WFM Motors Pty Limited v Bar M Pty Limited

For nearly three decades Ristorante Macchiavelli was an iconic Sydney restaurant. Equally iconic was its proprietor, the late Giovanna Toppi (the Second Defendant (Giovanna)). Her daughter, Paola (the Third Defendant), followed her mother into the restaurant business. Without intending any disrespect, in this judgment the parties will be referred to by their given names.

These proceedings concern Giovanna’s liability to the Plaintiff, WFM Motors Pty Ltd (WFM), which sues Giovanna under a third party guarantee and mortgage provided by her as security for a loan of $1,100,000 advanced to a company, Bar M Pty Ltd (the First Defendant) (Bar M), of which Paola is the director. The mortgage was over an investment property owned by Giovanna in Macleay Street, Potts Point (the Property). Bar M and Paola have admitted their liability to WFM in respect of the loan. WFM was the landlord of premises at Rushcutters Bay where Paola operated her restaurant called Bar M (the restaurant).

By a cross-claim, Giovanna applied for relief from enforcement of the mortgage and guarantee under the Contracts Review Act 1980 (NSW) (CR Act), the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) and, or in the alternative, the general law of unconscionable conduct.

Two very different pictures of Giovanna were sought to be drawn by the parties. Giovanna’s case was that she was an elderly, vulnerable, poorly educated mother with limited English, who was a victim of the unconscientious conduct of her daughter and WFM. WFM submitted that what Giovanna may have lacked in formal education was more than made up for by a business acumen amply demonstrated by her successful career as a Sydney restaurateur over many years. Giovanna, according to WFM’s case, had volunteered to assist her daughter and her daughter’s business and well understood, and had received independent legal advice about, the legal obligations which she assumed towards WFM.

A complicating feature in what was by no means a straightforward case was the circumstances surrounding the giving of Giovanna’s evidence. The trial was conducted remotely due to the Covid pandemic. Taking Giovanna’s evidence remotely proved far from satisfactory. That is not a criticism of her or of any of the legal representatives on both sides of the record. Her evidence was adjourned early in her cross-examination for three months so it could be completed in person. Unfortunately, and unexpectedly, Giovanna died during the adjournment. Her son, Walter Toppi, was substituted as representative of her estate. An important question for the resolution of these proceedings has become how the Court should treat Giovanna’s evidence, including so much of it (in fact most of her evidence) as had not been the subject of cross-examination.

For the reasons which follow, the Court has concluded that WFM is entitled to judgment and that Giovanna’s cross-claim fails.

Mr P R Jammy of Counsel appeared for WFM. Mr N J Kidd of Senior Counsel appeared for Giovanna and, after her death, for Walter.

What follows are the facts which the Court finds to be uncontested or not seriously contestable, including by reason of admissions or concessions. The essential disputed matters as asserted by the parties are also noted at the relevant point in the chronology of events for context, with the reasons for specific findings cross-referenced to elsewhere in these reasons.

From 2015 to 2018, Bar Machiavelli Pty Ltd (Bar Machiavelli), whose sole director was Paola, leased premises in Neild Avenue, Rushcutters Bay (the Premises) from WFM to run an Italian restaurant (the 2015 Lease). The term of the 2015 Lease was for 6 years commencing on 1 December 2015 with a starting annual rent of $235,000 per annum. Bar Machiavelli was a trustee for a unit trust in which the unit holders were G & P Toppi Pty Ltd (G & P Toppi) and companies associated with Mr Bicher and Mr Pellarini (the Bicher entities).

G & P Toppi (now known as Cara Nonna Pty Ltd) was incorporated on 4 February 2016 with Giovanna and Paola as directors and Giovanna as a shareholder. So much is evidenced by a historical company extract in evidence. In her brief oral evidence, Giovanna asserted that she knew nothing about the company, but conceded she could have been a director if Paola had made her sign something.

On 21 March 2018, the Bicher entities commenced proceedings in this Court against Bar Machiavelli, G & P Toppi and Paola for breach of trust and for debts said to be owed by Bar Machiavelli of approximately $830,000 plus interest (the Bicher trust proceedings). Paola was represented in those proceedings by a solicitor, Mr Philip Beazley.

In April 2018, Giovanna was being represented in relation to another matter by a solicitor, Ms Vivian Evans of Uther Webster & Evans. In relation to that same matter, Mr Beazley was acting for Paola.

On 25 May 2018, the solicitors for the Bicher entities wrote to WFM informing it of the Bicher trust proceedings. The letter, which was copied to Mr Beazley as Paola’s solicitor, asked that WFM give them notice of any proposed transfer of the 2015 Lease.

On 5 June 2018, Ms Evans wrote to Dr Sharon Reutens, a consultant psychiatrist with experience in old age psychiatry:

Dr Reutens saw Giovanna on 6 June 2018 for two hours.

Sometime in June 2018, Paola became sole director and shareholder of Scuie Scuie Pty Limited.

On 12 June 2018, Paola (as sole director of Bar Machiavelli) appointed a voluntary administrator to the company on the basis of likely or actual insolvency.

Dr Reutens’ report to Ms Evans about Giovanna is dated 25 June 2018 (the Report). Because of its proximity to the events in question in these proceedings, it is necessary to set out some parts of the Report at length:

On 13 August 2018, the Bicher entities commenced proceedings in this Court against WFM, the administrator of Bar Machiavelli and Paola for orders that WFM consent to the assignment of the 2015 Lease from Bar Machiavelli (in administration) to the Bicher entities (the WFM lease proceedings). WFM actively opposed the relief sought and was represented in the proceedings by HWL Ebsworth (HWLE). Paola was represented by Mr Beazley.

Orders were made by Brereton J on 10 September 2018 in the WFM lease proceedings requiring WFM to consent to an assignment of the 2015 Lease and requiring WFM to pay the costs of the Bicher entities.

By reason of the Court’s acceptance of the evidence of Mr Colacicco (see [92] below) and the finding that Giovanna had a fundamental disposition to assist Paola (especially in relation to Bar M) (see [139] below), the Court finds the following occurred during September 2018 in accordance with his affidavit evidence:

Furthermore, the Court finds that the conversation referred to in the preceding paragraph must have occurred after 10 September 2018 (because Mr Beazley’s offer of that date set out in [23] below makes no express reference to a mortgage) and before the email of 27 September 2018 set out in [28] below.

On 10 September 2018, Mr Beazley wrote to WFM:

On 14 September 2018 this item appeared on the restaurant website under the heading “Lazarus Rising: 82 Years Young, Giovanna is Back”:

On 27 September 2018, Bar M was incorporated with Paola as sole director and shareholder.

On 27 September 2018, Giovanna purportedly signed a letter addressed to Mr Beazley which stated:

Mr Beazley admitted that he had typed this letter. Giovanna’s evidence was that she had no recollection of ever seeing or signing that letter, had never instructed Mr Beazley to act for her and that she had been in hospital undergoing dialysis on 27 September 2018. A hospital record in evidence records, and the Court finds, that Giovanna underwent dialysis from 7am to 1pm that day.

At 7.51pm on 27 September 2018, WFM’s solicitor, Ms Maria Townsend of HWLE sent an email to Mr Beazley which included:

Mr Beazley replied by email at 9.27pm:

On 28 September 2018, the Settlement Deed was executed to resolve the proceedings instituted by the Bicher entities (the Settlement Deed).

Giovanna was a party to the Settlement Deed, as was G & P Toppi. Among the payments provided for by the Settlement Deed (the Settlement Amount) was a payment by Giovanna to Bicher & Son Pty Ltd of $100,000 as repayment for a loan described as the “Giovanna Loan”, defined as “the loan made by Bicher & Son to Giovanna in the amount of $100,000”.

There was in evidence a copy of the Settlement Deed signed by Giovanna and Paola as directors of G & P Toppi and by Giovanna in her personal capacity, this latter signature being witnessed by Mr Beazley. Giovanna’s evidence was that she had no knowledge of the “Giovanna Loan” and that as far as she was aware she did not sign the Settlement Deed.

The total of the Settlement Amount was $1,100,000 secured by a mortgage over the Property. In return for the Settlement Amount, the Bicher entities agreed to discontinue the Bicher trust proceedings against Paola and not enforce the judgment against WFM obtained in the WFM lease proceedings.

On 8 October 2018, Ms Townsend emailed Mr Beazley including:

On 10 October 2018, Ms Townsend emailed Mr Beazley:

Mr Beazley’s affidavit evidence is that he met Giovanna on or about 12 October 2018:

Mr Beazley acknowledged, and the Court finds, that he did not keep any file note or other written record of the advice he says he gave Giovanna on that occasion. Giovanna denies any such meeting took place.

On 15 October 2018, Mr Beazley sent a letter to HWLE saying “We enclose the executed loan and lease documents”. In doing so, it appears he was premature, because it drew this email from Ms Townsend at 3.48pm that day:

Giovanna underwent dialysis from 7.30am to 1.30pm on Thursday, 25 October 2018.

By emails sent at 4.33pm and 5.11pm on 25 October 2018, Ms Townsend sent Mr Beazley the final versions of the transaction documents. The first of these included:

At 4.58pm on 25 October 2018, Mr Beazley received a text message from Paola which stated: “Can you call mum to come in to sign the papers tomorrow. X [Giovanna’s mobile phone number is set out]” (Paola’s text message).

Mr Beazley’s electronic diary records him as being in Parramatta Children’s Court from 9.30am to 10.00 am on Friday, 26 October 2018.

On 26 October 2018 at 10.31am, Ms Townsend’s personal assistant emailed Mr Beazley referring to the previous day’s emails of 4.33pm and 5.11pm and saying: “We look forward to receiving the signed document [sic] today and details of settlement which is due to take place on Monday”.

At 11.03am on 26 October 2018, Mr Beazley downloaded for execution the final form of the transaction documents that had been emailed to him by Ms Townsend the previous afternoon.

By letter dated 26 October 2018, Mr Beazley sent the signed transaction documents to Ms Townsend. These included (Giovanna’s signed transaction documents or the Transaction):

The statutory declaration referred to in the preceding sub-paragraph recorded:

Mr Beazley’s evidence (set out at [102] below) is the effect, and the Court accepts by reason of Mr Beazley’s electronic records, that Giovanna’s signed documents could only have been signed between 11.00am and 2.26pm on 26 October 2018. The Court also accepts Mr Beazley’s evidence that he has no independent recollection of meeting with Giovanna at that time and that (as he accepted at T174.05) the documents were being executed “in a big rush”. Furthermore, Mr Beazley has no file note or other record of what advice he gave Giovanna at any such meeting.

Giovanna’s evidence sworn in response to this evidence of Mr Beazley’s was:

As part of the same suite of documents, Bar M entered into a new lease of the Premises with WFM (the 2018 Lease). Giovanna guaranteed Bar M’s obligations under the 2018 Lease. That obligation was also secured by the mortgage she gave over the Property. The 2018 Lease included a higher rent intended to provide a means for the payment to WFM over time of the costs it had incurred in the WFM Lease Proceedings. The mortgage also secured Giovanna’s guarantee obligation in respect of Bar M’s performance of the 2018 Lease. In other words, Giovanna’s obligations to WFM were not limited to securing Bar M’s obligation to repay the funds that had been advanced and were repayable with interest within 12 months of the date of draw down.

On or about 28 October 2018, Bar M drew down just less than $1,100,000 under the facility provided by WFM.

By reason of the Court’s acceptance of the evidence of Mr Colacicco (see [92] below), the Court finds the following occurred on the evening of 28 October 2018 in accordance with his affidavit evidence:

Giovanna’s evidence was that in January 2019 Paola said to her (Giovanna) that Giovanna would soon have to sell the Property to pay WFM’s mortgage. Giovanna said she denied knowledge of the mortgage and asked Ms Evans to obtain Giovanna’s signed transaction documents from Mr Beazley.

Mr Beazley sent at least some of Giovanna’s signed transaction documents to Ms Evans on 1 November 2019. So much appears from a letter from Ms Evans to Mr Beazley dated 1 November 2019 which included:

There was no evidence of any reply from Mr Beazley to Ms Evans’ inquiries.

WFM and Bar M agreed to extend the repayment date of the $1,100,000 loan first to 24 January 2020 and then to 24 February 2020.

Bar M defaulted in its obligations to WFM by failing to repay the amount due by the extended repayment date.

On 5 March 2020, Bar M failed to comply with a demand from WFM to repay the loan.

Giovanna failed to comply with a demand from WFM to repay the loan on or before 13 March 2020.

WFM commenced these proceedings by statement of claim filed on 15 September 2020.

Giovanna sold the Property by a contract made on 7 April 2021 for $8,500,000. WFM agreed to discharge a caveat it had lodged over the Property upon payment of funds into Court sufficient to meet WFM’s claim against Giovanna.

Before turning to the essential facts in dispute between the parties, I will set out the relevant legal principles in relation to fact finding, and then consider the evidence of the various witnesses, together with submissions made in relation to potential witnesses who were not called.

I summarised the legal principles as to fact finding and credit in Maria Saravinovksa v Krste (Chris) Saravinovski; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964. The relevant sections are extracted below:

Beazley, Giles and Santow JJA set out the principles relevant to the weight to be given to a witness’ evidence when they have died before they were cross- examined in Amalgamated Television Services Pty Limited v Marsden [2002] NSWCA 419 (Amalgamated):

Levine J set out a rationale for affording any weight to evidence untested by cross-examination in Marsden v Amalgamated Television Services Pty Limited [2001] NSWSC 510 (citations omitted):

Ward CJ in Eq (as her Honour then was) set out what a Jones v Dunkel inference is in Galati v Deans [2021] NSWSC 1094:

As I have already noted, Giovanna’s affidavit evidence was that without explanation from anyone, and not understanding what she was signing, Giovanni acquiesced in Paola’s request “Mum, I need you to sign here” or “Sign here, Mum”. However, an important preliminary question is what approach the Court should apply to her evidence when most of it was not able to be tested by cross-examination.

As was required to be the case at the time, the entire hearing was conducted remotely. Giovanna was sworn through an interpreter at 10.33 am (T85:1) on the third day of the hearing (Monday, 20 September 2021), which had commenced at 9.30am. With that commencement time my practice is to take a morning tea adjournment at about 11am.

Giovanna was cross-examined by Mr Jammy for about half an hour. It was done through an Italian interpreter, although Giovanna appeared to understand some questions before they were interpreted and answered in English. The cross-examination, such as it was, takes up ten pages of transcript. After some questions about Giovanna’s history as a restaurateur, the topic had turned to preliminary questions about the Settlement Deed and the alleged debt of $100,000 owed to the Bicher entities when morning tea was taken.

Before the Court rose, I said this to the parties (T96:1-8):

I indicated to the parties that over morning tea I could make inquiries if a court room could be made available outside the main Queen’s Square complex for the hearing to continue in person. I then had this exchange with Mr Kidd SC (T96:45-97:13):

The solution I had in mind was not achievable. After the short adjournment I informed the parties that the only possibilities were to press on with taking Giovanna’s evidence remotely or adjourn her evidence. I also said (T97:50 – T98:1-8):

The exchange continued in the (electronic) absence of Giovanna and Mr Jammy said (T99:36-100:4):

Mr Kidd SC neither consented to nor opposed the application provided that the length of any adjournment to take Giovanna’s evidence would not be too long. Ultimately, Giovanna’s evidence and the time for final submissions was adjourned to 6 and 10 December 2021 respectively, on the basis that all the other witnesses would give their evidence on the days originally fixed for the entire hearing. That is what occurred. Unfortunately, and unexpectedly, Giovanna died on 3 November 2021.

WFM submits the Court should limit the use made of Giovanna’s affidavits, as it may unfairly prejudice WFM (s 136 Evidence Act 1995 (NSW)) and that it should only be accepted to the extent it is not contradicted by other evidence. In support of the application for a limiting order, Mr Jammy’s closing submissions identified numerous areas upon which Giovanna was not able to be cross-examined which he submitted were central to the dispute, including (and I here reproduce Mr Jammy’s written submissions):

On the contrary, Mr Kidd SC submitted that Giovanna’s evidence should not be so limited in circumstances where the cross-examination was adjourned through no fault of her own.

I will first consider what is to be made of affidavit evidence which was the subject of what little cross-examination did occur. I propose to treat it and the cross-examination evidence (such as it was) in the same way I will approach Giovanna’s affidavit evidence that had not been the subject of cross-examination. This is because the technical and other issues identified in the transcript exchanges set out above demonstrate that, through no one’s fault, it was not able to be conducted in a way that was fair to anyone, including Giovanna. In any event, the cross-examination had barely begun to touch any central issue before it was adjourned.

Insofar as Giovanna’s affidavit evidence generally is concerned, I do not accept either that the evidence should be limited as Mr Jammy submits or Mr Kidd SC’s appeal to the proposition that what occurred was no fault of Giovanna’s. Inevitably from time to time witnesses, in some cases central witnesses, die before they are able to be cross-examined. I propose to follow what was said in Amalgamated and Fulton (see [62] and [63] above).

In approaching Giovanna’s evidence, I have borne in mind that it goes to the critical issues in the case, so the possibility of the Court being more prepared to accept untested evidence on peripheral issues does not apply. Furthermore, while the language of “weight” and “discount” is familiar in this field of discourse, it is metaphor which, in my respectful opinion, is helpful only up to the point that it begins to disguise or distract from how a judge as trier of fact actually approaches her or his task. My own preference is to analyse the issue in terms of persuasiveness.

As is noted in [62] above, the judge must be actually persuaded of the existence of a fact, which is not the same thing as a pseudo-scientific determination of 51% probability. The judicial process of being persuaded is ultimately the application of common sense and human experience (concepts which overlap but are not co-extensive) to reach a state of satisfaction that something happened. The degree of certainty that accompanies that state of satisfaction is reflected in the law’s different requirements in relation to standard of proof, including by application of the statutory expression of the Briginshaw standard in civil matters, or proof beyond reasonable doubt in criminal matters. Matters of common sense and human experience include propositions such as that an account of an event prepared shortly after the relevant event is likely to more accurately reflect what occurred than an account written five years later, or that the evidence of a witness with no interest in the outcome is likely to be more accurate than a partisan witness. Another example are the matters identified by McClelland J in the well-known passage from Watson quoted at [62] above.

In assessing the evidence of a person, the common law has long taken the view that the giving of evidence is a human rather than mechanical or administrative process. This means that a critical element in determining the persuasiveness of a witness’s evidence, especially when it has been given on the written page, is to require the witness to be made available so that the judge can bring to bear her or his own human experience in assessing the likely reliability of another human being by seeing them in person, and by observing how they respond to the testing of their evidence both in terms of what they say and how they say it. While by no means infallible, this latter element – demeanour – can be useful as one factor in the complex, interactive and intuitive process of fact finding.

In the case of Giovanna’s evidence, it has a degree of persuasiveness for the reason identified by Levine J in Amalgamated at first instance (see [64] above). It may be more persuasive in relation to any matters deposed to if they accord with what human experience suggests is inherently likely, is contrary to her interest or is corroborated by other evidence which the Court accepts. However, the persuasiveness of her evidence that is not contrary to her interest will be reduced on critical matters for at least two reasons.

First, it is the evidence of a party and must be considered in the light of the issues identified in Watson quoted at [62] above.

Second, unlike the evidence of other witnesses, the Court will not have the advantage of seeing Giovanna in person and observing how she responded to the testing of her evidence both in terms of what she would have said and how she would have said it. Depending on the nature and importance of the fact in question, these matters may mean that her evidence cannot be as persuasive as the evidence of a witness who has been cross-examined, and whose evidence has not been relevantly undermined by that cross-examination.

Dr Reutens was called to prove the Report (extracted in [18] above). It was not a report prepared for these proceedings or which even coincidentally deals with the specific issues in these proceedings. That is not a criticism.

Dr Reutens presented as a considered and professional practitioner whose evidence the Court has no hesitation in accepting. The most pertinent aspect of her relatively brief cross-examination (taking up only five pages of transcript) was (T76:12-44):

Notwithstanding the provisional nature of her diagnosis, I propose to take her conclusions into account as relevant but far from determinative. This is because it was a conservative, provisional diagnosis of a “mild” condition requiring further investigation in circumstances where Giovanna was on the borderline of the relevant diagnostic indicator, scoring twenty-two out of thirty on the Roland University Dementia Assessment Scale where a score of twenty-two or less is suggestive of cognitive impairment.

As will become apparent in these reasons, the Report is of far greater significance in these proceedings not so much for its conclusions but because it records in a way which I accept as accurate both what Giovanna told Dr Reutens at the time and how Giovanna appeared in circumstances unaffected by the present dispute.

Mr Francesco Colacicco (Mr Colacicco) is a real estate agent who assists WFM.

Mr Colacicco’s evidence (set out at [21] above) is that he took a phone call from Giovanna. Giovanna was upset and distressed due to the legal proceedings instituted by the Bicher entities. Giovanna pleaded with Mr Colacicco to speak to Mr Nick Politis (Mr Politis), the owner of WFM, to see if he could help Paola and her with a loan and offered the Property as security.

Mr Kidd SC submitted that Mr Colacicco’s evidence is unreliable because it is based on his memory alone, unsupported by any contemporaneous record such as a file note. Furthermore, the request for Mr Colacicco to make an affidavit had come from Mr Politis, who was an important business connection for Mr Colacicco.

On the contrary, WFM submitted that any connection between Mr Politis and Mr Colacicco does not bear on the truthfulness of his evidence. Furthermore, although Mr Colacicco could not remember every conversation during this period, he was sure he could remember significant conversations.

I do not accept that Mr Colacicco’s business connection to WFM is a sufficient or proper basis to doubt Mr Colacicco’s evidence. It was not put to him that his evidence was false, rather that it was not reliable given the passage of time and the frailty of human memory. Mr Colacicco presented as an independent and reliable witness whose only interest was to assist the Court by telling it what he could recall. He adhered to his evidence under cross-examination. The Court accepts his evidence.

In reaching this conclusion there are three other matters I should record in relation to Mr Colacicco’s evidence about the conversation he said occurred at the restaurant on the evening of 28 October 2018 (see [51] above).

First, my acceptance of Mr Colacicco as a reliable witness has been made taking into account that Giovanna denied the relevant parts of his evidence. However, in accordance with the approach I have set out in paragraphs [81] and [82] above, I find Mr Colacicco’s evidence to be more persuasive than Giovanna’s untested denial.

Second, at [115] below I have concluded that no Jones v Dunkel inference should be drawn in relation to WFM’s failure to call Mr Politis. If I had drawn such an inference, it would then have made it easier for the Court to infer based on Giovanna’s denial that no such conversation had taken place. However, the inference would still not have assisted Giovanna’s case because I would nevertheless have concluded that Mr Colacicco was a reliable witness whose evidence I should accept.

Third, Mr Kidd SC cast doubt on the reliability of Mr Colacicco’s evidence of the conversation because he gave this evidence in cross-examination (T152.6 – T152.46):

Mr Kidd SC drew to attention as an example of the fallibility of human memory that Mr Colacicco’s account did not refer to the additional words he had recorded in his affidavit “…You saved us. Don’t worry we’ll pay back the money in 1 year. I will sell the property”.

I am satisfied of the reliability of Mr Colacicco’s affidavit evidence notwithstanding the evidence recorded in [51] above for two reasons. First, I accept Mr Jammy’s submission that at that point of his evidence set out in [96] above, Mr Colacicco had not been asked to recount what had been said, but had been giving a more general response to the proposition that he could not remember what had occurred. Second, when Mr Colacicco’s evidence in the witness box is understood in both its immediate context (“a discussion between Mr Politis and Giovanna on the date of the loan advance”: see [96] above) and earlier questions (see T150:37 – T151:11) about his recollection of what Mr Politis had said to him (Mr Colacicco) about the terms on which he would make the loan, the evidence Mr Colacicco gave – “Giovanna…came over to Mr Politis, kissed us hello and thanked him and thanked myself as well” – can only be understood as being to the effect that Giovanna was thanking Mr Politis (and Mr Colacicco) for the financial assistance WFM had given.

Daniel Ryan (Mr Ryan) is a director of WFM. He gave his evidence in a straightforward fashion with clear answers. He presented as a businessman giving evidence about a business transaction in a truthful way and he did not give any sense that his evidence was coloured by a perceived need to defend WFM’s conduct in entering into the arrangements which it did with Paola and Giovanna. The Court accepts his evidence.

In explaining the view to which I have come as to the treatment of Mr Beazley’s evidence, it is convenient to set out my conclusions before dealing with the parties’ submissions:

Mr Beazley swore two affidavits in these proceedings in WFM’s case, the first on 28 May 2021. This referred to a meeting with Giovanna on or about 12 October 2018 (see [36] above).

Mr Beazley’s second affidavit was sworn on 15 September 2021, the day before the hearing commenced. Because of its importance, it is necessary to set out some parts of the affidavit at length:

Mr Beazley was cross-examined in relation to a dispute involving the Law Society in 2014, including proceedings brought against him in NCAT by the Law Society successfully alleging professional misconduct and the truthfulness of his explanations in that dispute. These related to when Mr Beazley realised he ought to give a Notice of a Show Cause Event in relation to two creditor’s petitions that had been presented against him. It was submitted for Giovanna that Mr Beazley had been dishonest in his evidence before NCAT, a proposition Mr Beazley firmly denied in the witness box. Furthermore, as WFM submitted, no express finding of dishonesty was made by NCAT.

I do not regard the evidence that emerged concerning the matters referred to in the preceding paragraph as sufficiently close in time or subject matter to these proceedings to be of reliable assistance in assessing Mr Beazley’s credit. In any event, the views to which I have come are derived from his own proven conduct and evidence in relation to the issues in these proceedings. Recourse to collateral evidence as to credit is unnecessary.

Insofar as Mr Beazley’s memory is concerned, I accept the gravamen of Mr Kidd SC’s first submission that any confidence the Court might have in its reliability is decisively shaken by the circumstances of his first and second affidavits. His first affidavit was sworn on 28 May 2021, less than three years after the events in question. However, Mr Beazley candidly said that he only recalls the first meeting with Giovanna on 12 October 2018 and not their second meeting on 26 October 2018. I do not accept his rationalisation in his second affidavit as to his failure to recall the second meeting “because there was nothing unusual or special about it”. It seems to me that, accepting his account of events for the sake of the argument, having to arrange for an elderly client to attend his offices at short notice, print out and explain the contents of a suite of legal documents and then have them executed and returned to HWLE all in the space of about three hours might be thought to be unusual.

The Court’s conclusion is that even allowing for the fact that Mr Beazley is a busy solicitor, his complete failure to recall the later events gives the Court no real confidence in the reliability of his memory. This casts critical doubt over the reliability of the recollection that he has proffered as to the substance of the advice he says he gave Giovanna, quite apart from the question of the adequacy of that advice, assuming it was given (as to which see [167] below).

Second, Mr Kidd SC emphasised that Mr Beazley did not make a file note or record and retain on his file the advice given by him to Giovanna in accordance with rule 11 of the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 (NSW). This meant both that Mr Beazley had only his memory to rely on and demonstrated non-compliance with professional standards. Mr Beazley sought to explain his failure on the basis that the requirements change every year. I accept Mr Kidd SC’s submission that explanation is wrong. Assuming in Mr Beazley’s favour that it was seriously advanced, it again reflects adversely on the standard of his professional practice.

WFM submitted that, whether the failure to record his advice is a professional shortcoming of Mr Beazley or not, it did not support a finding that he did not give Giovanna such advice. I do not agree. The failure to record the advice as was required casts doubt both on whether the advice was given and its competence on the assumption that it was given.

Third, Mr Kidd SC pointed to the fact that Mr Beazley had certified that Giovanna signed Giovanna’s signed transaction documents on 25 October 2018 in his presence. As Mr Beazley himself accepted, that could not have occurred until 26 October 2018 and Mr Beazley had no satisfactory explanation why he had certified that she had done so on 25 October 2018.

Mr Jammy submitted that the probable explanation was simple error. Given the admitted rush in which things were apparently done, I accept that is the probable explanation. However, that only again reflects poorly on the care and competence with which Mr Beazley approached his task. Of even greater concern to the Court on that score is that Mr Beazley permitted Giovanna to declare, and he witnessed that declaration (set out in [46] above), that she had received independent legal advice (being the advice he said he had given her). Independent advice in the context of a third party mortgage and guarantee transaction means independent of both the lender and the borrower. Mr Beazley could not give such independent advice because he was acting for Paola and Bar M. That he either failed to see or ignored his clear conflict of interest casts further doubt on the standard of his professional practice and, therefore, the quality of any advice he may have given to Giovanna.

Fourth, attention was drawn to the evidence relating to the execution of the Settlement Deed. This was to the effect that someone – “presumably Mr Beazley” according to the submissions for Giovanna - removed execution pages signed by the Toppi parties and attached them to another version of the Settlement Deed signed by the other parties. Not least because no original documents were in evidence, such alleged conduct if it occurred was not sufficiently demonstrated as being attributable to Mr Beazley to be taken into account in assessing his evidence on the critical matters in this case. In any event, the Court has come to its views about the lack of reliability of Mr Beazley’s evidence without recourse to this matter.

Fifth, Mr Beazley swore in his affidavit of September 2021 that, at the time of his May 2021 affidavit, he was not sure which documents were being sued upon. In cross-examination, however, Mr Beazley conceded he had been provided with the relevant documents before he swore his May 2021 affidavit. He did not accept that what he had said in his September 2021 affidavit was false. Mr Kidd SC submitted that it was false. I am not satisfied it was false in the sense of a knowingly wrong statement. I am well satisfied that it is yet another example of professional carelessness and lack of attention to detail on the part of Mr Beazley.

Finally, it was submitted that Mr Beazley and Paola had a close relationship that was more than the ordinary solicitor client relationship. They had celebrated two birthdays together at the restaurant. Further, Paola sent Mr Beazley an email on 18 June 2021, saying: “Well, if [Giovanna] drops dead then we can frustrate the probate and settlement… here’s hoping.” I accept Mr Kidd SC’s submission that Mr Beazley’s evidence must be understood as being coloured by friendship with Paola rather than an arm’s length professional relationship between a solicitor and his client. However, in and of itself, I do not regard such a friendship as sufficient to be a decisive matter in not accepting his evidence, although it will certainly lend support to such a conclusion where it is available by reference to other matters.

It was submitted for Giovanna that a Jones v Dunkel inference in relation to Mr Politis should be drawn because he had not been called to give evidence notwithstanding that he was obviously in WFM’s camp and had knowledge of relevant events either directly or through others. However, WFM submits there is no scope for such an inference as Mr Politis’ evidence would have been hearsay and Mr Colacicco had already given a first-hand account of what had occurred at the restaurant on 28 October 2018 (see [51] above).

The Court concludes that no Jones v Dunkel inference can be drawn in relation to Mr Politis because his evidence would only have been cumulative of Mr Colacicco’s evidence: Manly Council v Byrne [2004] NSWCA 123 at [60]-[67]. No objection was pressed to the relevant parts of Mr Colacicco’s evidence, including hearsay material of what Mr Politis said to Mr Colacicco about why and on what terms the former was prepared to make a loan. WFM called as witnesses the two people who were actually involved in making the Transaction happen: Mr Ryan and, to a lesser extent, Mr Colacicco. Furthermore, any evidence from Mr Politis about what Giovanna said to him and Mr Colacicco on 28 October 2018 (see [51] above) would clearly only have been cumulative of Mr Colacicco’s account and could not have affected the complexion of Mr Colacicco’s evidence of the incident: Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 at [85] per Nettle JA. In my respectful opinion, it falls within the hornbook example of cumulative evidence: if there were five people at a meeting, it will be sufficient to call one person who was at the meeting to give evidence of what that person heard being said.

It was submitted for Giovanna that a Jones v Dunkel inference in relation to Paola should be drawn against WFM because she had not been called to give evidence. Paola and Bar M have filed an acknowledgment of their liability for the whole of the amount claimed by WFM and Paola consented to her solicitor, Mr Beazley, giving evidence for WFM. WFM has not yet taken any enforcement action again Paola or Bar M. In those circumstances, Mr Kidd SC submitted that Paola was “in the camp” of WFM, had evidence relevant to the proceedings and there was no explanation for her absence.

WFM submitted there is no scope for such an inference because Paola was a non-party witness and not in WFM’s “camp”.

The Court accepts WFM’s submission. Paola was a non-party witness, that is to say she was not under the control of WFM or Giovanna. The fact that she may have admitted her liability to WFM does not put her under the control of or “in the camp” of WFM. That analysis may have been different if there was evidence that WFM had released Paola from liability to it and agreed to indemnify her from suit by Bar M and Giovanna. But that is not this case.

Quite apart from not being under the control or influence of WFM, nor would WFM be reasonably expected to have called Paola. If Paola had been called by WFM and denied that she had improperly influenced her mother, that evidence would have been of little assistance to WFM because Giovanna would have argued that any such denial was driven by self-interest in deflecting any liability from herself (Paola) to Giovanna.

There was no real dispute between the parties as to the principles to be applied. Because of the view to which the Court has come on the facts, the most salient legal principles can be stated relatively briefly.

The relief and matters to be considered by the Court under the Contracts Review Act 1980 (NSW) are set out below.

Campbell JA set out the elements that must be satisfied to found a claim under the Contracts Review Act 1980 (NSW), in Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205; [2008] NSWCA 343:

Allsop P (as his Honour then was) said, in Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36:

WFM drew to attention this conclusion by Pembroke J in Williams v Commonwealth Bank of Australia [2013] NSWSC 335:

This last case, it was submitted for WFM, demonstrates that something more must be proved than that Giovanna was merely elderly at the time she signed the Giovanna Guarantee and Mortgage. Further, it is not enough that she obtained no personal benefit from the transaction.

Mr Kidd SC contended that this was a case of asset lending, of which Basten JA (as his Honour then was) said in Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 (Khoshaba):

Brereton J (as his Honour then was) said in Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 (Riz) (reversed on appeal on other grounds):

WFM’s submissions accepted that Khoshaba and Riz demonstrate that asset lending may be unjust. However, it was put that there is no one-size-fits-all formula for when a contract is unjust – each case must be assessed on its own merits, although the fact that the asset is the family home may make it more likely that the contract is unjust. In this case the asset was the Property, which was an investment property and not Giovanna’s family home.

The parties’ respective cases were presented as ultimately depending on several contested factual areas, which may be summarised as:

WFM characterises Giovanna as a savvy businesswoman who received adequate independent legal advice and whose health and age did not affect her ability to understand legal documents in English.

It was submitted that evidence of Giovanna’s English ability comes from a variety of sources. Mr Colacicco gave affidavit evidence that Giovanna conversed in English and her English was good. Mr Ryan gave evidence in cross-examination that Paola and Giovanna were talking to each other in English. Mr Beazley gave affidavit evidence that he spoke to Giovanna in English, explained documents to her and that she had understood. Giovanna’s English was good enough for her to conduct a two-hour psychiatric assessment in that language with Dr Reutens. Not only was Giovanna able to tell Dr Reutens about her background and life, but she was able to understand explanations about the effect of legal documents. Although Giovanna gave oral evidence in Italian, even in the short time she was in the witness box she often gave answers to questions in English before they were interpreted.

In 2018, Giovanna considered herself to be healthy, saying she feels younger than ever in an article on the restaurant website (see [24] above). WFM submits Giovanna was healthy enough to visit casinos regularly.

On the other hand, Mr Kidd SC submitted that Giovanna characterised herself as an 82-year-old widow who finished school in Year 5 in Italy. It was Giovanna’s position that her English was limited and she could not understand legal documents in English; she had signed Giovanna’s signed transaction documents because she was asked to do so by Paola and she trusted her daughter. Furthermore, her health was suffering. Giovanna needed dialysis three times a week and she had a possible cognitive impairment as of 25 June 2018.

In my respectful view, the best evidence the Court has about Giovanna in September and October 2018 is the Report, which carefully sets out Dr Reutens’ observations of Giovanna on 5 June 2018. There is no evidence to suggest that those observations would not be equally applicable to Giovanna three or four months later. I will set out my findings about Giovanna and some related issues by reference to the Report (extensively extracted at [18] above). The quotations in [135] to [140] below are from the Report.

For the reasons advanced by WFM set out in [131] above, especially the Report, I find that, while English was not her native language, Giovanna could understand and speak conversational English well. That is unsurprising given the length of time she had been a successful restaurateur who had a significant “front of house” presence. So much is demonstrated by the fact that Dr Reutens was able to obtain over a period of two hours Giovanna’s history and to ask her questions for the purpose of examining her.

I reach that conclusion bearing in mind Dr Reutens’ observation that “questions sometimes had to be repeated because [Giovanna] did not appear to understand them”. However, the important point for present purposes is that I infer that with repetition Giovanna was able to understand them. Furthermore, as the discussion recorded by Dr Reutens with Giovanna about an enduring power of attorney demonstrates, Giovanna was able to understand and retain a clear explanation about legal documents.

I also accept and find in accordance with Dr Reutens’ observation that “it is probable that [Giovanna’s] understanding would be enhanced with the use of an Italian speaking interpreter”. Where precision and clarity of communication, and a higher degree of comfort about Giovanna’s understanding was required, the assistance of an interpreter was desirable. This is supported by the recommendation that “she attend legal appointments with an Italian speaking interpreter in order to minimise any effects of language”. However, Dr Reutens’ use of “minimise” informs my conclusion that while the use of an interpreter on such occasions was desirable, it was not essential. Putting it another way, Giovanna was not a person who would be unable to attend effectively on an English speaking professional without an interpreter. The two hour interview with Dr Reutens without an interpreter demonstrates that to be the case, even allowing for Dr Reutens’ cautious observation “although she appeared to understand my questions in the interview and the cognitive screening questions, her results might have been affected by language factors”.

On at least three occasions (not extracted in [18] above) Giovanna referred to having to take legal advice or discuss a course of action with her solicitor. The Court is satisfied that she understood she could seek legal advice on matters of importance from her solicitor.

I find that Giovanna’s general disposition was to trust and assist Paola, notwithstanding she had been “very upset” and “disappointed” that Paola had allegedly said (recalling it was Walter who had reported this to Giovanna) that Giovanna should be moved to a retirement home. It was against that background of trust that she would sign what Paola put in front of her: “Mrs Toppi said that because Paola was the oldest she had always trusted her and anything Paola asked her to sign she had signed”.

Elsewhere in the interview Giovanna had said “I don’t want to have a bad relationship with [Paola]”. Dr Reutens also recorded “Ms Toppi said that she maintained a good relationship with Paola” and that “Ms Toppi stated that Paola and her husband had gone bankrupt in another business and she wanted to help Paola so Ms Toppi set her up in the business [Bar M]”.

I do not regard this conclusion about Giovanna’s desire to help Paola as being inconsistent with Giovanna saying she did not want to leave Paola a legacy. The reason Giovanna gives for that is precisely her generosity in life to Paola. However, I am not persuaded that negatives the probability that Giovanna would have wanted to help Paola keep the restaurant (an eventuality that arose after the interview with Dr Reutens). As Giovanna is recorded as saying on the Bar M website (see [24] above) “As long as I live I will be here to support my daughter”.

In reaching this conclusion I have also taken some support from the fact that Giovanna made these statements in circumstances where it was Walter who had taken Giovanna to see Dr Reutens, so there is no possibility of any proximate influence over Giovanna by Paola (as, for example, might be said to have occurred where it is the major beneficiary who has taken an elderly testator to the solicitor who prepares the testator’s will).

This conclusion also corroborates, and fortifies my acceptance of, Mr Colacicco’s evidence that it was Giovanna who asked for Mr Politis’ help, volunteered the Property and later thanked Messrs Politis and Colacicco for their help in advancing the funds to pay the Settlement Sum.

On a related topic, I find, as Dr Reutens recorded, that Giovanna intended to sell the Property and understood the process of selling. This again corroborates, and fortifies my acceptance of, Mr Colacicco’s evidence that Giovanna said to Mr Politis “I will sell the [Property]”. In reaching this conclusion I have not overlooked Mr Kidd SC’s submission that what Giovanna told Dr Reutens about wanting to sell the Property did not contemplate providing further financial support to Paola. However, as I have already observed, the need for such support did not crystallise until after the interview with Dr Reutens. The Report provides clear evidence of the importance Giovanna placed on having assisted Paola into the restaurant. That, in turn, I consider makes more likely the prospect that Giovanna would not have wanted that assistance to come to nothing by Paola being evicted from the restaurant, and therefore would have wanted to help Paola again when the dispute with the Bicher entities erupted as it did.

This brings me to a central issue between the parties: did Giovanna understand the nature and risks she assumed in entering into the Transaction? Her untested affidavit evidence was that she did not and that she would not have entered into the Transaction if it had been explained to her and she had understood.

Giovanna bore the onus in these proceedings of proving those matters. Having carefully considered all of the evidence, I am not actually persuaded on the balance of probabilities that she did not understand or that she would not have entered into the Transaction if she had understood. I reach that conclusion without taking into account Mr Beazley’s evidence because, as I set out in [167] above, I am not satisfied what advice he may have given to her or its adequacy.

The best evidence in support of Giovanna’s case on this point was Giovanna’s evidence – which I have considered in the way I have set out in [81] to [83] above – and some aspects of the Report. I accept Dr Reutens’ provisional diagnosis that Giovanna had Mild Neurocognitive Disorder. However, in addition to being provisional, it was not directed to her capacity to understand the transactions at issue in these proceedings. Nor does the Court have any expert evidence to make any conclusion on that point based on inferences from Dr Reutens’ findings.

I have also taken into account Dr Reutens’ finding that at the time of the Report Giovanna did not have testamentary capacity. There are two reasons why I think this is of little assistance to the present task. First, and again, the Court does not have any expert evidence to make any conclusion based on inferences from Dr Reutens’ findings. In other words, how (if at all) can her conclusion on testamentary capacity be “translated” to Giovanna’s capacity to understand what she was undertaking by the Transaction? Second, and closely related to the first point, Dr Reutens’ conclusion is based on her characterisation of Giovanna’s testamentary task as “moderately complex” and she goes on to explain the complexity.

To the extent that, in the absence of expert evidence, I am able to express this conclusion, I have real doubt that the same degree of “complexity” attended the Transaction and her decision to enter into it. I am therefore not satisfied that Dr Reutens’ conclusion on testamentary capacity can be called in aid in the present case to support Giovanna’s untested affidavit evidence. In entering into the Transaction, Giovanna’s decision essentially involved taking a view about Paola’s ability and the likely success of the restaurant, matters about which Giovanna had the unique experience of a lifetime in the restaurant business, and her regular “front of house” attendances at the restaurant, to inform her decision making.

After the matters referred to in the preceding paragraphs, I have also taken into account that when the Report and its various conclusions are considered in their entirety, they support the conclusion that Giovanna could understand legal documents and concepts and that, while an interpreter was desirable, she could even do so when such things were explained to her in English. Therefore, I am of the view that Dr Reutens’ report casts real doubt on the persuasiveness of Giovanna’s untested affidavit evidence on these matters, even if some weight (see [86] above) is given to Dr Reutens’ diagnoses, including the provisional diagnosis of a Mild Neurocognitive Disorder.

To this must be added the Court’s acceptance of Mr Colacicco’s evidence set out in [21] and [51] above. Mr Colacicco’s evidence contradicts Giovanna’s evidence. As WFM submitted, it demonstrates that she requested Mr Politis to advance funds, she offered up the Property as security for the loan, she understood it was repayable in 12 months and that its repayment might require the sale of the Property, which she was prepared to do.

I have also taken into consideration that Giovanna, as a self-made success in the restaurant business, must have developed some business acumen. In addition, there was evidence, not explored in any detail because Giovanna was not able to be cross-examined, about previous transactions that:

Taking all of the matters commencing at [134] above into account, I am not actually persuaded on the balance of probabilities that she did not understand or that she would not have entered into the Transaction if she had understood.

It does not automatically follow from the previous paragraph that the Court should find that she did understand or that she would have entered the Transaction if she did have the benefit of proper and independent legal advice. However, in this case the evidence warrants that conclusion. First, whatever she may or may not have understood, the Court finds based on Mr Colacicco’s evidence that, having requested Mr Politis to advance funds and offered up the Property as security for the loan, she understood the most critical aspects: it was repayable in 12 months and that its repayment might require the sale of the Property, which she was prepared to do. When to these findings is added the Court’s conclusion (see [139] above) that Giovanna was disposed to help Paola and would not have wanted her previous assistance to Paola in opening the restaurant to come to nothing, the Court finds that Giovanna would have proceeded with the Transaction even if she had received proper and independent advice about its nature and effect, including that it extended to securing Bar M’s performance under the 2018 Lease (noting that is not an obligation upon which WFM sues in these proceedings).

WFM submitted Giovanna personally owed Bicher & Son Pty Ltd $100,000 (the Giovanna Loan), and this amount was used from the Transaction to repay the debt. In this way, Giovanna derived a benefit from the Transaction.

On the other hand, Giovanna’s affidavit evidence was that this debt did not exist. It was submitted for her that, without repayment of the Giovanna Loan, Giovanna did not derive a benefit from the Transaction. Furthermore, even if she did owe the debt, any relief under the CR Act could be fashioned so as not to deprive WFM of its right to repayment of so much as went to payment of the debt.

There are three reasons why the Court finds the Giovanna Loan did exist, even when Giovanna’s untested denial of the existence of the debt is taken into account.

First, the Settlement Deed was the product of an arms-length negotiation in the context of contested litigation. It would make no sense for the Bicher entities to acquiesce in the inclusion of a fictitious item as part of the Settlement Deed. However, it does make sense that the Bicher entities would use the commercially advantageous position in which they found themselves as a result of the litigation, especially the WFM Lease Proceedings, to extract repayment of a debt owed by Giovanna.

Second, Mr Ryan gave evidence in cross-examination that he had been made aware in the time leading up to WFM’s advance of funds that $100,000 was “going to Giovanna” (T53.6), although he accepted that he did not know what it was for.

Third, the Report makes clear that Giovanna gambled and that she owed people money. As it records: “Mr Toppi said that Ms Toppi received $40,000 a month in rent from the Potts Point building, but she owed people money”. This makes more probable that she owed the Bicher entities money, even an amount as large as $100,000 given the reported size of her gambling habit.

These three matters are more persuasive of the existence of the Giovanna Loan than Giovanna’s untested denial. However, while not dispositive, in considering her denial I have also taken into account that her denial may be the product of poor memory or a reaction to an inconvenient or embarrassing truth. Either possibility finds some support in Giovanna’s reaction recorded in the Report to being presented with her 2017 Will, which it appears from the Report she had undoubtedly executed.

Finally, while absence of financial benefit may not make a contract unjust, non-financial benefit is also relevant in this case. There were two related non-financial benefits for Giovanna to enter into the Transaction and thereby ensure Paola did not lose the restaurant, both apparent from the Report and other uncontroversial evidence:

I have dealt with Mr Beazley’s evidence at some length (see [100] to [113] above), so can state my factual conclusions concisely. These conclusions are all made taking into account Giovanna’s untested evidence.

Despite the difficulties which I have identified with his evidence, having seen him give his evidence and taking into account his communications with HWLE, I am satisfied that he acted for Giovanna in relation to the Transaction. I regard Paola’s text message (see [41] above) as the essential piece of contemporaneous corroboration. I have also taken into account to a limited extent the letter at [26] above, which I accept was signed by Giovanna: limited because in its terms it only relates to the matters giving rise to the Settlement Deed.

For reasons I have already given (see [110] above), Mr Beazley was not a solicitor independent of both the lender and the borrower. He had a conflict of interest in acting for both Paola and Giovanna.

To find that Mr Beazley did not meet with Giovanna on 26 October 2018 and that he did not witness her signatures in his presence would be very serious findings including that an officer of the Court had lied to the Court. Such findings would require satisfaction on the Briginshaw standard. I am not so satisfied, having seen him give his evidence and taking into account Paola’s text message as independent, contemporaneous corroboration. I would also be slow to make such findings in the absence of Giovanna having been tested on her evidence. In reaching this conclusion I have taken into account the dating of Giovanna’s signed transaction documents, but have accepted that this is likely to have been the product of mistake in the obvious haste of what occurred on 26 October 2018.

Having seen him give his evidence and taking into account Paola’s text message, which I find more persuasive than Giovanna’s untested evidence, I am satisfied that Mr Beazley met with Giovanna on 26 October 2018 and witnessed her sign Giovanna’s signed transaction documents. I also accept, not least because it was inherently likely given my finding that he acted for her and because of the declaration (see [46] above), that he gave her some advice about entering into the Transaction. However, in the absence of any written record of that advice, given the views to which I have come about both the reliability of his evidence and his apparent lack of adherence to professional standards, I am unable to make any finding about the nature of that advice or its adequacy.

WFM submitted that whatever had happened on 26 October 2018, the Court could take account of whatever advice Mr Beazley gave Giovanna on or about 12 October 2018. Hospital records show Giovanna had dialysis on 11 and 13 October 2018. There are two reasons why I do not accept that submission.

First, and again, in the absence of any written record of that advice, given the views to which I have come about both the reliability of Mr Beazley’s evidence and his apparent lack of adherence to professional standards, I am unable to make any finding about the nature of that advice or its adequacy.

Second, I accept Mr Kidd SC’s submission that Giovanna’s signed transaction documents differed in a significant respect from those executed on 12 October 2018, a point about which Mr Beazley seemed to be unaware until it was pointed out to him in the witness box. That was that the scope of Giovanna’s liability was expanded under the Transaction to include guaranteeing Bar M’s performance under the 2018 Lease.

Both Mr Colacicco in his affidavit and Mr Ryan in his cross-examination described their various observations and interactions with Giovanna, including seeing her regularly at the restaurant. Other than acknowledging her age, none of what they described would have put them on notice of any obvious vulnerability or impairment on the part of Giovanna. They had both conversed with her in English (Mr Colacicco also in Italian as their common native language). The Court infers from their descriptions that WFM had no notice of any obvious vulnerability or impairment on the part of Giovanna other than her age (which in and of itself is not a vulnerability or impairment).

Next, there was an issue between the parties directed at least in part towards the concept of asset lending. It was submitted for Giovanna that Mr Ryan’s evidence supported a finding that WFM did not care whether the Toppi interests could repay WFM without having to sell the Property. In cross-examination, Mr Ryan was asked whether WFM had undertaken any assessment of the capacity of Bar M to be able to repay the loan. Mr Ryan replied that WFM had not undertaken any such assessment. Mr Ryan was also asked whether he had seen any financial statements or cashflow forecasts of the restaurant business. Mr Ryan replied that he had not seen such documents.

WFM submitted that Mr Ryan’s evidence does not support such a finding. In cross-examination, Mr Ryan was asked whether he had any idea whether Bar M would be able to afford to repay the loan. Mr Ryan replied that he did have some idea of whether Bar M would be able to afford to repay the loan. WFM occupied the building next to the restaurant and Mr Ryan could see the restaurant had enough customers to make it work.

Consistently with the Court’s view of Mr Ryan as a reliable witness (see [99] above), the Court accepts his evidence that:

WFM’s view of Paola and Giovanna appears from Mr Ryan’s answer as to why WFM would not consent to an assignment of the 2015 Lease to the Bicher entities (T44:2-12):

Mr Ryan’s evidence, which I accept was (T58:41-T61:8):

The final issue is WFM’s knowledge concerning Giovanna’s legal representation. As to this the Court finds that WFM must be treated as being fixed with their solicitors’ knowledge that Mr Beazley was acting for Giovanna and Paola and that, as their solicitors ought to have known had they turned their mind to it, Giovanna did not have the benefit of independent legal representation.

It is convenient to summarise the Court’s essential factual findings relating to the period June to October 2018:

It will be clear from the foregoing that Giovanna’s case fails on the facts. Nearly all of the facts urged upon the Court on her behalf as justifying relief under the CR Act have not been made out. Most of the facts which have been established point against such relief being granted.

The first step under the CR Act is to consider whether the Transaction was unjust in the circumstances it was made. Taking account of all the matters referred to in [178] above, the Court does not conclude that it was in that sense. The proven feature of this case which could support such a conclusion is that Giovanna did not have independent legal advice and that WFM ought to have known that through its solicitors. I do not think that is sufficient in the context of all the other matters to conclude that the Transaction was unjust in the circumstances in which it was made.

However, even if that conclusion is wrong and the Transaction was unjust in the circumstances in which it was made, the Court would not, in the exercise of its discretion, grant any relief. The reasons for this are all of the matters (other than the absence of an independent solicitor and WFM’s imputed knowledge of that) identified in [178] above. To the extent that Mr Beazley failed Giovanna by not recognising his conflict and ensuring she received independent advice, it would be unjust in all the other circumstances I have identified to visit the consequences of that failure on WFM.

There is another matter of context which has informed the conclusion which the Court has reached. This was not a transaction involving a bank or other professional lender. The Transaction took place in the context of a pre-existing commercial relationship of landlord and tenant where both sides (WFM on the one part, and Paola and Giovanna on the other) wanted their relationship to continue. Each had their own distinct interests for that to occur. It would be artificial to view the Transaction as a third party mortgage and guarantee simpliciter and ignore that broader commercial context. In my respectful view, looking at what occurred in that way points against both injustice in the circumstances and, if that be wrong, against the Court granting any relief and depriving WFM of the commercial benefit for which it had bargained.

There are two other matters which I should note.

First, I am not satisfied that what occurred was, in all the circumstances, asset lending of the kind criticised in Khoshaba and Riz, not least because the Property was not Giovanna’s home (that is not to say that a transaction concerning an investment property can never be asset lending). There was no accounting or other evidence that at the time of the Transaction it should have been clear to WFM (and the other parties) that the loan from WFM would not be able to be serviced. The fact that 12 months later it was not repaid is not of itself sufficient to found such an inference.

Furthermore, Mr Ryan’s evidence demonstrates that WFM had a rational basis to make the commercial judgment to enter into the 2018 Lease. Unlike a commercial lender, WFM was not lending money in the expectation of a return through the interest charged. It would make no sense for WFM to enter into the 2018 Lease and fund the Settlement Sum if it thought there was no real prospect of Paola, with Giovanna’s matriarchal “front of house” presence, making a success of the restaurant and complying with the 2018 Lease. I do not accept that WFM was indifferent to the serviceability of its loan to Bar M or that it was engaging, or thought itself to be engaging, in a “potentially fruitless enterprise” of the kind referred to by Basten JA in Khoshaba.

Second, I have taken into account that by entering into the 2018 Lease and the Transaction, WFM obtained significant, additional commercial benefits compared to the 2015 Lease, including a higher rent to recover its costs of the WFM Lease Proceedings and the benefit of a secured guarantee from Giovanna for not only repayment of the Settlement Amount but also for Bar M’s performance under the 2018 Lease. The latter is not sought to be enforced by WFM in these proceedings. In any event, I do not consider any of those matters to be more than a reflection of the parties’ respective commercial bargaining positions and not, of themselves, indicia of unjust or unconscientious conduct by WFM.

I will next briefly consider Giovanna’s other claims.

Giovanna relies on these provisions of the ASIC Act:

Allsop P (as his Honour then was) set out principles applicable to ASIC Act claims in Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O’Donnell [2011] NSWCA 389, (Bathurst CJ and JC Campbell JA agreeing) which I respectfully adopt:

It will be apparent from the Court’s findings in [178] above that there is no basis for finding – and the Court does not find – the kind of “high level of moral obloquy” on the part of WFM of the kind his Honour identifies. This claim also fails.

Keifel CJ, Bell, Gageler, Keane and Edelman JJ in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 set out the principles applicable to an unconscionability claim as follows:

Again, it will be apparent from the Court’s findings in [178] above that Giovanna has failed to demonstrate a “special disadvantage” or any “unconscientious taking advantage”. This claim also fails.

WFM is entitled to judgment on its claim against Giovanna’s estate. Giovanna’s cross-claim will be dismissed. Giovanna’s estate is to pay WFM’s costs of the proceedings.

The parties will be given an opportunity to bring in short minutes to give effect to these reasons, including quantifying WFM’s claim up to date. If these are agreed, the orders will be made in chambers. Otherwise, on a date to be fixed the Court will hear any special costs applications or resolve any other matter in relation to the final orders on which the parties are unable to agree.