Kilvert v Martin
[2012] QCAT 592
•27 November 2012
| CITATION: | Kilvert v Martin [2012] QCAT 592 |
| PARTIES: | Olivia Kristiana Kilvert (Applicant) |
| v | |
| Kristina Elizabeth Martin (Respondent) |
| APPLICATION NUMBER: | MCDO248-12 |
| MATTER TYPE: | Other minor civil dispute matters |
| HEARING DATE: | 14 September 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | William LeMass, Adjudicator |
| DELIVERED ON: | 27 November 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The Application to enforce the terms of the deed is dismissed. |
| CATCHWORDS: | De facto – Jurisdiction – Loans – Duress – Undue influence |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Ms Kilvert in person |
| RESPONDENT: | Ms Martin was represented by Mr McDougal of counsel |
REASONS FOR DECISION
Ms Kilvert and Ms Martin were a young couple involved in a caring and loving relationship from February 2007 until October 2011. During this time they variously lived together, worked, studied and enjoyed extensive travel both domestically and overseas to USA, Canada, Japan, UK, road trips to Perth, Sydney, Alice Springs and Darwin.
They were a couple who celebrated their relationship at times as both engaged and married with certain informal ceremonies. Whether they were in fact a de facto couple, as defined by the relevant State or Federal family legislation, is not relevant for these proceedings.
On the 23 December 2010 the parties moved in together in a flat in West End. Ms Martin was studying and Ms Kilvert was working, essentially supporting her spouse. Ms Martin’s father assisted in defraying the cost of supporting his daughter during this period by paying to Ms Kilvert the sum of $360.00 per fortnight (total $8,280.00).
The parties became friendly with their upstairs neighbour, Ms Strouther.
By September 2011 the relationship was breaking down. Ms Martin had a difficult year. She had put on a lot of weight. There had been a suicide in the family, she was on anti depressive medications with the dose having been increased and she faced end of year examinations with the prospect of moving just beforehand.
Ms Kilvert was upset that Ms Martin was apparently not attending classes and had deceived her about this. This led to difficult discussions about money and outright hostility between the parties, occurring on 29 October, in the company of Ms Griffin,[1] and 30 October when Ms Kilvert came down from upstairs again in the company of Ms Griffin.
[1] Affidavit 4 October 2012.
I am satisfied that during September 2011 Ms Kilvert formed a close relationship with Ms Strouther, which continues at the time of this hearing.
The deed
This is a dispute about a single matter, that is: is Ms Martin bound by the terms of a deed entered into between the parties on 6 November 2011 at the flat. Ms Kilvert’s application states “I therefore seek enforcement of the deed dated 6 November 2011.”
Jurisdiction
Ms Martin raised a preliminary point concerning the jurisdiction of this Tribunal where the parties were in a de facto relationship. This was one reason why both parties were given leave to be represented.
Parties, whether married or de facto, who in clear terms agree to make loans or other binding financial arrangements between themselves may properly be the subject of this Tribunal’s jurisdiction.
Senior Member Oliver made as much clear in the decision on appeal of McCoist:[2]
However, before one gets to a consideration of whether the dispute is one of adjustment of property rights under the Property Law Act, in which case the Tribunal clearly does not have jurisdiction, there needs to be a determination of whether the advance to Mr Jones was a loan, repayable on terms or demand as is claimed in Ms McCoist’s application or a gift. It seems to me the only relevance of the relationship in these circumstances is that it may give support to Mr Jones’ contentions.
The proceeding is not concerned about division of property or pooling of assets for their joint benefit. If Ms McCoist’s evidence is accepted then I see no reason why the loan would not be repayable and an order could be made within the jurisdiction conferred on the Tribunal. The mere fact that the parties may be in a de facto relationship does not of itself oust the jurisdiction of the Tribunal.
As I have indicated the relationship itself may give support to Mr Jones’ contention that the advance was a gift as opposed to a loan but these questions of fact require a determination. Even if they were in a de facto relationship this does not create an automatic bar to a finding that a loan agreement was entered into between them.
[2] Jones v McCoist [2011] QCATA 212.
In so far as Ms Kilvert seeks repayment of loans, proper jurisdiction exists within this Tribunal to consider this matter despite the parties' relationship.
The dispute
During the relationship Ms Kilvert appears to have had greater expendable resources than Ms Martin and financed much of their activities and trips away. There were also more commercial financial arrangements between them concerning mortgage payments, superannuation, insurance and car payments. Ms Kilvert receives a contribution each week from Ms Martin’s father. The fact that Ms Martin owes Ms Kilvert money is not an issue in this matter. Ms Martin admits as much. The quantum of debt is an issue of dispute, but not for determination in this matter as Ms Kilvert’s case is that the parties' rights are fully described and bound by the deed. The respondent’s case is that she was not aware of what she was signing and that it was only signed under duress.
Parties in loving relationships do not usually sit down and document transactions in the sort of detail that people in a business relationship would when making payments or advances because of trust or embarrassment. In this case there are no contemporaneous notes or memoranda at all.
In September 2011 Ms Kilvert found herself in the position of primary bread winner for some years, who had not just kept her partner but also to whom undocumented loans were owed and to which Ms Martin was not committing to pay.
At this time Ms Kilvert’s prospects of full recovery without the assistance of Ms Martin were poor at best. Ms Kilvert’s sister is a solicitor.
During September, at the request of Ms Kilvert, Ms Martin wrote a handwritten note, previously referred to as the “promissory note.”[3] This set out categories of payments for which she was liable to repay Ms Kilvert.
[3] Marked OKK 16 and put with the file.
The circumstances of signing the deed
In late September 2011 Ms Kilvert was clearly upon the horns of a dilemma. Her continuing relationship with Ms Strouther had a propensity to upset Ms Martin. However she needed Ms Martin to finally confirm and agree the debt.
Ms Kilvert says in evidence that she consulted her sister, a solicitor, and showed her the “promissory note” who advised “that means crap” and that she needed a formal agreement to perfect her position, greater than described by the simple “promissory note” for which consideration was past. The only possible binding instrument was a deed; a solemn and historic document that, when signed under seal, obligates the giver of the deed without the need for any consideration to be given by the other party. Ms Kilvert and her sister drafted such a document.
I am unsure whether the purported deed is in fact a deed. It is, in reality, an acknowledgement of debt as it recites an acknowledgement. But, I will proceed as if it is a deed.
A meeting was arranged for 6 November 2011 at the flat and Ms Kilvert prearranged for Ms Strouther to be in attendance as the necessary witness. At this juncture the parties' recollection of events vary markedly, Ms Kilvert and Ms Strouther say Ms Martin was chatty, discussing catching up with a former girlfriend. Ms Martin on the other hand, says she was placed under much pressure to sign the document, she was emotional being forced to confront Ms Kilvert’s new lover and also the unforeseen and painful end of her relationship with Ms Kilvert. She says she was crying and even cried on the paper itself. Ms Strouther spoke to Ms Martin, explaining the document which she then witnessed Ms Martin signing. Ms Kilvert left with the document which moved her position from tenuous at best to, as she maintains today, perfected.
Ms Martin remained unaware of the gravity of what she had just done until she completed her exams and looked to her accounts. Ms Martin contacted Ms Kilvert on 23 November 2011 to advise of perceived errors on the face of the document. The parties met at the Three Monkeys Café to discuss the figures. Ms Martin says there was double counting, overstatement of items and failure to bring to account in excess of $8,000.00 in capital payments by Ms Martin.[4] Ultimately these amounts were not further negotiated nor according to the evidence formally denied.
[4] See hand written document marked ex “B” and placed with the file.
Ms Kilvert sent an email saying she had taken advice from a lawyer and accountant, "… amount of $26,720.00 to be paid in full by 31/12/2011 as outlined in the deed that we agreed to, signed and witnessed on 6/11/2011." It is clear that at this point Ms Kilvert believes that no matter what the true position may be, the deed prevails.
The law is clear that a person who makes an agreement by offer and acceptance, appropriate consideration is given, records that agreement in writing and signs that document, is bound by its written terms and can not later complain of an error. There can be no doubt that signing a contractual document is normally taken to indicate the incorporation into the contract of its entire content. Mere failure to read or understand such a document is not enough to negate the adoption of any of its provisions: Wilton v Farnsworth “Any weakening of these principles would make chaos of everyday business transactions.”[5]
[5]Cheshire and Fifoot Law of Contract 10.26; Wilton v Farnsworth (1948) 76 CLR 646 at 649.
The deed is in writing and signed and in the ordinary course would bind Ms Martin. It is wholly insufficient for her to say she had not checked the figures she signed and is bound. She must pay the full amount unless the contract can be set aside upon one of a number of grounds: mistake, duress, undue influence or fraud.
Ms Martin says that she signed the document as a result of duress being the pressure bought upon her by Ms Kilvert.
The position of Ms Martin
I accept that Ms Martin was in difficult circumstances during mid 2011. I know, from Ms Kilvert’s written submissions, that she had put on a lot of weight and a foot injury prevented her from exercise exacerbating this issue. She was depressed and on medication, which had been increased in dose. There was a problem with her studies, lecture attendance and looming exams.
In September-October 2011 Ms Martin’s long term relationship with Ms Kilvert had been terminated and she confronts being thrown over for another. This is great turmoil even for a person of robust personality and not medicated. When approached on the subject of money she readily concedes, “the promissory note”. When asked to formalize the arrangement she requested more time.
I have no doubt that at this time Ms Martin was still very much in love with Ms Kilvert and held a myopic view that the couple would reconcile. Ms Martin says in evidence that Ms Kilvert would, before the 31 October, sleep upstairs, but as Ms Strouther was an electrician she would leave very early for work, and Ms Kilvert would come downstairs and get into bed with Ms Martin.
Further, there is clear evidence that immediately after the deed was signed Ms Martin sent very affectionate messages to Ms Kilvert:
“Hi Chicky. Just letting you know that there is exit mould all over the bathroom so be careful going in and hold something to your mouth and nose. Let me know if you plan to go back to the apartment and I will come over and finish sorting stuff. Hope dinner was nice. Kx”
And
“Don’t worry about cleaning. I will do it in the morning. You just take care of you for now. I would have come over and helped if you needed it rather than being stuffed now. Have a great day at work. Love you. K x”
These messages betray that Ms Martin had no idea what had just happened. Ms Martin is confronted with these circumstances on 6 November 2011 in the flat. She had many reasons to be upset as she was emotional, depressed, lacked confidence, was apparently struggling with her weight and under stress with her upcoming exams. Her girlfriend for whom she still held feelings would not give her more time.
By comparison Ms Kilvert needed to correct her error of failing to document the arrangements and, by comparison was confident, prepared, insistent and had no intention of reconciling. Ms Kilvert arranged to meet Ms Martin on the 6 November 2012 and for Ms Strouther to be available to witness.
At this meeting Ms Martin, under no obligation, crosses out $1,000 where it is written against the USA Trip and gratuitously increases her liability to $2,000 before signing as requested and whilst still unsure of the figures. Without the benefit of legal advice she signed away any right to complain for gross error.
In believing that she could fix errors in the document Ms Martin approached Ms Kilvert in November 2011 only then to realise Ms Kilvert’s differing intentions of the 6 November 2011.
Does the conduct amount to duress?
I must look at the transaction as a whole. Prior to the afternoon of 6 November the parties’ financial circumstances were an amorphous amalgam of historically mixed funds and undocumented arrangements to repay some of these funds. The likely result of that was Ms Kilvert would have difficulty in recovering those funds. Later on 6 November, this was crystallized into an obligation upon Ms Martin to repay $26,720 by 31 December 2011.
The test set out by McHugh JA in Cresendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 was:
"The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate. Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct."
Further, one must look to see what the ascendant party is trying to achieve. It is necessary, in assessing the acceptable limits of coercive conduct, to examine both the means used and the end sought.[6]
[6] Seddon in Finn, Essays on Restitution 1990 chapter 5.
Husbands and wives are a relationship where the presumption of undue influence can readily be assumed.[7]
[7] Farmers’ Executors Cooperative and Trustees Ltd v Perks (1989) 52 SASR 399.
Duress and undue influence are often linked to the doctrine of consideration. The absence of consideration leads more readily to the finding of duress.[8]
[8]See Cheshire & Fifoot Law of Contract 8th edition page 655 paragraph 3, page 670 paragraph 3.
The question of duress was visited at the highest level in the case of Commercial Bank of Australia Limited v Amadio and Anor where Deane J at 474 said:
"Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (see Union Bank of Australia Ltd v Whitelaw [1906] VLR 119; 91906) VLR 711 at p. 720; Watkins v Combes [1922] HCA 3; (1922) 30 CLR 180 at pp 193-194; Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 at p. 713)"
and Mason J stated at 461 that with undue influence:
"… the will of the innocent party is not independent and voluntary because it is overborne".[9]
[9] Commercial Bank of Australia Limited v Amadio and Anor [1982-83] 151 CLR 447.
What benefit did Ms Martin get from signing the deed? None. Was she obliged to sign the deed? No. Had she paused to obtain legal advice it is most unlikely that the document would now be signed. What were the immediate consequences for Ms Martin of not signing? Nothing. Ultimately she would be involved in litigation as she is now but in a far preferable position. Did Ms Kilvert obtain an advantage? Yes. Was Ms Kilvert in a superior position? Yes, she knew that the deed was binding and when the opportunity arose to negotiate a variation based on an apparent gross error, she chose not to deny the error, but to enforce the deed.
Findings
I find that Ms Martin’s consent was obtained when she was compromised by grief for a lost relationship and the conflict of facing the two involved. Upon this point I prefer the evidence of Ms Martin as to her physical condition and state of mind on 6 November 2011 when signing the deed. She was in my opinion in all the circumstances overborne.
The parties were in a relationship and no consideration was passing which more readily leads to a finding of duress. The quality of consent or assent in the absence of opportunity for cooling off or independent advice is again compromised.
I find that the deed entered between the parties is unenforceable by Ms Kilvert as it was obtained by duress and or undue influence. Ms Kilvert sought substantial advantage over Ms Martin when she possessed special knowledge about the legal effectiveness of a document specifically drafted for this purpose. She kept this secret and neither disclosed this to Ms Martin or gave her an opportunity to obtain the benefit of independent advice, which she herself had.
I find that Ms Kilvert used undue pressure, which was illegitimate, to compel Ms Martin to sign away valuable rights. The pressure was a cause of her assent and Ms Martin saw no reasonable alternative. I find this because Ms Kilvert was aware of Ms Martin’s depression and continued affection for her and, in spite of this, used her superior position in the relationship to trap Ms Martin into giving away the superior legal rights she previously enjoyed. Ms Martin received no benefit for this. Ms Kilvert knew Ms Martin had no idea of the gravity of her actions and when an opportunity arose to fairly address this imbalance Ms Kilvert sought to take advantage of the bargain she had obtained by duress by refusing to negotiate apparent errors on the face of the document.
It is relevant to consider that this agreement would not be binding in any family law jurisdiction as they have long recognised the ability of one party to be overborne by another at the end of a marriage. Any agreement made without the benefit of independent advice can not be enforced.[10]
[10] Family Law Act 1974 (Cth), section 90G.
I set aside the agreement as void for duress, restoring the parties' status quo to a position that they were in before the deed was signed. The deed is void for the purposes of creating binding obligations but remains valid as evidence of whatever weight of the parties' intentions.
The application to enforce the terms of the deed is dismissed.
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