to Ms Onkoud's signature on a document signed by Ms Onkoud ten months earlier when Ms Potter was not present.
The plaintiff placed significant reliance on the 27 October 2010 email. In particular, the fact that it refers to a proposed meeting in the offices of Clamenz Lawyers to discuss this proposal. It was submitted that this timing was consistent with the fact that the Deed of Mortgage was signed around 1 December 2010. Ms Onkoud gave evidence that she was pregnant when she signed the document. She was pregnant in April but by December 2010 she had her baby.
Given the surrounding circumstances, I am satisfied that Ms Onkoud signed copies of the Deed on or around 1 December 2010. It is not necessary for me to determine whether she is lying about this or is simply mistaken about it and has conflated two events. She may well have signed something in April, it was just not the Deed.
Fourth, there was evidence that Ms Onkoud's signature, initials and mobile telephone number were all on the withdrawal of caveat. Ms Onkoud's evidence was, again, that she signed it because she was asked to by Fabian Chocron.
Fifth and finally, the bank records before me show that as a result of the refinancing, funds were deposited into Ms Onkoud's bank account. It was submitted on behalf of Ms Onkoud that as at early December 2010 she did not need a loan from Sergio Chocron because she had about $120,000 in her bank account, which was a loan from the Marroquito Unit Trust. The difficulty with that submission is that it shows that she was aware that she had received a loan from the Marroquito Unit Trust at the time of the refinancing. This does not support her version that she knew nothing about these loans.
Overall, Ms Onkoud's evidence was that the 2010 refinancing was about her right to be on the title. I accept her evidence that she felt entitled to have her name on the Property on the basis that she had contributed funds to the initial purchase and was paying off the mortgage through her income. However, that does not explain why she would not have read any of the documents arising out of that transfer.
For these reasons, I am satisfied that Ms Onkoud signed the version of the Deed where the signature of Lisa Potter appears on or about 1 December 2010. Although I am not satisfied that she knew nothing at all about the loan at that time (as she contended), that does not mean that I accept the plaintiff's account.

[17]

Sergio Chocron's Version: Ms Onkoud was aware she owed him $107,500.

I am not satisfied that Ms Onkoud willingly entered into a loan whereby she agreed to be personally liable to repay her brother-in-law $107,500.
Fabian Chocron gave evidence at a time when Family Court proceedings were on foot and the marriage breakdown was far from amicable. The evidence showed that Sergio Chocron and Fabian Chocron are close in that context, his evidence that he felt "conflicted" about his role in the proceedings rang hollow. He refused to accept that he was helping his brother Sergio Chocron. His evidence was that the defendant is the mother of his children and the plaintiff is his brother and that, "that's just why am telling the truth, to explain what's there, and that's it. Just to explain everything". In the context of Family Court proceedings against his former wife I did not accept his evidence that he was not acting in a manner to prejudice Ms Onkoud's entitlement to her share of the matrimonial home in the Family Court proceedings.
There were other aspects of Fabian Chocron's evidence that I did not accept either. I am satisfied from the documents before me that he alone, and with his brother on occasion, ran his business in a way that involved frequently moving funds between family trusts, business and personal accounts. On this basis I cannot accept his evidence that he had no way to know whether Ms Onkoud ever made online transactions on her accounts. Although Ms Onkoud gave evidence that she did not give Fabian Chocron her password until 2012, when one has regard to the bank documents, there are transfers to Sergio Chocron from her account before that time that could only have been made by Fabian Chocron. I am satisfied that Fabian Chocron was aware of all of his wife's bank account details and her password and that Sergio Chocron obtained them from Fabian Chocron and not from Ms Onkoud.
As for Sergio Chocron, I do not accept his evidence that he does not wish to get Ms Onkoud out of his house and he just wants the money she owes him. There were a number of credit issues with his evidence. The first of these was his prevaricating evidence as to whether or not he was receiving income from IT Bizolutions.
Sergio Chocron denied that he was ever an IT Bizolutions employee but agreed that he received payments from the company on three different bases; one was the payment of dividends, given that he owned shares in the company, the second one for the services he provided to IT Bizolutions in Argentina in relation to a contract IT Bizolutions had with a company called Alvarion and the third one as a subcontractor finding software engineers in Argentina to develop software for IT Bizolutions. He stated that his consultancy fees in relation to the Alvarion contract ended in 2010, however he was not able to give a satisfactory answer as to the payments received in relation to his subcontracting after that time or in any capacity including when he received his last payment and where they were paid into.
The evidence given by Sergio Chocron about withholding tax was also difficult to accept. The evidence before me is that he received multiple sources of Australian income. His evidence was that he did not prepare income tax returns in Australia. I do not accept his evidence that Ms Onkoud took out his withholding tax payments from the interest payments made to him.
Sergio Chocron's evidence was that he always first spoke to Ms Onkoud about the details of the loan rather than to his brother and business associate. Having regard to the close relationship between the brothers, this was another aspect of Sergio Chocron's evidence that did not ring true.
A significant difficulty with the plaintiff's case that Ms Onkoud knew she had to pay back this loan herself is the 2014/2015 emails. I am not satisfied that these emails are genuine for the following reasons.
First, the exchange on 23/29 December 2014 is identical, including punctuation, except the name of the alleged sender and receiver have been swapped. The words "will do" have been added to the 29 December email. Sergio Chocron was cross-examined about this but, as set out above, he was not able to give a satisfactory explanation.
Secondly, the "To" field is missing from the emails, a fact that Sergio Chocron agreed with in his evidence. He had no explanation for this either. I am satisfied that the removal of this field cannot be explained by "re-arranging" the email. Rather, it suggests deletion of content and/or editing.
Thirdly, there was evidence that Sergio Chocron had a personal email address and he and Fabian Chocron used that address to email each other. Sergio Chocron also had a work email address at Planex which he used to email Fabian Chocron. Ms Onkoud always used her Hotmail address. That is, Fabian Chocron, Sergio Chocron and Ms Onkoud all had other email addresses that they used to conduct communications. This raises suspicions about the email addresses used in these exchanges.
Fourthly, Sergio Chocron was unable to produce a single other email from himself at his IT Bizolutions email address to Ms Onkoud besides these emails said to have been sent in relation to the loan. Nor were any emails produced at all showing that Ms Onkoud had ever used this address.
Fifthly, there was no evidence in the plaintiff's case to suggest that Ms Onkoud ever went to her husband and discussed what to do about these emails after they started to arrive. If the emails had in fact been sent, and there truly was some expectation that it was Ms Onkoud alone who was responsible for paying off the loan, it would be expected that there would have been some discussion between the couple as to whether some of the loan could be paid from the joint account. The absence of any evidence of any such conversation casts further doubt on the authenticity of the emails.
Sixthly, all of the emails were "forwarded" emails. Sergio Chocron accepted in his evidence that once an email is forwarded it is able to be edited.
Seventhly, although Fabian Chocron agreed that he was the only person authorised to create an email address for IT Bizolutions, he would not accept that he was the only one that could do so and suggested that Ms Onkoud could have created this address. In circumstances where Ms Onkoud denies ever using this address, there is no evidence of her ever using this email address and she denied being a party to these emails, it is difficult to understand why she would have set it up just to get these specific emails from Sergio Chocron.
Eighthly, as at the date of the first "email", 16 December 2014, there was $143,890 in the joint account. It is difficult to see why Ms Onkoud could not have used some of those funds to transfer to Sergio Chocron if she indeed believed she was liable for this amount.
Ninthly, the timing of the emails coincides with funds in the joint account being depleted by transfers to Fabian Chocron's business account in purported repayment of his director's loans. By the time of the last email on 22 October 2015 there was only approximately $25,000 in the joint account.
Finally, between 8 January 2015 and 13 January 2015, a total of $85,000 was transferred into the joint account with the description "from 014 Mina". (presumably a reference to the other family trust called the Ocean 14 family trust). On 17 February 2015, another $40,000 was transferred into the joint account and described as "from 014 to Mina" and another $17,000 with the same description on 18 February. These payments were said to be occurring at the same time that Ms Onkoud was supposedly writing to Sergio Chocron about the debt. If she had all of these sums at her disposal it is difficult to understand why she would be replying in the manner in which she is alleged to have done.
For these reasons, I am not satisfied that these emails are genuine. I am comfortably satisfied that they have been fabricated: Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34. This finding raises serious doubts as to the credibility of both Fabian Chocron and Sergio Chocron. Sergio Chocron's evidence that he would speak to Ms Onkoud about these emails cannot be accepted as I am not satisfied these emails were actually sent. It is not necessary for me to be satisfied whether Fabian Chocron alone or both Fabian Chocron and Sergio Chocron created them; I am satisfied that Sergio Chocron could not have been giving truthful evidence when he said he discussed them with Ms Onkoud at the time.
Furthermore, the financial relationship between the Chocron brothers was so intertwined and complicated, I am not satisfied that Ms Onkoud could ever have been fully cognisant of its details. I note that as soon as the $107,500 loan from Sergio Chocron was deposited into Ms Onkoud's account there was a "round robin" which resulted in the money going back into Fabian Chocron's business.
There is no doubt that both Fabian Chocron and Sergio Chocron were sophisticated witnesses and appeared to be educated and articulate men. The difficulty is that given their close relationship, and the breakdown of Fabian Chocron's relationship with Ms Onkoud, I was not persuaded by their claims that this had nothing to do with wishing to deprive Ms Onkoud of her right to remain in her share of the matrimonial home in Australia. They both separately gave evidence in a way that suggested collusion between them. The exaggerated respect they showed to Ms Onkoud in their evidence did not "ring true" to me.
I am not satisfied that at any time Ms Onkoud was informed or understood that she was be personally liable for the loan from her brother-in-law to "buy" her share of the matrimonial home. Nor am I satisfied that at the time of the loan in 2010 either Fabian Chocron or Sergio Chocron had any such expectation either.

[18]

My conclusion: re-financing

As should be evident by now, I was not satisfied that any of the three witnesses who gave before me were being completely truthful in their evidence. As difficult as the financial arrangements between the Chocron brothers is to unravel, I am satisfied that the true nature of the disputed loan was as follows.
In 2010 Fabian Chocron needed to refinance and devised an arrangement whereby the additional funds he required (beyond the $512,000 CUA mortgage) would give rise to a debt in Ms Onkoud's name rather than his. Consistent with the 27 October 2010 email, I am satisfied he did this for asset protection reasons. It is a matter of common knowledge that most married couples own the matrimonial home as joint tenants rather than tenants in common. The departure from this practice is another basis for concluding that Fabian Chocron intended some form of asset protection by the refinancing.
I am satisfied that Fabian Chocron handled all of the couple's finances. Besides owning the Property as tenants in common, all of their finances were joint. Although there were some separate accounts, a careful examination shows that their incomes were mixed. I am satisfied that Fabian Chocron had access to all of Ms Onkoud's accounts and thus am not satisfied that any of the bank records purportedly showing transfers from her accounts were in fact made by her as opposed to her husband.
I am satisfied that Ms Onkoud knew about this re-financing in general terms, including the fact that, on the face of it, she appeared to be in debt to Sergio Chocron, but I am also satisfied that there was an understanding between the couple that it was Fabian Chocron who would repay this loan rather than Ms Onkoud.
I have reached this conclusion based on all of the evidence but, in particular, the evidence about the other two loans that Ms Onkoud was said to have taken out at the same time as this one. As stated above, Fabian Chocron claimed that Ms Onkoud owed him $375,000 from late 2010 for purchasing half of the Property from him as a tenant in common in equal shares. This $375,000 to her husband was comprised of three smaller debts.
The first of the three debts was an arrangement devised by Fabian Chocron whereby a proportion of the $512,000 joint CUA loan would be the responsibility of Ms Onkoud alone, specifically $137,000. There is no evidence as to any separate agreement between the couple, either oral or in writing, about this debt and it was never explained in the evidence how Fabian Chocron required Ms Onkoud to be personally responsible for $137,000 of the $512,000 loan from the CUA. Significantly, there was no evidence before the court of Ms Onkoud ever making any payments to her husband on this alleged discrete debt. As at 7 December 2018, there was still $451,207 owing on that mortgage to the CUA. From the CUA's perspective, that would appear to be a debt owed jointly by the couple.
The second debt was a $130,500 mortgage from Fabian Chocron's Family Trust (Marroquito Unit Trust), the second ranked mortgage. By the time of the hearing in this matter that loan had been paid back and the caveat withdrawn. There was no suggestion in the evidence that that loan had been paid back by Ms Onkoud. I am satisfied that it was repaid by Fabian Chocron and that this was always the intent of the parties.
Thus, it can be seen that two of the three "debts" supposedly incurred by Ms Onkoud to repay her husband for her purchase of a half share of the family home were in fact either paid for by Fabian Chocron (Marroquito Unit Trust) or not expected to be repaid separately by her (the CUA debt).
There is no evidence that as at on 1 December 2010 the couple had any marital difficulties. At that time Ms Onkoud was happy to trust Fabian Chocron with the couple's finances. Thus, even though the documents before me suggest that Ms Onkoud was aware that the paperwork suggested she owed her husband $375,000 as part of the refinancing on paper, I am satisfied that there was never any understanding she would have to personally repay it.
Between late 2010 and late 2014 things changed considerably. I am satisfied that when the marriage began to break down, Fabian Chocron started looking at ways to enhance his share of any future property divide. I am satisfied that the fabrication of the emails was part of this.
Having made these factual findings, I turn to consider the application of the relevant legal principles to them

[19]

Was the Deed a "sham"?

The primary defence advanced by Ms Onkoud was that the Deed was a "sham". As Gleeson CJ, Gummow and Crennan JJ observed in Raftland Pty Ltd v Federal Commissioner of Taxation (2008) 238 CLR 516 at 531; [2008] HCA 21, the term "sham" in this context is ambiguous and uncertainty surrounds its meaning and application. In Esanda Ltd v Burgess (1984) 2 NSWLR 139; [1985] ANZ ConvR 32, Priestley JA noted that two conditions are generally required for a transaction to be found to be a "sham": "… (1) when parties to an agreement disguise the nature of the transaction they intend to carry out by casting it into a form which makes it appear to third parties as a different kind of transaction evidence is receivable to show the whole of the transaction; (2) although such a transaction attracts the description "sham" and the document or documents in some cases will be wholly inoperative, one or more of the documents concerned may be operative according to its true nature: see Boydell v James at 627; that is, subject to its true nature being given effect, its terms will be operative between the parties."
Diplock LJ in Snook v London & West Riding Investments Ltd [1967] 2 QB 786 at 802 defined a "sham" as: "… acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v. Maclure and Stoneleigh Finance Ltd. v. Phillips), that for acts or documents to be a "sham", with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a "shammer" affect the rights of a party whom he deceived."
The defendant accepted that the present case was not a typical "sham" situation where both of the parties to the Deed intended that the document would operate otherwise than was disclosed on the face of it. Rather, Ms Onkoud's case was that she did not apprehend the content or import of the document and it was "sham" orchestrated between Sergio Chocron and Fabian Chocron for the purpose of creating a future ability of Sergio Chocron to denude Ms Onkoud of her half share in the former matrimonial home.
It was submitted on behalf of Sergio Chocron that the fact that Ms Onkoud obtained a 50% interest in the Property means that the Deed was not a "sham". This is because, it was submitted, this was not a transaction where the party owing money has not obtained any material benefit. It was submitted that for the Deed to be a "sham", Sergio Chocron would have to have made some "special gain" from the transaction.
I am not satisfied that the Deed between Ms Onkoud and Sergio Chocron was a "sham" for three reasons.
First, it was not a document that is intended to operate in a different manner to its terms. It was intended to operate as a mortgage and, by all accounts, did operate as a mortgage. I have already found that there was an understanding that Fabian Chocron rather than Ms Onkoud would actually be responsible for his wife's debt, but that does not mean that the Deed of Mortgage was intended to operate in a different way to its terms. As Lord Reid noted in Inland Revenue Commissioners v Littlewoods Mail Stores Ltd [1963] AC 135 at 154-155, a document or transaction is not a "sham" if it had "the effect it was purported to have" and does not do "something different from what the parties had agreed to do". This situation can be distinguished, for example, from a situation where a debtor and lender have an implied agreement that a debt will not be recoverable and the transaction has no effect at all: Re Sharrment Pty Limited; Lee Wynyard; Mark Wynyard; Lorreine Claire Wynyard and Seyta Pty Ltd v the Official Trustee In Bankruptcy (1993) 18 FCR 449; [1988] FCA 179 at [22] and [34].
Secondly, as Diplock LJ held in Snook, a sham requires "common intention among participants to the transaction" that the document does not create the legal rights and obligations that it purports to create. This was clearly not the case here. The defendant conceded that the alleged ruse she relied upon was between Sergio Chocron and Fabian Chocron whereas the parties to the Deed were she and Sergio Chocron.
Thirdly, on the defendant's case, the alleged sham was characterised as "a ruse orchestrated by Fabian Chocron and the plaintiff for the purpose of creating a future ability of the plaintiff to denude the defendant of her half share in the former matrimonial home". I am not satisfied that there is evidence to support such a contention. If there had been it might have created the potential for an "emerging sham"; that is, a situation where the parties to a binding and valid transaction subsequently agree that it should be used to mask an entirely different arrangement: Marac Finance Ltd v Virtue [1981] 1 NZLR 586 at 588.
The parties did not address me on the doctrine of "emerging sham". It appears to have a somewhat uncertain status in this jurisdiction: Lewis v Condon; Condon v Lewis [2013] NSWCA 204 at [80]-[81] per Leeming JA. In any event, even if the principles relevant to the notion of an "emerging sham" could otherwise be applied in this case, the same problems described above arise, namely that this transaction appears to have always been intended as a mortgage and there is no evidence that Sergio Chocron and Ms Okound intended to vary their arrangement (as opposed to Sergio Chocron and Fabian Chocron).
For these reasons, I do not accept the defendant's contention that the Deed was a "sham".

[20]

Deceit

Ms Onkoud's alternate defence was that her signature on the Deed was obtained by deceit. It was submitted that, if this tort is established, then the Deed was void.
The elements of the tort of deceit were noted in Magill v Magill (2006) CLR 226 CLR 551; [2006] HCA 51 where Gummow, Kirby and Crennan JJ observed the following at [114] (footnotes omitted): "114. The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance on the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation."
Putting to one side the factual findings I have made, another difficulty with Ms Onkoud's claim that she was deceived into entering the relevant loan agreement is that there is no evidence that she has suffered any damage caused by reliance on any false representation. That is, even if Fabian Chocron knowingly made a false representation with the intention that Ms Onkoud rely on it, she has still ended up with a half share of the home. The defendant's response to this was that Ms Onkoud has suffered loss "in the form of the present proceedings." I consider this to be a circular argument. The fact remains that in return for entering into this loan, whether it was she or her husband who was intended to pay it, she has received the benefit of a half share in the Property.
Another problem with reliance upon deceit is that the defendant maintained that the deceit was carried out by Fabian Chocron with Sergio Chocron's knowledge. Although "knowing involvement in the deceit practised by a fraudster" may be enough to give Ms Onkoud a claim against Sergio Chocron, there is little, if any, evidence that he was knowingly involved in any alleged false representations made by Fabian Chocron when the Deed was signed: Lewis Securities Ltd (In Liq) v Carter [2018] NSWCA 118 at [20].
I am not satisfied that the tort of deceit has been established.

[21]

Section 38(1) of the Conveyancing Act

Ms Onkoud also submitted that the Deed was invalid because it had not been signed by an independent witness, as required by s 38(1) of the Conveyancing Act. Section 38(1) provides that: (1) Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation.
Although there were four different versions of the Deed in evidence, there was only one which had the signatures of both Sergio Chocron and Ms Onkoud on it; the one where Ms Onkoud's signature was witnessed by Ms Potter. This is the relevant Deed, consistent with clause 6.8 of the Deed. As such, I am satisfied that this version of the Deed is the valid one and was signed by an independent witness, Ms Potter.
Further, the defendant submitted that the attestation statement by Fabian Chocron in the Deed does not refer to himself as a prescribed witness in accordance with s 38(1A). This argument can be fairly quickly disposed of. The version of the Deed witnessed by Fabian Chocron cannot be a valid Deed, as there is no counterpart signature by Ms Onkoud. Further, s 38(1A) is "without prejudice" to any other method of signing (including signing and having that signature attested by an independent witness as set out in s 38(1)) and was intended for situations where a party is disabled from signing by age, illness or accident (Brown v Tavern Operator Pty Ltd (2018) 98 NSWLR 586; [2018] NSWSC 1290 at [481]-[486] as per Ward CJ in Equity).
Finally, the defendant argued that she never received a copy of the Deed as required by clause 6.10 of the Deed. This clause provides that the Deed may be exchanged in counterparts and that executed counterparts will be provided to each party within seven days of execution of the Deed. The defendant claimed that she had never received a copy of the document signed by the plaintiff.
Although there was no evidence of the Deed ever being physically provided to Ms Onkoud, delivery in the context of a deed is not confined to physical delivery of the document. In Vincent v Premo Enterprises (Voucher Sales) Ltd (1969) 2 All ER 941, Denning LJ observed at 944: "The law as to delivery' of a deed is of ancient date. But it is reasonably clear. A deed is very different from a contract. On a contract for the sale of land, the contract is not binding on the parties until they have exchanged their parts. But with a deed it is different. A deed is binding on the maker of it, even though the parts have not been exchanged, as long as it has been signed, sealed and delivered. Delivery' in this connection does not mean handed over' to the other side. It means delivered in the old legal sense, namely, an act done so as to evince an intention to be bound. Even though the deed remains in the possession of the maker, or of his solicitor, he is bound by it if he has done some act evincing an intention to be bound, as by saying: I deliver this my act and deed.''
As Sackville AJA noted in Segboer v AJ Richardson Properties Pty Ltd (2012) 16 BPR 31,235; [2012] NSWCA 253 at [58], the critical inquiry is whether the party evinced an intention that they would be bound immediately. This is an objective enquiry, taking into account the circumstances surrounding the execution of the deed and the words and conduct of the parties (Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296 at [33]-[34], Realm Resources Ltd v Aurora Place Investments Pty Ltd [2019] NSWSC 379 at [71]). Again, there is little evidence to show that Ms Onkoud or the plaintiff conducted themselves in a way that indicated a belief that the document would not bind them.
I am not satisfied that any of these arguments have been made out either.

[24]

Has the loan been repaid?

The defendant's alternate argument was that even if the Court was satisfied that a valid mortgage existed between Sergio Chocron and her, the loan had been repaid.
It was common ground that there were significant transfers between the couple's CUA joint account and Sergio Chocron over time. Sergio Chocron's calculation was that there was a net transfer from the CUA joint account to him of $152,465.18 whereas Ms Onkoud's calculation was that the amount was $163,155. This does not take into account dividends paid to Sergio Chocron from IT Bizolutions and other monies that appear to have been paid to him by way of distribution from family trusts. It is to be noted that these amounts roughly equal the payments from Fabian Chocron and Ms Onkoud's joint account back to Sergio Chocron and is also an amount exceeding the present claim by Sergio Chocron in these proceedings.
The plaintiff's explanation for these repayments is that he had provided this amount in cash to his brother in Buenos Aries in 2014 and these transfers reflect repayments for that amount. This was the evidence of both Fabian Chocron and Sergio Chocron. Ms Onkoud's case was that arrangements were made for the payment of the goods they needed prior to their departure from Australia and the funds came from a bank account they held in Uruguay.
I have examined the evidence about these transfers to Sergio Chocron from the couple's joint account and make the following observations.
First, Sergio Chocron's evidence is that without the assistance of any documents he can assert four years after the fact that he provided $112,514.74 in cash to the couple in 2014. He did not provide any bank statements showing withdrawals of these amounts to support his claim. It was submitted on his behalf that bank statements would not assist the court because such evidence would not have clearly demonstrated the specific amounts provided to Fabian Chocron. I am not satisfied that this is the case. Bank records from Sergio Chocron showing large cash withdrawals of $112,514.74 would have given some support to his claim.
As it is, there is scant evidence about the alleged cash advances which amount to $112,514.74. It is to be noted that this amount is remarkably similar to the amount said to be owed by Ms Onkoud to Sergio Chocron under the Deed of Mortgage when regard is hard to the interest as at 2014.
Secondly, Fabian Chocron's evidence that he was able to open a bank account by March 2014 but still chose to deal with his brother by way of cash loans is a suspiciously convenient explanation in the circumstances. His evidence that he did not comprehend the banking requirements in Argentina before he returned to reside there does not sit well with the other evidence about his financial dealings and experience.
Thirdly, it seems unlikely that so much money would be loaned so casually by Sergio Chocron to the couple when a loan of a smaller amount required a deed of mortgage/caveat. Sergio Chocron's evidence was that he did not think it necessary to formalise or document this arrangement because he was simply "helping" his brother but he was also, in effect, helping his brother out with the smaller loan in 2010.
Fourthly, there was no documentary evidence to either prove or disprove that the couple had a bank account in Uruguay as contended by Ms Onkoud. I have had regard to the fact that the plaintiff bears the evidentiary burden in these proceedings.
Fifthly, the payments to Sergio Chocron came from the joint account rather than Ms Onkoud's account. I have already found that it was Fabian Chocron who handled all of the finances. A number of the transfers said to be interest payments were described as coming from "FChocron". I have already stated that I am satisfied that the couple's funds were intermingled. I am satisfied that there are loan repayments to Sergio Chocron from the joint account that do not on their face distinguish what they were repayments to Sergio Chocron for.
Sixthly, the caveat was withdrawn just prior to the move to Argentina. If there was indeed any suspicion on Sergio Chocron's part that the loan would not be shortly paid off, it is difficult to see why he would agree to the caveat being withdrawn at that time.
Seventhly, the claim that Ms Onkoud still owed a debt to Sergio Chocron was raised for the first time when marriage difficulties emerged. The prospect of the pending Family Court proceedings provides context to this.
Finally, and significantly, I have already made adverse credit against both Sergio Chocron and Fabian Chocron in relation to their evidence concerning the fabricated emails. I am satisfied that either Fabian Chocron alone or, in collusion with his brother, fabricated those emails. These credibility issues carry over to the evidence about which loan was being paid back to Sergio Chocron in 2014.
Having considered all of these matters, I am not satisfied on the balance of probabilities that the plaintiff has established that the amount of the debt remains outstanding. On that basis, although I am satisfied that the plaintiff extended a loan of $107,500 to Ms Onkoud in 2010, he has not discharged his onus of establishing that it has not been repaid based on the bank records and evidence before me.

[25]

Relief Claimed

I have found that the plaintiff cannot succeed. It is worth noting, however, that even if I had been satisfied that Ms Onkoud still owed Sergio Chocron the amount alleged, I would not have granted the primary relief sought, namely, a writ of possession.
The mortgage in Sergio Chocron's favour was over Ms Onkoud's half-share of the Property, as Ms Onkoud and Fabian Chocron held the Property as tenants in common. Tenants in common share the right to possession of the land, even if one of them chooses not to exercise that right. As Meagher JA summarised in Foregeard v Shanahan (1994) 35 NSWLR 206 at 221: "1. Since both joint tenants and tenants in common have joint possession of the land in which they have the estate, it was a settled rule of law that the possession of any one of them was the possession of the other of them, so as (for example) to prevent the statutes of limitation from affecting them; nor did the bare receipt of all the rents and profits by one operate as an ouster of the other: Ford v Lord Grey (1703) 1 Salk 285; 91 ER 253; (1703) 6 Mod 44; 87 ER 807. 2. It follows that, where one co-owner is in occupation and the other not, but there has been no actual ouster or exclusion by the former of the latter, the law treats the latter simply as someone who has chosen not to exercise his legal right to occupy the land."
Ms Onkoud and Fabian Chocron thus both still share possession of the land and any action for possession of that land should have joined both of them as parties. As French CJ, Gummow, Hayne, Heydon and Kiefel JJ held in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131]-[132]: "131. Walker Corporation submitted that where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined. That submission is correct. The Court of Appeal's orders directly affected Walker Corporation. The majority of the Court of Appeal (Macfarlan JA, Giles JA concurring) erred when it held to the contrary. 132. In News Ltd v Australian Rugby Football League Ltd the Full Federal Court (Lockhart, von Doussa and Sackville JJ) said: 'Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest.'"
In Boyd v Thorn [2017] NSWCA 210, the Mr and Mrs Boyd were co-owners (joint tenants) of land in southern Sydney. Mr Boyd had engaged in unconscionable conduct and breached fiduciary obligations to his aunt, whose estate was represented by Mrs Thorn. Some of the money obtained from Mr Boyd's unconscionable conduct and breaches of duty was used to repay the indebtedness of Mr and Mrs Boyd which was secured by mortgage over the land. Robb J made an order that Mr Boyd's interest in the land was subject to a constructive trust and charge in favour of Mrs Thorne and could be sold. Leeming JA and Emmett AJA (Macfarlan JA dissenting) found that once Mrs Thorn determined to seek proprietary relief against land of which Mrs Boyd was a joint owner, it was open to her to seek to challenge the findings of unconscionability and breach of duty, see [152] and [207].
As Leeming JA observed at [94], orders from a superior court which affect the rights and interests of parties that have not been joined "are not nullities but are, as a general proposition, apt to be set aside, as a matter of right".

[26]

Legal representation

It is of no small concern that Clamenz Lawyers acted for Sergio Chocron (although he denied this), Ms Onkoud and Fabian Chocron.
Clamenz Lawyers prepared the 2010 Deed and put the caveat on the Property. Sergio Chocron denied that they did so on his behalf. However, it would be highly unusual for Ms Onkoud to pay Clamenz to put a caveat on her own property to benefit Sergio Chocron. Two possibilities seem likely; either Sergio Chocron engaged Clamenz to act on his behalf, or Fabian Chocron engaged Clamenz to act on Sergio Chocron's behalf. Clamenz were also acting for Ms Onkoud. Whichever occurred, it would appear that Clamenz were acting for both the mortgagor and mortgagee of the relevant share of the Property in breach of the professional obligations outlined in r 11 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW).
I am satisfied that this law firm was acting for all three of the interested parties. Fabian Chocron's interests were protected by clause 3.2 of the Deed, which excluded his interest in the Property from the loan by his brother. Sergio Chocron's interests were addressed by granting him a right to security over the Property and the defendant's obligations were addressed in the Deed in the obligation to repay Sergio Chocron the amount of the loan. It is difficult to see how these three parties' rights could all be addressed by one solicitor nor is it suggested that the defendant ever received any independent advice from Clamenz Lawyers. This was a breach of that firm's professional obligations.
In Law Society of New South Wales v Ferry [2018] NSWCATOD 74, the NSW Civil and Administrative Tribunal found that a solicitor acting for both a mortgagor and mortgagee was a conflict of interest and constituted unsatisfactory professional misconduct. The Tribunal noted that once the solicitor was engaged to act for both parties, the potential for conflict arose. The solicitor then had to comply with the obligations outlined in r 11.3. There was no evidence that he had done so. As the Tribunal stated at [45]: "45. At the time of documenting the loan advance there was at the very least a potential for conflict between the interests of the lender on the one hand and the interests of the borrower and guarantor on the other; further, the evidence as to the Solicitor advising each of his clients that he was acting for each other party to the transaction is confined to his recollection, and was not recorded in any way."
The Tribunal further noted at [55] the "heightened" duty on solicitors in a potential conflict to assess the situation carefully and withdraw if necessary: "55. Because of the necessity for a solicitor to withdraw from representing a client when a conflict arises in circumstances where he or she has decided to represent more than one party in a transaction, it is necessary to be alert to the possibility of conflict arising at the outset of a transaction. A prudent solicitor, at the commencement of a transaction such as the one that we are concerned with, ought carefully consider - before deciding to agree to act for both parties - the potential for conflict and the consequences to each of the clients if a conflict does arise and the necessity for each of the clients to, at that point, look to retain separate lawyers. There is a heightened obligation continuing throughout such a retainer to be alert to the potential for conflict. A solicitor in these circumstances is always in a better position than either of the clients to discern the presence of potential conflict both at the outset and during the course of a transaction. There was, we find, a breach of the 2013 Rules and, on that basis alone, unsatisfactory professional conduct. Aside from the Solicitor's failure to comply with the conduct rules referred to above, in continuing to act for all parties following the loan advance being made, and in circumstances where there was in our view at that point clear conflict between the positions of the lender on the one hand and the borrower/guarantor on the other this constituted conduct in connection with the practice of law that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer (Uniform Law s296)."
Apparently Clamenz Lawyers no longer exists. Despite this, I consider it appropriate to make these observations given the unsatisfactory evidence about the signing of the Deed in this matter.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (29 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (26)

Cited By (2)