Judy Boord as Executrix of the Estate of Roman Iwankiw v Cabassi
[1999] WASC 114
JUDY BOORD as Executrix of the Estate of ROMAN IWANKIW -v- CABASSI & ORS [1999] WASC 114
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 114 | |
| Case No: | CIV:1301/1997 | 14-16 JUNE 1999 | |
| Coram: | WHITE J | 4/08/99 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Judgment against first defendant for $234,693 Plaintiff's claim against second defendant dismissed | ||
| PDF Version |
| Parties: | JUDY BOORD as Executrix of the Estate of ROMAN IWANKIW ANDREW CABASSI DOROTHY CABASSI HAZCOR PTY LTD (ACN 009 243 083) |
Catchwords: | Contract Acknowledgement of Debt Second defendant executing Acknowledgement upon being told by the plaintiff's solicitor that she was legally obliged to pay the first defendant's debt because she was a partner of his in an unrelated firm Solicitor's representation false and misleading Unconscionable for plaintiff to rely upon the Acknowledgement of Debt in the circumstances |
Legislation: | Nil |
Case References: | Tower Cabinet Co Ltd v Ingram [1949] 2 KB 397 Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 Garcia v National Bank of Australia Ltd (1998) 155 ALR 614 Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd [No 1] (1991) 28 FCR 151 L'Estrange v Graucob [1934] 2 KB 394 McAllister v Richmond Brewing Co (NSW) Pty Ltd (1932) 42 SR (NSW) 187 Redgrave v Hurd (1881) 20 Ch D 1 Solle v Butcher [1950] 1 KB 671 Svanosio v McNamara (1956) 96 CLR 186 Yerkey v Jones (1939) 63 CLR 649 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : JUDY BOORD as Executrix of the Estate of ROMAN IWANKIW -v- CABASSI & ORS [1999] WASC 114 CORAM : WHITE J HEARD : 14-16 JUNE 1999 DELIVERED : 4 AUGUST 1999 FILE NO/S : CIV 1301 of 1997 BETWEEN : JUDY BOORD as Executrix of the Estate of ROMAN IWANKIW
- Plaintiff
AND
ANDREW CABASSI
First Defendant
DOROTHY CABASSI
Second Defendant
HAZCOR PTY LTD (ACN 009 243 083)
Third Defendant
Catchwords:
Contract - Acknowledgement of Debt - Second defendant executing Acknowledgement upon being told by the plaintiff's solicitor that she was legally obliged to pay the first defendant's debt because she was a partner of his in an unrelated firm - Solicitor's representation false and misleading - Unconscionable for plaintiff to rely upon the Acknowledgement of Debt in the circumstances
(Page 2)
Legislation:
Nil
Result:
Judgment against first defendant for $234,693
- Plaintiff's claim against second defendant dismissed
Representation:
Counsel:
Plaintiff : Mr K E Yin
First Defendant : In person
Second Defendant : Mr J R Birman
Third Defendant : In person
Solicitors:
Plaintiff : McKenzie Lalor
First Defendant : In person
Second Defendant : Birman & Ride
Third Defendant : In person
Case(s) referred to in judgment(s):
Tower Cabinet Co Ltd v Ingram [1949] 2 KB 397
Case(s) also cited:
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
Garcia v National Bank of Australia Ltd (1998) 155 ALR 614
Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd [No 1] (1991) 28 FCR 151
L'Estrange v Graucob [1934] 2 KB 394
McAllister v Richmond Brewing Co (NSW) Pty Ltd (1932) 42 SR (NSW) 187
Redgrave v Hurd (1881) 20 Ch D 1
Solle v Butcher [1950] 1 KB 671
Svanosio v McNamara (1956) 96 CLR 186
Yerkey v Jones (1939) 63 CLR 649
(Page 3)
1 WHITE J: The plaintiff, in her capacity as the executrix of the estate of Roman Iwankiw ("the deceased"), sues the three defendants for the debt, in the sum of $391,310, which is the subject of a written Acknowledgement of Debt signed by each of them.
2 Although the plaintiff alleges in the statement of claim that the deceased "loaned to the defendants the sum of $550,000", there was no evidence tendered by the plaintiff to substantiate that allegation. The plaintiff, as executrix, is entitled to possession of all the books and records of the deceased and she is well acquainted with the deceased's former accountant. Nonetheless, the accountant was not called as a witness and no records were produced to establish the amounts said to have been "loaned" by the deceased, nor the identity of the borrower/s of such amounts. I can only assume that any such records, and the evidence of the accountant, would not have assisted the plaintiff's case. In the end, the plaintiff's claims are based upon the written Acknowledgement of Debt and upon certain statements and admissions made to the plaintiff's solicitors by the first defendant as to the moneys borrowed by or advanced to him by the deceased.
The case against the first defendant and the third defendant
3 The evidence satisfies me that the first defendant did obtain a loan of $200,000 from the deceased and that that loan has not been repaid. The first defendant pleads that the loan was made in fact to the third defendant. While I accept that the third defendant probably received the benefit of the moneys advanced, I am satisfied that the loan was in fact made by the deceased to the second defendant in his personal capacity.
4 In relation to the loan of $200,000, the deceased and the first defendant executed a "Bill of Sale By Way Of Security" on 13 December 1993, exhibit A-56. In that document, the grantor is described as "ANDREW CABASSI as Trustee for the HAZCOR FAMILY TRUST, trading as Mycara Stud & Feedlot".
5 I find that the first defendant was not at any time a trustee of any family trust, that there was not at any material time a trust correctly styled "Hazcor Family Trust" and that the third defendant was at all material times the trustee of the Cabassi Family Trust. I find that the mistaken description of the grantor in the Bill of Sale was given to the solicitor who drew it up by the first defendant and that the latter's understanding of the legal nature of a trust, a company or a partnership was minimal. I am satisfied on the balance of probabilities that the first defendant intended
(Page 4)
- that the loan should be made to the third defendant, but that this was not made known to the deceased and that the deceased contracted with the first defendant personally in relation to this loan. In his statement of evidence, admitted as the first defendant's evidence-in-chief, the following passages are relevant to the loan to the first defendant by the deceased.
"13. In December 1993 I visited Ray in Kalgoorlie. I told him about my problems with Taylor and Douglas and asked him to lend me $200,000 for a year. He replied 'Yes' and arranged for his solicitor, Tom Evans, to prepare a written agreement which I signed.
…
30. The original loan of $200,000 was supposed to be paid back in December 1994 but I could not afford to do so. Ray telephoned me from [sic time] to time to check on the position but he was not unduly concerned about repayment of the loan.
…
36. After Ray's death, Judy Boord telephoned me several times enquiring about the money I owed to Ray. We did not discuss the cattle management agreements because Ray had asked me to keep them confidential. However, Judy knew I was agisting cattle on Ray's behalf.
…
60. I am a slow reader and do not find it easy to comprehend legal documents. I have never denied responsibility for the debt to the plaintiff – in particular the loan of $200,000."
(Page 5)
- $50,000, a total of $183,750, as reflected in the account from the third defendant dated 25 November 1995, which is exhibit A-79.
7 In relation to the agistment agreement, the first defendant said, in his statement of evidence:
"77. The agistment, feedlot management and marketing costs, which include freight and transaction levies total $243,080.95.
78. I now owe Ray $34,693 calculated as follows:
Cattle purchase price 300,000
Agistment and management 243,081
543,081
less:
Payment Jan 1994 (300,000)
Payment June 1994 ( 50,000)
Sale proceeds (430,288)
Balance (237,207)
credit payments:
4 Nov 1994 133,750
21 Nov 1994 50,000
1 Mar 1995 18,764
- Balance outstanding ( 34,693) "
9 It appears that the various corporate entities that were set up in connection with the first defendant's operations were organised by the Melbourne accountants, Taylor and Douglas, and I find that, in relation to those entities, the first defendant relied upon those accountants for advice at all material times, with little understanding, himself, of the legal niceties involved.
10 The first defendant caused a letterhead to be produced for Mycara Stud and Feedlot on which the names of the first defendant and the second defendant appear. In fact, as appears from exhibit A-55, the third defendant is, and was from 12 October 1990 until the name was
(Page 6)
- deregistered on 16 February 1997, registered as the proprietor of the business name "Mycara Stud", and it is apparent that the first defendant and the second defendant were not at any material time in partnership under the style of "Mycara Stud and Feedlot", notwithstanding the use of the letterhead referred to above.
11 The second defendant did not wish to have her name included in that letterhead, but the first defendant said that, as she was his wife, her name should be on the letterhead, and she acquiesced. This was to have certain consequences in due course, as will appear.
12 Shortly prior to his death, the deceased consulted a firm of solicitors in Kalgoorlie, Messrs McKenzie Lalor (to whom I shall refer as "the plaintiff's solicitors"), and instructed them to endeavour to recover the amounts claimed by the deceased. Pursuant to those instructions, the plaintiff's solicitors wrote a letter addressed to the first defendant (exhibit A-75), in which they said, inter alia:
"We are solicitors instructed to act for Mr Roman Iwankiw in respect to a Bill of Sale and money owed to him by you in respect of various loans and dealings.
We are instructed that our client has leant you $200,000.00 and interest is payable at the sum of $1,660.00 per month."
13 On 26 October 1995, the second defendant replied to that letter on behalf of, and instructed by, the first defendant. The reply was on a letterhead of Mycara Stud and Feedlot (exhibit A-76), in the upper right hand corner of which there appear the names of the first and second defendants as "Andrew & Dorothy Cabassi" and the address.
14 The plaintiff's solicitors replied to that letter on 22 November 1995 (exhibit A-77), advising that the deceased had died and that they were now instructed to act by the plaintiff. The reply was addressed to the first defendant and included the following statements, among others:
"We now have further instructions in respect to moneys loaned by Mr Iwankiw to you.
We are instructed that in addition to the $200,000.00 that we wrote to you about earlier, there have been four other advances made to you in the sums of $170,000.00, $130,000.00, $29,500.00 and $50,000.00."
(Page 7)
15 The letter alleged a balance outstanding of $489,500 and concluded with a threat to institute proceedings for recovery of that amount and interest if payment were not made within seven days of the date of the letter.
16 Following receipt of that letter, the first defendant called to see the plaintiff's solicitors on 1 December 1995 and was interviewed by Mr W T McKenzie, a solicitor in the employ of his wife, the principal of the plaintiff's solicitors, who was acting for the plaintiff. In his letter to the plaintiff dated 5 December 1995 (exhibit A-79a), Mr McKenzie reported the result of his interview with the first defendant. He recorded, inter alia, that the first defendant had said that a total of $366,300 was owed to the estate by the third defendant. Mr McKenzie mentioned that he had no information about the third defendant and would make enquiries. Mr McKenzie set out the figures put forward by the first defendant in support of his contentions as to the amount owing. The first defendant is said to have offered to enter into a loan agreement providing for the payment of interest on the capital sum owing, the capital sum to be paid "when things come good". The letter concludes as follows:
"However, we are concerned about Hazcor Pty Ltd.
If we could get an Acknowledgement of Debt signed by Cabassi saying what he owes and that he owes it and not Hazcor Pty Ltd, it would make things much more simple.
Please make an appointment to discuss this matter with me when you return from your holidays."
17 On 19 March 1996, the plaintiff's solicitors wrote to the first defendant advising that Mr McKenzie and the plaintiff's husband would be in Esperance on business on 21 March 1996 and wished to speak with him to discuss the debt to the estate. On the following day, Mr McKenzie wrote again to the first defendant saying that:
"We can meet you at 9.00am, Thursday morning at your property. Please advise of the address urgently."
18 On 21 March 1996, the plaintiff, her husband and Mr McKenzie arrived at the home of the first defendant and were introduced to the second defendant. The second defendant offered tea or coffee to the visitors and there was a discussion concerning the debt to the estate. Mr McKenzie produced a written Acknowledgement of Debt which he had prepared for execution by the plaintiff and by each of the three
(Page 8)
- defendants (exhibit A-97) jointly and severally acknowledging an indebtedness to the estate by the three defendants in the sum of $366,300, agreeing on a schedule of repayments of that debt and including provision for a charge over any real property in which any of the defendants had an interest.
19 The first defendant executed the Acknowledgement of Debt both personally and for the third defendant, and the second defendant signed for the latter as its company secretary.
20 The first defendant applied, after the closing address by counsel for the plaintiff, for leave to amend his defence and counterclaim which had been drawn by the solicitors formerly acting for him.
21 The more substantial proposed amendments were:
1. To add a new paragraph, numbered 2A, reading:
"By mutual mistake the grantor is described in the loan agreement as 'A Cabassi as trustee for the Hazcor Family Trust', when it should say 'Hazcor Pty Ltd as trustee for the A Cabassi Family Trust'."
2. To change the references to the first defendant in paragraphs 3, 4, 5, 6 and 7 of the Defence to references to the third defendant.
3. To add at the foot of paragraph 10, after the sentence reading: "The first defendant then signed the acknowledgement of debt (as defined in the statement of claim) in his capacity as a director of the third defendant and personally" the words: "in reliance on Mr McKenzie's representation and in the mistaken belief that he was personally liable for the third defendant's debts.
4. To amend the counterclaim to seek orders:
(a) that the acknowledgement of debt (as defined in the statement of claim) be declared void, and
(b) that the loan agreement be rectified to substitute for the definition of the grantor the words "Hazcor Pty Ltd as trustee for the A Cabassi Family Trust".
(Page 9)
22 The application was opposed by counsel for the plaintiff.
23 The first defendant did not address me in support of his application to amend or, indeed, in support of his case. I formed a favourable impression of him as a witness, but there was no evidence which would support the proposed amended pleading. The "mistake" was not mutual. The probabilities are strongly that the first defendant informed the solicitor of the name of the grantor. No doubt, the first defendant was in error in giving the description he did, but there was no error on the part of the solicitor who drew the Deed. There was no evidence that Mr McKenzie had misrepresented to the first defendant that he was personally liable for the third defendant's debts.
24 I should mention at this stage that the first defendant had been represented by Messrs Paiker & Overmeire, solicitors, who had originally acted for all three defendants. Subsequently, the second defendant consulted Messrs Birman & Ride who took over the conduct of her defence. On 11 May 1999, Messrs Paiker & Overmeire wrote to the plaintiff's solicitors informing them that the first and third defendants did not wish to continue their defence to the plaintiff's proceedings and were prepared to consent to judgment as claimed. They requested suitable consent orders which they would then forward to the first defendant for his consideration. On 21 May 1999, Messrs Paiker & Overmeire again wrote to the plaintiff's solicitors to say that it was inherent in their clients' offer that the first and third defendants were also prepared to discontinue their counterclaim. On the same date, the plaintiff's solicitors replied accepting the offer that judgment be entered by consent.
25 The plaintiff's solicitors were furnished with a proof of the evidence to be given by the first defendant which had been prepared by Messrs Birman & Ride and understood that the first defendant would be called as a witness for the second defendant. In fact, the first defendant changed his mind about consenting to judgment and appeared in person at the trial. He was cross-examined by counsel for both the plaintiff and the second defendant, despite an objection by counsel for the plaintiff, which I overruled, that the plaintiff was prejudiced by the fact that the first defendant gave evidence on his own account and not as a witness called by the second defendant. I asked plaintiff's counsel what detriment had been suffered by the plaintiff and he replied (T270):
"The main detriment the plaintiff suffered was that whereas up until Friday it was assumed that the statement of Mr Cabassi would stand as his evidence in chief if called by the second
(Page 10)
- defendant, as it turned out he actually gave evidence in chief on his own behalf, he was cross examined by Mr Birman and put forward a version of the facts that was substantially different from that which he pleaded and which in fact was contained in his evidence in chief.
It was at variance with both those documents in at least two very substantial respects, the first one being the notion of the body of invoices. There was never any suggestion of that either in his pleading or in his evidence in chief. The second manner in which his cross examination varied substantially from his statement as well as his pleading was the suggestion that the agistment agreement was with Hazcor and not with himself.
The agistment agreement on his own statement, his own defence, was with himself and not with Hazcor. That was the basis upon which the plaintiff proceeded to trial, on that precise assumption. That didn't happen and I protested loudly about that yesterday, the manner in which the cross examination took place, because we really don't know where it goes. Is it something which was led from Mr Cabassi in order to impugn the plaintiff's claim or something to bolster the second defendant's claim? If so, where it led was something which I really had great difficulties in grasping because it was totally at variance with his own pleading as well as with the statement.
To that extent, to the extent that the plaintiff proceeds on the assumption that it was compromised and, with the compromise, the fact that he would not give evidence on his own behalf but would be relying on his evidence in chief contained in his statement - to the extent that that assumption was resiled from, I have suffered great prejudice, your Honour, because the material contained in his cross examination was not material that I was in any position to refute on my feet."
26 In the end, however, I do not think any prejudice was indeed occasioned to the plaintiff who elected not to rely upon a cause of action based upon the subsequent compromise agreement that the first defendant would consent to judgment. That agreement was based upon his inability to continue to finance the action rather than upon any admission by him of the plaintiff's case.
(Page 11)
27 On the pleadings, the first defendant admitted an indebtedness to the deceased in the sum of $34,693 in respect of the cattle agistment agreement between him and the deceased.
28 In giving evidence (T226) the plaintiff said of the deceased that he never had a tax problem because he was doing a development in Kalgoorlie. Mr Birman objected to that evidence on the grounds that it was hearsay and I allowed the question, while reserving the issue of admissibility. In the end, nothing turns on the matter and I overrule the objection.
29 In my opinion, the application to amend the defence should be refused, having been made far too late at the end of the trial.
30 On the basis of the pleadings and evidence as they stand, I consider that the plaintiff is entitled to judgment against the first defendant and the third defendant in the sums of $200,000 (in relation to the moneys lent by the deceased to the first defendant) and $34,693, a total of $234,693. I shall hear from plaintiff's counsel and from the first defendant as to the appropriate order in relation to interest and costs.
The plaintiff's case against the second defendant
31 In relation to the second defendant, there is no evidence that she was the recipient of any loan or other moneys from the deceased at any time, nor any evidence that she derived any pecuniary benefit as a result of such loan or other moneys.
32 Some dispute has arisen as to whether the second defendant was present in the room when Mr McKenzie read out the terms of the Acknowledgement of Debt and, indeed, whether he did read it out in full at that time. It is unnecessary to determine that dispute as nothing turns upon it. It is common cause that the second defendant said, when she was told that she had to sign the Acknowledgement of Debt, that it had nothing to do with her and that she did not wish to sign anything. She broke into tears and was obviously upset. She asked Mr McKenzie why she had to sign the Acknowledgement of Debt. At that point, Mr McKenzie produced the letter, (exhibit A-76) to which I have referred, containing the letterhead of "Mycara Stud and Feedlot" and the names of the first and second defendants. Mr McKenzie showed the letter to the second defendant. Mr McKenzie said in his evidence-in-chief:
(Page 12)
- "At some stage, I am not sure before or after she left the room, she asked why she had to sign.
I told her that she was a partner in the business as she was on the letterhead."
33 The second defendant's evidence-in-chief as to this was:
" … Mr McKenzie pushed some papers across the dining table that I now know to be the deed of Acknowledgement of Debt dated 21 March 1996 ('the deed') and said:
'Please sign'
I replied that whatever it was, it had nothing to do with me, as I was never a party to any loan or cattle agistment agreement and was not responsible for anything that had taken place.
Mr McKenzie showed me my letter to him dated 26 October 1995 … and pointed out that the letterhead clearly stated 'Andrew and Dorothy Cabassi' (which it did). Therefore, he said, I was in partnership with Andrew and equally responsible for the payment of any monies due under the loan agreement and the agistment agreement. …
I told him that I couldn't read it and that I didn't want to sign. I couldn't see through my tears to read what the deed said but I signed it without reading it anyway because I felt pressured. I understood from what Mr McKenzie told me that:
a) I was legally liable for Andrew's debts; and
b) if I did not sign the deed I would have to make immediate payment of all the monies outstanding …
No one explained to me and nor was I aware when I signed the deed that its purported effect was to charge Beauda Lodge to secure Andrew's debt to the plaintiff."
34 Her evidence was confirmed by the first defendant.
35 The plaintiff's evidence-in-chief in relation to this aspect was:
"Bill showed Dorothy and Andrew a document called an acknowledgement of debt and asked them to sign.
(Page 13)
- Dorothy said: 'I am not part of this, why do I have to sign? I don't want to have anything to do with this.'
Bill produced a letter that showed a letterhead with Dorothy and Andrew Cabassi containing correspondence about cattle.
Bill said that as she was on the letterhead, she was part of the business.
She then broke into tears and went out of the room.
Andrew signed the document.
Dorothy returned about 2 – 3minutes later and said, 'Where do I sign?' "
36 The plaintiff's husband's relevant evidence-in-chief was as follows:
"Dorothy then said that she should not have been included because the money had been loaned to Andrew and not to her.
Bill then produced a letter that had been written to Roman and the letter had Dorothy's name on the letterhead. He also said that meant 'you were a partner in Andrew's business also and that is why you needed to sign.' . . .
She broke down and cried and walked out of the room. . . .
Dorothy then walked back within less than five minutes and asked, 'Where do I sign?'
Dorothy then signed the document and we all left."
37 (It is common cause that the reference to "Bill" is a reference to Mr McKenzie, the reference to "Dorothy" is a reference to the second defendant and the reference to "Andrew" is a reference to the first defendant.)
38 On 21 March 1996, without any prior warning, the second defendant was presented with the Acknowledgement of Debt and told by the plaintiff's solicitor, Mr McKenzie, that she was obliged to sign it. Mr McKenzie had brought with him the letter dated 26 October 1995 on the Mycara Stud and Feedlot letterhead. It is reasonable to suppose that he had brought the letter with him for the very purpose for which it was in fact used, namely, to base an allegation that the second defendant was a
(Page 14)
- partner of the first defendant and, accordingly, liable for the latter's debts. That was stated to the second defendant by a practising solicitor in circumstances in which she was manifestly in distress and had said that she had nothing to do with the transactions and did not want to sign the document in question. She was persuaded to sign because of the statement by Mr McKenzie that she was legally obliged to do so as a partner of the first defendant. The letterhead used for this purpose was that of Mycara Stud and Feedlot. There was at no time any suggestion that the deceased had advanced any moneys whatever to a firm of that name and whether or not the second defendant was a partner of the first defendant in that firm (and I am satisfied that she was not) could not establish her liability to the plaintiff for the moneys advanced to the first defendant. The statement that, because of the letterhead, she was a partner of the first defendant, and accordingly legally liable for the latter's debts, was clearly wrong and entirely unjustified. (If authority is required to support that proposition, it is sufficient to refer to the decision of the Court of Appeal in Tower Cabinet Co Ltd v Ingram[1949] 2 KB 397).
39 In particular, there has been no suggestion that the deceased ever saw such a letterhead or advanced moneys in the belief that he was doing so to a partnership of which the second defendant was a member. There was, accordingly, no reasonable basis for the statement that the second defendant was obliged to sign the Acknowledgement of Debt because her name, together with that of the first defendant, was on the letterhead of Mycara Stud and Feedlot.
40 It is true that the plaintiff has said in evidence that the deceased told her that he had lent moneys to "the Cabassis", but the deceased had himself given instructions to Mr McKenzie in his lifetime to the effect that the moneys had been advanced to the first defendant and, until the preparation of the Acknowledgement of Debt, there was nothing to suggest that the second defendant was a debtor of the deceased's estate. Mr McKenzie should have afforded the second defendant an opportunity to seek independent legal advice before she signed the Acknowledgement of Debt. Had she done so, no doubt that advice would have been that she was under no obligation whatsoever to execute the Acknowledgement of Debt.
41 The representation made to the second defendant by Mr McKenzie, which induced her to execute the Acknowledgement of Debt, was false and misleading.
(Page 15)
42 In the circumstances, the plaintiff's claim against the second defendant is unconscionable and cannot succeed. The second defendant is entitled to judgment dismissing the plaintiff's claims against her with costs, and I give judgment accordingly.
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