Robert Angius v John Angius & Anor

These proceedings concern whether two mortgages totalling $600,000.00 entered into between the parties are voidable as sham mortgages or alternatively voidable or unenforceable by reason of unconscionability or estoppel.

Mr Robert Angius (the Plaintiff) has sought that the Court set aside two mortgages entered into between himself and Mr John Angius (the First Defendant) and his now deceased wife Ms Laura Angius and entered into between himself and Angius Investments Pty Ltd (the Second Defendant). The First Defendant is the father of the Plaintiff.

On 17 August 2017 the Plaintiff filed a Statement of Claim and on 25 August 2018 an Amended Statement of Claim.

On 1 September 2017 the Defendants filed a Defence.

On 24 November 2017 the Plaintiff filed a Further Amended Statement of Claim.

On 11 December 2017 the Defendants filed an Amended Defence.

The matter originally involved Makinson d’Apice as a third defendant however on 12 September 2018 I was informed that settlement had occurred with the firm which no longer played a role in the proceedings.

On or about 13 August 1984 the Plaintiff and his then wife Ms Silvana Angius purchased a unit at 5/13 Little Street Maroubra for the sum of $69,000 (Little Street Property) (CB 213).

The Plaintiff and Ms Silvana Angius each had savings of approximately $12,000 totalling $24,000 with the balance of the purchase price of the Little Street Property secured by way of mortgage to the Commonwealth Bank of Australia for the amount of $45,000 (CBA) (CB 104-105). On 9 November 1984 a mortgage was registered with the CBA over the Little Street Property CBA (214-215).

During the period 7 November 1984 to 7 June 1989 the Plaintiff made regular payments totalling $58,938 on the CBA mortgage (CB 216-223). On or about 14 July 1989 the CBA mortgage over the Little Street Property was discharged (CB 224-225).

In February 1993 the Little Street Property was sold for $176,500 (CB 226). At that time the Plaintiff and Ms Silvana Angius had cash savings and fixed term deposits of approximately $15,000 to $20,000 (CB 63).

On 19 April 1993 the Plaintiff and Ms Silvana Angius purchased a property at 74 Wild Street Maroubra for $370,000 (Wild Street Property) (CB 227).

The purchase price of the Wild Street Property comprised the $176,500 from the sale of the Little Street Property, the $15,000 to $20,000 savings of the Plaintiff and his wife and approximately $170,000 to $180,000 provided to the Plaintiff by his father the First Defendant and his mother Ms Laura Angius (now deceased). The Plaintiff asserts that his father and his mother told him they would gift him this amount of $170,000 to $180,000 (CB 63-64). The First Defendant in an affidavit of 26 October 2014 not sworn in these proceedings but filed in separate proceedings stated (CB 311):

There was no mortgage registered on the Wild Street Property at the time of purchase (CB 90, 227, 412).

In late 1993 Ms Silvana Angius was admitted to a psychiatric ward for approximately 8 to 9 months. The couple have four children, who the Plaintiff asserts he cared for during his wife’s hospitalisation, and the marriage deteriorated thereafter (CB 64, Plaintiff’s submissions [17]-[18]).

There is subsequently a gap in the contemporaneous materials before this Court as between the period 1993 and 1997.

In 1997 the Plaintiff met Ms Jaqueline Varela when she came to the Wild Street Property to assist him care for the four children. The Plaintiff now has two children with Ms Varela (CB 64).

On 15 September 1997 Bradfield & Pritchard Real Estate valued the Wild Street Property at $490,000-$510,000 (CB 228). On the same date Angus Levitt Real Estate valued the property at $500,000 (CB 229) and Ray White Randwick valued the property at $480,000-$510,000 (CB 230-231).

On 16 September 1997, a tendered file note of Makinson d’Apice recorded as follows under the matter heading “Robert Anguis [sic] – Family Law” (Exhibit D1, 6):

On 18 September 1997, a further file note of Makinson d’Apice recorded as follows (CB 232-236, Exhibit P2):

On 26 September 1997 Mr McDonald solicitor of Makinson d’Apice sent a draft letter addressed to M Roper & Co Solicitors to the First Defendant, stating “kindly let us know whether this draft is in order” (CB 237-239). This letter concerned a property settlement between the Plaintiff and his partner Ms Silvana Angius, and stated the Plaintiff’s parents lent the Plaintiff and his wife $200,000.00 to assist in the purchase of their matrimonial home stating the total indebtedness to the parents was $281,046.00 (CB 238):

This letter was sent to Ms Silvana Angius’ solicitors on 1 October 1997 as confirmed in a letter from Mr McDonald to the First Defendant (Exhibit P2, 4-6).

On 9 October 1997 Mr McDonald sent a letter to the Australian Tax Office stating “[o]ur client, Robert Angius, has handed to us the Child Support Assessment dated 13 September 1997” disputing the date on which child support began (CB 240).

On 9 October 1997 Makinson d’Apice provided a “With Compliments” slip attaching a mortgage document and transfer document purporting to provide for an unsigned mortgage in favour of the First Defendant and his wife as mortgagees over the Wild Street Property and transfer of the Wild Street Property from Ms Silvana Angius to the Plaintiff, although the transfer was only purportedly signed by the Plaintiff (Exhibit D1, 22-25). On the same date the Plaintiff was subject to apprehended violence orders in favour of Ms Silvana Angius (Exhibit D2).

On 19 November 1997, a Makinson d’Apice cover sheet recorded correspondence sent to M Roper & Co Solicitors concerning the Plaintiff’s family law dispute with Silvana Angius, stating “we have been instructed by our client that he is now prepared to pay the full settlement figure of $206,000.00 in a lump sum” (Exhibit D9).

On 24 December 1997 the CBA offered the Plaintiff a loan of $140,000 (CB 241-242).

On 23 January 1998, a Makinson d’Apice cover sheet recorded a message sent to the First Defendant stating “please ask Robert to sign at the bottom of the enclosed 2 pages (the originals were crunched up in the photocopier)” with those pages enclosing details of the Plaintiff’s four children with Ms Silvana Angius (CB 243-245). On this same date Mr McDonald sent a letter to the First Defendant concerning the Plaintiff’s property settlement with his wife and the defence of three charges placed against him on 26 March 1998 at Waverley Local Court (Exhibit D3, Exhibit D4).

On 23, 28 and 30 January 1998, 2 and 13 February and 18 March 1998 there was written correspondence between Makinson d’Apice, M Roper & Co Solicitors and the First Defendant concerning the precise terms of settlement between the Plaintiff and Ms Silvana Angius (Exhibit P2 8-12, CB 246). Mr McDonald’s cover sheet for correspondence to the First Defendant on 30 January 1998 provided (Exhibit P2, 7):

On 20 March 1998 Mr McDonald sent a letter to the First Defendant (CB 247):

On 27 March 1998, Mr McDonald recorded in a file note his conversation with the First Defendant regarding an “adverse result yesterday in the Local Court” apparently concerning the Plaintiff’s ongoing family disputes with Ms Silvana Angius (Exhibit P2, 13).

On 6 April 1998, there was further correspondence between Makinson d’Apice, the First Defendant and Ross Clarke & Associates concerning the Plaintiff’s family law matters (Exhibit P2, 14-17):

On 16 April 1998 there was further correspondence between Mr McDonald and Ross A Clarke & Associates concerning the family law dispute (CB 248-250). On 20 April 1998 Mr McDonald recorded in a file note which appears to be the following (transcribed from handwriting) (Exhibit P2, 18):

On 7 May 1998, Mr McDonald recorded in a file note titled “Robert Angius – Family Law” (CB 251, Exhibit D5):

On 11 June 1998, Makinson d’Apice recorded in a file note (Exhibit D6):

On 18 June 1998 the Plaintiff and Ms Silvana Angius executed Terms of Settlement as part of family law proceedings between them. The Plaintiff was to pay Ms Silvana Angius $206,000 as well as $25,000 into a trust account to their four children. Ms Silvana Angius was to sign over the Wild Street Property to the Plaintiff (CB 252-253).

The payment by the Plaintiff to his then wife of the sum of $206,000 was made up of amounts including:

However the Plaintiff asserts he and his wife had had a total of $120,000 in savings and in cash, some of which his wife had withdrawn without his consent (CB 65).

On 24 June 1998 Mr McDonald sent a letter to the First Defendant informing him the firm had filed the Application signed by both parties for Consent Orders in the Family Court in the Plaintiff’s family law dispute (Exhibit P2, 20). The Family Court Orders of 31 July 1998 can be found at CB 125-126 (see also letter of Mr McDonald confirming said orders at Exhibit P2, 21).

On 5 August 1998 Mr McDonald sent a letter to the First Defendant (Exhibit P2, 21):

On 12 August 1998 a letter was sent by Makinson d’Apice Lawyers to the CBA requesting the bank to make a settlement cheque for $140,000 in favour of Ms Silvana Angius by way of loan (CB 260) (see also Exhibit D1, 30). The First Defendant and Ms Laura Angius (the Plaintiff’s parents) were guarantors of the $140,000 loan with the CBA (CB 65).

On 14 August 1998 the Plaintiff signed a mortgage to his parents for the purported sum of $350,000 (Family Mortgage). The Plaintiff’s case is that this amount was crossed out and replaced with $500,000 without his knowledge or consent. The Plaintiff further asserts he did not sign the mortgage in the presence of the alleged attesting witness Mr Tibbetts (CB 174-175, 261-262, 280-281).

On or about 14 August 1998 Ms Silvana Angius transferred her share in the Wild Street Property to the Plaintiff (CB 90, 263-264). This was confirmed in a letter from Makinson d’Apice to the First Defendant on 17 August 1998 (Exhibit D1, 32, Exhibit P2, 22).

On 25 August 1998 Mr McDonald sent a letter to the First Defendant (Exhibit P2, 23):

On 25 August 1998, Makinson d’Apice sent the First Defendant a schedule of professional fees titled “Re: Robert Angius – Family Law” (Exhibit D7).

On 8 September 1998 Mr McDonald sent a letter to Mr Bennett at the Commonwealth Bank of Australia (Exhibit D1, 35):

On 22 September 1998, a response to assessment Child Support application was prepared (by Mr McDonald as contended by the Plaintiff) which at point 22 identified the Plaintiff had a mortgage on the house he lived in to both the Commonwealth Bank and “$500000 to John & Laura Angius” (Exhibit D1, 37-51, CB 195-208).

From 28 September 1998 to 16 June 1999 the Plaintiff made regular mortgage repayments to the CBA for the CBA Mortgage totalling $98,150 (CB 102, 118-122).

On 7 October 1998 there was some correspondence between Mr McDonald and the First Defendant concerning the Plaintiff’s wife Ms Silvana Angius’ interest in two mattresses and a microwave (Exhibit P2, 24).

On 29 October 1998, the Commonwealth Bank sent a letter to Mr McDonald confirming it had consented to a second mortgage on the Wild Street Property (CB 265). The Family Mortgage was apparently registered on 10 November 1998 (CB 90, 261).

On 19 November 1998, the Delegate of the Child Support Registrar made a notice of decision concerning child support between the Plaintiff and Ms Silvana Angius (CB 266-270).

On 24 November 1998, Makinson d’Apice sent the First Defendant a schedule of professional fees titled “Re: Robert Angius – Family Law” (Exhibit P2, 25-26, Exhibit D1, 60). This was accompanied by a letter to the First Defendant attaching a final account in the Plaintiff’s family law matter (Exhibit D1, 56).

On 11 February 1999 ChildSupport sent the Plaintiff a letter stating there would not be a change in his assessment concerning child support (Exhibit D1, 61-63). Seemingly in response to this the Plaintiff handwrote a letter asserting corrections and unsubstantiated information (Exhibit D1, 64-65).

On 25 March 1999 Mr McDonald sent a letter to the Plaintiff accepting instructions on a matter titled “DIVORCE (990455) DISCLOSURE OF LEGAL FEES” (Exhibit D8):

On 13 April 1999, the Commonwealth Bank sent to the First Defendant (Exhibit D1, 66):

On 22 May 1999 the Plaintiff purportedly signed an application for divorce to be heard on 9 July 1999 by the Family Court of Australia (Exhibit D8).

On 15 June 1999 Mr McDonald sent the First Defendant a letter (Exhibit P2, 27-28):

On 17 June 1999 Mr McDonald sent a further letter to Mr Moutzouris (CB 254-259, 273):

On 22 June 1999 Mr McDonald sent the First Defendant a further letter concerning the child support payments of the Plaintiff (Exhibit P2, 29).

On 25 June 1999 Mr McDonald recorded in his file note (Exhibit D1, 69):

On 29 June 1999 Mr McDonald sent a letter to the First Defendant (CB 274, Exhibit D1, 71-72):

On 30 June 1999 Mr McDonald sent a letter addressed to the Plaintiff (CB 275):

The letter of 30 June 1999 written by Mr McDonald addressed to the Plaintiff’s wife Ms Silvana Angius included as follows (CB 276):

On 2 July 1999 Mr McDonald sent a letter to the Deputy Child Support Registrar acting on behalf of the Second Defendant providing details of the Plaintiff’s pay cheques and maintenance deductions (CB 277-278).

On 12 July 1999 Mr McDonald recorded in a file note (CB 279):

On 16 August 1999 the First Defendant executed a company mortgage for the value of $100,000 in favour of Angius Investment Pty Ltd (Company Mortgage) (CB 282-283, Exhibit D1, 77-80). See also unsigned caveat over the Wild Street Property (Exhibit D1, 74-75).

On 27 August 1999 Mr McDonald sent a letter to the manager of Business Banking at the Commonwealth Bank (CB 284):

On 30 August 1999 Legalink instructions for Makinson d’Apice in the matter “Angius Investments Re: Angius Child Support” provided (Exhibit D1, 82):

On 6 September 1999 Mr McDonald recorded in a file note (CB 285):

On 14 September 1999 Mr McDonald sent a letter to the Land Titles Office (Exhibit D1, 87):

On 16 September 1999, Nicholle Masters of the Commonwealth Bank sent a letter to Mr McDonald (Exhibit D1, 89):

On 20 September 1999, Mr McDonald replied to Ms Masters (Exhibit D1, 90-92):

On 23 September 1999, Mr McDonald sent a letter to the First Defendant (Exhibit D1, 93-94):

On 28 September 1999 the Plaintiff purportedly signed a Financial Statement for the Family Court of Australia which recorded at Section H mortgages to the Commonwealth Bank of $138,834.00, to J. & L. Angius of $500,000.00 and to Angius Investments Pty Ltd of $100,000.00 (Exhibit D1, 95-104).

On 17 November 1999 Mr McDonald sent a letter to the Plaintiff enclosing a sealed copy of a Decree of Dissolution of marriage between him and Ms Silvana Angius (CB 286-288).

On 21 December 1999, Mr McDonald sent a letter to Ms Masters of the Commonwealth Bank stating “We now enclose at long last executed Deed of Priority in triplicate” (CB 289-297).

On 17 January 2000 the Company Mortgage was apparently registered for $100,000 (CB 90).

On 31 January 2000 Mr McDonald sent a letter to the First Defendant (Exhibit D1, 115):

On 14 April 2000 the First Defendant and Ms Laura Angius discharged the CBA Mortgage for the remaining amount owing of approximately $50,000 (CB 67, 75, 90, 118-122, 285, 303). The Plaintiff’s case is that they did this by way of gift to the Plaintiff.

On 22 November 2000 a Child Support Agreement between the Plaintiff and Ms Silvana Angius was purportedly signed by both parties (CB 133-138).

On 5 February 2002, Mr McDonald sent a letter to the First Defendant (CB 304):

In about 2005 to 2006 the relationship between the Plaintiff and his parents purportedly deteriorated. By 2010 there were allegations that the First Defendant was having an affair however this is denied (CB 68, 70-71, 306-307). It is the Plaintiff’s case that it was during this period that the First Defendant commenced to demand repayment of the mortgages from him (CB 68).

On 25 August 2011 the First Defendant and Ms Laura Angius purportedly entered into an agreement requiring the First Defendant to provide a legal undertaking as drafted by a solicitor that he would not claim upon the Family Mortgage for the Wild Street Property as against the Plaintiff (CB 73, 94, 305, 373-374).

On 6 October 2011 the First Defendant and Ms Laura Angius entered into a Separation Agreement (CB 375-380). The two entered into a Deed of Variation on 15 November 2011 (CB 381-384). On 16 November 2011 there was a further handwritten agreement between the two concerning proceeds of sale and property arrangements (CB 385).

On 9 June 2012 Ms Thi Quy Le provided a witness statement to the NSW Police concerning a purported encounter between the Plaintiff and his father the First Defendant (CB 306-307).

On 30 September 2015 Hallen J delivered his ex tempore reasons in Angius v Salier [2015] NSWSC 1446.

On 23 June 2017 the First Defendant (through his solicitors) was served with a letter dated 14 June 2017 enclosing a Notice to mortgagor pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) (CB 399-402). The notice claimed $3,312,644.33.

On 31 July 2017 there was correspondence between Makinson d’Apice and solicitors for the Plaintiff confirming that Mr McDonald was at that time elderly and unlikely to be able to be in a position to assist in the proceedings (CB 414). Mr McDonald passed away on 26 November 2017 aged 85 (Exhibit D1, 116).

In Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449; [1988] FCA 179 Lockhart J said (at 453-4):

In Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ said (at [46]) (citations omitted):

In Lewis v Condon (2013) 85 NSWLR 99; [2013] NSWCA 204 Leeming JA (with McColl JA and Sackville AJA agreeing) said (at [58]-[65] and [68]-[70]):

In In the matter of Italasia Pty Ltd [2017] NSWSC 811 Brereton J said (at [14]-[19]) (citations omitted):

In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 (“Amadio”), Deane J (with Wilson J agreeing) said (at 474-5) (citations omitted):

The distinction between unconscionable conduct and undue influence reinforced by Deane J in Amadio was also affirmed by Brennan J in Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 (at 626-7) (citations omitted):

In Thorne v Kennedy (2017) 91 ALJR 1260; [2017] HCA 49, Kiefel CJ, Bell, Gageler, Keane and Edelman JJ observed at [37]-[40] (citations omitted):

With respect to the distinct but related doctrine of undue influence again Kiefel CJ, Bell, Gageler, Keane and Edelman JJ observed in Thorne v Kennedy (2017) 91 ALJR 1260; [2017] HCA 49 at [30]-[34] (citations omitted):

In Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58 Dixon J said (at 674-5):

In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Brennan J said (at 427):

In Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [1]-[2], French CJ, Kiefel, Bell and Keane JJ observed (citations omitted):

The Plaintiff submits the two mortgages (the Family Mortgage and the Company Mortgage) in these proceedings totalling $600,000 are void and of no legal effect because (submissions [1]-[3]):

After briefly outlining material facts (submissions [4]-[68]) the Plaintiff contends that the Family Mortgage and Company Mortgage came into existence in 1998 and 1999 respectively and at the time they were registered no funds whatsoever were provided to the Plaintiff because such funds were not needed (submissions [69]-[74]). The Plaintiff submits he did not receive the total $600,000 secured by the two mortgages over the Wild Street Property, and no repayments have been made by him nor demanded by his parents until 2017 (submissions [75]-[79]). On this basis the Plaintiff contends the mortgages should be set aside as failing to secure any debts and as “sham” mortgages (submissions [80]-[81]).

In fact, the Plaintiff submits he did not receive “a cent” of the two mortgages as conceded by the Second Defendant in cross-examination, and that the mortgages in any event grossly exceeded the actual equity in the Wild Street Property. He contends the only legitimate mortgage over the Wild Street Property was that for $140,000.00 with the Commonwealth Bank, which was fully drawn in favour of a property settlement with Ms Silvana Angius. He suggests the only money received by him from his parents contemporaneously with the Family Mortgage and Company Mortgage was $50,000.00 for the discharge of what was the outstanding mortgage owed to the Commonwealth Bank. His case is that the total amount contributed by his parents to the Wild Street Property was this $50,000.00 plus approximately $175,000.00 contributed towards the purchase of the property in 1993 which he asserts was a gift, resulting in amounts manifestly less than the $600,000.00 claimed by the Defendants (closing submissions [10]-[22]).

Furthermore, the Plaintiff contends that the evidence is that the Family Mortgage was altered to enforce $500,000.00 by Mr McDonald on the instructions of the First Defendant and that Mr Tibbetts did not sign in the presence of the Plaintiff. (closing submissions [23]-[38]).

The Plaintiff’s case is further that the contemporaneous documents of Makinson d’Apice and Mr McDonald clearly demonstrate that all communications were between Mr McDonald and the First Defendant, and that the First Defendant was the driving force behind instructions given to Makinson d’Apice concerning the Plaintiff’s family law disputes and financial arrangements. He submits his father was not providing him with the relevant information or seeking instructions from him, and the Plaintiff himself was unable to exert agency over the actions of Mr McDonald due to his emotional stress at the time (closing submissions [39]-[44]). In short, the First Defendant was Mr McDonald’s real client, not the Plaintiff (closing submissions [77]-[85]).

The Plaintiff asserts his father was instrumental in working with Mr McDonald and an accountant in preparing much of the financial material for the Plaintiff’s maintenance and property settlement with Ms Silvana Angius (closing submissions [47]-[53]).

He asserts his evidence (notwithstanding his hearing problem) that he trusted his parents to enter into the mortgages to protect him and simply allowed his father to direct his affairs with Mr McDonald should be accepted as consistent with the materials (closing submissions [54]-[72]). On the contrary he contends his father’s evidence, for example as to the valuations of the Wild Street Property and his relationship with his deceased wife, was unreliable (closing submissions [73]-[76]).

In addition, with respect to undue influence or special disadvantage or unconscionability, the Plaintiff submits the Family Mortgage and Company Mortgage were entered into at the instructions of the First Defendant and at a time when the Plaintiff was stressed and had not received legal advice (submissions [82]-[94]). He argues the mortgages should be set aside on the basis of undue influence and/or unconscionable conduct (submissions [172]-[188]). The Plaintiff also asserts the Second Defendant expressly represented to the Plaintiff that the two mortgages were designed to protect him, and would only be activated in the event there was a future claim made against the Plaintiff by a future partner or de facto. He asserts he relied upon these representations in signing the two mortgages (submissions [95]-[96]). At the time his father was essentially his employer (closing submissions [45]-[46]).

The Plaintiff further contends there was no consideration for the two mortgages and that the First Defendant would be significantly and unjustly enriched in seeking payment of the mortgages including interest (submissions [97]-[111], [169]-[171]). He also asserts it would be unconscionable to allow the First Defendant to resile from his representations and reassurances that he would not enforce the mortgages as against the Plaintiff (submissions [112]-[113]).

After outlining the legal principles relevant to setting aside sham mortgages (submissions [114]-[117]) the Plaintiff submits the Family Mortgage and Company Mortgage were never intended to be enforced by the First Defendant against the Plaintiff, and that the mortgages were shams designed only to protect the Plaintiff against future claims made by future partners (submissions [118]-[119]). The Plaintiff submits that the only reason the First Defendant has issued a notice under s 57(2)(b) of the Real Property Act 1900 (NSW) is because his relationship with his son has deteriorated, and when the mortgages were entered there was no intention to enforce them or call upon them, as they were put in place for the purpose of protecting his son. It is now only due to his son’s perceived bad conduct that he believes he is now entitled to call upon them as a form of punishment (closing submissions [1]-[9]).

The Plaintiff submits the Family Mortgage was further not signed in the presence of the alleged attesting witness and was altered to include the words $500,000 by the First Defendant without the knowledge or consent of the Plaintiff (submissions [120]-[142]). He argues this constituted a fraud perpetrated by the First Defendant for his sole benefit, and the Plaintiff is entitled to a declaration that the Family Mortgage was procured by fraud and is thereby void as against him (submissions [143]-[149]).

The Plaintiff contends the First Defendant should be prevented by equitable estoppel from enforcing the two mortgages by representation or promise or convention (submissions [150]-[168]).

There is also a question of the affidavit of Ms Fiona Giannakopoulos dated 12 November 2014 which the Defendants sought to rely upon after the conclusion of the hearing. The Plaintiff’s case is that he received no prior notice of the documents, nor any opportunity to oppose their tender, and that the documents raise controversial issues which were not the subject of cross-examination. He submits little weight should be given to this evidence, and indeed that it should be excluded as prejudicial (submissions in reply [1]-[21]).

The Defendants submit the Plaintiff’s evidence and submissions as to affairs and violence between the various factions of the family are irrelevant to the matters at hand (submissions [1]-[6]). Their case is that the evidence of the Plaintiff as to family conversations is disputed and uncorroborated (submissions [7]). The best evidence of the mortgages is the historical documents and contemporaneous file notes of the solicitor Mr Tony McDonald from Makinson d’Apice (who has since passed away) which demonstrate the two mortgages were not shams (submissions [8]).

In any event, the Plaintiff has relied on the validity of the mortgages at various times when it suited him, including correspondences to a child support agency and negotiating the division of property with his estranged wife Ms Silvina Angius (closing submissions [9]-[112]). Their case is therefore that the Plaintiff relied on the validity of the mortgages and indeed always knew the reality that the mortgages were valid and enforceable by his parents against him (closing submissions [12]-[21]).

The Defendants therefore contend the Plaintiff has gained a material advantage from the two mortgages, and the two mortgages are not shams (submissions [13]-[15]). The Plaintiff received the benefit of the use of a car, use of a tow truck, payment of legal fees and repayment of a $140,000 loan (submissions [16]-[18]).

The Defendants deny that the Family Mortgage was fraudulently changed from $350,000 to $500,000 (submissions [19]-[20]). On the contrary, their case is that the Plaintiff must have known about this change as he later used it in child support documents, and there is no evidence of alteration without the Plaintiff’s knowledge (closing submissions [38]-[42]). They also deny the mortgages exceeded the value of the secured property, submitting on the contrary the value was carefully considered with an intention to accurately reflect its value in the mortgages (closing submissions [45]).

The Defendants contend the Plaintiff’s assertion of undue influence is unpersuasive, as the Plaintiff does not allege he was threatened or misled in any way. The Plaintiff was in no position of special disadvantage, neither because of his hearing loss nor financial pressure (submissions [21]-[26]). They refer to the Plaintiff’s emphatic denials in cross-examination of being fearful of his father, his assertion that at the relevant times his hearing problem did not affect him, and criticise the Plaintiff’s assertion of his financial dependence on his parents. Accordingly, the Defendants reject any claim of undue influence or special disadvantage by the Plaintiff (closing submissions [6]-[11]).

The Defendants further criticise the Plaintiff’s evidence given in cross-examination as revealing little other than an inability to answer questions and cooperate with the Court. They submit his evidence was purely self-serving (closing submissions [22]-[34]). On the other hand, the Defendants submit the evidence of the First Defendant was consistent and truthful (closing submissions [35]-[37]).

The Defendants also seek to rely on the affidavit of Ms Fiona Giannakopoulos of 12 November 2014, with its exhibits, to bolster their assertion that the amounts were paid by way of loan (closing submissions [43]-[44]).

The Plaintiff swore three affidavits on 13 July 2017, 1 August 2017 and 5 February 2018.

In his first affidavit (13 July 2017) he recounted how on or about 23 June 2017 his solicitors received a letter purporting to act as a Notice to Mortgagor seeking recovery of the amounts referred to in the Family Mortgage and Company Mortgage plus interest.

He said that the purchase of the Wild Street Property by himself and Ms Silvana Angius was made with the assistance of his parents by way of a gift of $170,000 to $180,000. The property was placed in the joint names of his wife and himself. He said there was no discussion prior to the purchase of the property of repayment of money at any time, and at “all times, both my parents stated to me that they would ‘give’ me the balance of the purchase price”.

The Plaintiff then described the breakdown of his relationship with his wife Ms Silvana Angius from 1993 when his wife was admitted to a psychiatric ward, resulting in 1997 in the breakdown of the marriage. He stated that in 1997 he became involved with his current partner Ms Jaqui Varela and that there “was a fear that Silvana and her family would seek to take the whole of Wild Street. There was also a concern raised by my parents that Jaqui may also press a claim against me further down the track”.

His evidence was that towards the end of 1997 or early 1998 he had a number of conversations with his parents to the following effect:

The Plaintiff recalled he signed the Family Mortgage on 14 August 1998 and the Company Mortgage on 16 August 1999, which were registered on the title of the property on 6 November 1998 and 17 January 2000 respectively. He denied signing the Family Mortgage in the presence of Mr Tibbetts and recalled that it involved the sum of $350,000 not $500,000. He asserted that at no time was he told by his parents prior to the Family Mortgage’s registration that it had been increased to $500,000.

He recalled soon after the Family Mortgage was put in place his father showed him the mortgage where he noticed it had $500,000 inserted, and recalled having the following conversation with his parents:

He said at no time did his parents ever suggest that the monies would be owing to them. In total he asserted his parents gifted him approximately $260,000 to $270,000. After outlining the purported factional disputes within his family, he reiterated he never received the alleged sum of $500,000 on or around August 1998 or the $100,000 on or around August 1999. He denied his father’s claim for $3,312,644.33.

In his second affidavit (1 August 2017) the Plaintiff responded to the affidavit of the First Defendant of 27 July 2017. He said that he included the reference to the Family Mortgage in his application with regards to Child Support “out of fear and in order to prevent Silvana seeking a greater share of our home”.

In his third affidavit (5 February 2018) the Plaintiff said at no time did Mr McDonald of Makinson d’Apice provide him with legal advice regarding the legal ramifications of him entering into sham mortgages or the Family Mortgage or Company Mortgage. He said he had limited interaction with Mr McDonald during the relevant period, with most instructions provided by his father to Mr McDonald without direct recourse to him. He said he recalled his father saying to him on more than one occasion words to the effect:

He said his father provided all the information relating to his earnings to Mr McDonald.

Much of the Plaintiff’s responses in cross-examination were argumentative and non-responsive. A selection only of the most pertinent answers are therefore described below.

In cross-examination the Plaintiff asserted that in 1997 Mr McDonald did not communicate with him (T12/19-38). He accepted he signed documents prepared by Mr McDonald, but never in front of him, and suggested at times Mr McDonald signed his signature without his authority (T13/15-45).

He accepted Mr McDonald did act for him in finalising divorce proceedings (T15/43-48). He denied Mr McDonald ever actually dealt with him in his child support proceedings, stating Mr McDonald only ever dealt with his father the First Defendant (T16/1-18).

He said at the time around 1997 he did not read many documents and would just sign them without reading them (T21/2-18, T33/2). He said he trusted his parents and was in a bad situation (T20/22-23). He denied he ever instructed Mr McDonald to act for him on child support (T27/1-15). He said he would just sign a document trusting his parents (T29/28-33). He repeated he never saw Mr McDonald nor asked for his help as he was “in an awful situation” where he could not afford to pay for a solicitor (T30/22-32).

He denied the mortgages reflected any debts to his parents (T58/31-33). The Plaintiff said he was not scared in 1997 or 1998, but was under severe pressure stating “I was under duress, under severe pressure, and trusted in my family” (T91/24-41). He said the figures in the child support form were not put there by him and were not correct (T66/29-32). He denied he ever saw Mr McDonald or ever had any meeting or conversation with him in relation to a mortgage (T72/21-47).

The Plaintiff said that he did not insert the $500,000 into the Family Mortgage as this was included by his father and Mr McDonald, and he did not have any say in the matter (T95/22-29). He repeated that most of the actions of Mr McDonald were done under the instructions of his father, with much of the child support paperwork sent to Waterloo Smash Repairs not directly to him (T113/1-27). However, he did accept Mr McDonald acted for him in his property settlement and divorce (T113/29-34).

He said he never received any money from any mortgage, stating it was “a fake mortgage” put in place as a protectionist mechanism to be activated should one of his partners claim against him (T120/28-44). He said the mortgage was a scam designed to trick (T121/1-19). He denied when he signed the Family Mortgage it was agreed it was for $500,000, stating the change to that mortgage was not done by him (T145/20-44). However he accepted that the $500,000 mortgage may have been relied upon in child support proceedings, but stated all he did was sign something and had no idea what “they did with it” (T145/41-50). He accepted he did not put in his application for child support that the mortgage was a sham (T146/34-40).

In re-examination the Plaintiff confirmed that Ms Silvana Angius knew the mortgages were sham mortgages because it came up in a family conversation (T149/12-33). He said it was when Ms Silvana Angius told him in a conversation she thought the mortgage was “not real” (T149/35-43).

Mr Tibbetts swore one affidavit on 17 October 2017.

In his affidavit he recounted how he was employed by the First Defendant for many years at Waterloo Smash Repairs until he retired in December 2007. He had not seen the First Defendant since and their relationship had been a working relationship.

He said the First Defendant asked him to sign documents two or three times at work which he did, and which occurred over a period of a few months. He said on each occasion the First Defendant covered with his hand or with a piece of paper parts of the pages he was asked to sign, although he did not obscure the whole page.

Mr Tibbetts asserted he did not know what the Plaintiff’s signature looked like and had never seen his signature on any document. He said the Plaintiff had never signed any document in his presence, and said when he signed the first page of the Family Mortgage it had not been signed by any other person including the Plaintiff.

In cross-examination Mr Tibbetts confirmed he worked as a spray painter for the First Defendant retiring in December 2007 (T35/31-35). He said he had not seen the First Defendant since he had retired and had only once seen the Plaintiff at a shopping centre where he did not have a long conversation with him (T35/41-50). He confirmed that memory might fade over 20 years (T38/12-13).

He said that the First Defendant simply called him into the office to sign a document, where he jokingly said “I hope I’m not signing my life away”. He indicated that when signing the First Defendant covered the document with his hand somewhat (T38/19-32). He confirmed that to his memory he was asked to sign documents two or three times (T39/4-5). He said whatever he was signing he did not know who else had been working on the document in the office (T41/38-40). He accepted it would be a bit difficult to say now that when he signed the document whether or not the Plaintiff had signed it just before he himself signed it (T42/1-3). To his recollection he did not remember signing more than one page of the document provided to him (T44/6-10).

In re-examination Mr Tibbetts said he had no recollection of the Plaintiff being in the room and signing his name on a document, or being in the room at all when he signed the document. He said he had no recollection of ever signing any document in the presence of the Plaintiff (T45/21-33).

The First Defendant swore one affidavit on 27 July 2017.

In this affidavit he described how in or about 1993 the Plaintiff asked him for $200,000 to assist in the purchase of the Wild Street Property. His account was that the Plaintiff said “I need $200,000 … Yes. I will pay you back”. The First Defendant said “I will loan you $200,000”.

The First Defendant said in or about 1998 his son asked for a further $300,000 to assist with his property settlement with Ms Silvana Angius, where his son said “I’ve agreed to pay Silvana $260,000, but I’m going to need about $300,000”. The First Defendant replied “Ok I’ll do that, but you will have to pay me back and you will now owe me $500,000. I want the $500,000 to be secured by mortgage”.

He said he consulted his solicitor Mr McDonald and arranged for a mortgage to be placed on the Wild Street Property for $500,000. Likewise he asserted in or about 1999 his son asked him the following:

The substantial balance of his affidavit went to responding to the other evidence and reiterating his version of events, although the First Defendant accepted he did say to his son “if you encounter financial or marital problems again in the future only a small part of the equity in your home could be accessed by your creditors”.

Many of the First Defendant’s replies in cross-examination were argumentative and non-responsive. Accordingly a selection of the most pertinent answers are described below.

In cross-examination the First Defendant accepted his son had had to give up work for eight to nine months to care for his four children whilst Ms Silvana Angius was in hospital (T155/7-9).

He denied that he had worked with Mr McDonald and his accountant to prepare a lot of the financial materials for his son in relation to the Plaintiff’s property settlement and maintenance disputes with Ms Silvana Angius (T155/48-T156/35). He said he had nothing to do with the separation of the Plaintiff from his wife (T157/4-7).

The First Defendant denied the Plaintiff’s version of the conversation surrounding the Family Mortgage and the Company Mortgage as entered into for protecting the Plaintiff against claims from his partners (T158/7-28). He denied he took care of all of the Plaintiff’s legal issues (T159/45-50). He said his son should have trusted his father or “he better be in the gutter” as the only way he could get money was from his parents (T160/14-21).

In cross-examination, the following pertinent exchanges occurred (T164/9-21, T165/34-T166/1, T168/44-T169/13):

The First Defendant accepted the $500,000 Family Mortgage was effected by Mr McDonald on his instructions (T186/24-38). He did not recall when the Plaintiff signed the Family Mortgage what the amount on it was (T190/42-47). He said the signatures on this mortgage were done within the same minute or the same time approximately (T292/34-37). He accepted the alteration to the Family Mortgage with a handwritten $500,000 was done by Mr McDonald, and that he told Mr McDonald the figure should now be $500,000, although denied he received valuations for the Wild Street Property (T192/35-46).

The First Defendant denied that his son was under a lot of stress when entering into the mortgages, denied he wielded a lot of influence over him and denied his son was very vulnerable at the time (T209/20-43).

He said that if his son had done the right thing he was entitled to call on the mortgages, stating if “one or my kids or my daughter act wrongly, his house is gone too” (T210/15-22). He denied he was at all times in control of his son’s property settlement and child support by providing instructions to Mr McDonald (T215/30-T216/35).

It became apparent at trial that the key factual controversy between the parties was the relevant circumstances surrounding the two mortgages.

In addition, in closing submissions, counsel for the Plaintiff no longer pressed any substantive case of waiver, abandonment, lack of consideration or unjust enrichment, although they were the subject of earlier written submissions (T237/3-16). I will therefore not consider these issues.

After the conclusion of the oral evidence at hearing, specifically on 23 October 2018, counsel for the Defendants sought to rely upon the affidavit and attached documents of Ms Fiona Giannopolous. As these materials appeared to be extensive I invited the parties at a directions hearing on 26 October 2018 to indicate their respective positions as to this material.

The Plaintiff opposed the tendering of the material, on the basis that it was prejudicial to allow material to be received when it had not been tested, for example, in cross-examination.

Whilst I have received the material, I have given it such little weight as it deserves given the absence of cross-examination and testing by the Plaintiff.

It is perhaps trite to observe that for a trial judge to purport to determine truthfulness on witnesses’ demeanour alone is a problematical exercise.

In this case, however, the two principal witnesses of the Plaintiff and the First Defendant have been in dispute for some time. Although they are father and son, the friction between them is now of some historical proportion.

This case turns largely upon the circumstances surrounding the execution of two mortgages: the Family Mortgage dated 14 August 1998 and the Company Mortgage dated 16 August 1999. The context surrounding these two mortgages is disputed. More precisely, the parties on either side give diametrically opposed reasons as to why the mortgages were executed.

The Plaintiff asserts no monies were ever loaned to him, and his father overbore him at a time of emotional vulnerability to enter into the mortgages, telling him that they would assist him in his family law proceedings. He does accept he received $170,000 to $180,000 as a gift from his parents to assist in the purchase of the Wild Street Property in or around April 1993, and further the discharge of a mortgage to the CBA of $50,000 on 14 April 2000 again by way of gift (CB 67, 75, 90, 118-122, 285, 303).

The First Defendant, on the other hand, asserts the mortgages reflected monies that had been advanced to the Plaintiff by way of loans.

Neither of the parties has any contemporaneous notes of any of the conversations which allegedly occurred outlining the context surrounding the two mortgages.

As witnesses, they were entirely unsatisfactory. Each gave evidence in a most argumentative and belligerent fashion, which did not assist the Court and which reflects the animosity in the family. Many of the answers they provided were contrived, in my view, simply to reflect what they thought would assist their case, rather than truthful recollections of events which occurred approximately 20 years ago.

Mr McDonald, the solicitor from Makinson d’Apice, was someone who may have provided real insight into the case. Unfortunately, he is now deceased. However, he has provided some contemporaneous documents, which to some extent shed light on the events in dispute.

With the above observations in mind, the key contrast in this case is that at the time the parties were discussing the mortgages the relationship between them was at least cordial. Presently, their relationship is acrimonious. This was ventilated with full fury at the trial.

The true framework for determining the circumstances surrounding the mortgages is not the parties’ respective versions of events and what they assert was purportedly said at the time of the Company Mortgage and the Family Mortgage. The true framework is the parties’ conduct at the time the mortgages were entered into, as evinced by the contemporaneous documents. This is because this provides a much surer indication of past events than the witnesses’ versions, whose recollections were clearly tainted by acrimony and a desire to give evidence favourable to their case. However, those statements and assertions of the parties that are corroborated by contemporaneous materials or those, properly viewed, made contrary to interest are what I have considered as most persuasive.

The Plaintiff has attempted to portray how he was emotionally overborne at the time of the two mortgages, such that there was an element of duress or manipulation by his parents in signing the mortgages. His case is that he was so unwell and stressed at the time that he simply signed anything that was put before him. Presently, the Plaintiff suffers from serious hearing difficulties. However, there is no medical or psychiatric evidence before me to suggest he was mentally challenged, or somehow mentally fragile at the time of the mortgages. In addition, he clearly stated in cross-examination “[b]ack then I didn’t have a hearing problem” (T90/40). There is no evidence he has or has ever had any cognitive impairment.

Whilst at the time of the mortgages the Plaintiff was going through an undoubtedly stressful divorce, I do not accept there is any persuasive evidence to suggest he was mentally fragile. Presently, there is no suggestion he has reduced mental capacity.

In addition, the Plaintiff has attempted to portray how his father was totally domineering during this period, and entirely controlled the Plaintiff’s affairs, family law proceedings and child support proceedings with Ms Silvana Angius by solely instructing Mr McDonald of Makinson d’Apice.

From my analysis of the contemporaneous materials, especially the file notes, there is no doubt that Mr McDonald dealt with both the Plaintiff and the First Defendant during the relevant times the Family Mortgage and Company Mortgage were entered into, as well as the Plaintiff’s family law disputes.

Although it is clear on the evidence that Mr McDonald did communicate and have some contact with the Plaintiff (see, eg, CB 251, Exhibit D5 and Exhibit D1, 69) it would appear the First Defendant was indeed the principal point of contact with the solicitors of Makinson d’Apice. However, as I have said, the Plaintiff clearly had contact as well with Mr McDonald.

Furthermore, I am satisfied from the contemporaneous materials that the Plaintiff did likely receive some money from his father, which he understood was intended to be in that regard a loan. I am also satisfied that he was not suborned into doing anything without understanding what was being done was in his interests. Those monies were provided to him in 1993 for the purpose of him and his then wife acquiring the Wild Street Property. However this issue was not fully ventilated at the trial.

The contemporaneous materials document that the First Defendant had himself it seems borrowed $200,000 from the CBA for the purposes of lending to his son. One file note of 16 September 1997 states “[t]here is a letter flagged with the yellow marker from the Commonwealth Bank of 9 March 1993 which indicates that John Angius obtained a home loan of $200,000.00 from the Bank to complete the purchase” (Exhibit D1, 6).

A further letter drafted by Makinson d’Apice sent to M Roper & Co Solicitors of 26 September 1997 states (CB 238):

Although the CBA documents evincing loans to the First Defendant and his wife are not before the Court, Mr McDonald was clearly instructed by the First Defendant that such a loan had occurred and then used it as a point of negotiation on behalf of the Plaintiff in the letter to M Roper & Co Solicitors.

There is no reason or evidence to suggest the First Defendant would have lied to Mr McDonald. There is further no evidence that M Roper & Co Solicitors would have been satisfied with Mr McDonald’s assertion without checking the $200,000 loan to the First Defendant and his wife alleged by Mr McDonald. Indeed, the inference I draw is that M Roper & Co Solicitors would have checked the veracity of the $200,000 loan from the CBA as competent solicitors would.

The Plaintiff suggests that Ms Silvana Angius knew that somehow the mortgages were shams or did not reflect any amount loaned. This is in my view a nonsense, as to suggest the Plaintiff told her they were shams and somehow she and her solicitor did not act on this knowledge, is not consistent with logic or the evidence.

The existence of a $200,000 loan is to an extent also corroborated by the First Defendant’s affidavit of 26 October 2014 included in the materials before me, wherein he stated:

This is a glaringly inaccurate account of the purchase of the Wild Street Property, which was not bought in 1985. However, it does provide further modest support that some funds “put in the names” of the Plaintiff’s parents were advanced to the Plaintiff for the purchase of the Wild Street Property.

However, there is no evidence as to the term of the $200,000 loan or when it was paid out if at all. The inference I draw is that the $200,000 was likely not a gift, as the First Defendant would not I consider have borrowed money to gift to his son. The far more likely inference is that he borrowed to loan money to his son. However as I have said this was never really a part of the Defendants’ case, and it could have been on one view of the evidence.

In addition, on 14 April 2000 the First Defendant and Ms Laura Angius discharged the Plaintiff’s CBA Mortgage for the remaining amount owing of approximately $50,000 (CB 67, 75, 90, 118-122, 285, 303). The Plaintiff accepts the discharge but asserts this amount was provided by way of gift.

I am satisfied therefore that both the $200,000 and the $50,000 were provided to the Plaintiff, and at least the $200,000 was likely loaned (not gifted) to the Plaintiff on or about 1993, on terms repayable on demand. But this comment is of no relevance in this case.

However, whilst some money was likely loaned to the Plaintiff, I do not accept the Company Mortgage or Family Mortgage are reflective of legitimate transactions, because they grossly inflate the amounts purportedly loaned at best to the Plaintiff on the available evidence.

There is simply no evidence from the First Defendant beyond his bare assertion that he ever loaned the Plaintiff $500,000 or $100,000. They are clearly sham mortgages, but shams which the Plaintiff was aware of and understood, or at best cared not one way or the other. They were contrived to protect the Plaintiff in family court proceedings or in any future relationship.

With respect to the Family Mortgage, I am satisfied the Plaintiff signed the alteration on the top right hand corner altering $350,000 to $500,000 after that alteration had been made. This is because Mr McDonald prepared the document, and whose handwriting and alteration I am satisfied is found on the document. It is highly likely prior to the Plaintiff signing the alteration, either he or someone in his office put the initials R.A. next to the $500,000 alteration to indicate where the Plaintiff should sign to indicate assent to the change.

I do not accept the Plaintiff’s signature on the top right reflects an assent to an address of a witness, as it would serve no legal or practical purpose to sign such a change. The only reason to sign where the Plaintiff has done would be to accept the alteration of the Company Mortgage from $350,000 to $500,000. I am therefore satisfied the Plaintiff signed after the alteration. As will be clear from my reasoning below with respect to equitable estoppel, it is immaterial as to whether it was not witnessed in the presence of Mr Tibbetts or otherwise. In any event I do not view this as an important aspect of the circumstances surrounding the mortgages.

In addition, the child support documentation indicates that the Plaintiff relied on the existence of a loan to his father, for example in an application which at point 22 identified a mortgage of “$500000 to John & Laura Angius” (Exhibit D1, 37-51, CB 195-20). The Plaintiff was clearly prepared to take the benefit from the alleged existence of a loan from his parents in order to diminish his potential liabilities in any family law disputes. In my view the reference to $500,000 further demonstrates that the Plaintiff was perfectly happy to inflate his supposed liability, changing a $350,000 mortgage document to $500,000. I do not accept this was a unilateral change of the First Defendant.

However, as I have already said there is no contemporaneous support that any amount of $350,000, $500,000 or $100,000 was provided to the Plaintiff by his father, beyond the assertions of the First Defendant. This much was accepted by counsel for the Defendants (T267/23-28).

I am satisfied, therefore, that no amount near to $600,000 as referred to in the Company Mortgage and Family Mortgage was loaned to the Plaintiff by his father. Those amounts were contrived in circumstances to give the appearance that the Plaintiff had little equity in the property. I am satisfied he knew of the two mortgages and either knew or did not care as to the purpose of these transactions. At the very least, the Plaintiff knew and accepted that his parents were acting in his interest.

As there is no evidence to demonstrate with any level of credibility $500,000 and $100,000 were loaned to the Plaintiff, and further given the First Defendant’s concessions in cross-examination referred to in [154]. I am inclined to accept the Plaintiff’s assertion that his father represented to him that the inflation of the mortgages was purely to assist him. Further I am satisfied his father represented in effect that they would not be called upon, as they did not represent the true state of affairs or amounts loaned. I am satisfied these representations were made in the presence of the Plaintiff’s mother or at least she acquiesced to it.

In summary, on the evidence as a whole, I am satisfied the First Defendant did represent to his son the two mortgages, including the increase from $350,000 to $500,000, were solely to create an apparent impediment to accessing the Plaintiff’s equity in any family law and child support proceedings. As a corollary of this, I am satisfied the First Defendant did represent to his son that this would be in the Plaintiff’s best interests, that the mortgages would not disadvantage him in any way, and that they would not be enforced. As a result of those representations the Plaintiff executed the mortgages, acknowledging a liability to his parents, to his obvious detriment.

I am therefore satisfied the doctrine of equitable estoppel in this case applies to vindicate the expectations of the Plaintiff against the Defendants who now seek to unconscionably resile from the expectation the First Defendant has created that the mortgages would not be called upon. On the evidence as I have it, it would be unconscionable to allow the Defendants to resile from the representations of the First Defendant to the Plaintiff. The Plaintiff has clearly relied on these representations to his detriment, by executing both the mortgages in circumstances purporting to acknowledge a debt of $600,000 in total, to the extent that it would be unconscionable to allow the Defendants to call on the mortgages: Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [77]-[78]. Were I to have found either mortgage was enforceable there may have been a question as to the attribution of liability to the First Defendant’s wife or her estate. However this was not fully agitated and does not now arise.

Independently of my findings on estoppel, I do not accept there is any case of undue influence, unconscionable conduct or duress made out by the Plaintiff, in the sense that the Plaintiff was not subject to any special disadvantage nor lacked the exercise of his own free will. Unconscionable conduct requires the innocent party to be subject to a special disadvantage, which the other party unconscientiously takes advantage of, with some degree of knowledge of the disadvantage. Undue influence, as a related but conceptually distinct concept, has been described as characterised by the absence of the free exercise of the individual’s will.

With respect to the above doctrines, the Plaintiff did not at any point suffer from any relevant disability or lacked free will. Indeed on one view he was entirely complicit in the arrangements. I do not consider he was overborne nor would he have needed much persuasion that the mortgages were for his forensic benefit. These findings however do not detract from my view otherwise that he was induced to believe they would not be enforced.

On the Plaintiff’s version of events, the monies provided to him by his father were always intended to be gifts, and if this were the case there is no case to be made out of undue influence, unconscionability or duress in this limited sense, as the transaction as understood by the parties was to be to the Plaintiff’s benefit.

Further, my impression of the Plaintiff in the witness box was of a person very unlikely to be susceptible to some special disadvantage, especially because his hearing problems were not acute as at the time of the mortgages. In cross-examination he denied being scared of his father. There is simply no evidence before me reasonably to suggest there was some relevant special disadvantage or lack of free will. As I have said, this does not detract from my conclusion that the Defendants are estopped from relying upon those relevant representations to the Plaintiff that the mortgages would not be enforced.

There was a brief suggestion by the Defendants in their closing submissions that the Plaintiff had not come to the Court with “clean hands”. Unclean hands was not pleaded by the Defendants and this assertion appears to be a throwaway line.

Nevertheless, as considered by Ward J (as her Honour then was) in Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587 there is open an argument that unclean hands may factor into my discretion of whether or not to grant relief.

In my view, the fact that the Plaintiff understood and went along with the two mortgages does not amount to unclean hands as neither an equitable defence nor a factor that in the exercise of my discretion leads me to refuse relief. It is no answer, on balance, to prevent the plain reality in my view that the two mortgages were not to be called upon. The Plaintiff’s contentment to go along with the directions of his father and use the two mortgages to his advantage lacks the element of proportionality that would amount to such a depravity in a legal as well as moral sense as to bar relief.

Both sides’ case has been run on an all or nothing basis. The Plaintiff denies the two mortgages are effective and seeks to set aside the s 57(2)(b) notice. The Defendants on other hand seek to enforce the full amount of the mortgages plus interest. There was neither a fall-back case proposed by the Defendants for the $200,000 nor any Cross-Claim which could have been brought to seek recovery of a lesser amount of $200,000.

In my view, notwithstanding the mortgages as shams, they created legally effective arrangements. However, in my view, there is no evidence to establish $500,000 or $100,000 was advanced to the Plaintiff. Given the representations of the First Defendant and the Plaintiff’s reliance on these representations to his obvious detriment, I would make declarations accordingly to give effect to my findings of equitable estoppel. It would also follow that the s 57(2)(b) notice cannot stand.

For the sake of clarity, I will hear the parties on the appropriate relief. I will indicate I am inclined to make orders as set out in prayers 1, 5, 6, 6A, 6B, 7, 8 and 11A of the Further Amended Statement of Claim.

I will hear the parties on the issue of costs if they cannot be agreed.