Supreme Court New South Wales Medium Neutral Citation: Tomanovic Multiown Pty Limited v Interlux Projects Pty Limited [2021] NSWSC 190 Hearing dates: 4, 5, 9 November 2020 Date of orders: 11 March 2021 Decision date: 11 March 2021 Jurisdiction: Equity Before: Emmett AJA Decision: Order that: 1. The First Second and Third Defendants, within 14 days, file and serve Short Minutes of Orders giving effect to these reasons. 2. The Plaintiff, within a further 14 days, file and serve a note indicating any dispute with the proposed orders and any further submissions that it wishes to make as to the consequences of the orders in favour of the First, Second and Third Defendants. 3. The Fourth Defendant, within 14 days thereafter, file and serve any further submissions as to the consequences of the orders in favour of the First, Second and Third Defendants. 4. If there is any dispute as to orders, each of the parties has leave to apply for the purpose of fixing a date for further argument. 5. If there is no dispute as to the proposed orders, judgment be entered in accordance with the proposed orders. Catchwords: CONTRACTS — unjust contracts — Contracts Review Act 1980 (NSW) — Unjust terms considered — Matters under Contracts Review Act 1980 (NSW), s 9(2) CONTRACTS — undue influence — presumed undue influence — Parent and child — overlapping application at equity and under Contracts Review Act 1980 (NSW) Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 12GM Civil Procedure Act 2005 (NSW), s 100 Contracts Review Act 1980 (NSW), ss 6, 7, 9 Corporations Act 2001 (Cth). s 1325 s 243 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law s 17(3) Cases Cited: Brown v NSW Trustee and Guardian [2011] NSWSC 1203 Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 Tomkinson v First Pennsylvania Banking and Trust Co [1961] AC 1007 Texts Cited: Birks and Chin, "On the Nature of Undue Influence", in Beatson and Friedmann (eds), Good Faith and Fault in Contract Law (Oxford University Press, 1995) Meagher, Heydon and Leeming, Equity: Doctrines and Remedies (Lexis Nexis Butterworths, 4th ed, 2002) Category: Principal judgment Parties: Tomanovic Multiown Pty Ltd (Plaintiff) Interlux Projects Pty Ltd (First Defendant) Daniel Mudri (Second Defendant) Jessica Lauren Mudri (Third Defendant) Miroslav Mudri (Fourth Defendant) Representation: Counsel: V R W Gray (Plaintiff) E Ball (First, Second and Third Defendants) Fourth Defendant (self-represented) Solicitors: Corporate & Civil Legal (Plaintiff) Doyles Construction Lawyers (First, Second and Third Defendants) File Number(s): 2018/00246780 Publication restriction: Nil Judgment 1. These proceedings arise out of a deed of loan dated 12 April 2011 (the Deed of Loan). The parties to the Deed of Loan were the plaintiff, Tomanovic Multiown Pty Ltd (Multiown), as "Lender", the first defendant, Interlux Projects Pty Ltd (Interlux), as "Borrower" and the second and third defendants, Daniel Mudri and Jessica Mudri (respectively Daniel and Jessica), as "Guarantor". In addition, on the same day, the fourth defendant, Miroslav Mudri (Miroslav) and the former fifth defendant, Brenda Smart, Miroslav's wife, executed a guarantee and indemnity in respect of the obligations of Interlux under the Deed of Loan (the Guarantee and Indemnity). Brenda Smart is now a bankrupt and leave was given to Multiown to discontinue the proceedings as against Brenda Smart. 2. There is no dispute that the Deed of Loan was executed by Interlux and by Daniel and Jessica and there is no dispute that the Guarantee and Indemnity was executed by Miroslav. However, there is a dispute as to the extent to which the monies owing under the Deed of Loan have been repaid. The principal issue in the proceedings is whether Daniel and Jessica should be relieved from liability under the Deed of Loan under the Contracts Review Act 1980 (NSW) (the Review Act) and whether Daniel and Jessica, together with Interlux, should be relieved from liability under the Deed of Loan by reason of undue influence on the part of Miroslav. The Deed of Loan 1. The Deed of Loan recites that Multiown had agreed "during its pleasure to grant to [Interlux]" the sum of $300,000 and that Interlux had agreed to repay to Multiown the sum of $830,000 at the expiry of the period of 12 months from the date of the Deed of Loan. The effect that appears to have been intended is that Multitown would lend the sum of $300,000 to Interlux for 12 months and that Interlux would repay the amount lent, together with interest of $530,000, at the end of that period. The sum of $830,000 was described in the Deed of Loan as "the Repayment Amount". Clause 1 of the Deed of Loan stated that the Repayment Amount was represented by the sum of $300,000 (described as "the Principal") and the sum of $530,000 (described as "the Sum"). 2. Clause 1 of the Deed of Loan provided for a mechanism whereby the obligation to pay the element of the Repayment Amount represented by "the Sum" could be discharged by the conveyance to Multiown of "one lot located in the four lot complex to be constructed and registered by [Interlux] at 40 Grosvenor Drive, Moranbah … (the Lot)". Multiown was entitled to have the Lot valued. If the valuation disclosed that the Lot was "less than $500,000", Interlux was to "convey the Lot to [Multiown] plus pay [Multiown] a cash amount equal to the deficit in the valuation of the Lot and the Sum". Clause 1 then provided that, if that could not be achieved to the satisfaction of Multiown by the Due Date, Interlux was to "provide cash for $530,000". The Due Date was the expiry of 12 months from the date of the Deed of Loan. 3. Clause 2 of the Deed of Loan provided that the Repayment Amount must be paid on the Due Date. Clause 3 provided for Interlux to notify Multiown at least two months prior to the Due Date if Interlux was unable to pay to Multiown the Repayment Amount by the Due Date. Clause 5 provided that Interlux would repay the Repayment Amount to Multiown, or such balance as should be owing by the Due Date, "together with any accrued interest". Provision was made in cl 4 for the payment of interest at a rate in the order of 176% per annum. The infelicity of the language of that provision prompted Multiown to abandon any reliance upon it in the proceedings. However, the presence of such a provision is may be relevant to the application of the Review Act. 4. Clause 6 of the Deed of Loan provided that Interlux would, upon request of Multiown, execute a mortgage over two named properties in favour of Multiown "for the money advanced". The two properties were a property known as 40 Grosvenor Drive, Moranbah (the Moranbah Property) and a property known as 498 Dulong Road, Dulong (the Dulong Property). Interlux had purchased the Moranbah Property in January 2011 for $200,000. Daniel purchased the Dulong Property in 2005 for $375,000. The Dulong Property became Daniel and Jessica's family home. Clause 7 provided that Interlux would not object to Multiown placing a caveat "over the property" to protect Multiown's interest pursuant to the Deed of Loan. It is not clear whether the reference to "the property" included the Dulong Property. 5. Clause 8 of the Deed of Loan provided that Daniel and Jessica guaranteed "the performance by Interlux" under the Deed of Loan until such time as the Repayment Amount and any interest due and payable had been repaid in full to Multiown. By cl 9, Interlux and Jessica and Daniel covenanted that "the current indebtedness to or to any future financier/lender over the property" would not be increased or obtained without first obtaining the written consent of Multiown. Again, it is unclear whether the reference to "the property" included the Dulong Property. However, cl 9 appears to assume that both the Moranbah Property and the Dulong Property secured advances to third parties and that the amount secured to third parties would not be increased without Multiown's consent. 6. On 22 March 2011, the sum of $49,000 had been deposited to the credit of an account of Interlux with Bank of Queensland Ltd. On the following day, 23 March 2011, the sum of $49,000 was transferred from that account to Smartbuild Pty Ltd (Smartbuild), a company controlled by Miroslav and Brenda. Those transactions were treated as part payment of the Principal, as referred to in the Deed of Loan. On 24 May 2011, Mr Zoltan Tomanovic (Mr Tomanovic) deposited the sum of $151,000 by to the credit of the account of Interlux with Bank of Queensland Ltd. On the same day, that sum was transferred to an account of Smartbuild. On 16 June 2011, a further deposit of $100,000 was made by Mr Tomanovic to the account of Interlux with Bank of Queensland Ltd. On the same day, the sum of $100,000 was transferred to the account of Smartbuild. Mr Tomanovic is the principal of Multiown and those transactions were treated as further payments of the Principal, as referred to in the Deed of Loan. Thus, the total Principal of $300,000 was advanced in three tranches, one before the Deed of Loan was executed and the other two some weeks after it was executed. 7. The Repayment Amount was not paid to Multiown on the Due Date. Specifically, the Principal was not paid to Multiown and there was no conveyance of the Lot, as contemplated by cl 1 of the Deed of Loan. 8. However, on 14 March 2013, Mudri Constructions Pty Ltd paid to Multiown the amount of the Principal referred to in the Deed of Loan, namely, the sum of $300,000. That payment was made in reduction of the money owing by Interlux to Multiown under the Deed of Loan. On 20 November 2015, MSM Developments Pty Ltd (MSM), a company controlled by Miroslav, sold to Multiown seven lots in a subdivision at Kingaroy, Queensland (the Kingaroy Lots), for the purchase price of $150,000. It is common ground that those seven lots had a value significantly in excess of the price of $150,000 and that that excess was to be credited against the amount owing by Interlux to Multiown under the Deed of Loan. However, there is a dispute as to the extent of the excess. Multiown asserts that the Kingaroy Lots had a value of $318,000 and that Multiown derived a net benefit of $168,000 less the stamp duty payable on the contract for sale, which amounted to $9,555. Daniel and Jessica accept that valuation. However, Miroslav asserts that the Kingaroy Lots had a value of $452,000 and that the benefit derived by Multiown from the contract was $302,000 less stamp duty. The Proceedings 1. In its amended statement of claim of 6 February 2020, to the extent pressed at the hearing, Multiown relied on the Deed of Loan and sought judgment in the sum of $375,000 plus interest under s 100 of the Civil Procedure Act 2005 (NSW) (the Procedure Act). The sum of $375,000 was calculated as follows: The Principal - $300,000 Plus the Sum - $530,000 Repayment Amount - $830,000 Less payment on 14 March 2013 - $300,000 Less benefit from purchase of Kingaroy Lots - $168,000 Balance - $362,000 Plus the amount of stamp duty - $9,555 Net amount claimed - $371,555. 1. In its amended defence dated 20 February 2020, Interlux admitted the claims made in the amended statement of claim save for the amount of the credit to be given for the transfer of the Kingaroy Lots, asserting that the amount of credit should be $302,000 rather than $168,000. In addition, Interlux alleged contravention of s 243 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 1325 of the Corporations Act 2001 (Cth) or s 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) as a basis for the Deed of Loan being set aside or not being enforced. That allegation was not pressed. 2. However, Interlux also relied upon defences of undue influence and unconscionable conduct as a basis for contending that the Deed of Loan should be set aside or should not be enforced against it. The relevant allegations in that regard may be stated as follows: 25. Prior to and around the time the Deed of Loan was signed, Miroslav exerted influence and pressure over Interlux. 26. The inference and pressure exerted by Miroslav over Interlux was unconscionable. 27. The inference and pressure exerted by Miroslav caused Interlux to sign the Deed of Loan. 28. Multiown knew or ought reasonably to have known of the matters alleged in paragraphs 25 and 27. 29. Multiown did not take steps to explain the Deed of Loan to Interlux, Daniel or Jessica or ascertain whether Interlux, Daniel or Jessica had obtained independent, legal or financial advice. 30. Interlux did not obtain independent legal or financial advice. 32. Interlux was suffering under a special disability when the Deed of Loan was signed, which special disability Multiown knew or ought reasonably to have known about. 33. The effect of the special disability was that Interlux was unable to conserve its own interests and was vulnerable to exploitation by Miroslav and Multiown. 1. The amended defences filed on behalf of Daniel and Jessica made allegations in relevantly the same terms as the allegations made on behalf of Interlux in its amended defence. In addition, each of Daniel and Jessica relied upon the provisions of the Review Act as a basis for contending that he or she as the case maybe was not liable as Guarantor because the Deed of Loan was unjust in the circumstances relating to the time when it was made. Relationship between Daniel and Jessica, and Miroslav 1. Miroslav was born in 1952 in Serbia, then part of the former Yugoslavia, and described himself as "a Russian". He speaks dialects of Ukrainian, Serbian and Croatian fluently and also speaks English. He migrated to Australia in 1970. Miroslav married Brenda Smart and they had three children, one of whom is disabled. 2. Miroslav began activity as a property developer in Queensland in about 2000 and developed his business to the stage where he was able to borrow some $29 million at the age of 30 and some $49 million at the age of 50. By 2011 he had borrowed millions of dollars for his proposed development project at Chinchilla. 3. Daniel was born in 1983 and lived at home with his parents for about 20 years. He is a joiner by trade and has engaged in that trade since 2001 when he was 18. Jessica was born in 1984. Prior to marrying Daniel, Jessica had worked for a company controlled by Miroslav, doing clerical and accounting work by using the MYOB programme and paying bills in accordance with directions given by Miroslav. Her knowledge of and familiarity with Miroslav's business activities were limited. Daniel and Jessica were married in 2007 and have two children, one born in June 2009 and the other in June 2011. In April 2011, when the Deed of Loan was signed, Jessica was seven months pregnant and was recovering from an emergency appendectomy that had taken place some three months earlier. 4. Jessica is currently the sole director of Interlux although Daniel was also a director until 2018. Daniel operates his joinery business through Interlux and has done so since 2007. He indicated that Interlux has not operated any other business. 5. However, up to November 2020, Daniel had been a co-director with Miroslav of seven of Miroslav's companies. He accepted that he would have expected to succeed to Miroslav's business interests when Miroslav retired. Accordingly, he had a prospective interest in the continued success of Miroslav's business interests. 6. Daniel visited his parents' house regularly to use the basement area, which was described as "the factory", to carry out his joinery work. Daniel and Jessica would also visit Miroslav's home on Fridays for a traditional family meal. Daniel said that they would predominantly discuss business at those meals and the discussion was probably 80% business and only 20% personal. Daniel said that the business discussed during those family meals was that of his parents, whose businesses were, he said, "intertwined". The businesses included a property development company, MSM, as well as a building company, Smartbuild, both of which were controlled by Miroslav and Brenda. 7. In early 2011, Daniel was on speaking terms with Miroslav although, for different periods, that had not always been the case. Daniel described his current relationship with Miroslav as "very fractured" and said that their relationship had been complex since he was in his teens. He said that his relationship with his father was tense and stemmed from the difficult relationship between Miroslav and Brenda and financial issues being experienced by Miroslav and Brenda. 8. Daniel said that in 2011 Miroslav did not have "projects happening" so he was spending more time in the office in the family home. Daniel said that his father was "much more involved" and his demeanour was "quite stressed and under pressure". He described his father as being "basically … almost … bipolar", where he had moments of high and then had low moments. Daniel said that when Miroslav was "on his highs" he lifted everybody but when he was "in his lows" everyone could feel it and could feel the pressure in the environment. Daniel said that, in early 2011, Miroslav was in a "downward spiral because he was experiencing financial difficulty". 9. Daniel described an incident in mid-2010 involving his parents. He said that his parents were in their home and were discussing financial matters. Daniel understood that it was "some sort of business financial pressure" and that there was an issue about money being allocated for bills. He said that he observed his father's face "getting quite red" and could see that something was building and that his father suddenly stood up and was quite emotional. He said that his father said: "I'm going to let it all burn, you bastards". and then stormed out of the house slamming the door behind him. Daniel said that the family did not see Miroslav for three or four days after that. 1. Daniel described his father as using "emotional guilt" to get his way during his "low" periods and adopting a "my way or the highway" attitude during his high periods. Daniel accepted in cross-examination that such episodes had occurred over several years and that that was simply part of Miroslav's personality and that he, Daniel, "had to live with it". Daniel accepted that he did not take his father's threats, such as to burn things or cast people out, literally but said that he found his father's behaviour difficult and stressful. Daniel said that from time to time Miroslav would disappear for many days and turned to alcohol while he was absent. He said that when Miroslav returned on such occasions there would be "a silent standoff" between his parents or "a period of tension" and then eventually "everyone just got onto back to what they were doing". Daniel said that the end result was that most of the time Miroslav would get his own way. 2. Daniel said that, in early 2011, when Miroslav was in one of his "low moments", they were having a discussion when Miroslav said that he was looking for funds to help out his cash flow. Miroslav said that there were some people that he was talking to and that he was trying to find someone else from whom to get funding. Daniel said that Miroslav was "quite upset" and described his father's demeanour as being "quite deflated and quite depressed". 3. Jessica described her relationship with Miroslav as being "minimal". She said that conversations over dinner involving Miroslav, Daniel and Brenda would generally lead to business related topics while she would discuss her children. Jessica said that Miroslav and Brenda were comfortable talking about financial issues in front of her but that in the first part of 2011 there was tension in the family because there were large numbers of bills outstanding. However, she said, she was preoccupied with her young child but her recollection was that it was "tumultuous" going to the home of Miroslav and Brenda. The circumstances of the Deed of Loan 1. Prior to March 2011, Miroslav had had dealings with Mr Tomanovic, who was the only director of Multiown, which operated a lending business and held an Australian Credit Licence. Mr Tomanovic has a history of lending money to people either personally or through entities controlled by him. Prior to 2011, Miroslav had asked Mr Tomanovic on about six occasions to help with short term loans of various amounts to assist with cash flow while waiting to receive proceeds from the sale of houses that he had built and Mr Tomanovic accommodated those requests. Mr Tomanovic described the loans as having been sourced through his friends and said that the loans were made on the basis of oral agreements only with no formal documentation. He said that Miroslav had always repaid the loans in full together with interest but never at the agreed time. None of the sums involved exceeded $100,000. 2. In early March 2011, Miroslav telephoned Mr Tomanovic. Mr Tomanovic described the conversation with Miroslav as follows: "Miroslav: Zoltan, we need to get urgently $300,000. Can you please help us urgently to get the money through your contacts? Mr Tomanovic: That is a lot of money. Off the top of my head I don't know of anyone who may be able to assist you quickly with such amount. I can ask around, but it may take time. If I find someone, I'll let you know." 1. Miroslav did not explain who "we" were but it was probably a reference to his family interests generally. Miroslav did not tell Mr Tomanovic the specific purpose for the borrowing or how the funds would be used or why he had such immediate urgency. Mr Tomanovic said that Miroslav did not explain to him his financial situation and whether the financial position of his family precluded him from using other assets and resources to obtain funds urgently needed. 2. At 12.02 pm on Friday 4 March 2011, an email was sent on behalf of Miroslav to Mr Tomanovic attaching an email sent on the previous day to Miroslav by Moranbah Real Estate. The emails were headed "40 Grosvenor Drive" and the email from Moranbah Real Estate relevantly said: "The proposed units at 40 Grosvenor Drive would have an expected sale price of $530,000 going by the current market trends, and an expected rental value of $1,100 per week." At 5.23pm on 4 March 2011, Miroslav sent an email to Mr Tomanovic relevantly saying as follows: "Here is the outline of the deal for $300,000 as discussed. I am booked out of Brisbane at 9:00 am Monday morning. 1. Mortgage or transfer of Dingo Caravan Park Qld Pty Ltd as security (sample of a transfer document attached.)[;] 2. Repayment of $300,000 for 12 months with release of mortgage or transfer on Dingo Caravan Park[;] 3. Title to one unit from the four unit plan at 40 Grosvenor Street, Moranbah at no cost[; and] 4. Fee free of charges." Enclosed with the email was a transfer from Dingo Caravan Park Qld Pty Ltd to Duka Mihajlovic for consideration of $300,000 dated 2 March 2011. The transfer was signed by Brenda. 1. At 5.55pm on 4 March 2011, Mr Tomanovic sent an email to Miroslav saying as follows: "Who is Duka Mihajlovic – showing as transferee on the attached docs? Is the title of the caravan park debt free – unencumbered? What do u mean by 4. – fee free of charges? Just to confirm at 3. We are talking about debt free unencumbered title - please confirm. If u wanted to come down here on Monday it is fine – lunch with u is always welcomed fun, if u do not want to come is fine too as I will get the funds to your nominated account on the basis of our mutual personal trust, initial $100 K amount as early as Monday 7/3/11[.] Rest in a day or so – but will need you to get docs signed which I will get solicitors to prepare on Monday, so we have this formaly [sic] covered. Hear from you soon – answers to my questions above[.] … Ps I'm doing this personal assistance for you as a friend not as [a] business associate." 1. On Sunday 6 March 2011 at 10.48am, Miroslav sent an email to Mr Tomanovic saying: "Property is unemcambered [sic] definitely. [D]uka is the [Y]ugoslav that was going to do the deal last week so [I] made the transfer and give u as sample[.] [F]ee simple means same as unencumbered in Qld they call free title that [sic]". 1. Miroslav travelled to Sydney on Monday 7 March 2011 and met with Mr Tomanovic. Mr Tomanovic said that Miroslav was "pleading to me to assist him to find someone one way or other to provide $300,000 for his proposed deal as soon as possible". 2. On Tuesday 8 March 2011, Miroslav and Mr Tomanovic went to the office in Parramatta of Robert Wehbe & Partners Pty Ltd, a firm of solicitors (Robert Wehbe), in order to give instructions for the preparation of loan documents for a short-term loan of $100,000 to MSM. Mr Tomanovic said that, while preparing the loan documents, Robert Wehbe advised that the security proposed by Miroslav was not an acceptable title or adequate security to be used for such a large loan. Miroslav said that he was told that the title was unsatisfactory because it was only leasehold. Mr Tomanovic said that Miroslav then proposed, as alternative security, development land in Chinchilla Queensland, which he understood was owned by a "related entity". 3. On the following day, Miroslav and Mr Tomanovic met in Parramatta again when Miroslav told Mr Tomanovic that he was "getting desperate" and that he had not managed to find anyone with $300,000 "to participate in my deal". He told Mr Tomanovic that he needed him to help get the money as soon as possible. Miroslav said that during the discussions, Mr Tomanovic said that his daughter, Bianca, would advance the funds to Miroslav. 4. At 3.32pm on 18 March 2011, Robert Wehbe sent an email to MSM under the heading: "Bianco Tomanovic - Advance to MSM Developments Pty Ltd Security Property: Lot 110 Price Street, Chinchilla and 40 Grosvenor Drive, Moranbah." The email enclosed several documents, including the following: * A deed of loan; * A mortgage of land at Chinchilla by MSM; * A caveat in respect of the Chinchilla land; * A declaration by Miroslav that he had received independent legal advice; * A warranty about the Chinchilla land. 1. Under the draft deed of loan enclosed with that email MSM was the Borrower, Miroslav and Brenda were the Guarantors and Bianca Tomanovic was the Lender. The draft provided simply for repayment of the Repayment Amount on the Due Date and provided for interest to be paid at the rate of 10% per annum on the Repayment Amount until repaid after the Due Date. Clause 3, the equivalent of cl 6 in the Deed of Loan, referred to the grant of a mortgage in respect of the Chinchilla land. There was no reference to the conveyance of a lot in the Moranbah Property as had been proposed in the email of 4 March 2011 and as was contained in cl 6 of the Deed of Loan. 2. Miroslav said that, at some stage after receipt of those documents, Mr Tomanovic told him that his daughter was not prepared to proceed with the loan and that Multiown would be lender. A further draft of a proposed deed of loan was prepared in the same terms as that enclosed with the email of 18 March 2011 except that Multiown, in its capacity as trustee for AFS Superfund, was shown as Lender. 3. Mr Tomanovic said that Robert Wehbe subsequently ascertained that the actual owner of the Moranbah Property was Interlux, the controllers and shareholders of which were Daniel and Jessica. Mr Tomanovic said that Robert Wehbe advised him that, in order to have a legally enforceable document to make sure that Multiown was adequately protected under "the proposed deal", Interlux would have to be the borrower since, even though Miroslav was Daniel's father, legally Miroslav was only a third party "in the proposed JV deal". Mr Tomanovic said that Robert Wehbe advised him that, since he had never met Daniel and Jessica and since Miroslav was Daniel's father and "the obvious driving force" to source funds and develop and build the Moranbah units, Miroslav and Brenda should be Guarantors. The reference to "the JV deal" appears to be a reference to the proposal contained in the email sent at 5.23pm on 4 March 2011. However, the only mention of the Moranbah Property in that email was the provision for transfer of a unit in the proposed development of the Moranbah Property. 4. Mr Tomanovic said that Miroslav told him at the meeting on 8 March 2011 that his goal was to help his son, Daniel, develop and build four townhouses at the Moranbah Property, so that Daniel and Jessica would benefit from the very lucrative property market in Moranbah by selling or renting out those townhouses. Assuming that Miroslav made such a statement, it is curious since, as at 8 March 2011, the proposal appears to have had nothing to do with the Moranbah Property or Interlux. 5. Mr Tomanovic confirmed in cross-examination that in his discussions with Miroslav they did not discuss "where every dollar will go and what is the purpose". He was emphatic about the fact that he had no idea as to the intended use for the proposed borrowing of $300,000. Mr Tomanovic had not met either Daniel or Jessica prior to the execution of the Deed of Loan. In any event, he made no effort to communicate with Daniel and Jessica about the proposed transaction. 6. On 5 April 2011, Robert Wehbe sent a letter to Messrs Hinterland Lawyers of Maleny Queensland, for the attention of Mr Illidge. Daniel described Mr Illidge as the "family conveyancing lawyer" who acted for Interlux on the purchase of the 40 Grosvenor Drive, Moranbah. The letter was entitled "Tomanovic Multiown Pty Ltd - Advance Interlux Projects Pty Ltd" and enclosed a number of documents including the unexecuted Deed of Loan, mortgages of the Moranbah Property and the Dulong Property, caveats in respect of those properties and other documents similar to those enclosed with the email of 18 March 2011. The Deed of Loan enclosed with the letter of 5 April 2011 differed from the two earlier drafts in that Interlux was substituted for MSM, the reference to the Chinchilla land was replaced with reference to the Moranbah Property and to the Dulong Property and Daniel and Jessica were substituted as Guarantors in place of Miroslav and Brenda. Miroslav collected the bundle of documents from Hinterland Lawyers and took them to his home. 7. Daniel said that, during the weeks leading up to 12 April 2011, Miroslav had raised with him the possibility of using the Moranbah Property as security for a proposed loan. He said that his father told him that he was working on a deal and that he was going to "get some money". He said that a few weeks later Miroslav told him in a conversation at his parents' house that he had been "able to do a deal with Zoltan but I'm going to have to use your property as security". Daniel asked him why he needed to use one of Daniel's properties as security and asked why he could not use one of his own properties, such as Chinchilla. That indicates that the proposal outlined by Miroslav in his email of 4 March 2011 had not previously been discussed with Daniel. 8. It appears that Daniel and Jessica attended at the home of Miroslav and Brenda on a day after 5 April 2011. The Deed of Loan and other documents are dated 12 April 2011. It seems likely that that is the day on which the documents were signed. 9. Daniel said that, when his father had spoken to him previously, he thought his father was referring to the property at Moranbah and that that was the property that was going to be used as security. He said that, when he read the Deed of Loan for the second time, before he signed it, he noticed that the Dulong Property was also "listed on that document". Daniel explained that the first time he read the Deed of Loan "literally, I flicked through it initially just to see - looking where to sign". He said that he then went back to the beginning of the document and read it again. He said that as he was stopping to read through the details Miroslav said to him: "Don't worry about the loan, I will be sorting it out with Zoltan. I just need you to sign this so that I can get the money." 1. Daniel said that he understood that Miroslav was to receive the money and that Miroslav was responsible for paying it back but needed his security to facilitate the transaction. When he saw cl 6 of the Deed of Loan, Daniel asked his father why his home was being included and said that his understanding was that his father only needed Moranbah. Miroslav responded: "Don't worry about the details. I'll be sorting it out, and Zoltan needed the extra security." Daniel asked why his father needed extra security "when there is also a large interest portion being charged as well as holding security". Daniel said that Miroslav responded by saying: "Don't worry about the details. As I told you, I'll be sorting it out. I just need this to get ‑ to be able to get the funds that I need, and I'll be paying back Zoltan." 1. When asked whether Miroslav was in one of his highs or his lows, Daniel responded: "I would say more low than high. I'd say probably he was in the more probably balanced. [sic]" When asked how Miroslav sounded, Daniel responded: "He sounded quite urgent. He was quite - there was a hint of pressure in his voice, but it was - it was more like an urgent sort of - getting this - this things [sic] signed and sort of assuring me that there is nothing to worry about, that he'll be looking after it and sorting it out." 1. Daniel said that he was feeling quite torn, quite pressured and anxious. He said that the adding of his home added "an extra bit of anxiety and sort of pressure on me". However, Daniel did not feel that he could say that he would not sign the documents. When asked why not, he responded: "I - basically was my - because I was involved with the - and understood the pressures, the way that the - my father sort of had - I was basically trusting his judgment even though it was - wasn't something that I would - I wasn't feeling comfortable. I also believe that, you know, what he was saying also - that he - that he was going to deliver it as well. So, I was listening to my father trying to be, you know, respectful in that way, but, at the same time having the feelings of uneasy as I knew that this wasn't, you know, what you would normally want to do, but, at the same time, I also trusted his judgment that, you know, for him to get these funds in, I believed him that he would sort this - this issue out." 1. Daniel said that there were parts of the Deed of Loan that he did not understand, such as cl 4 and cl 9. He said that he did not understand the words "covenant that the current indebtedness". 2. Jessica did not read any of the documents before signing them. The only person she spoke to about the documents was Daniel, who said that the documents needed her signature to assist to get some funds for Miroslav's business. She did not speak to a lawyer or anyone else before signing the documents. 3. Jessica accepted in cross-examination that, three months beforehand, she had signed a mortgage over the Moranbah Property in favour of Bank of Queensland in front of Mr Illidge. She accepted that Mr Illidge would have been available if she wanted advice about the documents that she was being asked to sign. However, she said, at the time there was a lot of haste and she believed that it was "time sensitive". She said that she would have liked to have believed that it would "all be taken care of". 4. Jessica said that her answer to the question whether she signed because she thought it would all be taken care of was "a yes and a no". She said she was unsure how to give a better response "to something that really is a relationship matter as much as it's a financial and legal matter". Jessica said that, when she signed the documents, she was thinking "about the family to a larger sense". The forefront of her feeling was that it was something "that just needed to be done" and that they needed to sign the documents. Jessica said that she would not have felt comfortable saying "no", that she would not sign the documents. She said that she and Daniel were told that they needed to assist and that their property was needed as "capital or collateral": she did not know "the exact word". Jessica said that she did not feel that she had "a lot of ability to discuss that at all". 5. Daniel and Jessica signed several other documents at the same time as they signed the Deed of Loan. Thus, each of them signed an acknowledgement that they had chosen not to obtain legal advice. Curiously, they also signed a document entitled: "Acknowledgement of legal advice by proposed borrower". That document contained a blank space for the name of a solicitor who had been instructed to give legal advice. The space was not completed. The document also purported to specify advice given by "my solicitor", who, as indicated above, was not named. Next, each of Daniel and Jessica signed a document entitled: "Consent by borrower/guarantor to legal advice". Again, the space for the name of a solicitor was left blank. Curiously, the document also purported to set out things that "my solicitor" had informed them before giving advice. 1. In addition, Daniel and Jessica signed "a declaration of purpose" that the credit to be provided by Multiown was to be applied wholly or predominantly for business or investment purposes. Each of them also signed a "privacy release" authorising Multiown to seek commercial or consumer credit information. Next, each of them signed a warranty concerning the Moranbah Property saying there were no unpaid outgoings in respect of the property or notices from Government or other authorities. Finally, each of them signed a form of authority undertaking a direction to pay addressed to Multiown and Robert Wehbe. The authority authorised payment to "our solicitors/legal representative" but the space for the name was left blank. It also appears that forms of mortgage were signed on behalf of Interlux by Daniel and Jessica. 2. It is clear that each of the documents was signed by Daniel and Jessica. However, the blank spaces and the inconsistency between the documents suggests fairly clearly that Jessica and Daniel did not read them or, if they did, did not comprehend them. Payment of the Repayment Amount 1. As I have said, it is common ground that the amount of the Principal, of $300,000, was repaid on 14 March 2013. However, there is an issue concerning the credit to be given in respect of the transaction concerning the Kingaroy Lots entered into on 20 November 2015 between MSM and Multiown. 2. On 20 November 2015, MSM, as vendor, and Multiown, as purchaser, entered into a contract for the sale of the Kingaroy Lots for the sum of $150,000. That contract was completed on 17 December 2015, when title to the Kingaroy Lots was transferred to Multiown and the price of $150,000 was paid by Multiown to MSM. It is common ground that the excess of the value of Kingaroy Lots over the sum of $150,000 is to be treated as a partial payment of the Repayment Amount. Multiown attributed a total value of $318,000 to the Kingaroy Lots, based on assessment of current market value provided by Ms Donna Freyling of Raine and Horne, Kingaroy, on 9 October 2015. In making her assessment of the current market value, Ms Freyling said that she had relied "mainly on the information supplied to us and our local knowledge". However, investigations did not include a title search, a zoning search, or a sighting of a zoning certificate or structural report. Ms Freyling said that her letters should not be construed as a valuation but rather "an opinion on the marketability of the property". 3. Miroslav, on the other hand, attributes a total value of $452,000 to the Kingaroy Lots based on valuations by the Queensland Valuer-General as at 30 June 2016. The circumstances of the valuation by the Valuer-General were not explored. Rather, copies of summaries of "key details" were tendered. There was no evidence as to possible variations in market prices between December 2015 and June 2016. Significantly, one of the documents included in the tender described "property activity" and referred to the sale of the Kingaroy Lots by MSM to Multiown. That tends to suggest, if anything, that that sale was treated by the Valuer-General as a sale at arm's length. Relevantly, stamp duty was assessed on the transfers of the Kingaroy Lots on the basis of the assessments made by Ms Freyling. In the circumstances, I am not persuaded that the value of the Kingaroy Lots was greater than the value on which stamp duty was assessed and for which credit is given by Multiown. That conclusion was not disputed by Interlux, Daniel or Jessica. Review Act 1. The primary position of Daniel and Jessica is that relief should be granted under the Review Act and that the Deed of Loan should not be enforced. In the alternative, they rely upon principles of undue influence, as does Interlux. Since Interlux is a corporation, it is not entitled to any relief under s 6(1) of the Review Act. 2. Multiown contends that the Review Act has no application to the present dispute because the proper law of the Deed of Loan is Queensland and not New South Wales. Where the parties have not specified the law to govern the contract, the proper law is that of the place with which the contract has the closest connection. Multiown contends that the Deed of Loan has a closer connection to Queensland than New South Wales. 3. The contract consisting of the Deed of Loan appears to have been made in New South Wales. After the documents were signed in Queensland on 12 April 2011, Miroslav took them to Sydney and delivered them to Mr Tomanovic or Robert Wehbe, in Parramatta. It is clear that there was no binding contract until the documents were so delivered. The sending of the documents under cover of the letter of 5 April 2011 might be characterised as an offer on behalf of Multiown, although it may be that it was no more than an offer to treat. Any such offer was not accepted until the delivery of the signed and executed documents in New South Wales. It may be that there was no binding contract until the documents were subsequently executed on behalf of Multiown in New South Wales. Either way, the contract was made in New South Wales. 4. There was no obligation imposed upon Multiown to make any advance. However, part of the Principal had been advanced some weeks before, as indicated above. The advance was made by a deposit of the sum of $49,000 on 22 March 2011. The manner of that deposit was not the subject of evidence. In any event, the payment preceded the making of any contract. The second payment of $151,000 on 24 May 2011 was made by "Inward TT". I would draw the inference that the payment was by means of electronic transfer to an account with Bank of Queensland in Queen Street, Brisbane. The third payment of $100,000 on 16 June 2011 was made by the same means. Clearly enough, Multiown is located in New South Wales and I would draw the inference that the payments were initiated in New South Wales. 5. The primary obligation of Interlux, as Borrower, was to pay the Repayment Amount at the expiry of 12 months from the date of the Deed of Loan. That obligation was to be satisfied partly by a payment of money and partly by a conveyance of land situated in Queensland. The Deed of Loan was silent as to where those obligations were to be performed. The forms of mortgage that were executed on 12 April 2011 were also silent as to the place of payment although each contained a promise by the respective mortgagors to pay the sum of $830,000 on "the … day of April 2012 (Due Date)". The date was left blank. No reliance was placed by the parties on the terms of the mortgages in relation to the obligations of Interlux, Daniel or Jessica. Interlux was named as mortgagor in the mortgage of the Moranbah Property and Daniel was named as mortgagor in the mortgage of the Dulong Property. 6. The Borrower, Interlux, was located in Queensland and carries on business in Queensland. Daniel and Jessica, as Guarantors, were also resident in Queensland. In addition, the properties that were to be the subject of security for the obligations of Interlux under the Deed of Loan were located in Queensland and payment of part of the Repayment Amount was to be effected by the conveyance of land situated in Queensland. 7. There was no evidence as to the intended purpose of the borrowing of the Principal by Miroslav, although the inference can be drawn that it was to be disbursed in Queensland. However, there is nothing in the Deed of Loan to specify the way in which or the place at which the funds borrowed by Interlux were to be disbursed. In fact, they were disbursed by apparent advance to Smartbuild by Interlux on terms that were not identified. 8. As a general rule, the proper law of a contract of loan is that of the jurisdiction of the lender. [1] Certainly, a borrower who comes into the jurisdiction seeking a loan must expect to conform to the laws of the jurisdiction to which he comes. The fact that security for a loan is situated outside the jurisdiction is material in so far as a foreign law must be observed to ensure the validity and enforceability of the security. I consider, in all of the circumstances, that the proper law of the Deed of Loan was New South Wales, where the contract was made and was to be performed. Accordingly, under s 17(3) of the Review Act, the Review Act applies to the Deed of Loan, since the law of New South Wales is the proper law of that contract. 9. Section 6(2) of the Review Act provides that a person may not be granted relief under the Review Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by that person or proposed to be carried on by that person. Daniel and Jessica seek relief under the Review Act. There is nothing to suggest that the Deed of Loan, insofar as it imposes obligations on them as Guarantors, was entered into in the course of or for the purposes of a trade, business or profession carried on by either of them. It may be argued that Interlux entered into the Deed of Loan for the purpose of a trade, business or profession carried on by Interlux. However, Interlux does not, as a corporation, seek relief under the Review Act. Section 6(2) has no application in so far as Daniel and Jessica seek relief under the Review Act. 10. The pivotal provision of the Review Act is s 7(1), which relevantly provides that, where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the things set out in s 7(1)(a)–(d). That includes deciding to refuse to enforce any or all of the provisions of the contract, declaring the contract void in whole or in part or varying any provision of the contract in whole or in part. 11. Section 9(1) relevantly provides that, in determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court is required to have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of compliance with any or all of the provisions of the contract or non-compliance with, or contravention of, any or all of the provisions of the contract. Section 9(2) specifies that the matters to which the Court must have regard include those set out in s 9(2), to the extent that they are relevant to the circumstances. 12. The matters referred to in s 9(2) include the following: 1. any material inequality in bargaining power between the parties; 2. whether the provisions of the contract were the subject of negotiation; 3. whether it was reasonably practicable for the party seeking relief to negotiate for the alteration of or rejection of any of the provisions of the contract; 4. whether any provisions of the contract impose conditions that are not reasonably necessary for the protection of the legitimate interests of any party to the contract; 5. … 6. the relative economic circumstances, education or background and literacy of the parties to the contract; 7. the physical form of the contract and the intelligibility of the language in which it is expressed; 8. whether independent legal or other expert advice was obtained by the party seeking relief; 9. the extent to which the provisions of the contract and their legal and practical effect were accurately explained to the party seeking relief and whether that party understood the provisions and their effect; 10. whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief by any other party to the contract or by any person acting or appearing or purporting to act for and or on behalf of any other party to the contract; 11. …; and 12. the commercial or other setting, purpose and effect of the contract. For the purpose of s 9(2), s 9(3) provides that a person is to be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time that the contract was made. 1. Daniel had been told by Miroslav in early 2011 that he was "working with a gentleman called Zoltan to obtain a loan of $300,000", although Miroslav did not say what the purpose of the loan was. Daniel responded that that should take the pressure off Miroslav, since Daniel knew at that time that Miroslav was under financial pressure. 2. Daniel agreed that, in 2011, companies associated with Miroslav owned properties that would require millions of dollars to buy. Daniel also agreed that, in comparison with the value of Miroslav's business and his assets, the sum of $300,000 was a very minor sum. 3. Daniel read the Deed of Loan before he signed it. He accepted that he had heard Mr Illidge explain, in relation to mortgages to the Bank of Queensland in 2011, that if there were any default under the mortgages, Bank of Queensland would take possession of and sell the properties that were the subject of a mortgage. He said that he did not remember that exactly but agreed that that "would have been discussed". He agreed that, in a sense, he knew that in April 2011. While Daniel did not know that the relevant documents had been sent from Sydney to Mr Illidge, he accepted that he would have had the option to talk to somebody, such as Mr Illidge, for advice that he felt he needed about the proposed transactions but decided not to do that. 4. When asked why he felt that he could not say to his father that he would not sign the documents, Daniel responded that he was involved with and understood the pressures that his father had. He said that he was basically trusting Miroslav's judgment even though it was not something that he was feeling comfortable with. He believed his father when he said that "he was going to deliver it as well". He said that he was listening to his father and trying to be respectful but at the same time feeling uneasy as he knew that "this wasn't, you know, what you would normally want to do". He said, however, that, at the same time, he also trusted Miroslav's judgment "for him to get these funds in". He said that he believed Miroslav when he said that he would "sort this issue out". 5. Daniel did not recall having seen Miroslav's email sent at 5.23pm on 4 March 2011 but accepted that it was possible that he had. He agreed that, at the time, he appreciated that, potentially, Smartbuild would do the development at Moranbah and that it was a possibility that the development of the Moranbah Property would be performed by one of Miroslav's companies and not by Interlux. He was perfectly prepared to proceed on that basis. 6. Jessica was prepared to, and in fact did, leave all business decisions to Daniel and Miroslav. She accepted that she would be likely to sign any legal documents they asked her to sign. Jessica had been present when Mr Illidge gave advice to her and Daniel in relation to the mortgages given by Interlux to Bank of Queensland in January 2011. She knew that Mr Illidge was available to advise her if she wanted legal advice about the documents that she was signing. However, she was willing to sign, and did in fact sign without further inquiry, legal documents that Daniel asked her to sign. Jessica relied on Daniel and Miroslav in business matters rather than on anything that might have been said on behalf of Multiown. 7. Jessica accepted that she signed the Deed of Loan and other documents on 12 April 2011 because she felt that it was necessary in the interests of her larger family and that, in so far as it entailed any risk, she was willing to accept that risk in the interests of the family. She said that, at the time, there was not a lot of room for discussion. She would not have felt comfortable in saying "no" that she would not sign the documents. Miroslav said that she and Daniel needed to assist Miroslav in seeking the money that he was seeking and that their property was needed to be held as "capital or collateral". Jessica did not object to Daniel mortgaging their family home in connection with the acquisition of the Moranbah Property by Interlux in January 2011. She signed the mortgages in favour of Bank of Queensland even though she had no idea about the transactions in question. 8. The primary question in relation to the Review Act is whether the Deed of Loan was unjust in the circumstances relating to the time that it was made. The Court must have regard to the public interest and all the circumstances of the case. Daniel and Jessica assert that the terms of the arrangement evidenced by the Deed of Loan were "usurious and unfair lending". They characterise the lending and repayment obligations as "incredibly lopsided" in favour of Multiown. Thus, there was no obligation imposed on Multiown to advance the funds but a fixed sum of interest was payable in respect of the advance irrespective of when the advance was made. Daniel and Jessica contend that there is a compelling public interest in the Court not enforcing such an arrangement. 9. In considering the matters set out in s 9(2), the Court is invited to hold that Miroslav represented all parties to the Deed of Loan in one way or the other. Thus, he was responsible for conveying "the deal struck" by the Deed of Loan from Multiown to each of Daniel and Jessica and was the person who conveyed the position of Multiown to them. He was, as Mr Tomanovic said, "the obvious driving force" behind the transaction. Daniel and Jessica contend that Miroslav was the only person who stood in any position at all with respect to Multiown and Mr Tomanovic, in so far as Daniel and Jessica were concerned. They say that he represented them in relation to the documents prepared by Multiown's solicitors and was the only person to whom Daniel spoke about the terms of the Deed of Loan. In that way, they say, Miroslav assisted Multiown, Daniel and Jessica to a "significant degree" within the meaning of s 9(3). They characterise Miroslav as being "the focal point of … the negotiation (limited, or even non-existent, as it was) of the Deed of Loan". 10. Daniel and Jessica played no role whatsoever in negotiating the terms of the arrangement evidenced by the Deed of Loan or the Deed of Loan itself. They had never met Mr Tomanovic or had any dealings with Multiown prior to signing the Deed of Loan. In so far as the interests of Interlux, Daniel and Jessica were represented by anyone in negotiating the transaction and the terms of the Deed of Loan, they were represented by Miroslav. Mr Tomanovic described Miroslav as "pleading" and "getting desperate". While the substance of "the deal" was first put forward by Miroslav, initially on behalf of MSM, it is fair to say that there was inequality in the bargaining power between Multiown, on the one hand, and Daniel and Jessica, on the other, within the meaning of s 9(2)(a) of the Review Act. 11. While the terms of the Deed of Loan were, in a sense, the subject of negotiation between Miroslav, on the one hand, and Mr Tomanovic on the other, those negotiations initially related to MSM as a prospective Borrower and Miroslav and Brenda as Guarantors. The security originally offered by Miroslav was rejected and security in the form of the Moranbah Property and the Dulong Property, owned by Interlux and Daniel, were substituted by Miroslav without any inquiry by Mr Tomanovic or Multiown's solicitors, Robert Wehbe, as to the willingness of Daniel and Jessica to enter into the proposed arrangements. Multiown, through Mr Tomanovic and Robert Wehbe, simply left it to Miroslav to procure signature of the documents by Jessica and Daniel as well as by Interlux. The additional documents signed by them made it clear that they had not received legal advice, notwithstanding that the documents had originally been sent to Mr Illidge. In the circumstances, it was quite impracticable for Daniel and Jessica to negotiate with Mr Tomanovic or any other representative of Multiown the alteration of or to reject any of the provisions of the Deed of Loan. It is clear enough that, if the money was to be advanced, the documents prepared by Robert Wehbe were to be signed. It was impracticable for Miroslav, who was "pleading" and "getting desperate", to negotiate for the alteration of the provisions of the Deed of Loan. A fortiori, it was impracticable for Daniel and Jessica to stand up to Miroslav. 12. Section 9(2)(d) of the Review Act requires that the Court have regard to whether the Deed of Loan imposes conditions that were unreasonably difficult to comply or were not reasonably necessary for the protection of the legitimate interests of Multiown. It is significant that Miroslav's email of 4 March 2011 made no mention of interest. Rather, the consideration contemplated by the email for a loan of $300,000 for 12 months was the transfer of ownership of a unit in the proposed development at Moranbah at no cost to the lender. The terms then proposed by the draft sent on 18 March 2011 converted that consideration into a fixed amount of $530,000. That is to say, a promise to convey a unit in the development was replaced by a promise to pay a fixed sum of money. Just as there was no evidence of any negotiation of that variation, from the proposal put forward by Miroslav, it is not possible to conclude that the term of the Deed of Loan requiring payment of "the Sum", irrespective of when the advance was made, an obligation to be guaranteed by Jessica and Daniel, was reasonably necessary for the protection of any legitimate interest of Multiown. 13. While English is not Miroslav's first language, he has lived in Australia for a considerable period of time and his comprehension of English appeared to be very good in the course of his evidence-in-chief and cross-examination. Similarly, while Daniel gave evidence that he did not understand cl 4 of the Deed of Loan, it is apparent that he understood the balance of the Deed of Loan, which, apart from some infelicities of expression, is fairly comprehensive. On the other hand, it is also clear that Miroslav was under some form of financial pressure in so far as Mr Tomanovic considered that he was "pleading" and "getting desperate". However, there was no evidence as to the financial position of Miroslav or any of his companies. As I have said, there was no explanation offered as to the reason why Miroslav needed to borrow $300,000 urgently. There was no explanation as to whether other assets of Miroslav or companies controlled by him were not available as a basis for borrowing the sum of $300,000 that appears to have been needed so urgently. 14. Neither Daniel or Jessica, nor Interlux, if relevant, obtained legal advice in relation to the Deed of Loan. However, as I have indicated, both Daniel and Jessica had been advised by Mr Illidge as to the consequences of giving a mortgage to secure an obligation of Interlux. Daniel read the Deed of Loan and understood its effect. Certainly, he was uneasy with its terms. Nevertheless, it is difficult to see what legal advice might have been given that might have prevented the signature on the Deed of Loan by Daniel and Jessica. 15. Similarly, there does not appear to be any real doubt that Daniel, having read the Deed of Loan, understood the legal and practical effect of its provisions. It is difficult to see any further explanation that would have prevented Daniel and Jessica from executing the Deed of Loan. 16. It is patently clear that the purpose of the arrangements evidenced by the Deed of Loan was to evidence arrangements whereby a sum of $300,000 would be made available by Multiown to Miroslav or companies associated with him. While the genesis of the transaction, the email of 4 March 2011, referred to the Moranbah Property, there was no suggestion in that email that the Moranbah Property would be security. The security proposed was the Dingo Caravan Park. The original proposal was that the borrower would be MSM. In circumstances that are somewhat obscure, MSM was replaced by Interlux and Miroslav and Brenda were replaced by Daniel and Jessica. The effect was that Interlux, Daniel and Jessica were interposed between Multiown or some other person or entity associated with Mr Tomanovic, on the one hand, and Miroslav or a company or companies associated or controlled by him, on the other hand. The addition of Daniel and Jessica as Guarantors, in substitution for Miroslav and Brenda, appears to have resulted merely from the fact that Daniel and Jessica were the directors and shareholders of Interlux, which was substituted as the Borrower in order to deal with the fact that the Moranbah Property was owned by Interlux. It is entirely unclear how the Dulong Property, the home of Daniel and Jessica, came to be added as security for the proposed obligations of Interlux. 17. Having regard to the matters referred to in s 9(2)(a), (b), (c), (d), (f), (g), (h), (i) and (l), and having regard to the public interest and to all of the circumstances of the case, I consider that the Deed of Loan was unjust in the circumstances relating to it at the time it was made, in so far as it imposed obligations on Jessica and Daniel. Those circumstances are of themselves dispositive, irrespective of whether any undue influence, unfair pressure or unfair tactics were exerted or used against Jessica and Daniel within the meaning of s 9(2)(j) of the Review Act. However, the matter of undue influence overlaps very considerably with the second basis upon which relief is sought by Daniel and Jessica and the basis upon which relief is sought by Interlux, namely, that all three entered into the Deed of Loan on the basis of undue influence on the part of Miroslav. Therefore, it is convenient to consider the remaining issues together. Undue influence 1. There was no dispute as to the principles applicable to an allegation of undue influence. The doctrine of undue influence requires a relationship between the parties that goes beyond that of mere confidence and influence and requires a relationship involving dominion or ascendancy. However, it is not necessary to establish a relationship of actual dominion by one party over another. It is sufficient to demonstrate that a party in whom trust and confidence is reposed is in a position to exert influence over the party who reposes that trust and confidence. It is necessary that one party has some element of authority or superiority over the other. That element of authority or superiority may be moral or practical, as distinct from legal. [2] 2. Undue influence can exist from very different sources. For example, excessive pressure may give rise to undue influence. However, since pressure is but one of the sources for the inference that one person may exert undue influence over another, it is not necessary that pressure that contributes to a conclusion of undue influence be characterised as illegitimate or improper. A person can be subjected to undue influence where the effect of factors such as pressure is that the person has no free will. Where a party is not a free agent and is not equal to protecting himself or herself, the Court will protect him or her. Undue influence can arise from the deliberate contrivance of another, which includes pressure, giving rise to such influence over the mind of the other that the act is not a free act. The question whether a person's act is free requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Thus, pressure can deprive a person of free choice where it causes the person to subordinate his or her will to that of another party. Questions of degree are involved but, at the very least, the judgment of the party seeking relief must be shown to be "markedly sub-standard" as a result of the effect upon that person's mind of the will of another. [3] There are various ways in which undue influence can be established. There may be a presumption that a transaction was not the exercise of a person's free will if the person is proved to be in a particular relationship and the transaction is one involving a substantial benefit to another that cannot be explained by ordinary motives or is not readily explicable by the relationship of the parties. [4] 3. Relationship of parent and child is a category in which there will be a presumption of undue influence. A disposition to a child by a parent may be explicable as being the consequence of parental love and affection without any suspicion of confidence being abuse. However, undue influence may well be presumed in the converse situation, even though the child be an adult, unless the parent establishes that the child had been emancipated from parental influence at the time of the transaction. [5] 4. Having regard to the conclusion that I have reached concerning the application of the Review Act to the circumstances of Daniel and Jessica, it is strictly unnecessary to deal with undue influence in relation to their position. However, the question of undue influence remains critical for the purposes of Interlux, since it does not have the benefit of the Review Act. 5. Daniel and Jessica contend that the evidence revealed that life in the Mudri family, under the shadow of Miroslav and Brenda, whom Daniel described as "incompatible", was difficult for Daniel in relation to his parents' businesses. Thus, Miroslav was prone to using "emotional guilt" and adopting a "my way or the highway" approach in order to get his own way. He was prone to outbursts and tantrums and to leaving the family for days when he did not get his way. Daniel and Jessica contend that the pressure and influence exerted by Miroslav was a constant fact of life in the Mudri family. Notwithstanding that Daniel described Miroslav as "probably more balanced" on the day when the Deed of Loan was signed, Miroslav nevertheless sounded urgent with a hint of pressure when he assured Daniel that there was nothing to worry about and that he, Miroslav, would be looking after it and sorting it out. 6. Daniel and Jessica contend that, as Miroslav's son, undue influence on the part of Miroslav can be presumed, particularly in the case of a loan "in the harsh and oppressive terms" of the transaction evidenced by the Deed of Loan. They contend that a loan arranged by a father for his son, in the circumstances of this case, should be presumed to have been the result of the exertion of undue influence by the father on his son. Many of the factors outlined above in relation to the Review Act are applicable in considering the question of whether undue influence was exerted by Miroslav on Daniel and Jessica, as well as on Interlux, the company owned and controlled by them. It is clear that Daniel had reservations about signing the Deed of Loan but did so because of the pressure brought to bear on him by Miroslav. 7. It matters not that Mr Tomanovic or Multiown did not have notice of what Miroslav did or how Daniel, Jessica and Interlux may have been affected. Multiown was prepared to make the further advances after the Deed of Loan was made, in the knowledge that it had been signed on behalf of Interlux and by Daniel and Jessica without the benefit of legal advice and without inquiry as to the circumstances in which Interlux, Daniel and Jessica had been asked to, and did in fact, execute the Deed of Loan and associated documents. Mr Tomanovic had never met Daniel and Jessica. He, and therefore Multiown, was prepared to entrust to Miroslav the negotiation of the transaction with Daniel, Jessica and Interlux. It matters not that Mr Tomanovic may not have been aware of the circumstances in which the Deed of Loan was executed or the transaction was negotiated with Daniel and Jessica. There is no injustice in Multiown suffering the consequences of entrusting that negotiation to Miroslav. I consider that, having regard to the undue influence brought to bear by Miroslav on Daniel and Jessica and, through them, on Interlux, the Deed of Loan should be set aside. Position of Miroslav 1. By the Guarantee and Indemnity executed by Miroslav, Miroslav guaranteed to Multiown: "(a) the payment of the Guaranteed Monies; and (b) the performance of the Borrowers' obligations under the Loan Contract and any Future Loan Contract; and (c) the performance of the Borrowers' obligations under any mortgage or insurance policy that was required from the Borrower." 1. Under cl 2.2, "the Guaranteed Monies" was defined as meaning the unpaid balance "of the Loan Contact and any Future Loan Contract" together with other monies. The term "Loan Contract" appears to be defined in a title page of the Guarantee and Indemnity in the following terms: "The Loan Contract dated the … day of April 2011 between [Multiown] as the Lender and [Interlux] as the Borrower, a copy of which is attached and marked 'A'". A copy of the Guarantee and Indemnity in evidence does not have a copy of "the Loan Contract" attached. It may be that an inference should be drawn that a copy of the Deed of Loan was in fact attached to the Guarantee and Indemnity signed by Miroslav and by Brenda. 1. No argument was addressed on behalf of any of the parties as to the consequences, for Miroslav, if the Court concluded that the Deed of Loan should be set aside as between Multiown, on the one hand, and Interlux, Daniel and Jessica, on the other hand. Indeed, Miroslav, who was not represented by lawyers but appeared in person, accepted that the repayment of monies owing under the Deed of Loan was his responsibility, to the exclusion of Interlux, Daniel and Jessica. As I have indicated, the only issue as between him and Multiown was that credit should be given for a greater value of the seven lots of land at Kingaroy than was allowed by Multiown. I have ruled against Miroslav's contention in that regard. Conclusion 1. It follows that there should be an order that the Deed of Loan not be enforced as against Daniel and Jessica pursuant to s 7(1)(a) of the Review Act. There should also be an order that the Deed of Loan not be enforced as against Interlux on the ground of the undue influence brought to bear on Daniel and Jessica as directors of Interlux. I propose to direct Daniel and Jessica to bring in short minutes of orders to reflect my conclusions. 2. The position of Miroslav is somewhat more complicated. It may be that Multiown will seek to rely on provisions of the Guarantee and Indemnity that might survive the orders made for the benefit of Interlux, Daniel and Jessica. I propose to afford Multiown and Miroslav the opportunity of further submissions, if they so wish, as to the consequences of the orders that I have just foreshadowed in favour of Interlux, Daniel and Jessica. ********** Endnotes 1. See Tomkinson v First Pennsylvania Banking and Trust Co [1961] AC 1007 at 1067-68 and 1081. 2. See Brown v NSW Trustee and Guardian [2011] NSWSC 1203. 3. Birks and Chin, "On the Nature of Undue Influence", in Beatson and Friedmann (eds), Good Faith and Fault in Contract Law (Oxford University Press, 1995) 57 at 67. 4. See Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 at [30]-[36]. 5. See Meagher, Heydon and Leeming, Equity: Doctrines and Remedies (Lexis Nexis Butterworths, 4th ed, 2002) at 510–511 [15-075]. 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