New South Wales Supreme Court CITATION : Woodvale Park v Thomas [2001] NSWSC 1182 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3463 of 2001 HEARING DATE(S) : 10, 11, 12 December 2001 JUDGMENT DATE : 12 December 2001 Woodvale Park Pty Limited (Plaintiff/Cross Defendant) PARTIES : David Gordon Thomas (First Defendant) Regency Financial Services (NSW) Pty Ltd (Second Defendant) JUDGMENT OF : Windeyer J at 1 Mr M Tobias QC with him Mr C M Simpson (Plaintiff) COUNSEL : In person (First Defendant) Mr J Armfield (Second Defendant) Acuiti Legal (Plaintiff) SOLICITORS : in person (First Defendant) Cabarrus & Associates (Second Defendant) CATCHWORDS : EQUITY - undue influence - option to purchase lands - whether obtained under duress - Contracts Review Act - whether option agreements unjust LEGISLATION CITED : Contracts Review Act 1980 Conveyancing Act 1919, s622G, s662I DECISION : See paragraphs 32 to 38 - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WINDEYER J WEDNESDAY 12 DECEMBER 2001 3463/01 WOODVALE PARK PTY LIMITED v DAVID GORDON THOMAS AND ANOTHER JUDGMENT 1 HIS HONOUR: The claim of the plaintiff Woodvale Park Pty Limited, which I will call "Woodvale" is that it is the assignee from the second defendant Regency Financial Services (NSW), which I will call "Regency" of an option given by the first defendant, Mr Thomas, to Regency to purchase a property of his at Blaxland, and an assignee from Regency of another option given by Mr Thomas to Regency to purchase a property of his at Emu Plains. 2 In essence, Mr Thomas says that he did not give any option to Regency in respect of either property, that insofar as he signed option agreements that they are not valid for various reasons relating to execution and the requirements s662G and s662I of the Conveyancing Act 1919 as to exchange of counterparts which had annexed to them copies of the contract which was to come into existence if the options were exercised. 3 In addition to that, he says that the options, if they exist, should be set aside because they were obtained under duress meaning, as I understand it for these purposes, undue influence; and, finally, if those arguments fail, that he should obtain relief under the Contracts Review Act 1980 because the option contracts were unjust within the meaning of that Act. 4 The evidence is that Mr Thomas and Mr Johns, who is in fact the sole director and, as I understand it, the sole shareholder of Regency, had been in negotiations for some time in the year 2000 in respect of a proposed joint venture for the development of the land of Mr Thomas at Emu Plains. There were discussions about the same time as to the land at Blaxland. Mr Thomas had in fact entered into a contract for the sale of the Blaxland land to a purchaser in 2000 for an amount in excess of $4 million. That contract was eventually rescinded by the purchaser, the evidence at least of Mr Johns being that there was every opportunity under the terms of that contract for that rescission to take place. 5 There were, according to Mr Johns, then negotiations and discussions about both properties, and Mr Johns says that eventually separate options were signed at his house on 4 December in respect of both properties. An option was given, according to Mr Johns, by Mr Thomas to Regency to purchase Emu Plains for $700,000, and an option was given to purchase the Blaxland property for $2.5 million. The evidence of Mr Johns is that these documents were prepared by a solicitor, who was not his normal solicitor; that they had annexed to them forms of contract which would come into existence if the option were exercised in accordance with the requirements of the Conveyancing Act; and that these documents were exchanged. 6 His evidence is that he realised these option documents were not in satisfactory form and that he arranged for new options to be prepared by his normal solicitor, Mr Currie of Messrs Canabus & Associates, and that he asked Mr Thomas to go to his house on 14 December to sign these. He says that Mr Thomas attended, that his wife, Mrs Johns was there, that his employee, Mr Timothy Jeffrey, came during the evening and witnessed the signature of Mr Thomas which was put on the documents in the presence of Mr Jeffrey. He says that there were annexed to both options, both in duplicate, copies of the contract of sale as required by the Conveyancing Act and that these were exchanged. 7 Mr Thomas said at the start that nothing was signed on 4 December, but the evidence is perfectly clear that the unsatisfactory document was signed on that date. He says that Mr Jeffrey was not present on that occasion. He says that on 14 December he was present at Mr Johns's house, that nobody else was present - certainly that neither Mrs Johns nor Mr Jeffrey was present, that he was frightened of Mr Johns, and that he felt that if he did not sign the documents then he would be placed in a position of some threat to him, and that accordingly he signed. He said that the contracts were not annexed to the option agreements at the time that he signed them. He said that he was given no opportunity to read the documents because, as I understood his evidence, he did not have his reading glasses with him and was prevented by Mr Johns from getting them. 8 There is one other matter to which I should make reference. It is not disputed that the documents which were signed on 14 December were not dated as at that date but were dated 4 December. This was at the wish of Mr Thomas because as the options could be exercised within a period of one thousand days Mr Thomas wished the time to run from the earlier date. 9 On 4 December, at the time it is claimed by Regency that the first documents were signed, Mr Thomas signed a document stating that he did not wish to obtain legal advice, the evidence being that he was satisfied that he had sufficient experience in the property matters to make any such advice superfluous. He, himself, has said that he has no great faith in lawyers. He said this was dictated to him by Johns, and that he signed it in fear. 10 The options provided as to the Emu Plains land that there would be an option fee of $8,000, and as to the Blaxland land there would be an option fee of $25,000. According to Mr Johns, those payments of those amounts were made by separate cheque on 4 December Mr Thomas, having signed a receipt to that effect. There are in evidence numerous documents which appear to bear the signature of Mr Thomas, some of which he challenged in the witness box, mostly when they were contrary to his case. I find and I have no doubt that all those documents were signed by him. 11 The day following the execution of the second batch of agreements, namely 15 December 2000, Mr Thomas says that he wrote to Mr Johns stating that having read the option, which had been given to him to sign without reading it, he withdrew the properties from sale and withdrew the options. He said that he would return the deposits later. There is conflicting evidence about whether or not the amount of the deposit was ever returned, the cheque was never cashed, and I have come to the conclusion that the repayment said to have been made was not made, but really little turns on that. 12 Mr Thomas said that the $33,000 which was paid to him by the two separate cheques was not paid for that purpose, was not paid on 4 December but at some later date, and was paid as contribution towards a joint development which he and Mr Johns were considering undertaking in respect of the Emu Plains land, and for which it is fair to say some preliminary plans were prepared by an architect engaged for that purpose. It is, I think, perfectly clear that the two cheques were paid as option fees or consideration for the options, and certainly the sum was not paid for the purpose for which Mr Thomas now says that they were paid. In fact all the evidence is against that argument. 13 It is necessary now to consider whether or not I should accept the evidence of Mr Johns, his wife, and Mr Jeffrey as to the persons present when the documents were signed on 14 December or whether I should accept the evidence of Mr Thomas that only he and Mr Johns were present. 14 There is of course the fact that Mr Jeffrey's name and signature appears as a witness to those documents. That of course does not prove that he was there at the time, because there can be no doubt that from time to time persons affix their signatures as witnesses when they were not present when the document purported to be witnessed was executed. In this case, however, I see no reason to disbelieve the evidence of Mrs Johns and the evidence of Mr Jeffrey. Without in any way taking away credit from Mr Jeffrey, I thought the evidence of Mrs Johns was plainly true and was given in such a way that it ought to be accepted as the truth. I have no doubt that she was there on 14 December, and I have no doubt that she was there on 4 December. Not only that, the signature on the execution of the documents appears to have taken place in a friendly atmosphere, and I accept that Mr Thomas stayed in the Johns house for a considerable time for dinner, and that Mr Jeffrey was not there for dinner but came for the purpose of witnessing the signature. 15 I also, in choosing between the versions of Mr Thomas and the version of Mr Johns and Mr Jeffrey, find that the contracts which were to come into force if the option were exercised, were annexed to the option agreements and that the signature of Mr Thomas, which appears in various places on those documents, was his signature. I make that finding because he did at one stage appear to cast doubt upon whether or not the signatures were truly his signatures. 16 I also find that counterparts were exchanged of each option, as is now required by the provisions of the Conveyancing Act. In making all these findings I accept the evidence of Mr Johns, Mrs Johns and Mr Jeffrey rather than that of Mr Thomas. There is every reason to do so. Mr Thomas was not a good witness and on a number of matters his evidence was contradictory. 17 It is necessary then to determine whether or not the claim of duress is made out. 18 This claim appears to have been founded upon some evidence of Mr Thomas that Mr Johns is and had been a violent man and that he was aware of this. I accept that after there was an altercation between Mr Thomas and Mrs Johns about caveats having been entered against the title to the properties by the assignee, Mr Johns may have made some aggressive comment to Mr Thomas, but that has nothing whatsoever to do with any claim for duress as to the signature of the options on 14 December. 19 The question is whether or not there was some undue pressure put on a man who is not shown in any way to be in any way under any disability, apart from the fact that he is 75 years of age. He has shown throughout these proceedings that he is well able to look after himself, and in fact insists on doing so. He has been, on his evidence conversant with his properties for very many years. He has had numerous bouts of litigation about his properties with the local council. He has put in development applications with the Blue Mountains City Council. He understands about the requirements for development. What he says is that he did not wish to sell his properties, that he always intended to retain them for the benefit of his children, and that he would not have signed anything had it not been for the undue pressure of Johns. 20 One thing that bears against this is he signed the documents on two occasions. If there had been some duress on the first occasion it seems to me to be quite unlikely that he could have been pressured into signing on the second occasion; he would have done the something about it to ensure that he was protected from this happening again. He did not have to go to dinner in the Johns household if he did not wish to do so. 21 There is really no evidence of duress. The evidence about Mr Johns having had his teeth knocked out was not shown to have any bearing on this matter; the evidence of an Apprehended Violence Order being obtained against Johns had not connection with the duress claim. Certainly that order had been obtained, but about 18 months earlier. This appears to have been known to Mr Thomas who, nevertheless, was prepared to maintain a friendly relationship with Mr Johns. I should add none of the other factors which sometimes give rise to a successful claim of undue influence, such as illness, lack of education, old age and the like, are put forward in this case, and if they had been it does not seem that they could have been found to exist. 22 The final matter then for decision is whether or not there should be some relief given under the Contracts Review Act 1980. 23 The only basis on which this claim could possibly have been made would seem to be that because Woodvale has been prepared to pay, in certain circumstances, a price for the land well in excess of the price payable to Mr Thomas by Regency if the options are exercised, that I should find that the land has been sold at a significant undervalue and that therefore the contract is unjust. Mr Thomas did not put forward any real argument on this but I should consider the matter as if he had. 24 There was a valuation of 12 May 2000 known to both Mr Thomas and Mr Johns of $2.35 million for the Blaxland property; there was a subsequent valuation made a few months later which put forward a price for the Blaxland property of $3.5 million. The evidence of Mr Johns, which I accept, which is partly to his credit and partly not to his credit, is that this second valuation by the same valuer was obtained in an effort to assist Mr Thomas with the earlier contract, to which I have referred, under which the property was sold for $4.2 million, to try to persuade the purchaser under that contract to continue with the purchase rather than to rescind the contract. Thus efforts were made, according to Mr Johns, to convince the valuer to increase the figure at which he valued the land on various grounds, which may or may not have had some proper basis in fact, but which at least would appear to be very doubtful. 25 In any event that valuation, apart from evidence of the figure, cannot really establish the value of the Blaxland land at the time the option agreements were entered into, and I do not think that it can be used to show in any way that there was a significant undervalue in price, so far as the price at which the Blaxland option could be exercised were concerned. 26 The other matter put forward, was that if the options are exercised by Woodvale as assignee, then the result will be that Regency will receive an amount of $1.3 million more than the price at which the options could be exercised by it. I do not think that those figures can go to show that the original option prices were so substantially below a proper value that any relief should be given under the Contracts Review Act on the basis that there is substantive injustice in the contracts as they exist. I should say that it has not been established, as I have found against Mr Thomas in respect of his claims of pressure, that there was any procedural injustice in bringing the contracts into existence. 27 There is no evidence, apart from the valuation of $2.35 million, of the value of the Blaxland land at the time the option was entered into, and it is clear there was negotiation about that price because the Blaxland land was ultimately agreed to be subject to the option at a price of $2.5 million. There is no evidence whatsoever of the value of the Emu Plains property to show the option price represented a significant undervalue. 28 There is one other matter which needs to be dealt with in these proceedings. This action came before the court and was the subject of this expedited hearing, because Mr Thomas not only denied the existence of the options but also refused, pursuant to that denial, to sign documents which are required and which would be required, had there been no assignment, to be signed so that necessary applications could be made to the Blue Mountains City Council, and also refused to allow appropriate inspections of the properties to be made. 29 There is no doubt that under the option agreements Mr Thomas was obliged under clause 7 to give consents or complete documents necessary to enable Regency to progress, as was said there, any applications for development, rezoning, subdivision and the like, with the appropriate council. There is also no doubt that under clause 7.2 Regency and its assigns were authorised to have access to the property for the purpose of bringing forward its applications to the council and for soil tests and the like. 30 One of the matters, which was not really argued but appears to have been raised by the defence, was that under clause 7.1 only the grantee would have the right to require Mr Thomas to sign the necessary authorities to enable the matter to progress. 31 The agreement provides in clause 3 that the benefit of the option can be assigned by the grantee. In my view there can be no doubt that under the authority to assign the benefit of the option comes with it on assignment of the rights to lodge the necessary applications as required by council, and therefore the right to require the grantor to execute all documents necessary for the pursuit of such rights. There would be no purpose whatever in a clause authorising assignment if the rights of the grantee of the option were in some way said not to go with that assignment. I should add that this matter was not really argued, and I do not know whether or not it was pursued by Mr Thomas, but in case it was, I just add that to the judgment. 32 The result of all of this is that the plaintiff is entitled to the orders which it seeks. 33 I make the declarations as sought in paragraph 1 of the statement of claim. 34 I make the orders sought in paragraphs 2 and 3 of the statement of claim. 35 I order that the first defendant pay the plaintiff's costs of the plaintiff's claim against him. Liberty to the plaintiff on seven days written notice to the first defendant to apply for any consequential relief, including an order under s.100 of the Supreme Court Act in the event of the refusal or failure of the first defendant to comply with order 3 within seven days of being requested to do so, or any failure to abide by the provisions of clauses 7.1 or 7.2 of the said deeds. I order that the plaintiff's claim against the second defendant be dismissed with costs. 36 Further an order has now been made that the plaintiff's claim against the second defendant be dismissed with costs. The plaintiff seeks an order that the costs, which the first defendant is to pay to the plaintiff, should include the amount of the costs ordered in favour of the second defendant against the plaintiff. In my view, it was necessary to have the second defendant joined to establish the rights between all parties in these proceedings, particularly as the rights of Woodvale were dependent upon the validity of the options between Mr Thomas and Regency, which he contested, and which have really been the true issue in these proceedings. 37 In those circumstances I consider it appropriate that a special costs order be made. 38 I order that: 1 The first defendant pay to the plaintiff the amount of costs ordered to be paid by the plaintiff to the second defendant. 2 The exhibits be returned after 28 days if no appeal is lodged. 3. Exhibit A be handed out now to the solicitors for the plaintiff so that they can give effect to their undertaking as to stamping and to be retained by the plaintiff's solicitors in its present form until the expiration of 28 days. They are to return it to the court if an appeal is lodged. 4. 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