Salera v Cousens
[2001] VSC 190
•13 June 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4080 of 1998
| ALFREDO AND MIRELLA SALERA | Plaintiffs |
| v. | |
| SHIRLEY YVONNE COUSENS | Defendant |
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JUDGE: | HARPER, J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 13 JUNE 2001 | |
DATE OF RULING: | 13 JUNE 2001 | |
CASE MAY BE CITED AS: | SALERA v. COUSENS | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 190 | |
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CATCHWORDS: Ruling – Relevance of evidence – Issue as to whether moneys advanced under a mortgage were paid in accordance with the mortgagor's instructions – Whether evidence from finance broker as to charges faced by him of fraud unrelated to this transaction relevant to reliance by mortgagees' solicitor on apparent written authority to disburse moneys in a particular manner – Allegation that mortgagees' solicitor was negligent irrelevant to liability of mortgagor – Whether allegation that documents were forged is relevant to state of mind of mortgagees' solicitor – Evidence excluded.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr. R. Cook | Mills Oakley |
| For the Defendant | Mr. D. Fitzgibbon | Waters O'Brien |
HIS HONOUR:
A question has arisen about the relevance of certain evidence sought to be adduced under cross-examination of Mr Keith Bulfin, a witness called by the plaintiffs. Questions of relevance are generally determined by reference to the pleadings. I propose to do so in this instance.
By their amended statement of claim dated 16 August 1999, the plaintiffs allege that the defendant is and at all material times was the registered proprietor of certain land in Frankston. That allegation is admitted.
It is next alleged that by an instrument of mortgage dated 23 May 1997, the defendant mortgaged her estate in that property to secure the payment of moneys lent to her by the plaintiffs. That allegation is also admitted.
The plaintiffs allege further that on 23 May 1997 they advanced the sum of $175,000 to the defendant. That allegation is denied.
The plaintiff relied not only on the mortgage taken out on 23 May 1997 but also on a variation of that mortgage dated 28 July 1997. The defendant admits the variation.
The plaintiffs allege that pursuant to the mortgage as varied they advanced a further sum of $155,000 to the defendant. That allegation is denied.
As appears from the defendant's amended defence and counterclaim dated 7 September 1999, the denials to which I have referred are linked with the proposition put forward by way of allegation by the defendant that she did not receive any moneys the subject of any advance pursuant to the mortgage as varied. She accepts, however, that moneys were paid by the plaintiffs as lenders pursuant to that mortgage. She asserts that, by a mistake for which the plaintiffs bear responsibility, the moneys were paid to the wrong persons.
It follows that the question before me is whether or not the sums made available by the plaintiffs by way of principle pursuant to their obligations as lenders was received by, or disbursed in accordance with the instructions of, the defendant.
There is evidence before me that the sum of $155,000 or thereabouts was disbursed in a way which paid out a debt that the defendant owed to clients of a solicitor who gave evidence in this proceeding, Mr Andrew John Quinn.
As I understand the defendant's position, it is that the borrowing which she effected through Mr Quinn's offices was indeed paid out as the plaintiffs allege. If so, there seems to be no contest but that at least in respect of the sum of $155,000 paid to Mr Quinn by way of settlement of the mortgage arranged through him, the moneys provided by the plaintiffs were disbursed in accordance with the defendant's instructions.
There remains the balance of the total sum of $330,000 being $175,000. The defendant asserts that this sum was not paid out in accordance with her instructions.
The plaintiffs rely upon a document signed by the defendant. That document is reproduced at p.162 of the court book. It is admittedly signed by the defendant as a witness to the signature of a Ms K. MacDonald, and is addressed to Mr Edmund Gurgiel, a partner in the firm of Feingold Partners Lawyers. He acted for the plaintiffs in the relevant transactions. He gave evidence that he acted upon this document as his authority to pay the sum of $175,000 in accordance with its terms. Those terms were as follows: "Please pay the sum of $175,000 less my legal fees to NVJ Pty Ltd, a company owned by Nicholas John Bulfin of 23 Seymour Grove, Brighton."
Mr Gurgiel's evidence was that he accepted this document at face value. He had no reason to think that it did not represent the wishes of the defendant. He knew that Ms MacDonald is a sister-in-law of the defendant and with the defendant was a person interested in the transactions which resulted in, among other things, the mortgage to the plaintiffs. He also knew that the loan was to be invested in a public company, interests in which were to be held by several entities, one of which was NVJ Pty. Ltd. On its face, therefore, the document was appropriate for what he understood its purpose to be.
The defendant attacks the document at p.162 of the court book on a number of grounds, although the full scope of the attack has not yet been clearly spelt out. One avenue likely to be the subject of submissions and evidence on behalf of the defendant arises from the fact that, although she admittedly signed the relevant document, she did so as witness but not as principal.
The defendant also seeks to attack the document on the basis that Mr Gurgiel ought to have suspected its authenticity as a request or authority from the defendant because he had knowledge of the fact that Mr Keith Bulfin, the witness presently under cross-examination, had at the relevant time been charged with fraud.
Even if this fact was known to Mr Gurgiel (and he denies that he knew it) it seems to me that this circumstance is irrelevant to the central issue: did the documents at page 162 of the court book reflect the defendant's wishes?; and if it did not, can Mr. Gurgiel's reliance upon it be used as the basis of a claim that the loan moneys were neither received by the defendant nor disbursed in accordance with her instructions?
Assuming that Mr. Gurgiel did know of Mr Bulfin's predicament, it was the fact that the charges then faced by Mr Bulfin had nothing to do with this transaction. Moreover, Mr. Gurgiel would not have known whether or not the charges were likely to result in a conviction, certainly he was not asked questions to that end, and it is hard to see how that line of questioning could have been productive for the defendant in any event. There is no suggestion that Mr Gurgiel knew so much about Mr Bulfin and his activities as to be able to assess the likelihood that he intended to defraud the defendant.
Nothing which has been put to me in relation to the proposed evidence to be adduced from Mr Bulfin seems to me to have any relevance to the question whether or not Mr Gurgiel knew or had reason to know that the document at p.162 did not represent the defendant's wishes in relation to the disbursement of the borrowed moneys. In short, there is nothing to suggest that Mr. Gurgiel, even if he knew that Mr. Bulfin faced charges involving fraud, also knew or ought to have known that the relevant document did not reflect the defendant's wishes.
We are not here concerned with negligence, a concept which has been floated around – out of context and out of place – during the course of argument. We are concerned with the state of mind of the plaintiffs' agent; a state of mind which, as the defendant would have it, was by reason of the agency also that of the plaintiffs themselves. We are concerned with whether or not Mr. Gurgiel, as a representative of the plaintiffs, knew or wilfully shut his eyes against the knowledge that the loan funds were not to be disbursed in the way they were. The fact (if it be the fact) that he knew that Mr. Bulfin had been charged with fraud cannot support the inference that he wilfully shut out from his mind the possibility that the defendant did not want the moneys to be disbursed in accordance with the document at page 162 of the court book.
It is submitted on behalf of the defendant that Mr Bulfin may be able to give other evidence that throws light upon relevant issues in this case. I am not persuaded.
Nothing which has been put to me suggests to my mind that Mr Bulfin is able to say anything which is relevant to what I see as the live issue here and that is the authority given by Mrs Cousens to the representative of the plaintiffs to disburse the borrowed funds in a particular way.
It may be that other documents generated in relation to this transaction were forgeries. In particular, I point to the document at p.159 of the court book which purports to be a letter of instruction to Feingold Partners from the defendant in relation to $15,000 which the plaintiffs sought to retain from the principal of the borrowed moneys against the possibility that certain repairs to the mortgage property would not be effected in accordance with the plaintiff's expectations or wishes. It may be that I will conclude if it is relevant that that document was a forgery. Even so, the evidence at present is that the $15,000 in question was, having been withheld, subsequently used to reduce the amount said to be owing by the defendant to the plaintiffs. If that be the case, then depending upon the principal findings in this case, the defendant may well have nothing about which to complain.
Save for the document at p.159, I see no relevance in the fact, if it be the fact, that other documents reproduced in the court book or said to be relevant, were or were not forgeries. The relevance of the other documents escapes me entirely.
For these reasons I will not allow Mr Bulfin to be further cross-examined. There has been no basis put forward upon which such further cross-examination would elicit any evidence of relevance. Nor will I allow any evidence to be called as to the genuineness of the signatures of the defendant on any documents. As I have said, the defendant admits that she signed the document at p.162. That is the relevant document and accordingly other evidence of forgeries will not assist me in determining the issue that lies at the heart of this case.
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