Theodore v Mistford Pty Ltd (No. 2)
[2002] QDC 296
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- Theodore v Mistford Pty Ltd (No. 2)[2002] QDC 296
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Theodore v Mistford Pty Ltd (No. 2)[2002] QDC 296
Theodore v Mistford Pty Ltd (No. 2)[2002] QDC 296
DISTRICT COURT OF QUEENSLAND
CITATION: | Theodore v. Mistford Pty Ltd & Ors (No. 2) [2002] QDC 296 | |
PARTIES: | MARIE MARGARET THEODORE (Plaintiff) And MISTFORD PTY LTD ACN 050 406 650(First Defendant) And MAX EGERTON VINES and VALERIE LYNETTE VINES(Second Defendants) And GLEN DAVID THEODORE(First Third Party) And MOBILE LAB PTY LTD ACN 074 680 194(Second Third Party) | |
FILE NO/S: | 147 of 1998 | |
DIVISION: | Civil | |
PROCEEDING: | Trial | |
ORIGINATING COURT: | District Court | |
DELIVERED ON: | 14 November 2002 | |
DELIVERED AT: | Maroochydore | |
HEARING DATE: | 15-16 October 2002 | |
JUDGE: | Judge J.M. Robertson | |
ORDER: | The plaintiff’s claim is dismissed with costs. On the counterclaim:
| |
CATCHWORDS: | DECLARATORY RELIEF – plaintiff seeks return of duplicate certificate of title lodged with defendants’ Solicitors by plaintiff’s son EQUITABLE RELIEF – defendants’ counterclaim alleging agreement by plaintiff to provide security for purchase of business EQUITABLE MORTGAGE – whether an equitable mortgage has to be in writing EQUITABLE ESTOPPEL – conduct of the plaintiff subsequent to completion FAILURE TO CALL WITNESS – where plaintiff fails to call son, Solicitor, Accountant and Bank Manager Cases cited: Theodore v. Mistford Pty Ltd & Ors [2001] QDC 212 Jones v. Dunkel (1959) 101 CLR 298 Payne v. Parker [1976] 1 NSWLR 191 RPS v. The Queen [2000] 168 ALR 729 Smith v. Samuels (1976) 12 SASR 573 Masters v. Cameron (1954) 91 CLR 353 Integrated Computer Services Pty Ltd v. Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] Adamson v. Hayes (1973) 130 CLR 276 Balaglow v. Konstandidis & Ors [2001] NSWCA 451 Walton Stores v. Maher (1988) 164 CLR 387 Statutes cited: Property Law Act, s. 11 Land Title Act 1994, s. 75(1) | |
COUNSEL: | M. Taylor (for the plaintiff) F.W. Redmond (for the first and second defendants) | |
SOLICITORS: | North Coast Law (for the plaintiff) Klar and Klar (for the first and second defendants) No appearance for the first and second third parties | |
- [2]The plaintiff’s claim is for declaratory relief. The plaintiff seeks an order for the return of a certificate of title to land registered in her name. The land is at Lot 55 Ballinger Road at Buderim (“the land”). On the 18th July 1996 the plaintiff’s son Glen David Theodore (the son who is also the first third party) lodged the certificate of title with Messrs Klar and Klar the defendant’s Solicitors. The plaintiff’s case is that the son had no authority from her to deal with the certificate in this way.
Background
- [3]The evidence establishes a number of facts which are not in dispute. On the 29th November 1995 the land was transferred to the plaintiff by her son and son-in-law (Peter Kew) for $40,000. The land had been transferred to the son and son-in-law on the 21st October 1994 for $56,000. On or about the 8th December 1995 the certificate of title was received by the plaintiff’s Solicitors who advised her that the deed would be held in security “until you instruct otherwise”. It is not disputed that on the 18th July 1996, (obviously prior to delivery to Klar and Klar), the plaintiff gave written authority to her Solicitors to release the Title Deed to the son.
- [4]The second defendants were directors of the first defendant which in 1996 operated a business known as Air Monitoring Services (the business) which essentially provided atmospheric testing services on behalf of various clients primarily to identify the existence of asbestos in building sites and other locations. In May 1996 the male defendant (Mr Vines) was approached by the son who expressed an interest in purchasing the business. Negotiations took place subsequently between the son and Mr Peter Klar Solicitor on behalf of the defendants. These negotiations were extensive and ultimately the proposal was for an instalment contract whereby the son’s company (the second third party) would complete by an initial payment, and the balance to be paid off over a specified period, such balance to be secured by a guarantee supported by an unregistered mortgage in favour of the defendants over the land.
- [5]A contract was prepared and executed and completed on the same day namely the 22nd July 1996. It forms part of Exhibit 8, and Exhibit 6.
- [6]On the 5th July 1996 the son sent a facsimile to Mr Klar advising:
“PROGRESS REPORT.
- (1)Monday 18 July 19.00am appointment with ANZ Bank to gain approval for the rework proposal which satisfies my mother’s accountants. Written confirmation of approval to be faxed to your office.
- (2)As new proposal involves the mortgage being taken over vacant land documentation will take three to four days. I regret causing this delay however I believe that it will be in both our interests to ensure appropriate finance is put in place”.
- [7]On 12 July 1996 Mr. Theodore advised the Defendants’ Solicitors that he was ready to proceed with the purchase of the business having borrowed $30,000.00 from the plaintiff and that he wanted to utilise $20,000.00 of that money for a deposit for the purchase of the business. At this time, Mr. Klar advised Mr. Theodore that there would be a requirement to lodge the Title Deed to the land with the Defendants’ Solicitors.
- [8]On 18 July 1996 Mr. Theodore attended the plaintiffs’ Solicitors office and provided them with a handwritten authority evidently composed by Mr. Theodore and executed by the plaintiff authorising the plaintiffs’ Solicitors to release the Title Deed to him. The authority signed by the plaintiff was only disclosed by the plaintiff after about three and a half years of concerted attempts to have the plaintiff provide complete disclosure. On the same day that Mr. Theodore obtained possession of the Title Deed, he deposited the certificate of title with the defendant’s solicitors and obtained a receipt.
- [9]At the time of settlement neither Mr Klar (nor the defendants) had had any direct dealings with the plaintiff. Mr Klar had kept the defendants closely informed of the negotiations with the son, and had given them advice about the various options and proposals. Prior to settlement on the 22nd July 1996, Mr Klar had advised the defendants that the holding of a certificate of title was not sufficient security for the payment of the balance of purchase price without the signed guarantee and mortgage. Notwithstanding this advice, the defendants wanted to settle urgently and instructed Mr Klar to proceed.
- [10]At or just prior to settlement, Mr Klar was advised by the son of the residential address of the land which he then wrote into the contract. At or soon after settlement Mr Klar gave the son copies of the deed of guarantee and the mortgage requesting that he have them signed by his mother. In his letter to the defendants on the 29th July 1996 (part of Exhibit 8) Mr Klar said in part:
“We have now forwarded the form of Guarantee and Mortgage for execution by Mrs. M.M. Theodore as well as the necessary Stamp Duty declarations required to attend to the stamping of the Contract and Mortgage on behalf of the Purchaser. Once those aspects of the matter have been attended to we will then retain the unregistered Bill of Mortgage and Title Deed in safe custody on your behalf.”
- [11]Mr Klar was adamant that at no time did he actually forward the documents to the plaintiff, rather they were handed to the son on the 22nd July 1996. Certainly, in the vast documentation placed in evidence there is no letter from Mr Klar to the plaintiff prior to the 9th August 1996 enclosing documents. The plaintiff says she did receive a letter from Mr Klar prior to seeing her Solicitor on the 9th August 1996, but I am satisfied that she is mistaken in that recollection.
- [12]In one of the many earlier interlocutory hearings I was asked to make orders in relation to the disclosure by the plaintiff of a number of documents including a file memo prepared by Mr Taylor (the Plaintiff’s Solicitor) relating to his conferring with her on the 9th August 1996. In my judgment delivered the 17th September 2002 (Theodore v. Mistford Pty Ltd & Ors [2001] QDC 212) I held that this memo and some other documents were privileged. During the trial, on the basis of improper purpose or, alternatively waiver in the course of the plaintiff’s evidence at trial, I revised the earlier ruling and the file memo is now Exhibit 9 in the proceedings. The memo reads:
“Attendance on Marie Theodore going over terms of a Deed of Guarantee and a mortgage to be granted. This is for the obligations of her son Glenn who is buying a business which is involved in also Environmental Testing. I pointed out the difficulties with a mortgage and a guarantee in that she was on the line and that on reading the documents it was not even clear what the terms were since the documents referred to a contract and she had not been given that. Advised at the very least that we should get a copy of the contract and see what she was letting herself in for and also perhaps consider taking a Bill of Sale over the business so that in the event that the business goes bad and the guarantee is used she can at least rank ahead of ordinary creditors in the business. She agrees with this approach.”
- [13]I infer therefore that the son had delivered the deed of guarantee and mortgage to the plaintiff but not the contract. On the 12th August 1996 Mr Taylor wrote to Mr Klar in these terms (part of Exhibit 8):
“We act for Marie Margaret Theodore who has asked us to consider the terms of a Deed of Guarantee and Indemnity and a related Mortgage. We understand that these documents are being granted in support of a loan by way of Vendor finance being given to her son Glenn Theodore by your above clients.
The documentation refers to the contract for its terms and unfortunately our client does not have access to the contract. Please supply a copy of the contract to enable us to advise our client as to her responsibilities and liabilities.”
- [14]The contract was forwarded by Mr Klar on the 23rd September 1996.
The plaintiff’s evidence
- [15]The plaintiff was the only witness in her case. Her evidence is in short compass. She said that she was aware in 1996 of the son’s interest in the business. She authorised the son to obtain the title deed from Mr Taylor. I find that this occurred on the 18th July 1996. This is the date of the hand written authority signed by her and is the same date that the title deed was delivered to Mr Klar by the son. The plaintiff strenuously denies any prior knowledge that her son was going to deliver the deed to Mr Klar, or any authority from her for him to deal with the deed in this way. This is the essential factual issue in the case. The plaint (after referring to the purchase of the business by the son, and some terms in the security documentation) states:
- “5.To obtain funds for the purchase of the business Glen Joseph Theodore requested the Plaintiff that she grant security over the land to secure a loan which Glen Joseph Theodore proposed to obtain from the ANZ Bank at Maroochydore.
- 6.In or about July 1996, and prior to 22 July, the Plaintiff gave to Glen Joseph Theodore the duplicate certificate of title pertaining to the land (“the title deed”), for the purpose of delivering the title deed to the ANZ Bank at Maroochydore as security for the proposed loan referred to in paragraph 5 hereof.”
- [16]In her evidence at trial, the plaintiff departed somewhat from paragraph 6. She says that she told the son that she would not fund the purchase of the business, however she would consider providing security by way of the deed to the land to the ANZ Bank, if the Bank was prepared to lend him the money to buy the business. She says that she and the son visited her long term manager, Mr Costello at the ANZ Bank Maroochydore, and saw him together for about 25 minutes. An officer from the Bank was called to produce any relevant bank documentation. No diary note of the appointment was produced, however the Bank Officer did say that could happen. Mr Costello was not called as a witness. The plaintiff says that he is retired. The plaintiff was not extensively cross-examined about what she says occurred at this meeting. The plaintiff’s description of what occurred is (p 8-9T):
“Well, Glen explained and showed them what he had about the business, whatever. I can’t remember what it was, but he showed them the business requisites and said that he needed – and they were selling it for $60,000 and I asked the ANZ manager, would he lend Glen that amount of money to buy that business, and he said, no. He said he wouldn’t buy that business because it was not a viable business. And I had already gone to see my accountant and asked her and she said that same thing. So, there was no way that I was going to do anything to help Glen get that business but, being a mother, I relented and lent him twenty thousand to go settle the business.
If we could just go back to the ANZ Bank when you went to see Mr Costello. Who was the loan – whose name was the loan to be in?—Glen’s.
All right. And your block of land was to be used as security?—Yes.
That was the proposition you were putting to them?—Yes.
And they refused to make that loan?—They did.”
- [17]It is not clear what documents were produced to Mr Costello by the son, and the plaintiff was not questioned as to what she recalled about the documents.
- [18]Although in that passage the plaintiff says that she had previously seen her accountant whose advice was similar to Mr Costello, immediately afterwards in answers to questions from her own counsel she said that she saw the accountant after the Bank, and with the son. She says that after the meeting with the accountant (which was on the same day as the meeting with Mr Costello) she and the son returned to her home. She had the title deed and she says “it was home, and I had forgotten it was there”. She told Mr Taylor (her counsel) that the son had gone down to Brisbane to settle, after she had agreed to lend him $20,000 for the business and $10,000 for the van “a day, couple of days” after the meeting with the Bank.
- [19]I am satisfied that the visit to the Bank and to the accountant occurred on the same day as the deed was collected by the son and delivered to Mr Klar, that is the 18th July 1996. As I have noted, the Bank Manager was not called, nor was the accountant, and nor was the son. On the evidence, all are at least accessible by the plaintiff and in respect of the plaintiff’s failure to call these witnesses, Mr Redmond has argued Jones v. Dunkel (1959) 101 CLR 299 which I will deal with later. It follows that the son must have made at least two trips to Brisbane to see Mr Klar after the meetings with Mr Costello and the accountant, that is on the 18th July 1996 to deliver the title deed, and on the 22nd July 1996 to pay the balance of deposit and take possession of the business after signing the contract. I infer therefore that the plaintiff’s agreement to lend him $30,000 ($20,000 of which was for the business) occurred between the 18th July 1996 and the 22nd July 1996. Her evidence is that she did not appreciate that the son had taken the title deed until on or shortly after the 22nd July 1996. Her evidence on this point is:
“— When he came back, he said that the solicitors had – Mr Vines can’t remember what he said, but the gist of it was that 20,000 was not enough, and that they needed more security, and so he told me that he handed over my deed as security and I was horrified, and said, “Why did you do that? I didn’t want you to do that”, and he said, “Oh, don’t worry. It was – it’s only held as a naked title.” And I didn’t know what a naked title meant. I assumed that I wasn’t going to have to hand it over.
And did he talk to you about any forms of mortgage or guarantee?—No. He said I wouldn’t have – and I said I wouldn’t take a guarantee, because I had been told by my late husband never to give a guarantee, so I was very adamant that I was not going to be a guarantor, and I told him that there was no way I was going to sign my deed over, but – and he assured me that that wouldn’t happen.
And then what happened next?—I – he went to the business. He got the business.
Yes. Well, did you receive any information or documentation?—I received a latter from Klar and Klar asking me to sign a mortgage – a guaranteed mortgage document, and I went to see my solicitor.
All right. Now, how long after the day that your son, Glen, came home did you receive that mortgage documentation from -----?—Oh, I can’t remember.
-----Klar and Klar?—A few weeks.”
- [20]As I have noted, there is no evidence to support her recollection that she received a letter from Mr Klar prior to her visit to Mr Taylor on the 9th August 1996.
- [21]She says that she had no intention of signing the security documents, and she went to see Mr Taylor for advice. I find that she went to see him on the 9th August 1996. Mr Taylor’s recollection of the meeting is recorded in Exhibit 9.
- [22]The plaintiff’s recollection of what occurred is somewhat vague which is not surprising. However she does recall a number of matters which are of importance. She recalls that she did not have a copy of the contract when she went to see Mr Taylor. This recollection is supported by Mr Taylor who wrote to Mr Klar on the 12th August 1996 (part of Exhibit 8) in these terms:
“The documentation refers to the contract for its terms and unfortunately our client does not have access to the contract. Please supply a copy of the contract to enable us to advise our client as to her responsibilities and liabilities.”
- [23]She also says that she did tell Mr Taylor about the certificate of title. In cross-examination this exchange occurred (in reference to the 9th August meeting):
“So you told Mr Taylor about the certificate of title having been lodged with Klar and Klar at the same time that you went to see him about the deed of guarantee, mortgage?—Yes.
So what was Mr Taylor’s advice in relation to the certificate of title?—He – we decided that we wouldn’t give any written authorisation for the other party to use it, and then that we would sue the other party for the return of it.”
- [24]Given that she was “horrified” to learn (I find on or about the 22nd July) that the son had deposited the deed with Mr Klar without her authority, it would be expected that at her first meeting with Mr Taylor this topic would have been foremost in her mind. Exhibit 9 makes no reference to the certificate of title, nor does Mr Taylor’s letter of the 12th August 1996. Mr Taylor gave evidence in unusual circumstances. He did not give evidence for the plaintiff and again, this is the focus of a Jones v. Dunkel submission by Mr Redmond. When I made the rulings in relation to privilege which resulted in Exhibit 7 being tendered by Mr Redmond, the plaintiff insisted that Mr Taylor be called to formally prove the documents as they were from his files. His evidence is at pp. 91-94 of the transcript. As a result, Mr Redmond was not able to cross-examine Mr Taylor, but he was cross-examined by his own counsel (also Mr Taylor). This enabled Mr Taylor (the Solicitor) to make a long statement (p. 94T) in which he sought to explain to me why the plaintiff had delayed in making a demand for the return of the title deed. It is common ground that no formal demand for return of the title deed was made until Mr Taylor wrote to Mr Klar on the 25th November 1997 (part of Exhibit 8), i.e. some 15 months after the plaintiff had initially consulted the Solicitor. Given that her own evidence is that she was “horrified” when the son told her what he had done, obviously the delay in formally demanding the return of the title deed is a matter of some importance. The plaintiff’s explanation for the delay was unconvincing. In effect, she said she had been overseas. Mr Taylor (the Solicitor) swears that the plaintiff did not tell him about the title deed when she spoke to him on the 9th August 1996. He says (at page 94) that he did not know that Klar and Klar had the deed until their letter to him of the 13th March 1997. That letter (part of Exhibit 8) is in these terms:
“We refer to previous correspondence in this matter and in particular note that we are awaiting your response to our correspondence to you of the 23rd September last.
We advise that we already hold the duplicate Certificate of Title reference 18689094 registered in the name of your above client pending return of the executed Deeds of Guarantee and Indemnity and collateral mortgage documentation.
We await your advices.”
- [25]On the 17th March 1997 Mr Taylor responded (part of Exhibit 8) in these terms:
“We thank you for your letter of 13 March 1997.
Our client is not particularly keen to grant the Deed of Guarantee and Indemnity and the mortgage. Since Mr Theodore has been in possession of the business for some time your clients may consider it appropriate to waive those requirements if all the obligations are being met as scheduled.”
- [26]If indeed he did only then discover that Klar and Klar had the deed, a situation which he described in evidence as “a much more serious proposition altogether”; it is curious indeed that he would write such a letter given the plaintiff’s evidence that she never intended signing a guarantee, and the deed was given to Klar and Klar without her authority. Given the plaintiff’s position at that time, on her evidence, to say “our client is not particularly keen” etc. does not suggest any major concern or “horror” about the other Solicitors having the title deed. In that long passage at page 94, Mr Taylor seeks to explain this by saying that he spoke to the plaintiff on at least two occasions during 1997 including the time when she made a new Will in July 1997, and each time she said “Glen is sorting that out for me. He has promised to sort it out for me”. Because of the unusual way in which Mr Taylor came to give his evidence, Mr Redmond was prevented from testing this evidence. In my opinion, Mr Taylor’s explanation defies common sense and is unconvincing. His evidence and the conflict with the plaintiff is a significant determinative factor in my assessment of the reliability of the plaintiff’s evidence as to her knowledge of the son’s dealings with the deed.
- [27]The evidence establishes that the son defaulted almost immediately after settlement in that interest payments were invariably late. Mr Klar met with him on a number of occasions in an effort to resolve the issue; but the son’s promises (like most of his earlier promises) were never carried out. By mid-late 1997 he was in default.
The case for the defendants
- [28]The defendants allege essentially that in his dealings with Mr Klar on their behalf relating to security for the balance of the purchase price, the son was acting as agent of the plaintiff and with her authority. In their counterclaim filed the 17th June 1998, the defendants allege inter alia that the deposit of the title deed by the son with the plaintiff’s actual or ostensible authority created an equitable mortgage. If it is found that the son was not acting with the authority of the plaintiff, the defendants allege that she has by her conduct post 22nd July 1996 ratified the acts of the son and acquiesced in the delivery of the deed. The relief sought inter alia is dismissal of the plaintiff’s claim, specific performance of the equitable mortgage or damages in lieu of specific performance.
Jones v. Dunkel (1959) 101 CLR 298
- [29]The unexplained failure of a party to call witnesses, may, not must in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted the party’s case. The rule in Jones v. Dunkel is more readily applicable in cases such as where it is the party who fails to give evidence. It’s applicability where a party has failed to call witnesses is more problematical. In Cross on Evidence Australian Edition at paragraph 1215, the learned authors quote with approval the statement of Glass JA in Payne v. Parker [1976] 1 NSWLR 191 at 201-2 (CA) where His Honour by reference to this aspect of the rule said:
“The missing witness would be expected to be called by one party rather than the other, … is also described as existing where it would be natural for one party to produce the witness: Wigmore, par. 286, or the witness would be expected to be available to one party rather than the other or where the circumstances excuse one party from calling the witness but require the other party to call him, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him, or where the witness’ knowledge may be regarded as the knowledge of one party rather than the other, or where his absence should be regarded as adverse to the case of one party rather than the other. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary. If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied.” (footnotes omitted)
- [30]The general principle has recently been stated by the High Court in RPS v. The Queen [2000] 168 ALR 729 at 737:
“In a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in that party’s camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party’s case: Jones v Dunkel (1959) 101 CLR 298 at 312 per Windeyer J and that ‘where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstances that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.’”
- [31]Mr Redmond submits that the Court should draw the inference against the plaintiff in this case in relation to her failure to call the son, Mr Costello, the accountant, and Mr Taylor, the Solicitor.
Mr Costello and the Accountant
- [32]Both are available according to the plaintiff. In my view their evidence would have been unlikely, in all the circumstances, to have elucidated a matter of importance in this case. The real issue is the state of the plaintiff’s knowledge about the son’s dealing with the deed. As the evidence presently stands, the plaintiff and the son met with the bank manager and accountant before lunch on the 18th July 1996. Both advised against the purchase of the business, and Mr Costello would not fund it, even if the deed was provided as security. It is unlikely in those circumstances that anything would have been said by the son or the plaintiff that would have shed any light on his plans to deal with the deed as he did. Therefore, in relation to the evidence of these people it would not satisfy that aspect of the rule discussed by Glass JA in Payne v. Parker at 202:
“Under other formulations, the condition is made out when the witness is presumably able to put a true complexion on the facts … . I would think it insufficient to meet the requirements of the principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him.”
- [33]Insofar as Mr Redmond’s submission implies that, because of the absence of any diary note by Mr Costello, the plaintiff is being untruthful in saying that she did meet him, and the absence of Mr Costello therefore would lead me to an adverse inference as to the plaintiff’s credibility, I disagree. Indeed, there is some evidence from Mr Klar’s conversations with the son of an intention to approach the Bank.
Mr Taylor
- [34]Ordinarily, the rule in Jones v. Dunkel does not apply where the witness not called is the party’s Solicitor. This is so where privilege has not been waived: see cases referred to in Cross et al. at p. 1088. At the time I overruled the plaintiff’s claim for privilege, the plaintiff had completed her evidence, however Mr Taylor had not closed his case (p. 48-51T). As I have noted, Mr Taylor did give evidence in unusual circumstances and in the defendant’s case. Mr Redmond’s submission relates only to matters on which he did not give evidence. The difficulty in that submission is that it is not really possible for me to know with sufficient detail what other relevant evidence could have been given by Mr Taylor. It may well be that privilege may have been claimed and upheld in relation to this other evidence. I am not persuaded that the circumstances permit me to draw an adverse inference against the plaintiff because of her failure to call her Solicitor. As I have noted, the evidence he did give under cross-examination by his counsel did not assist the plaintiff.
Mr Glen Theodore
- [35]The onus of establishing unavailability is on the party against whom the rule operates: Smith v. Samuels (1976) 12 SASR 573. In her evidence in chief the plaintiff was asked no questions about the availability of her son. She was asked about his whereabouts by Mr Redmond:
“Thank you. When did you give instructions to commence these proceedings? They gave in May 1988?—Yes, well I think that was when we – Mr Taylor started the proceedings and it became that Glen was involved in then, I think, the other party decided to sue Glen then, at the same time, because his business had failed and he had gone away, so we didn’t know where he was.
Do you know where he is now?—Sometimes.
Well, today?—No.
Where was he the last time you know?—He was in Yandina.
All right, and he stays in touch with you?—We are very – we’re not communicating very well at the moment, Glen and I.
- [36]I am satisfied that he was available to the plaintiff to give evidence if she had been so advised. Indeed, when Mr Taylor saw the son on the 20th November 1997 Mr Taylor records that the son told him that the title deed was given to him by his mother and he (the son) passed it on to the other Solicitors but that she never agreed to guarantee or give a mortgage. There is also the evidence of Jeffrey Conroy a Solicitor who works for Mr Taylor. He was called by the defendants. He gave evidence of consulting with the son re business dispute on a number of occasions in 1997, and organising a valuation of the land during one of these visits. I am satisfied that the son’s evidence would have been most material to the central issue at trial. The failure to call him is unexplained. I infer therefore that the son’s evidence would not have assisted the plaintiff.
- [37]In the circumstances of this case, it follows that in assessing whether or not the plaintiff knew of the son’s intention to deal with the deed as he did, or whether or not by her subsequent conduct she acquiesced or ratified his actions, inferences adverse to the plaintiff can more readily be drawn, because of her unexplained failure to call the son.
The credibility of the plaintiff
- [38]I have already referred to the conflict between the evidence of the plaintiff and Mr Taylor, and to the adverse inferences drawn as a result of her failure to call the son.
- [39]The plaintiff impressed me as a highly intelligent, astute and alert witness. She was not in the least overborne by cross-examination despite her obvious physical difficulties resulting from her distressing condition. I do not think she is a liar, however I regret to say that on the balance of probabilities, I do not accept her evidence that she did not know of her son’s plans to deal with the deed as he did on the 18th July 1996. I think it more probable than not that at the time of purchase of the business by the son, she did act with her heart and not her head; and that she has now convinced herself that she did not give him authority to deal with the deed, when in fact she did. As well as the matters referred to above, I have noted the coincidence of events on the one day, that is the day the son obtained the title deed from Mr Taylor, went with the plaintiff to see the accountant and the bank manager and delivered the deed to Mr Klar in Brisbane. In my opinion, it is more probable than not that she was aware, after the failure to obtain finance, that the son was going to hand over the deed as security to enable him to complete the sale of the business.
- [40]Despite not having heard from the son, I am satisfied that he is manipulative and probably dishonest. However, the plaintiff I think, quite unconsciously, gave me an insight into her attitude to her son when she said this in answer to a question about a $140,000 overdraft to the son that she knew nothing about:
“So Glen was given a fair amount of latitude?—He wasn’t given a fair amount of latitude. He took a fair amount of latitude. Unfortunately, I acted with my heart and not my head in Glen’s direction.”
- [41]It is indeed regrettable that the son has involved her in this way, but I am satisfied that she knew he was going to use the deed as he did and at that time she did so to help him achieve his desire. If I am found to be wrong in that conclusion, I am nevertheless satisfied to the requisite standard that by her acts and omissions subsequent to the 22nd July 1996, she ratified or acquiesced in the son’s conduct. As she noted dryly during cross-examination in answer to a question from Mr Redmond:
“Parenthood is not an unalloyed bliss?—No no, it’s not at all. Next time I’m going to have cats.”
- [42]In reaching this conclusion, I am fortified by some other evidence that emerged in the cross-examination of the plaintiff, and in other evidence.
- [43]As I have noted, it was not until the 27th November 1997 that a demand was made on behalf of the plaintiff for a return of the deed. In the process of exhaustive and lengthy disclosure (the plaintiff submitted six lists of documents, and there were four applications to the Court to compel disclosure), it was ascertained that the plaintiff had made a new Will with Mr Taylor on the 22nd January 1998. In that Will she states:
“I wish to record that my son the said Glen Joseph Theodore is indebted to me in the sum of $60,000 and that this amount is to be repaid by him to my estate prior to any distribution in terms of this Will.”
- [44]The plaintiff explains that she had lent her son $60,000 for other reasons, and that the change to the Will had nothing to do with any realisation that at that point in time, not only had she lost $20,000 advanced to the son, but the land (then valued at $43,000) might also be in jeopardy. In light of all the other findings against the plaintiff, I am unable to accept this explanation. I think it is probable that she was thereby acknowledging the son’s actions which had resulted in a loss to her.
Was the plaintiff a party to a contract with the defendants?
- [45]It follows from my factual conclusions that prior to completion the plaintiff authorised the son to deal with the deed in such a way as to enable him to complete the purchase of the business from the defendants which included the provision of security over the land. It does not matter, in my opinion, that the plaintiff had no direct contact with Mr Klar prior to completion. The contract here is in the first class referred to in Masters v. Cameron (1954) 91 CLR 353 at 360:
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but a t the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.”
- [46]In Integrated Computer Services Pty Ltd v. Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] McHugh JA (as His Honour then was) said (with the agreement of Hope and Mahoney JJA) at pp 11,117-8:
“In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship … A bilateral contract of this type exists independently of and indeed precedes what the parties do. Consequently, it is an error “to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed”… Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract.”
- [47]I am satisfied that the plaintiff authorised the son to provide the deed as security, and that she must have anticipated a term such as Clause 4.3 of the Contract signed by the son on the 22nd July 1996:
- “4.3For better security the payment to the Vendor of the balance purchase price (and interest thereon), the Purchaser warrants as follows:-
- (i)that there is not now any moneys owing by the Purchaser;
- (ii)that the Purchaser in entering into this Agreement, has made satisfactory inspection and enquiry of the Business;
- (iii)that the Purchaser is solvent and able to pay and satisfy all debts, obligations and commitments when due;
- (iv)that the Purchaser shall not (while any moneys remain owing to the Vendor hereunder) charge, mortgage, pledge, hypothecate or encumber or attempt to charge, mortgage, pledge, hypothecate or encumber, the Business or the Purchaser’s interest therein whether directly or indirectly without obtaining the consent in writing of the Vendor thereto;
- (v)that the Purchaser in support of the Guarantee contained in Clause 37 of the Standard Conditions shall procure the lodgement with the Vendor’s Solicitors on or before the Date for Completion of a stamped copy of this Agreement, the unencumbered Title Deed to the freehold vacant land at Lot 65 Ballinger Road, Buderim and a mortgage thereover in favour o f the Vendor, such mortgage to be prepared by the Vendor’s Solicitors (at the cost of the Purchaser) and to be unregistered while the Purchaser complies with the obligations on its part contained herein.”
Equitable mortgage
- [48]Mr Taylor submits that by reference to s. 11 of the Property Law Act, in order to establish even an equitable mortgage the son needed the written authority of the plaintiff. Section 11 is in these terms:
“11 Instruments required to be in writing
- (1)Subject to this Act with respect to the creation of interests in land by parol –
- (a)no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent lawfully authorised in writing, or by will, or by operation of law; and
- (b)a declaration of trust respecting any land must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will; and
- (c)a disposition of an equitable interest or trust subsisting at the time of the disposition, must be manifested and proved by some writing signed by the person disposing of the same, or by the person’s agent lawfully authorised in writing, or by will.
- (2)This section does not affect the creation or operation of resulting, implied, or constructive trusts.”
- [49]As the learned authors of “Equity Doctrines and Remedies”: Meagher, Gummow, Lehane, 3rd edition note at para 753: “From what has been said, it can be seen that the effect of s. 23C (in the same terms as s. 11) of the Conveyancy Act (NSW) and its equivalents elsewhere on dealings with equitable interests is in many respects thoroughly obscure”.
- [50]For my purposes, it is desirable to follow the approach of the majority in Adamson v. Hayes (1973) 130 CLR 276 which is that (s. 11(1)(a)) applies to equitable as well as legal interests in land. The wording of s. 11(1)(a) seems to contemplate four circumstances which create or dispose of an interest in land namely a writing signed by the person creating or conveying the same, or by the person’s agent lawfully authorised in writing, or by will, or by operation of the law. Presumably this means that an interest in land can be created “by operation of the law” which may not require anything to be in writing. I have not been referred to any authority dealing with this aspect of construction, and will proceed on the basis of such authority as there is in relation to s. 11(1)(a) or its equivalent. The distinction made by various members of the High Court in Adamson v. Hayes as to the applicability of (the equivalent provision to s. 11(1)(a) in that case) is between an agreement to assure property in the future and the future assurance. The distinction is discussed by Giles J (with whom Mason P agreed) in Balaglow v. Konstandidis & Ors [2001] NSWCA 451 (6 December 2001). In that case, the agreement found to have been made was an agreement to dispose of an interest in land, with the disposition to come when the agreement was performed, but no interest in land was disposed of within (s. 11(1)(a)).
- [51]Applying that analysis to the facts of this case, I have found that the son as her agent was authorised by the plaintiff to lodge the deed as security for the purchase of the business; and that a contract of the type referred to in Masters v. Cameron as the first class was made; which included an agreement to enter into a mortgage over the land. Clearly, the mortgaging of real property is creating an “interest in land”, however an agreement to enter into a mortgage does not thereupon create an interest in land and s. 11(1)(a) does not apply.
- [52]The creation of an equitable mortgage is further evidenced here by the lodgement of the deed with the defendant’s Solicitors: s. 75(1) of the Land Title Act 1994.
- [53]The defendants argue that in acting as she did, the plaintiff is now estopped from setting up her legal interest in the certificate of title. In Walton Stores v. Maher (1988) 164 CLR 387 Brennan J (as His Honour then was) said (at 428-429):-
“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.”
- [54]At pages 406-7 Mason CJ and Wilson J describe the “crucial question” as being whether the appellant was “entitled to stand by in silence when it must have known that the respondents were proceeding on the assumption that they had an agreement and that completion of the exchange was a formality?”
- [55]Applying that authority to the facts of this case:
- from 18 July 1996 there was a basis for those acting on behalf of the defendants to assume that the plaintiff intended to mortgage the land because the certificate of title was deposited, and on the basis of the actions of the son of which the plaintiff was aware;
- the plaintiff induced those acting on behalf of the defendants to adopt that assumption or expectation, on the basis of her authority to her son as her agent;
- those acting on behalf of the defendants settled the sale on the 22nd July 1996 in reliance on the assumption or expectation;
- the plaintiff knew or intended them to do so;
- the defendants will suffer detriment if the assumption or expectation is not fulfilled; and
- the plaintiff has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
- [56]It follows that the plaintiff’s claim must fail and that the defendants should succeed on their counterclaim. I will deliver a draft of these reasons to both Counsel with a view to inviting submissions, and perhaps agreement, as to the appropriate orders both as to relief and costs.
- [57]Finally, I have considered the submissions of both Counsel (particularly Mr Redmond) in relation to the participation of Mr Taylor and Mr Klar’s firm in the litigation. There is certainly no basis at all to criticize the continued involvement of Mr Klar’s firm. Mr Klar’s only involvement was as a witness with Mr Murphy acting at all times on behalf of the defendants. I have already made all the comments I deem necessary in relation to the evidence of Mr Taylor. It is not necessary for me to make any determination on Mr Redmond’s robust submission, except to say that in my opinion it is quite unfair to withhold such a submission until the end of the trial, when the submission really calls into question Mr Taylor’s integrity as a Solicitor.
- [58]Prior to delivering judgment on the basis of the above reasons, I provided a copy to both Counsel seeking their further submissions as to the appropriate orders to be made. In response to Mr Taylor’s submission about the factual findings, I would have thought that my reasons clearly establish that I have found that there was an agreement, to which the plaintiff through the son her agent was a party, to provide security over the land by lodging the deed and providing a Mortgage and Guarantee in terms handed to Mr Taylor by the plaintiff on the 9th August 1998, a copy of which documents are contained in Exhibit 8. If this is any doubt, for the reasons set out above, I so find.
Orders
- [59]The plaintiff’s claim is dismissed with costs.
- [60]On the counterclaim:
- I declare that there was, as at the 22nd of July, 1996 and still subsists, a binding agreement between the plaintiff and the first defendant and the second defendants that:
- (a)the Certificate of title to the land described as Lot 65 on registered plan 817375 County of Canning Parish of Mooloolaba contained in title reference 18689094 (“the land”) be deposited with the solicitors to the defendants;
- (b)the plaintiff would provide to the defendants a guarantee and indemnity in terms of the deed contained in Exhibit 8;
- (c)the plaintiff would grant a mortgage to the defendants over the land in the terms of the deed contained in Exhibit 8, such mortgage to remain unregistered until default on the part of the second third party;
- The plaintiff is to give effect to the declarations in 1(b) and (c) by executing the deed of mortgage and the deed of guarantee and indemnity in registrable form and by registering the mortgage;
- The plaintiff and the first third party are jointly and severally liable to pay the defendants the sum of $69,904.88, together with costs of and incidental to the action, together with reserved costs and accepting costs previously ordered in the proceedings to be assessed on an indemnity basis if not agreed;
- Liberty to apply in respect of any consent arrangements to substitute for existing injunctions; that liberty to apply can be exercised on three days’ notice by telephone and the consent arrangements can be arranged by facsimile.