Westpac Banking Corporation v Billgate Pty Ltd
[2013] NSWSC 1304
•11 September 2013
Supreme Court
New South Wales
Medium Neutral Citation: Westpac Banking Corporation v Billgate Pty Ltd [2013] NSWSC 1304 Hearing dates: 17, 18, 19 & 20 June; 29, 30 & 31 July; 1, 2, 12 & 13 August 2013; further written submissions 20, 22 and 23 August 2013 Decision date: 11 September 2013 Jurisdiction: Equity Division - Commercial List Before: Stevenson J Decision: Plaintiff entitled to judgment for debt and possession
Catchwords: BANKING AND FINANCE - banker and customer - loan facilities to property development companies - guarantees and mortgages to secure corporate debt - whether guarantor received independent legal and financial advice - whether Bank misled customer as to the availability of funds - whether Bank acted without authority in clearing customers' excesses - whether alleged misleading representations caused a funding crisis which caused cessation of building work and financial loss in the sale of property development - whether alleged misleading representations caused loss in that properties would have been sold in more favourable market conditions
TRADE PRACTICES -- misleading or deceptive conduct - Trade Practices Act 1975 - Fair Trading Act 1987 - Australian Securities and Investments Commission Act 2001 - whether representations by Bank in contravention of
CONTRACT - Contracts Review Act 1980 - whether deed liable to be set aside - whether deed is an "unjust" contract within the meaning of the Contracts Review Act 1980 - whether Bank engaged in unconscionable conduct or exerted economic duress in connection with the deed
CONTRACT - terms and conditions - deed of settlement and release - proper construction of deed - whether terms of deed are limited to "known" causes of action at the time of settlement - whether causes of action were sufficiently "known" in any case
EQUITY - whether guarantee and deed ought to be set aside - undue influence
EQUITY -- whether guarantee ought to be set aside - unconscionable conduct -- husband and wife - lack of independent advice
EQUITY - trusts - whether properties held on constructive trust
REMEDIES - statutory remedies - Trade Practices Act 1975 - damages - misleading or deceptive conduct - unconscionable conduct
REMEDIES - statutory remedies - Contracts Review Act 1980 - damages - unjust contract - whether guarantee and deed are unjust
DAMAGES - personal injuries - non-economic loss - anxiety and distressLegislation Cited: Australian Securities and Investments Commission Act 2001 (Cth)
Contracts Review Act 1980
Evidence Act 1995
Fair Trading Act 1987
Trade Practices Act 1974 (Cth)Cases Cited: A v N [2012] NSWSC 354
Attorney-General (NSW) v World Best Holdings Ltd [2005] NSWCA 261; (2005) 223 ALR 346
Australia & New Zealand Banking Group Ltd v Karam [2005] NSWCA 344; 64 NSWLR 149
Australian Competition & Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491
Bank of Credit and Commerce International SA (in liquidation) v Ali [2001] 1 All ER 961
Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59; (1998) 195 CLR 566
Cameron v Qantas Airways Ltd (1995) 55 FRC 147
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101
Grant v John Grant and Sons (1954) 91 CLR 112
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Kakavas v Crown Melbourne Ltd [2013] HCA 25
Karam v ANZ Banking Group Limited [2001] NSWSC 709
Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; (2008) 77 NSWLR 205
London and South Western Ply Co v Blackmore (1870) LR 4 HL 610
Lyall v Edwards (1861) 158 ER 139
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41
Salkeld v Vernon (1758) 1 Eden 64
The Owners Corporation of Strata Plan 61390 v Multiplex Corporate Agency Pty Limited (No 2) [2012] NSWSC 322
Watson v Foxman (1995) 49 NSWLR 315Category: Principal judgment Parties: Westpac Banking Corporation (plaintiff)
Billgate Pty Limited (first defendant)
101A Darling Point Road Pty Limited (second defendant)
William John Jamieson (third defendant)
Jennifer Robyn Jamieson (fourth defendant)
Louis William Le Compte (interested party)Representation: Counsel:
J B Simpkins SC with J M White (plaintiff)
W G Muddle SC with R A Parsons (first to third defendants)
D L Williams SC with J D Little (fourth defendant)
Solicitors:
Gadens Lawyers (plaintiff)
Ian Congdon (first to third defendants)
CLS Legal (fourth defendant)
File Number(s): SC 2012/312312 Publication restriction: Nil
Judgment
Introduction
The plaintiff, Westpac Banking Corporation, brings these proceedings as successor in law to St George Bank Limited (together, "the Bank").
The Bank provided facilities to the first defendant, Billgate Pty Limited and the second defendant, 101A Darling Point Road Pty Limited ("the Billgate Facility" and "the 101A Darling Point Facility" respectively).
The facilities were what the parties described as "BBSY" facilities. This was a synthetic bill product that emulated a conventional bill acceptance facility (where bills are discounted in the bill market). Funds were generated by drawdowns and rollovers on a one or two month cycle. Draw downs occurring between rollover dates were generally subject to a maturity date which coincided with the next rollover date for the principal bill and allowed the lesser amounts to be rolled into the next rollover of the larger amount.
When drawn down, funds were generally paid by the Bank to a conventional cheque account of the borrower and, in the case of 101A Darling Point, then paid to the builder or other recipient appropriate to the purposes of the draw down. Fees and charges included a discount fee and an acceptance fee, both of which were expressed as a percentage of the amount being drawn down or rolled over.
Billgate used the Billgate Facility to complete a development in Roslyndale Avenue, Woollahra. That development is now complete, the property sold and the proceeds paid to the Bank.
101A Darling Point used the 101A Darling Point Facility to complete a development of three apartments at a property it owns at Darling Point ("the Darling Point Project"). That development is also complete. The facilities were separate but, ultimately, cross-collateralised.
The sole director and secretary of Billgate and of 101A Darling Point is the third defendant, Mr William Jamieson.
There has been default under each of the Billgate and 101A Darling Point Facilities.
The Bank seeks judgment for an amount in excess of $28 million from Billgate, 101A Darling Point, and from Mr Jamieson pursuant to the facilities and guarantees each of them has executed in favour of the Bank.
The Bank also claims, pursuant to mortgages executed in its favour, possession of the Darling Point property, and another property at Joadja (of which Mr Jamieson is the registered proprietor).
The fourth defendant, Mrs Jennifer Jamieson, is the wife of Mr Jamieson. Mr and Mrs Jamieson separated in February 2011.
Mrs Jamieson operates a farm stay business at the Joadja property. That business is Mrs Jamieson's only source of income.
Mrs Jamieson is not a shareholder in either Billgate or 101A Darling Point. She is a shareholder of Jamcart Pty Ltd (which holds shares in Billgate). However, she holds those shares in trust for Mr Jamieson. Mrs Jamieson has no interest in 101A Darling Point.
From 2005, Mrs Jamieson was the registered proprietor of a property in Vaucluse. That property was the Jamieson family home. On 31 October 2005, the Bank advanced $3.5 million to Mrs Jamieson ("the Portfolio Loan"), secured by a mortgage over the Vaucluse property, to refinance a loan Mrs Jamieson had earlier taken out with Perpetual Trustee Company Limited to purchase the property. The limit of the Portfolio Loan was subsequently increased.
On 18 June 2009, Mrs Jamieson signed a guarantee (limited to $1 million) in respect of the indebtedness of 101A Darling Point to the Bank, and a mortgage over the Vaucluse property as security for that guarantee. The events of 18 June 2009 are central to the dispute between the parties.
Some 10 months later, on 15 April 2010, Mrs Jamieson signed a guarantee (limited to $1.3 million) in respect of the indebtedness of Billgate to the Bank. That guarantee was also secured over the Vaucluse property.
Prior to signing the documents referred to at [15] and [16], Mrs Jamieson had no liability to the Bank in respect of either 101A Darling Point or Billgate. Her only liability had been under the Portfolio Loan.
Mrs Jamieson exchanged contracts to sell the Vaucluse property in March 2011. Settlement occurred in June 2011. The net proceeds of sale, after payment of the monies owing by Mrs Jamieson to the Bank on her own account, in the order of $1.4 million, were placed on deposit with the Bank. The Bank has since purported to appropriate that sum in the circumstances described below.
Mrs Jamieson now lives in one of the three apartments at the Darling Point property with two of Mr and Mrs Jamieson's three children and with Mrs Jamieson's aged mother. Mr Jamieson lives in another of the apartments. There is no evidence as to who, if anyone, occupies the third apartment.
On 16 August 2012, the Bank and each of the defendants entered into a Deed of Settlement and Release ("the Deed") in which the defendants agreed to pay the Bank $23 million (by two instalments; $10 million by 17 August 2012, and $13 million by 21 September 2012) in full satisfaction of the Bank's claims. At the date of the Deed, the amount owing to the Bank was in the order of $37 million.
By the Deed, the defendants acknowledged default under the various facilities and agreed that, upon payment of the first instalment of $10 million, they would release the Bank from all claims. They also agreed that, if they defaulted under the terms of the Deed, they would, among other things, consent to judgment in favour of the Bank for: -
(a) possession of the Darling Point and Joadja properties; and
(b) the whole of the indebtedness to the Bank of 101A Darling Point and Billgate.
The first payment ($10 million) was paid on time. The second payment ($13 million) was not paid at all.
In addition to seeking possession of the Darling Point and Joadja properties, the Bank seeks to recover the full amount of the companies' indebtedness to it from Mr Jamieson pursuant to guarantees he has executed, as well as under the Deed.
The Bank does not seek monetary compensation from Mrs Jamieson. The only relief the Bank seeks against Mrs Jamieson is possession of the Darling Point and Joadja properties.
The Bank's case in chief
The Bank's case in chief is documentary and formal.
The Bank relies upon the security documents executed by the parties and, in particular, the Deed.
It is common ground that the Bank has made out, in its case in chief, its entitlement to the relief it seeks.
Whether or not, at the end of the day, the Bank is entitled to that relief depends upon the determination of the claims made by Mr and Mrs Jamieson in relation to, amongst other matters, the Deed.
The claims made by 101A Darling Point, Billgate and Mr Jamieson
101A Darling Point
The Bank and 101A Darling Point entered the 101A Darling Point Facility in December 2007 to fund the Darling Point Project. At that time, the Senior Relationship Manager at the Bank with whom Mr Jamieson was dealing was Mr Andrew Allan. In about May 2008, Mr Jamieson informed Mr Allan that the amount then available for construction under the 101A Darling Point Facility was inadequate. 101A Darling Point contends that, in response, Mr Allan represented to Mr Jamieson, and thus to it, that it should commence construction and that the Bank "would make available sufficient funds to complete the construction of the Development as such funds were required".
Mr Muddle SC, who appeared with Mr Parsons for 101A Darling Point (as well as for Mr Jamieson and Billgate), accepted that this statement could not be relied on by 101A Darling Point as a "blank cheque" and stated that 101A Darling Point did not rely upon it as a stand alone representation. Rather, it was relied on as background for the representations said to have been made in 2009.
101A Darling Point contends that the Bank represented, by a letter of offer of 9 June 2009 sent by the Bank to 101A Darling Point ("the 9 June 2009 letter of offer"), and by representations alleged to have been made by Mr Allan at a meeting at the Jamieson home at Vaucluse on 18 June 2009, that the following sums (which were set out in the 9 June 2009 letter of offer) would "stand as available funds" within the 101A Darling Point Facility upon entry into the facility amendment offered in the 9 June 2009 letter of offer: -
(a) $4,076,000 for construction;
(b) a further sum of $1 million for drawings by Mr Jamieson for the purposes of Mr Jamieson and Mrs Jamieson as follows: -
(i) an "equity redraw" of $350,000;
(ii) "professional fees" of $300,000;
(iii) "contingency" of $200,000; and
(iv) $150,000 comprising "previously unexpended funds" approved in an earlier facility letter.
101A Darling Point also contends that, at the same time, the Bank represented that the "existing debt" under the 101A Darling Point Facility was $8.222 million.
101A Darling Point contends that these representations were false because, first, the $1 million did not stand as available funds under the 101A Darling Point Facility as amended by the 9 June 2009 letter of offer and, second, because the "existing debt" under the 101A Darling Point Facility as at 9 June 2009 was $9.261 million, not $8.222 million.
101A Darling Point alleges that it was told by Mr Allan, in August 2009, that the $1 million was not available, and had been substantially expended before 9 June 2009.
101A Darling Point also asserts that, on 6 August 2009, Mr Allan, without its authority, transferred from 101A Darling Point's account "approximately $600,000" (it was, in fact, $629,150 - see [396] below), being funds which were the proceeds of a draw down on the 101A Darling Point Facility for the payment of progress claim number 13 to the builder engaged by 101A Darling Point to construct the development. 101A Darling Point alleges that, as a result, it was unable to pay progress claim 13 to the builder.
101A Darling Point claims that this caused what was described in submissions as an "immediate funding crisis" for 101A Darling Point and the construction of the Darling Point Project, deprived 101A Darling Point of funds to pay the builder's progress claims, placed the Project in jeopardy and caused the builder, temporarily, to cease work.
The builder issued a notice of default in November 2009, before suspending works in February 2010 until August 2010. This is alleged to have had the practical effect that completion of the construction of the Darling Point Project was delayed until February 2011. 101A Darling Point claims that, by this time, the market for units in the development had fallen such that the "obtainable price" for the units in the development was in the order of $12 million. Had the Darling Point Project been completed in late 2009 or early 2010, 101A Darling Point alleges the price that would have been "obtainable" was in the order of $21 million.
101A Darling Point claims damages for this alleged loss.
101A Darling Point, Billgate and Mr Jamieson seek to set aside the Deed on the basis that it is an unjust contract within the meaning of the Contracts Review Act 1980 and on the basis of the allegedly unconscionable conduct of the Bank leading up to the execution of the Deed.
101A Darling Point, Billgate and Mr Jamieson also claim that, because the releases in the Deed do not, in terms, release the Bank from claims "whether known or not known", the Deed is not effective to prevent them bringing claims against the Bank of which they were ignorant when entering the Deed (relying on Salkeld v Vernon (1758) 1 Eden 64 at [67] - [68]).
Billgate
Billgate makes a claim for relief that is consequential upon that claimed by 101A Darling Point. Billgate alleges that, "as a consequence of the matters pleaded" by 101A Darling Point, Billgate has or will suffer damage referrable to: -
(a) additional "holding costs" and the "cost of performing the renovation works" at the Woollahra property;
(b) disruption, from about August 2009, in Billgate's contractual relations with its contractors; and
(c) delay in "the execution of the renovation works" which, as the Woollahra development was completed in November 2010 rather than mid 2010, resulted in Billgate "missing the market" in relation to the sale of the Woollahra property.
Mr Jamieson
Mr Jamieson's claim is also consequential upon that made against the Bank by 101A Darling Point.
Mr Jamieson alleges that, but for the matters pleaded by 101A Darling Point, he would have sold the Darling Point property in a more favourable market permitting discharge of the securities that he has given to the Bank.
Mrs Jamieson's claims
Mrs Jamieson seeks monetary relief, relief in contract and proprietary relief.
Monetary relief
Mrs Jamieson claims that she executed the guarantee and mortgage referred to at [15] in reliance upon representations made by the Bank that the funds to be advanced to 101A Darling Point would be made available to Mr Jamieson to: -
(a) make payments when due and payable on the Portfolio Loan;
(b) to finalise the Darling Point Project; and
(c) to meet family living expenses.
Mrs Jamieson also claims that, but for her execution of the mortgage over the Vaucluse property, she would have, in mid 2009, sold the Vaucluse property into what she claims to have been a favourable market.
Mrs Jamieson claims that, contrary to its representations, the Bank set-off the relevant increase in the 101A Darling Point Facility granted by the Bank to 101A Darling Point against other loans, with the result that there were no funds available to service the Portfolio Loan or for any other purpose.
Mrs Jamieson claims that as a result, the Portfolio Loan fell into arrears. On 2 March 2011, the Bank demanded repayment of those arrears. Mrs Jamieson claims that this forced her to sell the Vaucluse property in a depressed market.
Mrs Jamieson sold the Vaucluse property for $7.5 million by a contract exchanged on 25 March 2011 and settled on 24 June 2011. As I have mentioned, the net proceeds of sale were in the order of $1.4 million. The Bank retained this sum in a term deposit, and has appropriated it pursuant to the provisions of the Deed.
Mrs Jamieson claims damages for the loss she claims to have suffered by reason of the fact that she sold the Vaucluse property in 2011, rather than in 2009.
She also claims damages for anxiety and distress
Relief in contract
Mrs Jamieson seeks to have the guarantees she executed in relation to 101A Darling Point and Billgate, and the Deed, declared void or set aside on the basis that the circumstances in which she entered those transactions were unfair, unconscionable and procured by misrepresentations by the Bank. So far as concerns the guarantee that Mrs Jamieson executed in relation to Billgate, Mrs Jamieson alleges that she understood the document merely to be an extension of her potential liability (by $300,000) under her existing guarantee to 101A Darling Point, and relies upon the defence of non est factum. In relation to the Deed, Mrs Jamieson alleges that the Bank exercised economic duress in procuring her execution of that document.
Although the Bank seeks no relief against Mrs Jamieson under either of the guarantees she has executed, Mrs Jamieson seeks to have them set aside.
As an alternative for having lost the opportunity to sell the Vaucluse property in 2009 (see above), Mrs Jamieson claims damages in respect of the Bank's appropriation of the interest bearing deposit representing the net proceeds of sale of the Vaucluse property.
Proprietary relief
Mrs Jamieson also claims, under general law, or alternatively under statute that: -
(a) 101A Darling Point holds the Darling Point property wholly on constructive trust in her favour;
(b) Mr Jamieson holds the Joadja property wholly on constructive trust in her favour;
(c) her interests in the Darling Point and Joadja properties are held in priority to any interest of the Bank; and
(d) alternatively, she is entitled to a life estate of each of the Darling Point and Joadja properties.
Mrs Jamieson submits: -
(a) she has lost her Vaucluse home by reason of the Bank's conduct;
(b) she now lives in one of the units at 101A Darling Point and has done so since moving out of the Vaucluse home;
(c) having regard to the conduct of the Bank by which Mrs Jamieson lost her property and home, it would be unconscionable for the Bank to rely upon its legal interest in the 101A Darling Point property or the Joadja property without giving effect to Mrs Jamieson's interest in those properties by way of the imposition of a constructive trust.
Claim against Mr Jamieson
Mrs Jamieson also makes claims against Mr Jamieson based on misrepresentations she alleges he made to her.
Ultimately, the only relief Mrs Jamieson sought against Mr Jamieson was that he transfer to her his interest in the 101A Darling Point and Joadja properties. Mr Jamieson does not oppose this. However, in light of the conclusions to which I have come concerning the claims made by Mrs Jamieson and the other defendants against the Bank, there remains no basis on which Mrs Jamieson could obtain such relief against Mr Jamieson. I shall make no further mention of it.
Decision
Ultimately, the conclusion to which I have come is that the attacks made by the defendants on the Deed, both as to its status and its construction, fail.
The consequence of that finding is that the Bank has the benefit of the releases given by the defendants to it under the Deed, and is entitled to the relief it seeks: judgment for possession of the Darling Point and Joadja properties, and judgment against 101A Darling Point, Billgate and Mr Jamieson for the debt claimed.
It follows that it is not necessary for me to make findings as to the other issues that arose in these proceedings. However, as these proceedings took place over eleven hearing days, and in deference to the detailed arguments advanced on behalf of the defendants, I will endeavour to deal with all that was put to me, albeit, in some cases, more briefly than would be the case had I not found that the Bank is entitled to the protection of the Deed.
The Facilities
The 101A Darling Point and Billgate Facilities were established in December 2007. Originally, the 101A Darling Point Facility was for $11.74 million, and the Billgate Facility was for $6.45 million.
The purpose of the facilities was to fund the developments in Woollahra and Darling Point to which I have referred.
The 2008 Representations
Mr Jamieson alleges that in about May 2008, prior to the commencement of construction of the Darling Point Project, he had the following conversation with Mr Allan: -
"Mr Jamieson: This building costing we have in the existing approval is not enough. This project cannot be built for that much money. In my opinion it would be more like $4.8 million.
Mr Allan: We will not make any changes to the facility just yet. I don't want to go back to Credit with a different number at present. Start the building and as you move it along we'll get you the rest of the money in a few months. We'll get a new valuation at that time."
In substance, Mr Allan did not dispute this conversation, although he said that what he had said about "Credit" was that he could not go back to the Bank's Credit area without sufficient information to assess the situation.
As I have said, Mr Muddle accepted that Mr Jamieson did not understand from Mr Allan's words that he had a "blank cheque". This representation was relied upon as background to the representations said to have been made in 2009.
The builders on the developments made progress claims from time to time. A quantity surveyor, Mr David Thomson, of Quantum Construction Consultants ("the Quantity Surveyor"), assessed those progress claims. Once the progress claims were certified, they were paid by progressive draw downs under the facilities. Those draw downs were effected by acceptance and discounting by the Bank of bills drawn under the two facilities.
It was the Bank's practice to send to 101A Darling Point and to Billgate a letter headed "Confirmation of Rollover Under Bill Acceptance/Discount Facility" each time a further bill was negotiated (the "Confirmation of Rollover Letters"). Each of the Confirmation of Rollover Letters specified, amongst other things, the face value of the maturing bill and of the new bill drawn in its stead.
An issue arises in the proceedings as to the extent to which Mr Jamieson read the Confirmation of Rollover Letters. The critical Confirmation of Rollover Letters were sent to 101A Darling Point and Billgate care of Mr Jamieson at the then Jamieson family home at Vaucluse. Mr Jamieson's evidence was that he did not open such letters but delivered them to his bookkeeper, Ms Erminia Cotaru, who would process the relevant details into the records of the company in question. Whether or not Mr Jamieson actually saw the Confirmation of Rollover Letters, the fact is the Bank sent them to the companies at Mr Jamieson's then address. The details were available for Mr Jamieson to see both in the letters themselves and, following Ms Cotaru's processing of the details, in the companies' records. I will return to this subject later in these reasons.
In early 2009, it became clear to Mr Jamieson that he required further funding in order to complete the Darling Point and Woollahra developments. At that time, Mr Jamieson had liquidated the majority of the group's share portfolio, so as to inject equity into the developments in the amount of approximately $1.1 million, and also exhausted his personal funds.
On 13 February 2009, the Bank sent 101A Darling Point a Confirmation of Rollover Letter that stated that the discounted proceeds of the bill drawn that day and payable to 101A Darling Point was $8,191,247.85 and that the face value of that bill (to mature on 13 March 2009) was $8,221,840.70.
On 16 February 2009, the Quantity Surveyor produced a report stating that the estimated development cost of the Darling Point Project was $5.75 million and that the value of work completed was in the order of $1.44 million. Thus, in February 2009, the value of work on the Darling Point Project to be funded was in the order of $4.3 million.
A "Project Summary" prepared by the Bank dated 20 February 2009 specified that the cost of work to complete the Darling Point Project was in the order of $4.1 million; some $200,000 less than the amount stated by the Quantity Surveyor.
An "Advance Application" prepared by Ms Joanne Yammine (who worked with Mr Allan at the Bank) sought an increase in the 101A Darling Point Facility from $11.74 million to $13.7 million and the Billgate Facility from $9.435 million to $10.435 million.
That document recorded the "current balance" of the Billgate Facility to be $8.062 million and the current balance of the 101A Darling Point Facility to be $8.222 million. As will emerge below, the latter figure assumes importance in this case.
A Credit Approval Memorandum also dated 20 February 2009 stated that the Billgate Facility was to be increased to $10.54 million and the 101A Darling Point Facility to $14.16 million.
That document also recorded: -
"To date, the client has injected some $1.1m equity via personal funds to assist with these cost increases. The client has requested that some ($738k) of this funding be re-imbursed in the proposed facilities to return sufficient cashflow for the group to ensure the completion of the projects (& cover living expenses)."
This was the first reference to what was later described as an "Equity Redraw" under the Billgate and 101A Darling Point Facilities.
101A Darling Point continued to draw down funds under its existing facility. On 12 March 2009, Mr Jamieson, as director of 101A Darling Point, wrote to the Bank authorising payment of a progress claim in the sum of $189,150.05. The Bank advanced those funds by accepting and discounting a further bill. On 13 March 2009, the Bank sent 101A Darling Point a further Confirmation of Rollover Letter that stated that $189,150.05 had been credited to 101A Darling Point's account and that the face value of the new bill was $8,476,921.98, to mature on 12 May 2009.
On 23 March 2009, Mr Guy Howes, an Executive Credit Manager of the Bank (to whom the Relationship Manager, Mr Andrew Allan, reported) made a note: -
"This is a difficult proposition as in both instances the [loan construction ratio] and [loan value ratio] increase, on the back of Nil equity and given adverse [gross realisation] movements in the current market.
However, on both projects the additional funding for variations to the proposed construction is supported given failure to do so would lead to a more adverse outcome...
Notwithstanding my support for the increases, I have recommended watchlisting the group as they have no more cash or liquid assets to put into the projects and are seeking reimbursement of funds invested to date to assist with GST and living expenses going forward, so we are increasing our proportional investment as well as dealing with a borrower with no ability to meet further variations or overruns."
A guarantee from Mrs Jamieson?
In April 2009, the question arose, for the first time, of the possibility of Mrs Jamieson providing a guarantee, supported by a mortgage over her Vaucluse property, in support of the proposed increased facilities.
According to Mr Jamieson, Mr Allan raised the matter by saying "we may need some more security".
By 6 April 2009, Mr Allan reported to Mr Howes that Mrs Jamieson would give such a guarantee: -
"Living expenses are detailed at $718k p.a (or $60k per month) with the remainder of equity being to facilitate project costs... The living expenses include servicing the [Portfolio Loan] for [Mrs Jamieson] - this payment is in compensation for providing the guarantee from the security property...
Additional comfort is taken from the commitment of the client - as evidenced by the willingness to add equity (even after re-draw), cross [collateralise] all securities and finally to include Mrs Jamieson and the family home into the transaction."
Mr Jamieson was reluctant to ask Mrs Jamieson to give such a guarantee. He did not raise the topic with Mrs Jamieson until the evening on which she signed the guarantee: 18 June 2009. In the meantime, Mr Jamieson sought to take the matter to a more senior level within the Bank and sought a meeting with the Bank's then General Manager, Mr Gregory Kenny.
By 8 April 2009, the current balance of the indebtedness of 101A Darling Point had increased to $8.477 million and the indebtedness of Billgate had increased to $8.161 million.
On 15 April 2009, Mr Allan reported to a more senior officer of the Bank, Mr Robert Collier: -
"Mr Jamieson has escalated a complaint through the usual channels [that is to Mr Kenny] regarding the current submission for the cost over-runs for Darling Point Road, Darling Point & Roslyndale Avenue, Woollahra.
It appears that he is trying to see if he can avoid putting additional security into the transaction (the wife's property if you recall)".
The meeting with Mr Kenny took place on 22 April 2009. Mr Jamieson attended with his solicitor, Mr Louis Le Compte. Mr Collier also attended the meeting.
According to Mr Jamieson the following conversation took place at the meeting: -
"Mr Collier: You will need your wife to be part of this.
Mr Jamieson: No. She keeps her things separately from me.
Mr Collier: Well you're going to need it.
Mr Jamieson: No I don't think that will happen."
Mr Jamieson gave evidence that he had the following conversation with Mr Allan after the meeting: -
"Mr Jamieson: Jenny won't give her guarantee for something she's not involved in.
Mr Allan: We're going to need it.
Mr Jamieson: She'll have to have her mortgage payments covered out of the facility. Well I'll need some money for myself.
Mr Allan: We'll put some equity draws in to cover that. You've put in a lot of consultant's fees and expenses.
Mr Jamieson: Yes. It's about seven hundred or eight hundred thousand. I've spent double the amount in the original facility. It needs to be that much again to reimburse me. We haven't used up all the amounts for consultants and contingency in the original approval. If we've got what's left over there, move it across to the new facility with three hundred thousand extra.
Mr Allan: Can you get me an updated statement of assets and liabilities. I also need a full update of your anticipated expenses for yourself and [Mrs Jamieson] so we can be sure we've covered everything."
On 24 April 2009, Mr Howes wrote to Mr Collier: -
"We are yet to hear back from Mr Jamieson concerning his discussion with his wife, however I would like to get on the front foot with this one if possible".
On 4 May 2009, the Bank sent 101A Darling Point a letter offering a new Commercial Bill Acceptance/Discount facility of $14.16 million to replace the then existing Commercial Bill Acceptance/Discount facility of $11.74 million.
The letter stated that the new facility was to be applied for the purposes described in a funding table in the following terms: -
101A Darling Point funding table
Purpose
Funding
Land (Existing debt)
$8,222,000
Equity Redraw
$350,000
Professional Fees
$300,000
Council Contributions
-
Construction
$4,076,000
Contingency (5%)
$200,000
Interest Capitalisation
$887,000
Holding Costs
$25,000
Marketing Costs
$100,000
Total
$14,160,000
It is common ground that $8.222 million was not the "existing debt" at 4 May 2009 but was, rather, the "existing debt" as at 20 February 2009 (see [71] to [75] above). The Bank has offered no explanation in these proceedings as to why the Bank described $8.222 million in this letter (and in the letter of offer of 9 June 2009 referred to below) as the "Land (Existing debt)".
Despite Mr Jamieson's statements to Bank representatives that he doubted that Mrs Jamieson would agree to give a guarantee, the letter stated that the security of the new facility was to include a guarantee from Mrs Jamieson limited to $1 million supported by a mortgage over the Vaucluse property. The evidence did not reveal how this came about.
Mr Jamieson did not tell Mrs Jamieson about this letter of offer or of the Bank's requirement that she provide a secured guarantee. He said he "avoided" doing so.
On 4 May 2009, the Bank also sent Billgate a letter offering a new Commercial Bill Acceptance/Discount facility for $10.54 million to replace the existing facility of $9.435 million.
The letter stated that this facility was to be applied for the purposes described in a funding table as follows: -
Billgate funding table
Purpose
Funding
Land (Existing debt)
$8,062,000
Equity Redraw
$388,000
Remaining Professional Fees
$100,000
Remaining Construction
$1,176,000
Contingency (5%)
$24,000
Council Contributions
-
Holding Costs
$50,000
Marketing Costs
$40,000
Remaining Interest
$700,000
Total
$10,540,000
It is common ground that $8.062 million was not the "existing debt" at 4 May 2009 but was, rather, the "existing debt" as at 20 February 2009. Again, the Bank has offered no explanation as to why the Bank described $8.062 million in this letter as the "Land (Existing debt)".
Each company's debt had increased since 20 February 2009 as a result of further drawings under the facilities.
The May letters of offer did not proceed as the Bank decided that the proposed increases in facilities should be subject to further conditions. The additional conditions included that there be evidence that each guarantor, and specifically Mrs Jamieson, receive independent financial and legal advice.
Proposed clearance of "excesses"
On 8 May 2009, Mr Allan's assistant sent a memorandum to Mr Howes: -
"Just wanted to seek clarification on the Jamieson Group's current excess position.
As you're aware we hold approval now to increase both the Billgate & 101A Darling Point Road facilities. [Letters of Offer] were delivered personally on [6 May 2009] so the settlement process has begun.
The client has a number of excesses in his accounts (as detailed below). Some of which will be cleared with the progress claim I have submitted today but the majority to be cleared once the increase in funding settles.
Account Name Account No. Amount
Billgate [XXXXX XX] $323,033
W J Jamieson [XXXXX XX] $130,514
Jenny Jamieson [XXXXX XX] $16,792
Total $470,339".
Thus the position was, as at 8 May 2009, that accounts associated with Billgate and with Mr and Mrs Jamieson were in excess of their current limits to the extent of $470,339 and that the Bank proposed to clear these excesses from the increased funding referred to in the letters of offer of 4 May 2009. This proposal was referred to by Mr Muddle, and Mr Williams SC, who appeared with Ms Little for Mrs Jamieson, as the Bank's "plan" to clear these excesses from the proceeds of the increased 101A Darling Point Facility.
On 12 May 2009, the Bank sent 101A Darling Point a Confirmation of Rollover Letter stating that the face value of the "new bill" was then in the order of $9.261 million, to mature on 10 July 2009.
On 26 May 2009, Mr Allan and his assistant made a diary note recording that the "excesses" in the accounts of Billgate, 101A Darling Point and Mr and Mrs Jamieson were then $584,981.17 and that those excesses would be cleared from the proposed increase in funds.
On 9 June 2009, the Bank sent further letters of offer to Billgate and 101A Darling Point. The letters were, relevantly, in the same form as the 4 May 2009 letters and, in particular, repeated the funding tables in those letters.
The letter to 101A Darling Point thus stated that "Land (Existing debt)" was $8.222 million, whereas the Confirmation of Rollover Letter of 12 May 2009 stated that the discounted proceeds of the bill drawn that day and payable to 101A Darling Point was $9,191,531.96 and that the face value of that bill (to mature on 10 July 2009) was $9,261,321.59.
Similarly, the letter to Billgate stated that "Land (Existing debt)" was $8.062 million, whereas a Confirmation of Rollover Letter sent on the same day stated that the discounted proceeds of the bill drawn that day and payable to Billgate was $8,398,164.83 and that the face value of that bill (to mature on 7 September 2009) was $8,502,064.84.
As I have mentioned, the Bank offered no explanation, in these proceedings, as to why the figures of $8.222 million and $8.062 million were described as being "Land (Existing debt)" in the 101A Darling Point and Billgate letters of offer.
18 June 2009 meeting at Vaucluse - 101A Darling Point guarantee and mortgage over Vaucluse signed by Mrs Jamieson
Mrs Jamieson executed a guarantee in favour of the Bank in respect of the indebtedness to the Bank of 101A Darling Point and the mortgage over the Vaucluse property on the evening of 18 June 2009 at the Vaucluse home.
Present at Vaucluse on that occasion were Mr and Mrs Jamieson together with, from approximately 7.00pm, Mr Le Compte and, from approximately 8.00pm, Mr Allan.
Each of Mr Jamieson, Mrs Jamieson, Mr Le Compte and Mr Allan gave an account as to what occurred, and what was said at Vaucluse on the evening of 18 June 2009. Each witness had a recollection of events that differed from that of the other participants at the meeting. To some extent, the course of cross-examination revealed that those differences were not as sharp as the affidavit evidence of the witnesses suggested.
The witnesses were giving evidence of a conversation that occurred over four years ago. In those circumstances, Mr Simpkins SC, who appeared with Mr White for the Bank, drew attention to the familiar words of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 - 9: -
"Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously describe as "misleading")... it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
Before dealing with the events of 18 June 2009, I shall make some observations about my assessment of the four witnesses.
The evidence of Mr Le Compte
The only document purporting to be a contemporaneous record of what occurred that evening is a three-page manuscript document headed "File Note" prepared by Mr Le Compte. Mr Le Compte produced that note to the Court in response to a subpoena issued in late March 2013 at the request of the Bank.
That file note was in the following terms: -
"Attg Jennifer Jamieson at XXXXX X, Vaucluse in dining room area. Bill Jamieson was in another room. Jenny [Mrs Jamieson] gave me a bundle of docs which she said she had rec'd that day fr Bill [Mr Jamieson].
On perusing the docs I said that they related to a loan to 101A of $14.6M and included a Fac Offer ltr dated 9 June 2009.
Jenny joined me at the dining table at 7.15PM and I explained to her, her obligations as gtor if she executed the docs as follows:
1. Her gtee was limited to $1M + interest + costs & expenses + restoring the Bank to its former position if any transaction was declared void for any insolvency reason + any amount lost by STG if J breach her obligations to the Bk.
2. STG can sue J for moneys owed and take possession of J's ppty & other assets on default by the borrower and sell those assets to recover amts due to STG.
3. STG does not need to sue the Borrower before suing Jenny.
4. LLeC can't give J financial advice - J sd she was receiving fin advice from Michael Twomey who did her tax returns.
5. LLeC is acting for Jenny, Bill, 101A and Billgate (100% owned by Jenny) but will cease to do so if any conflict of interest arises. Jenny sd she had no objection to LLeC acting for her & the others as all of their affairs were linked.
6. J sd she preferred not to have to give STG a guarantee plus 2nd Mge over the house but she felt she had no choice as her fortunes & income depended on Bill's income and all of it could be lost if she refused to gtee & mtge the house. She felt this was the best way to look after her family.
7. Jenny then signed all of the docs & I witnessed her signatures.
8. J then instructed me to get the loan transaction settled urgently so that moneys could be released to her & Bill.
9. LLeC sd he would copy the security docs & send her & Bill a copy with the originals going to STG via its solicitors.
J sd she did not need a copy of the docs & LLeC shd just give Bill a copy as he kept all of the records on behalf of her & him.
LLeC sd he would post her a copy of the ltr he would be sending to the Bank's solr tomorrow. This way JRJ would have a list of the various docs.
Note About 8PM Andrew Allan fr STG turned up at [the Vaucluse property] & Bill entertained Andrew in a room next to the dining area where the 2 of them had a discussion which did no disturb either Jenny or LLeC as their voices were inaudible. LLeC finished these notes abt 8.15PM & he and Andrew departed at abt 8.30PM."
Mr Le Compte created a further "File Note", dated 19 June 2009 in the following terms: -
"Engaged placing copy of ltr dated 19/6/09 fr LeC/Davey to Herbert Geer in stamped enveloped [sic] addressed to Jennifer Jamieson at Vaucluse and depositing it into Aust Post letterbox at Mosman Post Office at 6PM."
It is quite clear, from the form of these documents, that they purport to have been created on the dates they bear and contemporaneously with the events they record. Thus, each document contains abbreviations, for example, "STG" for "St George Bank", "Sd" for "said", "LLeC" for "Lou Le Compte" and "J" for "Jenny", suggestive of the notes being made within constrained time limits and shortly after the events they describe. The last sentence of the note dated 18 June 2009 actually states that Mr Le Compte "finished these notes" at approximately 8.15pm before Mr Le Compte's departure, with Mr Allan, from the Vaucluse property.
In fact, Mr Le Compte created the document (as well as the 19 June 2009 "File Note") on 10 April 2013, after he was served with a subpoena issued by the Bank to produce his file.
To put that fact in context, it is necessary to examine the events leading up to the production of the document.
On 24 October 2012, Mrs Jamieson's solicitors wrote to Mr Le Compte enclosing Mrs Jamieson's authority and direction that Mr Le Compte transfer his files relating to Mrs Jamieson to them.
On 25 October 2012, Mr Le Compte sent an email to Mrs Jamieson's solicitors stating, relevantly: -
"In 2001 we acted on the exchange of contracts...for the sale of... Vaucluse... We did not on the completion of this matter because on 15 June 2011 we ceased to act for Mrs Jamieson and handed our file to Garland Hawthorne Brahe (reference Brenden Miller) who attended to completion.
The only other matter that we appear to have acted for Mrs Jamieson in your time frame is in connection with a guarantee and indemnity given to her by St George Bank in June 2009 and we will be able to retrieve our file from storage late this afternoon and have it available for you to collect at 9am tomorrow."
Later that day Mr Le Compte wrote to Mrs Jamieson's solicitors: -
"We refer to our email of today's date (copy attached) and enclose Mrs Jamieson's file as requested.
The file consists of the following: -
1. A copy of our letter dated 19 June 2009 to Herbert Geer (2 pages) who acted for St George Bank Ltd.
2. Copies of the documents numbered 1 to 7 referred to in our letter to Herbert Geer.
Kindly acknowledge safe receipt."
The letter to Herbert Geer of 19 June 2009, to which Mr Le Compte referred, enclosed 11 documents executed on 18 June 2009 at Vaucluse including the guarantee and mortgage executed by Mrs Jamieson together with five other documents executed by Mrs Jamieson, as well as the guarantee executed by Mr Jamieson and three other documents executed by Mr Jamieson.
Mr Le Compte's letter makes no reference to any file notes. In cross-examination, Mr Le Compte agreed that he understood that Mrs Jamieson's solicitor wished to obtain any file notes that Mr Le Compte had made concerning any meetings Mrs Jamieson attended. He said: -
"Meetings with the Bank was what I understood he was after."
In cross-examination, Mr Le Compte gave the following evidence: -
"Q. If the file had consisted also file notes, you would have said so, wouldn't you?
A. I should have, that's for sure.
Q. If there had, in fact, been file notes of the events of 18 and 19 June you would have provided them to Mr Jamieson's new solicitors, wouldn't you?
A. Yes, I would."
The cross-examination continued: -
"Q. The fact of the matter is there were no contemporaneous file notes in existence for 18 and 19 June, were there?
A. There were because I saw them later myself."
In late March 2013, Mr Le Compte was served with a subpoena issued by the Bank calling for production of his file concerning Mrs Jamieson. The subpoena was returnable on 4 April 2013. Mr Le Compte produced no documents that day. The subpoena was adjourned to 10 April 2013. Mr Le Compte produced no documents that day.
At 12.21 am on 11 April 2013, Mr Le Compte sent an email to Mrs Jamieson's solicitors: -
"Apologies for missing Court but I had sudden illness which prevented me from being there by 9am.
I understand that the matter is listed for 9am this morning and I propose to attend then and produce the documents called for in the subpoena.
On 11 April 2013, Mr Le Compte wrote to the Registrar of the Court enclosing the subpoena served on him by the Bank and the file notes bearing the dates 18 June 2009 and 19 June 2009 (which Mr Le Compte now admits he created on 10 April 2013).
Mr Le Compte was served with a further subpoena by the Bank which required him to attend Court to give evidence on 17 June 2013; the first hearing day of these proceedings.
On that date Mr Le Compte produced a note addressed "To Whom it May Concern" in the following terms: -
"The File Notes dated 18 June 2009 concerning a meeting with Jennifer Jamieson & ors at her Vaucluse residence and 19 June 2009 concerning the posting of a letter to Jennifer Jamieson both headed "101A & St George" were made by me on 10 April 2013 when I discovered that my original file notes made on 18/6/09 and 19/6/09 had been lost after I took them from my paper file for scanning to my electronic file.
The File Notes made on 10/4/13 were made to the best of my recollection of events that took place on 18/6/09 and 19/6/09 respectively." (emphasis added)
Mr Le Compte referred to this document as his "side note".
Mr Le Compte claimed that the side note was a typed copy, word for word, of a manuscript note that he created on 10 April 2013, at the same time as the file note bearing the date 18 June 2009. Mr Le Compte was not able to explain why he did not include that manuscript version of the side note in the documents produced to the Court in response to the subpoena from the Bank.
Mr Le Compte gave this evidence in chief: -
"Q. I think you accepted, when the file was produced, there was no side note that went to the Court [on 11 April 2013] with the produced filed?
A. Yes, I didn't release when I was doing it that that was the case, but I later found out that was the case, yes."
Mr Le Compte gave this further evidence in response to questions from me: -
"Q. [The] handwritten side note was sitting somewhere for typing between 10 April 2013 and 17 June 2013, was it?
A. Yes, it was. It was on the front of the file which was under a few other files by then, but that's where it was.
Q. The person who was to type it up was your wife, was she?
A. Yes.
Mr Williams: Did you instruct her to destroy it?
A. No.
Q. Did you destroy?
A. No, she did. No I didn't destroy it."
Mr Le Compte was scheduled to give evidence in these proceedings on 20 June 2013.
Only on that date did Mr Le Compte's solicitors, Colin Biggers & Paisley, provide the typescript "side note" to Mrs Jamieson's solicitors.
Colin Biggers & Paisley were the solicitors for Mr Le Compte's professional indemnity insurers. Several weeks earlier, on 31 May 2013, Mr Le Compte had notified those insurers of circumstances likely to give rise to a claim against him by Mrs Jamieson. Mr Le Compte's notification to those insurers was as follows: -
"[The Bank's solicitor] phoned Louis Le Compte and said Jennifer Jamieson had made allegations against him in a cross claim and affidavit in the proceedings (to which Louis Le Compte is not a party)..."
Mr Le Compte's explanation for these events is that, when he received the subpoena to produce documents issued at the request of the Bank, there were, on Mrs Jamieson's file, notes to the effect of those bearing dates 18 June 2009 and 19 June 2009 that he produced to the Court on 11 April 2013 in response to the subpoena. Mr Le Compte claims that he arranged for his wife, who was also his secretary, to scan copies of those file notes into Mr Le Compte's computer system before producing the originals to the Court; but that, somehow, after service of the subpoena, the original file notes were lost. Mr Le Compte said that, faced with that circumstance, he created what he called his "recollection version" of the file notes together with a manuscript version of the "side note"; but that he only included what he described as the "recollection version" file notes (and not the manuscript "side note") in response to the subpoena.
Mr Le Compte gave the following evidence in response to my questions concerning the form of the "recollection version" side note: -
"Q. What were you seeking to do in terms of recording your recollection or otherwise [in] this file note?
A. I was doing two things. I was putting - putting together pieces of paper for my recollection if I needed later on to refer to it, but I also wanted everybody else to know what I thought had happened on that particular evening. And I couldn't be sure that that would happen because I didn't know whether I was going to be called as a witness or on subpoena. I was issued a subpoena which didn't tell me they are going to call on us to keep everyone on the right track as to put my version in with the produced papers.
Q. You were intending, were you, to create a document which appears to have been created on 18 June 2009?
A. It was my recollections what happened on 2009.
Q. Listen to the question. When you created the three page [18 June 2009 document]... were you intending to create a document which looked as if it had been made by you at about 8.15pm on 18 June 2009?
A. No, no I wasn't it.
Q. Go to the third page of the note...Look at the last sentence?
A. Yes.
Q. You see you referred to you having 'finished these notes' at 8.15pm?
A. Yes, yes, your Honour.
Q. Were you not intending, by using those words, to convey to any person who read this document it has been created at around 8.15pm on 18 June 2009?
A. No, I was just trying to record the events that happened on 18 June.
Q. Can you assist me to understand why you used the words "finished these notes" in the last sentence if you weren't trying to create a document which looked as if it had been created on 18 June?
A. I must say I was in a rush to finish this because I was in trouble in not having complied with the subpoena by the due date. I was scribbling my notes down with some speed. I didn't have any intent at any time to mislead anyone, but I can appreciate when I look at it now you might be misled. It certainly was not my intention. I was just trying to get all the details down on a piece of paper to let everyone know what happened on this night."
I do not accept this evidence. It is obvious from the form and wording of the file note, including the last sentence, that Mr Le Compte intended to pass the document off as a note created on 18 June 2009.
Similarly, it is clear from the form of the file note bearing the date 19 June 2009 that Mr Le Compte was seeking to pass that off as a note made on 19 June 2009 and, according to its terms, evidencing the posting by Mr Le Compte of a letter to Mrs Jamieson enclosing a copy of Mr Le Compte's letter to Herbert Geer of 19 June 2009, referred to above.
I do not accept Mr Le Compte's evidence that, when he received the subpoena issued at the request of the Bank, he had in his possession, on Mrs Jamieson's file, notes he actually made on 18 and 19 June 2009. If such notes existed, Mr Le Compte would have produced them to Mrs Jamieson's solicitors on 25 October 2012.
I also do not accept Mr Le Compte's evidence that, when he created his "recollection version" of the 18 and 19 June 2009 file notes, he also created a manuscript version of the typed "side note" dated 17 June 2013 produced by his solicitors on 20 June 2013. Mr Le Compte said that the language of the manuscript "side note" was identical to that of the 17 June 2013 typescript. In my opinion, the wording of that document is impossible to reconcile with the proposition that it was created on 10 April 2013. The document refers to files notes that "were made by me on 10 April 2013" (see [131] above). If, as Mr Le Compte claimed, the "side notes" were originally made contemporaneously with his "recollection version" and "file notes", such language would not have been used.
If it is necessary to identify what motivated Mr Le Compte to behave this way, my conclusion is two fold. First, Mr Le Compte had been provided with a copy of Mrs Jamieson's affidavit and, as his notification to his professional indemnity insurer indicates, apprehended that Mrs Jamieson might bring legal proceedings against him. Therefore, Mr Le Compte, not having any contemporaneous record as to what happened on 18 June 2009, created a document that purported to be such a record and which was, at least to some extent, exonerative of Mr Le Compte's position. Second, having been served with a subpoena to produce documents, Mr Le Compte sought to create a document that would deter Mrs Jamieson's legal representatives from calling him to give evidence in the proceedings.
I should make clear that I accept, without reservation, that until 20 June 2013, the Bank and those advising it, believed that the 18 and 19 June 2009 file notes were, as they appeared to be, documents produced contemporaneously with events on those days. It was only on revelation of the matters in Colin Biggers & Paisley's letter of 20 June 2013 that the Bank, and the other parties to the proceedings, learned the true position.
The truth only emerged because Mrs Jamieson's legal advisors served on the Bank a notice pursuant to s 167 of the Evidence Act 1995 requiring the Bank to produce Mr Le Compte as a witness to prove the file notes. But for that, the true position may never have emerged.
It follows that I do not accept Mr Le Compte's "recollection version" file notes as providing reliable evidence as to what occurred on those days. Further, I accept the submission made on behalf of both Mr and Mrs Jamieson that it is also likely that Mr Le Compte tailored his oral evidence to match the version of events in his "recollection version" files notes and that I should treat his evidence about those matters with the upmost caution.
The conclusion to which I have come is that I should not accept Mr Le Compte's evidence about these matters unless other reliable evidence corroborates that evidence, or it is, for some other reason, inherently probable.
The evidence of Mr Allan
Besides Mr and Mrs Jamieson, the other witness to give evidence about the events of 18 June 2009 was Mr Allan.
The impression I had of Mr Allan was that he gave his evidence openly and honestly, and endeavoured to give the best of his recollection.
However, on 18 June 2009, Mr Allan had been on a work related harbour cruise during the course of which, from around lunchtime, he was consuming alcohol. Mr Allan accepted that he was drinking beer throughout the afternoon and that, after the vessel docked at around 5.00pm, he spent several more hours drinking at a hotel in Woolloomooloo. Mrs Jamieson said that when Mr Allan arrived at the Vaucluse home at 8.00pm, he was "noticeably intoxicated", "smelt strongly of alcohol and was slurring his words". Even Mr Le Compte accepted that it appeared that Mr Allan had "had a fair bit to drink". Mr Le Compte said that "there was a bit of slurring" (but that "he was not falling over").
Mr Allan left the Bank in February 2010. He pointed to no contemporaneous note of the events of 18 June 2009 from which he could refresh his recollection.
That combination of circumstances leads me to exercise great caution in accepting Mr Allan's evidence as to the detail of what happened on 18 June 2009.
Mr Allan did not claim to have a recollection of everything said on 18 June 2009. But he did claim to have a recollection of saying a number of things about which there is controversy.
The evidence of Mr and Mrs Jamieson
Both Mr and Mrs Jamieson have, for obvious reasons, a keen interest in the outcome of these proceedings. The proceedings, and the events leading up to them, must have been stressful and upsetting in the extreme for both of them. Having enjoyed, with their children, what may well have been a most comfortable life in the Vaucluse premises, with the promise of the successful development of both the Darling Point and Woollahra properties, they have endured the stress and upset of the sale of Vaucluse, the exigencies and uncertainties of the two developments, what they evidently now see as being the Bank's failure to provide promised funding, the negotiations over 18 months leading up to the execution of the Deed and the pressures of this litigation.
In those circumstances, I do bear in mind the sage observations and warnings of McLelland CJ in Eq in Watson v Foxman, set out at [112] above.
So far as concerns their evidence before me, I do not have the impression that either Mr or Mrs Jamieson set out to do otherwise than give the best of their recollection of events which, over the years, no doubt troubled them deeply. There were times, however, when each of them gave evidence which, on the probabilities, and having regard to other circumstances surrounding the events in question, I have been unable to accept; including in relation to the events of 18 June 2009.
The funding table
Much of what was said on 18 June 2009 concerned the 101A Darling Point funding table in the 9 June 2009 letter of offer. To assist understanding that evidence, I set out a further version of the funding table, to which I have added a column numbering the nine items in the table. I shall return to the items in the funding table by references to those numbers: -
101A Darling Point funding table
Purpose
Funding
1
Land (Existing debt)
$8,222,000
2
Equity Redraw
$350,000
3
Professional Fees
$300,000
4
Council Contributions
-
5
Construction
$4,076,000
6
Contingency (5%)
$200,000
7
Interest Capitalisation
$887,000
8
Holding Costs
$25,000
9
Marketing Costs
$100,000
Total
$14,160,000
The order of events on 18 June 2009
Before Mr Jamieson arrived home
At around 4.00pm on 18 June 2009 Mr Jamieson was at his office at Double Bay. He had in his possession a form of guarantee for Mrs Jamieson in favour of the Bank in respect of the indebtedness to the Bank of 101A Darling Point (with a limit of $1 million) and a form of mortgage by Mrs Jamieson over the Vaucluse property in favour of the Bank. Mr Le Compte was also at Mr Jamieson's office that afternoon between approximately 4.30pm and 6.00pm.
At around 4.00pm Mr Jamieson telephoned Mrs Jamieson and said: -
"I've got some documents from the Bank for you to sign".
According to Mrs Jamieson, Mr Jamieson also said that "Lou [Mr Le Compte] is coming over tonight, and so is someone from the Bank".
Mr Jamieson had certainly arranged for Mr Le Compte to attend at Vaucluse on the evening of 18 June 2009 to witness Mrs Jamieson's execution of the guarantee and mortgage.
It is less clear, on the evidence, whether Mr Jamieson knew, at around 4.00pm on 18 June 2009, that Mr Allan would attend the Vaucluse premises later in the evening. According to Mr Allan, he had not planned to attend the Vaucluse premises until, whilst he was at the Woolloomooloo Hotel, Mr Le Compte suggested that he and Mr Allan meet at the Vaucluse premises with a view to going somewhere for a drink. I think it unlikely that Mr Jamieson told Mrs Jamieson that "someone from the Bank" was to come to Vaucluse that evening.
Mrs Jamieson said, and I accept, that Mr Jamieson did not tell her what "documents" he wanted her to sign.
After Mr Jamieson arrived home (before Mr Le Compte and Mr Allan arrived)
Mr Jamieson did not dispute that when he arrived home the following conversation took place: -
"Mr Jamieson: The Bank has put me in a real bind but I think it's all worked out. I've given them figures for the mortgage [the Portfolio Loan], living expenses and the money that I am due back from the project [the Equity Redraw]. I've also given them an estimate for finishing Darling Point. I've organised further finance from St George but they will only provide it if you agree to give a personal guarantee. I'm really sorry about this. I've tried to keep you out of it.
Mrs Jamieson: We both agreed a long time ago that I wouldn't sign a guarantee for your developments.
Mr Jamieson: I'm really sorry and I'm not happy about it but there is no other way. We have to do it. The Bank has put me in a corner and there is no time to arrange alternative finance elsewhere. I will work my arse off to finish by Christmas."
This was the first Mrs Jamieson knew of the Bank's requirement that she give a guarantee for the 101A Darling Point debt.
Mr Jamieson showed Mrs Jamieson the 9 June 2009 letter of offer and, in particular, the funding table on that letter and said: -
"The increased bank facility will give us enough to pay your mortgage [the Portfolio Loan] and the mortgage payments on the farm [the Joadja property] until Darling Point is finished, as well as our day to day living expenses including school fees and your American Express. There is enough for me to complete Darling Point and I will get cash back for the consultants I paid. The figures have all been done."
Mrs Jamieson said, and I accept, that she was very upset and angry about: -
"...being drawn into his business affairs and being forced to sign a guarantee, which I had refused to do since the proceedings between Bill and Custom Credit."
Although the matter was not explored in cross-examination, the latter comment suggests that Mrs Jamieson had earlier given a guarantee in relation to Mr Jamieson's arrangements with Custom Credit Corporation Limited with less than satisfactory results, from Mrs Jamieson's point of view.
Mr Le Compte arrives
At approximately 7.00pm Mr Le Compte arrived at the Vaucluse premises.
I accept Mrs Jamieson's evidence that the following conversation then took place: -
"Mr Le Comtpe: Bill and I have been negotiating with the Bank. The Bank is taking a hard line and I don't see any choice but for Bill and you to agree to the Bank's terms for this facility. You don't really have any choice but to get the project finished. Your mortgage and expenses will be covered for the future. There's plenty of profit in the project.
Mr Jamieson: We need to get our lives together. We just need to get over this last hurdle and get the properties finished before Christmas. Your mortgage will be paid and you'll get the farm outright when Darling Point is finished. The facility will provide us enough money to live on and to complete Darling Point. I have done all the figures and the Bank said there will be enough for everything. The Bank is prepared to make draw downs available and this will take care of our immediate problems.
Mrs Jamieson: Lou [Mr Le Compte], I'm really angry. I can't believe its come to this. I am being forced to give a guarantee.
Mr Le Compte: I'm sorry but unless you sign the guarantee the Bank will pull the rug out from under Bill. It's a good project and this is the only way forward and there's a lot of profit to be made still."
Mrs Jamieson said the following conversation also occurred: -
"Mr Jamieson: Don't worry, it will be over by Christmas... and we wont have the pressure we currently have on our finances.
Mrs Jamieson: If we have to sell the house I want to do it now. I don't want it to be a fire sale. You know people have left letters asking if we are interested in selling."
Mr Jamieson: No, we don't want to do that, I'm sure this will be finished by Christmas and the pressure will be off us. The money is in the Bank's figures, and I have already explained the figures to you."
Mr Le Compte denied that he told Mrs Jamieson that she did not "have any choice" but to sign the guarantee. He agreed, however, that that was his view. I do not accept Mr Le Compte's evidence. He said he believed that Mrs Jamieson did not have a choice but to sign and I accept Mrs Jamieson's evidence that that is what he told her.
Mr Le Compte said he gave Mrs Jamieson an explanation concerning the documents she was to sign to the effect set forth in his "recollection version" file note, and did so before Mr Allan arrived (although he said he was just finishing up with Mrs Jamieson when Mr Allan came to the door).
However, Mrs Jamieson's evidence, which I accept, was that it was only after Mr Allan arrived, in an inebriated state, that she executed the guarantee and mortgage; after a cursory explanation from Mr Le Compte.
Mr Allan arrives
Mr Allan arrived at Vaucluse at around 8.00pm. He said he was not intending to come into the house but did so on the invitation of either Mr Jamieson or Mr Le Compte.
Mr Allan apologised to Mrs Jamieson for the intrusion. He agreed that Mrs Jamieson appeared to be agitated and most reluctant to sign the guarantee.
He gave evidence, not disputed by Mrs Jamieson, of the following conversation: -
"Mrs Jamieson: I don't want to give a guarantee. Will the Bank give us the money without it?
Mr Allan: No. It's a requirement of the Bank."
What was said about the availability of funds?
According to Mrs Jamieson, after Mr Allan arrived the following conversation took place concerning availability of funds: -
"Mr Jamieson: You've got one very unhappy lady here.
Mrs Jamieson: Yes, I am a very unhappy lady that is for sure. I always said I would never get involved in Bill's business affairs again."
Mr Allan did not dispute that these words were said. He said "I can't recall" and that "it is possible".
According to Mrs Jamieson, the conversation continued as follows: -
"Mr Jamieson: I've shown Jenny the figures and explained that there is sufficient money to cover the mortgages for the home and the farm, money to live on and to complete Darling Point.
Mr Allan: Yeah, it is all there. Don't worry about it." (emphasis added)
Mr Allan said he did not recall this aspect of the conversation, but did not deny it occurred.
Mrs Jamieson said the conversation continued: -
"Mr Allan: You [that is Mrs Jamieson] don't need to worry about it. It is just one of those formalities the Bank has. It will probably never be used as this is a fantastic project. It is not very far off being completed. The project is on the home run.
Mrs Jamieson: I am not happy, lets just get it done."
Mr Allan denied, with some vigour, that he said that "it is just one of those formalities the Bank has", and suggested that he would have described the project as "reasonable" rather than "fantastic". He did not, in substance, dispute the balance of the conversation.
Mr Jamieson gave a less comprehensive account of what occurred in this part of the conversation but said that, at one point, he drew attention to the figure of $8.222 million in the 9 June 2009 letter of offer and asked Mr Allan "is this figure correct" to which Mr Allan replied "yes".
Mr Allan denied these words were said. However, I am satisfied this is what occurred. Mr Leon Bovaird, a finance consultant who knew Mr Jamieson as a client and later as a friend, gave evidence of a meeting he attended on 8 September 2009 (over two months later) with Mr Jamieson and Mr Allan. Mr Jamieson had arranged for Mr Bovaird to meet Mr Allan because of Mr Jamieson's then lack of understanding of the current funding position. Mr Bovaird said that the following conversation then took place: -
"Mr Jamieson: This spreadsheet that you emailed me last week shows that the existing debt for this facility is $8.222 million.
Mr Allan: Yes.
Mr Jamieson: This was the same figure you said was the Darling Point debt when you came to my home in June to get Jenny to give her guarantee.
Mr Allan: Yes that's the figure all the figures are correct.
Mr Bovaird: So the "Land" amount of $8.222 million shown in this document [the spreadsheet referred to] is the same as the 9 June 2009 'Facility Offer' was and still is today, the Land (existing debt)?
Mr Allan: Yes. But let's focus on what Bill needs to get the project completed rather than the existing debt."
Mr Allan agreed that he had said these words in Mr Bovaird's presence, and that what he said was true. As Mr Allan confirmed to Mr Bovaird in September 2009 that the $8.222 million was the "Land (Existing debt)", it is probable he did the same on 18 June 2009.
For that reason I accept Mr Jamieson's evidence that Mr Allan said that the $8.222 million figure in the 9 June 2009 letter of offer was "correct".
What Mr Jamieson made of that conversation is a different matter, to which I shall return.
Mr Jamieson said that the following further conversation took place concerning the "remaining line items" in the funding table (i.e. items 2 to 9 in the version of the funding table at [159] above): -
"Mr Jamieson: Because I'm convincing Jenny here to put a guarantee up. Are these figures here [referring to the remaining figures in the funding table] now available?
Mr Allan: Yes they are." (emphasis added)
And later (in reference to items 2, 3 and 6; "Equity Redraw" of $350,000, "Professional Fees" of $300,000 and "Contingency" of $200,000): -
"Mr Jamieson: Have you covered everything we need in this facility Andrew?
Mr Allan: Yes it's all there." (emphasis added)
Mr Allan initially denied that Mr Jamieson enquired about these figures. However, he later said that although he did not recall such an enquiry, it was possible that a conversation to this effect took place. I find that he said the words attributed to him by Mr Jamieson.
Mr Jamieson said that the following exchange took place, in Mrs Jamieson's absence: -
"Mr Jamieson: You're getting a million dollar guarantee from Jen, but we're also getting a million back in cash we can use.
Mr Allan: That's right". (emphasis added)
Mr Jamieson said that Mrs Jamieson then came back into the room and that, in Mr Allan's presence, the following conversation took place: -
"Mrs Jamieson: I don't want to do this.
Mr Jamieson: Look. We're getting a million dollars out of this. There is enough to cover your mortgage on Vaucluse and our expenses till the properties sell and to top up the project costs. We get three hundred and fifty thousand redraw, three hundred for consultants which I've already paid from my money so I'll be reimbursed and two hundred on the contingency as well as another one fifty from the existing approval. So we're getting a million of funds for the million guarantee.
Mrs Jamieson: I'm still not happy, but as long as the mortgage on Vaucluse and the expenses are covered I suppose it's alright." (emphasis added)
Concerning this conversation, Mr Allan gave this evidence in cross-examination: -
"Q. Mr Jamieson said to you, with Mrs Jamieson present: 'You're getting a million dollar guarantee from Jen, but we're also getting a million back in cash we can use'?
A. No, I don't recall that.
Q. Do you deny he said that to you at any time?
A. I believe he had that viewpoint. I don't know whether that was stated to me that evening. He may have said that at another time, yes.
Q. And he may have said it on this evening?
A. I don't recall it specifically on that evening.
Q. You understood him to have that viewpoint?
A. He raised it to me, yes.
Q. And what I am suggesting to you is that you replied on that night: 'That's right'.
A. No."
Thus, Mr Allan agreed that he understood that Mr Jamieson believed he was "getting a million back in cash" and said that Mr Jamieson had said as much "at another time". However, he was unable to say whether Mr Jamieson expressed this opinion on 18 June 2009. He denied that he said "that's right".
In her affidavits, Mrs Jamieson made no reference to any statement by Mr Jamieson concerning "getting a million dollars out of this".
In cross-examination, Mrs Jamieson said that, prior to Mr Le Compte and Mr Allan arriving, Mr Jamieson had said to her: -
"I've come up with the figures but the only thing is that the Bank want you sign a guarantee...it's about a million dollars... I'm really sorry Jen, it comes to a million dollars and they're going to need a guarantee for a million dollars from you."
I asked Mrs Jamieson whether Mr Jamieson said that the "million dollars" would come from the "increased bank facility" to which she said Mr Jamieson referred (see [168] above). Mrs Jamieson said she could not recall "those technical words" and gave this evidence: -
"Q. I'm just trying to see whether you have any recollection of any connection that Bill was making on that evening about what you have said [in Mrs Jamieson's affidavit] as "the increased bank facility" and what you just mentioned to me earlier about a million dollars being mentioned?
A. It was all the same time. He was talking about the... the funds had been all organised and there would be sufficient money made available by the Bank to cover Darling Point to completion, cover our mortgages and cover my living expenses.
Q. Was he telling you, can you remember, that it was the increased bank facility which would be about a million dollars?
A. I can't recall if he said, the Bank facility. I just know it was, the facility. The bank facility that he and the Bank had organised and it was going to be sufficient funding."
Later in the cross-examination, Mr Simpkins asked Mrs Jamieson whether she could recall the "million dollars" being mentioned after Mr Le Compte and Mr Allan arrived. Mrs Jamieson said "I can't recall if he said it again".
Mr Le Compte said that he did not hear Mr Jamieson say to Mr Allan in Mrs Jamieson's presence anything to the effect "you're getting a million dollar guarantee from Jen, but we're also getting a million back in cash we can use" or Mr Allan replying "that's right".
In all those circumstances, my conclusion is that Mr Jamieson may have said to Mrs Jamieson, before Mr Le Compte and Mr Allan arrived, something about a "million dollars". I am not, however, satisfied that there was any discussion about this matter while Mr Allan was present. I am not able to accept Mr Jamieson's evidence to the contrary. It is not supported by the evidence of either Mrs Jamieson or Mr Le Compte. And despite my misgivings about the general reliability of Mr Allan's recollection of events that night, he did seem confident in his denial that he agreed with anything said by Mr Jamieson about a "million dollars" (notwithstanding his acknowledgment that Mr Jamieson may have said something similar on another occasion).
My doubts as to the reliability of Mr Jamieson's recollection about this aspect of the matter is confirmed by the following evidence Mr Jamieson gave in cross-examination: -
"Q. On the occasion of this meeting on 18 June with Mr Allan, you never said, did you, in Mr Allan's presence words to the effect of 'You are getting a million dollar guarantee from Jen but we are also getting a million back in cash we can use'?
A. It was said in front of Jen, yes.
Q. Where do you say the million dollars was? Let me go back to the 9 June 2009 letter... You told his Honour you were discussing the equity redraw of $350,000, professional fees of $300,000 and the contingency of $200,000; that is $850,000?
A. Yes.
Q. Where do you say the missing $150,000 was?
A. That is where I thought that was coming out of the $8.222 million.
Q. So by what process of analysis did you regard there ever being an amount of $150,000 or thereabouts coming out of the $8.222 million?
A. I didn't have a process. I understood that. Mr Allan did the numbers up and I just trusted Mr Allan.
Q. There is no reference to a million dollars in the 9 June 2009 ...
A. I agree it is $850,000.
Q. When you were think about a million dollars coming back in cash you could use, what do you say you said?
A. Yes.
Q. You were thinking it was a $150,000 available from the $8.222 million?
A. From the earlier facility, that is correct.
Q. You thought it was coming out of the $8.222 million?
A. Yes.
Q. But that amount, you told his Honour in your evidence earlier, you thought would be the existing debt?
A. Yes, I do, still is the existing debt. That is the existing debt.
Q. So there could not be $150,000 coming back in cash out of that?
A. I don't know how the bank was going to do it. I was going to draw it out and put it into our working account. I asked him [that is Mr Allan] is 8.22 - I pointed to it. 'Is it correct?' And he said 'Yes, it is'. 'Is the 350, is it there?' He said 'Yes.' 'Is the 300 there?' 'Yes, it is'. 'Is the 200 there?' 'Yes, it is.' It was close enough to a million dollars as far as I was concerned and Jenny was putting up a million dollars guarantee. That's how I was convinced of it.
Q. Do you agree that you could not possibly have thought on 18 June that there was $150,000 cash coming back from what was described as existing debt of $8.222 million?
A. I was not sure how they were going to do it. I didn't do the numbers up. Mr Allan did the numbers up.
Q. He did the numbers up in a way that doesn't refer to an amount of $1 million, correct?
A. Correct.
Q. There is nothing in the letter of offer of 9 June 2009 that refers to or which might be taken to refer to a million dollars coming back in cash? Agree?
A. I agree." (emphasis added)
To my mind, this evidence casts doubt on whether, while Mr Allan was present, Mr Jamieson said anything about a "million dollars". It also reveals, in my opinion, Mr Jamieson's confused state of mind concerning, and the inherent improbability of, the central element of his case; namely whether he believed that the $8.222 million referred to in the 9 June 2009 letter of offer as "(Land (Existing debt)" in fact represented the "existing debt" of 101A Darling Point at that time.
I wonder if, between the lawyers, there has been a breakdown in communication and that the Bank is not fully aware of what it is asking of me, what the consequence for me would be.
I was not a willing guarantor to Bill's loans and once the guarantee documents were signed, the Bank did not do things that it had agreed to.
Since then, my family home has been sold to repay debt to the Bank which would not have been necessary if the Bank had not deceived me at the time I entered into the guarantee. The Bank holds my remaining equity - the only means I have to acquire another house for my family, which includes my elderly mother in her late 80s and my son and daughters.
I do not believe that the Bank can rightfully hold that equity, but have instructed my solicitor to defer taking any action about that while Bill is working to settle his loans with the Bank.
Now, through Gadens, it is being demanded that I relinquish the equity and any claims that I have against the Bank.
I have previously instructed my solicitor that:
· I will not sign a Deed where my existing rights are reduced, but I will release the Bank fully when they release me and return my equity to me.
· Also, I am prepared to agree to continue to defer taking any action against the Bank while Bill is still working to settle his loans.
Today's letter from Gadens says that I am not prepared to release the Bank. That is untrue.
Also, if I did sign the Deed and Bill can't do everything that he has promised, then the Bank will take my remaining equity and will take legal action to claim more from me. I and my family will end up with no home, no money and bankrupt. The Bank will have taken everything. So, I'm not signing a Deed that allows that.
I have tried to be reasonable so that Bill and the Bank can settle the loans this time. I don't know why the Bank is being unfair about this and would like you, not the lawyers, to explain to me why the Bank is acting in an uncommercial/vindictive and bullying way toward me. I understand that even now the $10 million will be lost if the matter is not settled today."
Mrs Jamieson said that this email had been "dictated to me" by Mr Jamieson and Mr Le Compte, but that it reflected what she herself was thinking on the date it was written.
Mrs Jamieson asserted that, contrary to what appears in the seventh paragraph of her email, she had not "previously instructed" Mr Miller of the matters there set out. Mrs Jamieson said that Mr Jamieson had conveyed those instructions to Mr Miller. She agreed that the Bank would read her email as a statement by her that she had in fact provided those instructions.
Later, on 13 August 2012, Mr Howes replied to Mrs Jamieson's email in the following terms: -
"The Bank is not prepared to settle the matter for less than the $23M proposed. The staggered settlement currently proposed exposes the Bank to the risk that the settlement will only partially complete. Therefore we will only discharge the minimum amount of our security to achieve that partial settlement and the balance of our security will be discharged in full when the full settlement is achieved. The $10M partial settlement has not been frustrated by the Bank, rather it has been frustrated by Bill's refusal to execute, amongst other clauses, the acknowledgements contained in the deed. Prior to Friday morning we were unaware that you also rejected, amongst other clauses, the acknowledgements contained in the Deed.
Any allegation that the Bank deceived you at any time is without foundation and is denied.
The Bank can rightfully hold you to your guarantee and our claim will be proved should it be tested. I understand that should that be the case, you will lose the $1.4M. I note that should Bill be able to settle the transaction as defined in the Deed, we will release those funds to you. If he cannot settle the transaction then the Bank will proceed against the remaining securities, including your guarantee.
The Deed requires you to release the Bank from any future claim. The Bank will not settle the Deed on terms different from those detailed in Gadens' letter at around 2pm to Lou Le Compte and copied to Brenden Miller."
In the email, Mr Howes made clear that "should Bill be able to settle the transaction as defined in the Deed" the Bank would release the proceeds of the sale of Vaucluse to Mrs Jamieson.
By now, the purchaser of the Woollahra property had served a notice to complete. Mr Jamieson said that by 13 August 2012 he had been informed by the purchaser of Woollahra that "he was looking for another property and preparing to terminate the contract". Mr Jamieson said that at this point he concluded "that I had no choice in the circumstances but to accept the terms then being presented" by the Bank.
On 13 August 2012, the Bank's solicitors wrote to Mr Le Compte (referring to Mr Le Compte's clients as being Mr and Mrs Jamieson): -
"... If the Deed of Settlement and Release has been not been executed by all parties and settlement of the first tranche of the refinancing effected by 4.00pm Wednesday 15 August 2012, we anticipate receiving the Bank's instructions to commence proceedings against the borrowers and guarantors, without further notice."
On the same day, Mr Jamieson had confirmed, through Mr Le Compte, his "in principle" agreement to the form of the Deed "subject, of course, to what transpires between Jennifer Jamieson and your client".
On the evening of 14 August 2012, Mrs Jamieson participated in a teleconference with Mr Le Compte, Mr Jamieson and Mr Miller.
In her affidavit evidence, Mrs Jamieson gave evidence of the following exchange with Mr Miller during that teleconference: -
"Mr Miller: Jen, you are signing away your rights and if Bill can't get finance you will have no recourse against the Bank.
Mrs Jamieson: Brenden, you know I don't want to sign the deed and sign away my rights.
Mr Miller: The bank won't accept $10 million without your release. Jen, you have to do this if you want to settle it. If you are confident Bill will be able to get the finance then this is the best result for you."
After the 14 August 2009 teleconference, Mr Miller sent an email to Mrs Jamieson: -
"As I understand it you and Bill were to reflect on whether you would agree to release any rights you have on the signing of the Deed (cf releasing rights after Bill completes the settlement). Could you let me know what decision you have made in that regard."
In this letter Mr Miller misstated the position in that the proposed Deed provided that Mr and Mrs Jamieson would release the Bank on payment of the first tranche of $10 million (rather than on signing the Deed).
On 15 August 2012, Mrs Jamieson attended the offices of Garland Hawthorne Brahe, with Mr Jamieson, to sign the Deed. She was met by Mr Steven Martin, a partner of that firm.
In her affidavit evidence, Mrs Jamieson gave the following account of her meeting with Mr Martin: -
"Bill and I were shown into a conference room. A discussion then took place to the following effect:
Mr Martin: 'Brenden has given me a brief rundown of the document you need to sign.'
Mr Martin then handed me a copy of a document titled "Settlement Deed" and said:
Mr Martin: 'Have a read of this. Have you got your driver's licence? I need to have some ID.'
I handed Mr Martin my driver's licence and he left the room to photocopy it.
Whilst Mr Martin was out of the room I flipped through the Deed but did not read it in any detail.
When Mr Martin returned to the conference room we had a conversation to the following effect:
Mr Martin: 'Any questions?'
[Mrs Jamieson]: 'What is the purpose of any questions? I don't have any choice. They're not going to change anything. They're not going to take the $10 million unless I sign it. I'm screwed if I sign and I'm screwed if I don't. I really don't want to sign this.'
Mr Martin: 'That is a matter for you.'
[Mr Jamieson]: 'The bloody bank has manoeuvred us into this position from the first time they got involved in the project. They mismanaged everything and now they are determined to screw us. They got Jenny to sign a guarantee in 2009 that she should never have signed as they never abided by the undertaking to provide the finance they undertook to do, which they got Jenny to sign for in the first place.'
Mr Martin: 'I really don't know about the background to this case however you are not the first people this has happened to and you won't be the last. I feel very sorry for you. You are in a very difficult position.'
[Mrs Jamieson]: 'I'm only signing this so that the bank will accept the $10 million.'
Mr Martin: 'You do realise that if the $13 million is not paid in [the] time specified in the deed you have no comeback as you have given up all your rights against the bank.'
[Mrs Jamieson]: 'Well, let's sign it. Let's get it over with.'"
Mrs Jamieson then signed the Deed. Mr Martin witnessed her signature.
Mr Martin's contemporaneous diary note is in the following terms: -
"After [Mrs Jamieson] had re-read the Deed I asked her 'are you ready to sign the Deed? I understand from Brenden that you are aware of its provision and wish to sign it'. She said 'I am not sure whether I want to sign and give up my rights against the Bank'. I said 'Well that's a matter for you to consider but you need to weigh up against any claim against the Bank that it is agreeing to waive a large sum of money provided you and Bill comply with the settlement sum of $23 million by 21 September. Your guarantee is being increased by $0.4 million to $1.4 million. If you doubt that Bill can refinance the properties to pay the remaining $13 million after the settlement you need to reconsider your position'.
She advised 'I only want to have our family put back into the position it was before and I believe the only way that can happen is if I sign the Deed and hope Bill pulls off sale of the properties. I'll have to trust Bill'.
I then reminded her that once the Deed was exchanged she had no further rights against the Bank even if the $23 million was not paid." (emphasis added)
Mrs Jamieson gave the following evidence in cross-examination: -
"Q: You understood that whether the settlement that had been negotiated and which would effect the settlement deed was achieved depended upon whether your husband was going to be able to make that second payment of $13 million?
A. Yes.
Q. You believed that your husband would be able to make that payment?
A. I hoped and prayed.
Q. You realised that that was not certain?
A. I was hopeful it was. I had to trust, I had to trust everybody, I had to trust.
Q. You realised it wasn't certain?
A. I had to trust that it was certain.
Q. You didn't believe it was certain?
A. No, not at all. I had to trust that it was certain. I had been backed into a corner totally.
Q. You knew that it wasn't certain?
A. No.
...
Q. Are you saying that you thought the refinancing for the $13 million was certain or uncertain?
A. I was hopeful, always hopeful, always hopeful that Bill was going to be successful with the additional $13 million.
Q. You knew from discussions with Mr Miller that there was a risk if the money wasn't paid over that you would have signed away your rights that the settlement wouldn't be achieved?
A. I was aware from my discussion on the night of the 14th that I was signing my rights away. As he said, it was the only way the bank could accept $10 million.
Q. You knew whether your husband, his entities and yourself was the benefit of the settlement it was dependent upon whether that second payment would be paid?
A. I had to trust, yes, that Bill would be successful with the $13 million."
Prior to giving that answer in cross-examination, Mrs Jamieson had not asserted, in any affidavit or otherwise, that Mr Miller or Mr Le Compte had told her that she had "no choice" but to sign the Deed.
When pressed, Mrs Jamieson accepted that these words had not been said but that, rather, Mr Miller had said something to the effect that entering the Deed was "the best result". Mrs Jamieson's preparedness spontaneously to make such assertions causes me to regard her evidence concerning this aspect of the matter with some care.
Mr Jamieson, 101A Darling Point, Billgate and the Bank executed the Deed shortly thereafter. Ultimately, it was dated 16 August 2012.
On 17 August 2012, the Bank was paid the first tranche under the Deed of $10 million. The second tranche of $13 million was due by 21 September 2012, but was not paid.
On 25 September 2012, the Bank appropriated the $1.4 million deposit representing the net proceeds of sale of the Vaucluse property.
The effect of the Deed
The effect of the Deed was that if the payments of $10 million and $13 million were made on time then: -
(a) the Bank would release 101A Darling Point, Billgate and Mr and Mrs Jamieson from all further liability;
(b) the money in the term deposit representing the net proceeds of sale of the Vaucluse property (some $1.4 million together with interest from June 2011) would be paid to Mrs Jamieson;
(c) on payment of the first $10 million (from the proceeds of sale of Woollahra): -
(i) the mortgages over the Woollahra property would be discharged and each of Mr and Mrs Jamieson would be released from liability as guarantors of Billgate;
(ii) Mrs Jamieson's liability under the 101A Darling Point guarantee would increase from $1 million to $1.4 million (in effect, to match the term deposit); and
(iii) 101A Darling Point, Billgate and Mr and Mrs Jamieson would release the Bank from all claims.
There was thus a differential staging of releases; the borrowers and guarantors released the Bank on payment of the first $10 million; the Bank only released the borrowers and guarantees once the whole $23 million was paid.
Is the Deed liable to be set aside? Is the Deed an "unjust" contract? Did the Bank engage in unconscionable conduct in connection with the Deed? Did the Bank exert economic duress?
Mr and Mrs Jamieson both seek to set aside the Deed on the basis that it was an "unjust" contract for the purposes of the Contracts Review Act, that the Bank engaged in unconscionable conduct (both statutory and equitable) in the circumstances leading to the execution of the Deed and that (particularly in the case of Mrs Jamieson) the Bank exerted economic duress which led to the execution of the Deed.
In my opinion, the Deed is not liable to be set aside on any of these bases by either Mr or Mrs Jamieson.
Mrs Jamieson
Mrs Jamieson executed the Deed in circumstances where for 18 months, from March 2011 until August 2012, as Mrs Jamieson well knew, the Bank had negotiated with Mr Jamieson in an effort to settle the disputes that had arisen between the parties.
The first point to be made is that throughout that period, Mrs Jamieson had legal advice, first from Mr English and then from Mr Miller. I do not accept the submission, made on behalf of Mrs Jamieson, that she did not thereby get independent legal advice. It is true that, so far as Mr Miller is concerned, he, from time to time, dealt directly with Mr Jamieson (as well as Mrs Jamieson) and addressed correspondence to both Mr and Mrs Jamieson. However, as Mrs Jamieson knew, Mr Jamieson was looking to Mr Le Compte for legal advice. Mr Miller was, at all times, available to Mrs Jamieson to give legal advice directly to her; and on a number of occasions, particularly in the weeks leading up to the execution of the Deed, Mr Miller gave Mrs Jamieson advice about her legal position, about whether she should execute the Deed, and the nature of the risks associated in so doing.
In particular, on 1 August 2012 (see [540] to [541] above) and on 9 August 2012 (see [545] above), Mr Miller gave Mrs Jamieson focused and clear advice about the effect of the Deed and the calculated risks that she was running by executing it.
Second, Mrs Jamieson was under no illusion as to the nature of the claims that she wished to make against the Bank. She obtained advice both from Mr English and Mr Miller about these matters and demonstrated, on many occasions a clear understanding of the nature of those claims; for example, at and prior to the meeting with the Bank on 8 May 2012 (see [500] above) and in her email to Mr Howes of 13 August 2012 (see [551] above) written two days before she executed the Deed.
Third, Mrs Jamieson made very clear, both in her communications with Mr Miller and others at the time, and in the evidence she gave in these proceedings, that above all other things she wanted to achieve a settlement with the Bank. Over and over again she said something to the effect "I just wanted everything to settle". She was content to let Mr Jamieson deal with the Bank so far as settlement was concerned and was prepared to accept and go along with whatever turned out to be the best settlement that Mr Jamieson could achieve.
The true state of Mrs Jamieson's mind was revealed, in my opinion, by what Mr Martin recorded in his contemporaneous note on the occasion Mrs Jamieson executed the Deed when she said to him: -
"I only want to have our family put back into the position it was before and I believe the only way that can happen is if I sign the Deed and hope Bill pulls off sale of the properties. I'll have to trust Bill."
Fourth, Mrs Jamieson had a powerful imperative to achieve a settlement with the Bank. If settlement could be achieved, and a compromise could be arrived at to quell the dispute between the Jamieson's and the Bank, there was a significant prospect of Mr Jamieson, and thus the family, achieving economic salvation which would, amongst other things, enable Mrs Jamieson to draw down the loan that she had negotiated with the ANZ and use it to purchase one of the units at 101A Darling Point (evidently unit 1) (see [526] - [529] above).
Fifth, the settlement that Mr Jamieson was able to achieve with the Bank represented a considerable compromise of the Bank's rights. If Mr Jamieson had been able to arrange finance to secure the payment of the second tranche of $13 million, the Bank would have abandoned its claim to recover the full amount of its debt (an amount of some $14 million more than the $23 million the subject of the settlement) and would have returned to Mrs Jamieson the $1.4 million proceeds of sale of the Vaucluse property.
Furthermore, it is not as if, throughout the 18 months during which the settlement was negotiated, the Bank put forward one proposal and told Mr and Mrs Jamieson to "take it or leave it".
During the 18 months, both the Bank and Mr Jamieson negotiated. First, the Bank proposed that Mr Jamieson have until the end of 2011 to sell the properties. Next, Mr Jamieson proposed a settlement whereby he would cause $20 million to be paid to the Bank. Shortly thereafter that figure was increased to $23 million. Initially, the Bank stated that it would only settle upon the basis that some proposal was made to repay to it the entirety of the Billgate and 101A Darling Point debts. Then the Bank relented and agreed, in principle, to accept $23 million, and later agreed to accept that sum by the $10 million and $13 million instalments. It also agreed to return the $1.4 million to Mrs Jamieson if those instalments were paid.
Initially, the Bank insisted that the Jamiesons release it from all claims upon execution of the Deed. Later, the Bank agreed that such releases could be postponed until payment of the first tranche of $10 million. It is true that the Bank always insisted that its releases of Mr and Mrs Jamieson and of 101A Darling Point and Billgate would only occur once the entire $23 million was paid. In insisting on that matter, and not budging from it in the final days of negotiation leading up to the execution of the Deed on 15 August 2012, the Bank certainly adopted a firm position. It had, however, moved a long way from the beginning of the negotiations and, as I have said, was offering, by its acceptance of the terms of the Deed, a considerable compromise over what would otherwise be its legal entitlements.
Sixth, Mrs Jamieson was well aware of the risks that she was running. The benefit to her of entering the Deed depended entirely on Mr Jamieson's ability to negotiate finance for the second tranche of $13 million. So much was obvious but was, in any event, made very clear to Mrs Jamieson by advice she received from Mr Miller.
No doubt there was considerable pressure on Mrs Jamieson to settle on the basis of the Deed. But settlement of the dispute with the Bank was the matter that, above all other things, Mrs Jamieson wished to achieve.
It is also true that a further imperative on Mr Jamieson, and thus Mrs Jamieson, to settle was the fact that the purchaser of the Woollahra property had served a notice to complete and, according to Mr Jamieson, was giving indications of terminating the contract.
Mr Williams placed great emphasis on the fact that Mrs Jamieson was, as it were, "on the hook", by reason of having executed the 101A Darling Point and Billgate guarantees and having executed a mortgage over Vaucluse which led to, on her case, the sale of Vaucluse in an unsatisfactory market, and the retention by the Bank of the $1.4 million proceeds of sale on deposit. It is also true that the 18 month period of negotiations leading up to execution of the Deed cannot be seen in isolation of the events which went before and led to the troubled circumstances in which Mrs Jamieson found herself by August 2012.
However, at the end of the day, the substance of the matter is that a compromise was achieved.
Mrs Jamieson gave evidence that she felt as if she had "no choice", in the sense of no practical choice, but to settle. Mrs Jamieson claimed that one reason that she felt she had "no choice" but to settle was that she was not, in August 2012, in a position to engage in litigation with the Bank.
However, as Mr Simpkins submitted, had the parties been unable to agree on the terms of a settlement in mid August 2012, it is inevitable that the Bank would have promptly commenced proceedings for possession and debt; perhaps by the end of August 2012.
The second tranche was due for payment only a short time thereafter (on 21 September 2012). Upon default, the Bank filed these proceedings shortly thereafter (on 9 October 2012) and 10 days later, on 19 October 2012, Mrs Jamieson sought to be joined as a party. Somehow or other she has been able to fund the defence of these proceedings (over 11 hearing days). Although there is no evidence of Mrs Jamieson's financial position in October 2012 compared to August 2012, the inference I would draw from those circumstances is that, in a way that she has not explained, Mrs Jamieson was in a position to litigate with the Bank, had she desired to do so. In my opinion, the reason she did not take that course was because, as I have sought to emphasise, of her overwhelming desire to see Mr Jamieson "get the best settlement achievable".
In my opinion, the Bank has not engaged in economic duress. In order to establish economic duress, it is necessary to establish "threatened or actual unlawful conduct" (see Australia & New Zealand Banking Group Ltd v Karam [2005] NSWCA 344; 64 NSWLR 149 at [66] per Beazley, Ipp and Basten JJA and A v N [2012] NSWSC 354 at [506] per Ward J) (cf Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 where McHugh JA expressed the test as being the application of "illegitimate pressure").
I see no basis for any finding that the Bank engaged in or threatened to engage in unlawful conduct.
I also see nothing in the conduct of the Bank which was unfair or which manifested some "moral fault or responsibility" (Australian Competition & Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [185] per Selway J), "high level of moral obloquy" (Attorney-General (NSW) v World Best Holdings Ltd [2005] NSWCA 261; (2005) 223 ALR 346 at [121] per Spigelman CJ) or "clearly unfair or unreasonable" behaviour (Cameron v Qantas Airways Ltd (1995) 55 FRC 147 at 179 per Beaumont J) such as would entitle me to conclude that the Bank had behaved in an unconscionable manner.
There is certainly no basis on the evidence to conclude that the Bank had a "predatory state of mind" and unfairly exploited any weakness in Mrs Jamieson's position such as could lead to a conclusion of unconscionability in the general equitable sense (see Kakavas v Crown Melbourne Ltd [2013] HCA 25 at [161]).
Nor do I see, in the circumstances that I have set out, any basis to conclude that the Deed was an unfair contract for the purposes of the Contracts Review Act.
My conclusion is that Mrs Jamieson's attack on the Deed fails.
Mr Jamieson
The matters that I have outlined in relation to Mrs Jamieson apply with even greater force to Mr Jamieson.
I have found that such misrepresentations as were made to him on 18 June 2009 were either then known to him to be a misstatement of the true position or, were so revealed shortly after.
The problems which arose with the builder of the Darling Point Project were, in substance, caused by Mr Jamieson's agreement to the 6 August 2009 transfer of funds to clear excesses.
Mr Jamieson was able to negotiate, in the 18 month period to August 2012, a considerable compromise of the Bank's claim against him and his companies, both in terms of the amount to be paid, and the terms upon which that amount would be paid.
As recently as the time that his Counsel made opening submissions in these proceedings, Mr Jamieson persisted in the claim that, when he signed the Deed, he thought the 9 June 2009 letter of offer for the 101A Darling Point Facility accurately stated the "existing debt" to be $8.222 million. In those submissions, Mr Jamieson contended that he had only learned the true position in the course of these proceedings. I have found that, in June 2009, Mr Jamieson well knew that $8.222 million was not the then "existing debt" of 101A Darling Point; he said as much to Mr Bovaird in September 2009. I therefore do not accept the proposition that Mr Jamieson was ignorant of that matter when he signed the Deed.
Mr Jamieson had legal advice from Mr Le Compte throughout the period of the negotiations. I accept the Bank's submission that Mr Jamieson's decision to enter into the Deed was "plainly one of commercial calculation". He contemplated the sale of the Darling Point and Woollahra projects, following refinance with the Bank, and assessed, prior to execution of the Deed, that "buying out the Bank" in this way was to his financial advantage and that of his companies. To the extent that Mr Jamieson said he thought he had "no choice" but to enter the Deed, this was simply because he considered the litigious alternatives to be uncertain, as he acknowledged in cross-examination.
Mr Jamieson thought, with the benefit of legal advice, that his financial position, and that of his related entities, was best served by taking the calculated risk that finance would be available to enable payment to the Bank of the second tranche of $13 million. Had Mr Jamieson been able to arrange that finance, the dispute with the Bank, which had been brewing for three years, would have been quelled and he would have achieved, at least so far as concerns the Bank, commercial salvation. It did not turn out that way. But, in my opinion, that is not because of any fault that can be laid at the Bank's door.
Mr Jamieson's attack on the Deed also fails.
The proper construction of the Deed - the Salkeld v Vernon point
On behalf of Mr and Mrs Jamieson it was submitted that, assuming the Deed was binding on them, on its proper construction, it did not operate to release the claims now made by Mr and Mrs Jamieson as those claims were not known to them when they executed the Deed.
On behalf of Mr Jamieson, Mr Muddle submitted: -
"It is settled law that a release does not apply to something of which the releasing party was ignorant unless there is an exceptionally clear and solemn instrument releasing claims, whether known or not known at the date of the release: Salkeld v Vernon (1758) 1 Eden [64 at] 67, 68. The Deed... does not contain such a clause".
The provisions of the Deed
The Deed is drawn in very wide terms.
Clause 6.1 states: -
"Upon payment of $10,000,000 to the Bank, the Borrowers and Guarantors unconditionally and irrevocably release and discharge the Bank from all or any Claim that the Borrowers and Guarantors presently have, may have or which but for this deed would, could or might at any future time have or have had, against the Bank in respect of any matter arising directly or indirectly out of or in connection with the subject matter of this deed, and any other matters relating to, arising out of or otherwise connected with:
(a) the Debt;
(b) the Guaranteed Amount;
(c) the Facility; and
(d) the Securities."
"Claim" was defined to mean, relevantly: -
"...any...causes of action whatsoever arising at law, in equity, and under statute, which they may have or which but for this deed would, could or might at any future time have or have had against each other in respect of or arising out of either directly or indirectly any matter referred to in or arising out of this deed."
The words "Debt", "Guarantee Amount", "Facilities" and "Securities" were defined to include all of those matters that were in dispute between the parties.
Further, cl 19.6 of the Deed provides that: -
"This document may be pleaded as a full and complete defence to any proceedings or claims commenced by or on behalf of the Parties arising out of the facts, matters and circumstances referred to in this deed."
Save that the Deed did not, in terms, release the Bank from claims "unknown" to Mr and Mrs Jamieson, it is hard to contemplate a deed of release being drawn in wider terms.
Mr and Mrs Jamieson relied upon what fell from the High Court in Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 where Dixon CJ, Fullagar, Kitto and Taylor JJ refer to (at 130): -
"... the equity to have the general words of a release confined to the true purpose of the transaction ascertained from the scope of the instrument and the external circumstances."
At 129, their Honours stated that: -
"... equity proceeded upon the principle that a releasee must not use the general words of release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor."
The principle has been discussed in many cases, including by Santow J in Karam v ANZ Banking Group Limited [2001] NSWSC 709 and more recently by Pembroke J in Owners Corporation of Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd (No 2) [2012] NSWSC 322.
In my opinion, the equity to which the High Court referred to in Grant v John Grant is of no avail to Mr and Mrs Jamieson.
It is obvious, from the wide terms of the Deed, and "the external circumstances", that Mr and Mrs Jamieson intended to release the Bank from all claims that they might have against the Bank arising out of their dealings with the Bank concerning the borrowings of 101A Darling Point and Billgate.
Each of Mr and Mrs Jamieson articulated those claims with clarity. Mr Jamieson claimed that he had been "dudded" by the Bank and that Mr Allan had made untrue statements to him in June 2009 concerning the monies which would be made available pursuant to the 9 June 2009 letter of offer.
So far as concerns Mr Jamieson, the particular matter that he relied upon, and which was emphasised in his opening submissions, was his alleged ignorance of the "existing debt" of 101A Darling Point in June 2009. Mr Jamieson claimed that he was not aware that $8.222 million was not the "existing debt" of 101A Darling Point in June 2009 until after the commencement of these proceedings. I have found that, to the contrary, Mr Jamieson was well aware of the true position.
So far as Mrs Jamieson is concerned, as I have set out above, she repeatedly articulated to the Bank her contention that she had been defrauded, that she was never a willing guarantor and that "the Bank did not do things it had agreed to do" (see, for example, the statements Mrs Jamieson made at the meeting with the Bank on 8 May 2012 (see [507] above) and her email communication with Mr Howes on 13 August 2012, two days before she signed the Deed (see [551] above)).
It may be that Mr and Mrs Jamieson were not aware, when they executed the Deed, of particular factual matters relevant to the complaints they make about the Bank's conduct which have been revealed to them (for example, through disclosure by the Bank) in these proceedings.
But they knew the fundamentals of their complaint, and ignorance of such particular matters cannot, itself, be a basis upon which to read down the general words of the release in the Deed. It is quite obvious to me from the words of the Deed, and the circumstances known to Mr and Mrs Jamieson when they executed the Deed, that, however reluctantly, Mr and Mrs Jamieson, by execution of the Deed, intended to release the Bank from all claims of the kind that they now seek to agitate in these proceedings.
The facts in this case do not remotely resemble those in Grant v John Grant, where the plaintiff company had no knowledge at all of the liability of the defendant that the plaintiff sought to enforce, but which the defendant contended was caught by the general words of a release entered into in a entirely different context.
In Multiplex, Pembroke J stated at [30]: -
"The equitable principle only has a role to play when it appears from the terms or the context or other admissible evidence, that the enforcement of the legal right would, by a literal application of the general words of a release, be against conscience."
I agree. There is no basis, on the facts of this case, to conclude that it would be "against conscience" for the Bank to rely upon the broad terms of the releases in the Deed. Those broad releases were an essential element of the compromise reached by the parties when they executed the Deed.
I reject the submission that the terms of the Deed are not apt to release Mr and Mrs Jamieson from the claims they have sought to prosecute in these proceedings.
Overall conclusion
My conclusion is that, as Mr Simpkins submitted when he opened the case, the Deed is the beginning, and the end of these proceedings.
Amendment to Mrs Jamieson's Cross-Claim
On the sixth day of the hearing (30 July 2013), Mrs Jamieson sought leave to amend her Commercial List Cross-Claim to plead breaches of the Code of Banking Practice additional to those already pleaded, to plead breaches of certain of the Bank's internal procedure requirements and to amend pleadings already made concerning the availability of funds to 101A Darling Point.
I allowed the amendment and said that I would give my reasons in this judgment.
The proposed amendments made clear that Mrs Jamieson did not claim damages from the additional breaches contended for. Rather, they were to be pleaded as additional circumstances concerning the Contracts Review Act and unconscionability counts already pleaded.
For the most part, the fresh allegations were of a factually uncontroversial and incontrovertible nature.
Further, for the most part, the allegations were foreshadowed in written submissions circulated prior to the commencement of the proceedings.
Mr Simpkins resisted the amendment on the basis that he had conducted his case, and in particular his cross-examination of Mrs Jamieson, on the basis of the existing pleading. Mr Simpkins also submitted that it might be necessary to adduce further evidence to meet the new claims.
I accept that Mr Simpkins may have wished to cross-examine Mrs Jamieson about some of the matters the subject of the proposed amendments. In particular, Mr Simpkins may have wished to put to Mrs Jamieson that it would have made no difference to her position had the Bank acted consistently with what Mrs Jamieson contends to be its obligations under its internal guidelines and in accordance with the Code of Banking Practice.
I accepted that submission, but considered that such prejudice as thereby arose would in substance be met if Mr Williams agreed that he would take no objection to Mr Simpkins submitting that I should find that Mrs Jamieson would not have acted differently had the Bank complied with its alleged obligations. Mr Williams so agreed.
The taking of evidence continued for three days after 30 July 2013, during which time Mr Simpkins called Mr Allan to give evidence. If the Bank wished to adduce further evidence to meet the amended claims, it had ample opportunity to do so.
Orders
I propose to enter judgment for the Bank for debt owing to it by Billgate, 101A Darling Point and Mr Jamieson, and possession of the Darling Point and Joadja properties.
I invite the parties to bring in short minutes of order to give effect to these reasons.
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Decision last updated: 11 September 2013
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