New South Wales Supreme Court CITATION : Palenzuela v Palaje & Ors [2009] NSWSC 1371 HEARING DATE(S) : 17.08.09, 18.08.09, 19.08.09, 20.08.09 JUDGMENT DATE : 9 December 2009 JUDGMENT OF : Nicholas J DECISION : Par 62 CATCHWORDS : CONTRACTS - whether contract of guarantee and security formed - turns on own facts - no question of principle LEGISLATION CITED : Contracts Review Act 1980 Conveyancing Act 1919 CATEGORY : Principal judgment Composite Buyers Ltd v Soong (1995) 38 NSWLR 286 CASES CITED : Cubillo v Commonwealth of Australia [2000] FCA 1084; (2000) 174 ALR 97 Palenzuela v Palaje [2008] NSWSC 527 Palaje v Palenzuela [2008] NSWCA 349 Nelia David Palenzuela - plaintiff PARTIES : Maria Concecion Palaje – first defendant Emily Palaje – second defendant Antonio Mauceri – third defendant FILE NUMBER(S) : SC 1226/07 M W Sneddon/P D'Arcy-King - plaintiff J Atkin – first defendant COUNSEL : No appearance – second defendant No appearance – third defendant McLaughlin & O'Riordan Solicitors - plaintiff SOLICITORS : S M Boyle & Co Solicitors – first defendant No appearance – second defendant No appearance – third defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Nicholas J 9 December 2009 1226/07 Palenzuela v Palaje & Ors JUDGMENT 1 His Honour: By her amended statement of claim filed 11 February 2008 the plaintiff claims declarations that the first defendant guaranteed the repayment to her of all money owed by the second defendant, and that the plaintiff has an equitable interest in the real property of the first defendant as security for the guarantee. The relief sought is said to arise under a contract made in August 2004, alternatively by way of estoppel. 2 The first defendant by her cross-claim filed 10 May 2007 claims relief under the Contracts Review Act 1980 in the event that the plaintiff's contract claim succeeds. 3 No relief is sought against the second and third defendants. On 13 July 2005 the plaintiff commenced proceedings against the second defendant in the District Court for the recovery of loans in the total sum of $191,604.34. She obtained judgment in default about six months later. The loans remain unpaid. 4 For convenience, I refer to the plaintiff as Nelia, to the first defendant as Maria, to the second defendant as Emily and to the third defendant as Tony. Nelia, Maria and Emily are of Filipino origin, and have lived in Australia for many years. Maria is Emily's mother. Nelia and Maria have known each other for about 50 years. At least until the commencement of these proceedings their relationship was close, trusting, and affectionate and such that Nelia refers to Maria as "Tiang" (equivalent to "Auntie"). At relevant times, Emily carried on business as a retailer of furniture under the name "Victoria Collection" at Rozelle, with Tony, with whom she had a de facto relationship. 5 It is common ground that between December 2003 and April 2004 Nelia made loans to Emily in the total amount of $75,000. It is also common ground that in August 2004 Nelia lent Emily an additional amount of $100,000. The principal issue in this case is whether Maria personally guaranteed to Nelia the repayment of Emily's borrowings, namely $175,000, alternatively, the repayment of the loan of $100,000. Maria has denied agreeing to provide such guarantee. 6 The other, and related, issue is whether the statement dated 15 May 2005 which was signed by Maria at the Star City Casino, Sydney, (the statement) evidences her admission of the guarantee, and operates as a charge over her property at Kensington to secure the guarantee. It is accepted that Maria signed the statement. 7 In her defence, Maria denies the pleaded bases of Nelia's claim. With reference to the statement, Maria alleges, inter alia, that she was induced to sign by Nelia's false representation that it contained a statement only to the effect that Maria witnessed the plaintiff loaning [sic] Emily an amount of $100,000, and that the document was required by Nelia in order to apply for a loan from St George Bank. The August 2004 loan 8 Nelia relied upon the statements made to her by Maria on 11 August 2004 during a conversation on their way to the Blacktown branch of the Commonwealth Bank of Australia immediately after they had attended a conference with Nelia's solicitor, Mr Aydin Acar. As Maria disputed Nelia's version of the conversation, it will be necessary to evaluate the reliability of each as a witness. In doing so, it is important to keep in mind that the relevant events took place over 5 years ago, and neither kept a contemporaneous diary note or other record. Thus evaluation of their evidence of the conversation requires an understanding of the events which preceded it and the circumstances in which it took place. 9 It is convenient to begin with a summary of the situation of the parties as at the beginning of August 2004. The underlying matters were not in dispute and, in any event, there was ample evidence of them. (Earlier background details are contained in the judgment of Barrett J in Palenzuela v Palaje [2008] NSWSC 527, and on appeal, in the judgment of Tobias JA [2008] NSWCA 349.) 10 Maria and Emily were the registered proprietors as joint tenants of a property at Prince Charles Parade, Kurnell (the Kurnell property). They were in the process of completing arrangements made in early May 2004 whereby Maria would transfer her interest to Emily for the consideration of $350,000. On 17 May 2004, under this arrangement, Emily made a part payment to Maria of $197,892.40, and Maria executed the relevant transfer. The balance of $150,000 was secured by an unregistered mortgage over the property dated 5 May 2004. The property was subject to a registered mortgage, and secured finance arranged by Emily from which source she paid her mother. (The transfer to Emily was not registered until 17 November 2004.) Nelia knew of these arrangements. She had witnessed the signatures of Maria and Emily on the mortgage agreement, and Maria's signature on the transfer 11 Nelia, a pensioner, was the registered proprietor of the property at Torrance Crescent, Quakers Hill (the Quakers Hill property) which secured a line of credit provided by ING Bank. Part of the $75,000 lent to Emily had been drawn under this advance. 12 At this time Emily was in a perilous financial situation. In late July 2004 she required refinancing in order to fund her business operations and to repay her debts to Nelia and Maria. However, her solicitors advised that it had become necessary for her to obtain the amount of $100,000 to pay a creditor in order to avoid "liquidation", which payment was required urgently. The timing had become critical. In these circumstances Emily asked Nelia to lend her that sum "to get out of the liquidation" (T p 272). Nelia said she would think about it and speak to her solicitor first. 13 Maria was the registered proprietor of the property at South Dowling Street, Kensington (the Kensington property). It was unencumbered. She knew Emily was in desperate and urgent need of money to meet the threat of liquidation, and was anxious for Emily to obtain financial assistance. She believed Nelia was the only person likely to provide any money to Emily. 14 On 4 August 2004 Emily, as borrower, signed a document entitled "Promissory Note" by which she agreed to repay Nelia the sum of $175,000 on demand, or by 30 October 2004. The evidence was unclear as to the circumstances in which it was prepared, or the purpose for which it was provided. I make no finding about it other than to observe that it shows that by this date Emily had requested Nelia to lend her an additional $100,000 and had undertaken to repay the total borrowing within the time specified. 15 On 5 August 2004 Maria obtained from the Blacktown branch of the Commonwealth Bank of Australia a bank cheque payable to Emily for the sum of $50,000 from funds held on a term deposit, which she described as her last emergency money. This she did at Emily's request. 16 On the same day, at the same branch of the bank, Nelia deposited a bank cheque for the sum of $104,990 drawn on ING Bank being the proceeds from a line of credit secured on her property at Quakers Hill. The deposit was to her account with the bank's branch at George and Market Streets Sydney. 17 It was accepted during final submissions that, as evidenced by Nelia's bank statements, the visit to the bank when the cheque for $94,217 was handed to Emily, took place on 11 August 2004. 18 I now turn to the conference with Mr Acar in his office at Blacktown. It had been arranged by Nelia for the purpose of obtaining advice on whether or not to lend the money to Emily. It was attended by Nelia, Maria and Emily. Maria and Emily knew of the purpose. It took place on the same day, and shortly before they went to the bank. 19 Mr Acar and the parties each gave an account of what was said at the conference. I prefer Mr Acar's version, which was unchallenged. I found him to be a truthful witness and accept his evidence. In any event the other versions, although less complete, were substantially consistent with his. To the extent that Maria's and Emily's versions differed from his, I find Mr Acar's version should be accepted as correct. 20 Relevantly, Mr Acar's evidence included the following: T p 123 (l 24-l 35): "Q. Are you able to give us the substance of what you said and what any one of them said? A. The substance of what I said; I told Nellie she shouldn't dare lend any money to Emily or Maria without a mortgage or a guarantee - sorry, the words were, without a mortgage from Emily or if the mother is going to guarantee Emily then a mortgage to secure that guarantee. SNEDDON Q. So the words "do not lend the money without a mortgage and guarantee" was your advice? A. Correct …" and T p 124 (l 1-l 30): "Q. Did you explain to any of the persons there why you were asking them questions about their property? A. Yeah, yes. I was definitely - I was - I'm sure that I did explain to them that the only way that money could be lent is if a mortgage was granted by whoever it was that was the borrower. I knew then that Emily was to be the borrower and when we investigated her properties I advised Nell to not lend the money to Emily based on Emily's mortgage and then the mother - there was discussion. I think Emily brought up the fact that the mother had a unit in Kensington and then I was told that it was unencumbered at the time. SNEDDON Q. Who said that? Was it Emily or the mother who said that in relation to the Kensington property? A. I believe Emily said that but in the presence of the mother; they were sitting next to each other. Q. And can you recall what was said? A. Well, I simply asked Is there a mortgage on that property and they said no, it's unencumbered, and - and that's where we got onto the situation of guarantee and mortgage. I said, "look, Nell, you need to secure yourself if you lend the money to Emily, the mother, don't you dare lend this money without a guarantee from the mum and that guarantee to be secured by way of a mortgage on a property". I believe the property was at Kensington from memory. Q. And during those conversations present was both Nellie Palenzuela, Emily and Maria Palaje? A. Correct …" and T p 131 (l 41-l 50): "Q. What did you say the guarantee in relation to? A. The guarantee was to secure the daughter's obligations but to make sure that the mother offered a mortgage to secure the guarantee. I recall saying the words the guarantee is worthless if there's nothing backing it up. Q. And who on your advice would be the guarantor? A. The mother. Q. And all three ladies were present when that was said? A. Correct." 21 In cross-examination he agreed that he told them that in his opinion the Kurnell property was not good security as it was encumbered. After leaving Mr Acar's office the parties went to the bank which was nearby. It was whilst they were walking to the bank that the critical conversation between Nelia and Maria took place. Emily's evidence, which I accept, was that although she accompanied them, she did not participate in it, and did not hear what they said to each other. 22 Nelia's evidence was (T p 37): "Q. … before you made reference to why the money was advanced you mentioned a conversation with Maria. Doing the best you can and in direct words as to what you recall being said, do you recall when and what words are used? A. When we left Mr Acar's office, upon the advice of Mr Acar that I shouldn't lend the parties money unless there will be a mortgage, some sort of security to the loan I should not lend the money. So at - by that when we left Mr Acar's office I asked them, 'What shall we do? Mr Acar asked, told me, advised me not to lend you any more money unless there is some sort of security'. Walking down the street, because the Commonwealth Bank was just across Mr Acar's office Maria and I were holding hands, she was holding on my arm walking, we were walking towards the Bank. I told her, "What shall we do? I cannot lend the money" and she told me that, "Don't worry about it Nellie. I personally guarantee that you will - that I will pay you, the money will get paid". You know, "that we have properties to back up the loan" and she started - they told me and Emily was also in the conversation, she was walking a little bit maybe two or three steps ahead of us, and - and she said "You know the property at Kurnell is worth so much and we have the property at Pyrmont" and Maria said "The Kensington property I don't owe anything but I don't live there because - because Robyn is staying there" so with that being told I - I was - I was confident that I will get my money back because they - she told me that they have the properties to back up the loan. Q. And in relation to the conversation, do you recall after you left Mr Acar's office how long did you speak before you went from Mr Acar's office to the bank? How long was the conversation for? A. From the moment we were going down the stairs, because Mr Acar's office upstairs; from the moment we were going down the stairs up to the Bank. Q. And was there any urgency expressed in relation to -- A. They said "What are we going to do? Mr Acar is asking for a mortgage. We don't have time. The liquidators are closing in. We need to get the liquidators paid …" and (T p 39): "Q. … What did you say? A. I told them, "What are we going to do now, because the solicitor advised me to get a mortgage off you" and Emily said "There is no time" and Maria said, "There is no time but don't worry about it Nellie, you will get your money back. You know that we have properties to back up the loan and I personally guarantee that you will get paid". Q. What did you say to that? A. I - I told them, "Just make sure that when you get the money back you will pay me straight away because the banks are also closing in to me" and I wanted to process the properties. HIS HONOUR Q. Did Maria make any reply to that? A. Yes. Q. What did she say? A. Maria said, "Don't worry. In two or three days time you will get your money back", two or three months time I am sorry, it was days or month. SNEDDON Q. And in relation to you advancing the additional $100,000, would you have advanced the money but for what Maria told you? A. If not for what Maria told me I would never advanced the money anymore because Emily has not paid me the previous amounts and I was already financially, you know, in trouble." and (T p 42): "Q. In relation to the words said by Maria in respect of the $100,000, what about the other $75,000 was that discussed as well in relation to how it's going to be repaid? A. Definitely it was discussed. HIS HONOUR Q. Who said what to whom? What did you say, what did she say? A. I said, "What about the 75,000?" We sort of agreed just to consolidate the two to 170 and Maria said and Emily as well said that "You can put the 175 together and we will guarantee that". Maria said "I guarantee the 175,000". SNEDDON Q. Was there anything else said in relation to the conversation that you recall from the solicitor's office to the Bank? A. Maria said not to worry because, like I said she said "I guarantee the payment of the loan". Q. In relation to your past dealings with Maria, do you take Maria from your own point of view as someone by her word? A. Yes. I have no - not a single doubt of what she was telling me because I told her many times - I look up to her as my own mother, nothing more." 23 Under cross-examination Nelia confirmed her reliance upon Maria's statement in deciding to lend Emily the money, and adhered to her account that Maria said she would personally guarantee repayment of the loan. She said (T p 101): "Q. Mrs Palenzuela, if you don't recall particular words used by either Mr Acar or other circumstances surrounding that day, how do you recall Maria using those words? A. Because they were important to me. Maria's guarantee is very important to me. Maria's word is very important to me. That is the - that is my deciding point, whether to lend the money or not. Q. You said this, "Maria's guarantee is very important to me"? A. Yes at that time." 24 Maria's evidence (T p 149) was that, on leaving Mr Acar's office, Neila said "… Mr Acar advised against me lending money to Emily, but I am not going to listen to him, I'm going to lend money to Emily". Maria denied saying that she would guarantee the loan and offer her properties as security. 25 It is common ground that the parties proceeded to the bank, where Nelly drew a cheque for $94,217, and gave it to Emily. The evidence also supports the finding, which I make, that at the same time Maria gave Emily the cheque for $50,000 which she had drawn on 5 August 2004. (It is also reasonably open to find that this cheque was given to Emily the day it was drawn but, in my opinion, the fixing of the date has no significance.) 26 The resolution of the conflict between Nelia and Maria turns on my findings about them as witnesses. 27 I accept Nelia's account of the conversation. In my assessment she was a truthful witness whose evidence on all issues was given as best as recollection allowed. She was not shaken in cross-examination. I am satisfied that, in circumstances where she was troubled about recovering money already lent to Emily, and had been strongly warned by her solicitor against lending without Maria's guarantee and security, it defies credence that she would have ignored the solicitor's advice and advanced the money without Maria's assurance. 28 With respect to Maria, during the course of the hearing I formed the view that she was a witness upon whose evidence no reliance should be placed where it was contested unless it was corroborated by, or was consistent with, independent documentary or other evidence. 29 It is well-settled that a trial judge is entitled to believe part of the evidence given by a witness and to reject the rest (a recent discussion of the cases is in Cubillo v Commonwealth of Australia [2000] FCA 1084; (2000) 174 ALR 97, pars 118-123 per O'Loughlin J). I have earlier referred to a segment of Maria's evidence which was unchallenged, and which I do accept. It was to the effect that she was aware of Emily's plight, was anxious that Emily obtain financial assistance, and believed Nelia was the only person likely to provide any money to Emily. I also accept that Maria feared that if Nelia did not provide the money to Emily, the funds which she herself had advanced to Emily would not be repaid. 30 On occasions, under cross-examination, Maria became visibly upset, sometimes prevaricated, and many times endeavoured to avoid answering a question directly when she perceived that to do so might be harmful to her case. There were occasions on which she demonstrated confusion, lack of memory, or invention, or all of these, which generated doubt as to the reliability of her evidence as to detail, and undermined her credibility as a witness. Examples include her denial that she signed the mortgage of 5 May 2004 (T p 205), her answers in cross-examination, in respect of the omission from her affidavit of 1 May 2007 of Mr Acar's use of the words "guarantee" and "security" (T p 195-204), her answers referable to Mr Acar's use of the word "guarantee" in the meeting on 11 August 2004 (T p 216-219), and her evidence referable to her lack of knowledge of Tony's whereabouts and circumstances (T p 190-195). 31 I am satisfied that Maria agreed to guarantee and secure Emily's borrowings in order to persuade Nelia to advance the additional $100,000 to rescue Emily, thereby enhancing her prospects of recovering the funds she herself had advanced to Emily. I find that Maria's assurance to Nelia that she would guarantee and secure all of Emily's borrowings, including $75,000 already lent, overcame Nelia's concerns and induced by, and in reliance upon, that assurance she proceeded to lend the additional $100,000 to Emily by the payment of $94,217 that day, and the balance shortly thereafter. The statement of 15 May 2005 32 Nelia contended that the statement evidences Maria's acknowledgement of her agreement made on 11 August 2004 to guarantee and secure the loans to Emily. The statement was signed by Maria in the presence of Nelia and Ms Alice Posada. Ms Posada signed as a witness. The statement is in the following terms: "I, Maria C Palaje, being of sane and sound mind do hereby declare that - I am the mother of Emily Palaje; On 13 April 2004 together with my daughter, Emily Palaje, we approached Nelia Palenzuela to seek her financial help; On several occasions Emily and I had to drive to Quakers Hill where Nelia lives. At times Nelia even invite us to sleep over. Nelia had always been very kind to my family. She even helped me redeem my pawned jewelries [sic] by lending me $3,000.00. During this time, my daughter Emily was having financial problems meeting our mortgage in our property at 126 Prince Charles Pde, Kurnell where I live, and the repayment on her investment property at Pyrmont. I know that Nelia will not refuse me any help. So that together with Emily, we induced her to go to her bank and took out a total of $175,000.00 to lend to Emily; The first instance was on 13 April 2004, wherein Emily borrowed $75,000.00 from Nelia and the second instance was on 19 August 2004 when Emily borrowed $100,000.00. In both instances I was privy to the transaction. I am fully aware that Nelia agreed to lend Emily the money, because she trust and respect me and because I made a personal guarantee against whatever assets I have (personal or real), to back up the loan being sought for. I did convinced Nelia to lend the money and assured her not to worry, because Emily will return all monies owing to her within two weeks from the day my daughter, Emily receive the money. Emily and I are aware that the money Nelia took out from her bank is in fact her line of credit over her residence at 51 Torrance Crescent, Quakers Hill; Nelia expressed her concern that she has no means to pay back the money being taken out from her line of credit over her property, if Emily cannot pay on time, but I have given her my word that Emily will pay it back on time; To ensure and to erase any doubts and give her peace of mind, Emily and I suggested to her to place a CAVEAT on our property at Kurnell as security. I hereby declare this statement and guaranty [sic] therein to be true and correct, and shall be binding upon and inure to the benefits of the parties and their heirs. Signed this 15th day of May 2005 in the State of New South Wales." 33 The following is a summary of relevant background to the signing of the statement at the Star City Casino on 15 May 2005. 34 On 24 August 2004 Mr Acar prepared a caveat for Nelia over the Kurnell property in which Maria and Emily were described as the registered proprietors. Emily signed her consent. The instrument was not registered. 35 On 17 November 2004 the transfer of Maria's interest in the Kurnell property to Emily was registered. 36 On 19 January 2005 Nelia registered caveat no. AB238027 over the Kurnell property of which Emily had become the registered proprietor. 37 On 22 February 2005 Maria's caveat over the Kurnell property was registered (no. AB303766). 38 Between 10 April 2005 and 11 May 2005 Nelia communicated with Emily by email expressing concern about the loan of $175,000, and pressing for repayment. She received no satisfactory reply. She said, and I accept, that out of respect for Maria she did not then attempt to recover from Maria under the guarantee until she had done her best to collect from Emily. 39 Nelia arranged the meeting with Emily at the casino a few days beforehand. Her evidence was that she said to Maria, in effect, that she had a statement for her to sign that she guaranteed the loans to Emily. 40 The meeting took place at about 3pm on 15 May 2005 at the casino. Nelia together with her friend, Ms Alice Posada, met Maria who was sitting at a poker machine. Nelia said (T p 46-47, l 41-34): "Q. And would you please tell his Honour, to the best of your recollection, exactly what happened when you approached her; if anything was said, what was said and who said it? A. When I approached her, she was sitting on the back - her back is, she is on - at the back. I tap her on the back an I told her, "There you are" and she said "Oh, there you are, Nelia". I said, "I brought the statement for you to sign, the statement I was talk to you about over the phone, I discussed with you over the phone" and she said, "Oh, yes", and then I told her, I pulled, took a piece of it. I gave one to her and I said, "Read it, and if you are happy with it, you can sign it" and she took her glasses and she read it and then she put, she get her bag- … … Q. Did she sign the document on the top of a handbag? A. --of a handbag. Q. In relation to you providing her with the document, was it folded, or unfounded? A. It was open. At first, when it came out from my bag it was folded, like one fold. Then I gave it to her open. Q. And when you gave it to her open, did she have her glasses on or off when she first took the document? A. She is always wearing glasses when playing the poker machine. Q. And in relation to the document, how long did she look at it, to your observation, perhaps, reading, but looking at the document before she signed it? A. About two, three minutes. Q. And in looking at the document, what did you see, what did you observe, what she was doing? A. She is reading it. She is reading through it. She was reading through it and then she asked me after reading, she asked me, "Where do you want me to sign". I point to her where her name is." and (T p 48, l 37-49): "Q. And in relation to after she signed the document, did she give it back to you? A. Yes. Q. The document which she signed, the original of which was handed to his Honour? A. Then we asked, I told her that, "I have Alice here with me so she can witness your signature". Q. What did Maria say to that? A. Yes, she said, "Hi, Alice", and then it was all right, Alice sign after she signed." 41 Ms Posada also described the meeting. I found her to be a truthful witness. Neither her evidence nor her credit was challenged. I accept it her evidence. She said (T p 183, l 5-12): "A. So, we went towards Tiang; she said, "That is Tiang", so we went towards her. That is the first time I saw her and then she, Nelia, put out a piece of paper and she opened it and give it to Tiang and Tiang read the piece of paper for about two to three minutes and then she asked for a pen. Nelia took out a pen from her bag and she sign. After Tiang sign the paper, Nelia ask me if I can witness the signature, so I willingly sign that piece of paper. Q. Did you sign acknowledging you witnessed Tiang sign the document? A. Yes." 42 She said that when the document was produced it was folded in half, and Nelia opened it and gave it to Maria. She and Maria signed the statement and a copy, and the copy was kept by Maria. 43 Maria's evidence was that, in the weeks before the meeting, she had telephone conversations with Nelia, during which Nelia told her that she was preparing a statement. Maria said (T p 161, l 26-35): "Q. … Did you say something to her, or did she say something to you in that conversation? A. Yes, I had said, "Yes, I will sign it, if you just prepare it", and then the following week she called me again, the same thing. She said, "I am typing the statement to say that you were there present when I lent money to Emily and I need your signature because I am applying loan from St George Bank". Q. Did you say anything in response on that occasion? A. I told her again, "Just prepare it and I will sign it."" 44 She also gave an account of the meeting. Maria said that she was sitting at a poker machine when Nelia and Alice arrived. She said that Nelia gave her the statement and said: (T p 164) "It is nothing to worry about. It is only that you were present when she give [sic] the money to Emily", whereupon she signed it. She said she did not read the statement before signing it, and that at the time it was folded in such a way that all she could see was her name. She denied that Ms Posada signed the document and a copy thereof, and that she was then given the copy. 45 In cross-examination Nelia denied that she said she needed a paper in order to obtain a loan from the St George Bank, and that the statement was simply to say that Maria witnessed the money being given to Emily. Ms Posada denied anything was said in relation to the St George Bank. I accept their denials. 46 I am satisfied that the evidence of Nelia and Ms Posada on this issue is the true account of the circumstances in which Maria signed the statement. On behalf of the defendants no submissions were made to the contrary. I find that Maria's account, including her version of the telephone conversation with Nelia, was a deliberate concoction in an attempt to advance her case, and I reject it. 47 Subsequently, Nelia demanded repayment of the $175,000 from Emily. On 13 July 2005 she commenced proceedings against Emily and Tony in the District Court for the recovery of the loans, and entered judgment in default about six months later. 48 On 20 February 2006 Emily transferred the Kurnell property to Permanent Custodians Limited, the mortgagee in possession, following the exercise of the mortgagee's power of sale. 49 On 26 June 2006 Nelia registered caveat no AC419128 over the Kensington property of which Maria was the registered proprietor. Nelia claimed an equitable interest in the land under what was described as a deed of guarantee of 15 May 2005 to which they were parties. 50 On 23 January 2007 these proceedings were commenced. Determination 51 In my opinion the evidence firmly established that, after leaving Mr Acar's office on 11 August 2004, Maria agreed with Nelia to personally guarantee the repayment of the loans to Emily in the total sum of $175,000, and to provide Nelia the Kensington property as security for the guarantee. 52 In reaching this conclusion I am satisfied that Mr Acar emphasised to Nelia, in the presence of Maria and Emily, that the guarantee should be secured against Maria's unencumbered property which, in discussion, had been identified as the Kensington property. Upon an objective assessment of the evidence of the discussion with Mr Acar and of the conversation afterwards, I find that it was the common intention of Nelia and Maria that the loans to Emily would be guaranteed by Maria for which the Kensington property would be provided as security. This finding is reinforced by Nelia's evidence that Maria's promise or representation induced her to agree to lend an additional $100,000, and then to proceed to the bank and give Emily a cheque for $94,217. It was common ground that Nelia lent the balance later. 53 With respect to the statement, the thrust of the defendant's submissions was that, when read as a whole, its wording was so unclear that it was difficult to ascertain precisely what it conveyed and, accordingly, was ineffective as an acknowledgment by Maria of the agreement claimed. The submissions were directed to the proper construction of the document. It was put that as only the Kurnell property was identified, and it contained no reference to the Kensington property, it was not open to find that it was intended that the Kensington property would be provided as security. It was also put that the statement was ineffective to operate as a charge in that it referred to the borrowing of $100,000 on 19 August 2004, an occasion which post dated the agreement made on 11 August 2004. 54 Further, it was put that in cross-examination Nelia displayed uncertainty as to the dates on which the various amounts were advanced to Emily. In short, the argument, as I understood it, was that the statement did not sufficiently identify the obligation asserted in these proceedings and, in parts, was inconsistent with it. 55 In terms, the statement is Maria's account of the circumstances in which the loans were made, and of the agreement she made with Nelia. My findings in relation to it are as follows. 56 I find that prior to signing the statement Maria read and understood its terms. I am satisfied she understood that by signing it she accepted the account therein of the circumstances in which the loans were made, and acknowledged her agreement to provide Nelia with a guarantee to be secured over her property. I find that, on its proper construction, the phrase "… and the second instance was on 19 August 2004 when Emily borrowed $100,000." was intended to refer to the actual occasion of the borrowing. This conclusion is consistent with the context in which the phrase appears which, relevantly, is the passage commencing with the words "… I know that Nelia will not refuse me any help …" and ending with the words "… Emily receive the money". In my opinion, the mistaken reference to 19 August 2004 instead of, correctly, to 11 August 2004 is of no significance. 57 Although it is true that, in terms, the Kensington property was not identified, the statement includes the following: "… because I made a personal guarantee against whatever assets I have (personal or real), to back up the loan being sought for". For the defendants, in final submissions, it was accepted (T p 322) that this phrase was sufficient to extend to any property without specific reference. 58 Overall, I find that the statement was intended by Maria to acknowledge the agreement made with Nelia on 11 August 2004. It operates to establish an equitable interest in Maria's real property, relevantly the Kensington property, sufficient to support Nelia's existing caveat over it. (Composite Buyers Ltd v Soong (1995) 38 NSWLR 286) To the extent that it is necessary to do so, I find that the statement is a memorandum of the agreement of 11 August 2004 in compliance with s 54A Conveyancing Act 1919. 59 Maria maintained her defence that she was induced to sign the statement by Nelia's false representation that it contained a statement only to the effect that she witnessed the loan to Emily of $100,000, and that Nelia required it to obtain a loan from St George Bank. I have earlier rejected Maria's evidence on this issue. The consequence is that the defence must fail. 60 Maria also maintained her cross-claim under the Contracts Review Act 1980 that at the time the agreement of 11 August 2004 came into existence it was unjust having regard to the circumstances in which it was made. 61 Persistence with the claim was entirely unconvincing; general principles were referred to but no form of relief was articulated. The only matter relied upon was that Maria was not given independent legal advice at the time. However, there was no evidence to suggest that she lacked understanding of the nature and extent of her obligations under the agreement. She demonstrated experience with the ownership of property, as well as an understanding of the obligations of a mortgagor and guarantor. In my opinion, the claim was without merit, and must be dismissed. Conclusion 62 The principal claim is for judgment under the guarantee in the sum of $175,000 and interest. It is agreed that the appropriate rate for interest is 8.5% per annum from 11 August 2004. I propose to order that there be judgment for Nelia against Maria in the amount with interest as claimed. 63 The claim that the Kensington property be charged to secure the payment of the debt should also be upheld. This claim is established under the agreement of 11 August 2004, alternatively, by the terms of the statement. 64 In the result, it is unnecessary to deal with Nelia's claim for relief under the principles of equitable estoppel. It is appropriate simply to state my opinion that the agreement and loan made on 11 August 2004 rendered it unconscionable for Maria to depart from her representation to Nelia that she would provide a guarantee and security over the Kensington property for all of Emily's borrowings in return for another loan of $100,000. Accordingly, Nelia is entitled to the relief she claims by the application of the principles of equitable estoppel. 65 It is appropriate to direct the plaintiff to bring in short minutes to give effect to these reasons. As to the question of costs, my present view is there should be an order that the defendants pay the plaintiff's costs of the proceedings. However, failing agreement, I will afford the parties the opportunity to address me on this issue. Arrangements should be made with my associate by 16 December 2009 for the re-listing of the matter. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.