Silvy v Hadeler - [2008] SADC 64

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SILVY v HADELER
[2008] SADC 64
Judgment of His Honour Judge Boylan
21 May 2008
CONSUMER CREDIT - CREDIT PROTECTION - GENERAL - MONEYLENDERS
Power to re-open unjust transactions - matters to be considered on re-opening unjust transactions. Whether debtor understood nature and implications of transaction. Transaction re-opened. Relief granted.
Evidence Act 1929 s.30; Consumer Credit Code s.17, referred to.

SILVY v HADELER
[2008] SADC 64

Mr Hadeler is a money lender. Ms Silvy borrowed money from him. There is a dispute about the number of occasions on which she borrowed money and the terms upon which she borrowed it. Relying on the Consumer Credit Code[1], Ms Silvy asks me to re-open at least one of the transactions and to relieve her from further payment. Mr Hadeler objects. He argues that the Code does not apply to that transaction or, indeed, to any of the transactions between him and Ms Silvy. I have come to the conclusion that Ms Silvy borrowed money from Mr Hadeler on two occasions only and that only one of those occasions is covered by the Code. In respect of that loan only, Ms Silvy is entitled to relief. I now give my reasons but introduce them by identifying various factual matters in dispute.
[1] Consumer Credit (South Australia) Act 1995 and Consumer Credit Code
As I have said, Ms Silvy claims that she borrowed money on two occasions only. The sums involved were $2,500 and $300 respectively. She says that on each of those occasions she signed a “loan agreement” only. Mr Hadeler claims that Ms Silvy borrowed money on four separate occasions. In addition to the loans of $2,500 and $300, Mr Hadeler claims that there were two further loans in the sums of $500 and $1,000. Further, it is his case that on each of those four occasions, Ms Silvy signed both a loan agreement and a bill of sale, the chattel the subject of each of the bills of sale being her car.
I propose dealing first with the evidence of the two undisputed loans. It will be apparent from my conclusions about those transactions why I have come to the conclusion that Mr Hadeler is an unreliable witness. I shall state my conclusions about those two transactions before explaining briefly why I reject Mr Hadeler’s contention that there were two further loans. I shall finish by referring to the provisions of the Consumer Credit Code and by announcing my final orders.
The first loan
In March 2005, Ms Silvy wanted to pay off some debts and borrow money to move house. Ms Angie Vanstone, suggested that Ms Silvy approach Wilfred Hadeler, a money lender, who operated a business known as “Cash on Wheels”. Ms Silvy already knew Mr Hadeler socially as did Ms Vanstone. Ms Silvy asked if she could borrow $2,500, telling Mr Hadeler that the loan was for domestic purposes. He agreed to lend her the money which was paid to her in two instalments. Shortly before the 15^th of March 2005, Mr Hadeler gave her $2,000 so that she could pay various debts, including amounts owing to a finance company or companies in respect of her motor vehicle. She paid out the loans and the car was then free of any encumbrance. Then, on the 15^th of March, Mr Hadeler went to her house. He paid her the remaining $500. On the same occasion, Ms Silvy signed a document. It was, she says, a four page document being a loan agreement. Mr Hadeler told her that a witness was required. Her friend Jamie Johnson came to her house and witnessed her signature on the fourth page of the document. Ms Silvy did not receive a copy of that document at the time. She also signed a schedule to the loan agreement. She denies that she signed a bill of sale on the 15^th of March 2005, or ever.
Mr Hadeler produced documents which he says Ms Silvy signed on the 15^th of March 2005. The first of them, Exhibit D2, is a loan agreement comprising two pages and a schedule. At the foot of the first page are what appear to be Ms Silvy’s initials. She and Mr Hadeler had both apparently signed at the foot of the second page, each witnessing the other’s signature. Attached to the two page loan agreement and marked “page 3” is a schedule. Ms Silvy admits she signed that schedule. She does not know if the schedule she signed included the alterations which appear on the schedule in Exhibit D2.
Ms Silvy denied that the two page loan agreement, Exhibit D2, is her document. She agrees the signature on page 2 appears to be hers but insists that she did not sign it; that she signed only on the fourth page of a four page document and that Jamie Johnson witnessed her signature on that fourth page.
Mr Hadeler also produced a bill of sale, exhibit D7. He insists that, on the 15^th of March 2005, Ms Silvy executed that bill of sale and that Jamie Johnson witnessed her signature. He says that he failed to register the bill of sale in time and asked her to execute it afresh some time later. I shall return to that.
D7 is a curious document. It would be more correct to say that it is suspicious. It comprises seven pages and a “cover sheet”. The first page is marked Page 1 of 6 and so on until page 5 of 6. The first four of those pages bear what seem to be Ms Silvy’s initials and page 5, which is a schedule of the personal chattels comprised in the bill of sale, bears what appears to be her signature. The engine number of the motor vehicle described has been altered on that page. Mr Hadeler has initialled the alteration. Ms Silvy has not. The next page is unnumbered. It is on different quality paper and is clearly a photocopy. The page bears the date 15^th March 2005 and contains Ms Silvy’s signature together with the signature and personal details of Jamie Robert Johnson. The next page is numbered, in handwriting, (not typed) “Page 6 of 6”. It is dated “2^nd May 2006”. It bears what appears to be Ms Silvy’s signature together with the signature and details of one Joseph Len Cama, as witness.
I shall return to these two documents, D2 and D7, but note here that Ms Silvy says that the page bearing Jamie Johnson’s signature is a copy of that which was the fourth page of the document she signed at her house on the 15^th of March 2005. I also note that it is quite apparent from the staple marks on both documents that various pages of each of D2 and D7 have been stapled on more than one occasion.
I now go back a little - to the schedule to Exhibit D2, being the schedule which sets out the particulars of the loan. Those particulars include the due date for repayment, namely 12 April 2005; the interest rate being “10% per $100 every 28 days” and a default interest rate of “80% per $100 every 28 days”. There is an alteration to the document where liquid paper has been used. The alterations have been initialled only by Mr Hadeler.
Ms Silvy understood that she was to pay interest at the rate of 10% per month on the outstanding balance. She said that there was never any agreement that she would pay interest only. She said that she received a document about interest rates when she took out the first loan. No such document was produced by either party. Mr Silvy said that she made various payments to Mr Hadeler. On occasions she paid money into his bank account and on other occasions she handed cash to him. Sometimes he gave her a receipt, sometimes he did not. She says that by the 16^th of December 2005 she had repaid him between $3,200 and $3,500. By that date, she considered that she had repaid the loan and refused to make further payments.
I turn now to Mr Hadeler’s evidence of the first loan. He agrees that it was in the sum of $2,500, that it was paid in two instalments, the second of them being paid on the 15^th of March 2005 when he attended at Ms Silvy’s house. He says that she signed two documents on that occasion, a loan agreement (Exhibit D2) and a bill of sale (Exhibit D7). He said that Jamie Johnson witnessed Ms Silvy’s signature on the bill of sale and that the unnumbered photocopied page in Exhibit D7 is a copy of the page signed by Jamie Johnson. He did not produce the original of that page and did not explain why he failed to do so.
Mr Hadeler claims that Ms Silvy has not repaid him; that she has, so far, repaid interest only. He produced Exhibit D12 which shows total repayments from her of $2,750. Ms Silvy agreed in cross-examination that she could only produce receipts for $1,350.
Mr Hadeler also claims that the loan was made for business purposes and that, therefore, the Consumer Credit Code does not apply to it. He claims that Ms Silvy told him the loan was for business purposes and that she gave him an ABN number. He produced a computer print out of a document bearing her ABN number. Ms Silvy agreed that she had had such a number but that it in fact belonged to her former de facto husband. She denied every providing an ABN number to Mr Hadeler.
The Second loan
There is no dispute that, on the 2^nd of May 2006, outside the Anglicare office at Elizabeth, Ms Silvy met Mr Hadeler and he lent her $300; that she signed a document on that occasion; and that Mr Joseph Cama witnessed her signature. But there is a dispute about the circumstances surrounding the loan.
Ms Silvy agrees that she has not repaid the sum of $300.00.
On the 2^nd of May 2006, Ms Silvy was living in a motel, at the expense of the South Australian Housing Trust. On that day, she attended the Anglicare office seeking emergency accommodation for herself and her two young children. Prior to that day, Mr Hadeler had been pressing her for repayment of the original loan of $2,500. In one of their conversations, he offered her a loan of $300 interest free to get her “on her feet”. Ms Silvy agreed to the loan and she and Mr Hadeler met outside the Anglicare office. With Mr Hadeler was Mr Joseph Cama. Mr Hadeler gave Ms Silvy $300. She signed a document on the boot on Mr Hadeler’s car. She says that she signed one document which comprised four pages and that Mr Cama witnessed her signature on the fourth page. Her evidence was that she signed that document only. She did not sign a bill of sale. She was not given a copy of the document she signed.
Mr Hadeler produced a loan agreement, Exhibit D9, which, he said, is one of two documents which Ms Silvy signed on the 2^nd of May 2006. The loan agreement comprises one page headed “Loan Agreement” and a further page headed “The Schedule”. Both of those pages appear to have been signed by Ms Silvy.
Mr Hadeler also tendered Exhibit D7, a document to which I have already referred and which I have already described. His case is that, on the 2^nd of May 2006, he was being a “soft touch”: he did not want to see Ms Silvy and her children on the street so he offered to lend her $300 interest free for three months. Accordingly, they met at Anglicare. Mr Hadeler says that he told Ms Silvy he had failed to register the bill of sale which he said she had signed on the 15^th of March 2005 and that he asked her to sign a new page in Mr Cama’s presence. He said that she did so and that Mr Cama witnessed her signature.
Mr Cama gave evidence that he witnessed Ms Silvy’s signature but could not say what the document was she signed. His evidence does not help me.
Before leaving my account of the facts surrounding the $300 loan, I note the following. Mr Hadeler insisted that he made only short term loans of two months or 56 days. He did so, he said, to avoid the operation of the Consumer Credit Code. That evidence does not fit with the schedule to the loan agreement. That schedule (part of Exhibit D9) describes the principal sum as $300, interest as “$30” and an interest rate of 10% every 28 days. There are other charges: default interest rate of 80% per $100 every 28 days, surcharge fee of $70 and a late payment fee of $100. Mr Hadeler has written on the schedule “3 months interest free” and recorded the 2^nd of July 2006 as the due date for repayment. That date is, of course, two months from the date of the loan agreement.
The disputed contracts
As I have said, Ms Silvy admits that she borrowed the sums of $2,500 and $300 from Mr Hadeler. She denied borrowing any other sums. Mr Hadeler, on the other hand, claims that she also borrowed $500 on the 29^th of April 2005 and $1,000 of the 6^th of May 2005. In respect of the first of these asserted loans he produced a loan agreement (Exhibit D3) and a bill of sale (Exhibit D8). In respect of the second of them, he produced a loan agreement (Exhibit D4) and a bill of sale (Exhibit D5). Those four documents bear what appear to be Ms Silvy’s initials and signature. Ms Angie Vanstone has apparently witnessed her signature on D8 and Ms Benita Markham, a friend of Ms Silvy’s, has apparently witnessed Ms Silvy’s signature on Exhibit D5. Neither Ms Vanstone nor Ms Markham was called. I would have expected Mr Hadeler to call each of them to support of his contention that Ms Silvy signed the bills of sale. He did not do so and gave no satisfactory explanation for his failure to do so. I conclude that their evidence would not have assisted his case.
I have examined each of the loan agreements and each of the bills of sale tendered by Mr Hadeler. They all bear multiple staple marks. I conclude that they have been taken apart and re-stapled, at least once each. There is no explanation for that. In the case of D7, (the original bill of sale) Mr Hadeler said that, owing to his failure to register it, he added the page which bears Mr Cama’s signature. He cannot explain the insertion of a copy of the page originally signed by Mr Johnson. When I asked him if he had any explanation he first suggested that the page had not been in the document when he tendered it to the court. He eventually acknowledged that he inserted the photocopied page but said that he had “no answer” to my question why he had done so.
Ms Silvy’s initials and signatures on the documents
Ms Silvy denies that she signed or initialled a number of documents. She agreed that the initials and signatures on those documents appear to be hers. I have examined them as I am entitled to do[2], and the disputed signatures appear the same as the undisputed ones. No handwriting expert was called. Mr Hadeler applied to adjourn the trial so that he could call a document examiner. I refused that application. Months before the trial, a Master of the Court had made plain to Mr Hadeler and to Ms Silvy their obligations with respect to witnesses. Indeed, a Master had specifically addressed the issue of Mr Hadeler’s obligation, if he wanted to call a handwriting expert, to have the report ready and the witness available at the listed trial date.
[2] Evidence Act s.30
Even if a handwriting expert had been called, I doubt that the expert’s evidence would have much assisted. It may well be that Ms Silvy did initial and sign various pages produced but, for reasons which I will come to shortly, I find that none of the bills of sale are her documents. I make the same finding with respect to the loan agreements dated the 29^th of April 2005 and the 6^th of May 2005.
The reliability of the parties
Ms Silvy impressed me as credible and reliable. She was never evasive and was willing to make concessions, especially about the similarity of disputed signatures and initials to undisputed ones. Generally, I accept her evidence and, where it differs from Mr Hadeler’s, I prefer it. Mr Hadeler was most unimpressive in the witness box. I have already referred to some of the documents he produced. He was unable to explain the insertion of a page into Exhibit D7. He failed to call Ms Markham and Ms Vanstone. He failed to call a document examiner despite his being aware of the significance of possible handwriting evidence and despite his having been warned of his obligations to have witnesses available at trial. Some of the records which he produced bear unexplained alterations and his evidence about the duration of his loan is inconsistent with his documents.
While I accept Ms Silvy’s evidence generally, two aspects of it worry me. The first of them is the resemblance of disputed signatures and initials to her undisputed ones. But this aspect of her evidence does not cause me to doubt her truthfulness. It may be that she signed some pages, not knowing that they did not form part of the document she thought she was signing. Pages signed by her, purportedly as part of one document, may well have been later included in other documents. As I have said, pages in various documents have plainly been “taken apart” and re-stapled. Secondly, I think she was aware that Mr Hadeler intended that she execute a bill of sale at the time of the initial loan. His advancing her the $2,000 on or about the 14^th of May 2005 so that she could free her car of the then existing encumbrances makes no sense otherwise. But I am satisfied, and I find, that she was not aware that the page she signed and which Mr Johnson witnessed was to form part of the bill of sale.
I find that Ms Silvy borrowed money from Mr Hadeler twice. On the first occasion she borrowed $2,500 and, on the second occasion, $300. She has repaid at least $3,200 in respect of the first of those loans. She has not repaid any amount in respect of the second of them. In respect of each of them, she signed only a loan agreement. I find that she did not borrow sums of $500 and $1,000 from Mr Hadeler. I find that she has never executed a bill of sale. It follows that Mr Hadeler has no claim over her car nor any claim to the proceeds of an insurance claim in respect of the car.
The Code
I turn to the question of relief under the Consumer Credit Code. The Code does not apply to the $300 loan as it was interest free and both parties agree that there were no credit charges. Therefore I make no orders with respect to it. I find that the Code applies to the loan for $2,500. I accept Ms Silvy’s evidence that the loan was for domestic purposes. She was charged interest and there were other charges. There is, in any event, a presumption that the Code applies unless the contrary has been established. On that topic, I note that the only evidence I received about Mr Hadeler’s business was that he holds a pawn broker’s licence. Usually, pawn broker’s transactions are not subject to the Code. But the case was fought on the basis that he is a money lender other than a pawn broker. The presumption applies. Although the loan agreements state that the duration of the loan is 28 days (from the 15^th of March to the 12^th of April 2005) I find that the parties both intended that the period of the loan was to be more than 62 days.
Re-opening the transaction
The court has power to re-open an unjust transaction. In determining whether or not the transaction is unjust, I am to have to regard to the public interest and to all the circumstances of the case. A number of circumstances convince me the transaction is unjust. The form of the schedule to the loan agreement (Exhibit D2) is not readily intelligible: on its face it describes the loan as being for a period of 28 days yet it contains provisions which clearly envisage that the duration will be more than 28 days. The schedule contains an alteration not acknowledged by Ms Silvy. Further, I find that Mr Hadeler took no measures to ensure that Ms Silvy understood the nature and implication of the transaction, especially with regard to the repayment of principal and interest. For those reasons, I find that the transaction was unjust. I re-open it and relieve Ms Silvy from any payment in excess of the amount which she has already paid which I find to be $3,200.