VELLA & BUCHANAN AND ORS
[2012] FamCA 500
•5 June 2012
FAMILY COURT OF AUSTRALIA
| VELLA & BUCHANAN AND ORS | [2012] FamCA 500 |
| FAMILY LAW – PROPERTY – where the wife seeks orders discharging her liability under a loan – where the bank with whom the loan was taken out is a party to these proceedings – where the wife alleges she was a volunteer at law – where the wife alleges that bank knew or ought to have known that the wife was a volunteer – where the wife alleges the bank failed to explain the effect of the documents she signed, and failed to afford her the opportunity to obtain legal advice – where the wife alleges that the husband assaulted her leading up to the signing of the loan documents – where the wife alleges the husband exercised undue influence over her with respect to the loan documents – where there is evidence from bank officers and the husband that directly contradicts the wife’s evidence – whether the wife was a volunteer – whether the husband exercised undue influence over the wife – where the wife was neither a volunteer nor subject to undue influence. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Agripay Pty Ltd v Byrne [2011] 2 Qd R 501 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 |
| APPLICANT: | Ms Vella |
| 1st RESPONDENT: | Mr Buchanan |
| 2nd RESPONDENT: | Bank 1 |
| 3rd & 4th RESPONDENTS:: | Mr Y & Ms Y |
| FILE NUMBER: | BRC | 281 | of | 2011 |
| DATE DELIVERED: | 5 June 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 14 & 15 February 2012, 13 March 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Rivett (uninstructed) |
| THE APPLICANT: | Direct Brief with Mr Rivett |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Theile |
| SOLICITOR FOR THE 1ST RESPONDENT: | Family Law Solutions |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Scott-MacKenzie |
| SOLICITOR FOR THE 2ND RESPONDENT: | Thynne & Macartney |
| SOLICITOR FOR THE 3RD & 4TH RESPONDENTS: | Mr Woods of Cogill Woods Legal Services |
Orders
Paragraphs 1 and 2 of the Interim Orders sought in the Initiating Application filed by the wife on 18 January 2011 be dismissed.
Paragraphs 17 and 18 of the Final Orders sought in the Initiating Application filed by the wife on 18 January 2011 be dismissed.
Paragraph 19 of the Final Orders sought in the Initiating Application filed by the wife on 18 January 2011, in so far as it pertains to the second respondent, be dismissed.
The Orders of Justice Mushin made 24 June 2011 be discharged.
In the event that any party makes an application for costs of and incidental to these proceedings, that application be made by written submissions within 21 days of the date of these orders (including a precise minute of the order/s sought) forwarded via e-mail to …@familycourt.gov.au contemporaneously sent to the legal practitioners for the other parties, with such submissions to indicate whether that party agrees with any application for costs being dealt with on the basis of those submissions in chambers without the necessity of further appearance.
The matter be adjourned to the Registrar on a date to be advised to progress the matter towards final hearing.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vella & Buchanan and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC281 of 2011
| Ms Vella |
Applicant
And
| Mr Buchanan |
1st Respondent
And
| Bank 1 |
2nd Respondent
And
| Mr Y & Ms Y |
3rd & 4th Respondents
REASONS FOR JUDGMENT
Proceedings for settlement of property are on foot in this Court between the parties to this relationship which commenced in about 1988 and ceased some 21 years or so later. In these proceedings, the wife has joined the Bank 1 (“the bank”) as a party.
The bank had, about three months prior to their joinder, commenced recovery proceedings in the District Court of Queensland in respect of a mortgage security held by it over a property owned jointly by the parties in B Street, Town 1.
The wife filed, in those proceedings, a Notice of Intention to Defend. The wife also sought interim relief in this Court in relation to those proceedings. On 24 June 2011, for Reasons given by Mushin J, his Honour ordered that, until further order, the bank be restrained from exercising rights under its loan documentation or mortgage over the B Street property and from proceeding further with the District Court claim.
Further directions were made by Kent J on 18 July 2011. Relevant for present purposes, his Honour ordered, pursuant to Part 10.3 of the Family Law Rules 2004, that the issue raised by the wife in her Initiating Application filed 18 January 2011 in relation to the loan from the bank be determined as a separate issue prior to the trial of the s 79 proceedings. His Honour also ordered that pleadings be filed (called “Points of Claim” and “Points of Response”).
The discrete hearing sees the wife seeking orders the effect of which is to release her from liability under the mortgage over the B Street property. The bank resists that claim and is supported by the husband. It is to that issue that these reasons relate.
Jurisdiction
The issue of the Court’s jurisdiction and power was addressed in initial proceedings (for injunction) before Mushin J. Before me, the applicant contends that jurisdiction is found in the Court’s accrued jurisdiction. The bank, whose interests are potentially adversely affected by orders of the type sought, accepts that the Court has jurisdiction to make the orders sought but says that jurisdiction (and the Court’s power) are found in Part VIIIA of the Act.
Ultimately, it is not necessary to resolve any issues that emerge from any such difference. As a result of the findings I will make, the question of what power or powers the Court has to make those orders does not emerge.
All parties accept that the Court has jurisdiction to hear and determine the matter. The parties cannot, of course, consent to, or concede, jurisdiction which the Court does not have. I am satisfied that I have jurisdiction to hear the matter by reference to the express provisions of Part VIIIA of the Act (see Hunt & Hunt (2006) 36 Fam LR 64 at [121], [124]).
The Case as Pleaded
The orders sought by the wife for the purposes of this discrete hearing, are contained in a Case Outline dated 14 February 2012, filed on her behalf:
1.An order that [the bank] release [the wife] from any liability in respect of the loan secured by the [B Street] house;
2.An order that [the bank] release the mortgage registered over the [B Street] house;
3.An order that [the husband, the bank and the husband’s parents] pay [the wife’s] costs of and incidental to the application.
The gravamen of the case pursued by the wife said to ground those orders can be seen in the Points of Claim which, in broad terms, allege:
·The bank had previously lent to a company of which the husband was the sole director, shareholder and secretary, and which is the trustee of the family trust, a loan in the amount of $2,100,000 to purchase a property at S Street.
·The loan was secured by the S Street real property; by property and a business owned by the husband’s parents; and, by a personal guarantee given by each of the husband and wife and the husband’s parents.
·On 8 December 2008, the B Street loan had been paid back but the mortgage remained registered.
·On 8 December 2008, the husband and wife signed a series of loan and security documents with the bank.
·The effect of those documents was to release as security for the loan, the property owned by the husband’s parents, and their business and to release them from their personal guarantees.
·The husband drew down on the mortgage facility given at the time of that restructure and paid about $550,000 to his parents.
·The payment was made (in two instalments) without the wife’s knowledge or agreement.
·The husband never revealed to the wife his intention to remove his parents as holders of security over the property.
·The wife was, in respect of those transactions, a volunteer at law.
·The bank’s officers knew or should have known that the wife was a volunteer in respect of those transactions.
·The bank ought to have known or foreseen that the wife was a volunteer.
The Points of Claim go on to allege undue influence and an alternative claim in unconscionability. The Points of Claim also allege negligence and negligent misstatements by the bank.
The first of those claims is based upon the husband exerting “undue influence on [the wife] to sign the December 2008 documents in that he overbore her and physically assaulted her on a number of occasions leading up to the signing of them.” As a result it is said that the wife did not bring her free will to the signing of the December 2008 documents and, as a result of that, it is said that the bank had “an obligation at law to insist that the applicant obtain independent legal advice in respect of the December 2008 documents.”
The Points of Claim go on to assert that the bank failed to ensure that the wife obtained independent legal advice before signing the December 2008 documents and that by reason of each and all of those matters, it is unconscionable for the bank to enforce the loan and the mortgage as against the wife.
The “alternative claim” is premised upon a finding that the applicant “did bring her free will to the December 2008 documents.” In that event, it is asserted that it is unconscionable for the bank to enforce the second loan and the mortgage by reason of the bank being “taken at law to have understood that, as a wife, [she] may repose trust and confidence in [the husband] in matters of business, and therefore to have understood that [the husband] may not fully and accurately explain the purport and effect of the December 2008 documents to the applicant.” It is then alleged that the bank did not “fully and accurately explain the purport and effect” of the documents.
It is separately asserted in respect of the documents that the bank (through its officers) “misrepresented their purport and effect to [the wife]” by stating that the husband was “seeking to set up the facility in order to establish an overdraft for his business ‘in case it was needed’, and stating that both signatures were needed to operate on the facility.”
It is also asserted that the wife was “surprised” by the December 2008 documents as she had had no prior opportunity to read them or gain an understanding of them before they were presented to her at the premises of the second respondent on 8 December 2008 shortly before she signed them.
There is a specific allegation that the wife did not fully understand the “purport and effect” of the documents and a lack of full or adequate explanation is asserted in circumstances where, it is alleged, there was no suggestion or insistence that the wife receive independent legal advice “even though [the bank’s] own Code of Banking Practice and their own Guarantee and Indemnity form requires them to do so.”
It is in those circumstances alleged that it is “unreasonable for the second respondent, its officers and employees to assume or suppose that the applicant had an adequate comprehension of the nature and effects of the December 2008 documents before she signed them.”
The essence of the claim in negligence or negligent misstatement is an assertion that a bank employee, Mr W, “…verbally represented to [the wife] that both the signatures of [the wife] and [the husband] were required to operate the second [B Street] loan account, and that the facility was one that was ‘handy to have’ and ‘it is just a facility to have on hand’ and ‘it’s no big deal’”. Breach of duty is alleged by reason of those representations being untrue or partially untrue and constituting a misrepresentation of the relevant facts. A further allegation is made that the bank breached its duty of care by failing to adequately explain the true nature and effect of the December 2008 documents and failing to ensure that the wife received independent legal advice.
It is asserted that the applicant’s damage is constituted by the husband drawing down the sum of approximately $550,000 on the loan and paying that sum to his parents.
Although the issue has earlier been determined as one that can be considered discretely from those issues which might impact upon findings relevant to a settlement of property between the parties pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”), it will be appreciated that some issues and factual matters are likely to be common to both.
For example, the assertion by the wife that she is a volunteer is dependent upon her not having received a benefit in the transaction at the centre of the claim. That, in turn, is dependent upon the wife establishing that there was no indebtedness by her and the husband to the husband’s parents which such indebtedness was (as the husband asserts) partially repaid by the transfer to them by the husband.
That allegation in turn, depends, it would seem, upon an assertion by the wife that property owned by her and, subsequently, property owned jointly by the husband and her, was utilised so as to make profits during the course of the relationship and that those profits found their way to the husband’s parents. That assertion is denied by both the husband and the husband’s parents, who are parties to these proceedings, although it is plain on the evidence before me that there was a financial interrelationship of some sort between them all during the course of the relationship.
As a second example of the means by which the issues might be intertwined, the wife is unable to establish loss and damage in respect of the alleged claim in negligence only if the $550,000 would not, in any event, have been payable by her and the husband to the husband’s parents with the result that that sum would not have been available as between her and the husband in the proceedings for settlement of property between them. (In any event, it seems to me that, prima facie, the wife’s loss is not the amount of the draw down of the loan, but the amount that the draw down of the loan impacts (if at all) upon her overall settlement of property pursuant to s 79 of the Act).
Ultimate Findings as to Credibility
It will be plain from the brief outline just given that it is necessary to consider the principles emanating from the decisions of the High Court in Yerkey v Jones (1939) 63 CLR 649; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; and, more recently, Garcia v National Australia Bank Ltd (1998) 194 CLR 395.
As will emerge, the resolution of the wife’s claim turns, almost exclusively, on the resolution of the central factual assertions made by the wife which can be seen to underpin the potential application of those principles. Many, if not all, of those crucial factual assertions by the wife run contrary to sworn evidence given by bank officers including, in particular, Mr W and, also, contrary to the evidence of the husband.
I will shortly deal with each of those matters in more detail. The conclusions I have reached embrace findings that the (unchallenged) evidence of the bank officer, Mr N, and the evidence of his fellow bank officer Mr W should each be accepted in their entirety. I consider their evidence to be cogent and entirely reliable. As will be seen, the husband’s evidence in respect of events at two crucial meetings accords with the evidence of one or both bank officers. I accept his evidence in that respect.
By way of corollary, for reasons which will emerge, I consider the wife’s evidence to be unreliable and, in certain respects, untruthful.
Before dealing further with those matters in more detail, it is first necessary to outline a short background which places that evidence, and those findings, in perspective.
The Issues in Perspective
The wife’s evidence is that, at age 22, she purchased a home in her own name in Melbourne. The purchase price was $65,000 and the wife borrowed $47,000. According to the wife, she had paid down the mortgage to approximately $8,000 when the parties first met in 1987. At the commencement of the relationship, the wife had $12,000 savings, owned a car and had shares in AMP.
The wife gave evidence that the husband “badgered” her to give her $12,000 savings to his father and she “finally relented” in 1989. The wife claims she never saw any of that money again.
The wife’s property was subsequently sold (after the husband’s parents had overseen construction of a second dwelling on it). The wife says she “did not handle the money at all when my houses were sold and I received none of the money.” The parties subsequently purchased another block of land and a house was built on that property, again with the assistance of the husband’s parents. That property was also sold and the wife claims the “[husband’s] parents got all the money and I received nothing at all.” The wife claims the husband paid the money to his parents because he was of the view the parties “owed them for what they were doing.”
The parties purchased another home in Melbourne in 1995/1996 but the wife claims she “was not privy to any of the financial details.” That said, the wife also says “I think I signed mortgage documents to borrow money but I am not sure.” That home was demolished by her father-in-law who subsequently built a new one. The parties never moved into that home, which was subsequently sold although, on the wife’s version, she “did not receive any proceeds from the sale which all went to [the husband’s] parents.”
The parties purchased another home in Melbourne in 1997 and whilst the wife says she was, again, “not privy to any of the details”, she was of the impression that the money for the purchase ($660,000) came from “a financial arrangement” between the husband and his parents.
The parties lived in this property, and they subsequently purchased another property in Melbourne Suburb C which was, the wife claims, subject to “an agreement with [the husband’s] parents to participate in a venture.” As with nearly all of the previous purchases the wife claims she “was not privy to the arrangement.”
Three homes were built on the Melbourne Suburb C property, presumably subject to the “venture” with the husband’s parents. The wife recalls having “to sign loan documents to the [the bank] for over $1 million for [the development of the Melbourne Suburb C property]” although “the details of ownership or finance were not made privy to me and I was led to believe it was to be a mutually beneficial arrangement.”
In respect of the Melbourne Suburb C development, the wife claims she and the husband were under the impression that they would share the profits from its sale equally with the husband’s parents. According to the wife, she and the husband received nothing from the sale of the Melbourne Suburb C property. The wife also claims that the husband signed the property in which they were then living over to his parents for $400,000 which was, the wife says, a significant under value. There is no independent evidence to that effect.
The husband’s parents subsequently developed that property and sold it, according to the wife, for $2 million “and they kept all the proceeds.”
Using the $400,000 they received from the husband’s parents, the parties purchased a home “outright” in Melbourne Suburb O. That home was mortgaged in 2002 when, having moved to Queensland in 2000, the parties purchased a home in B Street, Queensland Town 1. The parties ran their newly-formed business from that property.
According to the wife, after her marriage her parents purchased four homes in Melbourne for her sister and herself “as an inheritance”. Three of the properties were put into the names of the wife and her sister, whilst one of the properties was registered in the names of the wife, her sister and her brother. The wife’s interests in those homes were subsequently called upon to satisfy the parties’ debt under a mortgage over the B Street property.
The wife claims that about “18 months after buying [B Street], [the husband] found the … [S Street] property….It was a huge house on 10 acres that might be subdivided.” According to the wife, she “only wanted to buy [S Street] if [the parties] could afford it without going into business with [the husband’s] parents again…”
The wife says the parties could not afford the property but the husband “…became obsessed about it. He pressured me to go along with it and get his parent’s help with the finance…” The wife claims that “[a]t the time we bought [S Street], I was asked to sign documents at the bank and reluctantly went along with it but I did not know exactly what I was signing other than for a loan to buy the property...”. The wife also says that she was not aware of an agreement reached between the husband and his parents with respect to S Street.
As it eventuated, a loan of $2.1 million was obtained in the name of the corporate trustee of the parties’ family trust (which the wife says the husband established without her knowledge). That loan was secured by the parties’ Melbourne Suburb O property and property belonging to the husband’s parents. The husband’s parents also agreed to pay the monthly interest instalments on the $2.1 million loan facility.
Initial applications to subdivide the property were refused, although following court proceedings in December 2008, development approval for the subdivision was granted.
The parties sold their property in Melbourne Suburb O in 2007 for $750,000. The wife says she “was coerced into selling it by [the husband]…” and “[o]ver a period of a couple of months in mid to late 2008, [the husband] told me on a few occasions that because we sold the house in [Melbourne Suburb O] the bank [was] prepared to give us a line of credit.”
The husband’s parents claim that they had a number of discussions, in which the wife was involved, regarding obtaining a release of the husband’s parents’ security for the $2.1 million facility.
The release ultimately occurred on 8 December 2008 when the husband and wife attended at the bank and each signed documents which, inter alia, extended the bank’s existing security over the B Street property and released the husband’s parents’ security for the $2.1 million facility.
The wife claims that she was completely unaware that the documents she was signing would release the husband’s parents, or that it would further encumber the B Street property. It is the events at that meeting on 8 December 2008 (and an earlier meeting at the property at which the wife alleges she was not present) which form the basis of the wife’s case against the bank.
Relevant Principles
In Garcia the submission that the decision of the High Court in Amadio had overruled the earlier principles emanating from the decision (and particularly the judgment of Dixon J) in Yerkey was specifically rejected (see per Gaudron, McHugh, Gummow & Hayne JJ at [27] ff.) That earlier principle has sometimes been referred to as “the married women’s equity”. (See for example Agripay Pty Ltd v Byrne [2011] 2 Qd R 501, per McMeekin J.)
Relief of the type sought by the wife is dependent upon the establishment of one or other of two kinds of circumstances: actual undue influence or, on the other hand, willingness on the part of (relevantly) the wife to enter the transaction but a failure to understand it arising by reasons of circumstances that point to (relevantly) the wife “misunderstanding or [of a] want of understanding of its contents or effect” (per Dixon J in Yerkey at 684).
Here, “actual undue influence” is asserted by reference to alleged violent conduct perpetrated by the husband upon the wife. In the alternative, the wife asserts that she had no understanding of the documents that she was signing and, in particular, no understanding that she was further encumbering the former matrimonial home at B Street. She asserts that she thought she was signing documents that would effect an overdraft for the purposes of the development to the S Street property. She also asserts, independently of those matters, misrepresentations made by employees of the bank and the husband.
It is clear that the principles referred to in Yerkey “do not depend upon the creditor having at the time that the guarantee is taken notice of some unconscionable dealing between the husband as borrower and the wife as surety”. In addition, the principle “begins with the recognition that the surety is a volunteer: a person who obtains no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee.” (Garcia at [31]).
The High Court in Garcia refers (at 409) to a “combination of circumstances” that “makes it unconscionable to enforce” the surety in an appropriate case:
(a)In fact the surety did not understand the purport and effect of the transaction;
(b)The transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed);
(c)The lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet
(d)The lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.
As I attempted to outline in discussion with counsel for the wife during the course of the proceedings, the principle applicable in the second category of case is based on the assumption that the lender understood that, because the potential guarantor was a wife, she may “repose trust and confidence in her husband in matters of business”. The principle also proceeds from the further assumption that the husband may not fully and accurately explain the purport and effect of the transaction to this wife. Indeed it is those assumptions that lie at the heart of the requirement for the lender itself to take steps to explain the transaction independently to the wife or to “find out that a stranger had” done so.
Significant to the facts of this case, in Garcia Callinan J held (at 443), referring to the evidence at trial in that case of “pressure and want of understanding” that:
Very rarely will such findings as were made here be open in a case of a wife with the qualifications, experience and other attributes possessed by this appellant. One aspect of the change that has occurred in the enhancement of women’s opportunities and relief from discrimination is that, in practice, wives may find it more difficult to satisfy a court that they have succumbed to pressure, or have been mislead by their husbands in financial matters.
In order to exclude the wife from the category of volunteer, the benefit or gain by the wife “must be direct or immediate” (see Agripay, per McMurdo P at [11], citing Cranfield Pty Ltd v Commonwealth Bank of Australia [1998] VSC 140 at [103], [104]; State Bank of NSW v Chia (2000) 50 NSWLR 587 at 601.)
In rejecting the contention that the wife was not a volunteer in Agripay, the President of the Queensland Court of Appeal held (at [11]) that the evidence was that the prospect of any profit to the wife was “speculative” and that “[e]ven if she did receive some eventual modest benefit, it was likely to be neither direct nor immediate…”.
In terms of the evidence relating to the wife’s assertions as to her lack of understanding of the transaction in this case, it might be observed that the trial judge in Agripay found as a fact (at [20]) that the wife there:
…did not understand critical aspects of the transaction she was guaranteeing, including the amount of the principal debt, the terms of the loan, and the risks of this unusual investment, particularly the high management fees in the early years of the loan and the illiquid nature of the investment because of the absence of a market for sale… Her misapprehension concerned essential aspects going to the heart of the transactions she was guaranteeing…
I turn now to consider the evidence in more detail.
The Evidence
It will, I think, already be clear that the wife’s case rests almost entirely upon an acceptance of her own evidence. It is her evidence which is central to the assertion that her will was overborne in the agreement to the transactions complained of and the signing of documents effecting same. More particularly, her assertions as to what occurred, or did not occur, and what was said, or not said, at meetings with officers of the bank can be seen as crucial to other assertions lying at the heart of her claim/s.
The acceptance of her account in those respects involves rejecting the evidence of two bank officers and the husband. As will emerge, I accept in its entirety the evidence of each bank officer and the evidence of the husband in respect of the specific issues to be addressed. As will be seen, the acceptance of that evidence pertains to specific allegations made by the wife and the circumstances said to surround and support those allegations.
The wife was a singularly unimpressive witness. Indeed, I am comfortably satisfied that her evidence was largely untruthful.
Specific examples will be referred to in a moment. First, though, it is necessary to observe that I reject the notion that the wife was, generally, a naïve non-participant in the commercial affairs of her family (by which I mean including those transactions involving her in-laws) and, then, the commercial affairs of her marriage. She owned property as a single woman of 22. Transactions involving real property concerned her and her siblings throughout the marriage.
I accept that the commercial inter-relationship between the husband’s parents, the husband and her were attended by conflict from time to time and were the subject of arguments between her and the husband. I also accept that the wife may not have been aware of the minutiae or exact details of that commercial inter-relationship, including, for example, amounts that may have been owed by the husband and wife to the husband’s parents from time to time.
However, I reject utterly the notion that the wife was ignorant of those arrangements as she asserts.
In what I find is an attempt to inculcate a false picture of herself as financially ignorant and naïve, the wife asserted that, up until early 2009, she “did not know what [bank] statements were. I hadn’t looked at them. I didn’t understand how they operated. My last understanding of banking was going into a bank with physical money.” I specifically reject that evidence.
I find that the wife was, generally speaking, just as much an active and enthusiastic participant in the S Street property venture as the husband and that she knew that it could not be facilitated without significant borrowings and the assistance of her husband’s parents in securing those borrowings.
This finding is consistent, for example, with the wife’s evidence during cross-examination that she took the initiative to attend the Planning and Environment Court “a few times”, notwithstanding the fact that, as she alleges, the husband did not want her to attend. She alleges this was to “show [her] support” and because she “wanted to see what was going on, because I wasn’t privy to what was going on.” I reject her explanation of her reasons for attending. In my view, she attended because she knew, and was interested in, the impact of the proceedings upon the venture.
I specifically reject, for example, the evidence of the wife earlier quoted that she only wanted to buy the S Street property without reference to the husband’s parents. I also specifically reject the wife’s evidence that she was unaware of any agreement reached between the husband and his parents with respect to their assistance in acquiring that property.
I find specifically that the wife well knew that the husband’s parents were meeting the interest payments on the borrowings for S Street. Indeed, I find that she well knew they could not be met without the parents’ assistance.
8 October 2008 Meeting
The wife alleges she was not present at a meeting with Mr N and Mr W from the bank at the S Street property on 8 October 2008. Contrary to this contention, the husband gave evidence that the wife was “an active participant” at that meeting, providing “Turkish coffee for all of us and [sitting in] throughout the whole meeting.” Mr W, who attended at the S Street property on 8 October 2008 in his capacity as manager of the parties’ lending facility, stated that:
…I recall that [the wife] was not a quiet participant and she was involved in the discussions. For example, [the wife] described to [Mr W’s manager] and I, the background of [R Company] [the parties’ business] and what the business entailed.
During the course of the [meeting on 8 October 2008], [the husband] and/or [the wife], in the presence of each other, [my manager] and I, said words to the effect of:
(a)They had future plans for the [S Street] property, but were yet to decide if they would develop the site or on-sell it to a developer;
(b)They had a desire to draw down funds from their Home Loan…The Home Loan had a redraw facility attached to it, which allowed either [the husband] or [the wife] to separately drawdown funds from this facility when they desired;
(c)They wished to remove [the husband’s] parents…as guarantors of the […] Home Loan.
My recollection is that both [the husband] and [the wife] were actively involved in the discussion regarding the above matters…
Mr N, Mr W’s manager, attended at the S Street property with Mr W on 8 October 2008. According to Mr N, the wife was present at the meeting on 8 October 2008 and “[t]here was no indication that she was having any issues understanding English, neither was there any indication that she did not understand the content of the discussions we were having… [the wife] also participated in the discussions however not to the extent of [the husband].” The wife, according to Mr N, “was present for the duration of the meeting.”
Alleged Violence
The wife alleges that during 2008 “on three occasions [the husband] physically assaulted me to the point where I had bruising on my face, throat, neck, and across my chest and my arms…” The wife also alleges that when she attended at the bank on 8 December 2008 “I was visibly bruised on my left cheek and around my neck on this occasion.” During oral evidence, the wife said that, at the time of the meeting at the bank on 8 December “I had just been beaten black and blue and – within an inch of my life…I had bruising – severe bruising that I couldn’t hide with makeup…”. The wife went on to say that the last of the alleged assaults took place “days” before the 8 December 2008 meeting and at the time of that meeting, the wife “was in a huge state of anxiety and … very edgy”.
The wife relies upon the evidence of a friend, Ms K, to support her claim that she had bruising on her body around the time of the December meeting with the bank. Ms K deposes to seeing “two separate bruises on [the wife’s] body at two different times” in “the last few months of 2008”. Ms K asserts seeing these bruises “on a number of occasions that I met with her. I would say about a dozen occasions…” The first bruise Ms K reports seeing was “on [the wife’s] upper arm…” After this bruise, Ms K says she “saw bruising on the left side of [the wife’s] face and around her left jaw line and down the left side of her neck. The marks on her neck were severe and over a large area of her neck…”
During cross-examination by counsel for the bank, Ms K clarified that she saw the bruising referred to in her affidavit “in the December period”. When asked by counsel how that evidence could sit with a photograph taken of the wife on 3 December 2008 in which no bruising on the left side of the wife’s face and/or neck is visible, Ms K responded “[the wife] was using makeup to cover up the bruises…” This evidence is in direct contradiction to the wife’s evidence that she “couldn’t hide [the bruising] with make-up.”
The wife also alleged that she attended a doctor “four months” after the last alleged assault because she “still had bruising”. That would have been in or about April 2009. In contrast to this evidence, Ms K deposed to the wife telling her she had attended a doctor prior to seeing the second set of bruises in late 2008. Ms K also gave oral evidence that whilst the bruises she allegedly saw on the wife took some time to heal, “it certainly wasn’t months”. During oral evidence, the wife asserted that the doctor gave her a referral for a counsellor and, when the wife told the doctor how she obtained the bruise, he asked the wife “what did you do for him to do that?” at which point the wife “got up and walked away.” The wife did not attend the counsellor as she could not afford it. There is no evidence from the doctor; the wife claims the doctor did not take any notes during his consultation.
The husband denies ever assaulting the wife, and instead alleges that the wife assaulted him on several occasions. During oral evidence, the husband stated that he had seen bruising on the wife’s “cheek” in November 2008, but that that bruising was a consequence of his “restraining her from further assault on my body”. The husband alleged that:
It was mid November [2008]. I was in the – what’s called the TV/family room, folding some clothes. She arrived home in a rage and, out of the blue, from behind, started kicking, spitting, throwing – like windmill arm actions and I was hit numerous times in shock. I ran – walked very fast to a room in the back of the house next to that room, which is known as the sewing room, to try and just shut the door and at least let her calm down and she barged through the door – and when she’s in a rage, she’s in a rage – and she did not stop. I thought, I’m cornered here. I have to stop her from seriously damaging me, because I have seen what’s happened before when she hit me in amongst a double brick wall. So I restrained her and, in the process, we fell to the ground and I pushed her, held her wrists and – because she was spitting as well – and put them against her face to stop and try to stop her from kicking as well.
The husband asserted that any bruising stemming from his “restraining the wife” was not visible at the 8 December 2008 meeting, nor was it visible on 3 December 2008 when he and the wife hosted a “river cruise” with franchisees of their business.
A colour photocopy of a photograph depicting the wife on a boat was tendered by the husband. The photo was taken on 3 December 2008 by Ms H, who was a franchisee. There are no discernable bruises to the left side of the wife’s face or neck in the photo. Ms H gave evidence that she “definitely” did not see any bruising on the left-hand side of the wife’s lower jaw and/or neck on 3 December 2008 nor was the wife wearing more make-up than usual.
Mr W stated in his affidavit filed 20 May 2011 that he “did not see any bruises on [the wife] at the [8 December 2008] Meeting. I would distinctly remember if I had seen any bruising as I would have been very uncomfortable and would have immediately reported the matter to my manager at the Bank.” Mr W also stated that the wife’s “mood was calm” during the meeting.
Other Allegations of Lack of Free Will
The wife states in her affidavit filed 18 January 2011 that Mr W was “nonchalant” and “matey” with the husband during the meeting on 8 December 2008. According to the wife “[Mr W] seemed very friendly with [the husband], but not so friendly with me. I felt uncomfortable and pressured.”
The wife also deposed that, during the meeting on 8 December 2011, Mr W left her and the husband alone. During cross-examination, the wife said that Mr W left them alone for “[a] good 10 minutes, maybe more…” during which time the husband told the wife that he required the loan “for the business. It’s just an overdraft.”
Mr W denies being overly friendly with the husband. According to Mr W the meeting on 8 December 2008 was only the second time he had met the parties and “therefore [he] was not overly friendly or unfriendly to either of them.”
Mr W gave evidence that he did not leave the parties alone during the meeting on 8 December 2008. According to Mr W, he offered to leave the parties alone but “was told there was no need.” Mr W also deposes to the parties having “a conversation between themselves in front of me in a foreign language.”
The husband gave evidence consistent with that of Mr W. According to the husband, the wife did not ask Mr W to leave the room, and at no point during the meeting on 8 December 2008 did Mr W leave the parties alone. During cross-examination, the wife said she did not recall speaking to the husband in a foreign language. The husband states, in his affidavit filed 15 June 2011, that the wife “initiated a conversation with me in front of [Mr W] in [a foreign language].”
Independent Advice
The wife deposes that during the meeting with Mr W on 8 December 2008, there was a “big stack of documents on the table” in respect of which Mr W said “you can read it if you can be bothered” at which time the husband and Mr W “joked about how nobody reads these big documents.” The wife claims that Mr W “put the documents in front of me and I signed them. He did not offer me the chance to get independent legal advice, or advise me to get any.”
The husband states, in his affidavit filed 15 June 2011, that “I particularly recall [Mr W] saying we could get independent legal advice in relation to the documents.” The parties, according to the husband, declined to do so.
According to Mr W he sent a copy of the documents that were to be signed by the parties to them prior to the meeting to give them “ample opportunity to read the documents carefully prior to … meeting with me to sign the documents.” During oral evidence, I asked Mr W if he had a standard practice when meeting with customers to sign documents of the sort signed by the parties on 8 December 2008. Mr W confirmed that, whilst he could not recall verbatim what he said to the parties on 8 December, he did have a usual practice “which requires me to provide the documents in advance, but also recommend customers seek independent legal advice.” Mr W said there was no reason why he would not have followed his usual practice on 8 December 2012. I accept that evidence.
Mr W also stated, in his affidavit filed 20 May 2011 that, if either of the parties had seemed “agitated or was not willing to sign the loan documents, I would have declined to witness their signature on the documents.”
Representations
The wife alleges that Mr W told her that the documents she was signing on 8 December 2008 were in respect of “just a facility to have on hand” and that such a facility was “handy to have”. The wife claims that she was not informed that, in signing the documents, the husband and wife were extending the bank’s security over the B Street property and were removing the husband’s parents as guarantors of the loan taken out with respect to the S Street property.
The wife says she sought confirmation from Mr W that the loan agreement was “no big deal” and whilst Mr W “did not answer [he] nodded…” The wife also claims that Mr W told her the husband could not withdraw money unless she authorised such withdrawal, and vice versa. Mr W denies telling the wife that neither party could access the account without the authorisation of the other. According to Mr W “it is unusual for a husband and wife to request that a joint account be only accessed with the consent of the parties…”
During cross-examination by counsel for the bank, the wife claimed that Mr W told her “several times” that the loan facility “is no big deal” and is “handy to have”.
Mr W claims that, based on his usual practice, he would have “explained each document to both [the husband] and [the wife] as I asked them to sign their signature on each document. I then witnessed their signatures…”
During cross-examination by counsel for the bank, the husband stated that “[Mr W] explained what [the documents] were. This is security, this is releasing. This is for the […] mortgage and so on …” In his affidavit filed 31 August 2011, the husband claims the wife “knew why we were going to [the bank] [on 8 December] as she had attended the meeting in October with the bank and we had discussed the release of my parents and the new facility many times.”
Conclusions about Evidence
My disquiet about the veracity of the wife, gained by listening to and observing her evidence is underlined by what I regard as untruthful evidence about her non-attendance at a meeting at the S Street Property on 8 October 2008. Three separate deponents depose to the wife’s attendance at that meeting. The husband does so, as do Mr W and Mr N, each of whom are bank officers. As earlier referred to, I accept their evidence.
The wife agreed in cross-examination that, given the subject matter of the alleged meeting (namely, a borrowing in excess of $2 million) if a meeting had occurred at which she was present she “would not forget” attending it.
At first, the wife asserted that she “could not recall” whether or not she was present at any such meeting. When pressed, the wife denied her attendance at that meeting. In doing so she specifically asserted that the husband and the two bank officers just referred to were untruthful when each asserted that she did attend that meeting and that Mr W and the husband had been untruthful in the witness box in that respect.
Remarkably, in light of those specific assertions, Mr N’s evidence was not challenged; he was not required for cross-examination.
Mr W did give evidence. I consider his evidence to be thoughtful, careful and considered. I have no doubt about his veracity. I accept specifically the evidence of Mr W, Mr N and the husband that the meeting took place and the wife was present at that meeting.
Equally importantly, I accept the evidence of each that the wife was an active participant at that meeting.
This false evidence by the wife about a centrally important matter taints the wife’s evidence in significant ways. The non-attendance at that meeting is crucial to the overall assertion by her of her lack of involvement in and about the negotiations that ultimately led to the transactions complained of and the alleged lack of information and representations allegedly made in and about those transactions.
It is also crucial to what in my view is a clear distinction between the facts here and the circumstances in cases such as Agripay, above. If the husband and officers of the bank were making plans and discussing obligations in the absence of the wife, the circumstances might be seen to be more akin to those pertaining in Agripay and the cases earlier referred to. The circumstances here, as I have found them to be, might be seen to be in stark contrast to those circumstances. Here, as I find, the husband and wife sought jointly the benefit of the venture at the heart of the transactions and sought to take the burden of borrowings necessary to effect the transactions concomitantly. (See in that regard the reference to “the combination of circumstances” referred in Garcia at 409).
Findings and Conclusions
I make the following findings in respect of the issues relevant to the determination of the discrete issue before me:
a)The wife does not establish that there was actual undue influence upon her at the instance of the husband operative at the time she entered into these securities which she seeks to avoid. I reject her evidence as to threat and actual violence by the husband. I reject her account of the meeting/s and the alleged lack of involvement by her.
b)The wife was not a volunteer in the sense in which that specific expression is used in Garcia. This is not a case where a person is “roped in” to an agreement not of their choosing from which they gain nothing. That is, the wife in my view did obtain, potentially, a direct financial benefit from the transaction and the performance of the obligations which she agreed to guarantee; she obtained the same potential benefit as the husband.
c)The assumption that might otherwise arise whereby the bank ought to have understood that the husband may not fully and accurately explain to her the purport and effect of the transaction which the wife entered, is displaced by evidence that the wife actively participated in the meeting at the S Street property on 8 October 2008 during which the parties discussed with Mr N and Mr W their “desire” to draw-down funds to facilitate development of the property and to remove the husband’s parents as guarantors.
d)Contrary to the assertion of the wife, she was well aware of the nature of the transaction and its purport and effect.
e)Contrary to the assertion of the wife, she fully participated in the two interactions with the bank and was aware at all times of the nature and extent of the obligations attaching to her.
f)Contrary to the assertion of the wife, the representative of the bank, Mr W, explained to her the nature of the transaction and the obligations specific to the wife.
g)The wife did in fact bring her free will to the signing of the documents on 8 December 2008. I reject her evidence that she was overborne by either the husband or any bank officers.
h)I accept that the bank officer, Mr W, advised the wife that she should obtain independent legal advice in respect of the transactions which she was entering. I reject the wife’s evidence to the contrary.
i)Contrary to the assertion of the wife, neither the husband nor Mr W made any or all of the representations which she attributes to them in respect of the purport, nature or extent of the documentation which she entered.
j)Specifically, and again contrary to the assertion of the wife, an employee of the bank (Mr W), did not represent to the wife that signatures of both husband and wife were required to operate the B Street loan account.
k)Specifically, and again contrary to the assertion of the wife, Mr W did not represent to the wife that the facility was “just one that was handy to have” and “it is just a facility to have on hand and ‘it’s no big deal”.
l)It is not established that the bank failed in the asserted, or any, duty of care owed by it to the wife.
m)It was no part of any duty of care owed by the bank, in the circumstances of this case at least, to the wife, that it should “ensure” that she received independent legal advice.”
For these reasons, I reject the wife’s claims as against the bank and will dismiss the wife’s application in so far as it seeks declarations and orders excising any liability on her part to the bank stemming from the loan agreement entered into on 8 December 2008.
I order accordingly.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 5 June 2012.
Associate:
Date: 5 June 2012
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