Sherwin and Sherwin v Commens and Commens [2008] NTSC 45

Sherwin and Sherwin v Commens and Commens [2008] NTSC 45 - NTSC 2008 case summary — Zoe

[9]

[8]

The evidence that was led on behalf of Mr and Mrs Sherwin comprised an affidavit of Mrs Sherwin that was sworn on 8 February 2008, the oral evidence of Mrs Sherwin, an affidavit of Mr Sherwin that was sworn on 8 February 2008, the oral evidence of Mr Sherwin, a report and oral evidence of Michelle Helena Novotny who is a handwriting expert, and a report and oral evidence of Dr Venugopalan who is a psychiatrist. Both Mr and Mrs Sherwin gave evidence about the circumstances in which they came to advance the total amount of $1,120,000 to Mr and Mrs Commens. Ms Novotny gave evidence that in her opinion it was highly probable that the second signature on Exhibit P1, which is a written Acknowledgement of Loan of $500,000 from Mr and Mrs Sherwin, is that of Mr Commens. Dr Venugopalan gave evidence that Mrs Commens suffers from a major depressive disorder that is in partial remission with active psychiatric treatment. In his opinion, giving evidence in court and being subject to cross-examination could be a major stress for Mrs Commens in her present mental condition and it is likely that such stress would have a significant adverse affect on her mental condition.

[9]

Mr and Mrs Sherwin did not call Mrs Commens to give evidence. Mrs Commens is in Mr and Mrs Sherwin's camp. Mr and Mrs Commens have separated. They are in the process of going through a divorce and proceedings are on foot in the Family Court of Australia. Mrs Commens is living in a house that is owned by Mr and Mrs Sherwin and they are paying for some of her legal fees in the Family Court of Australia. However, no adverse inference can be drawn against Mr and Mrs Sherwin for not calling Mrs Commens to give evidence. They did not call her to give evidence because they believed that she was psychiatrically unfit to give evidence. Their decision is supported by the evidence of Dr Venugopalan. I accept the evidence of Dr Venugopalan. In my opinion there was a significant risk that Mrs Commens' mental condition may suffer adversely if she gave evidence. The risk remained even if Mrs Commens gave evidence by way of video conferencing.

[10]

Mr Commens gave oral evidence, and an affidavit that he swore on 15 May 2008 was read. Mr Commens gave evidence that he was not privy to any discussions about the advancement of the four amounts totalling $1,120,000. All of the discussions about those amounts were between Mrs Sherwin and Mrs Commens. At all times he understood that each of the four amounts of money was a gift. Mr Commens also gave evidence that at no stage before he was served with a copy of the Writ did either Mrs Sherwin or Mr Sherwin ask him to repay any of the four amounts of money totalling $1,120,000.

[10]

[11]

Before setting out my findings of fact it is necessary to state what is my assessment of the evidence of Mr Commens. I found Mr Commens to be an almost wholly unreliable witness. He was deliberately evasive, defensive and dissembling. He feigned a lack of knowledge about his financial position at the relevant times. I find that he lied to the Court when he said that he did not sign Exhibit P1 which is a written acknowledgement that the amount of $500,000 which was paid to Mr and Mrs Commens on 19 December 2001 was to be repaid to Mr and Mrs Sherwin. I also find that Mr Commens lied when he said that he neither caused the various facsimiles about the financial position of his and Mrs Commens' farming business to be sent to Mr and Mrs Sherwin nor did he have any knowledge of those documents being sent to them. Having done so, I have found it difficult to accept most of his evidence.

[12]

Mr Commens' evidence that he did not sign Exhibit P1; the facsimile dates on the various statements of financial position that were sent to Mr and Mrs Sherwin were fabricated; and he had no involvement in sending the documents to Mr and Mrs Sherwin lacked the ring of truth and reality. He admitted that, bar one document which was in Mrs Commens' handwriting, all of the statements of financial position which were sent to Mr and Mrs Sherwin were in his handwriting and there was no evidence that the facsimiles had been tampered with in any way.

[13]

I do not accept Mr Commens' argument that each of the four sums of money was a gift. Mr Commens' argument is intrinsically implausible. Mr Commens said that he had no dealings with Mrs Sherwin about financial matters, Mrs Commens had all of the dealings with Mrs Sherwin about financial matters, but he did not say that Mrs Commens told him at any stage that Mr and Mrs Sherwin were giving them a gift of any money or that he enquired about how the money came to be paid into his bank account. It cannot be that money appeared in his bank account but he had no conversation with Mrs Commens about how the money came to be paid into his bank account. Mr Commens failed to provide any basis for his belief or assertion that the four sums of money were paid as gifts. He failed to do so in circumstances where, according to his own evidence, he had full use of all four sums of money for the purposes of the farming business.

[14]

Mr Commens lied because of his antipathy towards Mr and Mrs Sherwin, which has arisen because he believes that Mr and Mrs Sherwin have not duly recognised his true worth or the contribution that he has made to their family or the care that he says he has provided to Mrs Commens, and because he does not want to repay the sum of $1,120, 000. Mr Commens' antipathy towards Mr and Mrs Sherwin was glaring throughout the proceeding.

[15]

On the other hand I accept the evidence of Mr and Mrs Sherwin. They were unshaken in cross-examination, and their evidence was logical and internally consistent. Their evidence was also supported by the Acknowledgment of Loan dated 20 December 2001 that was signed by Mr and Mrs Commens and the statements of financial position that were sent by Mr and Mrs Commens to Mr and Mrs Sherwin before the two amounts of $500,000 were advanced to them.

[16]

To the extent that there is a conflict between the evidence of Mr and Mrs Sherwin and Mr Commens I prefer the evidence of Mr and Mrs Sherwin.

[11]

[17]

I make the following findings of fact.

[18]

During 1989, Mr and Mrs Commens became interested in purchasing two rural properties, "The Glen" and "Lonesome Dove". The properties are situated near Oakey which is a small country town in the Darling Downs in South East Queensland.

[19]

In February 1990, Mr and Mrs Sherwin advanced an amount of approximately $924,361 to Mr and Mrs Commens to purchase The Glen and Lonesome Dove. In or about June 1990, Mr and Mrs Commens completed the purchase of the two properties. The properties were purchased with money provided by Mr and Mrs Sherwin. Mr Commens says that the money which was advanced for the purchase of the properties was a gift. Mr and Mrs Sherwin say that the money was advanced as a loan. It is not necessary to decide this question nor is it necessary to decide, if the monies were a loan, if the debt was forgiven. No claim is made by Mr and Mrs Sherwin for the repayment of that money.

[20]

After Mr and Mrs Commens purchased The Glen and Lonesome Dove they sold their home in Brisbane. The home was purchased for them by Mr and Mrs Sherwin as a gift. Mr and Mrs Commens then made their home on Lonesome Dove. Mr Commens made improvements to the two properties and he conducted farming activities on the properties. Mrs Commens was his partner in the farming business. In order to conduct the farming activities Mr Commens acquired farm machinery, plant and equipment, the acquisition of which he financed through institutional lenders. He also obtained an overdraft facility at his bank which he used in part to meet the operational expenses of the farming business, in part to pay for some improvements to the properties and in part to obtain income for him and Mrs Commens.

[21]

In addition to obtaining finance from banks and other institutional lenders, Mr and Mrs Commens also received advances of money from Mr and Mrs Sherwin which were used to pay for improvements to the two properties including the construction of a large dam on The Glen, to purchase a tractor, to purchase cattle and for operational expenses. Apart from moneys which were advanced to Mr and Mrs Commens to purchase a house in Carindale in Brisbane, all of the money advanced by Mr and Mrs Sherwin to Mr and Mrs Commens, in which Mr Commens had an interest in receiving, was advanced in connection with Mr and Mrs Commens' farming business.

[22]

The farming activities of Mr and Mrs Commens were not successful. They appear to have over capitalised on infrastructure and other improvements to the properties; Mrs Commens made very little contribution to the operation of the properties; Mr Commens was not a very skilful farmer; he became distracted by other matters; he devoted a lot of time to caring for his wife, who became an alcoholic and who suffers from psychiatric problems, and to caring for his children; and from time to time the properties were affected by drought. In his affidavit sworn on 15 May 2008, Mr Commens states that over the 15 years that they owned the rural properties they struggled financially. They had few good seasons but the good seasons were significantly outweighed by the bad seasons. They struggled to keep afloat. As a result Mr and Mrs Commens got into significant debt and from time to time they were pressured by the banks and other financial institutions about the payment of various outstanding amounts of money.

[23]

On or about 4 May 1999, Mr and Mrs Commens purchased a rural property called "Success" for $600,000. Mr and Mrs Commens borrowed the whole of the purchase price of $600,000 for the property from the National Australia Bank Limited. The loan was an interest only loan with a floating interest rate which was required to be repaid to the bank as soon as possible.

[24]

By the beginning of December 1999, Mr and Mrs Commens owed the banks and other financial institutions more than $1 million. They had an overdraft of about $500,000, the interest only loan of $600,000, and they owed money for the acquisition of various farm machinery, plant and equipment. In his affidavit sworn on 15 May 2008, Mr Commens states that, although the bank was not about to foreclose, they were struggling financially. The farm was not productive and it was not producing anywhere near enough income to support Mr and Mrs Commens and their children.

[25]

On or about 18 December 1999 Mr Commens telephoned Mrs Sherwin and they had a conversation to the following effect:

[17]

[27]

I find that in the course of the above conversation Mrs Commens was acting as Mr Commens' partner in the farming business.

[28]

After she spoke to Mr and Mrs Commens on 18 December 1999, Mrs Sherwin spoke to Mr Sherwin about Mrs Commens asking Mrs Sherwin if they would advance her and Mr Commens the sum of $500,000. Mr Sherwin told Mrs Sherwin that he did not want to lend Mr and Mrs Commens any more money. He said that he would not stop Mrs Sherwin from lending them more money but she should ask Mr and Mrs Commens for some documentation about their financial position so they could assess how Mr and Mrs Commens were going.

[29]

On 20 December 1999, Mrs Sherwin telephoned Mrs Commens and told her that she and Mr Sherwin might agree to lend them the amount of $500,000 if Mrs Commens sent Mrs Sherwin some documentation setting out their financial position. Mrs Commens agreed and at about 10.10 pm on 20 December 1999 either Mr Commens or Mrs Commens sent Mr and Mrs Sherwin a facsimile which very roughly set out some details about the financial position of Mr and Mrs Commens' farming business. The facsimile was handwritten by Mr Commens and it has the telephone number of Mr and Mrs Commens on it and the header 'CR & MJ Commens'. A copy of the facsimile was tendered in evidence.

[30]

The details on the facsimile dated 20 December 1999 that were in Mr Commens' handwriting included the following: 'overdraft $500,000', 'loan $110,000', 'machinery payment $18,000 twice yearly', and 'new farm $600,000'. Mr Sherwin perused the facsimile dated 20 December 1999. He was not satisfied with the limited information that it contained about Mr and Mrs Commens' financial position. As a result, he either faxed the facsimile dated 20 December 1999 back to Mr and Mrs Commens or he requested Mrs Sherwin to obtain more detailed information from them.

[31]

On 22 December 1999, Mr and Mrs Sherwin received a further facsimile from Mr and Mrs Commens. The facsimile has Mr and Mrs Commens' telephone number on it along with the header 'CR & MJ Commens'. The contents of the facsimile were handwritten by Mr Commens. The facsimile was tendered in evidence as Exhibit P4. The facsimile contains more detailed information about the financial position of Mr and Mrs Commens' farming business. Not only did it contain a summary of the various amounts owed by Mr and Mr Commens but it contained the interest rates applicable to each amount owed and a rough statement of income and expenditure. The document contains a statement that was handwritten by Mr Commens that, "We can cope with all of the payments if we could reduce the overdraft and cut expenditure."

[32]

The facsimiles respectively dated 20 and 22 December 1999, were provided by Mr and Mrs Commens to Mr and Mrs Sherwin for the purpose of persuading Mr and Mrs Sherwin to lend them the amount of $500,000. The fact that Mr and Mrs Commens sent the facsimiles to Mr and Mrs Sherwin rebuts Mr Commens' suggestion that the amount of $500,000 was a gift. I accept Mr Maurice's submission that if the monies were intended as a gift there would be no need for Mr and Mrs Sherwin to scrutinise the financial position of Mr and Mrs Commens' farming business. The only purpose for which the financial information was sought and given was so that Mr and Mrs Sherwin could assess if they had any prospect of getting their money back from the conduct of the farming operations.

[33]

Mr Sherwin reviewed the contents of the facsimile dated 22 December 1999. He did not think that the further information provided by Mr Commens was reliable information and he did not want to lend the amount of $500,000 to Mr and Mrs Commens. Nonetheless, Mr Sherwin told Mrs Sherwin that it was up to her if she wanted to loan Mr and Mrs Commens the amount of $500,000 and they reluctantly agreed to lend the money so that Mr and Mrs Commens could clear their overdraft.

[34]

On 22 December 1999 Mrs Sherwin telephoned Mrs Commens and they had a conversation to the following effect:

[25]

[42]

I find that in the course of the above conversation Mrs Commens was acting as Mr Commens' partner in the farming business.

[43]

Following the above telephone conversation Mrs Sherwin spoke to Mr Sherwin about Mrs Commens' request for a further loan of $500,000. Mr Sherwin told Mrs Sherwin that he was against lending Mr and Mrs Commens more money but if she wanted to lend them more money he would reluctantly agree to do so. Mr Sherwin told Mrs Sherwin that before they agreed to any further loan they should obtain some further information about Mr and Mrs Commens' financial commitments.

[44]

On 9 December 2001 either Mr Commens or Mrs Commens sent a facsimile to Mr and Mrs Sherwin containing very rough details about the extent of Mr and Mrs Commens' indebtedness in relation to their farming business, the amounts owing in relation to various farming machinery, plant and equipment, an estimate of some of the costs of planting certain crops on the rural properties and some income projections based on the production of various crops. Mr Commens had handwritten the information contained in the facsimile and the facsimile had Mr and Mrs Commens' telephone number on it and the header, "CR & MJ Commens".

[45]

The facsimile dated 9 December 2001 reveals that Mr and Mrs Commens were carrying a debt level in excess of $1.4 million and that Mr and Mrs Commens had annual financial commitments for various machinery, plant and equipment of about $140,000.

[46]

Mr Sherwin was unsatisfied with the detail of the financial information contained in the facsimile dated 9 December 2001 and arrangements were made to obtain further financial information from Mr and Mrs Commens. On 13 December 2001, Mrs Commens sent another facsimile to Mr and Mrs Sherwin. The facsimile contained additional financial information about Mr and Mrs Commens' farming business. The facsimile dated 13 December 2001 reveals that Mr and Mrs Commens were carrying a total debt in excess of $1.8 million, urgent and pressing bills totalled $670,000, Mr and Mrs Commens expected to incur costs of $115,000 in relation to the production of crops, and they expected to earn an income in excess of $800,000.

[47]

I find that in sending the facsimile dated 13 December 2001, Mrs Commens was acting as Mr commens' partner in the farming business. I find she was so acting whenever she may have sent the statements of financial position to Mr and Mrs Sherwin.

[48]

The facsimiles respectively dated 9 and 13 December 2001, were provided by Mr and Mrs Commens to Mr and Mrs Sherwin for the purpose of persuading Mr and Mrs Sherwin to lend them the further amount of $500,000. The fact that Mr and Mrs Commens sent the facsimiles to Mr and Mrs Sherwin rebuts Mr Commens' suggestion that the amount of $500,000 was a gift. I accept Mr Maurice's submission that if the monies were intended as a gift there would be no need for Mr and Mrs Sherwin to scrutinise the financial position of Mr and Mrs Commens' farming business. The only purpose for which the financial information was sought and given was so that Mr and Mrs Sherwin could assess if they had any prospect of getting their money back from the conduct of the farming operations.

[49]

After Mr and Mrs Sherwin received the facsimile from Mr and Mrs Commens dated 13 December, Mr Sherwin reviewed the financial information contained in the facsimiles. He was concerned that the estimated income of Mr and Mrs Commens' farming business was inflated and that the expenses of operating the farming business had been under estimated. His overall impression was that the level of Mr and Mrs Commens' debt was disproportionate to the size of their rural properties and the financial information that he had received reaffirmed his view that he did not want to lend them any more money. As a result, Mr and Mrs Sherwin agreed that they would only lend Mr and Mrs Commens the further sum of $500,000 if they were prepared to sign a document acknowledging that the money was a loan which was to be repaid.

[50]

On 19 December 2001 Mrs Sherwin spoke to Mrs Commens on the telephone. The substance of the telephone conversation was as follows:

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (50 paragraphs)

Parties

Cases Cited (3)