Zhou v Mindarie Drive Pty Ltd

[2023] WADC 63

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   ZHOU -v- MINDARIE DRIVE PTY LTD [2023] WADC 63

CORAM:   BOWDEN DCJ

HEARD:   3-6, 11 & 14 APRIL 2023

DELIVERED          :   16 JUNE 2023

FILE NO/S:   CIV 947 of 2020

BETWEEN:   WEN JUN ZHOU

Plaintiff

AND

MINDARIE DRIVE PTY LTD

First Defendant

TOMAS BRIONES AGUIRRE

Second defendant

DANIEL BRYAN SANBROOK

Third Defendant

BARRY MILES BOOTH

Fourth Defendant

JENNIFER ROSE BOOTH

Fifth Defendant

Catchwords:

Loan agreement - Breach of guarantee and indemnity - Rescission of deed - Unconscionable conduct - Statutory unconscionable conduct - Undue influence - Misrepresentation and misleading and deceptive conduct - Affirmation of contract - Jurisdiction of District Court to provide equitable remedies

Legislation:

Nil

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff	:	Mr P Lafferty
First Defendant	:	No appearance
Second defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	Mr G D Maher
Fifth Defendant	:	Mr G D Maher

Solicitors:

Plaintiff	:	Armeli & Molony Lawyers
First Defendant	:	Not applicable
Second defendant	:	Not applicable
Third Defendant	:	Not applicable
Fourth Defendant	:	Laird Lawyers Commercial Lawyers
Fifth Defendant	:	Laird Lawyers Commercial Lawyers

Case(s) referred to in decision(s):

Abram Steamship Co Ltd (in liq) v Westville Shipping Co Ltd (in liq) [1923] AC 773

Agripay Pty Ltd v Byrne [2011] QCA 85; [2011] 2 Qd R 501

Allcard v Skinner (1887) 36 Ch D 145

Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38

Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72

Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40

Australian Securities and Investments Commission v Kobelt [2019] 368 ALR 1

Bainbrigge v Browne (1881) 18 Ch D 188

Bank of New South Wales v Rogers [1941] HCA 9; (1941) 65 CLR 42

Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30

Brunker v Perpetual Trustee Co (Ltd) [1937] 57 CLR 555

Clay v The State of Western Australia [2023] WASCA 77

Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208

Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846; (2020) 291 FCR 155

Evans v Benson & Co [1961] WAR 12

Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395

Goldsworthy v Brickell [1987] Ch 378

Gunn v Meiners [2022] WASCA 95

Immer (No 145) Pty Ltd v The Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26

Jenyns v Public Curator (Qld) [1953] HCA 2; (1953) 90 CLR 113

Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113

Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392

Khoury v Government Insurance Office of New South Wales [1984] HCA 55; (1984) 165 CLR 622

Matthews v Bayview Holiday Village Pty Ltd [1990] 2 WAR 167

Matthews v Smallwood [1910] 1 Ch 777

Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; [2015] 236 FCR 199

Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353

Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634

Scarf v Jardine (1882) 7 App Cas 345

Shephard v Tuanie Paul Galea as Executor and Trustee of the Estate of the Late Joseph Galea [2020] WASCA 152

Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 15] [2023] WASC 56

Stubbings v Jams 2 Pty Ltd [2022] HCA 6

The Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

The Lunching Pad Pty Ltd v Minister for Culture and the Arts [2001] WASC 299

Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85

Tulloch (deceased) v Braybon (No 2) [2010] NSWSC 650

Watkins v Combes [1922] HCA 3; (1922) 30 CLR 180

Yerkey v Jones (1939) 63 CLR 649

BOWDEN DCJ:

An overview and some matters not in dispute

1. In 2017 the first defendant, Mindarie Drive Pty Ltd (Mindarie Drive), was involved in a property development (the Jade Development) on a property in Hillarys (the Hillarys property).  The Jade Development involved the building of 14 mixed residential and commercial units. 

2. By the latter part of 2017 Mindarie Drive needed further funds to complete the development and borrowed the funds from the plaintiff pursuant to a loan deed dated 5 December 2017 (the Deed) whereby the plaintiff agreed to lend Mindarie Drive up to $500,000. 

3. The second and third defendants Mr Aguirre and Mr Sanbrook are business partners and shareholders and directors of Mindarie Drive. 

4. The fourth and fifth defendants Mr and Mrs Booth are the parents of Mrs Aguirre, the wife of Mr Aguirre.

5. Mr Aguirre, Mr Sanbrook and Mr and Mrs Booth were, jointly and severally, the guarantors of Mindarie Drive's loan from the plaintiff and the terms of the guarantee and indemnity are contained in the Deed.

6. Mr and Mrs Booth each initialled pages 2 - 27 of the Deed and each signed immediately underneath a clause which stated:

   I … understand that I am entitled to independent legal advice prior to signing the Deed.  I have / chosen not to obtained independent legal advice.  

   I confirm that I fully understand the terms of this Deed and will comply with its obligations.  I have willingly executed this Deed and will comply with … its obligations and terms.  

   In addition, Mr and Mrs Booth each signed an attestation clause in a section referring to guarantors.  Mr and Mrs Booth do not dispute that the Deed contained the guarantee but claim they were not aware when they signed they were the guarantors for the loan.  

7. Mr and Mrs Booth owned their residence in Butler which was subject to a reverse mortgage.  That residence was used as security for the loan and the reverse mortgage was discharged on or about 8 December 2017 with funds advanced pursuant to the loan effectively ensuring that the plaintiff had a security for the loan which was free of encumbrances. 

8. Regrettably for all concerned the Jade Development was not a financial success which became apparent about the middle of 2019.  

1. In October 2019 in an apparent effort to protect Mr and Mrs Booth from the fallout of the failed Jade Development and their liability as guarantors, Mindarie Drive granted a mortgage over eight lots in the Jade Development to Mr and Mrs Booth as security for the liability they had incurred in the Deed as guarantors (Exhibits 1.41, 1.42). 

1. Although some monies were repaid Mindarie Drive failed to repay the loan in full and an amount of $311,975 plus interest remains outstanding.  The plaintiff called upon each of Mr Aguirre, Mr Sanbrook and Mr and Mrs Booth as guarantors to repay the loan.  None of the guarantors repaid the loan and these proceedings were commenced. 

2. The plaintiff seeks orders that Mr and Mrs Booth pay the sum of $311,975 plus interest as they are the only remaining guarantors defending the plaintiff's claims.  The plaintiff claims against them for breaching the terms of the guarantee and indemnity. 

3. Mr and Mrs Booth do not dispute that they have not repaid the amount sought by the plaintiff.

4. Mr and Mrs Booth say that when they signed the Deed they had not received independent legal advice and were not aware that it contained a guarantee provision.  They say they had not been informed by their daughter, her husband or Mr Sanbrook or the plaintiff prior to signing the Deed that they were providing a guarantee and when they signed were not advised in adequate terms by the plaintiff's solicitor that the Deed contained a guarantee and the effect of the guarantee. 

5. Mr and Mrs Booth say the Deed was entered into as a result of undue influence exerted by Mr and Mrs Aguirre or that it is unconscionable for the plaintiff to rely on the Deed either in equity or under s 237 of the Australian Consumer Law (sch 2 of the Competition and Consumer Act 2010 (Cth) (ACL) or s 237 of The Australian Consumer Law (WA) (ACLWA)), or pursuant to the principle in Yerkey v Jones(1939) 63 CLR 649. They defend the claim on those grounds, and counterclaim seeking orders declaring the Deed void or rescinded and seek actual rescission of the Deed.

6. A jurisdictional question arises in relation to Mr and Mrs Booth's claims as the plaintiff says the District Court does not have the jurisdiction to determine the equitable relief sought by Mr and Mrs Booth. 

The evidence

1. A total of eight witnesses gave evidence.  The evidence is summarised below although other parts of the evidence are summarised when dealing with specific issues in the judgment. 

2. It is accepted that Ms Wang was acting as agent for her mother, Ms Zhou, and Mr Lee was her mother's solicitor.  Accordingly, it is not disputed that the knowledge of Mr Lee and Ms Wang is the knowledge of the plaintiff.  A reference in the paragraphs that follow to the plaintiff's knowledge or state of mind or actions includes knowledge or state of mind or actions of Mr Lee and Ms Wang.  

3. A reference to 'the meeting' is a reference to the meeting at Mr Lee's office on 5 December 2017.

Ms Zhou

1. Ms Zhou, 75 years of age, was born in China and cannot speak English.  She gave evidence with the assistance of an interpreter.  Ms Zhou had carried on a business lending money in China for a short period of time. 

2. Ms Zhou was the lender of the monies that were ultimately advanced to the borrowers and identified her signature on the Deed (Exhibit 1.21).  She left all the dealings in relation to this loan to her daughter, Ms Wang.  

3. I accept Ms Zhou's evidence which was not seriously in contention and accept that of the money she advanced pursuant to the Deed, $311,975 plus interest remains unpaid.  

Mr Lee

1. Mr Lee is a registered legal practitioner in the State of Western Australia being first admitted in 2013 and has run his own legal practice since 2017.  He speaks English and Mandarin. 

2. He received his initial instructions from Ms Zhou in November 2017 when she advised that she was advancing up to $500,000 to the borrower and her daughter would be handling the matter on her behalf.  Mr Lee carried out due diligence searches through Landgate, the relevant insolvency services and the personal property security register, and searches relating to the directors, secretary, and shareholders of Mindarie Drive (Exhibits 2.58, 2.59, 2.60). 

1. Mr Lee emailed Ms Wang with a costs agreement, an authorisation to act and the initial loan deed (Exhibit 1.13).  Mindarie Drive was the borrower and, at that stage, Mr Aguirre and Mr Sanbrook the only guarantors.  That agreement provided for a loan of $500,000 over a period of 12 months (Exhibits 2.58, 2.59, 2.60).  

2. Mr Lee met with Ms Wang on 30 November 2017 and advised her of his concerns about the security and that any directors' guarantees would not be beneficial as the directors had probably provided other guarantees and he recommended further security. 

3. On 4 December 2017 he emailed Ms Wang (Exhibits 1.19, 2.62) with the first significant changes to the deed.  The varied deed provided that Mr and Mrs Booth were additional guarantors, and their Butler property was additional security with a caveat to be lodged over it and the existing mortgage on that property discharged.  Mr Lee's law firm were appointed as agents to ensure that occurred.  It also provided that a caveat would be lodged over the Jade Development site (the Hillarys property) and both the Hillarys property and the Butler property were referred to in the deed as caveatable properties. 

4. Mr Lee said the third draft deed (Exhibit 2.63) provided for default interest at 30% and a GST clause was added at Ms Wang's instructions.  After the third draft Ms Wang rang him and told him the borrowers and the guarantors wanted to meet urgently and he arranged a meeting for 12.00 noon that day, 5 December 2017.  

5. The fourth draft deed was created on 5 December 2017 (Exhibit 2.64) at approximately 12.00 noon due to Mr Lee making amendments before the meeting commenced.  The amendments provided that on the discharge of the mortgage, $200,000 would be released and when Mr and Mrs Booth provided clear title to their Butler property the lender would release a further sum of $186,000 (cl 3.2), $90,000 interest was to be withheld from the amounts advanced to the borrower (cl 4.3) and a new cl 3.4 was inserted providing that the lender had the right to withdraw the loan sum upon 30 days' notice and the borrower would have to repay the loan in full.  Clause 9 provided that the caveat over the Hillarys property could not be withdrawn until the loan had been paid in full and the borrower agreed not to challenge the caveat registered by the lender.  A provision was made that the caveat on the Hillarys property could be withdrawn to enable the issue of new titles and the caveat could then be re-registered.  Clause 12.9 was inserted making the guarantors jointly and severally liable. 

6. Mr Lee said that Mr and Mrs Booth, Mr Sanbrook and Mr Aguirre came to his office together about 12.00 noon and he showed them into the boardroom (ts 134).  He did not know if they all arrived in the same car.  Mr Lee had not met Mr and Mrs Booth previously but understood from discussions with Ms Wang that they were providing the security for the loan.  He was still making amendments to the draft deed.  Shortly after Ms Wang arrived and was shown into the boardroom Mr Lee said he had put three copies of the 12.00 noon draft (Exhibit 2.64) on the desk and told the parties to discuss the changes.  Shortly after he left the room. 

7. Around about 12.30 pm Mr Lee checked on the parties and was told by either Mr Aguirre or Mr Booth that amendments were required.  He said that generally Mr Aguirre did most of the talking.  The change was to correct the spelling of Mr Booth's Christian name from Barrie to Barry.  That change was made and the 1.00 pm version of the Deed produced (Exhibit 2.65).  Other than Mr Booth perhaps requesting the change to the spelling of his name Mr Lee could not recall Mr or Mrs Booth at that stage doing anything other than exchanging pleasantries (ts 139). 

8. At about 1.00 pm Mr Lee said he was told to make further amendments and he told the parties that he needed more time and sent them away for lunch, telling them to come back at about 2.00 pm.  He said Ms Wang and Mr Aguirre stayed behind and spoke for about five minutes. 

9. The parties reattended his office at around about 2.20 pm and went into to the boardroom.  Mr Lee entered the boardroom with the final draft of the Deed (Exhibit 1.21) which was ultimately signed. 

10. Mr Lee said he had printed out three copies of the final Deed and took the parties through the changes.  Mr Lee said he spoke to everyone, not specifically referring to any individual person.  The changes he had made were to cl 1.1, a new item 13, cl 3.2B and cl 3.2C, cl 3.4, cl 4.5B and cl 5.6.  He believed Mr Aguirre suggested at least one of the changes.  The interest rate was amended from 30% to 18%.  The spelling of Mr Booth's Christian name was amended in one place previously overlooked.  There was no change to the guarantee clause. 

11. Mr Lee said he went through the changes bit by bit but could not recall the exact words used.  He left the room for about 30 - 35 minutes for the parties to consider the changes.  He was later told they were ready to sign and re-entered the boardroom. 

12. Mr Lee said that before the Deed was signed he spoke to Mr and Mrs Booth by saying words to the effect of:

    Mr and Mrs Booth, I trust that you have read through and reviewed the document, as per the document you have the right to seek independent legal advice prior to signing the document, you have a choice to sign it or not to sign it today, can you confirm if you would like to seek legal advice. 

13. Mr Lee said Mr and Mrs Booth both 'basically' said they did not require independent legal advice, and both individually said words to the effect that they were happy to sign (ts 102 - ts 103).  

14. When taken in more detail to what occurred Mr Lee said he was very clear to make sure Mr and Mrs Booth understood the effect of the guarantee.  Mr Lee said he pointed out cl 12 of the Deed, saying this is a guarantee, these are the terms and he very vividly remembered pointing them to sch 2, page 27 of the Deed where it is highlighted stating 'upon signing this your property will be used as security and you are providing a guarantee and indemnity for the loan'.  When asked to recall what he said, Mr Lee replied words to the effect of 'please have a look at this, please have a look at this page, your assets or your property will be used as a security for the loan and what you have provided is a guarantee and indemnity'.  Mr Lee said he usually says in simple terms, that means everything and anything that is under your personal name can and will be used to satisfy the debt in the event of the default and believed he used similar words on that day.  Neither Mr or Mrs Booth said anything. 

15. Mr Lee's evidence was that he once again asked 'everyone' were they happy to sign the document today and 'they' nodded, and he proceeded with the signing.  He said he spoke face‑to‑face with Mr Aguirre and Mr Sanbrook and asked whether they wanted independent legal advice by pointing out and reading to them sch 3 of the Deed, page 28, because he wanted them to be very sure that they had every right and opportunity to seek independent legal advice and they said 'no we are fine.  We have chosen not to obtain independent legal advice' and then they signed.  Mr Lee said that he scored out the word 'have' underneath Mr Sanbrook and Mr Aguirre's names and when he came to Mr and Mrs Booth he pointed out and read to them the clause on page 29 and basically told them about it and pointed out that they had the right to independent legal advice and asked them if they wished to obtain independent legal advice before signing and both individually said 'no' (ts 102 - ts 108). 

16. In cross-examination Mr Lee maintained his evidence that he spoke to all four guarantors using their first names and said you are guarantors, that is, your assets will be used as security.  He said he talked through the caveat over the properties saying he did not read the clause verbatim but said there would be a caveat over their property and referred to the property's address.  Mr Lee said he explained the caveat was a charge over the property, and told them in simple terms they were providing a guarantee explaining that basically means that everything and anything that 'you own can and will be used to satisfy the debt in the event of the default'.  Mr Lee said he 'definitely' recalled mentioning the guarantee and indemnity (ts 148 - ts 150).  

17. Mr Lee maintained that after discussing the caveat he asked everyone if they were happy with the Deed and prepared to sign it and the Booths nodded and when he came to sch 3 on page 29 he said 'do you understand the right to seek independent legal advice.  Do you wish to obtain independent legal advice' and they each said 'no' (ts 153).  He also maintained he said you 'do not have to sign this today' and he scored out the word 'have' in everyone's presence. 

18. Mr Lee said he gave Mr and Mrs Booth the basic understanding that they had the right to seek independent legal advice and denied that there was time pressure from either himself or Ms Wang (ts 152 - ts 159). 

19. Mr Lee initially said that he and the parties initialled each page one by one with the exception of the execution clause, sch 3 and the cover page but accepted his evidence in this regard was wrong because his initials are not on each page of the document. 

20. Mr Lee consistently maintained that he pointed out to Mr and Mrs Booth separately that they had the right to independent legal advice and asked them if they wanted independent legal advice and they individually replied 'no'.  He said that Mr and Mrs Booth were the last people to sign and had gone through the document literally page by page. 

1. After the Deed was signed at about 4.30 pm, Mr Lee scanned an electronic copy for his records, gave one copy of the partially signed Deed (Ms Zhou had yet to sign) to Mr and Mrs Booth, and one copy to either Mr Aguirre or Mr Sanbrook. 

2. Mr Lee said Mr Aguirre was putting a bit of pressure on to get it done saying in the presence of all that he wanted to go to the bank before it closed (ts 160).  He said Mr Aguirre appeared to do most of the talking at the meeting apart from Ms Wang and appeared to be the spokesperson for the borrower/guarantors (ts 92). 

3. Mr Lee said the reverse mortgage on Mr and Mrs Booth's property was discharged on 8 December 2017 and the caveat lodged on their property on 17 January 2018 (Exhibits 1.25, 1.28). 

4. Ms Zhou signed the documents in mid-December 2017. 

5. Mr Lee said there were no discussions about the caveat on Mr and Mrs Booth's property being only temporary, pointing out that all the draft deeds provided that the caveat over their property was going to remain until the debt was repaid. 

6. Mr Lee denied the suggestion he had initially underquoted due to underestimating the time necessary for the meetings and preparing the Deed and denied that he was under any time or costs pressure. 

7. Mr Lee accepted that he did not make any enquiries into Mr and Mrs Booth's financial details and made no specific request of the parties to send any documents to Mr and Mrs Booth.  He assumed Ms Wang or Mr Aguirre would.  Mr Lee said when he provided the quote, he asked Mr Aguirre to forward the costs estimate to Mr and Mrs Booth and asked to be provided with their contact details, but they were not provided. 

8. Mr Lee could not recall where the parties were seated at the meeting (ts 142), nor could he recall the exact words used at the meeting and he was wrong when he said that he initialled the signatures of each of the four parties on pages 3 - 20 of the Deed. 

9. Mr Maher's ultimate position was that the fourth and fifth defendants accepted that Mr Lee gave a warning but said the warning was insufficient and there was insufficient evidence as to the content of the warning.  Mr Maher did not specify exactly what he meant by a warning.  

10. A reference to the disputed advice hereinafter is a reference to whether Mr and Mrs Booth were advised they were providing a guarantee, the effect of the guarantee, and of the right to obtain independent legal advice and that they did not have to sign the Deed that day (the disputed advice).  The disputed advice was given on Mr Lee's evidence at the same time that he advised that their property was being used as security and a caveat would be placed over the property.  It was not disputed that Mr and Mrs Booth knew a caveat would be placed over their property and it appeared to me that it was not disputed that they knew their property would be used as some form of security for the loan. 

11. I find Mr Lee was a creditable witness and had a reasonable recall of the events notwithstanding the error referred to above.  He made some contemporaneous notes of some of the events at the meeting of 5 December 2017.  I found that Mr Lee gave his evidence in a straightforward and plausible manner.  I deal later with the reasons why I find that he gave the disputed advice.  

Ms Wang

1. Ms Wang is Ms Zhou's daughter.  English is not her first language, and accordingly some allowance must be made.  Ms Wang has experience in developing small properties owned by her or her family and said she and her husband 'ran' those projects. 

2. Ms Wang understood that Mr Aguirre and his in-laws had a close relationship like the Chinese, and supported each other (ts 262).  She said Mr Aguirre told her 'they like very Chinese culture, because our culture is families altogether, funding together, whatever.  You know this from my impression probably.  I come from China, yes this was my impression from Thomas'.  

3. Mr Aguirre said something like he had paid for his in-laws to go on a cruise 12 months previously (ts 256).  Ms Wang said she thought Mr and Mrs Booth lost some money and Mr Aguirre originally wanted a loan from them and they said 'do not take the loan ‑ we will pay for that' (ts 256).  No reliance was placed by either party on this answer and no further details of what was meant by this answer emerged.  Ms Wang understood that Mr and Mrs Booth owned their Butler residence. 

4. Ms Wang first met Mr Aguirre in Malaga on 14 November 2017 when he was introduced as a property developer.  He told her about the 'Jade Development' and said he could get finance anywhere (ts 245) but urgently needed the money.  Ms Wang said that Mr Aguirre wanted the loan quickly so he could finish the project and describing him as 'pushy' in a very nice way (ts 243).  She met Mr Sanbrook on 15 November at his office. 

5. Ms Wang said her mother had expressed interest in providing the finance requested by Mr Aguirre and over the next few weeks she obtained feasibility studies, pre-sales contracts, various ASIC searches and other information relating to Mr Sanbrook, Mr Aguirre and the company (Exhibits 1.1, 1.8, 1.9, 2.56).  She provided some of this information to Mr Lee. 

1. On 20 November 2017 she advised Mr Aguirre that they would consider lending between $350,000 - $500,000 for one year with a security over the Hillarys property (Exhibits 1.4, 1.5). 

2. Ms Wang consulted Mr Lee in late November 2017, and he provided a cost breakdown for his services via email.  She forwarded this email to Mr Aguirre as he was paying all the legal fees.  At one stage he told her they had their own lawyers, however she told him they wanted their lawyers to prepare the documents and ultimately, he had no objection to this. 

3. On 30 November 2017 Ms Wang received a draft loan, a costs agreement and instruction authorisation from Mr Lee and she forwarded these to Mr Aguirre (Exhibit 1.14). 

4. On 1 December 2017 Mr Aguirre rang and told her that she could not place a caveat over the Hillarys property because of difficulties it may create with the current financier and contractors.  She told him they would not do business on that basis and the deal was off. 

5. Mr Aguirre later rang saying that they could offer both his and Mr Sanbrook's properties as security.  She spoke to her mother and advised him that they could not proceed because her mother wanted the security property to be free from encumbrances. 

6. Ms Wang said Mr Aguirre then offered his in-laws' property, telling her initially the property had no mortgage and explained that the property would ultimately be his in the future.  Ms Wang was adamant that Mr Aguirre specifically offered Mr and Mrs Booth's property as security for the loan and that he used the word security.  Mr Aguirre told her the address of the property and she searched realestate.com.au and looked at sales records for similar sized properties.  Later Mr Aguirre told her the property had a reverse mortgage on it and she advised him that they would not be interested in taking a second mortgage. 

7. Ms Wang's evidence was that Mr Aguirre suggested they extend the loan so they could pay off the reverse mortgage and told her the mortgage was only $70,000 - $80,000.  Mr Aguirre told her that his in‑laws were happy to offer the property as security and 'can' be guarantors to the loan (ts 202, ts 205).  

8. Ms Wang's mother was happy to proceed on that basis.  As Mr and Mrs Booth's property was subject to a reverse mortgage, she wanted Mr Lee's law firm to discharge the mortgage and place a caveat on the Butler property as soon as the loan was made. 

9. On 4 December 2017, the second draft deed was provided to her and the next day she forwarded it to Mr Aguirre (Exhibit 1.8). 

10. Ms Wang said Mr Aguirre called her for a meeting on the 5 December 2017 and told her Mr Sanbrook would pick up his in‑laws and drive them to the meeting.  Ms Wang was surprised Mr Aguirre was moving so quickly and she felt it was 'quite desperate' (ts 263).  She subsequently confirmed the meeting time with Mr Lee and Mr Aguirre.  She said Mr Aguirre was constantly following up with her (ts 243). 

1. Ms Wang said she did not know the extent of Mr and Mrs Booth's assets other than they owned their Butler property and the only search performed was on that property (ts 246, ts 262, ts 263).  Ms Wang's position was that in the event of default Mr and Mrs Booth needed to repay the loan with their property being the 'final security'. 

2. On 5 December Ms Wang arrived at the meeting about 12.00 noon.  Mr Lee took her to the boardroom and Mr and Mrs Booth, Mr Aguirre and Mr Sanbrook were already seated.  She was introduced to Mr and Mrs Booth and noticed that there were deeds on the table.  Mr Lee had previously given her a copy of the draft deed, but she could not recall when. 

3. Ms Wang started to read the draft deed incorporating the latest changes and she said the others were reading it as well and there were some discussions between the other four but she could not recall who was involved in those discussions. 

4. Ms Wang said she went in and out of the room to ask Mr Lee questions and Mr Aguirre and the others raised concern about the default interest rate and the right to caveat properties.  Mr Aguirre and Mr Sanbrook said if they sold some of the Jade Development units the caveats would need to be removed from the Hillarys property for those sales to proceed and then be relodged.  Mr Aguirre asked whether if they repaid the loan early the security would be released (I infer this is a reference to the Butler property) and moved over to the Hillarys property and she advised that would be considered if the properties had the same value. 

5. Ms Wang said Mrs Booth made some comment over the interest rate.  No other witness referred to this comment.  

6. Ms Wang recalled Mr Lee saying before lunch that he represented the lender and if they had any questions about the Deed, they would need to seek their own legal advice (ts 228).  Ms Wang said that there was the need for some further changes to the Deed and Mr Lee suggested they go out for lunch while those changes were made.  She and the others went to lunch at the Inglewood Hotel.  Mr and Mrs Booth, Mr Sanbrook and Mr Aguirre were sitting together although Mr Sanbrook and Mr Aguirre came over and spoke to her briefly. 

7. Eventually, they all went back to Mr Lee's office and Mr Lee gave everybody a copy of the Deed.  She and Mr Lee went into a smaller room and went through the changes for about half an hour.  She kept asking if she was covered and was satisfied with the explanation that basically they were getting a first mortgage by way of a caveat.  Eventually there was a knock on the door and Mr Aguirre said, 'we are ready'.  

8. Mr Lee then asked everybody to come into the smaller room and when they did so he asked if everybody was happy and then went upstairs and printed out the Deed.  Ms Wang said both Mr and Mrs Booth said they wanted to sign the Deed and go to the bank straight away and sign the discharge of the mortgage after the meeting (ts 223, ts 224).  

1. Ms Wang said there were three sets of documents to be signed.  Mr Aguirre and Mr and Mrs Booth were reading one copy, Mr Sanbrook had another copy and Mr Lee was reading the changes out (ts 225).  He went through sch 1 reading the term of the loan, the borrower, the lender, the interest rates and the guarantors (ts 226, ts 228).  He named the guarantors individually (ts 272) and she remembered him dealing with the middle square in the second schedule by reading the address of the properties that were security (ts 273).  In cross‑examination Ms Wang could not recall, in relation to the guarantee, if Mr Lee read it verbatim or summarised although she thought he read it but said he did say to each person they had the right to obtain legal advice before they signed the document and all four said no.  She said Mr Aguirre replied no need, as did Mr and Mrs Booth and then Mr Sanbrook.  She heard Mr Lee say, 'you consent, don't want legal advice' and they said no.  Mr Lee asked them to initial every page.  She could not recall if Mr Sanbrook or Mr Aguirre signed first.  Ms Wang said Mr and Mrs Booth were the second parties to sign. 

2. Ms Wang said that when Mr Lee came to the clause in the Deed about legal advice, he asked Mr and Mrs Booth if they wanted to obtain legal advice and they said no and he then asked the parties to sign with their full signature.

3. Ms Wang's evidence remained unshaken that when everyone was ready to sign Mr Lee suggested they seek their own legal advice and she heard Mr Aguirre say 'We no need' and both Mr and Mrs Booth said 'No Need' and Mr Sanbrook said 'No Need' (ts 229).  Ms Wang said Mr Lee mentioned that the proposed guarantors and borrowers could get legal advice on a couple of occasions. 

4. Ms Wang said Mr Aguirre wanted the money as soon as possible and she told him if they sign the documents today, she might be able to get to the bank that day and advance some money. 

5. Ms Wang could not remember precisely but thought the meeting finished about 4.30 pm to 5.00 pm. 

6. She said that a total of $381,975 was advanced pursuant to the Deed. 

7. Ms Wang said she had not asked anything about Mr and Mrs Booth's income and did not know anything about their assets other than that they owned the property provided as security.  She knew they were Mr Aguirre's in-laws. 

8. She was surprised by how quickly Mr Aguirre was moving.  She said he was very nice but pushy and generally responded quickly with any queries she had and was constantly following up with her (ts 243). 

9. Ms Wang's evidence was not faultless.  On occasions she answered questions by giving her impression of what the witness said rather than what was said.  She was the only witness that referred to Mrs Booth's comments on interest rates.  Notwithstanding this Ms Wang struck me in the main as an honest, accurate, reliable and truthful witness and I accept her evidence in relation to the disputed advice for reasons explained later. 

Mr Sanbrook

1. Mr Sanbrook said finance was needed for the Jade Development because of some unexpected expenses due to a requirement to put the power underground and finish off works that were not included in the building contract and the like. 

2. Mr Sanbrook attended a number of meetings with Mr Aguirre in relation to obtaining additional finance and said although he was familiar with the financial side of the business basically Mr Aguirre dealt more with it and the final say was generally with Mr Aguirre and his wife.  Mr Sanbrook said he did not agree to any terms without Mr Aguirre's approval.  He said they had spoken to a number of different prospective lenders, and brokers and they needed money to complete the project as there were no other options.  If they did not obtain the finance the company faced liquidation and they needed the money quickly.  He said it was fairly 'pressing' and there was definitely 'urgency surrounding' the matter. 

3. Mr Sanbrook knew that Mr Lee was doing the documentation and was aware that Mr and Mrs Booth were providing their property as security and knew that the existing loan on their property had to be discharged so that the borrower would obtain security over an unencumbered property, but he said he did not discuss the details.  He recalled Mr and Mrs Booth's mortgage was about $80,000. 

4. He also knew that Mr and Mrs Booth were giving a personal guarantee, in respect of the Deed but was not sure when he was first made aware of that.  He said he knew this before the Deed was signed (ts 312, ts 321) and 'presumed' he was told by Mr and/or Mrs Aguirre and 'guessed' that was at the office.  He knew this was needed to make the finance happen.  Mr Sanbrook said he was not 'over the moon' about Mr and Mrs Booth providing a personal guarantee because the Aguirre family had given up a lot already but said he and Mr Aguirre were under a lot of pressure. 

5. Mr Sanbrook said he did not contact Mr and Mrs Booth at all and never told them he was not 'over the moon' about them providing a personal guarantee as he did not see them.  He said he did not have much to do with them going guarantors as this was more to do with Mr Aguirre's family. 

6. Mr Sanbrook could not recall very much about the meeting saying he only remembered bits and pieces and did not recall very much. 

7. Mr Sanbrook's recollection was that he collected Mr and Mrs Booth from their home and was sure he would have thanked them for going guarantors but had no recollection of doing so.  He did not recall any discussions in the car.  He thought he drove Mr and Mrs Booth to the meeting but did not specifically recall doing so.  No other witness said Mr Sanbrook drove Mr and Mrs Booth to the meeting. 

8. He remembered driving to the lawyer's office, and when they arrived, they went into a small room which had no space and there were a number of people in the room, some standing but he could not remember how many or who they were.  He said people were coming and going and repeated that he did not recall much.  He described the meeting as being a little haphazard.  He knew Mr Lee was Ms Wang's lawyer and not acting for the borrowers and did not recall Mr Lee saying they could seek independent legal advice. 

9. Mr Sanbrook did not know if they went to the meeting to discuss matters or just sign the Deed.  He said ultimately, they were divided up and all went over to the pub and then took it in turns going back and forth from the pub to the office. 

10. In one part of his evidence Mr Sanbrook said he did not go back to Mr Lee's office after lunch but went back to his own office.  Later he said he recalled walking over to Mr Lee's office after lunch but could not recall exactly what happened and did not recall when the meeting finished.  He did not recall requesting changes to the Deed and did not remember discussing the Deed. 

11. Mr Sanbrook originally said they were split for the signing of the Deed but later in his evidence said that was not correct. 

12. When asked whether he said 'No' to Mrs Booth, whilst walking back to Mr Lee's office after lunch, in response to her query about whether their property was at risk he replied variously, 'he did not specifically recall saying that', 'no, I wouldn't have said that', 'I don't recall if I did or I didn't'.  When his attention was drawn to a previous affidavit which referred to him giving assurances, he said he could not specifically recall giving assurance, but he was always convinced that the risk of the project was minimal, and he was optimistic that the project would be successful (ts 535).  He could not recall whether Mr Aguirre was present when he gave those assurances. 

13. Mr Sanbrook did not remember seeing Mr and Mrs Booth sign the Deed.  He did not recall specifically reading the Deed or when he signed the Deed.  He did not know if he was in the room when Mr and Mrs Booth signed.  He did not recall Mr Lee being there when the parties signed, and he did not recall Mr Lee witnessing the signatures.  

14. When asked whether Mr Lee referred to independent legal advice, Mr Sanbrook replied 'I do kind of remember that only vaguely'. 

15. Mr Sanbrook said he was not forced or rushed into signing the Deed and would have checked it before signing and would not have signed the Deed unless it was what was agreed. 

1. He did not recall any specific discussions after the meeting or how many versions there were of the Deed.  He did not specifically recall any assurances the caveat would only be temporary. 

2. Mr Sanbrook struck me as an honest witness however his evidence is simply so vague that it is generally unreliable. 

3. Mr Sanbrook did not specifically recall who was in the car when he drove to the meeting.  He could only remember bits and pieces of the day of the signing and did not recall much of the meeting before lunch.  He originally said that he did not go back to Mr Lee's office after lunch then said they went back to Mr Lee's office and then said that he could not recall if they went back to Mr Lee's office.  Ultimately his evidence amounted to saying he could not recall what happened in Mr Lee's office and did not recall any specific discussions of the meeting.  He did not recall signing the Deed.  He did not know who was in the room when Mr and Mrs Booth signed and did not recall seeing them sign the Deed.  He could not specifically remember seeing Mr Lee when the parties signed the Deed, nor did he recall Mr Lee witnessing the signatures.  His evidence over whether he made any remarks to Mrs Booth and if so, what he said was vague.  

1. Mr Sanbrook's evidence is so vague and unpersuasive that I place no direct reliance upon it. 

Mrs Booth

1. Mrs Booth was born on 20 August 1951 and married Mr Booth in 1970 making her 66 at the time the Deed was signed. 

2. Mr and Mrs Booth moved to Perth in 1987 and purchased a property in Lynwood.  Her husband arranged the mortgage with the bank which she signed without reading, although having skimmed through it.  Mrs Booth said she understood the effect of a mortgage. 

3. After her husband suffered some health difficulties they moved in with their daughter in North Beach and then moved to her father's residence in Hamilton Hill where she cared for her father who was in ill health.  After her father's death they remained at the Hamilton Hill house for about two years.  They subdivided that property selling the original house to finance a new house which was built on the subdivided block.  They sold that house and moved to their Butler residence in February 2014 which they had purchased with the proceeds from the sale of her father's house.  They subsequently took out a reverse mortgage of approximately $70,000 on that residence.  Pursuant to the terms of that reverse mortgage they did not pay any interest or repay any principal from that loan.  Any interest was added to the loan and would be repaid when the house was sold. 

4. Mrs Booth retired from the workforce at 60.  Before Mr Booth's first stroke in January 2017, she had not paid the bills but after the stroke she said she 'took over and did everything' (ts 344).

5. She was aware that Mr Aguirre, and his business partner Mr Sanbrook were building units at the Jade Development and had been to those units. 

6. She recalled her daughter Mrs Aguirre ringing saying that Mr Aguirre needed extra money to finish the building.  Her daughter said they could obtain a loan at very high interest rates however they could obtain a loan at a lower interest rate but would need to put a caveat over the Booths' property to obtain the lower interest rate (ts 377).  Her daughter told her she did not have to do so but it was cheaper and easier and less interest for them.  Her response was if it was going to help it was okay. 

7. Mrs Booth thought a caveat meant that they could not sell the house for a 'period of time' (ts 363) or 'a little while' (ts 368) or 'for a few months' (ts 378) but otherwise did not know the effect of a caveat.  

8. Mrs Booth said the next day, or a few days later, Mr Aguirre came to their house, sat down and said that they were going to go to the bank and pay out the reverse mortgage so they could obtain the loan and then put a caveat over the house (ts 349).  Mrs Booth said she felt that Mr Aguirre was hurried and desperate and said she agreed because she thought they had to pay off the reverse mortgage to put a caveat on their house and thought this was the way things had to be done.  She did not refer to her daughter attending that meeting although her daughter's evidence was that she did.  

9. In one part of her evidence Mrs Booth said she told Mr Aguirre that she would pay the $80,000 back, in another part of her evidence she said she did not say that. 

10. Mrs Booth said that a couple of days later Mr Aguirre took her and her husband to the St George Bank and paid out the loan with a cheque. 

11. Mrs Booth said she was later contacted by Mr Aguirre and told that they had to go to a lawyer and that he would pick her up tomorrow.  She said Mr Aguirre picked her and her husband up at about 10 o'clock and drove them to the lawyer's office.  Nothing was discussed in the car about the loan. 

12. Mrs Booth believed that all they were doing was witnessing Mr Aguirre's loan as they had let him put a caveat over their house and she thought it was a legal requirement that they witness the loan (ts 388, ts 393).  Mr Aguirre told her 'it' had to be done in front of a lawyer. 

13. Mrs Booth said Mr Aguirre had not mentioned he had any draft deeds although her daughter told her in one of the phone calls that Mr Aguirre was reading the loan papers the night before. 

14. Mrs Booth said that when they arrived at the meeting it was between 10.00 am and 11.00 am.  They were taken to a room with a big table.  Mr Sanbrook was already there.  She thought it was rude that no‑one introduced the other people.  They sat down.  In addition to her husband, Mr Sanbrook, Mr Aguirre and Ms Wang, some others were present.  She had not previously met Ms Wang.  She said there were no copies of any documents in front of her. 

15. Mrs Booth said there was a man present who she was pretty sure was a lawyer.  Mr Aguirre flicked through some papers and asked the lawyer to change some matters.  Mrs Booth said she did not look at any papers and had no interest in seeing what they were (ts 392).  Mr Aguirre said to Mr Sanbrook to take 'mum and dad' for a coffee across the road.  They had been in the room for at most 10 minutes before they went across the road for a coffee for about an hour, and they talked in general but not about the loan. 

16. Eventually, Mr Sanbrook received a phone call and said it is time to go back.  As they were walking back to the lawyer's office Mrs Booth had 'just a bad vibe' or a premonition and said to Mr Sanbrook 'we couldn't lose our house' and Mr Sanbrook said 'no, it's just a formality'.  She said she was satisfied from what Mr Sanbrook told her that they could not lose their house.  This conversation, on Mrs Booth's evidence, did not occur in the presence of Mr Lee or Ms Wang.

17. Mrs Booth said they went back to the same room in the lawyer's office.  Mr Aguirre, Mr Sanbrook, Mrs Booth, her husband, Ms Wang and a couple of others were present.  

18. The Deed was brought out within seconds.  Mr Aguirre already had the document, but no-one else had a copy.  She could not say if the lawyer was there.  The Deed was stapled.  Mrs Booth says the front page was turned over so she could not see its contents.  Mrs Booth is the only witness to say this.  Mr Aguirre signed first and then they all signed one page at a time.  She did not look at the pages.  She did not read the pages or schedules and she said each page was placed in front of her to sign for no more than two seconds and she just signed and initialled where Mr Aguirre told her.  Mrs Booth said she just literally looked at the bottom where she had to sign and presumed she was signing as a witness.  She said she was never told that her and her husband had the right to obtain independent legal advice.  She was told by Mr Aguirre where to sign and did so. 

19. Mrs Booth was unsure if Mr Lee was in the room when the Deed was signed.  Her husband said nothing but did what he was asked. 

20. Mrs Booth maintained consistently that neither her nor her husband read the Deed which was not given to her.  She said Mr Aguirre showed her where to sign and she just initialled or signed her name as instructed. 

21. She said she felt rushed and presumed that they had a period of time allotted to them to get in and get the deal done. 

22. She maintained constantly there was no discussion about independent legal advice.  She did not read anything in the Deed about independent legal advice.  She did not see who made the crossings out in the Deed.  She said Mr Aguirre seemed happy.  

23. Mrs Booth said there was no conversation in the room.  Her husband just sat there.  She said nothing.  Mr Sanbrook said nothing.  Ms Wang never spoke.  She said the paperwork was literally put in front of her and she signed where she was told.  All she thought they were doing was witnessing Mr Aguirre's loan. 

24. Mrs Booth did not say anything to anybody about her or her husband's health and said the state of her husband's health was known to Mr Aguirre, her daughter and to herself.  No-one at the meeting other than Mr Aguirre knew of her or her husband's previous medical issues. 

1. Mrs Booth said that she understood what a guarantee was.  That is, if basically if you were guaranteeing another person, and they did not pay, you had to pay.  She said she had no idea what an indemnity meant. 

2. After signing the document everybody said goodbye and she left the lawyer's office about 12.30 pm. 

3. In 2019 she noticed that Mr Aguirre was stressed and near breakdown and her and her husband were told they could lose their house.  She demanded to see the Deed and it was provided by either Mr or Mrs Aguirre.  As soon as she saw the front pages with its reference to guarantors she nearly passed out with shock.  She read through the Deed and saw the section about obtaining legal advice had been crossed out and asked her daughter who crossed that out and told Mr Aguirre that if she had seen that nothing would have been signed. 

4. She said her husband became stressed and was saying they could lose their pension because if they lost their house, they would have to explain why they lost their house, and it could ultimately result in them losing their pension. 

5. Mr Aguirre took her to a lawyer, and they signed mortgage documents (Exhibits 1.41, 1.42) which she thought provided them with some sort of protection and would result in them not losing their pension.  Mindarie Drive gave Mr and Mrs Booth a mortgage over a number of units in the Jade Development based on the fact that they had provided a guarantee for the loan in the Deed. 

6. Mrs Booth said her daughter never suggested obtaining legal advice and they did not consider obtaining legal advice because they thought Mr Aguirre was a businessman who knew what he was doing (ts 378) and she thought he would know what it was about (ts 379).  Mrs Booth said that her husband left the matters to her.  She said Mr Aguirre did not explain anything about the caveat or the guarantee and never said they were providing a guarantee, she said if the word guarantee had been mentioned she would not have signed anything. 

7. Mrs Booth said her husband's memory was terrible.  He relied on her, and just went along with what she said and did not ask any questions. 

8. Some months later Mr Aguirre told her the caveat was off their house and Ms Wang was putting the caveat over the Jade Development units. 

9. Mrs Booth said she thought Mr Aguirre or Mr Sanbrook had tricked her because it was Mr Aguirre's loan. 

10. Mrs Booth's evidence was contradicted in some areas by other witnesses.  Mrs Booth's evidence was that Mr Sanbrook was not with her, her husband and Mr Aguirre when they drove to the meeting (ts 387) or when they drove home after the meeting (ts 410).  The evidence of both Mr Aguirre and Mr Sanbrook was to the contrary. 

11. Mrs Booth's evidence was the reverse mortgage was discharged some days before the meeting when I find it was discharged some days after the meeting (Mr Lee, Mr Aguirre). 

12. Mrs Booth's evidence that the meeting concluded around lunchtime is inconsistent with the evidence of everyone else at the meeting (Ms Wang, Mr Lee, Mr Aguirre, and Mr Sanbrook).  

13. Mrs Booth said there was one copy of the final deed provided by Mr Lee which was stapled at the top and the first page was turned over (ts 399) and she saw only one copy of that document.  This is contradicted by the evidence of Mr Lee (three copies), Ms Wang (three copies), and Mr Aguirre (more than two copies).  No other witness said that the front page of the Deed was turned over and obscured from view.  Mrs Booth's evidence on this matter was I find no more than an attempt to justify her claim that she had not observed her and her husband's names listed as guarantors on the front page of the Deed. 

14. Mrs Booth said she was not told of the right to have independent legal advice or that she was signing as a guarantor or the effect of a guarantee.  This is contradicted by Ms Wang and Mr Lee. 

15. I found aspects of Mrs Booth's evidence implausible.  She said she was rushed into signing the Deed and given only a second or two to sign her name on each page.  Mrs Booth said when she signed the Deed, she did not see the references to caveats and guarantees because she was concentrating on the area where she was initialling, that is, the bottom right-hand corner of each page. 

16. In relation to page 29 of the Deed which requires a full signature, not simply an initial, Mrs Booth said she signed because it was her name under the line and she did not think to look above where she signed and did not see any of the writing immediately above where she signed. 

17. It was apparent in cross-examination when taken to the various pages in contention, that Mrs Booth could easily see the references to the guarantee, the caveat over the property and the like on the pages.  

18. I find it inherently implausible that she did not notice any of the references to caveats and guarantees when initialling the Deed and did not notice any reference to the right to get independent legal advice when signing the document. 

19. I find Mrs Booth's evidence that when she signed the Deed she thought she was just witnessing Mr Aguirre's signature that being a requirement because a caveat was being placed on her property inherently implausible.  On her own evidence she knew that a caveat was being placed on her property and believed the legal effect was to stop her and her husband from selling or dealing with the property for a short period of time.  I find it inherently implausible that she could believe that a deed which puts a caveat and restrictions on her property just required her to witness another person's signature and did not need to be signed by her as an owner of that property and party to that deed.  

20. In relation to the central issue as to what occurred at the meeting and whether the disputed advice was given, her evidence is contrary to the evidence of Mr Lee and Ms Wang who I find credible and I do not accept Mrs Booth's evidence in respect of those matters.  I find her evidence is against the preponderance of the evidence which I do accept.  Further reasons are provided at [267] - [274].  The fact that I do not find her credible in respect of those central issues causes me to doubt the rest of her evidence and I do not rely on it on any contentious issue unless supported by credible evidence.  

Mr Booth

1. Mr Booth was born on the 15 July 1946 and married Mrs Booth in 1970.  He was 71 when the Deed was signed.  

2. Mr Booth knew that Mr Aguirre and his daughter were raising a loan to finish a building project but did not remember much about the meeting and could not recall any details of it.  He said he had no recollection of the day that he signed the Deed saying it was just a blur.  He did not recall signing the Deed or putting his initials on the Deed.  He did not recall who was at the meeting. 

3. He did not know a caveat was put on the property, but he accepted that he received a letter being Exhibit 1.29 from Landgate advising him of that fact. 

4. Mr Booth struck me as a creditable witness however his evidence in relation to the signing of the Deed does not assist me as he has no recollection of events. 

Mrs Aguirre

1. Mrs Aguirre is the daughter of Mr and Mrs Booth and the wife of Mr Aguirre.  She said her parents moved to Butler to be near her and her husband and their daughter (ts 455).  Mrs Aguirre has experience with building projects having worked from the age of 19 as a personal assistant with a large development company doing feasibility studies, council meetings, sale documentation, meeting with consultants and the like. 

2. She married in 2018.  She continued to do some project management for her husband and others. 

3. Mrs Aguirre was the initial project manager for the Jade Development, a position as I understood the evidence, she notionally still had.  However, as she was going through a 'bit of a bad period' and had difficulties in her life due to her brother's ill health and her own mental health issues, her husband basically took over that role (ts 437).  She said her husband was trying to keep her out of it because she was so stressed and she had a bit of a breakdown (ts 453). 

4. Mrs Aguirre said at the beginning of the project she prepared various cash flow documents to assist with obtaining finance but was not involved in capital raising as that was not really her thing and she did not like asking people for money. 

5. She became aware that Mindarie Drive required additional funding for the Jade Development as a result of requiring more car stackers and the need to relocate the power underground.  She and her husband had used some of their superannuation funds to prop up the project.  Obtaining extra finance was an extremely important event in her life and she was aware her husband was actively looking for investors and had found an investor. 

6. On one occasion her husband rang her angry and annoyed, saying that the investor kept changing her mind and now wanted a caveat over the property as security.  Mrs Aguirre's experience with caveats was that they were a tool to force negotiations (ts 447). 

7. Her husband said at some stage that the caveat could not go on the Hillarys property until it was finished but as soon as it was finished the caveat would go onto the Hillarys property from whichever property the caveat had been placed on.  Mrs Aguirre suggested they use their own apartment or house as security, and he said he would discuss it that night.  

8. When they discussed the issue, her husband told her that the investor would not take a caveat over their apartment or house and wanted it over an unencumbered property.  Mrs Aguirre said she suggested approaching her parents as she knew they would probably agree to their property being used as security (ts 468).  She did not recall ringing her parents to discuss this issue but accepted she would have.  She would have asked if they could put a caveat on their house and asked to come and talk to them. 

9. Mrs Aguirre said there was pressure to get things done and the next day, or the day after that her, her husband and her mother and father sat down.  She remembered sitting in the lounge room telling her parents that the project was about to finish but they were in a bit of a pickle, as they needed finance to finish it and the investor wanted a caveat over the parents' property and would not accept a caveat over the Aguirres' properties. 

10. She said her husband did most of the talking.  It was not a long meeting.  Her father was cautious and a bit of a worrier by nature who would worry about everything and asked if they were at risk.  She and her husband said there was no risk, it was just a caveat over their property and when the project was finished the caveat would move over to the titles that were issued for the units.  She told her mother that she would not put her in that position of risk and maintained that she did not want to put her parents at risk.  Her parents agreed to the proposal and her husband said he would organise it.  Her husband explained to her parents that the reverse mortgage would be paid out by Mindarie Drive.  

11. Mrs Aguirre said her father had suffered some damage after the strokes and his personality changed and whilst he was not the same man as he was previously, he could still read documents and she was comfortable that he understood the discussions about the caveat. 

12. Mrs Aguirre said she did not suggest her parents obtain legal advice as she did not see lodging a caveat over their property as being a risk.  It is important to observe that this belief was as a result of her understanding of the effect of a caveat and not as a result of anything the plaintiff did or said.  Mrs Aguirre was confident the building was going to be built and was excited about the apartments and said she knew there was plenty of equity in the project (ts 447).  

13. Mrs Aguirre said her husband never made any reference to a deed or giving a personal guarantee or to her parents providing a personal guarantee and only ever referred to lodging a caveat over her parents' property.  While she trusted her husband looking back, she did not think he fully understood what was going on. 

14. Mrs Aguirre said her husband told her he was going to pick her parents up for the signing of the documents one morning and made it clear that he did not want her involved.  She did not attend the meeting.  

1. I am satisfied that the plaintiff did not know of Mr Aguirre's presumed undue influence and had no constructive notice of it and was not wilfully blind to it, accordingly Mr and Mrs Booth's defence and counterclaim fail in relation to undue influence. 

2. However, if I be wrong in this regard and the plaintiff did have such notice or knowledge of the circumstances or was wilfully blind then I consider the question of whether Mr Aguirre's undue influence brought about the transaction.  

Did Mr Aguirre's undue influence bring about the transaction?

1. If I am wrong and the plaintiff had the constructive notice referred to or was wilfully blind then the plaintiff has satisfied me on the balance of probabilities that Mr and Mrs Booth signed the Deed in the exercise of their own independent will. 

2. I find that Mr and Mrs Booth were given the disputed advice by Mr Lee.  They were also in the room when that advice was given to Mr Aguirre and Mr Sanbrook.  Neither Mr or Mrs Booth who are of full age and mental competency said anything or did anything to indicate that they were not aware previously that they were guarantors.  They both knew the effect of a guarantee as a result of their life experiences and as a result of what Mr Lee told them at the meeting and knew that a caveat was being put over their property and that caveat would have legal consequences.  They said nothing at the meeting to indicate that they were surprised by the guarantee or were hearing about it for the first time, and they did not ask to speak to Mr Aguirre in private or query him.  They said they were happy to proceed and did not want legal advice.  I am satisfied that they exercised their own free will in signing the Deed. 

1. I find that after having been given the disputed advice they proceeded to sign the Deed because, I find, at the time Mrs Booth trusted Mr Aguirre's business sense and had every confidence in Mr Aguirre's business skill. 

2. Simply put, Mrs Booth was happy to assist because on her own evidence it helped Mr Aguirre and I infer she thought she was assisting her daughter and her husband in their business venture in circumstances where Mr Aguirre, Mr Sanbrook and Mrs Aguirre were confident that the Jade Development would be successful and there is no evidence showing that anyone had any concerns about the viability of the development at that stage.  That was a decision Mrs Booth made of her own free will because she wished to support her daughter and her husband in his business venture, something unconnected with any relationship of influence. 

3. Mr Booth executed the Deed as he was happy to proceed if his wife was prepared to proceed.  That was a decision he made of his own free will something unconnected with any relationship of influence. 

4. I find that any presumption of special influence from the relationship of Mr and Mrs Aguirre has been rebutted by the time Mr and Mrs Booth signed the Deed.  The plaintiff has satisfied me on the balance of probabilities that Mr and Mrs Booth signed the Deed in the exercise of their own independent will. 

5. I am satisfied that the judgmental capacity of Mr and Mrs Booth was not substandard such that it constrained them in assessing alternates and deciding between them.  They did understand the alternates.  That is that they did not have to sign the Deed.  The plaintiff has satisfied me on the balance of probabilities that Mr and Mrs Booth signed the Deed in the exercise of their own independent will and not as a result of any actual or presumed undue influence. 

6. I dismiss Mr and Mrs Booth's defence and counterclaim based on the allegation of undue influence. 

Election by affirmation

1. In light of the findings that I have made it is not necessary for me to deal with the plaintiff's contention that Mr and Mrs Booth have affirmed the Deed by their conduct in registering mortgages over the Jade Development units.  For the sake of completeness, however, I deal with the issue. 

2. Mr and Mrs Booth registered mortgages over the Jade Development units on the basis that by entering the Deed they had guaranteed the loan and that gave them an interest in the units.  The plaintiff says this means they have affirmed the Deed.  The plaintiff says that on one hand Mr and Mrs Booth come to the court saying the Deed is void due to undue influence and/or unconscionable conduct and yet on the other hand they register a mortgage over the Jade Development units justifying it on the basis of the very Deed they seek to set aside.  

3. The issue is whether Mr and Mrs Booth's actions in entering into the mortgage over the Jade Development units are consistent only with an intention to keep the Deed on foot and inconsistent with the exercise of their rights to rescind that Deed such that it can be said that by their actions they elected to affirm the Deed.  

4. An election to affirm the Deed would only be an irrevocable waiver of the power to terminate that Deed where the election was made with knowledge of the circumstances giving rise to the alternate inconsistent set of rights between affirming the Deed and rescinding it: Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 (Sargent); Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38.

5. That means to constitute an election to affirm the Deed Mr and Mrs Booth must have been aware at the time they entered into the Jade Development mortgage of their right to rescind the Deed or the facts giving rise to the right to rescind the Deed.  Khoury v Government Insurance Office of New South Wales [1984] HCA 55; (1984) 165 CLR 622; Evans v Benson & Co [1961] WAR 12 [14] would suggest that the latter is all that is required.

6. I accept that by the time Mr and Mrs Booth executed the Jade Development mortgage, they were unaware of their legal right to rescind the Deed.  I find they were aware of the terms of the Deed that they claim they were previously unaware, and they knew (taken at its highest for them) the facts surrounding Mr Aguirre's deceptive conduct and the factors constituting his undue influence and accordingly I find that criteria fulfilled. 

7. At the time they entered into the Jade Development mortgage Mr and Mrs Booth clearly acted on the basis that the Deed remained on foot. 

8. However, conduct which merely involves recognising a deed does not necessarily amount to an election to affirm the deed.  Similarly exercising rights under a deed does not necessarily amount to an affirmation of the contract: Sargent.  Thus acts such as accepting rent, or receiving interest under a contract have been held not to be an affirmation of the respective contract: Matthews v Smallwood [1910] 1 Ch 777; Sargent; Immer (No 145) Pty Ltd v The Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26 (Immer). 

9. In Immer the court observed that a party who terminates a contract will ordinarily have acted in a way clearly inconsistent with the exercise of the right to keep the contract on foot but the converse situation (affirmation) is not answered so readily.  Immer establishes that a party aware either of the right to rescind or facts giving rise to a right to rescind can act on the basis that a deed remains on foot without necessarily abandoning their right to rescind it. 

10. The conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other. 

11. The evidence in relation to Mr and Mrs Booth entering into the Jade Development mortgage did not quite reach the stage of the Booths saying that they were making the best of a bad situation, the evidence of Mrs Booth was that Mr Booth was concerned that his pension may be affected if the guarantee was called upon.  Mrs Aguirre's evidence was to the effect that they wanted to provide some form of security or reassurance for Mr and Mrs Booth and Mr Aguirre organized to take them to Mr Kenworthy, a lawyer, who prepared the Jade Development mortgage.  Mr Aguirre's evidence was to the same effect.  I accept this evidence as it is inherently probable based on the events as a whole.  This I find involves no more than a recognition of the Deed and does not amount to an election to affirm the Deed.  Objectively viewed it does not establish that Mr and Mrs Booth had an intention to or did abandon their right to rescind the Deed. 

12. In addition, an election to affirm the Deed needs to be communicated to, in this case, the plaintiff.  A party can only be held to have elected 'if he has communicated his election to the other party in clear and unequivocal terms': Abram Steamship Co Ltd (in liq) v Westville Shipping Co Ltd (in liq) [1923] AC 773; Immer; Scarf v Jardine (1882) 7 App Cas 345 [361].

13. There is no evidence as to when the plaintiff became aware that Mr and Mrs Booth entered into the Jade Development mortgage.  The plaintiff was not a party to the mortgage.  There is no evidence this alleged election to affirm was communicated to the plaintiff expressly or impliedly.  Therefore, the plaintiff has failed to establish that there has been an affirmation constituted by the Booths entering into the Jade Development mortgage.  

14. Objectively viewed, Mr and Mrs Booth's act in entering into the Jade Development mortgage whilst it is an act which recognized the Deed is not an election on their part not to exercise their right of rescission. 

Does the District Court have jurisdiction to grant the equitable relief sought by Mr And Mrs Booth?

1. In view of my findings that Mr and Mrs Booth are not successful in their defence or counterclaim it is not necessary for me to deal with this issue, however for the sake of completeness, I make the following observations.

2. It is common ground that the plaintiff's claim falls within s 50(1)(a) of the District Court of Western Australia Act 1969 (WA) (District Court Act).

3. The plaintiff submits that because the plaintiff's claim is within the court's jurisdiction that does mean the court has jurisdiction to determine the counterclaim which seeks equitable relief (declarations and rescission) as its primary relief.  The plaintiff submits that the equitable relief sought can only be within the court's jurisdiction if it is ancillary to a claim by Mr and Mrs Booth within the court's jurisdiction via s 50 (1) of the District Court Act and as they are not seeking damages or any other claim within the court's jurisdiction in their counterclaim the equitable relief sought cannot be said to be ancillary to any relief sought by that counterclaim. 

4. Even if the plaintiff's submission was correct it would mean that if the defendants were successful in any of their defences the plaintiff's claim would be dismissed but the court could not make the orders of recission and declaration sought in the counterclaim.  

5. Mr Maher says that the plaintiff's claim for primary relief is undoubtedly within the court's jurisdiction and therefore the court does have jurisdiction to grant the relief sought by the defendant as s 55 of the District Court Act vests in the court the power to grant equitable remedies to the defendants on their counterclaim in circumstances where the plaintiff's claim for primary relief is within the court's jurisdiction and submits that Matthews v Bayview Holiday Village Pty Ltd [1990] 2 WAR 167 supports this contention.

6. There is no doubt the plaintiff's claim is within the court's jurisdiction.  There is no doubt that the defence and counterclaim seek equitable relief only (declarations and recission). 

7. Longstanding authority establishes that the power of the District Court to grant equitable remedies is in the nature of an ancillary or auxiliary power to be exercised in the determination of claims otherwise within the jurisdiction of the court: Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208.

8. Mr and Mrs Booth's defence is undoubtedly within the jurisdiction of the court.  What is required is to examine the counterclaim and see whether the equitable remedies sought are in the nature of an ancillary or auxiliary power in relation to the defence. 

9. As Pullin J in The Lunching Pad Pty Ltd v Minister for Culture and the Arts [2001] WASC 299 (The Lunching Pad Pty Ltd) found, the District Court has jurisdiction to grant equitable relief sought in a counterclaim if the equitable relief sought in that counterclaim and defence merely meet and answer the plaintiff's claim and go no further.  In such a case the equitable relief sought in the counterclaim is ancillary to the defence and within the court's jurisdiction.  

10. If the counterclaim goes further than meeting and extinguishing the plaintiff's claim as it did in The Lunching PadPty Ltd (declaration sought in counterclaim was that the defendant was entitled to occupy premises for a term of five years, the plaintiff's claim was for possession of the premises) it would exceed the court's jurisdiction.  

11. In this case, Mr and Mrs Booth's counterclaim seeks the equitable remedy of a declaration that the Deed had been rescinded or alternatively recission of the Deed in relation to them or a declaration that it is void pursuant to s 237 of the ACL. That is a counterclaim which, if it succeeds, merely meets and answers the plaintiff's claim and goes no further and is therefore within the court's jurisdiction as the equitable relief is, in effect, ancillary to the defence: Matthews v Bayview Holiday Village Pty Ltd; The Lunching Pad Pty Ltd. 

Conclusion

1. I have dismissed Mr and Mrs Booth's defence and counterclaim. 

2. I accept Ms Wang's evidence and the evidence adduced by the plaintiff which establishes the following:

   •Original loan amount - $381,975. 

   •Interest from 5 December 2018 to 10 March 2022 (the date of part payment of the principal), at 18% per annum being $188.37 per day x 1,192 days is $224,537, less $45,349.50 being interest paid between 31 January 2019 and 5 March 2020, therefore the total interest accrued as at 10 March 2022 was $179,187.  

   •On 10 March 2022 $70,000 was repaid, reducing the principal loan from $381,975 to $311,975, at an interest rate of 18% per annum, or $153.85 per day.  Interest accruing from 11 March 2022 to 16 June 2023 is 461 days at 18% per annum or $153.85 per day, is $70,924. 

   •Total owing to the plaintiff therefore is $311,975 (balance of the loan outstanding) plus interest of $250,111 ($179,187 plus $70,924), equalling $562,086. 

3. Accordingly there should be:

   1.Judgment for the plaintiff in the sum of $562,086. 

   2.Mr and Mrs Booth's counterclaim is hereby dismissed. 

   3.Mr and Mrs Booth should pay the plaintiff's costs to be taxed if not agreed.

   I shall hear from the parties as to the terms of the formal order. 

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

KH

Associate

16 JUNE 2023