Westpac New Zealand Limited v Nicol HC Auckland CIV 2010-404-007649

[2011] NZHC 1873

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-007649

UNDER  Part 12 of the High Court Rules

IN THE MATTER OF     an application for summary judgment

BETWEEN  WESTPAC NEW ZEALAND LIMITED Plaintiff

ANDWENDY CONSTANCE NICOL Defendant

ANDMARK THOMAS NICOL Third Party

Hearing:         14 July 2011

Appearances: B J Upton and W Hofer for the Plaintiff

D Wu for the Defendant
M T Nicol, in person Third Party

Judgment:      15 July 2011

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

15.07.11 at 4:00pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors/Counsel:

B Upton / W Hofer, Simpson Grierson, Auckland –  [email protected] /

[email protected]

D Wu, David Rooke Law, Botany – [email protected]

WESTPAC NEW ZEALAND LIMITED V WENDY CONSTANCE NICOL HC AK CIV 2010-404-007649 15

July 2011

Background to Westpac’s claim against Ms Nicol and Ms Nicol’s third party

claim against Mr Nicol

[1]      The plaintiff (Westpac) seeks an order for summary judgment in the sum of

$273,142.88, together with interest in terms of the statement of claim.

[2]      It seeks to enforce the defendant‟s (Ms Nicol) obligations with regard to:

(a)      A joint personal loan agreement (personal loan) dated 3 May 2006 and signed by Ms Nicol and her estranged husband, Mark Thomas Nicol (Mr Nicol).

(b)      A joint titanium Mastercard credit card facility (credit card) that Ms

Nicol and Mr Nicol opened and operated. [3]   The application is opposed on the basis that:

(a)      Ms Nicol was allegedly unduly influenced by Mr Nicol to sign the loan agreements in relation to the personal loan.

(b)Her liability to Westpac has been discharged because Westpac has entered into a settlement agreement with Mr Nicol which incorporates sums now claimed.

[4]      Although Ms Nicol has not filed any opposition with regard to the credit card debt she has filed an interlocutory application for summary judgment against Mr Nicol (as a third party) seeking indemnity and contribution from him.

[5]      Without opposition from Westpac this Court, on 5 May 2011, granted leave to Ms Nicol to issue third party proceedings by way of summary judgment against Mr Nicol.  In her statement of claim against Mr Nicol she pleaded, in relation to the loan documentation, that:

(a)       She and Mr Nicol were co-debtors.

(b)She is entitled per s 86 of the Judicature Act 1908 to contribution and indemnity from Mr Nicol to the extent of the whole of the debt due.

[6]      She alleges that Mr Nicol induced her to enter into the loan documentation for his own benefit, that is in developing his exclusive interest in the investment and development of his real estate portfolio.  She said she was inexperienced in business matters and relied upon and trusted Mr Nicol for advice and guidance on financial matters.

[7]      She  said  she  was  persuaded  to  sign  the  loan  documentation  on  the representation of Mr Nicol building up his investment portfolio, that he had liaised with Westpac to set the deal up, and that Ms Nicol need only sign the documentation and not worry about anything.   She claims she is entitled to full indemnity and contribution from Mr Nicol in connection with the claim against her.

[8]      She  also  pleads  the  settlement  deed  entered  into  between  Mr  Nicol  and Westpac on 30 September 2010.   She avers that the deed has settled the total indebtedness of both parties and the residual balance owing by her.

[9]      Mr Nicol  has  filed an  opposition  to  Ms  Nicol‟s third party claim.   The borrowings in question pre-dated the parties‟ marriage separation and their relationship property division.  Mr Nicol added:

(a)      That Ms Nicol has entered into numerous loan agreements over an extended period of time for multiple properties.

(b)The marital relationship was a working partnership where Ms Nicol was an active participant “at all times fully aware and capable of making decisions with regards to financial matters”.

(c)       Total control of family finances remained with Ms Nicol.

(d)It was Ms Nicol that “finally drove the family trust and company to financial chaos through her outrageous demands for a grander... lifestyle”.

(e)      Ms Nicol understood and was actively involved with every financial decision made: she actually controlled the direction of the trust and the company.

(f)      Rather  than  it  being  a  case  of  her  being  intimidated  and  unduly influenced by him, the reverse was true.

[10]     Mr Nicol has sworn an affidavit in which he deposes to the truth of what he

has pleaded in opposition to Ms Nicol‟s third party application.

[11]     Ms Nicol has not filed an affidavit in reply to Mr Nicol‟s affidavit.  Indeed her affidavit in support of her claim against him simply confirms that “to the best of my knowledge and belief for all of the statements and allegations contained in the statement of claim” are true and correct.   She does however refer also to the two other affidavits she has filed in defence of Westpac‟s summary judgment application. In those Ms Nicol described the nature of her business relationship with Mr Nicol. She said she was involved by name only to assist Mr Nicol to qualify for a “tax dodge”.  Her general task was to open letters and put those in an appropriate file; that she did not read them in any detail.

[12]     She said it was not until she was served with a copy of Westpac‟s demand that  she was  aware she  had  signed  the  guarantee but  she clearly identifies  her signature upon it.  She thinks she recalls the occasion when she must have signed those papers.  It was she thinks in early 2009 when she met Mr Nicol‟s new solicitor at a McDonald‟s restaurant.  Ms Nicol deposes that Westpac dealt exclusively with Mr Nicol in arranging the grant of the personal loan; that Westpac was aware of Mr Nicol‟s expertise  and  abilities  in  real  estate  and  the  building  of  his  investment portfolio; that although invited to meetings on rare occasions she was never advised of the implications of executing documentation relating to the personal loan; rather she was given papers to sign and told not to worry about anything else.

[13]     Ms Nicol believed Mr Nicol was a valued client of Westpac.   Occasional invitations were issued to attend events organised and hosted by Westpac.

[14]     Ms Nicol recalls an occasion when she and Mr Nicol met with Mr Curry and Ms Philipson of Westpac.  At that time she recalled Mr Curry advising that two of the investment properties would have to be sold.  She did not know before then that Mr Nicol was in financial difficulty.

[15]     She and Mr Nicol separated in January 2010.  Concerning her involvement in

Mr Nicol‟s business she said she only ever acted when directed to do so by Mr Nicol.

[16]     In her second affidavit Ms Nicol attached a copy of the settlement deed completed between Westpac and Mr Nicol.   It records an agreement by which Mr Nicol would repay the sum of $50,000 by five annual instalments at $10,000.

[17]     The  settlement  deed  refers  to  Mr  and  Ms  Nicol  being  directors  and shareholders of Wenmar Property Holdings Limited (Wenmar); that Westpac made advances to Wenmar which included a Choices Home Loan Summary dated 28

August 2009 which was signed by Mr and Ms Nicol; that Mr and Ms Nicol guaranteed Wenmar‟s obligations in their personal capacity in a guarantee and indemnity dated 12 September 2002.

[18]     The total sum calculated to be owing of $275,321.98 included the balance owing under the Wenmar loan agreement (of $5,668.73) and the balance owing under the home loan agreement (of $255,855.63).

[19]     The deed recorded that Westpac agreed to accept $50,000 plus legal fees in full and final satisfaction of his obligations to Westpac.

Hearing outcome

[20]     At the conclusion of counsels‟ submissions yesterday I informed the Court

that in my judgment:

(a)       An  arguable  case  for  a  claim  of  undue  influence  could  not  be sustained.

(b)      The settlement deed between Westpac and Mr Nicol did not release

Ms Nicol from her obligations to Westpac.

(c)       There  was  no  basis  for  not  immediately  giving  to  Westpac  the judgment they were entitled to.

[21]     Concerning  Ms  Nicol‟s third  party summary  judgment  claim  against  Mr Nicol I observed that claim claimed an indemnity from Mr Nicol for the very same reasons Ms Nicol raised in her defence of Westpac‟s claim against her.  I noted there was a significant conflict in the evidence of Mr and Ms Nicol and although such was not of a degree that influenced my finding that there was not a sufficient case for undue influence to defend the Westpac claim, yet it was clear the conflict was of a degree such that this Court should not be tempted to resolve those issues between Mr and Ms Nicol without recourse to trial.

[22]     Accordingly I informed Ms Nicol that her summary judgment claim against Mr Nicol would be dismissed and that that proceeding would be transferred to the standard track for disposal.

[23]     I commented to the parties that I had been advised by Ms Nicol‟s counsel, Mr Wu that the property relationship issues between Mr and Ms Nicol have not been resolved.  I offered the view that matters between Mr and Ms Nicol ought best be confined to a relationship property claim for it is likely that the total amount of the parties‟ indebtedness to Westpac was a matrimonial debt which, for relationship property purposes, would be shared equally.

[24]     I advised counsel those fuller reasons for my decision would follow.  They are below.

Issues

[25]     They concern whether:

(a)       Ms Nicol has an arguable case to show that she was unduly influenced by Mr Nicol to enter into their personal loan agreement.

(b)The settlement deed between Westpac and Mr Nicol discharged any liability of Ms Nicol.

[26]     The first issue is not about proof of undue influence but rather about whether there is a sufficiently strong case for same that could be argued at a trial.  It involves an  examination  of the circumstances  of this  particular case to  see if  there is  a sufficient suggestion of undue influence having been practised.   Ms Nicol claims such a case could be entertained if it could be accepted that she depended upon Mr Nicol for financial advice and was not really given any option but to accept such.

[27]     The issue concerning the settlement deed between Westpac and Mr Nicol concerns an interpretation of the relevant deed.  Was it or was it not intended to have that affect of releasing Ms Nicol‟s covenant.  Further and by its words did it in fact produce that outcome?

Undue influence

[28]     There is a raft of case authority containing pronouncements as to what will amount to undue influence.   Some of those are of English origin.   For present purposes the Court need only consider whether there is an arguable case to prove a claim of undue influence.

[29]     For summary judgment purposes Westpac needs to prove there is no defence available to Ms Nicol.   On the face of Westpac‟s documents Ms Nicol's liability appears clear.  She has joint and several responsibilities to meet the loan which they both borrowed from Westpac and which they both promised to repay.  The obligation is therefore upon her to satisfy this Court that she has a worthy case to argue a defence of undue influence.

[30]     As to who was the stronger or more dominant partner in their relationship, Mr and Ms Nicol are completely in conflict.   In this case these conflicting claims follow their marriage separation.   Seldom can the truth of conflicting claims be resolved short of trial and recourse to cross examination.   Therefore it is for this

Court to consider whether, even on Ms Nicol‟s own account, there is sufficient basis

for proof of the claims she makes.

[31]     Mr Wu calls in aid the principle set out in the case of Royal Bank of Scotland

Plc v Etridge (No2) [1].  In that case Lord Nicolls stated:

[1] Royal Bank of Scotland Plc v Etridge (No2) 2002 [2 AC 773].

[14]     Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant‟s financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient,  failing  satisfactory  evidence  to  the  contrary,  to  discharge  the burden of proof.  On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence.  In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties‟ relationship.  He preferred his own interests. He did not behave fairly to the other.  So the evidential burden then shifts to him.  It is for him to produce evidence to counter the inference which otherwise should be drawn.

[32]     Ms Nicol‟s case is that she placed her trust and confidence in Mr Nicol for the purpose of entering into various transactions including the personal loan and payments of various invoices/accounts.  She says the loans in the transactions were executed only pursuant to the strict instructions of Mr Nicol.

[33]     But, the Etridge case also stated that:

The traditional view of equity in this tripartite situation seems to be that a person in the position of the wife will only be relieved of her bargain if the other party to the transaction (the bank, in the present instance) was privy to the conduct which led to the wife‟s entry into the transaction.  Knowledge is required.

[34]     Mr Wu‟s submission in response to this is that Westpac had dealt exclusively with Mr Nicol in arranging the grant of the personal loan; that Westpac was aware of Mr Nicol‟s expertise and abilities in real estate and in the building of his investment portfolio.

[35]     Mr Wu submits Westpac ought to have had notice of the undue influence or otherwise was wilfully blind as to the implications of the transactions for Ms Nicol

and chose instead to rely upon Mr Nicol‟s expertise and abilities.

[36]     Mr Wu also refers me to the judgment of the Court in Barclays Bank Plc v O’Brien [2] where reference is made to a combination of two factors which ought put a creditor on enquiry when a wife offers to stand surety for the husband‟s debts:

[2] Barclays Bank Plc v O’Brien [1994] 1 AC180 at 196.

(a)       The transaction is on its face not to the financial advantage of the wife; and

(b)       There  is  a  substantial  risk  in  transactions  of  that  kind  that,  in procuring the wife to act as surety, the husband committed a legal or equitable wrong that entitles the wife to set aside the transaction.

[37]     Lord Nicolls added that in these circumstances (where a wife is asked to

stand surety for her husband‟s debts) there is a limited duty on the Bank as follows:

[54]      The furthest a bank can be expected to go is to take reasonable steps to satisfy itself that the wife has had brought home to her, in a meaningful way, the practical implications of the proposed transaction.  This does not wholly eliminate the risk of undue influence or misrepresentation.   But it does mean that a wife enters into a transaction with her eyes open so far as the basic elements of the transaction are concerned.

[38]     Mr Wu submits Ms Nicol entered into the agreement for the personal loan and made payments on various tax invoices/accounts without being adequately advised of her duties and the implications of executing the same.  He submits the personal loan was entered into solely to enable Mr Nicol to build his investment portfolio.   He submits the nature of the transaction, being a joint loan, meant Ms Nicol was effectively standing as a surety for Mr Nicol for whom the loan was obtained.

[39]     Mr Wu submits there was no evidence of Ms Nicol being advised of the implications of the transaction, or it being suggested she obtain independent legal advice in relation to signing same.  Westpac, Mr Wu submits, ought to have taken reasonable steps to satisfy itself that Ms Nicol was aware in a meaningful way, of the practical implications of the proposal she committed to.

The settlement deed

[40]     It  is  dated  30  September  2010.    Mr Wu  submits  the  liabilities  between

Westpac and Ms Nicol and Westpac and Mr Nicol were identified by the terms of the

deed.   He submits the deed should be interpreted by reference to the following factors:

(a)       The deed refers to both Mr and Ms Nicol.

(b)Mr  Nicol  admits  an  indebtedness  to  Westpac  in  the  full  amount claimed against Ms Nicol in this proceeding, under both the personal loan and the credit card facility.

[41]     As the deed was drawn by Westpac then according to the rule of contra proferentum, any ambiguous interpretation of the deed or of any clause contained in the same ought to be read against Westpac.

Considerations

[42]     Mr and Ms Nicol engaged in small scale property development.  Particular projects were conducted through special purpose companies.  The lending to those companies (which Ms Nicol guaranteed) is not the subject of the present claim.

[43]     The personal and business affairs of the Nicols were kept separate.   This followed accounting advice they received.

[44]     In respect of the personal lending Westpac in 2006 provided a facility of

$140,000 to the Nicols pursuant to a personal loan which was signed by them both.

[45]     In 2008 the loan was varied when the credit limit was increased to $240,000. Mr Nicol and Ms Nicol both signed a new loan agreement at the time.  The terms of that loan were standard and provided that the liability of them both was joint and several.   Ms Nicol believes personal loan documentation was completed before a

„new‟ solicitor in a McDonald‟s restaurant in early 2009.  She may well have been mistaken about the nature of the documents she believed she signed at that time, for the personal loan documentation had been completed at an earlier time.

[46]     When in July 2010 the personal loan was in default, demand for full payment was made.

[47]     The Nicols also opened and operated a credit card facility – again upon the basis that they were each joint and severally liable for all indebtedness owing if the credit card facility was cancelled.   The credit card was cancelled on 7 September

2010 and demand for the balance outstanding was delivered.

[48]     I accept the submission of Mr Upton that much of Ms Nicol‟s evidence addressed her connection with business affairs only and then mostly in relation to lending  to  Wenmar  Property  Holdings  Limited.    Concerning  the  personal  loan account it is not in dispute that she used this account on numerous occasions for day to day living expenses; that she saw statements and filed them in connection of same as they were addressed to her; that she was present at several meetings where the Nicols‟ personal  and  business  circumstances  were  explained  and  in  which  she realised there were significant financial difficulties.  A perusal of the personal loan statements clearly shows a predominant, even exclusive use, for personal and household expenses.

Undue influence

[49]     Undue influence is directed at conduct within a relationship which justifies the  conclusion  that  the  agreement  was  not  the  result  of  a  free  exercise  of  a guarantor‟s will and therefore, should not be allowed to stand.

[50]     In Contractors Bonding Limited v Snee [3], the Court of Appeal said undue influence:

... consists of the gaining of an unfair advantage by an unconscious use of power by a stronger party against a weaker in the form of some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, though not always, some personal advantage obtained by the stronger party.  It is directed at conduct within a relationship which justifies the conclusion that the disposition or agreement was not the result of a free exercise of the disponer‟s will.  The doctrine is founded on the principle that equity will protect the party who is subject to the influence of another from victimisation.

[3] Contractors Bonding Limited v Snee [1992] 2 NZLR 157 at 165-166.

[51]     I have already referred to the House of Lord‟s decision in Etridge and in particular those parts of the decision upon which Mr Wu‟s submissions relied.  Those

quotations need consideration also by reference to Lord Nicolls explanation for the rationale of undue influence at pp 794 and 795:

[6]       The issues raised by these appeals make it necessary to go back to first principles.  Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience.  The objective is to ensure that the influence of one person over another is not abused.   In everyday life people constantly seek to influence the decisions of others.   They seek to persuade  those  with  whom  they  are  dealing  to  enter  into  transactions, whether great or small.   The law has set limits to the means properly employable for this purpose.   To this end the common law developed a principle of duress.  Originally this was narrow in its scope, restricted to the more blatant forms of physical coercion, such as personal violence.

[7]       Here, as elsewhere in the law, equity supplemented the common law. Equity extended the reach of the law to other unacceptable forms of persuasion.  The law will investigate the manner in which the intention to enter into the transaction was secured: “how the intention was produced”, in the often repeated words of Lord Eldon LC, from as  long ago as 1807 (Huguenin v Baseley 14 Ves 273, 300). If the intention was produced by an unacceptable means, the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or “undue” influence, and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person‟s free will. It is impossible to be more precise or definitive. The circumstances in which one person acquires influenced over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion.

[52]     Therefore is there in this case a sufficient argument to show Ms Nicol was subject to undue influence; if so was Westpac sufficiently aware of circumstances to put them on enquiry as to the risk of undue influence; and, if so, did Westpac act in such  a  way  as  to  insulate  itself  from  the  consequences  of  the  alleged  undue influence.

[53]     Whilst in certain professional relationships the Court can assume the effect of influence in the advice or direction given by one to another, no such presumption ought to be assumed in the relationship between a husband and wife.  In the marriage situation a claim of undue inference ought to be measured in circumstances where:

(a)      A complainant placed trust and confidence in the other party with respect  to  his  or her financial  affairs;  or the other party acquired ascendency, domination or control over the complainant.

(b)A transaction that is not readily explicable by the relationship of the parties. [4]

[4] Etridge [14].

[54]     As Lord Nicolls observed in Etridge [para 14]:

On proof of these two matters the stage is set for the Court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence.

[55]     It follows that if Ms Nicol is unable to satisfy the prerequisite which gives rise to a rebuttable evidential presumption that undue influence has been exercised, she must provide clear evidence of an exploitation of a relationship of trust.  That is, Ms Nicol must show, at least to a sufficiently arguable standard that:

(a)       Mr Nicol had the capacity to influence her compliance. (b)     That that influence was exercised.

(c)      That its exercise was undue.

(d)      That  its  exercise  brought  about  Ms  Nicol‟s signature  to  the  loan

transaction.

(e)      The transaction was to her manifest disadvantage. [5]

[5] Contractors Bonding (supra) p.166.

[56]     Then there remains the issue of whether or not Westpac knew or ought to have known of the existence of undue influence by the obtaining of Ms Nicol‟s signature to the personal loan transaction documents.   Etridge identified this limitation to the broad scope of an undue influence claim.  The limitation referred to cases where the relationship between a surety and a debtor is non commercial. However different considerations apply where the complainant is a principle debtor to the transaction in question, as Lord Nicholls noted:

[48]      As to the type of transactions where a bank is put on enquiry, the case where a wife becomes surety for her husband‟s debts is, in this context, a straightforward case.  The bank has been put on enquiry.  On the other side

of  the  line  is  that  case  where  money  is  being  advanced,  or  has  been advanced, to husband and wife jointly.  In such a case the bank is not put on enquiry, unless the bank is aware the loan is being made for the husband‟s purposes, as distinct from their joint purposes.

[57]     For Ms Nicol to succeed with her undue influence defence she needs to satisfy this Court there is sufficient evidence to raise a presumption of undue influence; of a placing of trust in confidence in Mr Nicol with respect to financial affairs; or to show Mr Nicol acquired ascendency, domination or control over Ms Nicol; and that her entering into the loan obligations is not otherwise readily explicable by the husband and wife relationship.

[58]     Seemingly  absent  from  Ms  Nicol‟s evidence  is  anything  to  support  her assertions of dominance or control in relation to the Nicol‟s personal spending, as distinct from the business relationship spending.

[59]     Ms Nicol says she merely signed the personal loan because Mr Nicol told her to do so.   But, it was clearly in her interests that she did sign it.   She directly benefitted from the funds advanced under the loan.   It funded family household expenses and as well school fees.  It was always within her ability to ascertain the level  of  borrowing  and  in  that  regard  the  extent  of  her  personal  liability. Undoubtedly she received the monthly statements for the personal loan which were addressed to her and to Mr Nicol.

[60]     There was nothing in this from which undue influence can be presumed. There is nothing in this which suggests an unconscious use of power by a stronger party against a weaker one, or the exploitation or abuse of influence, or some unfair conduct which meant Ms Nicol was not exercising her own free will.   Undue influence does not arise merely because a wife is persuaded by her husband to sign something she does not turn her mind to.   Persuasion is not necessarily unconscionable.

[61]     I  accept  Mr  Upton‟s  submission  that  trusting  ones  husband  does  not necessarily mean there has been exploitation or an abuse of power.  Also and significantly in this case Ms Nicol cannot point to any manifest disadvantage in her signing the loan documents.  She needed access to the funds for day to day expenses

for her family and herself.  Whilst she now may regret having committed herself to an obligation to repay the loan she cannot before then identify circumstances where she was unhappy about the extent of personal borrowing involved.  It is unlikely that she can claim to her having been unaware of the extent of borrowing incurred.

[62]     Ms Nicol asserts that because she says Westpac dealt only with Mr Nicol, that Westpac should have been on enquiry on her behalf.  The „Etridge limitation‟ arises where a bank is aware a loan has been made for the husband‟s purposes as distinct from a husband‟s and wives joint purposes.  But, in this instance, the relevant bank account is a joint account and of that it cannot be said it was clearly operated for Mr Nicol‟s benefit alone.  It cannot be said for these reasons that Westpac was put on enquiry on Ms Nicol‟s behalf.

Summary

[63]     In  considering  whether  a  defence  of  undue  influence  arises  then  three questions need to be asked:

1.        Was there undue influence, presumed or not?

2.If there was undue influence was Westpac put on enquiry about it?

3.If Westpac was put on enquiry about it did it take steps to protect itself e.g. to suggest that independent advice should be obtained.

[64]   In enquiring whether there was undue influence case authority notes a presumption  may  be  made  when  the  circumstances  of  the  parties‟ relationship suggests it should be e.g. when one party consults another for advice.  However, that presumption of undue influence cannot arise in the usual husband and wife scenario. Whilst it may in circumstances where a wife is asked to act as surety for a husband‟s separate debts, it may not at all arise where the husband and wife have from the beginning jointly assumed responsibility for payment of that debt.

[65]     Therefore if there is no presumption an enquiry concerns whether or not a rebuttable  presumption  may  exist.    Such  may occur  in  a  situation  of  trust  and confidence but despite which there is a transaction which is not really explicable by that relationship between the parties.   In that situation when a transaction is not explicable by the nature of the relationship a presumption of undue influence may be implied.

[66]     In this case Ms Nicol refers to events and situations in support of her claim of undue influence, of her claim that such a presumption can arise notwithstanding that it does in a husband and wife relationship.  Ms Nicol says Mr Nicol had the capacity to influence her, that he exercised that influence, that its exercise was undue, and because of it, she was manifestly disadvantaged in that outcome.

[67]     If then Ms Nicol overcomes those undue influence requirements she must still show that Westpac was put on an enquiry of that undue influence i.e. that in the circumstances in which a husband and wife together signed a joint and several obligation to Westpac, Westpac should at least have warned Ms Nicol to obtain independent legal advice.

[68]     In this case the onus upon Ms Nicol to establish a case of undue influence falls well short of any knowledge of same being imputed to Westpac.

[69]     Although Ms Nicol eschews attributions of personal bank account control, it is clear she largely controlled the use of that bank account.  Although she and Mr Nicol dispute respective accounts of trust and confidence, it is as likely as it is not she exercised a significant element of control with that personal account.

[70]     Ms Nicol has endeavoured to show an element of undue influence existed notwithstanding, but her claims are improbable.   She signed the documents in circumstances where there was no obligation for her to be independently advised. She saw the bank statements and she filed them.  They were addressed to her.  She attended bank meetings.

[71]     The case for Ms Nicol does not pass the fact that her actions were explicable by the nature of the parties‟ relationship and because their loan was a personal one and was in their joint names.

[72]     The relationship did not disadvantage her much less did it so manifestly. Clearly, for the reasons that the bank statements identify, the relationship was of considerable advantage to her.

[73]     Even if Ms Nicol could show that her operation of the personal loan account was  to  her  manifest  disadvantage,  she  needs  to  show  some  basis  upon  which Westpac could have been aware of that.  It is clear from Etridge that the bank could not have been put on enquiry unless it knew that the loan was only for Mr Nicol and not from Ms Nicol or that Ms Nicol was providing surety for loans which Mr Nicol alone had incurred.

[74]     That did not happen here. Theirs was a joint personal account obligation.

The settlement deed

[75]     Ms  Nicol‟s submission  is  that  her  liability was  discharged  by Westpac‟s settlement with Mr Nicol.  At common law a release of one joint contractor releases the other.  It is upon that principle Ms Nicol relies.  Mr Wu urges that the terms of the  settlement  deed  make  it  clear  that  in  consideration  of  Mr  Nicol‟s promise, liability for repayment, including that of Ms Nicol, was released.  Mr Wu submits further that this is confirmed by the fact that Westpac‟s solicitors sent to Ms Nicol a copy of their solicitor‟s account for costs for the preparation of the settlement deed. From Ms Nicol‟s point of view the fact that the invoice sent to her at all meant that the settlement deed concerned her and reinforced her position that she was, by it, released.

[76]     Mr Wu‟s submissions focussed upon aspects of the deed which reinforced an impression of totality and finality.  He points out that Ms Nicol‟s name is referred to in the deed as was the amount that she and Mr Nicol borrowed.

[77]     The  deed  referred  to  the  total  sum  owing  by  them  both  which  by  this proceeding is now claimed against Ms Nicol but in respect of which sum Westpac has accepted a compromise from Mr Nicol; that Mr Nicol admitted the liability fully and completely for the total indebtedness.

[78]     As earlier indicated in this judgment, the question of whether or not the settlement deed releases Ms Nicol depends upon an interpretation of its terms.  For the purpose of interpretation I refer to the following aspects of the deed:

1.        The parties are named as Westpac and Mr Nicol.

2.By clause 1.1 Mr Nicol admits his outstanding indebtedness in the sum equal to the total indebtedness due to Westpac and that by signing the deed he admitted liability fully and completely for the total indebtedness.

3.Mr Nicol agreed to repay the sum of $50,000 by five annual instalments of $10,000 and as well to pay the legal costs for the preparation and implementation of the deed.

4.Under the heading „Forbearance and Release‟ Westpac agreed to take no further steps against Mr Nicol to recover the total indebtedness due in consideration of the deed being executed and noted that if Mr Nicol defaulted in his instalment payments then the total indebtedness crystallised and then became due

and could be enforced against him.

5.The parties acknowledged that the deed did not operate as a waiver of Mr Nicol‟s obligations, nor preclude any right of remedy in the event of default.

6.Mr Nicol was precluded from being able to enter into any other agreement or debt arrangement with any other party whilst bound by the terms of this deed to Westpac.

[79]     Clearly   the   settlement   deed   comprised   an   agreement   for   Westpac‟s forbearance to sue.  It did not provide a release for Mr Nicol or for that matter Mrs Nicol of their obligation to pay the total indebtedness.

[80]     If  as  much  is  not  clear  by  the  terms  of  the  settlement  deed  then  it  is

underscored by clause 5.3 of the parties‟ personal loan agreement which provides:

More than one borrower

If there is more than one of you, each of you is individually liable for the full amount under this agreement.  You are still bound by this agreement, even if anyone you thought was going to sign this agreement does not sign it, or any of you is not bound by it or is released from part or all of their obligations under it.  You refers to each of you.  Any one of you can make a drawdown, redraw, redraw, postpone repayments or capitalise interest.

Summary

[81]     There is no basis for Ms Nicol‟s claim to be released by the terms of the

settlement deed.

Credit card debt

[82]     Ms Nicol has not raised any defence to her liability in respect of the credit card.   Therefore Westpac is entitled to judgment in respect of the credit card regardless  of  whether  her  application  for  summary  judgment  against  Mr  Nicol seeking indemnity and contribution is successful or not.

Stay of enforcement

[83]     Mr Wu submits that even if it is proved Ms Nicol does not have an arguable case based on undue influence or if the settlement deed does not release her from her liability  to  Westpac  that  judgment  should  not  be  entered  until  her  third  party summary judgment claim against Mr Nicol has been heard.  Mr Wu submits the two claims are interlinked because in essence they are based upon the same contractual obligations except Ms Nicol says any obligation she has can be shown to be payable by Mr Nicol.  She needs time to prove that position.

[84]     I have, I hope, already identified the improbability of Ms Nicol‟s task of her avoiding liability to Westpac‟s claim.   Although she has for the purposes of this proceeding obtained legal aid and although Mr Nicol has agreed with Westpac to pay a modest sum over a lengthy period of time, these facts should not influence a Court‟s discretion to deny a plaintiff that judgment which they are immediately entitled to.   At best a Court could be encouraged to use its discretion to delay judgment upon a promise of payment in the near future. That is not available here.

Judgment

[85]     Judgment is entered in favour of Westpac against Ms Nicol in the sum of

$286,272.58 which is inclusive of interest at the contract rate to 14 July 2011 but less the sum of $2,053.13 charged as solicitor‟s fees for the preparation of the settlement deed between Westpac and Mr Nicol.

[86]     Ms Nicol was legally aided.  I certify that in the event that this Court was to fix fees then those would be calculated on a category 2B basis, together with disbursements as approved by the Registrar.

[87]     As advised to counsel, any recourse for payment of costs should be pursued pursuant to the provisions of the Legal Services Act.

Associate Judge Christiansen