Barboutis v Macchia - [2010] WADC 115

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: BARBOUTIS -v- MACCHIA & ANOR [2010] WADC 115

CORAM: SCHOOMBEE DCJ

HEARD: 12 - 14 MAY 2010

DELIVERED : 6 AUGUST 2010

FILE NO/S: CIV 2492 of 2008

BETWEEN: COLIN JOHN BARBOUTIS
Plaintiff
AND
LUCIO MACCHIA
First-named Defendant
GOLD HENGE ENTERPRISES PTY LTD (ACN 053 255664)
Second-named Defendant

Catchwords:

Contact - Loan agreement - Non est factum - Misleading and deceptive conduct by silence - Unconscionable conduct - Statutory limitation - Laches

Legislation:

Nil

Result:

Plaintiff's claim succeeds in the amount of $141,474 plus interest

Representation:

Counsel:

Plaintiff:     Mr A Metaxas
First-named Defendant     :     In person
Second-named Defendant     :     No appearance

Solicitors:

Plaintiff:     Metaxas & Hager
First-named Defendant     :     Not applicable
Second-named Defendant     :     Not applicable

Case(s) referred to in judgment(s):

Atwell v Roberts [No 3] [2009] WASC 96
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51
Blomley v Ryan (1956) 99 CLR 362
Commissioner of State Taxation (WA) v Pollock (1993) 11 WAR 64
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
Hipworth v Mahar (1952) 87 CLR 335
Junker v Hepburn [2010] NSWSC 88
NRMA Ltd v Morgan (1999) 31 ACSR 435
Orr v Ford (1989) 167 CLR 316
Parker v South-Eastern Railway Co (1877) 2 CPD 416
Petelin v Cullen (1975) 132 CLR 355
The Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 79 ALJR 129
Wintertons Construction Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97
Young v Queensland Trustees Ltd (1956) 99 CLR 560

SCHOOMBEE DCJ: Mr Barboutis, the plaintiff, claims payment of $141,474.00 pursuant to a loan agreement entered into by Mr Lucio Macchia, the first-named defendant, and Gold Henge Enterprises Pty Ltd, the second‑named defendant on 3 November 1996. Gold Henge Enterprises Pty Ltd was not represented at the hearing of this matter. Mr Lucio Macchia represented himself.
Mr Macchia raised the defence of non est factum on the basis that the principal sum of $55,000 under the loan agreement was not paid to him, but for the benefit of Gold Henge Enterprises Pty Ltd, and that he was of the understanding that he had only signed a guarantee for the repayment of the principal sum by Gold Henge Enterprises Pty Ltd.
Mr Macchia also alleged that there was misleading and deceptive conduct by Mr Barboutis which led to him signing the loan agreement and that Mr Barboutis acted unconscionably. Mr Macchia further submitted that until a demand was served on him on 2 October 2008, which was almost 12 years later, there was no indication that the loan would be enforced against him and Mr Barboutis unfairly allowed the interest to accumulate under the loan agreement. Mr Macchia relied on the doctrine of laches and raised the defence of statutory limitation. In addition, Mr Macchia claimed that the loan agreement was contrary to the Consumer Credit (Western Australia) Act 1996.

The background facts

At the time that the loan agreement was entered into Mr Barboutis was a stock broker with William Noall Limited, a stock broking firm. Gold Henge Enterprises Pty Ltd had a share trading account with William Noall Limited and had incurred a debit in the amount of approximately $110,000 on that account. Mr Barboutis was responsible to his firm for debit accounts not cleared by a client. He therefore sold shares that he owned and transferred their proceeds in the amount of $49,115.63 into the Gold Henge account with William Noall Limited. In addition, Mr Barboutis borrowed $50,000 from his father and transferred that amount into the Gold Henge account. Mr Barboutis discussed the transfer of the two amounts with Mario Macchia, the brother of Mr Lucio Macchia, but not with Mr Lucio Macchia.
Because Gold Henge Enterprises and the Macchia brothers did not have any money to pay the debt in the Gold Henge account with William Noall Limited, Mr Barboutis agreed to wear half of the debt himself and loan the other half to Gold Henge Enterprises Pty Ltd. Mr Mario Macchia suggested a firm of lawyers to draft a suitable loan agreement. Mr Barboutis instructed the lawyer that Mr Lucio Macchia was to be a borrower under the agreement in order to secure the loan. The loan agreement was by way of a deed and duly stamped on 23 October 1997.
The loan agreement referred to both Gold Henge Enterprises Pty Ltd and Mr Lucio Macchia as "the Borrower". No explanation was provided during the trial why Mr Mario Macchia was not a party to the loan agreement. The loan agreement stated that the principal sum of $55,000 would be deposited by the lender, Mr Barboutis, to the account of Gold Henge Enterprises Pty Ltd with William Noall Limited and that this deposit would be proper discharge by the lender of his obligations under the loan agreement.
The loan agreement provided for "the Borrower" to repay to the lender the principal sum on or before 2 April 1997. In addition the Borrower was to pay interest in the amount of $458.33 monthly in advance until the principal sum was repaid. The loan agreement stated that should the Borrower make default under the deed, the whole of the principal sum would become immediately due and payable at the option of the lender on the day following demand, together with interest until payment. The interest was stated to itself bear interest and to accrue daily.
At the time that the loan agreement was entered into Mr Lucio Macchia was the sole director of Gold Henge Enterprises Pty Ltd and also its secretary. It is not in dispute that it was Mr Mario Macchia who represented Gold Henge Enterprises Pty Ltd in the share trading business conducted between Gold Henge Enterprises Pty Ltd and William Noall Limited. Mr Lucio Macchia was not involved in giving instructions to Mr Barboutis, although Mr Barboutis recalled that he had seen a written authority from Mr Lucio Macchia to open a share trading account on behalf of Gold Henge Enterprises Pty Ltd. Mr Barboutis was not able to produce any records in that regard as William Noall Limited was no longer trading.
Mr Barboutis was provided with two originals of the loan agreement by the lawyer. He gave one to Mr Mario Macchia a few days before meeting with the Macchia brothers and Mr Mario Macchia's partner, Christine, at Mario Macchia's house on 3 November 1996. At the meeting there was some 20 minutes of social conversation and Mr Barboutis and Mr Lucio Macchia then signed the loan agreement. Mr Lucio Macchia also signed on behalf of Gold Henge Enterprises Pty Ltd as its director, and the common seal of the company was affixed.
The content of the document was not discussed at the meeting, nor was it explained by anyone to Mr Lucio Macchia on that occasion. Mr Barboutis assumed that it had been explained to Mr Lucio Macchia on an earlier occasion by his brother. Mr Barboutis asked Mr Lucio Macchia whether he had read the document and he confirmed that he had done so. Both duplicate originals were signed at the meeting.
Mr Lucio Macchia gave evidence that he could not recall what was said by anyone at the meeting when the loan agreement was signed. Mr Lucio Macchia said that prior to 3 November 1996 his brother had asked him to come and sign a document and given him a perfunctory explanation, which he could not recall. Mr Lucio Macchia did not ask to see the document before he went to the meeting and doubted whether he had ever read it. Mr Lucio Macchia said that he could not recall Mr Barboutis asking him whether he had read the document. Mr Lucio Macchia said that he understood that shares would be transferred from Mr Barboutis' account to the account of Gold Henge Enterprise Pty Ltd and that he was asked to guarantee the repayment by Gold Henge Enterprise Pty Ltd.
After some initial reluctance, Mr Lucio Macchia admitted that it was his signature on the second page of the loan agreement. However, he queried whether the initials on the first page were his. The original of the loan agreement was missing and Mr Barboutis relied on a copy thereof.
A copy of the loan agreement was discovered by Mr Barboutis and described as a copy of the loan agreement entered into on 3 November 1996. Pursuant to O 30 r 4(1)(b) of the Rules of the Supreme Court 1976, a party on whom a list of documents is served is deemed to admit that a copy described in a list as a copy is a true copy of such a document. The recipient of a list of documents accordingly admits the authenticity of any such document unless, pursuant to O 30 r 4(2) he denies the authenticity of the document in his pleading or disputes the authenticity of the document by notice within a prescribed period of time. Mr Lucio Macchia did not deny in his defence or counterclaim that he had signed the loan agreement or that the copy discovered by Mr Barboutis was a copy of the original agreement. I accordingly proceed on the basis that the two pages discovered as the loan agreement are a true copy of the original loan agreement entered into on 3 November 1996.
On 10 April 1997 Mr Barboutis received a letter which was ostensibly signed by Mr Lucio Macchia asking for an extension of time for the repayment of the loan until mid July 1997 due to unforeseen legal matters arising in the administration of an estate. Mr Lucio Macchia denied that he had signed or sent this letter. It may well be the case that Mr Lucio Macchia did not sign this letter, because even to a lay person the signature on the letter appears to be totally different to the signature on the loan agreement. In an affidavit sworn and filed by Mr Lucio Macchia in defence of an application for summary judgement in this matter he says that his brother, Mario Macchia, told him that he had caused the letter to be sent. It is not necessary to decide whether Mr Lucio Macchia signed and sent this letter or not, because it is the circumstances surrounding the signing of the loan agreement which determine whether Mr Lucio Macchia is bound by it, and not whether he had knowledge of the creation and dispatch of this letter.
It appears from a schedule compiled by Mr Barboutis' father that apart from an initial payment of $458.33, no interest payments were made in respect of the loan until August 2000 when various amounts ranging from $150 to $760 were paid on a monthly basis. The last payment was received in January 2005. The schedule indicates that the principal debt of $55,000 together with the monthly amount of interest, calculated daily and computed, amounts to $141,474 as at 1 October 2008.
Mr Lucio Macchia said that he had made none of the interest payments and was not aware of them. Most of the notes received by Mr Barboutis as a cover note for cheque payments or explaining delays in payment were signed by Mario Macchia, although one was signed "Lou & Mario". Again, it is not necessary to decide whether Mr Lucio Macchia had knowledge of what payments were made after the loan agreement had been entered into. It is the circumstances surrounding the signing of the loan agreement which are determinative.

Non est factum

Mr Macchia raised the defence of non est factum, saying that he had not read the loan agreement at the time and understood that his liability was that of a guarantor and not a principal borrower. Mr Macchia also claimed that Mr Barboutis had breached his "common law duty to disclose the true nature and content of the agreement".
In general terms there is no common law duty on a party to an agreement to explain the true nature and content to the other party. Such a duty can only arise under special circumstances, such as where silence would constitute misleading or deceptive conduct. Parties who are able to read and write English and capable of understanding the meaning of a document or at least the importance of it so that they may obtain advice, are expected by the law to look after their own interest. The defence of non est factum only applies to persons who are unable to read owing to blindness or illiteracy or are otherwise, through no fault of their own, unable to have an understanding of the purport of a particular document.
In order to make out a defence of non est factum against an innocent party who relied on the document and the signature on it, the defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that his failure to read and understand the document was not due to carelessness on his part. A failure to take reasonable precautions in ascertaining the character of a document before signing it would amount to carelessness. There is a heavy burden on a defendant who seeks to establish this defence: Petelin v Cullen (1975) 132 CLR 355 at 359 – 360.
The position is different where the innocent party knew or had reason to suspect that the defendant signed the document under some misapprehension as to its character, or even caused the defendant's misunderstanding. In Petelin v Cullen (supra) the defendant spoke little English and could not read English. He had given an option to purchase land to the plaintiff. At a later stage the defendant received a document providing for an extension of the option in consideration of $50. A cheque in that amount was attached. The plaintiff's agent saw the defendant after the document had been received and asked whether he had received the $50 and the letter. The agent then told the defendant "sign it that you received $50". The defendant had only read the letter "a little bit" and did not know what it meant. He thought that it was a receipt for the cheque of $50. Under these circumstances the Court upheld the defence of non est factum.
The facts in Petelin v Cullen are to be distinguished from the facts in the present case. Mr Lucio Macchia acknowledged that he is able to read and write English and was able to do so in 1996. Further, Mr Barboutis did not encourage Mr Macchia to sign the loan agreement or made any misrepresentation regarding its content or effect. Mr Barboutis was an innocent party in the sense described in Petelin v Cullen, as he had no reason to suspect that Mr Macchia had signed the loan agreement under a misunderstanding to its character. The nature or content of the document was not discussed at the meeting nor at any other time between Mr Barboutis and Mr Lucio Macchia. Mr Barboutis asked Mr Macchia whether he had read the document and after replying in the affirmative, Mr Macchia signed the document.
The loan agreement is not difficult to read. It consists of one page containing the terms and another page with the signatures of the parties. It says clearly that Mr Lucio Macchia and Gold Henge Enterprises Pty Ltd are "the Borrower". It explains that the principal sum shall be deposited by Mr Barboutis to the account of Gold Henge Enterprises Pty Ltd with William Noall Limited and that this will be deemed to be discharge by Mr Barboutis of his obligations under the deed. The agreement states that "the Borrower" shall repay the principal sum on or before 2 April 1997 and that interest is payable on the principal sum until it is paid.
Mr Lucio Macchia signed the document in his personal capacity and on behalf of Gold Henge Enterprises Pty Ltd. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 79 ALJR 129 the High Court held at [45] that a party who signs a document, which is known and intended to affect legal relations, conveys a representation to a reasonable reader of the document that the person who signs has either read and approved the contents of the document or is willing to take the chance of being bound by those contents whatever they might be. The court also referred at [42] to Parker v South-Eastern Railway Co (1877) 2 CPD 416 at 421 and said that in an ordinary case, where an action is brought on a written agreement which has been signed by the defendant, the agreement is proved by merely proving the signature, and, in the absence of fraud, it is wholly immaterial that the defendant has not read the agreement and does not know its contents. The Court further relied on Wilton v Farnworth Petelin v Cullen (1948) 78 CLR 646 at 649 where Latham CJ said the following:
"In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every‑day business transactions."
In the Alphapharm Pty Ltd case the defendant had signed an agreement regarding the distribution of a medical product, but had not read a particular exclusion clause. The defendant claimed that the plaintiff should have done everything reasonably possible to bring the terms and conditions to the attention of the defendant. The High Court rejected this proposition. The Court held at [54] that unless special circumstances, such has misrepresentation or duress applied, a party relying on a signed legal agreement did not have to show that due notice was given of its terms.
In the present case Mr Macchia was not entitled to rely on Mr Barboutis to explain to him the nature and content of the loan agreement. Mr Macchia was well able to read it for himself and the loan agreement is not difficult to understand. If Mr Macchia had any problems in understanding the document, he should have sought advice in that regard. Mr Macchia acknowledged in cross‑examination that he could have taken the document away with him and read it at his own leisure or obtained advice on its content and effect. However, Mr Macchia chose to sign the document at the meeting and, unless a misrepresentation or unconscionable conduct has been proven, Mr Macchia cannot escape the consequences of signing the document.

Misleading and deceptive conduct

Mr Macchia also relied on a breach of s 10 of the Fair Trading Ac 1987. This section provides that a person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
It is common cause that Mr Barboutis did not say anything at the meeting or on a previous occasion regarding the nature and content of the agreement which could have misled Mr Macchia. Mr Macchia agreed in evidence that Mr Barboutis did not say anything at the meeting and just kept quiet.
Mr Macchia alleges that Mr Barboutis engaged in misleading and deceptive conduct by silence, because he did not explain the nature and content of the loan agreement to Mr Macchia. It is accepted law that silence may constitute misleading conduct, but only in circumstances where there is a duty upon the representor to reveal a matter if it exists, and where the other party is therefore entitled to infer from the silence of the representor that the matter does not exist: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 557.
Mr Macchia relied on NRMA Ltd v Morgan (1999) 31 ACSR 435 at [1429] where Giles J summarised the relevant principles as follows:
"Silence may constitute misleading conduct as part of all relevant circumstances constituted by acts, omissions, statements or silence, for example if the circumstances are such as to give rise to the reasonable expectation that if a particular state of affairs exists it will be disclosed. Put another way, if the silence gives rise to an inference that the state of affairs does not exist, a failure to disclose that it exists may be misleading conduct. It is sufficient to refer, among the many cases on the subject to Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84; Demagogue Pty Ltd v Ramesky (1992) 39 FCR 31; 110 ALR 608; and Warner v Elders Rural Finance Ltd (1993) 41 FCR 399; 113 ALR 517."

The circumstances under which silence can be misleading or deceptive are limited. There is no general duty by a party dealing at arm's length in a commercial situation with another party to disclose all the information that the first party knows may be helpful to the other party. It is only if the first party provides some explanation or information, that this must adequately convey the information which the other party reasonably expects to receive: Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 88.
In Wintertons Construction Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 114, Hill J explained this principle by saying that silence of itself does not constitute misleading or deceptive conduct. It is only where the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, that the failure to do so might constitute misleading or deceptive conduct, because the person would then be entitled to infer from the silence that no danger of detriment existed. In Wintertons Construction (supra) the Court held that a builder did not have a reasonable expectation that the defendant, a merchant banker, would disclose to the builder the financial affairs of the banker's client, a developer who could not complete a project because of a lack of funds.
In the present case Mr Barboutis said nothing to Mr Macchia to explain the loan agreement. Both parties were dealing with each other at arm's length and both were expected to look after their own interests. There were no particular circumstances which entitled Mr Macchia to believe that Mr Barboutis would explain the loan agreement to him or the background which led to it being entered into.

Unconscionable conduct

Mr Macchia further submitted that Mr Barboutis had acted unconscionably in not explaining to him the background to the loan agreement and the nature and content of that document. Mr Macchia pleaded in his counter-claim that "the whole situation was deliberately concealed" from him and that he was denied the opportunity to read the document or to obtain independent advice in respect of it.
In common law it is unconscionable conduct where a party takes advantage of the fact that the innocent party is under a special disability or special disadvantage which means that he or she is not able to assess what is in his or her best interest. However, in order to take advantage of the situation the first party must know or ought to have known of the existence of the condition or circumstance which places the innocent party under a special disability or special disadvantage and of its effect on the innocent party: The Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447 at 462 per Mason J at 467 and per Deane J at 474.
In Blomley v Ryan (1956) 99 CLR 362 at 405 Fullagar J explained that circumstances of special disability or disadvantage could be of great variety and were difficult to classify, but gave as examples, "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary". However, it is not every person who is of advanced age, lacks education or could benefit from an explanation who is in a position of special disability or special disadvantage. It is the inability of an innocent party to judge his or her own best interest which determines whether the innocent party suffered from a special disability or a special disadvantage: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at [12] per Gleeson CJ.
A person is not in a position of special disadvantage simply because of an inequality of bargaining power. Good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interest: ACCC v CG Berbatis Holdings Pty Ltd (supra) at [11].
In The Commercial Bank of Australia Limited v Amadio (supra) a representative of the bank asked an elderly couple, aged 76 and 71 respectively, to sign a mortgage document. The couple had limited command of written English and no experience of business. They had been told by their son that the mortgage was only valid for six months and for a limited amount. Further, they believed that their son's company was flourishing and prosperous and only temporally in need of funds. The 18 page long complicated document was presented to the elderly couple in their kitchen after they had just finished their lunch and were clearing the dishes. They signed it without reading it.
The representative of the bank knew that the son's company was in dire financial straits. He knew that the couple had limited English and that they had not read the document or obtained independent advice. Deane J held at 478 that the representative of the bank simply closed his eyes to the vulnerability of the couple and that the disability which affected them which was clearly obvious to him.
The situation is quite different in the present case. Mr Macchia is not under any disability nor was there any evidence of any special disadvantage under which he suffered. He could read and write English and had conducted his own business producing video and photographic material. He was given what is essentially a one page document which he could have read in five minutes. More importantly, he acknowledged that he could have taken the document away to read it at leisure and consider it further or obtain legal advice. There is no evidence before me that Mr Barboutis had any knowledge or suspicion that Mr Macchia might be in a position of special disadvantage or that he had not read or understood the document.
One of the factors relied on in Amadio for setting aside the mortgage on the basis of unconscionable conduct was that the elderly couple asked the representative from the bank whether the mortgage was limited for a period of six months. The representative therefore knew that they were under a substantial misunderstanding. There is no evidence in this case that Mr Barboutis knew that Mr Macchia misunderstood the document.
The essential elements for establishing unconscionsable conduct are not made out.

Statutory limitation

Mr Macchia pleaded in his defence that Mr Barboutis had never issued a letter of demand prior to filing the writ on 2 October 2008. Insofar as this statement is intended to raise a defence of statutory limitation, there is no merit in such a submission.
Pursuant to the loan agreement Mr Macchia undertook to repay the principal sum on or before 2 April 1997. The loan agreement was in the form of a deed. Section 38(1)(e)(i) of the Limitation Act 1935 provides that the limitation period for actions of covenant or of debt upon any bond or other speciality is 20 years.
An action for the repayment of a loan is an action of debt: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567 and Atwell v Roberts [No 3] [2009] WASC 96 at [152]. An action of debt based on a covenant contained in an instrument under seal is an action of debt upon a speciality: Hipworth v Mahar (1952) 87 CLR 335 at 338 and Commissioner of State Taxation (WA) v Pollock (1993) 11 WAR 64 at 68.
Accordingly, the limitation period for a claim for the repayment of the loan as set out in the loan agreement, which was under seal, is 20 years. Mr Barboutis's claim would therefore not have been statute barred until April 2017.
It could be argued that upon a proper interpretation of the loan agreement repayment of the principal sum was made conditional upon Mr Barboutis making demand on the borrower. Clause 4.1 of the Loan Agreement provides that if the borrower makes default under the deed, the whole of the principal sum shall immediately become due and payable "at the option of the Lender on the day following demand by the Lender". It could therefore be said that the cause of action only arose on the day after Mr Barboutis made demand on Mr Macchia to repay the principal sum.
A statutory demand for repayment of the loan was served by Mr Barboutis on Gold Henge Pty Ltd on 18 March 2005 and a written demand was made on Mr Macchia on 2 October 2008. Insofar as it was necessary for Mr Barboutis to serve a demand on Mr Macchia prior to claiming the principal sum, it became due and payable the day following the demand, that is, on 3 October 2008.
If the loan only became due and payable in October 2008, the Limitation Act 2005 would apply. This Act came into operation on 15 November 2005. Section 4(1) of that Act provides that it applies to causes of action that accrued on or after the commencement day.
Pursuant to s 18 of the Limitation Act 2005 a claim on a cause of action founded on a deed cannot be commenced if 12 years have elapsed since the cause of action accrued. If Mr Barboutis' cause of action only accrued once demand had been made on Mr Macchia, Mr Barboutis would still have been able to make a claim within 12 years after October 2008.
Accordingly, there is no concern that Mr Barboutis' claim may be statute barred.

Laches

Mr Macchia further relied on the doctrine of laches on the basis that Mr Braboutis did nothing for 12 years to remind Mr Macchia of the debt and "was happy to just let the interest build up". Mr Macchia relied on Orr v Ford (1989) 167 CLR 316. However, in Orr v Ford (supra) Deane J explained at 339 that the traditional defence of laches only applies in respect of a claim in equity. Mr Braboutis' claim is a claim at law.
There is generally no obligation upon a contracting party to remind the other party of his or her obligations, such as to pay interest, and the debtor cannot complain about inaction by the creditor, unless the creditor made a clear representation that he or she no longer expected the debt to be paid in which event a defence of waiver or representation by estoppel might succeed. None of these defences have been raised in this case, and there is no evidence before me which would support such a defence.

Consumer Credit (Western Australia) Act 1996

Mr Macchia lastly pleaded that the loan agreement did not comply with the Consumer Credit (Western Australia) Act 1996. Section 5 of this Act incorporates the Consumer Credit (Western Australia) Code. The Code regulates the provision of consumer credit in certain circumstances. Section 6 of the Code provides that it only applies where credit is provided wholly or predominantly for personal, domestic or household purposes. Section 6(4) states that for purposes of s 6, investment by the debtor is not a personal, domestic or household purpose.
In this case the credit was provided to Gold Henge Enterprises Pty Ltd so that it could pay off the debt in its share trading account with William Noall Limited. The credit was therefore not provided to Gold Henge Enterprises Pty Ltd for any personal, domestic or household purpose.
Section 6(1)(a) of the Code also provides that the Code only applies where the debtor is a natural person. In this case the money was provided to Gold Henge Enterprises Pty Ltd, but because Mr Macchia agreed in the loan agreement to be liable as a principal debtor, he is also a debtor and the requirement that the debtor be a natural person has therefore been met. However, the credit was not provided for personal, domestic or household purposes.
Accordingly, the Consumer Credit (Western Australia) Code and the Consumer Credit (Western Australia) Act 1996 do not apply.

Conclusion

When Mr Macchia agreed in November 1996 to be a principal debtor for a debt incurred by Gold Henge Enterprises Pty Ltd and signed a loan agreement to that effect, he was not under any special disability or special disadvantage and there is no reason why he could not have looked after his own best interest in deciding whether to sign the loan agreement or whether to obtain legal advice. There was no obligation on Mr Barboutis to explain the content of the document to Mr Macchia or to provide him with an explanation of the circumstances that led to Gold Henge Enterprises Pty Ltd having a debt in its share trading account. Mr Barboutis did not make any misleading representation to Mr Macchia whether express, implied or by silence. Further, Mr Barboutis was under no obligation to remind Mr Macchia that interest was accruing on the loan. If Mr Macchia had forgotten about the loan, as he claims, that is not Mr Barboutis' fault or responsibility.
I should also say that I had the distinct impression that Mr Macchia was not honest about his recollection of the circumstances under which the loan agreement was entered into. When asked whether it was his signature on the copy of the loan agreement, Mr Macchia answered "It looks scrawly. Well, it must be". Pressed for a more definite answer, Mr Macchia replied "Okay, let's say yes, then". The issue again arose at a later stage in cross-examination and this time Mr Macchia answered "Well, the spelling of my name is not correct, for a start". He then replied "Well, that must be my signature", before finally agreeing "Okay, yes it is." Mr Macchia was equally reluctant to acknowledge that he could have taken the document away and have read it at his leisure.
Mr Macchia's explanation of his reaction when the statutory demand for $95,282.85 was served on Gold Henge Enterprises Pty Ltd in 2005 also does not ring true. He said that he was amazed, rang his brother Mario and told him to sort it out as he did not want to know about it. Mr Macchia stated that he only glanced at the statutory demand and denied that it triggered any recollection of the loan agreement that he had entered into. Mr Macchia said that he had "forgotten all about it."
It appeared that Mr Macchia tried to distance himself from any knowledge of the signing of the loan agreement or any subsequent events connected with the loan agreement.
I do not accept Mr Macchia's evidence. However, even if I accepted his evidence, including his assertion that he did not read the loan agreement, this does not change the outcome of this matter. As I have indicated before, an innocent party, such as Mr Barboutis, is entitled to rely on the signature affixed to a legal document by an adult person who is not under any disability. In the absence of fraud, misleading or deceptive conduct or unconscionable conduct, neither of which applies, the adult person is bound by the content of the agreement whether he has read it or not.
Gold Henge Enterprises Pty Ltd was not represented at the hearing and did not file a defence. The claim by Mr Barboutis therefore succeeds against both, Gold Henge Enterprises Pty Ltd and Mr Lucio Macchia, in the amount of $141,474 plus interest thereon from 1 October 2008 until the date of judgment. I shall hear the parties with regard to the calculation of the interest.

Joint Obligation

Pursuant to the loan agreement Gold Henge Enterprises Pty Ltd and Mr Macchia were "the Borrower" and they are therefore joint promissors. A joint promise creates a single obligation upon both promissors, but that does not mean that a joint promissor is only partly liable for the amount of the obligation. A successful plaintiff is entitled to enter judgment for the full amount of his proven claim against one promissor, as long as the plaintiff does not recover the same amount more than once: Junker v Hepburn [2010] NSWSC 88 at [52] – [54].