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TAG v CBS

 

[2016] QCA 318

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

TAG v CBS [2016] QCA 318

PARTIES:

TAG
(applicant)
v
CBS
(respondent)

FILE NO/S:

Appeal No 4275 of 2016

SC No 2630 of 2010

DIVISION:

Court of Appeal

PROCEEDING:

Application for Extension of Time/General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2013] QSC 127

DELIVERED ON:

29 November 2016

DELIVERED AT:

Brisbane

HEARING DATE:

8 September 2016

JUDGES:

Morrison and Philip McMurdo JJA and Atkinson J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

  1. Refuse the application filed 28 April 2016.
  2. Order the applicant to pay the respondent’s costs of the application.

CATCHWORDS:

APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – TIME FOR APPEAL – EXTENSION OF TIME – GENERAL PRINCIPLES AS TO GRANT OR REFUSAL – where the parties were in a de facto relationship between 2003 and 2007 – where in 2009 the parties purportedly entered a recognised agreement pursuant to s 266 Property Law Act 1974 (Qld) (“PLA”) to settle any claims each of the parties may have had against the other – where the applicant did not comply with the agreement’s terms – where in 2010 the respondent commenced proceedings seeking specific performance of the agreement and damages for various breaches – where the applicant alleged the agreement was unenforceable and, alternatively, was not a recognised agreement within the meaning of s 266 PLA because it omitted a loan repayable to the applicant’s mother – where in 2013 the trial judge found no evidence of the existence of the loan, rejected the applicant’s defence and granted the respondent the relief sought – where in April 2016 the applicant filed an application for an extension of time to appeal – where the applicant’s affidavit attributes her delay in prosecuting her appeal to her poor health – where the applicant contends the trial judge erred and the application should be granted because there were two pieces of evidence demonstrating the debt owed to her mother – whether the evidence proved the existence of a debt payable to the applicant’s mother – whether the application for an extension of time within which to appeal should be granted

Property Law Act 1974 (Qld), s 266, s 266(1)(c)

GAC v CNT [2013] QSC 127, approved

TAG v CBS [2015] QCA 246, related

COUNSEL:

M Martin QC for the applicant

S W Sheaffe for the respondent

SOLICITORS:

Luke Comino Solicitors for the applicant

McKays Solicitors for the respondent

  1. MORRISON JA:  I have read the reasons of Philip McMurdo JA and agree with those reasons and the orders his Honour proposes.
  2. PHILIP McMURDO JA:  The parties in this case lived in a de facto relationship from early 2003 until August 2007.  On 29 January 2009, they signed what purported to be a recognised agreement under the Property Law Act 1974 (Qld) to settle any claim under that Act which one might have had against the other.  However the present applicant did not perform her obligations under the agreement and ultimately, by a proceeding brought in the Trial Division in 2010, the present respondent claimed specific performance of that agreement and other relief to compensate for her breaches of that contract.
  3. The applicant defended that claim by alleging, upon several legal bases, that the agreement was unenforceable by the respondent.  A further defence was that if the agreement was enforceable under the general law, it did not have effect as a recognised agreement within the meaning of s 266 of the Property Law Act, with the consequence that it did not oust the court’s jurisdiction to adjust the interests in the property of either or both of the de facto partners under Division 4 of Part 19 of that Act.  By that stage, the relevant limitation for a claim for relief under Part 19 had long expired.  By s 288, that period is two years from the day on which a de facto relationship ended.  The applicant counterclaimed for an extension of time in which to make such a claim,[1] arguing that in the terms of that provision, hardship would result to her if leave were not given.  She further claimed for a property adjustment order.
  4. After a five day trial, the present respondent was given judgment for substantially all of the relief that he had claimed.  The counterclaim was dismissed.  The primary judge rejected each of the defences under the general law to the claim for enforcement of the agreement.  He further held that the agreement was not only enforceable contractually, but also as a recognised agreement under s 266, thereby precluding a claim for a property adjustment order.
  5. That judgment was given on 15 April 2013.  There was no appeal within the permitted period of 28 days from the judgment.  But on 22 July 2013, the applicant filed in this court an application for an extension of the period in which to appeal.  Although the applicant had been represented by solicitors and counsel at the trial, by this stage she was unrepresented.  She also applied for a stay of the judgment, which was refused by an order in this court on 25 July 2013.  Her application for an extension of time was refused in November 2015.[2]
  6. On 15 November 2013, the applicant became bankrupt on her own petition.  That bankruptcy was annulled in December 2015 after she entered into a composition with her creditors.
  7. The present application, by which the applicant again seeks an extension of time within which to appeal against the 2013 judgment, was filed on 28 April 2016.  On the way in which this application was ultimately argued, the proposed appeal would be made upon one ground, namely that the trial judge erred in concluding that the agreement was a recognised agreement under s 266.  There would be no challenge to the trial judge’s conclusions that the 2009 agreement was enforceable under the general law.  By the proposed appeal the applicant seeks an outcome whereby she could apply for a property adjustment order or at least apply, on the case being returned to the Trial Division, for an extension of time in order to seek such an order.
  8. From 2013, the respondent through his lawyers maintained that once the applicant became bankrupt, any right to apply for an extension of time to appeal or a right of appeal itself was vested in her trustee in bankruptcy.  At the hearing of the present application, that argument was not pressed.
  9. The merits of the proposed appeal have been fully argued.  Of course the merits are not the only relevant consideration in this application to extend the time to appeal.  It is necessary also to consider the applicant’s explanation for her delay and the consequences for the parties of the grant or refusal of the application.[3]

The 2009 agreement

  1. The agreement was in the form of a deed which was prepared by the respondent’s solicitors.  The deed was executed at the end of a lengthy day of discussion and negotiation in which the applicant was represented and advised by a solicitor and also advised by her mother.
  2. Each of the parties was then aged about 37 and had conducted his or her own business.  The applicant’s business had been unsuccessful in the years leading up to the agreement, which she attributed to her poor mental health directly caused by the respondent’s infidelity during the relationship.  By the time that this agreement was made, the company through which she had conducted her business was late in paying its creditors.  The principal asset which was owned in common by the parties was the house in which they had lived and in which the applicant was still living in 2009.  There were no children of the relationship.
  3. The deed of agreement recited that the parties had commenced residing in a de facto relationship in the house in about March 2003 and had separated in about August 2007.  The deed recited that the parties had made “equal contributions to the purchase/mortgage payments for the property”, a fact which the applicant disputed at the trial.
  4. The deed further recited that it was made with the intention that it be a recognised agreement within the meaning of s 266.  It listed what were said to be the parties’ “joint” property, financial resources and liabilities, the property, resources and liabilities of the applicant and, within a third schedule, those of the respondent.  The applicant’s proposed ground of appeal is that the schedule of her liabilities critically omitted a debt in excess of $400,000 which was owed by her to her mother.  It is that omission which is said to have invalidated this agreement as a recognised agreement under s 266.
  5. The agreement made specific provision for the house in which they had lived, which was then held by the parties as tenants in common in equal shares.  It was agreed that the applicant would immediately transfer her interest to the respondent and that he would borrow $950,000, on the security of the house, which would be used to discharge the two existing mortgages with the balance to be divided between the parties in certain amounts.  One of the existing mortgages was to Suncorp Metway Ltd and the other was to a company called Factotum Pty Ltd.  The Suncorp mortgage was granted to secure money which the parties had borrowed for the purchase of the house.  The Factotum mortgage secured an advance, although borrowed by both parties, which was to fund the applicant’s ailing business.  Shortly after the agreement was made, the applicant’s half interest was transferred to the respondent and he borrowed $950,000 which was then distributed according to the agreement.  An amount of $561,191.45 was paid to Suncorp Metway Ltd and $120,525.97 was paid to Factotum Pty Ltd.
  6. The balance of the borrowing of $950,000 was applied, again according to the agreement, by $30,000 being paid to a company associated with the respondent, $1,777 being paid for some legal fees, $60,000 retained by the respondent and an amount of $176,455.58 being paid to the trust account of the applicant’s then solicitors.  By clause 21.3 of the agreement, that last payment was made for the purpose of discharging debts due and owing to third parties by the applicant or the company through which she had conducted her business.
  7. The agreement further provided that for a period of 12 months from its date, the applicant would reside in the house and would pay $1,000 per week towards the mortgage payments on the refinanced amount.  The respondent was to pay the balance of the mortgage payments in an estimated amount of $1,500 per month.  It was agreed that if the applicant failed to pay her contribution, she would vacate the property and would forfeit her option to purchase the property from the respondent which the agreement conferred.
  8. As to that option to purchase, the parties agreed that on the expiry of that period of 12 months, the applicant would have an option to purchase the house by which, upon the exercise of the option, she would be obliged to discharge the existing mortgage and pay to the respondent the sum of $200,000.  In the event that she did not exercise her option to purchase, the respondent was able to either retain the house in his ownership or list the property for sale.  If he retained the house, the applicant was to vacate possession and he was to pay her an amount of $150,000.  If he elected to sell the house, the proceeds of that sale were to be applied in discharging the mortgage, paying the costs and expenses of the sale and paying the balance to the applicant and the respondent in the respective shares of 40 and 60 per cent.
  9. From those terms of the agreement it is possible to discern a value, or a range of values, which the parties attributed to the house.  At the trial there was in evidence a valuation of the house as at August 2008 in the sum of $1,200,000, which was broadly consistent with the terms of the agreement.
  10. In the events which occurred, the applicant remained in possession of the house until after the trial in 2013, although, as the trial judge found, the respondent had duly elected to retain the house and had given the applicant a notice to vacate by no later than March 2010.  The applicant paid the agreed sum of $1,000 per week for only 20 weeks of the 12 month period from the date of the agreement.
  11. At the trial the respondent claimed an order that the applicant vacate the property, pay $1,000 per week for the remaining 32 weeks of that 12 month period and pay a further amount, as damages for breach of contract, assessed at $1,000 per week for the weeks from 15 March 2010 until the date of the judgment.  However pursuant to an interlocutory order affecting the conditions of her continuing occupation of the house, the applicant had paid to the respondent’s solicitors sums which reduced the respondent’s claim to a net amount of $104,160.  His Honour held that this amount should be set off against the sum of $150,000 which was payable to her according to the agreement, resulting in a net amount of $45,894 to be paid by the respondent.  That sum was ordered to be paid to the trust account of the applicant’s solicitors, to be held as security for any costs awarded in the respondent’s favour.
  12. Had the agreement been duly performed by the applicant, she would have had possession of the house for a period of 12 months and would have received, in net terms a total of approximately $274,000.[4]  Therefore if the house was worth, say, $1,200,000 as at the date of the agreement, the applicant would have received most of the “equity” of approximately $419,000[5] which the parties then enjoyed in the property.  Further, the Factotum debt of approximately $120,000, although owed by both parties, had been incurred for her benefit.
  13. According to the agreement, the house and the mortgage debts upon it were the only “joint property, financial resources and liabilities” of the parties.  The agreement provided, in effect, that each party was to retain his or her own separate assets and liabilities.

The issues at the trial

  1. The applicant resisted the respondent’s claim upon several bases.  She alleged that the agreement was unenforceable against her because it was made at a time when she was suffering psychological disorders which were known to the respondent and by which she was unable to fully comprehend the meaning and effect of the agreement.  She alleged that the agreement was procured by conduct of the respondent in the nature of “manipulation, harassment, stress, emotional pressure and conflict” created by the respondent.[6]  She further alleged that her execution of the deed was vitiated by the circumstance that the respondent’s solicitor had previously acted for both parties and that the solicitor’s presence at the meeting where the agreement was made caused her significant “worry, anxiety and distress”.[7]  Upon those same bases, she claimed, in the alternative, that the agreement was voidable at her election and counterclaimed for a declaration to that effect.  The applicant further pleaded that the respondent had repudiated the agreement by placing or allowing a caveat to be placed over the house.  By her pleading, she purported to accept that repudiation and to terminate the agreement.
  2. Each of those allegations was rejected by the trial judge.  There is now no attempt to challenge his findings as to any of those defences.  The present application and more particularly the merits of the proposed appeal must be considered upon the premise of the correctness of those findings.
  3. The applicant then pleaded that the agreement was not a recognised agreement pursuant to s 266, for which there were several reasons advanced by the pleading, each of which was rejected by the trial judge.  All but one of those need not be considered here.  What is now relevant is the applicant’s case that the agreement did not contain a statement of significant liabilities, because it omitted a liability which was said to be owed to the applicant’s mother.  In a particular to paragraph 40a of her pleading, the applicant described this as:

“The debt owed jointly by the Plaintiff and the Defendant to the parents of the Defendant in the sum of at least $447,951.17 …”.[8]

  1. An application to apply for a property adjustment order could not be made if this was a recognised agreement as defined in s 266, which is as follows:

“266Meaning of recognised agreement

  1. A recognised agreement of de facto partners is a cohabitation or separation agreement of the de facto partners that—
  1. is a written agreement; and
  1. is signed by the de facto partners and witnessed by a justice of the peace (qualified) or solicitor; and
  1. contains a statement of all significant property, financial resources and liabilities of each de facto partner when the de facto partner signs the agreement.
  1. Whether all significant property, financial resources and liabilities of a de facto partner are stated depends on whether the value of a property, financial resource or liability of the de facto partner that is not stated is significant given the total value of the de facto partner’s stated property, financial resources and liabilities.”
  1. His Honour rejected a submission for the applicant that the effect of s 266 was to require the parties to include in their agreement valuations of all relevant property, financial resources and liabilities.  He correctly held that the reference in s 266(2) to “value of a property, financial resource or liability” defined the criterion of significance for the purposes of s 266(1)(c), rather than requiring that value to be stated in the agreement.
  2. His Honour then said:[9]

“Turning to the allegation of the debt jointly owed by the plaintiff and defendant to the defendant’s parents in the sum of $447,951.17, I note that if the proposition [that this liability should have been included] be correct it would have been a matter for disclosure, not only by the plaintiff but also by the defendant, and on the face of the separation agreement it was disclosed by neither.”

It is submitted for the applicant that this revealed a legal error by the trial judge.  It is said that s 266 did not impose any duty of disclosure upon either or both of the parties.  Rather, by s 266(1)(c), it prescribed an essential element of a recognised agreement, namely the inclusion of a statement of all significant property, financial resources and liabilities of each de facto partner.  It is argued that whether a party knows of an omitted item of property, financial resource or liability is irrelevant.  It is the mere noninclusion of such an item which has the legal consequence that the agreement, although contractually enforceable, is not a recognised agreement as defined under s 266.

  1. The applicant’s argument as to the proper interpretation of s 266, which does not appear to be now contested, conforms with the language of the provision.  There is no indication within s 266 or elsewhere of a qualification to the effect that a party who knows of the existence of a relevant item will be unable to rely on its omission to dispute the efficacy of the agreement as a recognized agreement.  Section 266(1)(c) has no analogue in another jurisdiction and the court has been referred to no authority on the present question.  In my view the applicant’s argument should be accepted.
  2. It must be said that it is not plain that his Honour ultimately reached a different view.  Rather he reasoned that because the alleged debt was not one which was owed by each of the parties, rather than by the applicant alone, the applicant had not proved the particular omission which she had pleaded.  The respondent’s evidence was that he had no knowledge of this debt until the allegation had been pleaded.  His Honour found that the respondent was not a borrower in this respect.
  3. His Honour continued:[10]

“The upshot is there is simply no evidence that the plaintiff owed the debt pleaded, from which it follows there was no failure to state that alleged debt on his part.  The debt alleged is said to be a joint one.  That has not been made out.”

  1. The applicant’s challenge to the judgment is therefore upon the basis that his Honour should have considered an alternative and unpleaded case, namely that the debt was owed by the applicant alone.  If that debt existed in fact, then its noninclusion would have had the consequence that this was not a recognised agreement under s 266.
  2. After discussing some of the evidence as to whether there was such a debt owed by the applicant alone, his Honour stopped short of making a finding of fact on that question, one way or the other.  He said:[11]

“On the face of it there was a failure to disclose on the defendant’s part relating to a loan that appears to have been solely for her benefit, or at least to her benefit through her business.  But that is not the subject of a pleaded complaint.

It may very well be that the defendant’s parents provided very significant financial assistance to her in the conduct of her business, particularly during the era when it started to fail with the onset of her psychological disorders, in combination with other financial difficulties.  It may well be [that] the loan was mentioned in the course of the settlement negotiations that occurred on the day the settlement agreement was reached.  For example, the defendant recalls that during the settlement conference her mother made the comment that she would not be getting her money back.  However, the specific complaint raised in the pleadings must obviously fail given the state of the evidence on the topic.”

My initial impression of that part of the judgment was that his Honour had accepted that there had been such a loan made to the applicant.  However my concluded view is that there was no such finding.  At least because the pleaded case was that the debt was jointly owed, it appears that his Honour considered that it was unnecessary to answer the question.

The present application for an extension of time

  1. As already noted, the applicant first sought to appeal against this judgment by an application for an extension of time in which to appeal which was filed in July 2013 but which was not dismissed until 27 November 2015.  That passage of time is largely explained by the applicant’s bankruptcy and by her poor mental health.  The applicant having become bankrupt in November 2013, her trustee in bankruptcy informed the Court of Appeal registry in February 2014 that in the absence of any funding for the prosecution of her application, it would be abandoned.  Subsequently the applicant sought to have her bankruptcy annulled.  Although that ultimately occurred, she was still an undischarged bankrupt when this court dismissed that application for an extension of time.  In her reasons for dismissing that application, the President described its history as follows:

“The progression of the application for an extension of time has been very slow since its filing over two years ago.  It has involved many extensions of time to the applicant for the filing of her material and she has certainly been extremely dilatory in pursuing the application, in part because of her poor state of mental health.  She has at times been selfrepresented and at other times represented by lawyers.”

  1. It should be noted that the applicant’s proposed ground of appeal in her present application was not within her appeal as it was proposed by the 2013 application.  That is not fatal to her present application.  But her proposed ground of appeal has not been inspired by the discovery of any fact which has only recently emerged.
  2. The present application for an extension of time, in the terms in which it was filed on 28 April 2016, sought leave to appeal upon a wider basis than is now argued.  In the application as filed, the proposed grounds of appeal were that the trial judge erred by failing to grant an adjournment of the trial and appoint a litigation guardian for the applicant and that he further erred by finding that the agreement was enforceable or alternatively by “refusing to set it aside and to make a property adjustment under s 286 of the Property Law Act 1974.”  This explains why much of the evidence in the applicant’s affidavit which was filed with this application is no longer relevant.  But that affidavit remains relevant by further explaining the passage of time from the judgment of the trial judge until the filing of this application.  It demonstrates that the applicant endured poor mental health during that period.
  3. She was hospitalised in May 2013 and then released under the care of Mental Health Queensland before filing her original application for an extension of time.
  4. She left the subject house on 26 July 2013, having at that time no money.  She moved to her sister’s house and was under her care.  She was depressed and on heavy medication.  She was again hospitalised in October 2013.  Her former solicitor obtained a default judgment against her in November 2013 which, she says, exacerbated her depression.  On 14 November 2013, she filed her own petition for bankruptcy.
  5. According to a report in March 2014 by her treating psychiatrist, over the previous year she had had problems with the excessive use of a prescription drug and a tranquilising agent.  Subsequently her health improved and according to another report of the same psychiatrist, this time dated in October 2015, the applicant had been stable since March 2015 and capable of providing clear instructions to her lawyers.  But she is still under the care of this psychiatrist and other health care professionals.
  6. Clearly she was unable to afford her own legal representation although she did have the assistance of a lawyer for a period during 2015.  Her present solicitor was retained in May 2015, by which point the applicant had recovered sufficiently to obtain casual employment.
  7. When she applied for the annulment of her bankruptcy, Jarrett FCJ found that the applicant had been incapable of committing an act of bankruptcy at the time she presented her petition because she was incapable of forming the requisite intent.
  8. In summary there is a considerable body of evidence which explains why the applicant did not progress her challenge to the 2013 judgment.  The evidence is consistent with the comments of the President when dismissing the first application.  This is not a case where a litigant has been able but not willing to prosecute a proceeding.
  9. It is, of course, also necessary to consider the position of the respondent.  The existence of a time limit for an appeal is a recognition of the desirability of finality in the resolution of disputes.[12]  There is the further consideration that this agreement has now been fully performed and the respondent has in all respects been the sole owner of the property since April 2014.  If an extension of time were granted and the appeal allowed, there would be a need for further litigation between the parties.  The applicant’s counsel agrees that in that event, the application for a property adjustment order would have to be remitted to the Trial Division for a further trial.  Those circumstances are not of themselves fatal to an extension of time but they are adverse to the applicant’s case.

The merits of the proposed appeal

  1. The applicant’s argument relies upon two pieces of evidence as demonstrating that the trial judge ought to have found that she was significantly indebted to her parents.
  2. The first is a document which was described as “[s]chedule of amount outstanding to [the applicant’s] parents as at 29 April 2008.”  The document was given that description in the index to a bundle of documents which was tendered at the commencement of the trial by counsel for the plaintiff (ie the present respondent).  It is a sixpage list of transactions covering a period from 2 January 1998 until 22 April 2008 and containing a “subtotal” of $447,951.70.  Each page is headed “monies owing”.  The applicant’s argument is that this was evidence which proved the debt which she had pleaded.
  3. This document was not considered in the trial judge’s reasons.  That is understandable when the basis upon which his Honour received the document is understood.  When the respondent’s counsel tendered this trial bundle, counsel said:

“There is also … a bundle of documents … [t]hese have been agreed to be tendered as evidence at the outset.  I can also hand up two copies of these again, one for the record and one for your Honour to use as your Honour considers.”

The trial judge asked both counsel whether the parties consented to the bundle being admitted as an exhibit and each answered in the affirmative.  His Honour then said:

“My experience … has been … that when a compendious document is tendered at the start by consent it doesn’t always transpire that all of the documents turn out to be relevant.  Often when documents are tendered as one goes you can be sure one way or the other whether they are relevant.  I intend to accept it as an exhibit … with this caveat.  If by the end of addresses neither party has at any stage referred me to a particular document within this exhibit, I will not have regard to it because you have not identified it as relevant.”

The applicant’s then counsel said to his Honour “that is a fair enough course”.  The respondent’s counsel said “I am not suggesting you read all the documents, your Honour, by any stretch”.

  1. On one view of some of the applicant’s oral evidence, it could be thought that she had referred to this sixpage schedule.  However that was apparently not the view of her trial counsel when regard is had to this exchange in the course of his final address:

“HIS HONOUR:  So in paragraph 40 there’s some matters listed at page 9 of the pleadings.  Let’s look at paragraph A where it says it did not contain certain things.  The first is the debt owed jointly by the plaintiff and defendant to the parents in the sum of at least $447,951.17 was not included.

MR WRIGHT:  Yes, your Honour.

HIS HONOUR:  What evidence is there that such a debt was owed jointly by the plaintiff and the defendant?

MR WRIGHT:  The only – the only evidence that was led in that regard, your Honour, was by the defendant in oral examination and crossexamination.  It was tested in crossexamination, but there’s no documents to effect the existence of that.

HIS HONOUR:  In fact, she seemed to concede in crossexamination that she didn’t have a memory of the detail of it.

MR WRIGHT:  No.  There was mention of a schedule, but no actual loan agreement or anything that evidences it in that way.

HIS HONOUR:  She did say, did she not, that at one point that it was a loan to [the applicant’s company].

MR WRIGHT:  Yes, your Honour.  Well, I think that on crossexamination she said that it was a loan to [that company] in part and it was a loan for something of the plaintiff’s.  That was not specified.

HIS HONOUR:  I mean, it’s a very big sum.  One would have an expectation that some evidence of substance might have been adduced in support of such a substantial amount of money.  Is there any documentary evidence at all about it?

MR WRIGHT:  In evidence no, your Honour.”

  1. What is clear is that despite this document being within the bundle which was tendered in the plaintiff’s case, each side conducted the trial on the understanding that the present applicant had to prove the existence of the liability.  What might have appeared as a concession, from the inclusion of the document in the tendered bundle, was negated by the conduct of the trial.
  2. The origin of this document was not explained.  It was not demonstrated to have been created by someone with reference to relevant accounts and records.  Importantly it was not identified, let alone proved as reliable, by the applicant’s own evidence.  And as I will discuss,[13] the document is inconsistent with the pleaded allegation which it may have inspired, namely that the applicant’s mother had lent something of the order of $447,000 to the applicant.  In that way, the document was adverse to the applicant’s case.  Although the trial judge was not bound to consider it, the document, as part of the evidence, could be considered by this court on an appeal.
  3. The second piece of evidence which founds the present application is another document which was within the trial bundle, namely a letter from the respondent’s solicitors to the applicant dated 15 April 2008.  The letter proposed that the parties refinance the mortgage which then existed over the house in order to fund the repayment of some of the applicant’s creditors and, at the same time, protect the respondent’s interests by a recognized agreement under s 266.  The letter set out the solicitors’ instructions as to the parties’ relevant assets and liabilities, which included an amount of $100,000 described as a “Loan debt to [the applicant’s mother]” by the applicant.  The letter urged the applicant to obtain legal assistance and attend a proposed mediation.
  4. The letter was admissible against the respondent as an admission of the existence of a liability, in approximately that sum, as at April 2008.  At least if it was consistent with other evidence, it was probative of the fact of a liability which was in an amount of significance for the purposes of s 266.  But the trial judge was asked to determine the relevant factual question or questions without regard to this document.  It was a document which was ventilated in the course of the crossexamination of the respondent but not in a way which is presently relevant.  And the weight which could have been given to this piece of evidence was affected by the applicant’s own evidence which I will now discuss.

The applicant’s evidence about the debt

  1. Whilst it is clear that the applicant was not in a perfect psychological state at the time of her trial, it must now be assumed that she was able to give instructions to her lawyers and to give evidence when examined and crossexamined.  That is because she is not pursuing her challenge to the judgment upon the previously stated ground that her trial ought to have been adjourned for her mental state.
  2. The trial judge had the benefit of seeing her as she gave evidence over several days.  He found that neither party was an obviously dishonest witness and that “[o]f greater importance though was the defendant’s obvious inability to recall evidentiary detail.”  His Honour accepted that this was “to a large extent, a product of her psychological state in a historical sense”.  But he added that he “did not detect any indication [that] her psychological state interfered with the process of her actually giving evidence in any material way”.  Rather, “the substance of the problem lay in her difficulty in recalling past events reliably, doubtless because of the detrimental effect of her psychological disorders.”  The result, his Honour said, was an inability “to give reliable evidentiary detail in respect of material events, including matters of financial detail and, even more importantly, the events surrounding the making of the separation agreement.”  His Honour added:[14]

“It is unfortunate, given that disadvantage, that witnesses who may have assisted in providing more reliable evidentiary detail in support of her cause were not called.  That is particularly so in respect of those witnesses who might have assisted her cause in providing more reliable evidence of the events surrounding the property agreement with which this case is pivotally concerned.  Those witnesses were her then solicitor as well as her mother, each of whom, on the evidence, provided active assistance to her on the day.”

At another point of his judgment, he noted that the applicant’s mother, who did not give evidence, had been present for part of the trial.

  1. The applicant gave evidence of her deteriorating health during the course of the relationship.  In turn she attributed the downturn in her business to her poor health.  It was in that context, she said, that she received financial assistance from her parents.  But beyond that general statement, her evidence was unclear and indeed cast doubt upon her pleaded case.
  2. In her evidenceinchief there was first this evidence:

“I’ll just go back to a couple of things.  Were you aware of a loan – was there a loan between your parents and yourselves or [the respondent]?  Yes.

Can you tell me about that loan?--  It was a loan we got out when things were going a bit tough and [the respondent] did need some money as well and it was a loan we got from my parents on the sale of the unit at the Gold Coast.

So tell me about the unit at the Gold Coast.  How long did you – was that your parents’ or yours, or how long did you own it for?  It was [a company], which I was a director of, onethird director, Mum twothirds director.

MR SHEAFFE:  Well, I object, your Honour.  I don’t think this is in the pleading.  I just unless they’re referring to this item that’s not disclosed in paragraph 40(a)(i).  I don’t think – I think she was asked about a loan between [the applicant], [the respondent] and her parents.

HIS HONOUR:  Just prompt our memory, Mr Wright, is it in there somewhere?

MR WRIGHT:  It is, your Honour.  It is the debt jointly owned by the plaintiff and the defendant to the parents of the defendant in the sum of $447,951.17.

HIS HONOUR:  So it is that.

MR WRIGHT:  I beg your pardon?

HIS HONOUR:  It is the one that your opponent was thinking, so let’s keep going.

MR WRIGHT:  Thank you, your Honour.  So the balance I have just described, which is in the pleadings, how did that balance come to arise?  Can you explain to me the original debt, what was paid off, what it was that for?  No, I can’t properly explain it to you.  My mum was the one who did all of that because with Vicount Towers and money lent to my brother and the money that she – that’s the first time I had seen that – all I can say is that Mum is the only person that can answer how that came about, the debt.

So when you say the first time you knew about it, what do you mean, I’m sorry?  Oh, what I mean is that I hadn’t – it wasn’t me who actually did the dividing up of what was owed to Mum and Dad.  It was my mother.  Not me.

So this one is a loan that’s evidenced by-----

MR SHEAFFE:  Don’t lead.

MR WRIGHT:  Okay.  Thank you.  Where is the evidence for what this loan is about?  Is there a document?  Yes, my mother has a document.

Okay?  My mother is not present today.”

  1. On the following day of the trial, still in examinationinchief, she said at one point that she prepared the statement of assets and liabilities, which was used in the 2009 agreement, with the help of a friend.  But subsequently in her examinationinchief, she said that it was her mother who “went through all of my paperwork and did it [the preparation of the statement of assets and liabilities] herself.”  The applicant was then asked whether on the day of the agreement, she was satisfied that the statement “reflected what those liabilities were” and answered “Yes”.  That evidence is significant in at least two ways.  The first is that it shows that the applicant was aware of the content of the schedules of assets and liabilities in the agreement.  It was not the case that the schedules had been prepared without reference to her and she had not read them.  Consequently the omission of any reference to this debt is some evidence of the nonexistence of the liability, because the applicant agreed that the schedules were an accurate statement of the parties’ positions.  Secondly, the applicant’s mother, the suggested creditor, did not include this as a liability within the “paperwork” which she prepared.  And as the trial judge remarked, the applicant’s mother was not called as a witness.
  2. A little further in her examinationinchief was this evidence:

“There’s some mention about – and we started to talk about it yesterday, a debt, and you were having difficulty but can you remember anything about the debt that you owed to your parents?  There was a balance of some 447-----

MR SHEAFFE:  Don’t lead.

MR WRIGHT:  Okay.  There was a debt to your parents-----?--  I know the exact, it’s $447,000.

And what was that for?--  That was for money my parents had put into the business to prop it up.

And that was borrowed by you or by you and [the respondent]?--  [The respondent] was with me at the time, so yes, it was.  He knew about the debt.

But was the loan to you or to you and [the respondent], to you personally?--  To me personally, but money was given out of it to [the respondent].

And so was that debt ever paid back up until the time of the settlement agreement?--  No.

Did you ever discuss the debt with [the respondent]?--  Yes, I did.

What did you tell [the respondent]?--  That Mum and Dad have propped up the business and that we have to get some money back to them.

So the money from your parents, it was used for what purpose?  Do you know what the original balance was?--  No, I’m sorry.

Okay.  So the amount that was outstanding at the time of the settlement agreement, was that reflected at all in any of the statements that you’ve seen in the agreement?--  All I can tell you is I know there was $477,000 that Mum had told me to prop up the business while I wasn’t well, while the business was running not as proficiently as what it was when I was better, and that’s the only reason I spoke to [the respondent].  I said, ‘I’m unwell, [the respondent].  I can’t go to work.  I can’t make money.  I have to get money off Mum and Dad.’

So when told [the respondent] about you’re receiving this money, when was that?--  Year-----

Was it the year that – the terrible year of 2008?  Did it happen at that time or was it before that?--  It would have been about, yeah, around 2/7/08.  Yes, definitely.

And after that did you mention it to [the respondent] again?--  Yes, I did.  I mentioned it to him constantly.

What would you say when you spoke to him about it?--  ‘We have to get this money back to Mum and Dad’.

And-----?--  “You caused where I am, [the respondent], so – I’m running at a loss in my company because of you and I’ve had to borrow parents – money from my parents and they’re pensioners that are to be paid back.”

  1. The applicant then gave evidence that on the date of the agreement, her mother raised the subject of the funds which she had provided and said at some time that “she [her mother] wasn’t getting her money back.”  The applicant was asked if she had expected to see such a debt “reflected in the separation agreement” and she said that she had expected to do so because it was what she owed to her parents, adding that it was owed by both parties.
  2. In crossexamination the applicant was asked whether this amount of $447,000 “was a loan”, to which she answered “Yes”.  She was asked whether she was saying it was a liability in that amount to which she answered:  “Yes, my mother claims its $440,700”.[15]  There was then this evidence:

“Do you know anything about this, this loan?--  I do know that part of it was paid off.

Was it a loan?--  It was a loan of – it was money to prop up [the respondent’s] and my business.

All right?--  So I would call it a loan.

Can you describe it?  Can you describe it?  Was it made in one payment?--  I don’t know.  I’m sorry, I can’t recall.

Was it made in a number of payments, do you know?-- I’m sure my mother would have made a number of payments.

Do you know?--  I’m saying I’m sure.

Have you ever seen a document?--  Regarding the 447,000?

Regarding an original loan of moneys that were made?--  I saw a schedule of some sort but not a loan.

You say you saw a schedule.  Can I ask you whether or not any money transferred from your Mum to yourself and [the respondent]?--  The money transferred from my Mum to [my company].

So money was transferred from yourself to [your company]?  When was that money transferred?--  I wouldn’t have a clue.”

  1. A little further on in crossexamination she was asked whether she was saying “it’s a loan?” to which she answered:

“I’m assuming it’s a loan, that’s what I said.”

She was then asked who had given instructions for the pleading of this part of her case and she answered that her mother had done so, adding:

“To be honest, I don’t know about this loan.  I’m saying I may have seen a schedule.  I’m trying to explain to you.  … I’m assuming it’s a loan.”

  1. Within those passages, the applicant said more than once that her mother had contributed funds to support the business conducted by the applicant’s company.  When asked in crossexamination whether or not any money had been transferred by her mother to herself and the respondent, she said that the money transferred from her mother had been transferred to the company.  She explained that her mother had had to “take over the business [of that company] for quite a number of years”.
  2. An ASIC search of the company was within the tendered bundle.  It showed that the company had been incorporated in 1997 with the original directors being the applicant and her mother.  Her mother ceased to be a director in August 2007.  The applicant became the company’s sole director and shareholder, holding the three issued shares.  Her mother had previously held two of those three shares.  When it was suggested in crossexamination that she did not know much about this loan at all, she agreed saying that her mother was “my other director and at that time I wasn’t well”.  At that point she added “I’m sure it was after 2005 [that the loan was made]”.
  3. Therefore her evidence, taken as a whole, is at least equally consistent with a loan having been made, not to the parties or at least to the applicant, but instead to the company.  Further, the loan was made apparently at a time when the applicant’s mother was a director (and it may be inferred, the majority shareholder), adding to the likelihood that it was a loan made to the company.
  4. The amount of $447,000 which was pleaded in the Defence was apparently derived from the schedule which was within the trial bundle.  But that schedule detailed payments totalling that amount over a period beginning in 1998.  The applicant was “sure” that the loan was made after 2005.  If so, there is no evidence that it was of the order of $447,000, and the schedule indicates otherwise.
  5. On the schedule, in handwriting on the first page appear the words: “From [the company]” and the company’s name appears on the top of the following pages.  Many of the transactions appear to be referable to the company’s business.  Many and perhaps most of the transactions, even from 2005, are not described in a way which is referable to a loan to the applicant from the applicant’s mother.  Notably there are some items, but only two in number and totalling $750, which are described as “loan from Mum”.
  6. Consequently the applicant’s oral evidence did not prove that there was a debt owing by her to her mother as at January 2009.  Her evidence was at least equally consistent with the loan being to the company rather than to her.  And her evidence acknowledged the possibility that some amount had been repaid but she could not even approximate the sum which had been repaid.
  7. But most importantly, her evidence did not prove even an approximate amount which was lent.  The only purported quantification of the loan was by her reference to what was in her pleading.  When it is seen that the amount which was pleaded was derived from the schedule in the tender bundle, and the content of the schedule is understood, the falsity of the pleaded case is apparent.  The amount of the loans from her mother, and in turn the amount of any remaining liability as at January 2009, remained unknown.

Conclusions and orders

  1. It follows that if the applicant were granted an extension of time in which to appeal, on a rehearing in his court, the evidence at the trial, including the two documents at the forefront of the applicant’s argument, could not support a finding that a significant liability was omitted from the agreement.  That conclusion is fortified by the appellant’s failure to include a reference to any such debt in the agreement and by her mother, who is said to have prepared the list of assets and liabilities, not including such a reference.
  2. The proposed appeal, which is now confined to the single ground that the omission of a liability meant that this was not a recognised agreement, has no apparent merit.  It is essentially for that reason that I would refuse this application, although there are other discretionary considerations which are adverse to the applicant’s case as I have discussed.
  3. I would order as follows:
  1. Refuse the application filed 28 April 2016.
  2. Order the applicant to pay the respondent’s costs of the application.
  1. ATKINSON J:  I agree with the orders proposed by Philip McMurdo JA and with his Honour’s reasons.

Footnotes

[1] The power to extend being conferred by s 288(2).

[2] TAG v CBS [2015] QCA 246.

[3] Creswick v Creswick & Ors; Tabtill Pty Ltd & Ors v Creswick [2011] QCA 66 at [15].

[4] The sum of $176,455.58 from the refinance plus $150,000 less $52,000.

[5] $1,200,000 less amounts of the mortgages totalling approximately $781,000.

[6] Amended Defence, paragraph 7.

[7] Amended Defence, paragraph 32.

[8] The applicant’s father died in August 2007 and the case was conducted upon the basis that this was, in January 2009, a debt owing to the applicant’s mother.

[9] GAC v CNT [2013] QSC 127, 1-13.

[10] [2013] QSC 127, 1-16.

[11] [2013] QSC 127, 1-16.

[12] D’OrtaEkenaike v Victoria Legal Aid (2005) 223 CLR 1, 17 [35]; [2005] HCA 12.

[13] See paragraphs [64]-[65] below.

[14] [2013] QSC 127, 1-11.

[15] Rather than $447,000.

Close

Editorial Notes

  • Published Case Name:

    TAG v CBS

  • Shortened Case Name:

    TAG v CBS

  • MNC:

    [2016] QCA 318

  • Court:

    QCA

  • Judge(s):

    Morrison JA, Philip McMurdo JA, Atkinson J

  • Date:

    29 Nov 2016

  • White Star Case:

    Yes

Litigation History

Event Citation or File Date Notes
Primary Judgment [2013] QSC 127 15 Apr 2013 -
Notice of Appeal Filed File Number: Appeal 4275/16 28 Apr 2016 -
Appeal Determined (QCA) [2016] QCA 318 29 Nov 2016 -

Appeal Status

{solid} Appeal Determined (QCA)