New South Wales Supreme Court CITATION : LANDER v TRIGGER [1999] NSWSC 1253 revised - 22/12/99 CURRENT JURISDICTION : Civil FILE NUMBER(S) : 10021/98 HEARING DATE(S) : 25-26 November 1999 JUDGMENT DATE : 17 December 1999 Joan Irene Lander (Plt) Rodney Wayne Trigger (Def & X-cl) PARTIES : John Alfred Ralphs (1st X-def in 1st X-cl) Annette Marcia Ralphs (2nd X-def in 1st X-cl) Diana Karageorge (X-def in 2nd X-cl) JUDGMENT OF : Newman J K Tapsell (Plt, & 1st & 2nd X-def in 1st X-cl) COUNSEL : A Moen (Def, X-cl in both X-cl) J Simpkins (X-def in 2nd X-cl) Watkins Tapsell SOLICITORS : Whitelaw McDonald Colin Biggers & Paisley CATCHWORDS : ACTS CITED : Contracts Review Act Real Property Act DECISION : See para 64 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION NEWMAN J FRIDAY, 17 DECEMBER 1999 10021/98 - LANDER v TRIGGER JUDGMENT 1 HIS HONOUR: These proceedings were initially started by way of a claim for possession for land being brought by the plaintiff against the defendant. The basis of the plaintiff's claim was that the defendant had defaulted under a mortgage. 2 The subject mortgage had originally been given by Mr and Mrs Ralphs to the defendant but had been transferred to the present plaintiff. 3 In his defence the defendant relied upon s 7 of the Contracts Review Act and unconscionability in relation to the original mortgage. 4 Furthermore the defendant then issued cross-claims against the original mortgagee, Mr and Mrs Ralphs, and a second cross-claim on the basis of professional negligence against a solicitor, Mrs Karageorge whom he had seen in relation to the original mortgage. 5 The reason why the defendant was seeking a loan in about September 1995 was that he wished to undertake a business venture with an acquaintance of his named, Peter O'Shea. 6 The business venture was to involve the pair using a truck owned by O'Shea to go into the country and to collect bush rocks. Those rocks would then be sold to nurseries and others who would wish to use rocks of that type for garden decoration. 7 At the time when O'Shea and the defendant agreed to enter into the venture, O'Shea's truck was in need of repair. 8 One of the reasons why the defendant, who was an invalid pensioner, desired to obtain loan funds was to have the truck repaired so that the venture could proceed. 9 O'Shea suggested to the defendant that he should see a mortgage broker, one Michael Moloney, to obtain a loan. This the defendant did. 10 Mr and Mrs Ralphs were clients of a firm of solicitors known as Watson Tapsell. In particular Mr Albert Watkins of that firm was known to Mr Ralphs. Mr Ralphs had available the sum of $10,000 for investment purposes and this fact was known to Mr Watkins. 11 Apparently Mr Moloney was aware that Watkins Tapsell had clients' funds available to lend on mortgage security. 12 Having been contacted by the defendant he wrote to that firm advising that his client wished to borrow $10,000 on first mortgage, having enquired if Watkins Tapsell had a client who would be interested in entering into such a transaction. 13 Contact was obviously made by Watkins Tapsell with Moloney advising that they did. 14 Then followed a letter from Karageorge & Co (the second cross-defendant) to Watkins Tapsell giving title details and advising that that firm acted for the defendant. 15 The evidence indicates that the letter was probably written as a result of the actions of a Ms McAusland who it seems, performed secretarial work for both Moloney and Karageorge. 16 Watkins Tapsell replied to that letter and forwarded mortgage documents, requisitions on title and ancillary documents. 17 There is no dispute that the defendant then saw Mrs Karageorge. What then happened is a matter of considerable dispute. 18 It was the defendant's contention that Mrs Karageorge spent but five minutes with him and made a few elementary enquiries of him. He claims that he only wanted $3,000 and was unaware that the proposed loan was for $10,000. 19 On the other hand, Mrs Karageorge deposed that she spent some twenty-five minutes with him and explained the salient features relating to the mortgage and his liabilities under the mortgage. 20 The resolution of what happened at that meeting is a key factual matter in these proceedings. 21 In any event the matter proceeded in a normal fashion resulting in the defendant executing an appropriate mortgage document. Settlement of the mortgage took place on 28 September 1995 and funds were disbursed. 22 Out of the $10,000 the mortgagee's solicitor's costs, Mrs Karageorge's costs and Moloney's fees together with disbursements were exacted. 23 In the event the defendant received in his hand only about $7,000. 24 All, or a great part of that sum was passed by the defendant to O'Shea. The basis of the agreement between O'Shea and the defendant was that they would draw weekly amounts from the partnership funds and ultimately divide the profits of the venture equally. The venture, in fact, did not get off the ground. 25 The defendant got in touch with various persons to whom the partnership wished to sell bush rock and as I understand his evidence received favourable responses from those whom he contacted. Unfortunately, O'Shea squandered the funds and no bush rocks were ever collected. 26 However, the defendant proceeded to make payments under the mortgage to the Ralphs. A default occurred in June 1996. However, in response to a demand being made by Watkins Tapsell in relation to the arrears the defendant not only made up the arrears, paid a penalty for so doing but also paid his July instalment in advance. 27 Not surprisingly Mr Ralphs deposed that these actions indicated that the defendant was a reliable person. I should add that neither Mr or Mrs Ralphs, Mr Watkins or Joan Lander had ever met the defendant until after the commencement of these proceedings. 28 In August 1996 Watkins Tapsell wrote to the defendant asking whether he wished to repay the mortgage or renew it. The term of the mortgage I might add, was for one year. 29 Mr Ralphs in August 1996 advised Mr Watkins that he no longer wished to continue the mortgage and required the principal sum to be repaid to him. 30 Mr Watkins, in turn, then contacted Joan Lander, another client, and asked if she would take over the mortgage which she agreed to do. 31 Prior to Mr Ralphs advising Mr Watkins that he no longer wished to continue with the mortgage, the defendant had written to Watkins Tapsell advised that he wished to renew the loan. He repeated that request in a letter sent in November. 32 On 10 September 1996 Watkins Tapsell forwarded to the defendant a letter enclosing a variation of mortgage, a new first mortgage, and ancillary documents. In the accompanying letter Watkins Tapsell told the defendant as follows: "As these documents are to be signed before a solicitor, we should be pleased if you could approach a local solicitor for this purpose." 33 In fact, the documents were signed before a person whose address was the Court House, Kurri Kurri. However, nothing would seem to turn on the identity of that person. 34 There is nothing remarkable about any of the mortgage documents whether they be the documents relating to the original loan or to the loan from the Ralphs or to the transfer of the security to Joan Lander. 35 The variation of mortgage was registered at the Land Titles Office on 30 September 1996. Mr Watkins forwarded the Ralphs a cheque for $10,000. 36 The defendant continued to make payments under the mortgage for approximately another year. He then defaulted in September 1997. 37 In October 1997 the plaintiff served a notice pursuant to s 57(2)(b) under the Real Property Act on the defendant. 38 These proceedings were commenced on 7 January 1998. As I have indicated above the matter which gives rise to the principal factual dispute in the matter was the contents of the first meeting between Mrs Karageorge and the defendant. 39 That meeting took place on 25 September 1995. In his affidavit, the defendant deposed as to how that meeting came about and the contents of it. That part of his affidavit is as follows: "On 25 September 1995 I went to the offices of Diana Karageorge solicitor. Peter came with me to Sydney. I was requested to see Diana Karageorge by Michael Moloney. I did not know Ms Karageorge before this day and had not heard of Ms Karageorge before this day. Diana Karageorge introduced herself. The meeting with Diana Karageorge lasted no more than five minutes. I said to Diana Karageorge: 'I am on a pension.' Diana Karageorge said to me: 'You will be able to make the repayments easily. It's only twenty dollars a week.' Ms Karageorge did not read the documents to me. Diana said: 'Do you understand what is in the documents.' I said: 'I think I do.' I signed the documents but did not understand what I was signing. I wanted the money and wanted it all over and done with. I was depressed and fearful at the time that I signed the documents. I received no advice as to the legal and practical effects of the loan documents. Ms Karageorge never advised me that I would lose the house if I did not make the repayments. I have had little experience in reading legal documents." 40 On the other hand as I have already noted, Mrs Karageorge denied that this meeting was of such a desultory nature. 41 Her evidence was that she explained to the defendant who she was and why she was seeking him and she gave a full explanation of the liability which he would be undertaking should he enter into the mortgage transaction. 42 Not only that she claimed she discussed the question of him obtaining long term finance at the completion of the term of the loan. 43 Not only did she deny the contents of the alleged conversation deposed to by the defendant but she stated that she believed he was a truck driver. File notes which she kept at the time are confirmatory of that evidence. 44 In support of the defendant's claim as to his understanding of the original transaction, a report from a Dr Rickarby, psychiatrist, was tendered in evidence. Dr Rickarby certifies that the defendant in fact, is suffering from schizophrenia, major depression and alcohol dependant disorder. He comes to certain conclusions which are dependent upon the history he had been given. 45 While I have no reason to doubt Dr Rickarby's diagnosis, the conclusions he draws are as a result of all histories which he received which in fact differ from the factual findings which I am about to make. Accordingly, I do not find his evidence of assistance to the defendant. 46 In the light of the defendant's actions following the completion of the original mortgage transaction which as I have said, included not only making repayments on time but when in default, correcting that default in accordance with the conditions of the mortgage and his understanding as evidenced by his letters in August and September 1996 to Watkins Tapsell of the need for him to renew the mortgage, I am of the view that in fact as Mrs Karageorge did advise him thoroughly as to his liabilities under the mortgage as she deposed she did I thus accept her evidence in the matter in preference to that of the defendant wherever their testimony is in conflict. 47 It follows that I am of the view that the defendant was well aware that the mortgage sum was $10,000 and that he was fully aware of his liabilities and responsibility under that mortgage. 48 He was seeking a loan for a business purpose. Unfortunately that business collapsed through no fault of his own or for that matter any of the other parties to this litigation. It collapsed because of the conduct of his prospective partner, Mr O'Shea. 49 It may well be that his introduction to Mrs Karageorge was unconventional. However, as I have said, I am satisfied that she did tender appropriate advice to him and as I have said subsequent actions confirm that he understood that advice. 50 Accordingly, there is nothing about that transaction which was unconscionable. Thus, in so far as unconscionability is concerned the defendant has failed to make out his case in that regard. 51 He also relies upon s 7 of the Contracts Review Act 1980. 52 Section 6(2) of the Contracts Review Act is in the following terms: "A person may not be granted relief under this 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 the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales." 53 In Ellison v Vukicevic (1986) 7 NSWLR 104, Young J decided that a contract to grant a mining lease was for the purpose of a "trade, business or profession". He cited, with approval, an unreported judgment, 11 May 1984 of Lee J Collings v Parker where Lee J said: "The expression 'for the purpose of' has the meaning that the contract under consideration is entered into as an ordinary incident of the carrying on of a particular trade, business or profession then being carried on or proposed to be carried on." 54 His decision was cited with approval by Toohey and Gaudron JJ in Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at 400. 55 Because the purpose of the defendant seeking to borrow money was for the purpose of entering into a partnership to obtain and sell bush rocks, I am of the view that s 6(2) applies and that thus the defendant is precluded from obtaining relief under the Contracts Review Act. 56 It follows that in relation to the first transaction the defendant has failed to make out his case. 57 The consequence of this is that his cross-claim against the Ralphs must fail in view of my findings as to the appropriate nature of the advice tendered by Mrs Karageorge to him. His claim against her for professional negligence must also fail. 58 In relation to the second transaction, Joan Lander has the benefit of s 42 of the Real Property Act. Section 42, relevantly, is in the following terms. "42.(1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except: (a number of exceptions which do not apply to this are then mentioned.) (2) In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio." 59 It follows that in any event, s 42 stands in the way of the defendant obtaining the relief he seeks by way of defence to her claim. 60 I should add that I see nothing untoward in the manner in which the variation of mortgage was carried out by Joan Lander's solicitors. As far as they were aware, the defendant had been advised by Mrs Karageorge as to his rights and liabilities under the original mortgage. As I have found that confidence was not misplaced. 61 While Watkins Tapsell did not specifically tell the defendant to seek advice from a solicitor they told him to go and see one in order to have the documents executed. They, of course, were not aware that the defendant was suffering from any psychiatric malady. 62 However, s 42 in any event makes Joan Lander's title indefeasible. Accordingly, the defence cannot succeed as against her claim. 63 Accordingly it follows that the plaintiff must succeed in her claim for possession and that the defendant's cross-claims against the Ralphs and Mrs Karageorge must fail. 64 Accordingly there will be judgment for possession for the plaintiff and judgment for the cross-defendants on the cross-claims. 65 I shall defer the entering of judgment until delivery of these reasons so that the amounts of debt owed by the defendant to the plaintiff may be calculated. 66 I shall also defer making any costs orders until delivery of these reasons. Last Modified: 12/22/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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