Fahey v White
[2011] VCC 1408
•10 August 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
(Not) Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-04529
| ROSALIE MEGAN FAHEY | Plaintiff |
| v | |
| GREG WHITE | Defendant |
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| JUDGE: | HIS HONOUR JUDGE LACAVA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 11 and 12 July 2011 |
| DATE OF JUDGMENT: | 10 August 2011 |
| CASE MAY BE CITED AS: | Fahey v White |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 1408 |
REASONS FOR JUDGMENT
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Catchwords: Agreement by the plaintiff to lend money to the defendant. No agreement in writing. Question of fact whether moneys paid by plaintiff to the defendant were by way of gift or loan. Question of fact as to terms of loan. Declaration of equitable interest as mortgagee. Whether plaintiff entitled to lodge a caveat against title of defendant’s property.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. M Hines | DLA Piper Australia |
| For the Defendant | In person | |
| HIS HONOUR: |
1 This proceeding was commenced by the plaintiff by Writ filed on 11 September 2009. For the reasons that follow, there will be judgment for the plaintiff on the claim.
2 When the proceeding was called on for trial on 11 July 2011 the defendant’s then solicitor sought leave to file a notice that he ceased to act on the ground that he had not been placed in funds to act in the trial. I granted the application of the solicitor in the result that the defendant was unrepresented in the trial. During the course of the trial as best I could I explained the trial procedures to the defendant who represented himself. In particular, at the conclusion of the evidence in chief of the plaintiff I explained to the defendant that he could question the plaintiff and he should put to the plaintiff in question form what he said his case was so that the plaintiff could have the opportunity of answering what he asserted his case to be. Regrettably, the defendant did not conduct his case in the way that I had asked him. Indeed he did not put his case to the plaintiff at all.
3 In order to explain the orders which I will subsequently make and the reasons for them, it is necessary to re-trace the history of dealings between the plaintiff and the defendant. Much of which was uncontested.
4 The relevant history commences in about August of 2008. At that time the plaintiff was a woman of middle age who had, for many years prior thereto, suffered badly from Crohn’s Disease. She had also suffered from muscular myopathy and both of these illnesses, either together or separately, had hospitalised her from time to time.
5 Notwithstanding her disabilities, the plaintiff had managed to live her life to the full and in an active way. So much so that she had achieved by participating in Para Olympics in equestrian. She was, and remains, a person active in equestrian.
6 On 15 August 2008, the plaintiff was injured in a riding accident. She sufferered a burst fracture of her lumbar vertebra at L1 level. She was hospitalised at the Alfred Hospital where she remained for approximately one month. She was placed in a full-length brace and then discharged for rehabilitation at the Caulfield Rehabilitation Hospital where she remained for a further three months. She was discharged in November of 2008.
7 Whilst hospitalised and whilst rehabilitating, the plaintiff was placed on an intensive medication regime consisting, inter alia, of cortisone drugs, anti- depressants, blood pressure tablets, diazepam, indocid and morphine. She ceased taking anti-depressant drugs in June of 2009. The indocid aggravated her Crohn’s Disease and she suffered bleeding from the bowel in about the middle of June of 2009.
8 The plaintiff gave evidence, which was not contested, that she first met the defendant in 2006. At that time, she had a horse for sale and through a mutual friend she was introduced to the defendant who was looking for a horse that suited his daughter to ride. The plaintiff sold her horse to the defendant on a three-month trial basis. At about that time, the plaintiff also had another horse which was injured. The defendant, who is a builder and developer, told the plaintiff that he had a shed on his 15-acre property and he offered to allow the plaintiff to agist her horse at his property where it could recover. Thus, from about 2006 onwards, the plaintiff and the defendant were friends.
9 The friendship developed and the plaintiff commenced to give riding lessons to the defendant’s daughter, Brianna.
10 In about 2006 or 2007, the defendant and his wife had separated. Apparently his children had initially gone to live with their mother but by New Year’s Eve of 2007, the defendant telephoned the plaintiff to say that his daughter, Brianna, had returned to his house. Because of the previous relationship that had existed between Brianna and the plaintiff as friends, with the plaintiff being her riding instructor, Brianna had expressed that she was keen to see the plaintiff again. The defendant therefore invited the plaintiff over to his home on New Year’s Eve of 2007, which invitation was accepted by the plaintiff. The plaintiff’s friendship with the defendant’s daughter, Brianna, was thereby rekindled.
11 The defendant lives on a property consisting of 15 acres with a large and comfortable home and a dam and show arena for equestrian, with a large machinery shed and a large bungalow which was situated about 200 metres from the house. The defendant’s property is described in certificate of title Volume 9729 Folio 340 and known as 45 Gruyere Road, Gruyere in Victoria (“the Gruyere Property’). In late 2008 the bungalow was in a messy and untidy condition, having been occupied by a brother-in-law of the defendant. I was told by the plaintiff in evidence, and accept, that the bungalow was small, messy and consisted of three rooms with a kitchen, bedroom and another room.
12 After the friendship between the plaintiff and the defendant, but particularly Brianna, was rekindled on New Year’s Eve of 2007, the plaintiff continued to see the defendant and his daughter on a regular basis, with the plaintiff giving the latter riding lessons. The plaintiff told me in evidence, and I accept, that she had been told by the defendant that his marriage breakup had not been amicable and that there were proceedings on foot in the Family Court. This was later confirmed by evidence given by the defendant.
13 At the time of her riding accident in August of 2008, the plaintiff was living in her own home in Mt Evelyn. She described this house in evidence as consisting of an A-framed house with a spiral staircase and steep steps at the front of it. She described it as being a beautiful and comfortable home and although she was able to keep one horse nearby at a neighbour’s property, there were no facilities at the property in Mt Evelyn for her to keep her horses.
14 At the time of her riding accident, the plaintiff, although not wealthy, was relatively comfortable. She had her Mt Evelyn home, which she described and which I accept was comfortable. She had a small mortgage and was living alone. She told me that she had to work hard to make ends meet. However, she had assets, being her home subject to the mortgage, a 1996 Falcon car and a number of valuable musical instruments, being a classical guitar, a base guitar and mandolins. She had three horses which were valued at “maybe” $2,000 to $3,000 each. The plaintiff’s evidence on all of these background factual matters being uncontested I accept it.
15 The plaintiff told me in evidence, and I accept, that the defendant knew that she was struggling financially to make ends meet. After her accident, the plaintiff said in evidence that there were conversations between her and the defendant about the plaintiff’s proposed living arrangements. The plaintiff gave evidence the defendant knew that the plaintiff wanted a property where she could agist her horses which could not be kept at Mt Evelyn.
16 At his home the defendant had horses and a cow and his paddocks were suitable for agisting horses.
17 After the plaintiff had her accident and was hospitalised, she said that she had one visit from the defendant and his daughter, Brianna. At this visit nothing was said between the two as to where it was that the plaintiff proposed to live. The plaintiff gave evidence that at the time of the visit she was in the Alfred Hospital and she was still catheterised and on oxygen. The defendant and his daughter did not visit her at the Caulfield Rehabilitation Hospital. I was told by the plaintiff, and accept, that at that time the defendant’s daughter was aged approximately sixteen years. Again, the plaintiff’s evidence on these factual matters is uncontested and I accept it.
18 Whilst the plaintiff was hospitalised at the Caulfield Rehabilitation Hospital she was advised by medical staff that because of her physical injuries, she
19 The plaintiff put her property on the market and it sold the day it was placed on the market for a sale price of $308,000. I accepted into evidence the Contract of Sale for the Mt Evelyn property as Exhibit A. The Contract of Sale is dated 29 September 2008.
20 The plaintiff had a friend, Jillian Barton, who gave evidence before me. The plaintiff gave evidence that whilst she was hospitalised and recovering at Caulfield Rehabilitation Hospital, she gave Jillian Barton official capacity to take care of her financial affairs. At the time that the plaintiff sold her property no discussions of a financial nature had taken place between her and the defendant. The plaintiff gave evidence, which I accept, that at this time she had not been told by the defendant anything about his financial affairs.
21 The plaintiff gave evidence that in October 2008, the defendant telephoned her at the Caulfield Rehabilitation Hospital in the evening. The plaintiff told me, and I accept, that she was asleep when the defendant rang. The plaintiff said, and I accept, that when the defendant rang, his voice was that of a distressed man. She told me, and I accept, that she had heard the defendant in this distressed way earlier in 2008, in January, when he was speaking about the difficulty of settling financial matters with his wife. At that time, the plaintiff told the defendant that he should consult with a counsellor, which advice was taken up by him. The plaintiff’s evidence in this regard was not contested and I accept it.
22 The plaintiff told me in evidence that when the defendant telephoned he seemed shaky and nervous, and his speech was not normal either in tone or manner. The plaintiff told me that the defendant said he was worried about his house and he thought he was going to lose the house because of the amount of money the Family Court might order him to pay to his wife. The plaintiff gave evidence she was told by the defendant that he could not raise the finance and borrow enough money to pay out his former wife. The plaintiff told me that the defendant said to her that he felt so bad and he felt like “putting a bullet to his head”. The defendant told the plaintiff that his children were very upset and he hoped to borrow $500,000 to $550,000 from a financial source in order to settle with his wife. This evidence was uncontested by the defendant, and I accept the plaintiff’s evidence.
23 At this point in time the plaintiff was struggling with her health, recovering in the Caulfield Rehabilitation Hospital. She had to sell her house and she did not know how or where she was going to live. She had been living in hospital where, as she put it, “everything was done for you” but she was nevertheless desperate to leave hospital and did not know how she would cope with everyday living. The plaintiff remained on a heavy medication regime. The plaintiff told me that when the defendant said to her, “I feel like putting a bullet to my head”, she took him seriously and she felt somewhat responsible for him, in the sense that she felt compelled to assist him if she could.
24 The plaintiff gave evidence that the defendant said to her that he knew that she had sold her house and he asked her if he could borrow $150,000 from her to assist him with paying out his wife. The plaintiff gave evidence this upset her, but she felt obliged to try and help the defendant if she could. At that time she said she had no immediate plans for the use of the proceeds from the sale of her house because no other property suitable to her disabilities had been identified for her to buy. She told the defendant that she would lend $150,000 to the defendant on condition that the loan of $150,000 was documented by a solicitor. I accept that evidence. The plaintiff told me in evidence that the defendant said to her in the conversation that she could put a caveat on his house in order to secure the amount of money that she loaned to him. I also accept that evidence. He said to her, and I accept, that “your money will always be safe”. The defendant did not address this in evidence. I accept the plaintiff’s evidence on these matters.
25 The plaintiff gave evidence that she asked the defendant where she was going to live. She said that the defendant told her in the same conversation that he would fix the bungalow at his property and add another room on to it and make it comfortable for her to live there. He said to the plaintiff, and I accept, “he could have me out of the house and into the bungalow within two weeks if I agreed to the loan”. The plaintiff gave evidence she told the defendant that she would lend him the money provided it was properly documented and, on condition that if she fell ill during the middle of the night requiring ambulance attendance, that would not be a problem. The plaintiff gave evidence that the defendant agreed to this. I accept the plaintiff’s evidence.
26 The plaintiff gave evidence the defendant told her that because he was borrowing money from her, she could live “rent free in the bungalow for so long as the loan was outstanding”. He added that the plaintiff could earn extra money by teaching horse riding in the arena located on the property and she could teach Brianna and others at his property. The defendant did not address these issues in his evidence. I accept the plaintiff’s evidence.
27 The plaintiff was asked in evidence whether there was any discussion as to when the loan was repayable. The plaintiff said that there was. She said that she requested that the money be repaid in two years and the defendant agreed to this. I accept this evidence.
28 The plaintiff said that the defendant agreed to pay interest in addition. She said his words were, “I would rather pay you the interest than the bank”. I accept the plaintiff’s evidence that the defendant was to pay interest but not whilst she was living rent free on his property. In my view the evidence shows the arrangement was that the defendant would pay interest on any money borrowed so long as it remained unpaid after the plaintiff had ceased living with him.
29 The defendant does not dispute that the plaintiff provided the money claimed to him. He asserts that any monies provided to him by the plaintiff were not by way of loan but by way of gift. The defendant did not put to the plaintiff that the money paid to him by the plaintiff was not a loan but a gift. He was unable to point to any conversation where the plaintiff agreed that any money advanced by her was a gift.
30 The plaintiff did not give any evidence as to a specific rate of interest that would be paid by the defendant on money borrowed from her which might remain unrepaid after she left the property. I accept that the rate of interest was not discussed between the plaintiff and defendant but that the defendant would pay interest to the plaintiff without a specific rate being agreed upon.
31 The plaintiff said that the defendant at no stage told her anything about his financial position. She said in evidence that the defendant knew most of the relevant factors relating to her financial position. The plaintiff said the defendant knew that she had no savings, and that she was in receipt of a disability pension and that she was selling her Mt. Evelyn property which was subject to a mortgage. She said in evidence that she had told him she would be looking to buy another property more suitable to her. I accept this evidence.
32 The plaintiff was discharged from Caulfield Rehabilitation Hospital on 13 November 2008. At the time of the plaintiff’s discharge from hospital the plaintiff gave evidence the defendant had said to her that he was unsure as to whether or not, and to what extent, finance from another source was available to him. At the time of the conversation in the middle of October 2008 between the plaintiff and the defendant, the defendant said to the plaintiff that he was trying to arrange finance to pay out his wife from another source. As the plaintiff put it, at the time she was discharged she was waiting to see if the defendant really needed to borrow money from her at all.
33 Because of this uncertainty, whilst the plaintiff was in hospital, she had Jillian Barton confer with the defendant as to whether or not he actually required to borrow the plaintiff’s the money. The plaintiff called Jillian Barton in her case. Jillian Barton gave evidence she had a discussion with the defendant concerning if and when he required to borrow money from the plaintiff. Jillian Barton gave evidence that the whole of her discussion with the defendant was on the basis that the defendant would advise her if he needed to “borrow” the money from the plaintiff. I accept that evidence.
34 Because by 13 November 2008 there was somewhat of a hiatus as to whether or not the defendant would actually need to borrow money from the plaintiff, Jillian Barton gave evidence that she, on behalf of the plaintiff, spoke with the defendant as to where the plaintiff would live. She was told by the defendant that he would let the plaintiff come to live at his house. The defendant indicated to Jillian Barton that he was willing for the plaintiff to come to his house whilst he was waiting to see if his loan from another source was available by which time he would know for sure whether he needed the plaintiff’s money as a loan in addition to his other borrowings. I accept this evidence from Jillian Barton.
35 After discharge from hospital, the plaintiff immediately went back to her home at Mt Evelyn for two weeks prior to the settlement of that property. She packed up her valuables which were transported to the defendant’s property towards the end of November 2008. She gave evidence the defendant took some of her belongings to his house whilst a removalist took the heavy items. When the plaintiff moved into the defendant’s property, the defendant still had not heard whether or not he had finance from another source available to pay out his wife. I accept the plaintiff’s evidence as to these matters.
36 The plaintiff moved into the defendant’s property on 28 November 2008. That is uncontested. She gave evidence she at first moved into a bedroom in the defendant’s house. At that time the bungalow was still not ready for her occupation. She told me, and I accept, that this was a very difficult time for her, moving as she was into a comparative stranger’s home in circumstances where she was still recovering from her injury and suffering from ongoing physical disabilities. She did not know how she was going to live or cope or how she was going to do the housework and she felt embarrassed at living in the defendant’s home. The plaintiff told me in evidence, and I accept, that whilst for the first few days things were pleasant to the extent that the defendant made the plaintiff breakfast in bed, nonetheless soon after relations between the two deteriorated. The plaintiff said in evidence the defendant would come home from work in the evening and yell abuse at her and members of his family for what he said was the untidy state of the house. Again the plaintiff’s evidence as to these matters was not contested and I accept it.
37 Notwithstanding the plaintiff’s initial insistence that any money she would lend to the defendant be documented by solicitors, that never occurred. I find that was because by the time the plaintiff actually provided money to the defendant (by two separate payments) by way of loan, she was living in the defendant’s house. She had sold her house and, because of her fragile state of health and ongoing disabilities, she felt at that time almost entirely dependant upon the defendant.
38 In my view the evidence shows that because of her almost complete dependency upon the defendant for support and a place to live, the plaintiff came to trust the defendant and she accepted his assurances that any money she advanced would be by way of a loan repayable in two years or upon her vacating his property, whichever first occurred.
39 Further, I find it was a term of their agreement that whilst the money loaned remained unpaid the plaintiff could live rent free in the defendant’s property with the money loaned secured by caveat over the defendant’s property.
40 Trusting that the defendant would be true to his word the plaintiff agreed to go ahead and advance money to the defendant without having a solicitor document the terms of the loan.
41 The sale of the plaintiff’s property at Mt Evelyn settled towards the end of November of 2008, at which time, on the direction of the defendant, the sum of $18,955.54 was transferred by the plaintiff’s estate agents to an account controlled by the defendant. This was the first part of what I find to be a loan from the plaintiff to the defendant. The defendant does not contest that he advised the plaintiff to have this money paid directly into his bank account, nor does he contest that there was no loan documented at that time. At the defendant’s suggestion, the plaintiff telephoned her agents, Barry Plant at Lilydale, and instructed them to place the balance of the deposit, after agent’s commission and expenses ($18,955.54), into an account controlled by the defendant. After the money was paid I find there was no further discussion about the matter between the plaintiff and the defendant for some days.
42 The plaintiff gave evidence that whilst the plaintiff was living in the defendant’s home, on or about 5 December 2008, the defendant told her that his finance from another source had been approved. He showed her a letter dated 3 December 2008 to that effect. The plaintiff said in evidence that she made a note in her diary and gave her evidence in reference to it. I accept her evidence in this regard. The plaintiff gave evidence that at that time the defendant asked her to increase the further amount that she would lend him from $150,000 to $200,000. The plaintiff gave evidence uncontested the defendant said to her that $150,000 was not enough to enable him to pay out his wife and secure his home from sale. The plaintiff said that she felt trapped, that she had moved everything to the defendant’s home and because of her situation she did not know where she was going to go or how else she could live. Reluctantly, she agreed to increase the further amount that she would lend to the defendant to $200,000.
43 The plaintiff gave evidence that on 5 December 2008, the defendant told her that he needed a bank cheque for $200,000 to prove to his wife’s solicitor that he had the money and so that he would not need to sell his house which was, at that stage, on the market for sale. The defendant told the plaintiff that if she provided him with the bank cheque payable to him for $200,000 he would not bank the cheque but merely produce it to his wife’s solicitor as evidence of the fact that he had the necessary money to pay out his former wife so that the defendant’s property would be taken off the market and he could thereby secure it. The plaintiff gave evidence the defendant said “he just needed to show a bank cheque to his wife’s solicitors and he asked that the cheque be payable to himself”. I accept the plaintiff’s evidence as to these matters.
44 On or about 5 December 2008, the plaintiff obtained a bank cheque for $200,000 from her bank, the Commonwealth Bank at Mt Evelyn, payable to the defendant. She said she did this “so that the defendant’s house would not be sold”. I accept the plaintiff’s evidence.
45 As a result of paying money to the defendant, the plaintiff was left with minimal finances. She had previously hoped to buy a new house, a car and have a holiday, but these were no longer on her agenda.
46 The week after the plaintiff provided the defendant with a bank cheque for $200,000, she told me in evidence that she was in the kitchen of the defendant’s house with the defendant and his son Mitchell. The defendant asked Mitchell to go and get a letter for “Rosalie”. His son Mitchell returned with a piece of paper in the form of a letter which I admitted into evidence as Exhibit C. That letter reads as follows:
“17-11-2008
6 Banool Avenue
Mt Evelyn Vic 3796
To Whom it May Concern,
I Rosalie Megan Fahey, currently of 6 Banool Avenue, Mt Evelyn, Victoria, do gift the whole monetary sum and no more than $200,000 to Greg White of 45 Gruyere Road, Gruyere, Victoria. The said amount will be transferred to Greg White no later than 30 November 2008 by close of business.
I Rosalie Megan Fahey, do declare the above statement true and correct to best of my knowledge according to my current understanding of the monies being available to me at this time.”
Signed
Rosalie Megan Fahey.
47 The plaintiff told me, and I accept, that she signed this letter. The plaintiff gave evidence that when she signed the letter it was undated and the defendant’s address was not in the top right hand corner of the letter. In evidence the plaintiff also said, and I accept, that before she signed the letter, the defendant said to her:
“I need you to sign this letter or Sue is going to sell the house. No one will ever see this letter. If my wife’s solicitors think the money is a loan they won’t believe me capable and will sell the house.”
48 The plaintiff said that she said four times to the defendant that she would not sign the letter, but because she felt beholden to the defendant and had nowhere to go and live, she felt trapped. She said the defendant said to her on numerous occasions over and over, “You can trust me. Only my wife’s solicitor will see this letter”. The plaintiff said she signed the letter notwithstanding that it referred to the monies she had provided to the defendant being a gift rather than a loan. She did so on the basis that the reference to a gift would never be relied upon by the defendant. I accept that evidence. I find the letter, exhibit C, does not in terms reflect the true nature of the agreement between the plaintiff and the defendant.
49 There are aspects to this letter which I shall return to later. However, notably, the defendant did not call his son, Mitchell, who was a witness to the conversation between the plaintiff and defendant that preceded the signing of the letter. I infer he could not have advanced the defendant’s case.
50 The defendant said in evidence the letter was in fact drafted and prepared by the plaintiff. I reject the defendant’s evidence as to how the letter came into being and I accept the plaintiff’s evidence regarding this exhibit and what the defendant said he would do with it.
51 In cross-examination, the defendant put to the plaintiff that she had in fact not only signed this letter, Exhibit C, but she had prepared it herself. The plaintiff denied that she had prepared the letter.
52 Further, I note the defendant’s suggestion in his cross examination of the plaintiff that the letter was in fact prepared by her was not pleaded in his defence. In my view the defendant made up the suggestion. The defendant gave evidence which I shall latter refer to, that the letter, exhibit C was typed by the plaintiff. I reject that evidence and accept the plaintiff’s denial that she typed the letter.
53 The plaintiff told me in evidence, and I accept, that she signed the letter because she felt “powerless”, her living in the defendant’s house with nowhere else to go. In signing exhibit C I find the plaintiff relied upon the assurance of the defendant the letter would not be used for the purpose of documenting their actual agreement but would only be used for the purpose of evidencing to the defendant’s wife’s solicitors that he had received money by way of a gift from the plaintiff.
54 The plaintiff said in evidence that after Exhibit C was signed, things began to deteriorate further in the relationship she had with the White family. She was made to feel unwelcome, and while she was still living in the house, she was soon after asked to live in the bungalow which was very unsatisfactory, had no air conditioning, was too hot and had very poor facilities, and the family virtually stopped talking to her. She said she tried to keep quiet; she kept her head down and did not cause trouble in the house until after Christmas. She said the bungalow was not what she had been led to expect by the defendant’s representations.
55 The plaintiff gave evidence her possessions, including expensive musical instruments, had been “thrown” into a 20-foot shipping container located on the defendant’s property. She said she tried to find things in the container with difficulty because of her disabilities. The plaintiff said, the defendant found items such as a computer for her but he was annoyed at having to do so and he damaged other goods in the process. She said she had access to some but not all of her goods and chattels. Part of the plaintiff’s claim is for return of her possessions located in a container on the defendant’s property and/or for damage to those possessions. For reasons which I shall later explain, I make no finding about this aspect of the plaintiff’s evidence at this time.
56 The plaintiff said in evidence she had trouble looking after her horses after the accident. The defendant said he would help her with the horses, which he did for the first week only. Her horse equipment was left in the defendant’s shed. The defendant took the food bins that she had for her horses and used them to feed his dogs. The plaintiff said she was unable to get into the shed to feed her horses.
57 When the plaintiff first moved in she was having meals in the house but this stopped when she went into the bungalow. She was living on frozen take- away food whilst in the bungalow.
58 In January 2009, the plaintiff was having difficulty talking to the defendant. She gave evidence she telephoned her bank and was advised that the cheque for $200,000 had in fact been cashed on 8 December 2008. This was contrary to what the defendant had said he would do with the cheque. I accept the plaintiff’s evidence as to these matters.
59 The plaintiff gave evidence she and the defendant had a conversation on 18 January 2009 via telephone. She had had a separate telephone line installed in the bungalow. She said she asked the defendant to repay her the money she had loaned to him. She said the defendant told her at that time that he would make an attempt to repay the money. The defendant told the plaintiff that he wanted her off his property and that he would attempt to repay the money to her. He said: “I’ll give you your money back as soon as you get out.” He said to her in addition: “You’ll have to pay rent until you leave.” I accept the plaintiff’s evidence as to this conversation. The defendant in his evidence did not dispute the conversation.
60 Then there was a second telephone call on 25 January 2009. The plaintiff agreed with the defendant in this conversation that things were not working out. The plaintiff said and I accept that during this telephone conversation she asked the defendant to repay the money he owed her. She said in evidence she told the defendant that as soon as she was repaid the money she had loaned him she would leave. The plaintiff gave evidence the defendant said he would return the money to her as soon as possible. I also accept the plaintiff’s evidence as to this conversation.
61 In the meantime, the defendant’s house had been on the market but not sold. The plaintiff gave evidence, which was not contradicted, that soon after she had provided him with the bank cheque for $200,000, the defendant purchased a new car, a new television, a new sound system and other expensive goods. The plaintiff said that when she first agreed to lend the money she had no reason to believe that he could not or would not repay her. The defendant had told her that he earned $15,000 per week from his work during the first week that she was living at the property.
62 The plaintiff had plans for her money. She was eventually going to buy her own home and set herself up in accommodation which she could manage to live in.
63 The plaintiff said that after her telephone call on 25 January 2009 she was visited at the property by her friends, the Fraziers. The next day the defendant, for some reason, came to her and begged her to stay at the property.
64 The situation between the plaintiff and the defendant reached somewhat of a stalemate. The plaintiff continued to live on the defendant’s property and the defendant did not repay the money loaned by the plaintiff to him although she had asked him to repay the money.
65 Notwithstanding the conversations between the plaintiff and the defendant on 18 and 25 January 2009, the plaintiff did not leave the property until 18 June 2009. The plaintiff said she was distressed in the conditions in which she was living and the way she was being treated. During the night before she left the property, someone had jumped onto the roof of the bungalow and was banging on the roof, scaring her. The plaintiff left the defendant’s property with only a few of her possessions. Her other possessions remained in the container.
66 The plaintiff said that having left the property, she returned a few days later to collect her possessions. Jillian Barton helped her to remove the last of her clothes. Colin Barton, Jillian Barton’s husband, had been suffering from cancer and he was unwell. He went into the bungalow and then the defendant appeared and started yelling at him. The plaintiff said that he appeared like a dog who was about to attack and an unsatisfactory situation developed during which the defendant, according to the plaintiff, punched her. Jillian Barton came and picked up the plaintiff and the police were called. I accept the plaintiff vacated the property in acrimonious circumstances.
67 In December 2009, the plaintiff returned to the property with a removalist and with a person named Sharon Moody. The plaintiff had obtained an intervention order preventing the defendant from coming near her. The purpose of attending the property was to collect her possessions and chattels but the defendant told the police that none of the plaintiff’s belongings were in his locked shed. She was therefore prevented from obtaining many of her possessions. The possessions she claims are listed by description in Annexure A to the Statement of Claim.
68 Jillian Barton gave evidence that she visited the plaintiff at the Caulfield Rehabilitation Hospital and thereafter had conversations with the defendant about his loan arrangements. She said her conversations were with the defendant on the telephone. In addition she said in evidence that whilst the plaintiff was in the Caulfield Rehabilitation Hospital, the defendant was not able to give a specific answer as to when he would need the plaintiff’s money or indeed, if he wanted the money at all. Jillian Barton asked the defendant when he would know whether he needed to borrow the plaintiff’s money because the plaintiff needed to know so that arrangements could be made for the sale of her house and for accommodation. When Jillian Barton spoke to the defendant she said he did not know what was happening with his money but he did not dispute that he was borrowing money from the plaintiff. The defendant assured Jillian Barton that he would look after the plaintiff if she was to live at his property. Jillian Barton attended at the property and helped the plaintiff remove herself and some of her possessions. I accept Jillian Barton’s evidence. Her evidence was not contested by the defendant.
69 The defendant gave evidence that the letter (exhibit ‘C’) was signed by the plaintiff in front of himself and his son. The defendant said the plaintiff told him the money was a gift. The defendant said in evidence the plaintiff in fact typed the letter in front of his son, Mitchell. As I have already said, I accept the plaintiff signed the letter but she was induced to do so by representations made by the defendant which I have already dealt with above. I reject the defendant’s evidence the letter was typed by the plaintiff.
70 In his pleaded defence the defendant pleads that the plaintiff agreed in conversations held on 28 November 2008 and on 3 or 4 December 2008 to gift money to him but conspicuously he makes no mention of the letter (exhibit ‘C’) in his pleading. The defendant further pleads the conversations wherein the plaintiff allegedly agreed to gift him the money were held in the presence of himself, his son Mitchell White and a person called John O’Brien. Neither Mitchell White nor John O’Brien was called by the defendant to give evidence. I infer neither witness would have advanced the defendant’s case.
71 The defendant said in evidence he told the plaintiff that he was not able to repay her the night the letter (exhibit ‘C’) was signed. He said nothing was discussed about interest rates or a timeframe for repayment or anything. He said the money was always to be a gift. He said his house was on the market in October 2008, Family Court orders had been made relating to his property settlement with his wife and the gist of that was that he had to come up with $534,000 to pay out his former wife’s share. He said he looked after the plaintiff for about three months in his home. When his eldest daughter arrived home, the plaintiff had to move out and go to the bungalow. He said in February 2009, there was a gathering to celebrate his birthday and from that point on he did not see eye to eye with the plaintiff. He said the plaintiff never asked him to repay the money. He said he did not throw her out of his property, that she left of her own accord. He agreed that he knew the plaintiff well and had known her for eight years. He said he agreed to fix the house and feed her when she was sick. He said that she needed him “and I needed her”. He said the plaintiff offered to help him out and he accepted her offer with the proviso that “I’d look after her”. He said there was no time factor and he knew she was on a lot of medication. He said the house is presently in his name subject to a mortgage of $540,000 to Sandhurst Trustees. It is valued at $880,000. He says he has debts of $900,000. He said he took all of the plaintiff’s possessions and chattels and put them in the shipping container. He said the plaintiff never had any objection. He said lots of items belonging to the plaintiff were damaged in the initial transit by removalists. He said he did not recall seeing classical guitars or other instruments, but he said everything is in the shipping container. He agreed that the living arrangements had become unworkable by the time the plaintiff left and he said that her leaving was a sensible course for her to take. He said she wanted to leave and so she left.
72 The defendant gave evidence insisting that he did not have an obligation to repay the money. He said he used the money to pay debts and not to buy the house. He said he owed Boral Limited $45,000. He also said in evidence he purchased a Daimler-Chrysler truck for $80,000 and that he paid $30,000 to ESANDA and there were other debts. He said the debts were in the name of Doxton Pty Ltd, which he controls. That is the company through which he conducts his business. He said he did not ask for the money; the plaintiff offered it to him. He gave evidence he told the plaintiff of his situation and she offered him the money. He said in evidence there was never any discussion about having the solicitors document the arrangement. He said he never told the plaintiff what the money would be used for, other than he needed the money to pay out credit defaults that he had outstanding, and he said to the plaintiff “if anything was to change just to let him know”.
73 Then the defendant said:
“I said I would repay after seven years. It was a gift at the start but I will
repay after seven years but not beforehand.”
74 I find this evidence to be quite inconsistent with the defendant’s pleaded case and his denials of the existence of a loan given in evidence. When tested in cross examination the defendant was unable to give any reason as to why the plaintiff would just gift him more than $200,000 unsecured. I reject the defendant’s evidence that any money provided to him by the plaintiff was a gift. I find it was a loan.
75 I found the defendant to be a generally unsatisfactory witness. In my view he made up much of his evidence to suit his case as the trial moved along. His final concession that he said to the plaintiff that he would repay her in seven (7) years time was an example of how his evidence was made up. That evidence was not foreshadowed in the pleaded defence. The evidence in the plaintiff’s case that the money was a loan is, in my view, overwhelming. Because of this the defendant was forced to make the concession he would repay her in seven (7) years time was merely an attempt on his part to ameliorate the weight of evidence against his case. His evidence that the plaintiff prepared exhibit ‘C’ was but another attempt to turn the wave of evidence in his favour. For the reasons expressed above it failed. I reject the defendant’s evidence.
76 I granted leave to the plaintiff to further amend her statement of claim on the second day of trial. The amendments were more cosmetic than substantive.
77 On behalf of the Plaintiff, Mr. Hines submitted, inter alia, as follows:
(1)
The plaintiff gave evidence that she advanced the defendant $18,955.54 on 28 November 2008 and $200,000 on 5 December 2008, drawn on 8 December 2008. That evidence was not contested. I accept the submission.
(2) The plaintiff’s evidence was that she and the defendant agreed the advance was by way of loan, for a two-year term and at interest, and that they agreed that she would be entitled to lodge a caveat over the Gruyere property to protect her loan. Her further evidence was that at the defendant’s urging she signed the letter alleged in the particulars to paragraphs 29 and 30 of the Defence (Exhibit C) as part of a ruse to satisfy a third party of the defendant’s means and relying on his assurances that he would not use the letter against her. Her evidence was that the defendant well knew she never had any intention of gifting the money to him. As I have indicated above I generally accept the submission save that interest was only to be payable whilst the amount of the loan remained outstanding after the plaintiff vacated the defendant’s property.
(3)
The defendant’s evidence was that he undertook to repay the plaintiff’s money after seven years on the proviso his credit defaults were lifted. For reasons stated above, I reject that evidence.
(4) The plaintiff’s evidence should be accepted for the following reasons:
(a)
Despite the Court’s invitation to do so, the defendant never put his case to the plaintiff either in his Defence or in cross-examination;
(b)
Without explanation, the defendant did not call material witnesses including his son, Mitchell, and the witness O’Brien, to corroborate his evidence that the letter was not false as the plaintiff testified, and that the plaintiff gave other indications of an intention to make a gift;
(c)
He offered no plausible explanation for her gifting the bulk of her property to him;
(d) Her evidence was detailed and credible; (e)
Jillian Barton’s testimony was that she had had a conversation with the defendant in which she described the transaction as a loan and he did not object. This evidence was not challenged. Barton appeared to be a witness of credit;
(f)
The declaration in the letter (exhibit ‘C’) is inconsistent with both versions of the transactions; that is, a loan and a seven-year “gift”. Hence, on either parties’ testimony it was not true. The words “to whom it may concern” with which the exhibit commences are consistent with an intention to impress a third party, rather than an intention to effect a transaction, and so the letter on its face should not be read as being itself dispositive;
(g)
Exhibit ‘C’ did not in terms address the first payment by way of loan of $18,955.54 at all and spoke only of the amount of $200,000. I accept this confirms the plaintiff’s evidence as to exhibit ‘C’.
(h)
The defendant’s evidence that the plaintiff never asked him to repay the money, even after they were no longer speaking to each other, is not credible.
(5)
For these reasons, it is unnecessary for the Court to consider the issues of whether there was a gift made on condition. I accept these submissions.
(6)
Paragraphs 20 to 25 of the Further Amended Statement of Claim plead undue influence, or unconscionability, and (b) and (c) of the Prayer for Relief claim consequential equitable relief.
(7)
The plaintiff gave detailed and credible evidence that at the relevant time she suffered from a special disability, viz-a-viz, the defendant; that she was intimidated by him; felt “trapped” and did not wish to confront him, and she received no independent professional advice; it seriously affected her capacity to protect her interests; she could not refuse his request although they were fraught with risk for her of a catastrophic loss. The defendant was aware of her disquiet, as was evidenced by his repeated assurances to her that she should trust him, and he took unconscientious advantage of the opportunity this presented by
(8)
Her evidence of her apparent physical and emotional difficulties, of his repeated assurances, of his promise to look after her, and the improvidence of the transaction raise a presumption of undue influence; but in any event, she has no need of a presumption, because the above was evidence of actual undue influence. I accept this submission.
(9)
The defendant’s evidence that the plaintiff freely offered to give him the money interest free for at least seven years was not put by the plaintiff and was uncorroborated, as mentioned above. As I stated earlier, I reject the defendant’s evidence as to this matter.
(10) There was ample and persuasive evidence of the plaintiff having suffered a detriment in reliance on induced assumptions, including the assumption that she would have a secured interest in the Gruyere property. Thus, an equity was created by an estoppel preventing the defendant from resiling from the assumption, and this warrants orders being made to the effect of paragraphs (b) and (c) in the Prayer for Relief. I accept this submission.
(11) From their agreement that the plaintiff would be entitled to lodge a caveat over the Gruyere property to protect her loan, it follows that both parties intended for the plaintiff to have an equitable mortgage or charge over the Gruyere property securing the amount due. The advances were a consideration for the mortgage or charge. An agreement that a person may place a caveat on another’s title has been held to constitute an equitable charge. The evidence supports a declaration in the terms sought in the Prayer for Relief. I accept this submission.
(12) By inference, under statute, interest pursuant to a loan agreement can be recovered even if no particular rate is agreed. In this case, where the Court should find that there was a secured loan, interest should be awarded at the lower of the standard variable rate over the relevant period for secured loans, and the rate under s.2 of the Penalty Interest Rates Act 1983 from the time of the relevant advance to judgment. The alternative, if the Court were to find against the plaintiff that there was no agreement for the payment of interest, would be to allow interest at the rate under s.2 from the time of demand, which, according to the plaintiff’s evidence, was around mid-January 2009. I reject this submission. I find the plaintiff is entitled to interest under s.2 of the Penalty Interest Rates Act 1983 from the time she vacated the property on 18 June 2009 she having previously demanded repayment.
(13) If, contrary to the submissions made by the plaintiff the Court were to find that the loan was unsecured, the higher standard of rate of interest on unsecured loans would be applicable. I find the loan was to be at all times secured.
(14) The plaintiff’s evidence of standard rates should be admitted under s.64(1) and s.2(b) and s.67(4) of the Evidence Act 2008. I make no finding relating to this submission.
(15) The Court should make an order for the delivery up of the goods listed in the Annexure A to the plaintiff’s Further Amended Statement of Claim. The plaintiff gave contested evidence of her right to possession to these goods and of their still being on the Gruyere property. The parties having agreed to the orders by consent attached hereto on 12 July 2011 I make no finding in relation to this submission at this time and I will make an order that the questions relating to the plaintiff’s possessions be tried separately.
78 The defendant when asked for submissions declined to make any other than to submit that the money provided to him by the plaintiff was a gift.
79 In her statement of claim the plaintiff pleads, relevantly:
a.
the plaintiff agreed to lend money to the defendant at the defendant’s request and that she did in fact lend the money which totalled $218, 955.54; and
b. the loan would be for a period of not more than two (2) years; and c.
the defendant would pay to the plaintiff interest on the loan at the same rate as the commercial rate charged on a personal loan; and
d.
the defendant would repay the plaintiff the amount of the loan and interest then owing by monthly instalments over a period of not more than two (2) years; and
d.
the defendant would grant the plaintiff an equitable charge over his property to secure the funds advanced under the loan pursuant to which the plaintiff would be able to lodge a caveat over his property; and
e.
the defendant would permit the plaintiff to occupy and reside in a bungalow located on his property until the loan was repaid; and
f. the defendant would renovate the bungalow; and g.
the defendant would arrange for the plaintiff’s personal property to be moved from her property to his home; and
h.
the defendant would cook and provide meals to the plaintiff on a daily basis; and
i.
the defendant would care for the plaintiff in the event she became ill; and
j.
the defendant would permit the plaintiff to agist her horses on his property at no charge and would assist her in the care of the horses.
80 I find that the plaintiff has made out a case that the money she provided to the defendant was by way of a loan but not on the terms as pleaded by her. I find on the evidence as follows:
a.
the plaintiff paid the sum of $218,955.54 to the defendant by two payments, the first being $18,955.54 and the second being for $200,000.00;
b.
the total sum paid by the plaintiff to the defendant was by way of a loan;
c.
the loan would be either for a period of not more than two (2) years from the time of the second payment, namely 8 December 2008 or was repayable immediately on demand if the plaintiff vacated the defendant’s property before the expiration of two years, whichever event first occurred; and
d.
the defendant would pay interest to the plaintiff but not during the time that she was living on his property but rather during the period of time, if any, between the time she vacated his property and when the defendant repaid the loan; and
e.
there was no agreement as to the rate of interest that the defendant would pay and there was no agreement that the loan be repaid by monthly instalments including interest. I find that in the event the defendant did not repay the plaintiff when she vacated his property it was implied the plaintiff was entitled to demand repayment of her money and interest thereafter which she has done; and
g.
the defendant would grant the plaintiff an equitable charge over his property to secure the funds advanced under the loan pursuant to which the plaintiff would be able to lodge a caveat over his property; and
h.
the defendant would permit the plaintiff to occupy and reside in a bungalow located on his property until the loan was repaid; and
i. the defendant would renovate the bungalow; and j.
the defendant would arrange for the plaintiff’s personal property to be moved from her property to his home; and
k.
the defendant would care for the plaintiff in the event she became ill; and
l.
the defendant would arrange ambulance and other emergency services care for the plaintiff in the event she became ill whilst living at his property; and
m.
the defendant would permit the plaintiff to agist her horses on his property at no charge and would assist her in the care of the horses.
81 I reject the plaintiff’s case as pleaded that it was part of the agreement the defendant would provide her with all meals and I reject the plaintiff’s case as pleaded that he would care for her in the event she became ill.
82 As to the question of interest, I reject any argument advanced by the plaintiff that she was to receive both rent free accommodation and interest in consideration of the loan. The plaintiff did not give any evidence as to the rate of interest or when it was to be paid. In my view it was implicit in the discussions between the plaintiff and the defendant interest would only be paid after demand was made by her and after she vacated the defendant’s property.
83 As part of her claim the plaintiff claims the costs of her accommodation from the time she vacated the property on 18 June 2009. She has lead evidence of the money she has paid at various places for accommodation and she has produced receipts to substantiate her claim which it is submitted is compensable as damages for breach by the defendant of the loan agreement. I reject that submission.
84 In my view the plaintiff is not entitled to damages being the costs of her alternative accommodation. In my judgement the amount claimed for accommodation in damages does not arise as a consequence of a breach of the loan agreement between the parties. In my view the parties, having agreed the plaintiff would be paid interest by the defendant should the loan remain unpaid after she vacated the property, then that was the agreed compensation for the defendant’s failure to repay. In my view the plaintiff is entitled to interest on the amount outstanding from the defendant at the penalty rate as compensation for her being without the money she is owed. Interest will be payable at the penalty rate from 18 June 2009.
85 In my view it was never contemplated between the parties that if the defendant failed to repay the plaintiff after she vacated the property that he would compensate her by paying whatever rent she may have incurred by being accommodated elsewhere. The rent paid by the plaintiff was not a loss that reasonably flowed from a breach of the agreement. The agreement was that she would be compensated by payment of interest which I find to be payable at the penalty rate. Were the plaintiff to receive the costs of her alternative accommodation in addition, in my view that would amount to double compensation to which she would not be justly entitled.
86 I will order under order 47.04 of the rules that the plaintiff’s claims against the defendant for the return of her possessions and/or for damages caused to them by the defendant be tried at a separate time.
87 I will make orders as follows and will give leave to the plaintiff to bring into court in draft form orders reflecting this judgment.
1. There be judgment for the plaintiff on the claim. 2.
The defendant pay to the plaintiff the sum of $218,955.54 together with interest of $ calculated at the rate applicable under the Penalty Interest Rates Act 1983 from 18 June 2009 until judgment.
3.
I declare that the plaintiff has an equitable interest as mortgagee in the property registered in the name of the defendant described in certificate of title Volume 9729 Folio 340 and known as 45 Gruyere Road, Gruyere in Victoria to secure repayment of the sum of $218,955.54 and interest owing until repayment thereof and as such is entitled to lodge a caveat securing her interest as caveator against the tilte to the said property.
4.
Pursuant to order 47.04 of the rules, the plaintiff’s claims against the defendant for the return of her possessions and/or for damages caused to them by the defendant be tried at a separate time.
5.
The defendant pay the plaintiff’s costs of and incidental to the proceeding thusfar, such costs to be taxed in the absence of agreement on County Court Scale ‘D’.
Schedule of Consent Orders Attached to Judgment
By Consent:
1 On or before 2 August 2011, the defendant give the plaintiff and those assisting her access to his property and to the shipping container located on his property for the purposes of the plaintiff removing her goods referred to in Annexure A of the Further Amended Statement of Claim from the shipping container, taking away with her those which she selects, and repacking the remainder into the shipping container.
2 That the plaintiff through her solicitors give to the defendant 48 hours’ written notice of the time at which she intends to attend at the property under Order 1.
3 Before the plaintiff takes away any goods or repacks any of the goods into the shipping container, each party must prepare and sign and exchange with the other party an inventory describing each of the goods removed from the container.
4 Each item removed from the container be photographed by each party at the time it is removed from the container.
5 On or before 9 August 2011, the defendant deliver to a place advised to him by the plaintiff’s solicitors in writing the shipping container containing the remainder of the goods as repacked into the shipping container pursuant to Order 1.
6 Pursuant to Order 47.03 of the Rules, the questions of damage to the goods (if any) and who was responsible for such damage (if any) at law be tried as a separate issue.
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