Nader v Valasinavicius
[2016] VCC 1001
•15 July 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-15-01956
| KEN NADER | Plaintiff |
| v | |
| VILMA VALASINAVICIUS | Defendant |
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JUDGE: | HER HONOUR JUDGE COHEN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12, 13 & 14 July 2016 | |
DATE OF JUDGMENT: | 15 July 2016 | |
CASE MAY BE CITED AS: | Nader v Valasinavicius | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1001 | |
REASONS FOR JUDGMENT
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Subject: Loan agreement
Catchwords: Whether loan amount advanced
Legislation Cited: Penalty Interest Act 1983
Judgment: For the plaintiff
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms A J Golding | JD Poloni & Co |
| For the Defendant | Ms F Mercader | Mercader Lawyers |
HER HONOUR:
1 This proceeding commenced in the Supreme Court in December 2013, in response to an application for removal of a caveat on the title of a property known as 14 Toolern Street, Melton South (“the property”). The case was transferred to this Court in 2015. It is now limited to a claim by the plaintiff for the amount, together with interest, allegedly owing under a loan agreement made between the parties in about early August 2011.
2 The plaintiff claims that pursuant to an oral agreement, and confirmed by the signing of a written loan agreement and mortgage document, he loaned to the defendant the sum of $50,000 and she agreed to repay 6 months later the total sum of $75,000, being the amount of the loan with $25,000 in interest.
3 None of that loan has been repaid.
4 The defendant denies any liability to pay any amount to the plaintiff. She admits that she signed a loan agreement and mortgage document, understanding and intending that she was agreeing to borrow $50,000 from the plaintiff, to be repaid as $75,000 including interest after 6 months, and that she was giving a charge over the property as security. However, she claims that she did not receive any of the amount of money allegedly loaned.
5 Notwithstanding that there had been amended pleadings raising issues of rectification of the loan agreement document, denying an oral agreement between the plaintiff and defendant, the parties agreed to limit the trial to the sole issue of whether the plaintiff paid the defendant the sum of $50,000 in the period June to August 2011[1].
[1]Refer Order made 12 July 2016 by Judicial Registrar Tran
6 The plaintiff gave evidence himself, and called Mr Guner as a witness. The defendant gave evidence herself, and called one other witness, Ms Conception Babiano. Except for Ms Babiano, the credibility of each of the other witnesses is in issue.
7 The following background facts are not in issue.
i) In 2009 the defendant became registered proprietor of a property known as 14 Toolern Street, Melton South (the property), subject to a registered mortgage to the Westpac Bank.
(ii) The property was an investment property and she had the intention to develop it by having one or more units built at the back of the property.
(iii) By late 2009 the defendant was in a relationship with Mr Mustafa Guner[2], and he had some role in assisting in relation to plans to redevelop the property.
[2]The spelling of this man’s surname remains unclear – it has variously been typed in documents as Guner, Gunner, Gunnar, and even Guner. His wife’s surname was registered as caveator on title as Guner.
(iv) In October, 2010 the defendant borrowed $50,000 from an individual named J Kociper, for the purpose of developing units at the back of the property. A caveat was lodged on title in respect of that lender’s interest in the property as an unregistered mortgagee.
(v) By the middle of 2011, the defendant needed to borrow further money to proceed with the plans for the units, and also as she was also struggling to make repayments under the mortgage to Westpac Bank, although not yet in default under that mortgage.
(vi) Mr Guner had known the plaintiff for several years, and suggested to the defendant that a further loan might be able to be obtained from Mr Nader. Mr Guner asked the plaintiff if he might be willing to make a loan to Mr Guner’s girlfriend, the circumstances being to assist with the redevelopment of the property. Mr Nader agreed to a meeting to discuss the proposition.
8 It is also not in issue that on a date which no-one can now specify, in June or early July 2011, the defendant went with Mr Guner to a meeting with Mr Nader at Mr Nader’s business premises – a coffee shop on Sydney Road Brunswick - to discuss a loan that she was seeking. All agree that what was discussed and agreed at that meeting was that the defendant wanted to borrow and the plaintiff agreed to lend to her, the sum of $50,000, for a period of 6 months at the end of which it would be repayable with interest of $25,000, so the total repayable after 6 months would be $75,000. It was recognised that this represented a high rate of interest, as that reflected the risk because of the bank mortgage and caveator’s loan already existing and owed. It was also agreed that if the loan could not be repaid after 6 months, it could be extended. It is implicit in both sides’ case that at that meeting the defendant agreed to give security for the loan against the property.
9 The plaintiff says that the defendant and Mr Guner asked for the loan to be paid in cash, but the defendant insists that she did not request that and would have liked it paid into her bank account. It is common ground that the plaintiff said that it would take some time for him to put together that amount of cash, and he also said that he wanted it documented and would have his solicitors draft the documents.
10 I am satisfied that following that meeting the plaintiff instructed his solicitors to draw documentation to reflect the arrangement. However, the principal sum was put as $75,000, which he says was agreed with the defendant to be simpler as that was the sum to be repaid. An invoice to him from his solicitors reflects that the documents were drawn by 27/7/11[3]. When the documents were ready he contacted Mr Guner to tell him so.
[3]Exhibit 2
11 From this point onwards, the sequence of events is in dispute. The plaintiff’s case is that there were two further meetings about this loan, both at the plaintiff’s coffee shop, at which he and the defendant were present as well as Mr Guner. He says that at the next, or second, meeting he showed them the documents, the defendant read them and he also read them to her, and that she agreed to proceed with the loan and would sign these documents. He says that as he had not brought the money to that meeting a third meeting was arranged for a week later. At the third meeting which he says was probably on a Wednesday evening, as his shop was closed Tuesday and Thursday evenings at that time, he showed the money to the defendant and Mr Guner, then the defendant signed the loan agreement and the mortgage document, Mr Guner witnessed her signature on the loan agreement, and he also signed the documents although his signature was not witnessed at that time. There were two copies of the documents, each signed, and he gave one copy to the defendant. After the documents were signed he says he then handed a bundle of cash of $50,000 to the defendant who counted it and was satisfied. He said they all then drank a coffee before the defendant and Mr Guner left.
12 The defendant denies that there was ever a further meeting attended by her with the plaintiff. She says that she signed the loan agreement and mortgage documents but that was at her house, brought there by Mr Guner who asked her to sign them and who told her that she would get some money from the loan soon afterwards if she signed. She says she did not meet with the plaintiff again and never received any of the loan amount, in cash or paid into her bank account. She says that she kept asking Mr Guner when she was going to receive the money and he kept making excuses. Later that year she ended her relationship with him because she says she no longer trusted him having discovered that he was married, having until then believed he was a single man. Mr Guner agrees that the relationship ended about 4 to 5 years ago.
13 The plaintiff’s case therefore depends upon whether I can be satisfied, on the balance of probabilities, that the loan was actually made. The parties agreed that the sole issue for the court as to whether the loan was actually made should be determined by whether $50,000 was received buy the defendant herself.
Credibility of witnesses
14 There are aspects of the evidence of each of Mr Nader, Mr Guner, and Ms Valasinavicius about which I have some doubts as to its truthfulness or reliability. I have therefore considered the evidence of each of them carefully, including inconsistencies or variations, as well as the general credibility before relying on it.
15 The plaintiff says that he handed to the defendant at the third meeting a bundle of cash totalling $50,000, pursuant to their agreement and after she had signed the documents his lawyers had drawn. He says that she counted it and was satisfied and that she and Mr Guner left with that money.
16 The first challenge to the truthfulness of the plaintiff’s version of events is that there is no objective, or other evidence than the plaintiff’s word, of his having possessed or had the ability to source $50,000 in cash.
17 When substantial amounts of cash are the subject of dispute, it is very often difficult to prove their alleged existence, and suspicions often arise as to whether they were possessed at all or as to the legitimacy of the source of such funds. In my view that is a legitimate challenge to the plaintiff’s case, and I as follows I have considered and assessed the evidence about that in this case.
18 Further, despite an order made in the Supreme Court for discovery in May 2014 of all bank statements or any document showing the source of funds for the amount of the alleged loan, the plaintiff did not disclose the red rental book that was produced and tendered in this case, to show the rents he says he received in cash during the relevant period and used as part of the $50,000. It also emerged in cross-examination that he says he has a receipt book for rent received directly from tenants in cash, but he had never discovered it and did not have it at court.
19 Copies of relevant pages of that book and a description of its use were provided in an affidavit he swore in December 2015, so if the defendant’s solicitor had understood what they were, as she claims not to have done until the book and reference to those pages was raised in court, she could have asked to inspect the original, being the red book itself. Therefore, although there is no satisfactory explanation for the failure to discover this document earlier, and I doubt the truth of the plaintiff’s response that he was not aware of that order for specific discovery, it cannot be said that the defendant had no notice of its existence or content.
20 The plaintiff said that it took him some weeks to put together $50,000 in cash, but he was able to do so because he and other members of his family run “cash businesses” and keep on cash on hand at home for the family’s use. He claims to have borrowed $17,500 from his brother who he knew was likely to have the proceeds available of regular kick-boxing events his brother ran. His own coffee shop business operates on cash receipts, and he could take amounts from that. He says he also used amounts of rent received in cash over that period. He he and his wife, and through two family companies, own 15 rental properties, and some of the tenants bring him their monthly rent in cash, as he prefers. The red rental book sets out monthly rents paid, and whether by cash or cheque or direct banking, the latter occurring for those properties managed by an estate agent. Taking into accounts some payments in late June, and those in July 2011, I calculate that approx. $5000 in rent was paid by others in cash in that period, and a further $2000 came from the plaintiff himself as rent as I understood him for the coffee shop. He said that further cash came from his 3 adult sons who buy and sell items at auctions, and as they still live at home and work at times with him they share their money with the family. He also said that his wife and he also withdraw and keep available for family use, amounts of cash from the bank, where income from directly deposited rents accumulate.
21 There was no evidence from the plaintiff’s brother as to the $17,500, nor from his wife or sons as to having contributed cash towards the $50,000 at that time, and no other documents that reflect these amounts. Indeed I gather that the plaintiff had not made discovery of any of his or his family company’s bank records. There being no explanation as to why his brother or other family members had not given evidence to support his own about providing this cash, I infer that any evidence they would have given would not have advanced the plaintiff’s cash. That leaves only the plaintiff’s own evidence about this, together with the red rental book.
22 The failure of the plaintiff to disclose the rental book until last December legitimately raises some suspicion, however on looking at the book generally I am satisfied that it is a genuine record of what he describes it to be. I am satisfied that it is not a recent concoction to support his case, as it contains entries commencing in 2002, for fewer properties then, has changed over the years in exactly what details are recorded, and appears to contain some regular and some irregular entries such as when an insurance claim is paid. I also accept his evidence that this book is mainly kept by his wife and they provide it to their accountant to prepare tax returns, and the accountant sorts out which entries relate to which company or owner of each property.
23 Although I am sceptical that he would be borrowing from his brother without any promise of share of interest or profit, I am satisfies that the plaintiff’s business and those of other family members are such as to produce considerable cash receipts. I also accept that these amounts are available as a pool for all family members when needed, and over a period of more than a month were capable of amounting to $50,000 in cash. For these reasons I am satisfied that the plaintiff could obtain $50,000 over the period he describes for the proposed loan, and that bank statements would not record such amounts as such.
24 Another matter going to the truthfulness of the plaintiff is that in contrast to his evidence before the court that there were three meetings with the defendant present, in an affidavit sworn in December 2015, he deposed to there having been two meetings with the defendant and Mr Guner, at the second of which he said she signed the documents and he handed her the $50,000 in cash. His explanation for this was that he was referring there to two meetings at which they were all present after the documents were available. Objectively that does not seem a likely explanation, but he appeared straightforward when he gave this explanation, and it does not cause me to completely discount or dismiss his evidence in this trial.
25 It was also suggested that by stating in his affidavit that he had read an affidavit of Mr Guner and that “that affidavit summarizes the process by which I advanced the sum of $50,000 to the defendant” he had adopted Mr Guner’s statement that the money was handed to the defendant at a meeting that was on 6 August 2011. I am not persuaded that by confirming the summary of the process Mr Guner was attaching central significance to the date of that meeting.
26 Submissions on behalf of the defendant place heavy emphasis on the fact that the loan agreement and mortgage documents are dated 6 August 2011, and the plaintiff’s case was framed, as pleaded and in affidavits sworn, around the documents being signed on 6 August 2011 and that being the date when the loan money was allegedly paid to the plaintiff. It was argued that because the defendant denies meeting the plaintiff on a second or third occasion, and has produced work documents and her friend Ms Babiano’s evidence to show that she was not at the plaintiff’s coffee shop on the afternoon or evening of 6 august 2011, she did not sign the documents there nor receive the money as the plaintiff (and Mr Guner) describe.
27 The date of 6 August for the loan does not in my view significantly undermine the plaintiff’s own credibility. Indeed the plaintiff in his evidence said that the meeting was definitely not on a Saturday because that is a family day for him, and that if 6 August 2011 was a Saturday that was not the date of the meeting when the plaintiff signed the documents and he handed her the money.
28 The defendant also points to the fact that the loan document describes the sum advanced as $75,000 and not $50,000, and argues that that reflects a lack of integrity in Mr Nader in that his instructions to his lawyer were untrue in relation to that sum, and he was prepared to sign a document that contained that untrue loan amount, an amount which the plaintiff agrees was not in fact advanced.
29 When this was put to him in cross-examination Mr Nader’s explanation was that he and the defendant had agreed before it was drawn up that it would be simpler to put that as the loan amount as $75,000 was the amount to be repaid. The proposition that she had specifically agreed in advance of signing it that the document would put the principal sum as $75,000 was not put to the defendant during cross-examination, so I place less weight on the plaintiff’s evidence about this than I might have done. However it is not suggested that the defendant did not read and understand the content of the document before she signed it, so both she and the plaintiff signed it with this inaccuracy.
30 Although the loan agreement records the principal sum advanced under the loan to be $75,000, which clearly both sides agree was not the true sum agreed to be advanced, the document records the repayment to be in accord with what all say was agreed, namely $75,000 at the end of six months from the date of advance or the date of the agreement. There was provision for further interest if extended, to which I shall refer later. I have considered whether the fact that Mr Nader apparently gave his lawyers instructions which misstated the true amount of the loan should be regarded as reflecting some dishonesty or lack of integrity relevant to his evidence about what he says occurred in making the alleged loan. There is ultimately no detriment to the defendant as the correct repayment amount was stated, and she too signed the document with that discrepancy from the true amount she had asked to borrow. In my view the misstatement of the amount of the loan does not render the agreement unenforceable as both parties agree on what the intended amount of the loan actually was, and the agreed repayment amount was accurately recorded in the agreement, and both signed the document with the principal sum misstated.
31 There is a further discrepancy in the loan agreement document, relating to the completion date or date when repayment of the loan was due. That date in the schedule is 5 January 2012, whereas both parties agree that the loan was repayable at the end of six months and not five as 5 January would have been from the date of the document as it is recorded namely 6 August, 2011.
32 I do not infer that this was anything other than a genuine mistake, in that the typed version anticipated a starting date in July 2011, so completion six months later in January 2012. When July was changed to August, by Mr Nader and his wife, they must have overlooked making the corresponding adjustment to a month later for the completion date. The loan was not repaid on 5 February 2012, or at any subsequent time, so default would have occurred then rather than in January.
33 I have already said that some aspects of the plaintiff’s evidence raise issues about his credibility and reliability as a witness, but overall I found the plaintiff’s evidence reliable enough to use in making my findings.
34 The defendant appeared anxious throughout her evidence, and also at times when sitting in court. She was often difficult to understand but it was not suggested that she could not understand English or needed an interpreter’s assistance. I have taken into account that giving evidence in court can be stressful, especially for people intimately associated with the events and invested in the result. She said that the property at 14 Toolern Street was an investment property acquired by her in 2009 with a loan from the Westpac Bank. She said she was in a relationship from 2009 until the end of 2011 with Mr Guner and that with his encouragement she was planning to redevelop the property by building units at the back. By June or July 2011 she was in need of further funds to meet repayments of the bank mortgage and to further the plans for the redevelopment, and says that Mr Guner suggested that he had a friend from whom they might be able to borrow.
35 She gave evidence that she attended a meeting with the plaintiff, with Mr Guner present, at the plaintiff’s business premises in Sydney Road, Brunswick. She described there being customers at the time with people playing cards there and the premises were not to her liking. Nevertheless, at the meeting she told the plaintiff she wanted to borrow $50,000 and there were discussions to which she agreed that the plaintiff would be willing to lend $50,000 to be repaid together with $25,000 interest after six months. She was aware that she would be asked to sign a mortgage on the property. She says that she did not ask for or want the $50,000 to be paid in cash but wanted it deposited into her bank account. She had provided her licence details to the plaintiff at that meeting for those details to be used in the loan agreement. The plaintiff had said he wanted to have documents drawn and also would need time to put together the cash.
36 The defendant says that she had no further meeting with the plaintiff. She says that the documents, being the loan agreement and mortgage, were brought to her house by Mr Guner who asked her to sign them and she did so. She said that the reason she signed them was that “we wanted the loan”. She says that Mr Guner took the documents away after that, that she had no further meeting with the plaintiff about the loan, and that she never received any money.
37 She had worked for many years at a hotel in the city, and gave evidence that on Saturday 6 August 2011 she worked all day and after work went with her friend Ms Babiano to dinner where they stayed until going home. Documents confirm that she worked 8am to 4pm on 6 august 2011, and Ms Babiano confirmed meeting her as she left work and going together to a friend’s for dinner and going straight home at the end. I am satisfied that she did not attend the plaintiff’s coffee shop or sign the loan document or mortgage on 6 August 2011.
38 However, the introduction of her work roster for that week led to an issue as to her credibility, because she stated that she worked Wednesdays, and was working all Wednesdays back then, but the week’s rostered showed her having a rostered day off on Wednesday 3 August 2011. Although that evidence could not have proved she met the plaintiff that day or went to his coffee shop, her reaction and attempt to avoid the fact that she had insisted that she worked every Wednesday did cast doubt on the reliability of some of her other equally firm answers.
39 The plaintiff submits that until this trial she has denied any meeting between her and the plaintiff at this coffee shop, so her story has significantly shifted and that should cast doubt on her credibility. Pleadings drawn by lawyers, presumably are based on clients’ instructions, but are not sworn by the party and I do not hold the pleadings and variations as indicators of changes in evidence by either party in this case.
40 I gained the impression that she feels aggrieved at Mr Guner’s role in this matter, in relation to the property, as well as in what she says was his deception as to his marital position while they were in a relationship, and the filing of a caveat on the property in his wife’s name. I make no finding that this has caused her to lie, but conclude that she has been focused on blaming Mr Guner in ways that might have coloured her memory of events involving the plaintiff.
41 Mr Guner gave evidence with the assistance of an interpreter, although he clearly spoke and understood some English. He said that during June, July and August 2011 he was in a close relationship with the defendant, although that finished four or five years ago. He said his involvement in relation to the loan was that he had known the plaintiff for a number of years and knew that the defendant required a loan, so he introduced them to each other – first, at the plaintiff’s coffee shop on Sydney Road, and that there were two further meetings there of the three of them about the loan and without anyone else present. He maintained that he could not recall any of the dates or times but thought it was afternoon.
42 Mr Guner describes a third meeting occurring. He said that at that meeting again at the plaintiff’s coffee shop, the plaintiff first showed them a bundle of cash, the defendant then signed the documents, he saw her do so and witnessed her signature, and that $50,000 cash was handed to the defendant there, that she counted it and took it with her. He said that he and she left that meeting in separate cars as they had come, and he did not see what she did with the money. He was not cross-examined about whether he knew what had happened to any of the money after that, including whether any was spent on the unit development. He confirmed that it was his signature on the top left hand side of page 4 of the loan agreement[4]as a witness to the defendant’s signature. He could not recall how many copies of the documents were signed, but said he recalled that she took a copy.
[4]Exhibit 3
43 In cross-examination, he was asked whether when he signed the loan agreement as witness to the defendant’s signature, all the details in the schedule were filled in. He said that when he witnessed her signature, the form was all filled in, like it appears, but he was not sure on what date it was signed and could not remember whether the date had been changed in handwriting.
44 It was put in cross-examination that he had caused the lodging of a caveat over the property in his wife’s name in 2013. He denied any suggestion that the caveat was lodged to secure an interest of his or that he had caused it to be lodged. I strongly doubted his assertion that his wife and the defendant knew each other, and that his wife had paid for the deposit on the property, but I am not in a position to make a finding on those circumstances and only consider them as reflecting some doubt on Mr Guner’s credibility.
45 It was my impression that Mr Guner had much more involvement with the proposed development of the property and arrangements for its financing than he said, and that he does know more about what happened to the money he says he saw the defendant receive at the third meeting from the plaintiff. I have taken into account that he has since had a falling out with the defendant. I have not given unqualified acceptance to all that he said in evidence, and have not given it as much weight as I otherwise would have to non-party witness to a transaction. Nevertheless, as he was present and participated one way or another in each party’s version of the events, I have taken into account that he says he saw the cash handed to and counted by the defendant, and further that he specifically denies that the documents were taken by him to her home and signed by her at her home at his request, or having told her that if she signed the money would be paid into her bank account, or that she would receive some of it.
Other relevant parts of the evidence
46 Although stemming from the plaintiff’s actions, I have regarded as objective evidence the fact that the plaintiff retained his lawyer to have documents drawn to record the proposed loan, and after the documents were signed returned them to the solicitor to lodge a caveat.
47 An invoice from his solicitors dated 27 July 2011 is consistent with the documentation having been drawn by that date, although it also bills in advance for the lodging of a caveat to secure the proposed unregistered mortgage. The caveat was lodged on 15 August 2011.
48 The plaintiff’s evidence is that the defendant took with her one copy of the documentation, the loan agreement being signed by him but no one having witnessed his signature. He said he took his copy home and asked his wife to witness his signature. He says it was at the time his wife was witnessing his signature, or shortly after that, that the date in the schedule of the document was changed from July to August and was made as 6 August 2011. He says that a couple of days or so after his wife witnessed his signature he took the documents to his solicitor. It is clear from Land Titles Office records that on 15 August a caveat was lodged on behalf of the plaintiff in respect of a claimed charge against the property, the date of that charge claimed to be 6 August 2011, namely, the date on the documents.
49 It is common ground that after six months from the signing of the document the amount of the loan was not repaid. The plaintiff did not contact the defendant directly about this. He says that he asked Mr Guner what was happening and was told that they were nearly at the stage of having the council approve the plans and the redevelopment was proceeding. He then received a notice from the Westpac Bank that the defendant’s repayments to it were in default. He says he was alarmed by this and contacted Mr Guner, who told him the payments to the Westpac Bank would be made. A couple of months later, another notice from the Westpac Bank to the plaintiff notified him that the defendant was again in default of her repayments to the bank. After that he referred the matter to his solicitor.
50 The Westpac Bank apparently took possession of the property pursuant to its mortgage and the property was sold at auction in September 2013. The price enabled full repayment to Westpac Bank and the earlier caveator and the balance of the proceedings are being held pending outcome of this proceeding.
Findings
51 There was a meeting in June or July 2011 between the plaintiff and defendant and Mr Guner. I am satisfied that at that meeting it was agreed that the plaintiff would lend $50,000 in cash for the purpose of being used to keep up payments under the registered mortgage and to develop the property with the building of units. I am satisfied that it was agreed that $25,000 interest would be paid, making the sum repayable after six months $75,000.
52 Although, on my calculation, the $25,000 represented a very high interest rate of 100% per annum, it was clear to all that the loan carried considerable risk because there was already a registered mortgage to the Westpac Bank and another loan secured by caveat against the property. I am also satisfied that it was made known to the plaintiff at the time that the defendant would have difficulty maintaining repayments to the bank if she did not obtain a further loan to assist in development of the property so that there could be plans and permits approved for the development of units. Therefore, the situation warranted a very much higher interest rate than usual to reflect the high risk of the loan. Consistent with all witnesses agreeing that that is the amount of interest that was agreed, I am satisfied that that discussion and agreement occurred.
53 Documents were drawn by the plaintiff’s solicitor, which although misstating the principal sum to be advanced, accurately stated the repayment amount. The loan document was signed by both parties, and the mortgage document by the defendant. Although she disputes that the signing occurred in the presence of the plaintiff, I am satisfied that she when she signed the documents she knew the purpose of each document and that the reason she signed them was that “we wanted the loan”. Further, she knew that she was signing a mortgage as security for that loan against the property.
54 The key issue for me to decide is whether I can be satisfied, on the balance of probabilities, that the sum of $50,000 was paid by the plaintiff to her.
55 Notwithstanding some doubts about a sum as large as $50,000 without documentary trail as to its source, and my impression that no witness (apart from Ms Babiano) was entirely truthful in relation to the events in question, I am satisfied on the balance of probabilities that Mr Nader did put together a sum of $50,000 in cash, and that he in fact handed it to the defendant at a meeting at his coffee shop after she first signed the documentation. I take into account not only his own and Mr Guner’s evidence that this occurred at the described third meeting. I accept the plaintiff’s evidence that that occurred on a weekday evening at his coffee shop. I accept that his signature was subsequently witnessed by his wife, who was clearly not present at the time but whose name appears on the document as such witness. I also accept his evidence that either on the day of his wife witnessing his signature or in the following days, they dated the documents, and that could well have been on Saturday 6 august 2011, because Saturday is the day they would usually be home spending time as a family. That is consistent with the colour of the ink being different in the dates than in the signatures.
56 I also take into account the objective evidence of the caveat being lodged nine days after the date on the documents, as supporting that the loan had in fact been made. I consider it highly unlikely that Mr Nader would not only have engaged his solicitor to draw these documents, but also have returned the signed documents to his lawyers for the caveat to be lodged had he not in fact advanced the money to make the loan. I regard the lodging of the caveat as supporting the proposition that he acted consistently with this being a legitimate transaction.
57 Finally, despite the defendant insisting that she did not receive the money, I think it unlikely that she would have made no attempt to contact the plaintiff for it, especially once she received, as she admits she did, notification from the Land Titles Office that a caveat had been lodged on the property in mid-August 2011. She may have been asking Mr Guner about this initially, and still trusting his answers to her, but my impression is that she was personally sufficiently enough in these transactions to have taken an active move to obtain the loan moneys if she had not known that they had been paid. It may be that she had allowed Mr Guner to take charge of the moneys, but that was not suggested to him when he gave evidence. She knew the plaintiff’s business address, and even if it was not the type of premises where she would like to go alone, she could have sent him a letter. Finally, her evidence is that her relationship with Mr Guner broke up in late 2011 when she discovered that he was married. I think it highly unlikely that after that she would not have made some effort to contact Mr Nader directly, if she had believed that he had lodged a caveat over the property for a loan she had not received.
58 The plaintiff suggests that I could also infer from the fact that the bank did not repossess and sell the property until 2013, that repayments to it were being made for more than a year after the time of the loan agreement, and from that that the loan moneys were being used to make those payments. Although I know that the mortgagee sale of the property was in September 2013, there is insufficient evidence of when default was made by her under the bank’s mortgage. Mr Nader said he as a caveator received two notices sent by the bank that she was in default, some months apart, and that they were received after she was in default under his loan so I infer after January 2012, but that gives too little further time frame for that conclusion to be drawn, especially as I have no information about the amount of her repayments to the bank.
59 For these reasons I am satisfied that the loan of $50,000 was in fact made by the plaintiff to the defendant. I am satisfied on the balance of probabilities that it was handed to her at a meeting at his coffee shop after she signed the documents. I find that that occurred in the days prior to 6 August 2011, and probably on the evening of Wednesday 3 August.
60 I have considered the defendant’s submission that to find that the money was advanced on a date other than the date of the loan document would be unfair to the defendant in light of how the case was pleaded. It was submitted that that would be unfair as the defendant had not had a chance to investigate where she was on the Wednesday, or produce evidence to meet that allegation.
61 The use of the expression “on or about “ 6 August, ought to have alerted her lawyer to the prospect that the case might not ultimately be pinned solely to the specific date of the document. Further, as the defendant said in evidence, and maintained over several answers, when the possibility of the preceding Wednesday was put to her, that she always worked all day Wednesdays, I am not convinced that further investigation about her whereabouts that day would have resulted. The legal position is that the precise date the loan was advanced would not alter her liability to repay it if it was so advanced. Reliance on 6 august as that date was relevant to issues of credibility and reliability of the witnesses who said the money was handed over on a particular occasion, but for reasons already outlined I am satisfied that those events did occur albeit not on the 6 August 2011.
62 I am satisfied that the defendant was liable to repay that loan by a payment of $75,000 six months later, by 5 February 2012, although probably on 2 February. I intend to order judgement for the plaintiff for that sum.
63 The plaintiff also claims interest on the outstanding amount. He claims pursuant to the terms of the loan agreement, that interest should be calculated at 18% per annum from a date seven days after the completion date. The defendant resists that claim. Although I reject the submission put that that would be unjust enrichment, there are some circumstances which I consider undermine that aspect of the plaintiff’s claim. First, although there was evidence that at the first meeting when the loan was agreed there was discussion that if the loan was not repaid at the end of six months it could be extended, there was no evidence of discussion or agreement as to interest during such an extension. I infer that it would have been intended that interest would accrue, especially in light of the very high interest rate agreed for the six month period (reflecting the high risk of the loan and the defendant’s high degree of need for it).
64 However, there is no evidence that the rate of 18% was specifically agreed if there were default in repayment. I infer that the terms to that effect were inserted into the loan agreement document by the lawyers, and may well have been usual rates in such agreements. However, as the loan agreement document did not in fact record entirely accurately the terms which the parties had agreed, specifically the principal sum, and the completion date, I am not satisfied that I can conclude from the inclusion in the loan agreement document, albeit signed by both parties, that they had in fact agreed about that penalty interest rate. I am therefore not satisfied that the plaintiff is entitled to interest pursuant to those parts of the loan document.
65 I also take into account in relation to the claim for interest, that there is no evidence that there was a demand made directly to the plaintiff for the outstanding amount of $75,000. If not able to rely on the terms of the loan agreement as to when interest commenced to run, there would have needed to be a demand on the debtor to activate any other claim for interest prior to issue of the Writ. On the contrary, plaintiff says he made no direct contact with the defendant about the overdue repayment, but only dealt with Mr Guner about it, until he became alarmed enough after the bank notification of her being in default to it to refer the problem to his solicitors. There is no evidence of a letter of demand from his solicitors to the defendant.
66 I am satisfied that when the Writ was issued the sum of $75,000 had long been owing by the defendant to the plaintiff. I consider that interest from date of issue of the Writ should be awarded under the rates prescribed over the intervening period under the Penalty Interest Act. That has been calculated as $19, 839 to today.
67 I shall order judgment for the plaintiff in the sum of $75,000 together with interest of $19, 839, being a total of $94, 839.
68 I shall hear submissions about costs.
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