Mitchell v 700 Young Street Pty Ltd
[2001] VSC 116
•23 April 2001
| SUPREME COURT OF VICTORIA | Not Restricted |
| COMMERCIAL AND EQUITY DIVISION |
No. 4193 of 1999
| MARION MITCHELL | Plaintiff |
| v | |
| 700 YOUNG STREET PTY LTD (ACN 061 650 673) | First Defendant |
| and | |
| GALATON PTY LTD (ACN 005 652 040) | Second Defendant |
| and | |
| WILLIAM MITCHELL | Third Defendant |
| and | |
| COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) | Fourth Defendant |
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JUDGE: | Cummins J |
WHERE HELD: | Wangaratta & Melbourne |
DATES OF HEARING: | 16-19 October, 30 October 2000, 29-31 January 2001 |
DATE OF JUDGMENT: | 23 April 2001 |
CASE MAY BE CITED AS: | Marion Mitchell v 700 Young Street Pty Ltd and Others |
MEDIUM NEUTRAL CITATION: | [2001] VSC 116 |
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Equity – unconscionable conduct – undue influence – sale of land – mortgage – guarantee – mother and son – vulnerability and dependence – bank - Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Bridgewater and Ors v Leahy and Ors 156 ALR 66; Garcia v National Australia Bank Ltd (1998) 194 CLR 395 – relief refused.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | R. Berglund Q.C. | Kell Moore |
| For the First, Second and Third Defendants | Derek Norquay | |
| For the Fourth Defendant | M. Sifris | G.S. Ray |
HIS HONOUR:
This is a most unfortunate case.
The plaintiff, Mrs Marion Mitchell, now a 79 year old woman in poor health, on 22 January 1999 instituted proceedings against her son, an Albury accountant, and other parties alleging unconscionable conduct by them towards her. The plaintiff and her son were and are living in the same premises at Thurgoona Park, a north-eastern suburb of Albury, New South Wales. The plaintiff claims relief from financial transactions she entered into with her son and other parties, upon the basis that they were unconscionable and that her son and the other parties did not inform her of their true nature. She claims that the transactions have altered her financial state from that of a financially secure widow to that of penury.
The plaintiff was born in Scotland on 5 April 1922. She was one of 12 children. She was locally educated at a public school until 14 years of age. She married and with her husband James migrated to Australia in 1960, settling in Melbourne. She always worked. She worked as a cleaner and as a caretaker at a school in Richmond. Her husband worked as a carpenter and inspector until his retirement. Mrs Mitchell and her husband over the years had lived in a school house in Richmond, owned and mortgaged a house at 10 Turner Street, Glen Iris, owned and rented out a property in Mitcham, purchased a unit in Lennox Street, Richmond and in 1973 jointly purchased a property at 17 Green Street, Richmond. Green Street remained the family home for over 20 years. Mrs Mitchell had a strong personality and managed the family finances. In the 1990s Mr James Mitchell’s health deteriorated. Mrs Mitchell nursed him for the last three years of his life. He suffered a stroke on Christmas Day 1994 and died on 5 January 1995. Mrs Mitchell remained in the Green Street home alone. She then was 72 years of age.
The third defendant, Mr Bill Mitchell, an accountant, is the only child of Mr James Mitchell and Mrs Marion Mitchell. He was born in Scotland on 4 March 1946 and at the age of three months was adopted by them. He came with them when they migrated to Australia in 1960. He was reared and educated by them, obtained his qualification as an accountant, and having lived for a period in the Turner Street, Glen Iris premises moved to Albury in 1975. There he practised as an accountant, primarily in the fields of taxation and business management. He was made bankrupt in 1990 which disability was discharged in 1993. He had married and divorced. There were three children of that marriage. He then married Jasmine Mitchell. They have two children. They resided in Lavington, a northern suburb in Albury. In May 1995 they purchased a block of land in Thurgoona Park, a pleasant north-eastern suburb of Albury, and were planning to build on the block and move there.
In 1995 the plaintiff, Mrs Marion Mitchell, was residing, alone, at 17 Green Street, Richmond. She and her husband had been deeply devoted to each other. They had been married for over 50 years. After her husband’s death his personal items, such as bathroom toiletries, remained undisturbed by Mrs Mitchell. Over the years Mrs Mitchell’s health had been good. She had had a car accident in December 1977 in which she sustained an injured right elbow. From the beginning of 1995, following the death of her husband, her affective state deteriorated. She commenced becoming depressed and suffered from sleeplessness. During 1995 and the first half of 1996 (until she left Green Street) she was treated by Dr G. Santoro for depression, sleeplessness and loss of confidence. Her husband’s death, not unnaturally, had a major impact on her. Over the years prior to his death, he and she had visited Albury regularly. They liked the way of life, the grandchildren, the poker machines. In 1996, seeing the loneliness and affective deterioration in his mother, Mr Bill Mitchell discussed with her the prospect of her moving to Albury to live with his family. It was the caring and sensible thing to do. She agreed to do so. I deal hereunder with the legal and financial elements of the history. But its humanity is compelling and apparent. A graphic description was given by Mr Bill Mitchell of his mother on the day she left Green Street in August 1996:
“During the winter she was very unwell prior to the move. On the particular day I picked her up in the middle of August, she looked absolutely dreadful. She was sitting in front of the fire with a blanket over her, and the fire wasn’t even on.” (T 370)
In what is a key to this case, Mrs Marion Mitchell upon ceasing working had commenced to receive the age pension. She was determined to keep it, with its concomitant benefits, not only as her due, which indeed it was after her prudent and working life, but also as a significant security until her ultimate death. With her son’s support and assistance, she arranged her affairs so that the receipt of the pension was not jeopardised. When, however, the move to Thurgoona Park was considered, with all its significant personal benefits to Mrs Mitchell, a problem arose. Her ownership of Green Street (which by this time had passed into her sole name upon the death of her husband) was likely to jeopardise her receipt of the full pension because it would no longer be her principal domestic residence. If let, the income would be counterproductive to her fixed aim of securing the full pension and of minimising her taxation liability. For reasons and in circumstances I shall detail hereunder, her son also had a significant interest in the Green Street property being transferred to a company of which he was a director – the second defendant, Galaton Pty Ltd. It would if mortgaged provide cash flow to him. In September 1996, the plaintiff sold 17 Green Street, Richmond to the second defendant in circumstances to which I shall come.
As I have stated, whilst living in Lavington Mr Bill Mitchell and his wife Jasmine had purchased land in Thurgoona Park. As at early 1996, they had plans to build a residence on that land in the next year or two. The decision that Mrs Marion Mitchell would live with them involved an enlargement of the house and, given her general condition, a bringing forward of the timing of its erection. Accordingly, Mr Bill and Mrs Jasmine Mitchell cancelled the original land purchase and purchased a larger block in the same area. The residence on it was built in two stages: stage one, a smaller residence, which until completion of stage two was the temporary family residence and then was to become Mrs Marion Mitchell’s premises (as indeed it did and remains); and stage two, a larger and more substantial part, which was to become the residence of Mr Bill Mitchell, his wife Jasmine and their two children (as indeed it also did and remains). The two parts constituted one house.
Mrs Marion Mitchell moved to Thurgoona Park in August 1996. The change is described by her son:
“Now, as soon as she came to Albury she was in a warm environment, and within a matter of a few days she sparked up completely, she was a different person within a few days, and she had the grandchildren around her of course.” (T.372)
But there were clouds on the horizon. Unfortunately, Mrs Marion Mitchell in 1997 developed a meningioma – a benign brain tumor – which through no fault of hers caused erratic behaviour. The tumor was medically diagnosed, an operation performed in February 1997 and fortunately Mrs Mitchell made a full neurological recovery. Over time she suffered deterioration in walking and with balance and suffered leg weakness. But a familiar human pattern began to emerge. There were difficulties and tensions between the generations. Mrs Mitchell resented the scale of development of the property at Thurgoona Park. She expressed concerns about her son’s weight. Ultimately, 11 months after her arrival, on 22 July 1997 a blow-up occurred. Mr Bill Mitchell expressed it thus:
“His Honour: Mr Mitchell, what went wrong?---Shortly after arriving in Albury, my mother’s behaviour became erratic, very domineering, very interfering. I felt she had a problem. We got medical advice, it transpired she had a very serious brain tumour, which explained her erratic behaviour. That was removed, I think very early 1998. Her attitude, her health improved very dramatically over the next few months, it was excellent. Relationship was actually wonderful. We’d see her every day, we’d dine together most days. When construction started stage two, she became very bitter and twisted. To my knowledge she’s never set foot in stage two; some time after, she severed the tenancy arrangements, survivorship arrangements, from tenants in common to joint tenants, which displeased me greatly, and I then ceased to provide the financial support to Galaton to service the debt on the Richmond property.
Do you know why she so disliked stage two?---Yes, jealousy.
What does that mean?---She has always been a very very jealous person, and I do honestly feel the increased commitment was of concern to her.
What do you say you thought she was jealous of?---The fact that we were moving from virtually two rooms to a house that was probably more than twice the size of hers.
Did you ever sit down and try and talk through these personal things with her or did things just break down, or what?---They broke down very quickly. She is extremely stubborn and I’ve inherited the same trait.
Was there any event or incident that you can recall which was a trigger for this, apart from the context you’ve just said about the stage two, but was there some happening which triggered it?---No, it had been building up probably for a couple of months; erratic behaviour, unbelievable demands, as in ‘Take me to the club immediately,’ ringing up from the club and saying, ‘Pick me up immediately’ irrespective of what you were doing. Just totally irrational behaviour with my older children. And she is a very domineering person, always has been, very interfering, and we had no idea that that would continue when she moved to Thurgoona.
There is no specific, for example, argument with you wife or something like that which made it blow all up, it was really a progressive thing, was it?---I was in Melbourne on a particular day, my wife rang me semi-hysterical saying she was being verbally abused by my mother and was terrified of physical violence. I hung up the phone, I rang a few seconds later and I could actually hear my mother verbally abusing my wife and it was extensive.
What was that about?---I don’t know. (Indistinct)
What happened after that?---I flew back from Melbourne that evening, had a fairly brief discussion with her, told her what I thought of her, which wasn’t pleasant, and we haven’t spoken to this day.
Very well. Mr Mitchell, we’ll take a quarter of an hour’s break.” (T.346-348)
From that day to this, Mr Bill Mitchell and his mother have resided at 88 Finlay Road, Thurgoona Park, in different parts of the same residence. He sees her regularly in the garden. He puts her mail under her door. All without them speaking.
Mrs Marion Mitchell described the family blow-up thus:
“I just thought ‘it’s worrying me, he keeps putting on weight’, I’ll have to have a talk with Jasmine. So I went down there, bright as you like, and I told her – I says ‘I’m worried about Bill, he’s putting on terrible weight, he can’t afford to do that’ – not a diabetic. I says ‘He really should be on a diet.’ Well she took it up the wrong way. She made out that I was saying, ‘I should have had him on a diet’, and I said, ‘Let her (indistinct) thing.’ So – she just flew off the handle, on the phone yelling to him, ‘Come home, come home’, and I (indistinct) so I just said – turned, I says, ‘That’s it’, and I said, ‘I’ll never say another word’, I says, ‘When my feet go out that door I’ll never be in here again’, and I never have.” (T.62)
On 10 January 1996, in Albury Mrs Mitchell had made a will, the sole beneficiary of which was her son, Mr Bill Mitchell. On 4 February 1998, in Albury she made a further will, revoking all previous wills. In it she bequeathed the whole of her estate to her niece, of Christies Beach, South Australia. On 22 January 1999 she instituted proceedings against her son and other parties alleging unconscionable conduct by them towards her in financial transactions she entered into with them in relation to the Green Street, Richmond and the Thurgoona Park properties. I shall turn to those transactions.
Before I do, some exposition is needed as to why it fell to the trial judge to ask such an obvious question as that just cited: “What went wrong?” Perusal of the Court File before the hearing had revealed that, apart from the filing of defences, no steps in the proceeding had been taken by the first three defendants. The defences (first to the plaintiff’s statement of claim and later to the fourth defendant’s cross-claim) albeit precise, involved no assertions and were confined to formal admissions, non-admissions and denials. An Order of Master Kings of 18 April 2000 which (by paragraph 8) required the provision of a written outline of oral evidence intended to be adduced at trial, had produced nothing from the first three defendants. At trial those defendants were represented by Mr D. Norquay, solicitor, of Wodonga. No questions were asked by him of any of the witnesses called for the plaintiff, including of the plaintiff herself. At the end of the third day of the hearing when the case for the plaintiff was all but concluded, Mr Norquay announced:
“Your Honour, I am instructed to withdraw the defence of the first and second and third defendants entirely.” (T.187)
Mr Norquay proceeded to state that that withdrawal was in relation to the plaintiff’s claim. He requested leave to withdraw, his clients waiting upon the result of the cross-claim and not proposing to take any part in its litigation. After discussion I excused Mr Norquay. On the next morning, upon closure of the plaintiff’s case, senior counsel for the plaintiff sought judgment against the first three defendants. Mr Bill Mitchell, however, remained under subpoena of the fourth defendant issued on 20 July 2000 to give evidence. Accordingly, I declined judgment and stated:
“…if the third defendant is going to be called as a witness by the fourth defendant, I think prudence would warrant my suspending the finalising of the case between the plaintiff and the first three defendants until I have heard what, if anything, the third defendant says in evidence.” (T.205)
Thereupon the fourth defendant’s case immediately commenced. The first witness called was Mr Bill Mitchell. He was examined in chief by learned counsel, Mr Sifris, for the fourth defendant, properly in the interests of that defendant. During Mr Mitchell’s evidence in chief it became patent that there were significant personal and emotional factors underlying the formalities of the history. I considered it was not just for the matter to be left only for cross-examination, given that the case involved mother and son and given Mr Mitchell’s evident distress in the witness box. Thus at the conclusion of his evidence in chief I asked the question: “What went wrong?” When he had completed his answer, above cited, I gave Mr Mitchell an adjournment to compose himself.
The plaintiff entered a number of transactions (“the impugned transactions”) each of which she now says is unconscionable. As to each she seeks a declaration that the documents constituting the transaction be set aside, damages and other consequential relief. The transactions and documents are the following. First, the sale on 3 September 1996 by the plaintiff to Galaton Pty Ltd of her property at 17 Green Street, Richmond for the expressed sum of $180,000, Galaton Pty Ltd becoming registered as the proprietor on 2 December 1996. Second, a mortgage dated 22 November 1996 over Green Street from Galaton Pty Ltd to the fourth defendant, the Commonwealth Bank, securing a principal sum of $144,000. Third, a second mortgage dated 17 June 1997 over Green Street from Galaton Pty Ltd to the fourth defendant securing an overdraft facility of $47,000. Fourth, a mortgage dated 23 December 1997 over 88 Finlay Road, Thurgoona Park from herself and the first defendant, 700 Young Street Pty Ltd to the fourth defendant. Fifth, a guarantee dated 18 September 1996 by herself and Mr Bill Mitchell to the fourth defendant for borrowings of Galaton Pty Ltd, securing the repayment of a $214,000 loan (being a loan account of $170,000 and an overdraft account of $47,000). Sixth, a guarantee dated 12 May 1997 by her and 700 Young Street Pty Ltd to the fourth defendant for borrowings of Galaton Pty Ltd, securing the repayment of a $175,000 loan. Documents 1, 2 and 5 related to the development of stage one at Thurgoona Park; documents 3, 4 and 6 related to stage two. As a consequence of the impugned transactions, the plaintiff has a potential total indebtedness to the fourth defendant of almost $400,000. The plaintiff says these impugned transactions were against her interests and were solely in the interest of Mr Bill Mitchell.
The sums advanced and secured were used essentially for the development of stages one and two of the property at Thurgoona Park, jointly owned by the plaintiff and 700 Young Street Pty Ltd. The first defendant, 700 Young Street Pty Ltd (so named after its Albury address and at which Mr Bill Mitchell practises as an accountant), was incorporated in December 1993. Mr Bill Mitchell is the company’s sole director and shareholder. The second defendant, Galaton Pty Ltd, was incorporated in May 1980. Mrs Marion Mitchell and Mr Bill Mitchell are its sole and equal directors and shareholders. Galaton Pty Ltd is, and has been since July 1981, the trustee of the Marion Mitchell Family Trust, a discretionary trust established on 20 July 1981. Mrs Marion Mitchell is the principal and a beneficiary of that Trust. The Trust was established on Mr Bill Mitchell’s recommendation to give Mr James Mitchell and Mrs Marion Mitchell taxation benefits. It held a number of passive investments. Mr James Mitchell and Mrs Marion Mitchell were the directors of Galaton Pty Ltd until Mr James Mitchell’s death, whereupon Mr Bill Mitchell became a director. During 1996 a number of attempts (including one directly handled by the plaintiff) were made to sell the Green Street property. They were unsuccessful. Ultimately, as the ongoing development at Thurgoona Park required money, the plaintiff sold Green Street to Galaton Pty Ltd for $144,000, utilised for payment of stage one at Thurgoona Park. The Yarrawonga firm of solicitors handling the documentation for the transfer dealt directly with Mr Bill Mitchell and not face-to-face with the plaintiff. Stage one at Thurgoona Park thus was financed by the plaintiff namely by the payment by Galaton Pty Ltd from passive investments of $150,000 and the proceeds of the sale of Green Street. Stage two at Thurgoona Park commenced in April 1997. It appears that the project is substantially overcapitalised, land and building costs totalling some $500,000 on a market value of about $350,000.
After the family blow-up in 1997 Mrs Mitchell severed the joint tenancy with her son in Thurgoona Park into a tenancy in common. Mr Bill Mitchell gave evidence that his and his mother’s arrangement at the outset was that the whole Thurgoona Park property would, on his mother’s death, revert to him, and that when she severed the joint tenancy he ceased making payments to the Bank as to Green Street. He has continued payments to the Bank as to Thurgoona Park, at the rate of $1,575 per month, and those payments are not in arrears.
In summary, the evidence of Mrs Marion Mitchell is that she was prepared, at her son’s insistence, to try living with his family at Thurgoona Park but not at the expense of losing her ownership of Green Street. She and her late husband had accumulated some assets over the years and she paid to her son the capital sum of $150,000 when she moved to Thurgoona Park as her contribution to the project there, being in effect for her unit. She was not consulted by her son as to the stage two development, had no knowledge of it other than physically observing the building works being performed, and was concerned as to the magnitude of the works. She did not know she was a guarantor to the fourth defendant of loans of any amount especially of the magnitude of up to $380,000. She did not know she was no longer the owner of Green Street. On a number of occasions her son would rush into her unit for her to sign various documents. He did not explain to her what the documents were, either in substance or in detail. She trusted her son and by reason of that trust signed the documents without requiring or receiving an explanation of their contents or meaning. She was not forced or pressured into signing documents but signed them in ignorance because of her trust of her son. At no time did she have any personal or direct dealings with the Commonwealth Bank. She dealt only with her son, whom she trusted explicitly. When ultimately she obtained independent advice it transpired that her son had misled her and defrauded her for his own gain. The transactions which that later enquiry revealed she had entered into were against her financial interests and certainly she would not have entered them if she had known their nature, substance or effect. Her life has been transformed from one of financial security to one of impossible indebtedness.
On the other hand, the evidence of the third defendant Mr Bill Mitchell is that his mother entered each of the transactions with full knowledge of their nature, substance and effect and that she willingly entered each one of them. She had had substantial financial experience over the years, handling her and her late husband’s finances, executing two mortgages (on 1 October 1968 to the CBC Sydney on the Turner Street, Glen Iris property and on 17 November 1978 to the ANZ Bank on the Green Street property), always was money conscious, with his accounting advice knowingly arranging her financial affairs to minimise taxation liability (including by the use over 15 years of Galaton Pty Ltd as the trustee of the Marion Mitchell Family Trust) and when she came into receipt of the age pension had a fixed and resolute intention to ensure she retained it in full and with its concomitant benefits, as was her right. When Mrs Marion Mitchell decided to sell Green Street she also decided upon his advice to divest herself of any assets which would preclude her from receiving the full age pension. She was a strong minded and knowledgable person. She would not sign documents without them first being explained to her. He and she entered the various transactions with common interests, the primary one of which was to secure her a supportive family environment in her last years. On each occasion he explained to her the nature, substance and effect of the transactions and their constituent documents. He did not apprise her of the “chapter and verse” (T.335) of the documents, that is, their every detail, but he did apprise her of their nature, substance and effect. The plaintiff had relevant and intelligent concerns as to the financing of the project, enquiring after Mr Bill Mitchell’s health and his ability to service the payments on the project.
I had the opportunity over time of observing both Mrs Marion Mitchell and Mr Bill Mitchell give evidence. Mrs Mitchell gave evidence on three occasions over three days; Mr Mitchell likewise. Mrs Mitchell was an intelligent and capable woman. She suffered substantial physical difficulty in walking but was cerebrally unimpaired. She did not suffer from dementia or any cognitive impairment. No doubt it was a demanding undertaking to attend court (in Wangaratta) and to give evidence of emotional, indeed traumatic, events over time and in detail. I fully acknowledge that very substantial effort. However, I do not consider that her evidence was accurate or reliable. I am unpersuaded by it. Indeed I am satisfied of its very opposite. I do not consider Mrs Mitchell was being deliberately untruthful. I consider she gave evidence truthfully of how she now believes events to have been. In the emotionally charged situation of the loss of her husband of 50 years, the recourse to her son’s family at Thurgoona Park, and the intergenerational breakdown of that recourse, she has convinced herself.
I was impressed by Mr Bill Mitchell as a witness of truth and of accuracy. His answers were direct and unequivocal. They were not opportunistic. Without hesitation he made his electronic diary available in full for examination by opposing parties. On two or three occasions he revealed emotion which I consider was not contrived but deeply felt and which I consider, far from seeking to display, he did his best to keep private. I found Mr Mitchell to be an impressive witness.
Mr Bill Mitchell’s evidence is confirmed in significant respects by the evidence of Mr A.J. Dodd, accountant of Albury. Mr Dodd was formerly an employee of Mr Mitchell and had acted professionally for Mrs Marion Mitchell. Mr Dodd gave evidence that in early 1996, before Mrs Mitchell moved from Richmond, Mr Bill Mitchell asked him to advise professionally and independently Mrs Mitchell concerning the financial arrangements for the proposed Thurgoona Park development. Mr Dodd had a number of consultations with Mrs Mitchell in the absence of Mr Bill Mitchell. Mr Dodd discussed with her the security of her age pension, the sale of Green Street to Galaton Pty Ltd and the financing of stage one of Thurgoona Park. He specifically discussed with her “on a number of occasions that Green Street will be removed from your name” (T.487). Mrs Mitchell told him that the sale of Green Street was effectively going to fund her buying into Thurgoona Park and then “she would only have the one principal residence (which) would enable her, with her other assets, to receive the pension” (T.486). Of the pension, Mr Dodd said Mrs Marion Mitchell “was delighted to be able to get it; she certainly didn’t want to lose it” (T.485). He said Mr Mitchell provided him with a written statement of the financing of stage one of Thurgoona Park, for explanation and provision to Mrs Marion Mitchell. This Mr Dodd did and Mrs Mitchell appeared to understand exactly what was occurring. Mrs Mitchell was happy with the whole situation and looking forward to moving to Albury.
Mr Dodd, a Justice of the Peace, impressed me as an honest and accurate witness.
Evidence of Mrs E. Marriott, a long-term friend of Mrs Marion Mitchell, also tends to support the evidence of Mr Bill Mitchell. Mrs Marriott said that Mrs Mitchell was “very clever” and “knew what she wanted” (T.563). She also said that one of the reasons that Mrs Mitchell could not get the full pension was that she had too much invested and that she wanted to get the pension but would never take anything that was not hers. Mrs Marriott’s evidence is in conflict with that of Mr Bill Mitchell on whether Mrs Marriott in October 1995 made the suggestion that he build a bigger place at Thurgoona Park to accommodate his mother. Mr Mitchell said she said that and Mrs Marriott said she did not but the matter is inconsequential given the amplitude of evidence that Mrs Marion Mitchell wished to move there and for good reason.
In considering the contending cases put, there are a number of matters to be borne in mind. First, it was put on behalf of the plaintiff, from the beginning to the end of the case, that her financial odyssey between 1995 and 1999 was from a financially secure widow with assets and no liabilities to one deeply in debt, via a series of transactions which demonstrably were not in her financial interests. However, that is only part of the story. It was very significantly in the plaintiff’s interests to face her elderly years, not alone in suburban Richmond, but with the support and safety of the family at Thurgoona Park. And once Mrs Mitchell vacated Green Street, foremost of her wishes was not to jeopardise her age pension. She also wanted to minimise her taxation liability. Both of those aims she achieved. Further, she has a half interest in Thurgoona Park. None of that trivialises the extent of her liability; but it explains her choices. They were not irrational choices. They were not inexplicable choices. And importantly, they were not uniformed choices.
Next, it was put for the plaintiff that she was in a position of vulnerability and inequality and that she was wrongly treated by a knowledgeable, powerful and avaricious son. Experience teaches us to be astute to vulnerability and inequality. Experience also teaches us to be astute to children or relatives who are opportunistic or vulture-like. Those considerations must carefully be borne in mind. Having considered them, I conclude Mrs Mitchell was fully mistress of her own decisions, which were made on sensible and rational bases, and that Mr Mitchell did not and did not seek to exercise dominion or undue influence over her. Mrs Mitchell did not receive advice from any legal practitioner in her dealings with her son which are the subject of this action. Mr Mitchell gave evidence, which I accept, that he asked his accounting employee, Mr A.J. Dodd, to take his mother, in Mr Mitchell’s absence, through the relevant considerations as to the sale of Green Street and the move to Thurgoona Park. Mr Dodd gave evidence that he did so and that Mrs Mitchell appeared to have a clear understanding of the transactions. I shall not repeat that evidence, which I have earlier summarised. But Mr Mitchell went further. He twice suggested to his mother that she also receive independent legal advice. She dealt with that suggestion swiftly. She replied: “I’m not wasting money on those thieving bastards”.
There is a dispute whether Mrs Mitchell said those words or not. I gave senior counsel for the plaintiff leave to recall her to give evidence on the matter, as Mr Mitchell gave that evidence (on 19 October 2000) as a witness for the fourth defendant. Most unfortunately, Mrs Mitchell has suffered a significant deterioration in health since she gave evidence in Wangaratta. In late November 2000 she suffered a cerebral episode and was admitted to hospital. She now has moderately severe cognitive deficit. She was unable to re-attend court to give evidence as to the disputed matter above cited. In place of her personal attendance I received and accepted an affidavit of hers sworn in Albury on 8 February 2001. In it Mrs Mitchell denied the reply and the conversation above cited. She deposed that she had used lawyers in the past, in relation to a house purchase and two car accidents. Mrs Mitchell’s denial loses no force by being in affidavit form as I had had a full opportunity to observe her as a witness and attributed to her affidavit the quality of live testimony. However I entirely accept the evidence of Mr Mitchell on the matter. It was cogent and convincing. It arose in the following context. Mr Mitchell was being examined in chief by Mr Sifris, counsel for the fourth defendant, in relation to the sale of Green Street, and in particular the mortgage of 22 November 1996 by Galaton Pty Ltd and the guarantee of 18 September 1996 to the fourth defendant. Mr Mitchell gave evidence that he explained the nature, substance and effect of the documents to his mother before she signed them. He said his mother’s major concern was his health and his ability to make the required payments and that they discussed that matter. The following then occurred:
“Mr Sifris: In relation to those two documents that I’ve taken you to – the Mortgage of Land and the guarantee – are you able to say whether you read them to mum, or whether you read them together, or whether you pointed your finger down, or how did it come - - - ? - - -No, we certainly wouldn’t have read them in chapter and verse. The whole procedure might’ve taken probably 30 minutes at the most. I am familiar with documents of this nature, and she would’ve accepted the fact that I am familiar with documents of that nature.
But nonetheless, there was discussion about these documents?---Yes.
Did you want to make sure that mum knew what they were?---Yes.
Was that important to you?---Yes, I – on a couple of occasions I suggested prior to this she get independent legal advice on whatever we proposed.
What did she say to that?---Well, she said ‘Well, I’m not wasting money on’ – and I won’t use the exact words she used.
You won’t use the exact words?---No.
Something to do with lawyers, I take it?---Yes.
HIS HONOUR: You’d better say what she said?---Well, ‘Those thieving bastards.”
Mr Mitchell gave that evidence in his usual direct manner. However, he momentarily paused before declining to use “the exact words”, and when he answered my question he spoke with some diffidence. I do not consider Mr Mitchell was dissembling. I consider his evidence on the matter was direct, spontaneous, given with some regret, and truthful. It is also significant. I shall return to it when dealing with the plaintiff’s claims against the Commonwealth Bank.
Next, after the family blow-up in July 1997 and when he and his mother were not speaking, it may be that on three occasions Mr Bill Mitchell forged his mother’s signature. The letter of the Commonwealth Bank to Mrs Mitchell of 24 October 1997 enclosed a form of acceptance of extension of guarantee to a new credit contract with Galaton Pty Ltd. The signature on the acceptance form may have been forged by Mr Mitchell. Also he may have forged the two apparent signatures of Mrs Mitchell on the Commonwealth Bank’s Authority to complete and pay dated 19 December 1997. Mrs Mitchell in her evidence said that the two signatures on the Authority were hers and she could not say whether the signature on the acceptance form was hers, but I do not regard that evidence as necessarily reliable. When first asked about the matters, Mr Mitchell appeared to be reconstructing but after receiving legal advice declined to answer the question whether he had signed his mother’s name on those documents, on the ground that his answers might incriminate him. That does not of course establish that his answers if given would incriminate him. I make no finding that Mr Mitchell on any of the three occasions forged his mother’s signature. Further proof would be needed to make such a serious finding. If Mr Mitchell’s recalcitrance was based upon the premise of no contact with his mother since the family blow-up in July 1997, two matters should be noted. First, he thrice said (T.314, 345 and 351) that he last spoke with his mother in September 1998. Second, the Thurgoona Park mortgage dated 23 November 1997 was admittedly signed by Mrs Marion Mitchell and positively identified by her as her own (T.112). There is no suggestion on behalf of the plaintiff, nor has there ever been (see her outline of evidence dated 4 August 2000 paragraph 23(b), being exhibit A) that Mr Bill Mitchell forged that signature. That mortgage was admittedly signed by Mrs Marion Mitchell four months after the family blow-up. However, for purposes of assessing Mr Bill Mitchell’s credibility both as a witness and previously as an adviser to his mother in the financial transactions the subject of these proceedings, I have proceeded upon the constructive premise that he did forge the signatures. I did so in order to subject his evidence to the blowtorch. Despite that construction, and being conscious that if proved it would be serious indeed, I accept Mr Mitchell’s credibility. If he did the impugned actions, they were done in an emotionally charged situation of intransigence between mother and son intersecting with what were previously agreed arrangements. That in no way would justify his doing it if he did, but it contains its impact on what otherwise was powerfully established positive credit. As a postscript, I add that when in final re-examination by Mr Sifris his mother’s evidence that the second signature on the Authority was hers and that she thought the first was hers, was brought to Mr Mitchell’s attention, Mr Mitchell did not opportunistically adopt his mother’s evidence but persisted in his position that he declined to answer questions about the matter. (The witness to the first document, Mr C.E. Butterfield, was not a knowing party to the forgery if it occurred. I accept his evidence that he witnessed the signature on the basis that Mr Mitchell told him it was his mother’s.)
I do not consider that the withdrawal of the defence of the first three defendants at almost the conclusion of the plaintiff’s case constitutes any admission including any admission (as submitted in writing by counsel for the plaintiff on 9 February 2001) of undue influence or unconscionability. In this emotionally charged case between mother and son, there may be, as I said during the proceedings, personal reasons, unconnected with the validity of the claim, which would motivate such a withdrawal. It is one thing to deny a claim and another actively to seek to defeat it. The matter was not explored in cross-examination of Mr Bill Mitchell.
For the reasons I have stated, I accept as truthful and accurate the evidence of Mr Bill Mitchell that he explained the nature, substance and effect of each of the impugned transactions to his mother before she entered them. I am affirmatively persuaded that Mrs Marion Mitchell entered the transactions with relevant knowledge, voluntarily and without undue influence. Mrs Mitchell’s decisions to enter the transactions were informed, explicable and rational. The plaintiff’s claim that the transactions were unconscionable is not made out. Accordingly, the plaintiff’s claim against the first three defendants wholly fails.
I next turn to the plaintiff’s claim against the fourth defendant.
In the circumstances of the findings I have made as to the claim of the plaintiff against the first three defendants, the plaintiff’s claim against the fourth defendant can be dealt with shortly. The plaintiff claims that the fourth defendant knew or ought to have known that the plaintiff was vulnerable and dependent and that the impugned transactions were against the plaintiff’s interests. The plaintiff also claims that at the relevant times the fourth defendant owed to the plaintiff a duty of care - to ensure that Mr Bill Mitchell fully informed the plaintiff of the nature, substance and effect of the impugned transactions and the documentation relating thereto before she entered the transactions and signed the documents, to ensure that she obtained separate and independent legal advice before doing so, to ensure that there was no possibility that the plaintiff was subject to the undue influence of Mr Bill Mitchell, to ensure that she was advised that the transactions were not in her interests, and to ensure that she was advised that the transactions were wholly for the benefit of Mr Bill Mitchell.
The plaintiff’s claim against the fourth defendant puts the bar much too high. First, it is factually wrong, on the findings I have made. The impugned transactions were not against the plaintiff’s interests and were not solely for the benefit of Mr Bill Mitchell. The plaintiff was advised of the nature, substance and effect of the impugned transactions and the documentation relating thereto before she entered the transactions and signed the documents. She was not vulnerable, dependent or under a special disability. She rebuffed Mr Bill Mitchell’s proposition that she obtain legal advice, in one graphic sentence.
A number of officers of the Bank were called to give evidence. Helpful though their evidence was, it is unnecessary, in the light of my findings, to review it in detail. It was the subject of close scrutiny under cross-examination. The Bank did not deal face-to-face with the plaintiff but either by correspondence or through the third defendant. The plaintiff criticises that lack of face-to-face contact and the circumstance that despite the documents including the 17 September 1996 letter enclosing the guarantee being marked “On no account to be handed or sent to any other person” they were provided by the Bank to Mr Bill Mitchell for transmission to Mrs Marion Mitchell. The plaintiff criticises the Bank for allegedly not following its own procedures as to those matters. But they are criticisms of detail which have no bearing of significance upon the issues between the parties given the findings of fact I have made.
Nor does the law require that which is contended by the plaintiff. There were no facts known to or available upon enquiry by the Bank to cause it to do what the plaintiff says the Bank should have done. The plaintiff was elderly but far short of the age of vulnerability or incompetence. The third defendant appeared to be a competent, sensible person with whom the Bank had had previous and current dealings and who was not acting contrary to his mother’s interests. There was no duty on the Bank to adopt an adversarial position in relation to Mr Bill Mitchell or to treat him as the enemy, nor was there any wilful blindness by the Bank. It is not the function of the Court to substitute its own view of commerciality of transactions for those of the parties, although of course uncommerciality may set up in appropriate cases an inference of unconscionability or undue influence. Here, there was much more to the story than mere commerciality. This case falls far short of attracting the principles enunciated in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, Garcia v National Australia Bank Ltd (1998) 194 CLR 395 or Bridgewater and Ors v Leahy and Ors 156 ALR 66. Ordinarily, the Bank’s interest under the two Green Street mortgages is indefeasible (s. 42(1) Transfer of Land Act 1958) unless there is an appropriate claim in personam. Here there was no undue influence and no unconscionable conduct and no special disability of the plaintiff. At the eleventh hour the plaintiff alleged that the documents of the impugned transactions were subject to the provisions of the Contracts Review Act 1980 (NSW) and were unjust according to its provisions notably section 9. Even if that Act did apply, the factual stratum which would attract its operation here has not been made out for the reasons I have expressed. In any event, the Act does not apply, by reason of the definition of “court” in section 4(1). The plaintiff’s claim against the fourth defendant to set aside the various securities accordingly fails.
It remains to deal with the cross-claim between defendants. Again, this matter can be dealt with shortly in view of the findings I have made. Pursuant to each of the Green Street mortgages, the Bank having made due demand is entitled to possession from Galaton Pty Ltd of the Green Street property. As against Galaton Pty Ltd, the Bank is entitled to judgment in the sum of $173,256.39 plus interest and $47,780.74 plus interest, those figures being based upon material provided by the Bank officer, Mr J.P. Doherty, being exhibit 7CBA. As against the plaintiff and the third defendant the Bank is entitled, demand having been made, to enforce the guarantee by each of them of 18 September 1996 in those sums also. I shall wait upon counsel as to the proper form of final orders.
Costs should follow the event.
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