IN THE COUNTY COURT OF VICTORIA
AT Melbourne
commercial DIVISION
COMPLEX CASES list	Revised
Not Restricted
Suitable for Publication	

Case No. CI-21-05601 

CHARBORD INVESTMENTS PTY LTD (ACN 104 932 532) AS TRUSTEE OF CHARBORD FAMILY TRUST & ORS ACCORDING TO THE ATTACHED SCHEDULE 	Plaintiff	
		
v		
		
ISABELLE SZWARCBORD 	Defendant	

---

JUDGE:	HIS HONOUR JUDGE COSGRAVE	
WHERE HELD:	Melbourne	
DATE OF HEARING:	27, 28, 29, 30, and 31 March, 3, 4, 5, 13, 14, 17, 18, and 19 April, 4, 5 and 6 July 2023 
	
DATE OF JUDGMENT:	23 November 2023 	
CASE MAY BE CITED AS:	Charbord Investments Pty Ltd & Ors v Isabelle Szwarcbord	
MEDIUM NEUTRAL CITATION:	[2023] VCC 2141		

REASONS FOR JUDGMENT
---

Subject:	CONTRACTS – GUARANTEE AND INDEMNITY – EQUITY

Catchwords: 	CONTRACTS – agreement – undue influence – presumption of undue influence – actual undue influence – no undue influence - unconscionable conduct – no special disability - pleaded case – agreement valid

GUARANTEE AND INDEMNITY – security – undue influence – presumption of undue influence – actual undue influence – actual knowledge of undue influence – constructive knowledge of undue influence – unconscionability conduct – general law unconscionability – no unconscionability - statutory unconscionability – section 12CB – no unconscionability

EQUITY – legal interest – beneficial interest – where all funds paid by third party – understanding or arrangement – terms of understanding or arrangement – trusts -  constructive trust – common intention constructive trust -  intention at the time of transfer – pleaded case – resulting trust – presumption of advancement – intention of the parties

Legislation Cited:	Australian Securities and Investments Commission Act 2001 (Cth); Evidence Act 2008 (Vic); Property Law Act 1958 (Vic); Statutory Declarations Act 1959 (Cth)

Cases Cited:	Anaconda Nickel Ltd v Edensor Nominees Pty Ltd [2004] VSCA 167; Attwood v Small (1838) 6 Cl & Fin 232; Australia and New Zealand Banking Group Limited v Ngo [2022] VSC 713; Axis Bank Limited v Gujarat NRE India Pty Ltd [2020] NSWSC 1711; Bank of New South Wales v Rogers (1941) 65 CLR 42; Blomley v Ryan (1956) 99 CLR 362; Bosanac v Commissioner of Taxation and Another (2005) 405 ALR 424; Bosanac v Federal Commissioner of Taxation (2022) 275 CLR 37; Bridgewater v Leahy (1998) 194 CLR 457; Brown v Brown (1993) 21 NSWLR 582; Callaghan v Callaghan (1995) 64 SASR 396; Calverley v Green (1984) 155 CLR 242; Carantinos v Magafas [2008] NSWCA 304; Commercial Bank of Australia v Amadio (1983) 151 CLR 447; Cong v Shen (No 3) [2021] NSWSC 947; Dearing v Dearing [2009] NSWC 1394; Dolan v Dolan [2023] VSCA 136; Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1; Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413; IMM v The Queen (2016) 257 CLR 300; In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966; Johnson v Buttress (1936) 56 CLR 113; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; Kawada v Kawada [2012] FamCA 273; King v Fister [2022] QCA 47; King v Lynpete Australia Pty Ltd [2012] VSC 140; Lin v Lin (No 2) [2022] VSC 542; Louth v Diprose (1992) 175 CLR 621; McIvor v Westpac Banking Corporation [2012] QSC 404; Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd [2015] VSCA 150; Nagi v Hussein [2020] VSC 401; Nathan v Williams [2020] QCA 138; Nelson v Nelson (1995) 184 CLR 538; NPV W.A Securities Pty Ltd v Interactive Network Services Pty Ltd & Anor [2006] VSC 284; Powell v Powell [2002] WASC 105; Sleboda v Sleboda [2008] NSWCA 122; Smith v Jenkins (1970) 119 CLR 397; Smith v Smith [2007] NTSC 31; Stubbings v Jams 2 Pty Ltd (2022) 399 ALR 409; Thorne v Kennedy (2017) 263 CLR 85; Vadisanis v Vadisanis [2014] FamCAFC 97; Walton Stores (Interstate) Ltd v Maher (1998) 164 CLR 387; Wilton v Farnworth (1948) 76 CLR 646; Yard v Yardoo Pty Ltd [2007] VSCA 35 

---

APPEARANCES:
	Counsel	Solicitors	
For the Plaintiffs	Mr T North KC & 
Mr E Kelly	CIE Legal	
			
For the Defendant	Ms N Obrart	Atticus Lawyers	
			
For the Fourth Defendant by Counterclaim	Ms C van Proctor	HWL Ebsworth Lawyers	

HIS HONOUR:
Introduction
1	This is an unfortunate case about Unit 2, 4 Trawalla Avenue, Toorak (“Unit 2”). The plaintiffs seek to enforce a charge over Unit 2 and to recover a debt exceeding $4 million allegedly owed by the defendant. The defendant contends that she is the registered proprietor and beneficial owner of the fee simple in Unit 2. She says that she obtained the unit as a result of a gift. To the extent that she signed loan deeds and a mortgage which encumbered the unit and/or created rights in one or more of the plaintiffs and the Australia and New Zealand Banking Group Ltd (“ANZ”), she says that it arose through undue influence and/or unconscionable conduct. The ultimate question is which view of events is correct.
2	Because the dispute concerns members of the Szwarcbord family, I will refer to them by their Christian names. In doing so, I intend no disrespect. Rather, the purpose is to avoid confusion and enhance clarity. 
Background
3	By a contract of sale dated 30 October 2015, Trawalla Developments Pty Ltd (“Trawalla Developments”) sold Unit 2 at its market value of $3,570,000 to Jacob Szwarcbord (“Jacob”) and/or the defendant (“Isabelle”) and/or a nominee purchaser. Jacob is the father of the third plaintiff (“Peter”), the father-in-law of Peter’s wife Marika, and the grandfather of the defendant (“Isabelle”). 
4	Jacob came to Australia after surviving the holocaust and the second world war. He initially established a painting business but then expanded the business into a building and development company, J & S Szwarcbord Pty Ltd. He led the business for many years. He and his wife, Sigrid, had two children, Peter and his older brother Michael. Michael maintains a financial interest in the property development business but is not involved on a day to day basis. 
5	Peter’s interest in the business dates from his teenage years. After completing his studies and working for a period in local government, Peter joined the family business full time around 1987. He has undertaken a variety of roles in the business. He has been engaged in design work, has supervised trades on site, provided materials and coordinated trades and building completion. Over time, he has also mastered the financial aspects of the business. 
6	The business continued in the structure established by Jacob until 2003. Then, with the advice of accountants and following discussions between Jacob and Peter, the structure of the business was re-organised and the name changed. 
7	Peter is a director, shareholder and controlling mind of several corporate entities engaged in property development work. This group of entities is known collectively as the Szwarcbord Development Group (“the Group”). The Group includes Charbord Investments Pty Ltd (“CI”), Charbord Investments No 6 Pty Ltd (“CI6”), Charbord Constructions Pty Ltd (“Constructions”) and Trawalla Developments. CI and CI6 were trustees of discretionary family trusts, the Charbord Family Trust and the Charbord Family Trust No 6 respectively. 
8	Isabelle has an older sister Jessica who was born in 1988. She studied law at university but is not admitted to practice. Isabelle was born in September 1992. Between about 2011 and 2019 she worked for the Group including Constructions. Like her sister, she is a beneficiary under the Charbord Family Trust and the Charbord Family Trust No 6. 
9	The funds to purchase Unit 2 came from three sources: CI, CI6 and the fourth defendant by counterclaim, the ANZ. CI and CI6 contributed money and the ANZ provided loan funds. As part of the security for the provision of loan facilities to the Group, the ANZ took a registered first mortgage over Unit 2 and a guarantee and indemnity from both Peter and Isabelle.
10	Trawalla Developments was registered as a company on 24 October 2012.  Then on 1 May 2013, Trawalla Developments became the registered proprietor of 4 Trawalla Avenue, Toorak (“the Trawalla Avenue property”). Trawalla Developments is not a party to these proceedings. It is the trustee of the Berbord Investments Unit Trust No. 2 (“the Berbord Trust”). The Berbord Trust is not a party to these proceedings.
11	There are a total of 2,520 units in the Berbord Trust. The unit holders are: 
•	P & M Superannuation Pty Ltd (controlled by Peter and his wife, Marika) who holds 630 units;
•	GB Developments Pty Ltd which holds 840 units;
•	S.E.M. Superannuation Pty Ltd (controlled by Michael) which holds 630 units;
•	Damon Krongold and Janene Krongold who hold 140 units;
•	Damon Krongold and Jeanette Krongold who hold 140 units;
•	KMH Superannuation Pty Ltd which hold 140 units.
12	The unit holders contributed to the purchase of the Trawalla Avenue property in proportion to their shareholdings. The remaining funds for the purchase were provided by CI, CI6 and the ANZ. CI and the ANZ funded the construction of the units at the Trawalla Avenue property. 
13	Constructions carried out the building of the units on the Trawalla Avenue property. Constructions built four units and a penthouse. Three of the units and the penthouse were sold to external parties. Each of the units and penthouse was designed by reference to a standard design with alterations possible at the request of the purchasers.
14	In October 2015, Trawalla Developments sold Unit 2 to Jacob and/or Isabelle and/or nominee as purchasers for $3,570,000. This was the market value at the time. The purchase price would not be paid until 2017.
15	The building development on the Trawalla Avenue property was completed in early 2017. Jacob moved into Unit 2 on 2 March 2017. He lived there until around February 2021.
16	On 22 March 2017, the nomination power in the contract of sale was exercised in favour of Isabelle. Trawalla Developments transferred Unit 2 to Isabelle in June 2017. Isabelle contributed no funds to the purchase or maintenance of Unit 2. Nor did she pay any of the interest or other monies due to the ANZ in connection with the acquisition of the unit.
17	Since July 2021, Isabelle has refused the plaintiffs’ requests that she consent to the sale of Unit 2. 
Pleadings
18	The pleadings in this case are important in the sense that the plaintiffs emphasised that they came to court to meet the case which Isabelle articulated through her defence and counterclaim in response to the plaintiffs’ allegations. The plaintiffs’ submissions noted in some detail the matters admitted by Isabelle and the limited and specific grounds she relied upon in relation to her claims of a special disability which formed a critical part of her case regarding undue influence and unconscionability. 
19	The plaintiffs were critical of Isabelle’s conduct of the case and her final submissions insofar as they raised matters which were not relevant on the pleadings or not raised in her opening. I will say more on this later.
Plaintiffs’ claim 
20	A central claim which the plaintiffs make is that Isabelle is indebted to CI and CI6 because they advanced and/or arranged for the advance of the funds necessary to acquire Unit 2 from Trawalla Developments. They paid the costs and expenses connected with the transfer of Unit 2 into Isabelle’s name. Exhibit PD is a detailed listing of the payments made by the plaintiffs in relation to Unit 2. The payments in green are the acquisition costs, rates, owners corporation fees (and other levies), water, energy, security and maintenance payments. The payments in orange are the interest payments, fees and charges due to the ANZ. The payments are cross-referenced to the parties’ discovery and the location of the relevant document in the court book. 
21	The plaintiffs contend that the funds paid to Trawalla Developments were advanced:
•	pursuant to an agreement, arrangement or understanding, or alternatively a joint relationship or endeavour between Jacob, Peter and Isabelle in 2015 (“the Acquisition Agreement”); and
•	in accordance with a loan deed executed on or around 2 July 2018 naming Isabelle as borrower and CI as lender of the principal sum (“the loan deed”).
22	In her defence, Isabelle admits important aspects of the claim. She admits that:
•	CI and CI6 are incorporated. Peter is a director, shareholder and controlling mind of various companies in the Group;
•	she is Peter’s daughter;
•	she is a beneficiary under the Charbord Family Trust and Charbord Family Trust No 6;
•	she was employed by Constructions and others in the Group between 2015 and 2018;
•	Trawalla Developments entered into a contract to sell Unit 2 on 30 October 2015;
•	on 9 March 2017, Trawalla Developments obtained an occupancy permit for Unit 2;
•	on 22 March 2017, she was nominated as sole purchaser of Unit 2;
•	on 26 and 27 April 2017, CI advanced $1.6 million to her ANZ bank account;
•	on 1 June 2017, $1,599,900 was paid from her ANZ bank account to Trawalla Developments;
•	on 27 June 2017, CI transferred $94,036.60 to Isabelle’s solicitors to pay the stamp duty and registration fees on Unit 2;
•	on 27 June 2017, CI paid $1,912.50 to the owners corporation;
•	the ANZ provided a letter of offer to CI dated 25 July 2017. The terms provided that Isabelle would give ANZ as security:
•	a first registered mortgage over Unit 2;
•	a guarantee and indemnity limited to $2,320,500;
•	she signed the acceptance of the ANZ letter and signed the mortgage and guarantee and indemnity in favour of the ANZ;
•	she became registered as sole proprietor of Unit 2 around 11 August 2017;
•	the ANZ registered the mortgage over Unit 2 on 31 August 2017;
•	on 2 July 2018, she entered a loan deed with CI as lender and herself as borrower. The loan deed contained the terms alleged in paragraph 20 of the statement of claim;
•	on 20 December 2018, ANZ provided a letter of offer to CI to increase the loan facilities by $2,350,000;
•	the ANZ letter of offer included terms that Isabelle would provide a mortgage in respect of the facilities and a personal guarantee and indemnity limited to $5 million;
•	she signed the acceptance and acknowledgement in the ANZ letter of offer and new guarantee and indemnity; 
•	on 10 July 2020, the ANZ proposed a letter of variation to CI, increasing its facilities by $2,271,500;
•	she signed the acceptance and acknowledgement of the 2020 variation letter from the ANZ;
•	by letter dated 21 April 2021, CI notified Isabelle that the lower interest rate under the loan deed was 10% per annum;
•	by letter dated 20 August 2021, CI notified Isabelle that the termination date under the loan deed would be 19 September 2021;
•	Isabelle did not pay the lender any money on 19 September 2021. She says that she was not liable to make any payment;
•	on 29 January 2021, CI lodged a caveat over Unit 2 claiming an interest as chargee under the loan agreement; and
•	Isabelle claimed entitlement to the unencumbered benefit of Unit 2 and has refused to consent to the sale of the unit.
23	Regarding the Acquisition Agreement alleged by the plaintiffs, Isabelle admitted:
•	the execution of the documents which were alleged to be in furtherance of such understanding or joint endeavour;
•	the financial transactions alleged to be in furtherance of such understanding or joint endeavour; and
•	she executed the ANZ banking documents directed to obtaining some funds.
She denied the Acquisition Agreement itself and that CI and CI6 paid some equity and all the expenses in relation to the acquisition of Unit 2 in reliance upon that agreement. But Isabelle acknowledged that she paid nothing towards the acquisition cost of Unit 2 and made no other payments in relation to Unit 2 (aside from a payment of council rates on 13 October 2021).
24	In relation to the loan deed, Isabelle admits:
•	signing the loan deed while not admitting she made an agreement with CI whereby that company would provide her a loan facility; and
•	the terms of the loan deed and that CI advanced the sum of $1.6 million.
Isabelle’s counterclaim
25	In her counterclaim, Isabelle alleges that:
•	the loan deed is void in whole or in part because of the undue influence and/or unconscionable conduct of Peter;
•	the security documents relevant to obtaining funds from the ANZ, including the mortgage and the guarantees and indemnities dated 2017, 2018 and 2020 are void as against the bank due to unconscionability; and
•	Unit 2 was transferred due to the gift intention of Peter and Marika. Thus, they gifted Unit 2 to her. Because Peter was her father, Isabelle also contended for Unit 2 through the presumption of advancement.
26	The plaintiffs deny undue influence and unconscionability. They say that when she signed the loan deed, Isabelle was emancipated from her parents and exercised her own free will. They also say that she lacked any special disabilities.
27	The plaintiffs deny there was any gift intention and say that there could be no presumption of advancement. Trawalla Developments, which was not a party to the proceeding, owned the Trawalla Avenue property and Unit 2. CI and CI6 were each trustees of a unit trust. Peter did not own Unit 2 or the trust funds and was not in a position to make a gift of either the unit or the trust monies to Isabelle. 
28	An area of concern during the trial was the defendant raising issues which were not pleaded. For example, early in the trial when Isabelle opened her case, counsel agreed that the only factors which she would rely upon to make good her allegations of undue influence and unconscionable behaviour were the factors pleaded in Isabelle’s defence and counterclaim. This prevented Isabelle from expanding her case and raising new issues without giving notice to the plaintiffs. 
29	During the trial and/or in her written closing submissions, Isabelle sought to raise matters even though they did not appear in the amended defence and counterclaim. 
30	For example, Isabelle alleged that the plaintiffs offended public policy by seeking unlawfully to avoid taxation obligations owing to the State Revenue Office and the Australian Taxation Office. The former concerned the payment of land tax and the latter related to capital gains tax. The thrust of the defendant’s allegations was that the documents filed with the relevant authorities showed that Isabelle was the legal owner of Unit 2. If in fact she were not the beneficial owner, then the owner could be liable for land tax. At present, the issue of beneficial ownership is not resolved. 
31	If and when Unit 2 is sold, capital gains tax could be payable if the sale price exceeds the cost base and no exemption applies. At present, there is no capital gains tax payable. 
32	The defendant was insistent in her closing submissions that the court should not countenance, or be party in any way, to illegal conduct whereby a party sought to engage in unlawful tax avoidance. For this reason, she said that the court should not grant any relief to the plaintiffs.
33	I make two comments in response to this. First, it is a serious matter to raise allegations of unlawfulness and potentially criminal behaviour in a civil trial. It should only be done with care and on clear notice to the opposing party. In circumstances where:
(a)	Isabelle did not explicitly raise the issue on the pleadings in advance of the trial and give the plaintiffs fair notice of the allegation; and 
(b)	the plaintiffs objected when the matter was raised at the hearing
I will not allow Isabelle to advance this matter in closing submissions.  
34	A second matter the defendant sought to raise was that the financial statements of CI and CI6 did not show any loan to Isabelle and if they did, those records were not genuine but were “doctored”. The absence of a loan owing by Isabelle to CI and CI6 in their financial statements was said to be significant because it showed that Unit 2 was gifted to Isabelle. 
35	Again, this allegation of concocted financial records was not pleaded or put to all material witnesses including Peter. Furthermore, there were documents produced to the court which evidenced the actual amounts paid by CI and CI6 into Isabelle’s bank account or to third parties for the purpose of meeting the acquisition costs and expenses connected with the purchase of Unit 2 from Trawalla Developments. 
36	In the circumstances, I do not propose to treat the issue of the allegedly concocted records as one which is properly before the court and which requires resolution. 
37	Another matter Isabelle sought to argue was that CI and/or CI6 did not advance $1.6 million to her by way of a loan under the loan deed because the advance date predated the date of entry into the loan deed by about a year and comprised the payment of funds from Trawalla Developments to itself. Peter arranged the transfer of $1.6 million into Isabelle’s ANZ bank account in April 2017. The two sums of $900,000 and $700,000 comprising the $1.6 million came from CI’s bank account at the ANZ. On about 1 June 2017, Peter (who was authorised to operate the account in Isabelle’s name) paid the money into the account of Trawalla Developments. 
38	Isabelle argued that this was a round-robin and did not represent a genuine transfer of funds. 
39	However, the evidence showed that Trawalla Developments owed money to CI and it repaid this debt. Then CI advanced its own funds into Isabelle’s account. These funds were then used as part of the equity in acquiring Unit 2 from Trawalla Developments.
40	The terms of the loan deed were such that Isabelle’s obligations as borrower included the initial sum of $1.6 million advanced in 2017.
41	A further issue was special condition 8.4(b) of the Schedule to the loan deed. Isabelle sought to argue that, as a matter of fact, she did not seek or obtain legal advice before she signed the loan deed. She said that Peter knew this. In turn, this was said to mean that special condition 8.4(b) was not complied with. This was a term which stated that the provision of the loan facility was subject to four conditions precedent. One such condition was that the borrower obtain independent legal advice in respect of her obligations and completed certificates of independent legal advice be provided to the lender. Hence, Isabelle argued that because the condition was not satisfied, the alleged lender did not advance any funds to Isabelle in accordance with the terms of the loan deed. 
42	Again, Isabelle did not plead the failure to comply with the condition precedent and the consequential effect upon the loan deed and its enforceability.
43	In a case like this, that failure is sufficient to disallow the matter being raised in final address. I note that it also overlooks part of special condition 8.4 to the extent that it gives CI, as the lender, an absolute discretion to waive any condition precedent. This provision was likely intended to protect the interests of the lender. If the lender chooses to advance the funds and take the risk that Isabelle may not seek or obtain independent legal advice, then such conduct implicitly waives the condition. 
44	In general terms, the main points raised by the pleadings are whether the loan deed between the first plaintiff and Isabelle, and the mortgage and security documents between the ANZ and Isabelle are to be declared void and set aside for undue influence and/or unconscionable conduct or whether they are enforceable. Also relevant is whether the plaintiffs otherwise have an equitable interest in Unit 2. 
Preliminary matters 
Issues and submissions 
45	When conducting a trial, I require counsel to confer beforehand and agree upon a list of the issues which they say the court must decide. At the conclusion of the evidence and before final submissions, I ask counsel to revisit the list of issues and to ensure that they are still accurate and relevant. Quite often during a trial, changes occur and matters which were formerly important fall away and new issues emerge. Listing the issues focuses the attention of the court and the parties on what is important. The list also provides the framework for the parties’ closing submissions.
46	In the present case, I explained to the parties at the conclusion of the evidence that I wanted them to reconsider the initial list of issues and decide if any modifications were needed. After the parties examined the list and informed me that no changes were required, I explained that their written submissions were to track the list of issues. Thus, on any given issue, I wanted to be able to read what each party said on the point. 
47	For reasons which were not revealed, the initial submissions filed by the parties did not adhere to the direction regarding their form. Accordingly, I adjourned the date set for oral closing submissions and directed the parties to file revised submissions in the correct form.
48	When writing a judgment, it is my practice to focus on the final submissions made by the parties. I operate on the basis that they represent how the party wants to put their case. To that extent, if for example, something is contended in a pleading but there are no submissions on the point, I assume that the pleaded point is not pressed. 
Section 128 certificates 
49	Isabelle sought certificates pursuant to section 128 of the Evidence Act 2008 (Vic) in relation to evidence on the unauthorised credit card transactions and the false swearing of statutory declarations. I issued certificates granting Isabelle privilege against self-incrimination in relation to the evidence she gave about the use (in conjunction with Jeremy) of Peter and Marika’s credit cards without permission. I also issued certificates in relation to the evidence Isabelle gave about the false swearing of statutory declarations in each of 2017, 2018, and 2020. I have had regard to Isabelle’s evidence on each of these points. 
50	The issue of privilege against self-incrimination was also raised during Jeremy’s evidence. Of particular concern to Jeremy was the unauthorised use of Peter and Marika’s credit cards, and his pending criminal proceedings in Queensland. I concluded that I would not compel Jeremy to answer questions in relation to the unauthorised credit card transactions because the matter was not one of central significance to this case and, Isabelle’s evidence on this topic was already before the court. Furthermore, I was not satisfied that a section 128 certificate issued in this court would provide sufficient protection to the witness in interstate criminal proceedings. Accordingly, Jeremy was not compelled to give evidence on his pending criminal proceedings in Queensland. 
Credit 
51	In addressing factual issues which arise in this case, especially regarding undue influence and unconscionable conduct, it is necessary to consider the credibility and/or reliability of the various witnesses in the case.
52	It is well recognised that conclusions about the interplay and relationship between people in dominant and subordinate positions in the context of undue influence and unconscionable conduct depend in large part upon the particular facts of the case. This requires the court’s assessment of the respective parties – their character, intelligence, capacity, nature and credibility. Also important are inferences drawn from this assessment. For this reason, it is said that the trial judge has an immeasurable advantage in appraising and evaluating the parties in court.
Marika 
53	Marika gave limited evidence but did so in a simple and transparent manner. She answered questions directly. She was sometimes vague about dates but was clear on the sequence of events.
54	Isabelle appeared to try to impugn Marika’s veracity by suggesting that she did not engage in any paid work and that Peter was her only source of funds. Marika agreed that, apart from a period of about six months around 1993 when she worked at KPMG because the recession had effectively closed Peter’s business, she had not worked since her daughters were born. She also acknowledged that she and Peter both relied upon the business of the Group to fund their lives. She said that if they separated and divorced, she gathered that there would be a settlement reached between them. If Isabelle wished to argue that Marika could not be relied upon to give truthful evidence because she was reliant upon Peter or the Group for her finances, it should have been put directly to her.
55	Marika struck me as saddened by the situation the family now faces. Isabelle’s conduct over a period of years has upset and disappointed Marika. Also, Jessica’s health has been an ongoing issue for the family. 
56	In my opinion, Marika is an honest and reliable witness and I can be confident in accepting her evidence.
Jessica Szwarcbord 
57	Like her mother, Jessica also gave limited evidence. She was plainly an intelligent person and has both undergraduate and postgraduate university degrees. She works at a health research institute. She listened closely to the questions asked of her and answered directly. Her evidence was not seriously challenged. In particular, the defendant failed to contradict Jessica’s evidence about Isabelle taking money from Jessica’s bank account without her consent or permission. I am satisfied that Jessica was a truthful witness whose testimony I can accept.
Ross Bergamin 
58	Ross Bergamin gave some evidence about the work history between his family and the Szwarcbord family in undertaking property development work. For over 40 years, Bergamin has been involved in the business of providing concreting and formwork services for high-end residential and commercial developments. He and Peter have been partners in a number of developments where Peter was the builder and Bergamin the subcontractor. He was a director of Trawalla Developments. He confirmed that he and Peter spoke about selling Unit 2 off-the-plan to a member of the Szwarcbord family. As part of this process, they obtained a valuation from CBRE and Bergamin agreed to the sale. Bergamin confirmed also that he never had any discussion with Peter or Isabelle about gifting Unit 2 to Isabelle. I have no difficulty in accepting Bergamin as a witness of truth.
Isabelle
59	From my observation of Isabelle in the witness box over a lengthy period, and having regard to other evidence adduced in the case, I consider that Isabelle is not a witness whose evidence can be safely accepted at face value. On the contrary, where there are contested issues of fact, in the absence of some corroborative material, I will usually prefer the other witness. I have reached this conclusion for several reasons.
60	Primarily, she does not value honesty or truth. For example, Isabelle had no scruples about, in effect, stealing from her parents by using their credit cards without their permission or without their consent to buy things for herself and/or Jeremy. On one occasion, she bought Jeremy a leather jacket for $8,350 and sandals for herself costing $2,150. This was not an isolated instance of such unauthorised behaviour. Even after Peter and Marika rebuked Isabelle and told her not to engage in such behaviour, she did not do as she was asked. 
61	Similarly, Isabelle and Jeremy had no hesitation stealing from Peter and Marika in relation to Jacob’s care. Peter formally engaged Isabelle and Jeremy to stay with Jacob from time to time of an evening at Unit 2 to monitor him and to ensure that help was available if he needed it. This was arranged by Peter in part to provide Isabelle and Jeremy with some extra cash to reduce their debts. Isabelle and Jeremy used to create time sheets setting out the time they spent with Jacob. They were paid on an hourly basis. Isabelle and Jeremy knowingly claimed to have worked at certain times when in fact they had driven away from the premises and left Jacob on his own. Their false claim was exposed by the security cameras which recorded their arrival and departure times. A reconciliation of the security data and the time sheets revealed their dishonesty. 
62	Another example of Isabelle’s dishonesty is the evidence about Isabelle taking money from Jessica’s bank account and saying that Peter gave her permission to do so. Isabelle did not contest Jessica’s evidence about this in any meaningful way. Isabelle simply lied to Jessica about the incident. Isabelle was flippant about the theft and the lie created to cover up the theft. 
63	In short, I am satisfied that Isabelle is someone who will act dishonestly and lie where necessary in order to protect herself or promote her agenda. 
64	Secondly, Isabelle did not display a favourable demeanour in the courtroom. She viewed the courtroom as just another forum in which to manipulate people to accept her view of the world. The fact that she is intelligent and articulate assists her. Also useful is her cunning and quick wit in pursuing her own best interests.
65	In addition to the above, Isabelle also signed several false statutory declarations. These were created in the context of providing the declarations to the ANZ in connection with security documents signed in 2017, 2018 and 2020. 
66	The 2017 declaration had two problems. First, in the declaration Isabelle said to the bank that she had received independent legal advice and financial advice regarding the loan and security documents listed in the declaration. These documents evidenced financial accommodation which the ANZ gave to members of the Group. Isabelle’s statement was false because she had received no such advice. Secondly, the statutory declaration purported to have been witnessed by John Button, the pharmacist at the Toorak Village pharmacy. Isabelle said that she never signed a document in front of that witness. Rather, having already signed the document, she would take the completed document to the pharmacy and ask Mr Button to witness the same. 
67	The situation was identical regarding the statutory declaration made on 21 December 2018 before the pharmacist. Again, Isabelle had not received any legal or financial advice and had signed the declaration before taking it to the witness.
68	Isabelle claimed that on one occasion, she asked Peter about obtaining independent legal advice but he said “don’t worry, just sign it”. That exchange set the precedent which she followed with subsequent documents. Thus, she said that when he asked her to sign these documents, she did so without reading them. 
69	As noted earlier, I remain sceptical of Isabelle’s evidence especially where she seeks to excuse her conduct or to paint herself in a more favourable light. The point here is that, even assuming Isabelle’s evidence on the issue was accurate, it shows that she is indifferent to the truth of the contents of the document and to the effect which the signed document might have on the recipient.
Jeremy 
70	Jeremy was not an impressive witness. In a way, he and Isabelle are well matched. Jeremy too is dishonest and has a limited regard for truth. 
71	Jeremy was charged in 2012 on 61 counts of theft over a period between April 2010 and April 2011. He pleaded guilty at the Melbourne Magistrates’ Court to one count. He was released on an adjourned undertaking without conviction and ordered to pay $1,000 to the court fund and $14,730 as compensation to the party from whom he stole the money. The court also ordered that anabolic steroids found in his possession be forfeited and destroyed. 
72	Jeremy was an active participant in the shopping which Isabelle undertook, the accumulation of debt by Isabelle and the unauthorised use of Peter and Marika’s credit cards. Similarly, he was also involved in taking money from Peter for acting as Jacob’s carer when he and Isabelle were not physically present at Jacob’s residence. Both Isabelle and Jeremy seem to regard Peter and Marika not so much as parents trying to do their best for their children but as a resource to be plundered. 
73	Jeremy was loyal to Isabelle and keen to please her. In order for Isabelle to maintain her family name after marriage, he changed his surname from Meehan to Szwarcbord. I consider that Jeremy would say or do whatever he thought necessary or desirable to assist Isabelle. To the extent that he has influence over Isabelle, I do not think that it would be a beneficial influence. 
74	I would be loathe to accept contested evidence from Jeremy without corroboration. 
Peter 
75	Peter is a successful businessman. He is committed to his family and values family loyalty and the reputation of the family. Generally, I would say that Peter tried to tell the truth as best he recalled it. On occasions, I consider his recollection was mistaken and to that extent, the reliability of his memory was not always accurate. Sometimes, I sensed from his behaviour in the witness box that he was trying to avoid a direct answer to a question. Also, sometimes he said he could not recall some matter which one might have expected that someone in his position should have recalled. However, I acknowledge that Peter was a busy person, very much the driving force in conducting the business of the Group. Overall, he was a credible and fairly reliable witness most of whose evidence I could accept.
Daniel Allison & Associates
76	Three people from Daniel Allison & Associates (“DAA”) gave evidence: Jane Clark, Brett Lethborg and Jessica McClelland. 
77	Ms Clark is a principal of DAA. She began working on the affairs of the Group in about 2008 when she worked at the chartered accounting firm BDO which she joined as a graduate in 1999. She rose to the position of senior manager before moving to DAA in 2010 as an associate principal. 
78	Ms Clark was an impressive witness who had a good recall of events and answered questions directly and clearly. I accept her as a credible and reliable witness who gave truthful evidence. 
79	Brett Lethborg was a principal at DAA who has been working on the financial affairs of the Group for about 12 years. He has a holistic role regarding the Group’s affairs which encompasses strategy, consulting, advisory and taxation work.
80	Mr Lethborg gave evidence remotely via Zoom because he was overseas on holidays at the time of the trial. Although I consider he was an honest witness who sought to tell the truth, he seemed a little distracted and out of sorts, perhaps due to the time difference between Australia and Europe and the effect of having run a marathon shortly before. More significantly, he was unable to access all the documentation he required to fully explain some of his answers. So, while parts of his evidence were less complete than they might have been, I consider him to be an honest witness. 
81	Jessica McClelland is an associate principal at DAA. She commenced work at BDO in March 2007 after graduating from university in 2006 with degrees in arts and commerce. She had the greatest day to day involvement with the Group, maintaining various ledgers and attending to much of the basic accounting work which the Group required. She reported to Ms Clark who in turn reported to Mr Lethborg. 
82	Ms McClelland explained much of the record keeping data. Due to lines of enquiry generated during her evidence and cross-examination, Ms McClelland was asked to search the Group’s accounting records for extra documents and then return to court to answer questions about the documents which she found. This meant that Ms McClelland came to court on four separate days to give evidence. Before the end of this experience, it was apparent that Ms McClelland seemed frustrated with the judicial process and the demands placed upon her. Nonetheless, while parts of her evidence were not altogether clear, she appeared to try and answer questions truthfully to the best of her recollection. It seemed to me that the timespan involved and the nature of the questions she was asked made some questions difficult to answer. I consider she was an honest witness. 
David Foran
83	The defendant called David Foran from the ANZ to give evidence. He obviously understood his role and work within the institutional property group of the bank. Foran answered the questions directly and without equivocation. I have no hesitation in accepting him as a credible and reliable witness. 
Issues
84	The parties provided a joint statement of the issues in dispute.
85	These are:
Contractual Claim
1.	By executing the document titled “Loan Deed” (“loan deed”), naming Isabelle as Borrower and CI as Lender (as admitted), did Isabelle enter into an agreement in which CI agreed to provide a loan facility to Isabelle?
2.	If question 1, above, is answered in the affirmative:
a.	was the loan deed signed by Isabelle by reason of the presumed or actual undue influence of Peter? If so: 
i.	is the loan deed voidable and liable to be set side?
ii.	Alternatively, is the loan deed voidable in part, in respect of interest and legal and other costs (clauses 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and Item 6 of the schedule?)
b.	was the loan deed “procured” by Peter such that the Peter took unconscientious advantage of Isabelle? If so:
i.	is the loan deed voidable and liable to be set aside?
3.	If each part of question 2, above, is answered in the negative then, by reason of the terms of the loan deed (which are admitted):
a.	has Isabelle charged Unit 2 to CI, as security for the Isabelle’s debt or liability, for the payment of the principal sum and Interest or any part thereof?
b.	by Isabelle not paying the principal sum and Interest, on 19 September 2021 or at all (as admitted), has there been an Event of Default under the loan deed?
4.	If question 3(b), above, is answered in the affirmative, is Isabelle liable to repay to the plaintiffs: the principal sum, Interest, and any other monies payable under the loan deed?
5.	If question 4, above, is answered in the affirmative, what is the quantum of Isabelle’s liability to CI as the named party to the loan deed?
Equitable Claims
Loan with, and Security provided to, ANZ  by Counterclaim
6.	Did the 2017 Letter of Offer extend an offer, to CI6, to increase the Facilities by way of additional loan facilities, including a loan facility in the sum of $2,320,500, for the purpose of assisting with the Group’s property development and investment activities, particularly its principal debtor, CI6 (“Trawalla Loan”)?
7.	Did Isabelle accede to the provision, as security for the Facilities, in particular to CI6’s indebtedness to ANZ, a first registered mortgage over Unit 2 and an individual guarantee and indemnity limited to $2,320,500 plus interest, costs, and other amounts:
a.	by signing the acceptance and acknowledgement section of the 2017 Letter of Offer from ANZ (as admitted)?
b.	by signing the 2017 guarantee and indemnity and the mortgage, each in favour of ANZ (as admitted)?
8.	Did Isabelle accede to the provision, as security for the Facilities, in particular to CI6’s indebtedness to ANZ, a first registered mortgage over Unit 2 and an individual guarantee and indemnity limited to $5,000,000 plus interest, costs, and other amounts:
a.	by signing the acceptance and acknowledgement section of the 2018 Letter of Offer and the 2020 Letter of Offer from ANZ (as admitted)?
b.	by signing the 2018 guarantee and indemnity and the 2020 guarantee and indemnity, each in favour of ANZ (as admitted?)
9.	Did the 2020 Letter of Offer discharge the 2017 guarantee and indemnity and the 2018 guarantee and indemnity by operation of law?
10.	 Has Isabelle sought to bring all parties to the 2017 Letter of Offer, the 2018 Letter of Offer, and the 2020 Letter of Offer as parties, in her counterclaim?
11.	 Were the mortgage and guarantees and indemnities:
a.	signed by Isabelle by reason of the influence of her partner, then husband, Jeremy?
b.	signed by Isabelle by reason of the presumed or actual undue influence of Peter? If so:
i.	did ANZ have actual or constructive knowledge of such undue influence?
ii.	are they voidable and liable to be set aside?
c.	“procured” by the unconscientious dealings of ANZ, within the meaning of section 12CD of the ASIC Act, or within the meaning of the common law? If so:
i.	are they voidable and liable to be set aside, including pursuant to section 12GM of the ASIC Act, or at law?
12.	 If (as is admitted by Isabelle) the statutory declarations signed by Isabelle on 28 July 2017, 21 December 2018 and 10 July 2020 (in respect of the 2017 Letter of Offer, the 2017 guarantee and indemnity, the 2018 Letter of Offer, the 2018 guarantee and indemnity, the 2020 Letter of Offer, and the 2020 guarantee and indemnity) contain untrue statements
a.	is ANZ entitled to:
i.	declaratory relief, that Isabelle made false statutory declarations in support of the 2017 guarantee and indemnity, the 2018 guarantee and indemnity, and the 2020 guarantee and indemnity?
ii.	an order that Isabelle indemnify all ANZ’s losses arising from false statutory declarations made by Isabelle, and its costs of this proceeding on a full indemnity basis, pursuant to clause 12.4 of the 2017 guarantee and indemnity, the 2018 guarantee and indemnity, and the 2020 guarantee and indemnity?
b.	alternatively, does Isabelle have no liability to ANZ (such that ANZ is not entitled to the relief sought in its counterclaim), by reason of any finding that:
i.	each of the 2017 guarantee and indemnity, the 2018 guarantee and indemnity, and the 2020 guarantee and indemnity are void or voidable by reason of undue influence and/or unconscionable conduct (see question 11, above)?
ii.	the 2020 Letter of Offer discharged the 2017 guarantee and indemnity and the 2018 guarantee and indemnity (question 9, above)?
Subrogation in Equity
13.	 With respect to Unit 2:
a.	have CI and CI6 paid all expenses, including the Purchase Price, owners corporation fees, council rates, and interest and bank fees relating to the Trawalla Loan?
b.	has Isabelle made no contributions to the Purchase Price, interest, fees or other expenses relating to Unit 2?
14.	 If questions 6, 7(b), 11(b)-(c), 13, above, are answered in the affirmative:
a.	would it be unconscionable for Isabelle to deny the proprietary rights and interests of CI and CI6 in Unit 2?
b.	has there been a subrogation in equity of Isabelle’s rights and interest in Unit 2?
Common Intention Constructive Trust
15.	 Did Peter, Jacob and Isabelle enter into an agreement, arrangement or understanding, alternatively a joint relationship or endeavour, to partner in the acquisition of Unit 2, for and on behalf of the Szwarcbord Development Group (“Acquisition Agreement”)?
16.	 If question 13, above, is answered in the affirmative, were the terms of the Acquisition Agreement as set out in paragraph 7 of the Statement of Claim?
17.	 If questions 11, 13 and 14, above, are answered in the affirmative:
a.	does CI and/or CI6 have an equitable interest in Unit 2? If so:
i.	would allowing Isabelle to remain in possession of, and to retain the proceeds of sale in respect of, Unit 2 be unconscionable, alternatively, constitute equitable fraud?
b.	is Isabelle estopped from claiming any equitable interest in, or impeding the sale of, Unit 2?
c.	does Isabelle hold Unit 2 on constructive trust for CI and/or CI6?
d.	by reason of the matters pleaded at paragraphs 96 to 98 of the plaintiffs’ defence to counterclaim, would it be unconscionable and against the interests of equity for any relief, including declaratory relief, to be granted in favour of Isabelle?
“Gift Intention”
18.	 Did Peter and Marika (not a party) state to Isabelle, in or about March 2016, that they wished and intended to give her Unit 2 as a gift and would pay all costs and expenses associated with Unit 2?
Issue 1: By executing the document titled “Loan Deed” (“loan deed”), naming Isabelle as Borrower and CI as Lender (as admitted), did Isabelle enter into an agreement in which CI agreed to provide a loan facility to Isabelle?
86	Isabelle admitted in her defence that she signed the loan deed around July 2018. The deed named CI as the lender and her as the borrower. However, Isabelle did not admit that in so signing the deed, she thereby made an agreement with CI whereby CI agreed to lend her the sum of $1.6 million.
87	The loan deed is clear on its terms and Isabelle admitted the terms of the deed. The deed shows that CI advanced amounts of $900,000 and $700,000 respectively on 26 and 27 April 2017. Those advances were made on the terms set out in the loan deed.
88	The loan funds were to attract interest. The lender was to advise the borrower of the applicable rate from time to time in writing. The rate was at the absolute discretion of the lender. 
89	In the closing submissions, both the plaintiffs and Isabelle agreed that this issue should be answered “yes”. Accordingly, I find that the answer to the first issue is “yes”.
Issue 2: If question 1, above, is answered in the affirmative:
(a) was the loan deed signed by Isabelle by reason of the presumed or actual undue influence of Peter? If so: 
(i) is the loan deed voidable and liable to be set side?
(ii) alternatively, is the loan deed voidable in part, in respect of interest and legal and other costs (clauses 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and Item 6 of the schedule?)
(b) was the loan deed “procured” by Peter such that the Peter took unconscientious advantage of Isabelle? If so:
(i) is the loan deed voidable and liable to be set aside?
Isabelle’s submissions 
90	Isabelle contends that issue 2(a) should be answered “yes” because of the presumed or actual undue influence to which she was subjected when signing the loan deed. 
91	Isabelle began her submissions on this issue by outlining the relevant legal principles about undue influence as recently set out by the High Court in Thorne v Kennedy. In cases where undue influence is alleged, the court must closely examine the facts in each case to see if the party in question acted freely and without influence. 
92	Isabelle relied broadly on four factual matters to establish the supporting evidentiary framework to justify her submission that she was subjected to undue influence. The matters were: (i) the relationship between Peter and herself; (ii) her personal characteristics; (iii) the nature of the loan deed; and (iv) the circumstances of entry into the loan deed.
(i) The relationship between Peter and Isabelle 
93	As to the relationship between Peter and Isabelle, Isabelle made reference to a number of matters. She said that Peter was, in effect, her employer between 2011 and 2019 because he was the sole director of Constructions and a co-owner of Medimart. This was important because Isabelle had never worked in anything except a family business.
94	Isabelle worked full-time for Constructions from 2011 until around 2019. Isabelle completed and submitted timesheets to Constructions on a weekly basis. The sheets recorded her hours of work. Despite her work for Constructions constituting a full-time job, she received, according to her tax returns, an annual salary of about $5,400. Any income beyond that amount was at the discretion of her father.
95	As director of the companies which acted as trustee of the Charbord Family Trust and the Charbord Family Trust No 6, Peter controlled the distributions made by the family trusts to individual family members. Although Isabelle’s tax returns for the years 2011 to 2019 showed that she received substantial distributions from the family trusts, Isabelle did not receive any such distributions into her bank account. The distributions nominally made to Isabelle seemed to be in fact transferred into the loan account of her grandfather Jacob. These transfers resulted from letters of direction instructing that the money be paid to Jacob. The plaintiffs could produce only four written directions of this kind. It appears that the amounts nominated in those directions do not match the amounts set out in Isabelle’s tax returns. The firm of accountants used by the Szwarcbord family and the Group, DAA, prepared Isabelle’s tax returns together with those of the companies in the Group and those of other family members.
96	According to Isabelle, Peter controlled her income and her living arrangements to the extent that Isabelle and later, her boyfriend and then husband, Jeremy lived with Peter and Marika in their house or, when Isabelle moved out to rented premises, Peter and Marika paid most, if not all, of the rent.
97	Isabelle said that when Peter presented Isabelle with documents to sign at work, she signed them without objection and without questioning their significance. She simply did as Peter asked her. Similarly, when performing the role of bookkeeper for the Group, Isabelle usually did what she was told.
(ii) Isabelle’s personal characteristics 
98	Isabelle relied upon certain personal characteristics. Having been born in September 1992, Isabelle was 25 when she signed the loan deed. Isabelle says that she was dependent upon Peter financially and that this rendered her emotionally dependent upon him as well. This was said to be evident from several emails which she sent him.
99	 She said that between early 2016 and late 2017, she attended a psychologist. Her parents paid for this treatment. The primary nature of the problem concerned the propensity of Isabelle (and Jeremy) to spend money which she did not have, especially on expensive luxury goods. They had what might loosely be called a shopping addiction.
(iii) The nature of the loan deed 
100	Isabelle relied upon the nature and terms of the loan deed which she signed on 2 July 2018. The terms of the deed had some unusual features which Isabelle said could work against her interests.
101	First, the lower rate of interest was determined at the absolute discretion of the lender. CI could inform the borrower in writing and the borrower would be bound by whatever rate was specified. This meant that the liability or exposure of the borrower on the loan could be altered significantly as and when CI decided.
102	Isabelle was obliged under the loan deed to:
•	indemnify the lender for any legal costs incurred in enforcing or attempting to enforce the deed or the securities;
•	pay all the lender’s legal costs and disbursements, stamp duty and registration fees on an indemnity basis in relation to the deed and the securities;
•	to indemnify the lender in relation to all legal and other costs and disbursements (on a full indemnity basis) which it incurred in relation to the repayment of the principal sum and any interest in the discharge of the securities; and
•	to indemnify the lender in relation to all legal and other costs and disbursements arising out of any event of default.
103	Secondly, clause 2.1 of the deed provides that, subject to the terms and conditions of the deed, the lender agrees to provide to the borrower a facility to advance the principal sum to the borrower and the borrower agrees to borrow the whole of the principal sum on or after the advance date. The principal sum is the initial amount of $1.6 million and any further amounts drawn down by Isabelle in accordance with special condition 8.1 of the deed, up to a maximum amount of $3,570,000. The advance date is, for the initial sum, 26 and 27 April 2017. In relation to any further sums advanced under special condition 8.1, the advance date is the date the funds are advanced to Isabelle. The practical result of this means that, under the deed, Isabelle agrees to borrow an initial sum of $1.6 million which was advanced more than 12 months before Isabelle even executed the deed.      
104	Finally, clause 2.3 of the deed specifies that the “Facility” will be available from the advance date and must be repaid in full on the Termination Date. The “Termination Date” for the facility is defined in item 5 of the schedule to the deed to include “any date at the lender’s discretion upon 30 days’ notice”. Hence, the lender determined the Termination Date.
105	Isabelle said that she had no need to sign the loan deed when she did. She became the registered proprietor of Unit 2 in August 2017 and signed the mortgage in favour of the ANZ on 28 July 2017. The mortgage was registered on 31 July 2017. Isabelle paid none of the costs and expenses connected with the purchase of Unit 2.
106	Isabelle says that she received no corresponding consideration or benefit in return for her signing the loan deed. In the circumstances, Isabelle contends that she assumed a significant obligation or risk in signing the deed. This was underlined by the fact that:
•	under clause 5.1 of the loan deed, Isabelle charged all her rights, title and interest in Unit 2 and agreed to execute a second mortgage if required by the lender.
•	on the plaintiffs’ case, as at 2 July 2018, an amount of $3,747,954 had already been advanced under the deed. This included the initial loan plus other amounts paid for stamp duty, land titles registration, owners corporation fees, legal fees, council rates and ANZ interest and line fees. This meant that the facility limit set out in item 4 of the schedule to the loan deed was already exceeded by approximately $178,000 at the time Isabelle signed the deed. Although the plaintiffs claim as at 11 October 2021 that the total sum of $3,747,954 had been advanced to Isabelle as at the date of the deed, the deed itself refers only to the sum of $1.6 million as having been drawn down at that time. 
(iv) Circumstances of entry into the loan deed 
107	Tisher Liner, the firm which acted for Peter and the Group, prepared the loan deed. Isabelle said that Peter did not instruct Tisher Liner to send her a copy of the deed. She said that Peter asked her to sign the loan deed one day at work in the office. She signed on his request. She obtained no independent legal or financial advice before signing.
108	Isabelle gave evidence of a conversation with Peter which occurred possibly in 2016. She said that Peter told her that a loan agreement would be drawn up to protect Unit 2. Isabelle would have to sign a loan agreement like Jessica did in relation to Rushall Crescent in order to protect the house, which was registered in her name in the event that she and her then partner split up and he tried to claim an interest in the house. Peter agreed that he had some conversation with Isabelle in which he discussed the need to protect the property.
Plaintiffs’ submissions 
109	The essence of the plaintiffs’ position was that Isabelle was not subjected to any undue influence. She was emancipated from her parents’ influence and her will was not overborne. The plaintiffs referred to the High Court judgement in Thorne v Kennedy where the court said that the existence of undue influence is proven either by direct evidence of the circumstances of the particular transaction (actual undue influence) or by a presumption (presumed undue influence) that arises by way of “common experience”: 
“Common experience gives rise to a presumption that a transaction was not the exercise of a person’s free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a “substantial benefit” to another, which cannot be explained by “ordinary motives”, or “is not readily explicable by the relationship of the parties”.
110	The plaintiffs accepted that there is often a presumption of influence when a child confers a benefit upon a parent. However, that presumption is inapplicable or unjustified once the child is emancipated from the control and authority of the parent. The time at which this occurs varies depending upon the circumstances of each particular case. Although it does not have an absolute correlation with the child becoming an adult at law, age is a relevant factor, especially when the child has more experience of the world as a person over the age of 18.
111	The plaintiffs contended that the law in Australia is unsettled regarding the question of who has the onus about the parent/child undue influence presumption when the child is in adult. They said that if the onus lay with the adult, then “the older the child the lighter the onus on the parent.” 
112	The plaintiffs submitted that a range of matters established that Isabelle was emancipated from her parents, and Peter in particular, at the time she executed the loan deed:
•	on her own admission, Isabelle was 25 years of age at the time and an adult. Since 1977, the age of majority in Victoria has been 18. At no time in connection with the case has Isabelle claimed that she was a child.
•	from January 2015, Isabelle was in a committed long-term relationship with Jeremy Meehan. They met in Canada while the Szwarcbord family was on holiday. Jeremy at the time lived in Geelong. The Szwarcbord family returned to Melbourne a little before Jeremy. When he arrived back in Australia, Isabelle picked him up from the airport and asked her parents if he could stay the night at their home rather than return to Geelong. Thereafter, Jeremy became a fixture in the family. He and Isabelle have lived together ever since. They initially lived with Peter and Marika before moving into rental properties for a period when Isabelle was about 26. They married in February 2019 when Isabelle was 26.
•	Isabelle acknowledged that she has no difficulty speaking, reading or understanding English.
•	Isabelle successfully completed her year 12 studies and commenced a university degree in banking and finance. She made her own choice as an adult to discontinue that course. Subsequently, she made an independent decision to undertake a short course to prepare a folio for fashion design. Then she decided not to pursue a career in fashion but came to work in the family business. There was no suggestion that she was forced into this choice.
•	it was apparent from her time in court giving evidence that Isabelle could read and assimilate documents quickly. She demonstrated this ability on multiple occasions when questioned about documents which she said that she had not previously seen or at least did not recall seeing earlier.
•	after joining the family business, Isabelle worked under Peter Mills to learn bookkeeping and administrative skills. She took over the bookkeeping role for the Group from about 2015 to 2017. Then she changed direction to become the design coordinator for the Group.
•	as assistant bookkeeper and then bookkeeper for the Group, her roles and responsibilities at the Group included making electronic accounting entries into the MYOB accounting program, invoicing, writing cheques, transferring funds between various bank accounts, providing transaction services, attending meetings with the bank, attending construction/development sites and collecting various items required at the development sites.
•	she also assisted Peter at work. Isabelle acted as his assistant and attended construction sites and meetings. This included meetings with the Group’s accountants. She regularly participated and took notes at these meetings. Often, they affected work which she performed for the Group.
•	at all relevant times, she understood the concept of a mortgage, guarantee and caveat. 
•	she knew that Unit 2 was subject to a mortgage in favour of the ANZ bank.
•	she independently chose to stop working for the Group and to begin working at the Medimart business in 2019. The Medimart business was initially developed by her uncle Michael. The Group then took a financial interest in the business and opened a Medimart shop in Frankston.
•	she independently chose to become a “content creator” at the age of about 27. This involved her ceasing work at Medimart and moving to Queensland with Jeremy to pursue a new career together.
113	The plaintiffs also addressed the issues of actual undue influence and unconscionability raised by Isabelle.
114	The plaintiffs noted that Isabelle’s claims regarding actual undue influence and unconscionable conduct in relation to the loan deed were based on several specific matters which reflected her dependent status or “special disability”:
•	her age at the time of executing loan and security documents.
•	her emotional dependency on Peter.
•	the relative complexity of the loan deed for a person of her age and experience.
•	her lack of knowledge about the contents and effect of the loan deed. This arose partly from Peter’s practice of presenting documents to Isabelle for her to sign without explaining the contents to her and/or without suggesting that she read them before signing and partly from Isabelle being accustomed to signing documents on request without knowing their content and effect.
115	The plaintiffs made submissions about these matters.
116	As to age, the plaintiffs relied upon their prior submissions regarding emancipation.
117	In relation to the issue of emotional dependency, they noted that it was not referred to in the defendant’s opening. Also, Isabelle gave no evidence about this issue during her extended time in the witness box. Given that Isabelle was close to Jeremy from January 2015 and they married in February 2019, it was likely that she had notably stronger emotional ties with Jeremy than with her father.
118	The loan deed is a formal legal document. Given her natural intelligence, experience of bookkeeping duties for the Group and being involved in the day-to-day operations of the Group, Isabelle ought to have been able to appreciate and understand the essential elements of the loan deed. The plaintiffs referred to various matters in this context – Isabelle was a clearly literate native English speaker; she had sufficient intellect and aptitude to attend university after completing school; from the age of 18, she was a full-time employee of the Group and had several years’ experience with a variety of bookkeeping duties; she understood the general nature of relevant property and finance documentation.
119	On the question of Isabelle’s knowledge of the contents and effect of the loan deed, the plaintiffs attacked her credit. They contended that she was an unreliable witness with regard to almost every document she executed in connection with the case. She had trouble remembering the execution of various documents she signed including those relating to the sale of Unit 2 and those relating to obtaining the loan finance from the ANZ in order to purchase Unit 2. They also said that Peter discussed the contents and effect of the loan deed with her.
Analysis 
120	I will summarise the relevant legal principles before dealing with the main arguments advanced by the parties.
Legal principles 
121	This issue raises questions about the potential impact of undue influence and unconscionable conduct on the case. The two doctrines are often related but remain conceptually different. The undue influence doctrine is concerned with the quality of the consent or assent by the weaker party. The critical element in deciding whether to grant relief is the impairment of the will of the weaker party. This differs from the focus with unconscionable conduct where the court examines the conduct of the stronger party to assess whether that person is trying to enforce or retain the benefit of a dealing with a person under a special disability in circumstances where it is not consistent with equity and good conscience that the stronger party should do so. 
122	The term “undue influence” has been used to mean a variety of things including abuse of confidence, misrepresentation and the pressure which constitutes common law duress. However, the pressure which can lead to a conclusion of undue influence need not be illegitimate or improper. In Johnson v Buttress, Dixon J described how undue influence could arise from the conduct of person “A” who influenced person “B” in such a way that B’s actions were not a “free act”. Acts which are not affected by undue influence are acts which represent the free exercise of a person’s will.
123	Undue influence can be actual or presumed. A party establishes actual undue influence by proving that the impugned transaction occurred in circumstances where there was such an influence over the mind of the party that the person did not engage in a free and independent act.
124	Presumed undue influence can arise in a couple of ways. First, there might exist a relationship between the parties which is recognised at law as giving rise to a presumption of influence. This applies to relationships such as solicitor and client, physician and patient, guardian and ward, parent and child. Gifts and benefits to a parent from a child (but not vice versa) are subject to the presumption. 
125	Secondly, the presumption can occur when a party proves that he or she reposed complete trust and confidence in the other party to the transaction (the dominant party).
126	Where there is a relationship of influence, either presumed or proven, the onus can shift to the dominant person to prove that the impugned transaction resulted from the independent and voluntary act of the claimant party.
127	The presumption will not apply where the child has been emancipated from the control and authority of the parent. Whether and when this has occurred is a question of fact in each particular case. There appears to be some inconsistency in the authorities about who bears the onus of establishing emancipation. In my opinion, the better view is, and the balance of authority supports the proposition that, the parent bears the onus. 
128	The critical issue to address when dealing with allegations of undue influence is whether, when the weaker party entered into the impugned transaction, that party did so in the exercise of their independent will. Was the capacity of the weaker party impaired such that they were not acting in the free exercise of their independent and voluntary will? Determining whether there was an exercise of independent and voluntary will necessarily involves questions of fact and degree. Accordingly, the court should consider matters such as whether, and to what extent, the weaker party was constrained in assessing alternative courses of action and deciding between them.
129	I will now examine the factual matters which Isabelle relied upon to found her case of undue influence. 
(i) The relationship between Peter and Isabelle 
130	While various matters which Isabelle referred to in the context of her relationship with her father were correct, I consider that her claims to emotional dependence upon him were greatly exaggerated. While there is often a close bond between father and daughter, as the child grows to adulthood, the relationship changes. Isabelle was 22 when she met Jeremy Meehan while on holidays in Canada. After Jeremy returned to Australia in early 2015, he became a fixture in the Szwarcbord household and he and Isabelle have been a couple ever since, marrying in February 2019. While, until the rupture in family relations in January 2021, Isabelle might have been on good terms with her father, I do not accept that she was emotionally dependent upon him. Jeremy is, and has been for years, the primary man in her life. 
131	I do not ignore that Peter was influential in determining the financial resources available to Isabelle. However, the history of the family relationship up until January 2021 shows that Isabelle was extremely well looked after in a material sense. Indeed, it could be said that she was indulged. 
132	Also, if Isabelle were emotionally dependent upon Peter (which I do not accept), that was a matter which ought to have been raised with Peter when he gave evidence. It was not. 
(ii) Isabelle’s personal characteristics 
133	Isabelle implies that she was young, needed psychological assistance and was someone whose will might easily be overborne. In my view, this is not an accurate assessment of Isabelle’s character. The question of character is important given that undue influence looks to the quality of assent of the weaker party and not so much the conduct of the stronger party. 
134	I regard Isabelle as intelligent, selfish and calculating. She was well aware that the family business gave her a comfortable and indulged lifestyle which very few people of her age could otherwise have afforded. She well understood that she derived substantial material and other benefits from the family business. 
135	Isabelle was well able to, and did, understand the modus operandi used to conduct the family business. This knowledge derived partly from her experience growing up in the family and partly from her experience of working in the family business. There was a reason the family did not remain in one house while she was growing up. She and the family lived in different places because the modus operandi of the family business required that they live in places for a time, and then the property was sold so that the proceeds of sale could be used in another project which the Group was undertaking. Part of the reason for having loan documents between family members and members of the Group was to protect the Group. Peter had explained to Isabelle that the same approach on this point had been taken in relation to the property at 65 Rushall Crescent, Fitzroy North registered in Jessica’s name. To the extent that Isabelle denies knowing this, I reject her evidence. 
136	Isabelle appreciated the quid pro quo of the unwritten arrangement which existed between entities within the Group and members of the Szwarcbord family. In theory, there were a couple of potential ways of looking at the arrangement adopted when a property was bought for development and a proposed unit was sold off-the-plan to a family member and registered in the name of that member. On the one hand, the family member was never intended to hold the beneficial interest in the property but was to hold the legal interest only as a trustee or nominee. On the other hand, the family member could hold the beneficial interest but the accepted understanding within the family was that, when the Group decided the property needed to be sold in order to access the proceeds of sale, the family member would simply acquiesce in this endeavour. The evidence suggests that the Group adopted the former approach in conducting its development work.
137	When giving evidence at the trial, Isabelle’s intelligence was obvious. She read and understood documents with ease, even those she claimed not to have seen before. She was quick witted and comfortable in the witness box and appeared relaxed in jousting with counsel, even pointing out the occasional mistake or ambiguity in the cross-examiner’s questions. She was not intimidated and was firm in her rejection of the plaintiffs’ case.
138	Isabelle presented as someone who is strong-willed, knows her own mind and does what suits her. She is focused on her own best interests – she went to university and then simply stopped when she felt so inclined. She did some work in fashion before joining the family business and remained there for some years. She joined by choice, not compulsion. I infer that she remained there because she enjoyed it. 
139	More recently, she has established herself as a content creator on the internet. The details on what this entails are limited but I understand that it relates, at least in part, to pornography. Isabelle is successful at this work as she currently earns about $80,000 per month from content creation. Notwithstanding the difficulties this work has caused within the family, and Peter in particular, she has continued with the work. 
140	It would be a mistake in this case to assume that Peter and Marika dominated Isabelle. In some ways, the relationship was inverted because Isabelle manipulated them. This is evident, for example, in Isabelle using her parents’ credit cards without permission to make unauthorised purchases, even after being asked by her parents to stop doing this. Marika said that she and Peter had to have their credit cards replaced a number of times in order to try and stop the unauthorised spending. On another occasion, Isabelle bought a new Mercedes Benz motor vehicle from Worrells Motors in Toorak. Before settlement was due, Isabelle realised she could not pay for the vehicle. She spoke to her parents and, to protect the family name and save Jacob embarrassment, Peter arranged for a Group entity to buy the car. Given my impression of Isabelle, it would not surprise me if she anticipated this outcome. Directly or indirectly, Peter and Marika provided Isabelle with a car. Further, it was not uncommon for Isabelle to seek financial help from her parents to meet her debts including her credit card debts. Over the years, this involved large sums of money. Also on occasion, Marika and Peter bought food or groceries for Isabelle. 
(iii) The nature of the loan deed 
141	Because of Isabelle’s intelligence, the household in which she grew up and her work experience for the Group, I do not consider that the loan deed posed any particular problems for Isabelle. She would have been able to read and understand the terms of the document had she chosen to look at them. Although Isabelle sought to rely on some terms in the document which she says are unusual, there is an important distinction here between theory and practice. In a purely commercial context, the terms to which Isabelle drew attention are unusual. But in practice, this was in a family context where an important objective of the loan was to protect the financial interests of the Group and the family, not to expose Isabelle to a potentially crippling loan agreement. The family wanted to protect itself against claims by former boyfriends, as it did with Jessica and Rushall Crescent. Ordinarily, in circumstances where there was no family schism and Isabelle co-operated in the sale of Unit 2, the family would not have contemplated suing Isabelle to recover the loan. 
142	In this case, Isabelle argued that entry into the deed imposed significant obligations and risk upon her and that no consideration or benefit moved to her in exchange for her entry into the deed.  
143	I infer from the above that Isabelle would contend, albeit somewhat obliquely, that the transaction regarding the loan deed should be set aside because it victimised her and put her in a position of manifest and unfair disadvantage.
144	While I accept that the execution of the loan deed and mortgage imposed obligations upon Isabelle which she would not otherwise have borne, the situation is more nuanced. One cannot look only at the obligations which Isabelle assumed without considering the broader context.
145	The Group, whether in its current or earlier iterations, has been engaged in property development for about 60 years. Three generations of the Szwarcbord family have been involved in that work. The evidence disclosed that since about 1999, over a lengthy period while their daughters were growing up, Peter and Marika used a technique or methodology for the way in which they undertook their property developments on behalf of the Group. This adapted or followed a similar methodology established by Jacob.
146	Peter has undertaken his property development work primarily, if not exclusively, in the Toorak area. The Group focuses on developing small luxury unit complexes. As part of the marketing plan for a new development, the Group would sell one of the proposed units off-the-plan to a family member. This had two main benefits. First, it assisted in marketing the development to interested third parties because it enabled the Group to say that one unit within the proposed development was already sold. The family could exploit such an off-the-plan sale to both encourage and give confidence to prospective buyers that there was demand for units in such a high-end development. Secondly, if the family member, in due course, moved into the completed unit and treated the unit as his or her primary place of residence for the period required by statute, then it raised the possibility that when the unit was later sold, the nett proceeds of sale would not be subject to capital gains tax. It was for this reason that during her childhood, Isabelle had lived at different places in or around Toorak. This included properties in Grange Road, Douglas Street and Kilsyth Avenue. 
147	When the property housing Peter’s family was sold, the normal practice was to employ the sale proceeds in another Group development. Hence, the aim was to accumulate and retain the money within the Group and use it to best advantage for the Szwarcbord family as a whole. This was a specific and established family plan and explains why Peter, Marika and the girls moved house as often as they did.
148	The Group used the same approach in relation to Unit 2 as it had on other earlier developments. Indeed, although the Group did not develop the site, it used the same approach on the purchase of a house in 2014 in Jessica’s name. Jessica became the registered proprietor of a house at 65 Rushall Crescent, Fitzroy North. Although she was able to live at the house up until 2021, she made no contribution to the purchase price of the house or any interest on the bank loan used to help fund the purchase or mortgage payments. A loan agreement existed between Jessica and Marika securing the funds advanced towards the purchase price. Jessica said that her parents paid for the house, the mortgage, and the rates, probably using Group funds. When she lived there with her ex-partner, they paid the electricity, gas and water bills. Jessica and her former partner moved to Phillip Island in 2021. 
149	Jessica moved to Phillip Island to live for about 12 months but returned to Rushall Crescent around April 2022. Jessica said that it was never suggested to her that the Rushall Crescent property was a gift from her father, mother or the Group. Jessica said that:
•	although the Rushall Crescent property was in her name, she did not own it;
•	there was a loan agreement in place between her and the Group in relation to the property; and
•	the Group could take and sell the property whenever it wanted to and she could not do anything to stop that outcome.
150	When she gave evidence, Marika confirmed that the Group provided funds to assist with the acquisition of the Rushall Crescent property. Marika also said that:
•	she had lived at the Rushall Crescent property since April 2021 and had never paid any rent to Jessica;
•	her estranged husband Peter, who had moved to Queensland but lived at the Rushall Crescent property when he was in Melbourne, had never paid rent to Jessica in relation to the property;
•	the Group paid the outgoings in relation to the Rushall Crescent property; and
•	having Jessica sign a loan agreement in relation to the Rushall Crescent property was a way to protect the property for the family in the event that (as later happened), she broke up with her former partner so that he could not claim a share in the property. By this, I infer that she meant either the partner could claim an interest in the property only after the debt to the Group had been discharged or that he could claim no interest because Jessica, while holding the legal interest, held no beneficial interest in the property.
151	Until the relationship between Isabelle and the rest of the family soured in January 2021 the family seems to have been quite close. In saying this, I am not implying that all was perfect. Families and family life are complicated and messy from time to time. But several things are clear on the evidence:
•	The Group had worked together satisfactorily for many years.
•	Peter and Marika, though now separated, appear to have a reasonably harmonious relationship. If they were bitter and acrimonious towards one another, I do not imagine Marika would allow Peter to stay at the Rushall Crescent property when he is down from Queensland. Nor do I think that Peter would wish to stay there. 
•	While Jessica is older than Isabelle, they seemed to have no more issues than usually exist between sisters, at least until Isabelle took money out of Jessica’s bank account without her permission and lied about it. 
•	The family seemed to go on trips and holidays together.
•	Peter in particular seemed to spend time with Isabelle and Jeremy, especially when they were all in Queensland in 2020 and early 2021.
152	The main cause of the rupture was the decision Isabelle made, together with Jeremy, to become a content creator on the internet. No party dealt directly and in detail with this aspect of the case at trial. However, it appears that Isabelle, and possibly to a lesser extent, Jeremy, became content providers on a website known as OnlyFans. Apparently this is a pornography website. The evidence did not disclose the extent to which, if at all, Isabelle and/or Jeremy featured in the content which Isabelle created. But once Peter learned of Isabelle’s involvement in such activity, he became upset. He insisted that Isabelle not use the family name and that she and Jeremy return to him various items like jet skis which he had previously lent them.
153	In most families, parents love their children. They try to help them, care for them and, where possible, assist them to realise their hopes and dreams. Parents frequently provide emotional and material support to their children, even when the children are adults. Peter and Marika were no different in this respect. But they were different from average with the resources at their disposal. It was apparent that they provided financial assistance to Jessica when she was battling ill-health to ensure she had food and accommodation. They also supported Isabelle on a substantial scale. The records produced at trial showed that Isabelle had an annual income of approximately $5,400 from working for the Group. However, the family business supported a lifestyle in which:
•	Isabelle went on regular holidays which were largely, if not wholly, paid for by her parents;
•	Isabelle spent lavishly on clothes and accessories which were well beyond her means. Her parents often paid the resultant bills;
•	Isabelle used her parents’ credit cards without permission or consent to finance substantial personal expenditure. Isabelle and Jeremy used the parents’ cards even after they were told not to;
•	Peter and Marika paid most, if not all, of the rental costs which Isabelle and Jeremy incurred for the limited times they lived in rental accommodation and not in Peter and Marika’s house.
154	Isabelle knew that however upset and annoyed her parents were about the ongoing extravagant expenditure she incurred, they would continue to help her. This was borne out in various ways. For example, they paid for Isabelle to see a psychologist to assist her with her shopping addiction. Also, they agreed to complete the contract on the purchase of a Mercedes Benz motor vehicle which Isabelle contracted to buy from Worrells Motors.
155	In short, although the loan deed had some uncommon terms and, in theory, created obligations and risk for Isabelle, the reality was that Isabelle was not greatly prejudiced in any practical sense. The objective of the deed was to protect the Group and the family rather than harm Isabelle. Provided she cooperated in the orderly conduct of the family business in accordance with its usual modus operandi, she had no real concerns.
(iv) Circumstances of entry into the loan deed 
156	Isabelle’s complaints about Tisher Liner preparing the deed, Tisher Liner not sending a copy of the deed directly to her, Peter asking her at work to sign the deed and not obtaining legal or financial advice about entering the deed are not genuine. She made no complaint at the time and not because she was a simple and guileless young woman. On the contrary, the absence of complaint and willingness to sign the deed reflected her considered and informed choice to be part of the family business and to enjoy the benefits which flowed from a successful business.
157	Overall, in relation to the signing of the loan deed:
•	Isabelle was intelligent, selfish and calculating;
•	the various factors relied upon by Isabelle to make good the allegation of undue influence are not established;
•	Isabelle appreciated that she received plenty of benefits as a result of the Group conducting a successful business – this included quality accommodation, an interesting job, and plenty of material benefits. She accepted until around January/February 2021, that there was no point in upsetting the family business model;
•	Isabelle was not someone whose will was easily overborne. She did what she wanted and was not the kind of person to quietly yield to pressure when it was not what she saw as being in her own best interests.
For these reasons, I find that there was no actual or presumed undue influence by Peter impacting the signing of the loan deed by Isabelle. Accordingly, the answer to issue 2(a)(i) is no. 
158	Likewise, given the answer in the previous paragraph, in the absence of further submissions by the defendant the answer to issue 2(a)(ii) is no.  
2(b) Was the loan deed “procured” by Peter such that the Peter took unconscientious advantage of Isabelle? If so:
(i) is the loan deed voidable and liable to be set aside?
159	Issue 2(b) concerns unconscionable conduct by Peter in allegedly taking advantage of Isabelle’s special disadvantage. 
Isabelle’s submissions 
160	Isabelle contends that she was in a vulnerable position, that Peter was aware of this, and that he exploited her vulnerability by procuring her to sign the loan deed. 
161	Isabelle began her submissions on unconscionable conduct by setting out some guiding principles with reference to cases including Commercial Bank of Australia Ltd v Amadio, Kakavas v Crown Melbourne Limited and Stubbings v Jams 2 Pty Ltd. These principles are uncontroversial. 
162	To establish her special disadvantage, Isabelle relied upon exactly the same factors as she did for undue influence. She argued that Peter was aware of her special disadvantage and unconscionably exploited her situation by procuring her signature on the loan deed. 
Plaintiffs’ submissions
163	The plaintiffs relied upon essentially the same arguments in relation to unconscionable conduct as they did for undue influence. 
Analysis
164	I accept the legal principles Isabelle outlined regarding the law on unconscionability. In essence, the main elements required in order for the doctrine of unconscionability to apply are:
•	there must be a relationship which puts one party at a special disadvantage relative to the other; 
•	the stronger party must know of the special disadvantage; and 
•	the stronger party must unconscionably exploit that disadvantage; 
165	The special disadvantage means that the innocent or more vulnerable party must be compromised in some way as a result of which they cannot make a judgment as to their own best interests. 
166	Isabelle’s position fails from the outset. For the reasons canvassed in relation to the four factors relied on regarding undue influence and the loan deed, I find that Isabelle did not suffer from any special disadvantage. She was intelligent, articulate and well able to understand the nature and effect of the loan deed. She had grown up in an environment where the family moved house as part of the conduct of its development business and she actually worked in the business as an adult. She was familiar with the modus operandi and financial aspects of the family business. Having regard to the benefits she received and the lifestyle she enjoyed, she had considerable personal incentive to do what she could to promote the success of the business and protect its assets. Moreover, she had seen the family protect its position with Rushall Crescent. Isabelle had an independent mind and followed her own inclinations to pursue what she regarded as her best interests. She was not the kind of person to be dominated by her parents. 
167	Due to this finding, it follows that Peter could not have:
(a)	known of the (non-existent) special disadvantage; and 
(b)	unconscionably exploited that disadvantage.
168	In my opinion the answer to issue 2(b) is no and therefore the answer to issue 2(b)(i) is also no.
3. If each part of question 2, above, is answered in the negative then, by reason of the terms of the loan deed (which are admitted):
(a) has Isabelle charged Unit 2 to CI, as security for Isabelle’s debt or liability, for the payment of the principal sum and interest or any part thereof?
(b) by Isabelle not paying the principal sum and interest, on 19 September 2021 or at all (as admitted), has there been an Event of Default under the loan deed?
4. If question 3(b), above, is answered in the affirmative, is Isabelle liable to repay to the plaintiffs: the principal sum, interest, and any other monies payable under the loan deed?
5. If question 4, above, is answered in the affirmative, what is the quantum of Isabelle’s liability to the CI as the named party to the loan deed?
169	The parties are far apart on what they consider to be at the heart of issues 3, 4 and 5. The plaintiffs ultimately contend that looking at the face of the loan deed and the transaction is sufficient to find for them. Isabelle submits that the court should examine the underlying transaction, the documents supporting the transaction and the transaction itself and in doing so will find that the loan deed should not be given effect.
Plaintiffs’ submissions
Issue 3(a)
170	The plaintiffs submit that clause 5.1 of the loan deed charges all of Isabelle’s present and future right, title and interest in the Trawalla property to CI and agrees to permit CI to lodge a caveat in respect of the property.
171	Clause 5.1 of the loan deed is in the following terms:
“5. SECURITIES
5.1	In consideration of the Lender entering into this Deed, and in order to better secure the obligations of the Borrower hereunder, the Borrower hereby charges all of their present and future right, title and interest in the Property (“the Charge”) and shall, if required by the Lender;
(a)	enter into and execute a second Mortgage (incorporating Memorandum of Common Provisions AA1955) in respect of the Property; and
(b)	permit a Caveat to be lodged and registered in respect of the Property.”
172	The plaintiffs contend that by agreeing to the loan deed, Isabelle charged Unit 2 to CI as security for her debt or liability under the deed. They point to Isabelle’s pleaded admissions as to the express terms of the contract and her conduct in relation to the caveat placed on the property. They argue that Isabelle has admitted that CI advanced monies towards the acquisition of Unit 2 and that CI is entitled to a charge. They highlight that Isabelle has not, and does not, seek to discharge the caveat. 
Issue 3(b)
173	The plaintiffs submit that in accordance with the clauses of the loan deed, there has been an event of default.
174	Clause 2.3 of the loan deed states:
“2.3 Facility Period
The Facility will be available from the Advance Date and (unless otherwise agreed in writing by the Lender in its sole and absolute discretion) the Facility must repaid in full on or before the Termination Date.”
175	The termination date was defined in the schedule to the loan deed as the earliest of: the death of Isabelle, the sale of Unit 2 or any other date at the absolute discretion of CI upon giving 30 days’ notice to Isabelle. 
176	The default clause of the loan deed provides:
“6. Default
6.1 In the event that:
(a) 		the Borrower does not pay on the due date any monies payable under this Deed;
…
the Principal Sum plus Interest and any other monies payable hereunder shall at the option of the Lender become immediately due and payable by the Borrower to the Lender notwithstanding the previous delay or waiver by the Lender and the Lender can immediately act on and enforce the Securities against the Borrower including (without limitation) enforcing the Charge.”
177	On 20 August 2021, CI provided notice to Isabelle that the loan and interest under the loan deed were to be payable on 19 September 2021. Isabelle paid no monies on or before 19 September 2021 towards the loan deed. The plaintiffs contend that this constituted an event of default under the contract.
Issue 4
178	The plaintiffs rely on clause 6.1 of the contract in support of their submission that the principal sum, interest and any other monies payable under the loan deed are liable to be repaid to the plaintiffs.
Issue 5
179	The plaintiffs contend that the amount of $1,972,298.52 plus interest for the period from 27 March 2023 to judgment, at the “Higher Rate of Interest”, is the quantum of Isabelle’s liability to CI. 
180	On 24 April 2017, Isabelle’s ANZ account was opened. On 26 and 27 April Peter transferred $1.6 million from CI’s account into Isabelle’s account. A $10 fee was charged by ANZ on 24 May 2017. On 1 June, Peter withdrew $1,599,900 and deposited it into Trawalla Development’s account. 
181	On 20 June 2017, Trawalla Development confirmed receipt of the part consideration and accepted delayed settlement. The balance of the purchase price was due within 60 days.
182	On 21 April 2021, Isabelle was notified that CI had set the Lower Rate of Interest under the loan deed at 10% per annum.
183	After Isabelle failed to pay the principal sum and interest on 19 September 2021, clause 3.5 was triggered. Clause 3.5 provided that if an event of default had occurred on behalf of the borrower, then the Higher Rate of Interest would be charged on the remaining balance until the principal sum and interest were repaid in full. The Higher Rate of Interest was set out in item 3 of the schedule to the loan deed, being the RBA Personal Loans (unsecured) variable rate which was 12.62% and then later reduced to 12.57%.
184	In response to Isabelle’s submissions in relation to issues 3, 4, and 5 the plaintiffs’ submit that underpinning those submissions is a common, erroneous assumption: namely, that no monies were lent to, or payable by, Isabelle under the loan deed. 
185	They say that this is untenable considering that Isabelle has conceded that issue 1 is answered in the affirmative, that the terms of the deed are admitted, and that it is substantially admitted that CI and CI6 together have paid all acquisition costs and expenses associated with Unit 2. Overall, the plaintiffs submit that Isabelle’s arguments contain serious allegations of dishonesty and illegality that should enliven the Briginshaw principle, that such claims are unpleaded, were not put to all relevant witnesses including Peter, are misconceived and should not be entertained by the court.
186	In response to the allegations of falsified records, the plaintiffs submit that the evidence of the DAA accountants was clear and unrefuted by evidence. That evidence demonstrated that the accounts reflect actual sums provided by CI and CI6 in respect of the actual acquisition costs and expenses associated with the Unit 2 based on source documents. The monies were advanced to Isabelle, or on her behalf, and constitute a debt that is properly reflected in the accounts. 
187	In relation to the “round robin” argument, the plaintiffs argue that the uncontested evidence is that Trawalla Developments owed a loan to CI and repaid that loan. CI then advanced its own funds to Isabelle’s account, and those funds were used to pay the first tranche of the acquisition price. Moreover, Isabelle’s obligations under the deed concern the principal sum as defined in the schedule to the deed to include the initial $1.6 million that “was advanced” on 26 – 27 April 2017. The plaintiffs contend that the timing of the loan is immaterial and explained by the Group’s accountants.
188	The plaintiffs argued that the requirement in special condition 8.4 that Isabelle had to obtain independent legal advice in relation to the deed was waived. They say that the fact that the funds were advanced implies such waiver. Furthermore, the deed was drawn up by the solicitors for the family and the Group and that those solicitors conducted the conveyancing for both Trawalla Developments and Isabelle, and that Isabelle did not contact the solicitors for advice.
189	Finally, the plaintiffs contend that the allegation that the loan deed was in furtherance of an illegal purpose should be afforded no weight. They say that such allegations were not put to Peter and, to the extent they were put to the DAA accountants, were denied. They say that no evidence was adduced to establish this and that the evidence was only that capital gains tax will be payable upon sale of Unit 2, which has not yet occurred. The evidence in relation to land tax is that it is payable by the party entitled to the benefit of the property which is currently being contested.  
Isabelle’s submissions 
190	Isabelle amalgamated her response to issues 3, 4 and 5. Her answers to the issues were:
Issue 3(a) 	the Trawalla property was not charged as security;
Issue 3(b)	there has not been an Event of Default;
Issue 4 	no money was lent pursuant to the deed therefore Isabelle is not liable to pay any money to the plaintiffs; and
Issue 5	as no money was lent it follows that no money is owing and that the quantum is zero. 
191	Isabelle advanced four arguments in support of her position that no monies are payable pursuant to the loan deed. 
192	First, Isabelle sought to rely upon discrepancies between financial statements from 2018 and 2020 prepared by DAA which were signed by Brett Lethborg and Peter and the 30 June 2021 balance sheet of the Charbord Family Trust (“balance sheet”) prepared by Jessica McClelland for these proceedings.
193	The “current assets” section of the balance sheet contains a line item titled “Isabelle Szwarcbord”. For 30 June 2017, the sum noted is $1,698,200. For 30 June 2020, the sum noted is $3,922,100. 
194	Isabelle argued that when you compare these figures to the financial statements, and adjust for total payables (liabilities of CI), total receivables (assets of CI), loans to related parties (assets of CI) of the financial statements and the total current assets of the balance sheet (adjusting for accounts receivable, cash on hand and prepayments), that what is revealed is that the figures in the financial statements differ from those in the balance sheet by the exact amount of the Isabelle Szwarcbord line item (except for 2017). Isabelle contends that this suggests that the Isabelle Szwarcbord line item was inserted after the signing of the 2020 financial statement. 
195	Isaballe noted that these discrepancies were sought to be explained away by Brett Lethborg as a recording issue from the accounting software. 
196	Of particular note to the defendant’s argument was the liability ledgers of CI between 2018 to 2021 and the evidence of Jessica McClelland. Isabelle contended that between the liability ledgers and Jessica McClelland, it was demonstrated that:
(a)	the company had asset and liability ledgers; 
(b)	these ledgers had a ledger titled “Isabelle Szwarcbord”; 
(c)	it is possible to make changes and reallocations within ledgers in the accounting software Xero. These changes are referred to as a “manual journal”;
(d)	the reference number for the manual journals in the liability ledgers referring to Isabelle’s loan were #6301, #6305, #6307 and #6309. Jessica McClelland stated that these manual journals were created in 2021. These amounts were reallocated by Jessica McClelland from the loan account of Jacob to the loan account of Isabelle to suggest that the amounts in Exhibit PE were reflective of CI’s accounts and monies owing to CI from Isabelle;
(e)	the total of the reallocations made in 2021 by Jessica McClelland is $311,966.86;
(f)	Jessica McClelland reallocated from Jacob’s loan account in 2021 an amount which was said to reflect the interest and line fees paid by CI6 to the ANZ each year in respect of the $2,300,000 facility (reduced to $2,170,000 in 2018). Isabelle pointed out that this was notwithstanding the fact that Jacob’s account was never allocated amounts paid by CI6 to the ANZ in respect of any interest or line fees. Isabelle also notes that the interest and lines fees claimed by the plaintiffs had been reduced after an error in calculation by Jessica McClelland;
(g)	the manual journal #4211 recording a debt of $1,971.514.67 and attributed to Isabelle was entered into CI’s accounts in 2021 contemporaneously with the other manual journals made. This was despite conflicting evidence from Jessica McClelland that she had made manual journal #4211 at the time of the transaction “based on the journal number”;
(h)	it was put to Jessica McClelland that the opening balance of $1,698,199.60 in the Isabelle Szwarcbord line in the 2018 liability ledger was reallocated to Isabelle’s account from other accounts in the liability ledger, on the basis that it is said to be an asset within a liability ledger and there would be no reason aside from a reallocation that an asset would be in a liability ledger;
(i)	the liability ledgers for 2017 were not produced despite being subject to a subpoena; and
(j)	the balance sheet was created by Jessica McClelland on 11 November 2021 but she cannot recall who had requested that she generate it. It was suggested that it may have been Jane Clark, Brett Lethborg or a solicitor.
197	Based on the above accounting exercise and evidence, Isabelle submitted that it is more likely than not that the opening balance of Isabelle’s liability ledger (being $1,698,199.60) was reallocated to Isabelle by DAA in 2021 and was before then not recorded as a loan owing by Isabelle to CI. Isabelle argued that this demonstrated that the financial records underpinning the debt are doctored and as such Unit 2 was intended as a gift. This was evident because prior to 2021, the financial records clearly indicated that no debt was owed by Isabelle. Instead, the debt was created in 2021 from other ledgers within CI’s accounts to reduce CI’s liabilities to related parties. 
198	Secondly, in further support of her argument that the financial statements did not show that Isabelle owed a debt to CI, the defendant contended that the transfer of funds was, in effect, a “round robin” that had occurred over a year before she entered the loan deed. The alleged round robin was that:  
(a)	On 24 April 2017, an ANZ bank account was opened in Isabelle’s name. On the same day, Isabelle signed an authority that authorised Peter to operate the bank account ending in 73898. 
(b)	On 25 April 2017, Peter organised a transfer of two payments totalling $900,000 from Trawalla’s ANZ bank account into the account of CI.
(c)	On 26 April 2017, Peter organised the transfer of the $900,000 from CI’s ANZ bank account into Isabelle’s account.
(d)	On 27 April 2017, Peter organised a transfer of $700,000 from Trawalla’s bank account into the account of CI. On the same day, Peter organised the transfer of $700,000 from the account of CI to Isabelle’s account.
(e)	On 1 June 2017, Peter withdrew $1,599,900 and deposited the amount into Trawalla’s ANZ bank account. 
199	Thirdly, Isabelle highlighted that special condition 8.4(b) of the loan deed required her, as borrower, to obtain legal advice. Special condition 8.4(b) was in the following terms:
8.4 Condition Precedent
The provision of the Facility is subject to the following conditions precedent:
…
(b) 		The Borrower obtaining independent legal advice in respect of the Borrower’s obligations and completed certificates of independent legal advice provided to the Lender. 
…
The Lender has the absolute discretion to waive one or more of the above conditions precedent.
200	This special condition was not complied with as Isabelle did not obtain independent legal advice. 
201	Isabelle said that Peter was aware that Isabelle did not obtain independent legal advice and that the plaintiffs had provided no evidence that special condition 8.4 had been waived.
202	Isabelle argued that on the proper construction of the loan deed, there was no facility advanced to Isabelle pursuant to the terms of the loan deed.
203	Finally, Isabelle argued that the loan deed should not be given effect because it was for an illegal purpose. In particular, she submitted that the business practice that the Group engaged in was designed to minimise future capital gains tax and avoid land tax. If the loan deed is given effect, then this would convey Unit 2 to CI in circumstances where no land tax has been paid.
204	In response to the plaintiffs’ suggestion that Isabelle has not and does not seek to remove their caveat over Unit 2, Isabelle argued that if she is successful at trial then there will be no basis for the plaintiffs’ caveat and as a result the caveat will not be maintainable.
205	As this issue did not relate to the ANZ, the ANZ made no submissions.
Analysis
Do the contemporaneous business records show a loan?
206	It seems that a preliminary issue to determine before answering issues 3, 4 and 5 is whether the business records record a loan under the loan deed.
207	As I have noted above, Isabelle contends, in effect, that the documents evidencing the accounting history of the loan have been doctored and that the true position is that the accounts show no loan owing before 2021.
208	As I observed earlier in the judgment, a question of whether the plaintiffs or DAA “doctored” the plaintiffs’ financial records in some improper or illegitimate way is not a matter which is before the court and does not need to be authoritatively determined. It is enough for me to say that:
(a)	There seemed to be some inconsistencies in the financial statements of the Charbord Family Trust for the financial years ending 30 June 2017 to 30 June 2020 inclusive, particularly between the balance sheet created in anticipation of this litigation by DAA and the liability ledger which includes loans to related parties.
(b)	Brett Lethborg, a principal at DAA, sought to explain the situation as best he could. Unfortunately, he was overseas at the time of the trial and gave evidence remotely without full access to all the records which he needed. He said that the loan to Isabelle was initially recorded as a negative liability in the “Trade and Other Payables” line item in the 2018 financial statements. This occurred due to a recording issue in the accounting software. Lethborg said that if he could examine the entries for “Trade and Other Receivables” and “Trade and Other Payables”, they would demonstrate that the financial records included the loan to Isabelle.
(c)	There were some manual journal entries made to the financial records, the explanation for which was not clear. 
(d)	I did not doubt the credibility or reliability of the witnesses from DAA although some technical aspects of the evidence given by Lethborg and Jessica McClelland were confusing.
(e)	Even if parts of the accounting evidence were unclear or confusing, it had no significant impact on this particular issue. The evidence demonstrated plainly that CI moved money into Isabelle’s bank account at the ANZ in order for her to effect the purchase of Unit 2.
209	On 24 April 2017, Peter and Isabelle opened an account at the Toorak branch of the ANZ in the name of Isabelle Eleanore Szwarcbord. On the same day, Isabelle authorised Peter to operate the account. That authority gave Peter the ability to sign, draw, make, discount, accept or endorse cheques, bills of exchange, drafts, promissory notes, withdrawals and other instruments and to authorise periodical payments, direct debits and recurring payments. In effect, Isabelle gave Peter complete control over the account.
210	On 26 April 2017, $900,000 was transferred out of CI’s ANZ account. This money was deposited into the account in Isabelle’s name opened by Isabelle and Peter on 24 April 2017. On 27 April 2017, a further $700,000 was transferred from CI’s ANZ account to Isabelle’s. These transactions are admitted by Isabelle in her pleadings. 
211	It was from this sum that the $1,599,900 was transferred to Trawalla Developments on 1 June 2017.
212	On any view of events, the transactions occurred. Money was moved into Isabelle’s account and then moved out. 
213	These funds became a loan when, around 2 July 2018, the loan deed was signed and executed by Peter on behalf of CI and Isabelle in her own capacity. The document made express reference to the two advances made on 26 April 2017 and 27 April 2017. The monies put into Isabelle’s account were not monies owed to her or money which she had saved or had held beneficially in another account. 
214	The fact that the contemporaneous business records do not clearly record this as a loan owing by Isabelle to CI does not change the fact that money was received by Isabelle and Isabelle later signed a deed characterising those funds as a loan.
215	In conclusion, I am not convinced that, because the business records do not show a loan clearly owing, no loan was owed. The undisputed facts of the matter are that the money was placed in an account in Isabelle’s name in April 2017 and in July 2018 Isabelle signed a deed that retrospectively recognised those funds as a loan. This is an admission. Moreover, Isabelle did not dispute that she made no payment towards the purchase price or other payments in respect of Unit 2 (aside from a payment of council rates).
Was the transfer of funds a round robin?
216	Isabelle’s attempt to characterise the series of transactions around the loan of $1,600,000 as a round robin is not persuasive. The uncontested evidence from Jane Clark and Peter makes it clear that Trawalla Developments had an outstanding debt owed to CI. In late 2016 that debt exceeded $2,000,000. By the time the transfer to CI occurred, that debt has been reduced to $1,847,231.44. 
217	The transfer from Trawalla Developments to CI was the partial repayment of that debt.  
218	The fact that the funds were then lent by CI to Isabelle, and Isabelle paid those funds to Trawalla Developments has no bearing on either the nature of the transaction between Trawalla Developments and CI, or the nature of the transaction between CI and Isabelle. 
219	Even if the transaction could be construed as a round robin, without pleaded allegations of sham and fiscal nullity, it does not affect the outcome. 
220	In my opinion, the transactions cannot be construed as a round robin. An outstanding debt was paid to CI which, in turn, made funds available to Isabelle for the purpose of paying the purchase price of Unit 2.
The contractual pre-conditions
221	Special condition 8.4(b) made the provision of the $1,600,000 conditional upon Isabelle obtaining independent legal advice in relation to her obligations under the loan deed and providing proof in the form of certificates to CI. This was subject to the exception contained in the same special condition that CI had the absolute discretion to waive the requirement. The special condition was drafted to protect the interests of CI.
222	Peter believed that Isabelle had not sought legal advice in relation to the signing of the loan deed. There was no evidence led that Isabelle did seek or obtain legal advice.
223	However, there is no requirement contained in special condition 8 that the borrower must be notified that one or more of the condition precedents had been waived. The loan deed is clear in its terms: the lender had “absolute discretion” to waive any of the conditions precedent.
224	No evidence was led about whether or not the remainder of the special conditions were complied with. 
225	The fact that the loan deed was signed a significant period of time after the funds had been provided implies that CI had waived the requirement of special condition 8.4(b) by the time the loan deed was entered into. 
Illegal purpose
226	Isabelle’s final contention in relation to issues 3, 4 and 5 is that the loan deed should not be enforced because it ultimately serves an unlawful purpose namely, avoidance of land tax and capital gains tax. 
227	A contract can be unenforceable if the contract is intended to further a purpose which is illegal, unlawful or contrary to public policy. However, as outlined earlier in these reasons, the plaintiffs emphasised on several occasions that they came to court to meet the case pleaded against them. Isabelle’s pleaded case did not include allegations of illegality or unlawful contracts. In the circumstances, I will not allow such claims to be raised in final address as live issues before the court. Isabelle had ample time before trial to amend her pleadings. She did not do so, nor did she seek to include the point in the list of issues. Indeed, Isabelle amended her counterclaim after the list of issues was prepared before trial but chose not to raise the doctrine of illegal contracts and public policy.
The issues
228	The above makes clear that the four arguments advanced by Isabelle have been unconvincing. They have not proved that funds were not lent, and they have not rendered the loan deed void. Therefore, the court will rely on the evidence at trial which supports the following findings.
229	$900,000 was placed in Isabelle’s account on 26 April 2017. $700,000 was deposited into the same account the next day.
230	$1,599,900 was transferred out of Isabelle’s account to Trawalla Developments on 1 June 2017.
231	The loan deed was executed by CI and Isabelle around July 2018. Clause 2.1 of the loan deed provided that CI agreed to advance to Isabelle the principal sum and that Isabelle agreed to borrow the principal sum on or after the advance date subject to terms contained in the loan deed.
232	The principal sum was defined as the amount referred to in Item 4 of the Schedule. Item 4 of the Schedule defined the principal sum as the initial sum of $1,600,000 comprising the two amounts advanced to Isabelle on 26 and 27 April 2017 and any further amounts drawn down by Isabelle in accordance with Special Condition 8.1.
233	The advance date was defined in the loan deed as the date referred to in Item 1 of the Schedule. Item 1 defined the advance date as 26 April 2017, 27 April 2017 and in relation to any other funds advanced, the date on which those funds are advanced.
234	By operation of clause 5.1 of the loan deed, Isabelle charged her interest in the property. Clause 5.1 of the loan deed provides that as consideration for CI entering the loan deed, Isabelle was to charge all of her present and future right, title and interest in Unit 2.
235	CI gave notice on 20 August 2021 in accordance with Schedule 5 that the Termination Date was 19 September 2021. Clause 3.1 provides that the whole of the principal sum will be repaid on or before the Termination Date.
236	Clause 6.1(a) provides that an event of default occurs when the Borrower does not pay by the due date monies payable under the loan deed. Thus, default occurred when Isabelle did not pay any monies by or on 19 September 2021. 
237	Because an event of default had occurred, clause 6.1 operates so that the loan, interest and any other monies payable under the loan deed became immediately due and payable by Isabelle. 
238	I note that, although it was not pleaded or argued, I am concerned that clause 3.5 of the loan deed might be penal in nature. The borrower is obliged to pay interest at the lower rate of 10% from the advance date until the principal and interest are repaid in full. But, if the borrower commits an event of default, then the borrower is to pay the lender interest at the higher rate on the outstanding principal. This was referred to earlier as 12.57% to 12.62%. Prima facie, this clause seems to impose an additional punishment for non-observance of a contractual term in the sense that it goes beyond damages and is more in the nature of a security for, and in terrorem of, the satisfaction of the primary obligation. 
239	The answers to the issues 3, 4 and 5 are therefore:
3(a)	Yes
3(b)	Yes
4		Yes
5		the principal sum plus interest.
Issue 6: Did the 2017 Letter of Offer extend an offer, to CI6, to increase the Facilities by way of additional loan facilities, including a loan facility in the sum of $2,320,500, for the purpose of assisting with the Group’s property development and investment activities, particularly its principal debtor, CI6?
240	Isabelle admitted that she executed the 2017 offer from the ANZ which, in its terms, is said to be an offer of commercial facilities to companies within the Group. The offer includes a facility of $2,320,500 which is said to be for the purpose of assisting with the Group’s development activities. 
241	The ANZ contended that issue 6 concerned the proper construction of the bank’s 2017 letter of offer. It argued that:
(a)	the document on its face appeared to be the complete contract containing the whole of the terms of the agreement between the parties; and 
(b)	background material such as prior negotiations and draft documents were irrelevant especially when the written terms were clear and unambiguous.
The document identified the parties and the purpose of each loan facility. 
242	The ANZ submitted that issue 6 should be answered yes.
243	Isabelle admitted that she executed the 2017 offer document from the bank. The terms provided for commercial facilities to companies within the Group. Isabelle agreed the question should be answered yes.
244	In the circumstances, I find the correct answer to issue 6 is yes. 
Issue 7: Did Isabelle accede to the provision, as security for the Facilities, in particular to CI6’s indebtedness to ANZ, a first registered mortgage over Unit 2 and an individual guarantee and indemnity limited to $2,320,500 plus interest, costs, and other amounts:
(a) by signing the acceptance and acknowledgement section of the 2017 Letter of Offer from ANZ (as admitted)?
(b) by signing the 2017 Guarantee and Indemnity and the Mortgage, each in favour of ANZ (as admitted)? 
245	Isabelle accepted that:
•	she signed the 2017 letter of offer from the ANZ;
•	she signed a guarantee and indemnity in favour of the bank together with an accompanying statutory declaration; and
•	there is no dispute that she provided a registered mortgage over Unit 2 and a guarantee and indemnity limited to $2,320,500.
246	The answer to both parts of issue 7 is yes. 
Issue 8: Did Isabelle accede to the provision, as security for the Facilities, in particular to CI6’s indebtedness to ANZ, a first registered mortgage over Unit 2 and an individual guarantee and indemnity limited to $5,000,000 plus interest, costs, and other amounts:
(a) by signing the acceptance and acknowledgement section of the 2018 Letter of Offer and the 2020 Letter of Offer from ANZ (as admitted)?
(b) by signing the 2018 Guarantee and Indemnity and the 2020 Guarantee and Indemnity, each in favour of ANZ (as admitted?)
247	The evidence was clear that Isabelle signed:
•	the 2018 and 2020 letters of offer from the bank;
•	the 2018 guarantee and indemnity limited to $5 million; and
•	the 2020 guarantee and indemnity with the same limit.
248	Isabelle admitted signing this documentation including the statutory declarations forming part of the bank’s security documents for the increased lending in 2018 and the further variation in 2020.
249	On the evidence, the answer to both parts of issue 8 is yes. 
Issue 9: Did the 2020 Letter of Offer discharge the 2017 guarantee and indemnity and the 2018 guarantee and indemnity by operation of law?
250	Isabelle submitted that the 2017 and 2018 guarantees and indemnities in favour of the ANZ were discharged by operation of law when the ANZ and the Group executed the new agreement being the ANZ’s 2020 letter of offer. The underlying principle was that, where there was a variation of the agreement between the ANZ as the creditor and the borrowers as debtor which could operate to prejudice Isabelle as the surety, the surety would be released and discharged from the liability as guarantor unless the surety consented to the variation or the contract of guarantee and indemnity provided to the contrary. 
251	Isabelle also argued that the execution of the later guarantees implicitly effected a recission of the earlier guarantees. 
252	Isabelle contended that:
(a)	the 2018 facilities increased the loan funds to the debtor by $2,350,000 above the amount contemplated in the 2017 letter of offer
(b)	the 2020 facilities increased the loan funds to the debtor by $2,271,500 above the amount contemplated in the 2018 letter of offer
These changes in 2018 and 2020 were material variations to the facilities. Isabelle argued that she was not consulted about, nor did she agree to, the variations. 
253	The ANZ contended that Isabelle did not refer to this issue in opening address or during the course of the trial. It said that the language of the 2020 letter of offer made clear that it was a variation of the existing finance and security arrangements. It did not purport to replace the existing letter of offer. The bank submitted that Isabelle consented to the variation by executing the 2020 security documents.
254	In my opinion, the 2020 letter of offer discharges neither the 2017 guarantee and indemnity nor the 2018 guarantee and indemnity by operation of law. The 2017 and 2018 guarantees are in terms which are substantially, if not wholly, identical. The 2017 guarantee and indemnity signed by Isabelle contains the following terms and definitions:
“3.2 	The guarantee in this clause is a continuing obligation and extends to all of the Guaranteed Money.
Variations to Guaranteed Arrangement
3.3 	You acknowledge that any Guaranteed Arrangement may be varied or replaced from time to time.
3.4 	You confirm that the Guaranteed Money includes any amount payable under any Guaranteed Arrangement as varied or replaced. You confirm that this applies regardless of:
(a) 	how the Guaranteed Arrangement is varied or replaced;
(b) 	the reasons for the variation or replacement; or
(c) 	whether the Guaranteed Money decreases or increases or the Guaranteed Arrangement is otherwise more onerous as a result of the variation or replacement.
This clause does not affect the operation of any limit set out in the Details and does not limit clause 20.10 ("ANZ's rights are protected").
Guaranteed Arrangement means any agreement or arrangement under which the Customer has or could in the future have obligations to ANZ (or any of its related entities) which ANZ and you agree in writing is guaranteed by this guarantee and indemnity.
Without limiting this definition, it also includes: 
(a) any agreement or arrangement described as a "Guaranteed Arrangement" in the Details; and 
(b)  an agreement or arrangement which is assigned or novated to ANZ (or any of its related entities) which you have acknowledged to be a Guaranteed Arrangement.
Guaranteed Money means, subject to clauses 20.17 and 20.18 ("National Credit Code"), all money which the Customer is or may become actually or contingently liable to pay to ANZ (including interest and Costs) under a Guaranteed Arrangement.”

255	These terms are substantially the same in the 2020 guarantee and indemnity which Isabelle signed, including the declaration witnessed by Jeremy. The guarantees and indemnities which Isabelle signed were continuing obligations extending to the guaranteed monies from time to time. To that extent, each guarantee and indemnity she signed had a continuing effect even when the guaranteed arrangement was varied or replaced. Isabelle effectively agreed or consented to the variations. In the circumstances, I do not consider that signing the ANZ security documents in 2020 discharged the guarantees and indemnities given in 2017 and 2018. Accordingly, the answer to issue 9 is no.
Issue 10: Has Isabelle sought to bring all parties to the 2017 Letter of Offer, the 2018 Letter of Offer, and the 2020 Letter of Offer as parties, in her Counterclaim?
256	In her case, Isabelle seeks to invalidate the mortgage over Unit 2 and the other securities held by the ANZ. However, in doing this, she self-evidently has not joined to the proceeding all the applicable borrowers and security providers. I note that Isabelle acknowledges this. The answer to issue 10 is no.
Issue 11: Were the mortgage and guarantees and indemnities:
(a) signed by Isabelle by reason of the influence of her partner, then husband, Jeremy?
(b) signed by Isabelle by reason of the presumed or actual undue influence of Peter? If so:
(i) did ANZ have actual or constructive knowledge of such undue influence?
(ii) are they voidable and liable to be set aside?
(c) “procured” by the unconscientious dealings of ANZ, within the meaning of section 12CD of the ASIC Act, or within the meaning of the common law? If so:
(i) are they voidable and liable to be set aside, including pursuant to section 12GM of the ASIC Act, or at law?
Issue 11(a)
257	This issue concerns the position between Isabelle and the ANZ. 
258	In her closing submissions, Isabelle said there was no evidence that she signed the guarantees and indemnities as a result of Jeremy’s influence. The other parties do not engage with this issue. I agree that the answer to this issue is no.
Issue 11(b)
Isabelle’s submissions 
259	Isabelle alleges that the ANZ knew or should have known that Isabelle signed the mortgage and the guarantees and indemnities as a result of Peter’s undue influence. The guiding principles of the law regarding undue influence have been addressed earlier in relation to issue 2. For the purposes of this question, I will deal with it from the perspective of the ANZ. 
260	Isabelle relies on the four factors pleaded as giving rise to her special disadvantage: the relationship between herself and Peter; her personal characteristics; the nature of the guarantees and indemnities; and the circumstances surrounding the execution of the guarantees and indemnities.
The relationship between Peter and Isabelle
261	This aspect of the case relied upon the same matters which Isabelle invoked in connection with her execution of the loan deed: Isabelle and Peter were father and daughter; Peter was effectively Isabelle’s employer from 2011 to 2019 and determined both her wage and the distributions she received from the various family trusts; Isabelle derived a small income from work but larger distributions from the family trusts – however, the distributions were not paid to her but to Jacob’s loan account; she says she signed documents as requested by Peter without objection. 
Isabelle’s personal characteristics 
262	Isabelle said that she was born in September 1992 and was aged 24 when signing the mortgage and 2017 guarantee and indemnity. In 2016-17, she consulted a psychologist for which her parents paid. Isabelle said she was financially and emotionally dependent upon Peter. 
The nature of the guarantees and indemnities 
263	Isabelle said that the 2017 guarantee and indemnity that she signed had the following features: there was no cover letter addressed to Isabelle; the guarantee was limited to an amount of $2,320,000 although the facilities totalled $16,223,000; Isabelle was not a director or shareholder of any of the borrowers within the Group; the authorised representatives of the Group in relation to the facilities were Peter and Vanessa Jay; Jeremy witnessed Isabelle’s signature on the guarantee and indemnity; John Button, the family pharmacist witnessed Isabelle’s signature to the accompanying statutory declaration.
264	Isabelle said that the features on the 2018 guarantee and indemnity were as follows: she was not a director or shareholder of any of the borrowers; the disclosure letter was addressed to her at Unit 2 although she didn’t live there; the ANZ emailed the documents only to Peter not her; the disclosure letter said that if she did not sign the guarantee the ANZ would not provide the facility to the borrowers; the guarantee was limited to $5 million but the facilities totalled $18,573,000; the authorised representative for the Group in relation to the 2018 facilities was Vanessa Jay and she witnessed Isabelle’s signature on the 2018 guarantee and indemnity; John Button signed the statutory declaration which Isabelle made; Isabelle’s liability as guarantor increased by $2,679,500 which was the value of Unit 2 at the time; Isabelle’s liability under the 2018 guarantee and indemnity increased by $2,679,500 while the facilities increased by only $2,350,000.
265	According to Isabelle, the 2020 guarantee and indemnity exhibited the following features: Isabelle was not a director or shareholder of any of the borrowers; the authorised representatives for the 2020 facilities were Peter and Vanessa Jay; Isabelle’s guarantee was still limited to $5 million; Jeremy witnessed Isabelle’s signature on the 2020 guarantee; the pharmacist at Main Beach, Queensland witnessed the statutory declaration which Isabelle completed; the cover letter and incorporated documents were addressed to Isabelle at Unit 2 although by this time she was living in Queensland; the ANZ emailed the documents only to Peter and not her.
266	In addition, the individual guarantor disclosure letter states on its first page:
“[the Borrowers have] applied to Australia and New Zealand Banking Group Limited… for banking facilities which we understand you have agreed to guarantee”
267	The statutory declaration in support of the guarantee and indemnity provides as follows:
“2 	I have received independent legal advice and financial advice regarding the loan and security documents referred to in paragraph 1.
3 	After receiving that advice I have freely and voluntarily signed the following documents:
Individual guarantee and indemnity (Guarantee) of the Customer’s obligations to ANZ limited to $5,000,000.00 plus interest, costs and other expenses accruing under the Guarantee.”
268	A box marked “important” in the Borrower/Guarantor Declaration forming part of the 2020 guarantee and indemnity stated:
“You should only sign this declaration if the credit is wholly or predominantly for:
- business purposes, or
- investment purposes other than investment in residential property.
By signing this declaration you may lose protection under the National Credit Code.”
The circumstances of entering the guarantees and indemnities 
269	Isabelle says that she is a third party guaranteeing a transaction from which she derives no benefit. She is not a director or shareholder of any of the borrowers or corporate guarantors for the facilities. She said that there was no evidence Peter suggested she obtain legal advice in relation to signing the guarantees and indemnities. She says that as a matter of fact, she did not obtain any such advice before executing the document. 
270	She says that Peter procured her signature to the guarantees and indemnities. She signed the 2017 and 2018 guarantees at work and the 2020 guarantee at a café in Queensland. She says that Peter did not tell her it might be against her interests to sign the guarantees. 
ANZ’s submissions  
271	The ANZ denied that Isabelle signed the security documents in favour of the bank as a result of undue influence. The ANZ observed that Isabelle claimed in her evidence that the bank had failed to follow the correct procedure in taking the $5,000,000 guarantee from her – it did not request or require an independent legal advice certificate.
272	The bank had several responses to Isabelle’s argument. First, it said that Isabelle had not raised such a claim or allegation against it in her defence and counterclaim. Secondly, the unchallenged evidence of the only bank officer who was called to give evidence was that it was unnecessary to obtain such a letter or certificate from a solicitor in this context. There was no other evidence called to the contrary. Thirdly, the guarantee and indemnity which Isabelle initially gave was limited to less than the value of the property. In 2018, it increased to the value of the property. The maximum permitted loan to valuation ratio under the agreement between the ANZ and the Group was 56%. Finally, there has been no default by the Group in its obligations and the bank has not needed or attempted to enforce the security documents against Isabelle. 
273	As to the relationship between Peter and Isabelle, the ANZ was aware of this. In addition, the bank knew from its dealings with the Group and the Group’s financial records that:
•	Isabelle was an adult;
•	Isabelle worked for the Group and was employed by a Group entity;
•	Isabelle received distributions from companies and/or trusts within the Group;
•	Isabelle’s work within the Group included bookkeeping responsibilities. She was familiar with the Group’s finances;
•	Isabelle dealt regularly with the bank on behalf of the Group. The Group held her out to the ANZ as having the authority to do this work and she was in fact so authorised; and
•	Isabelle used bank transaction facilities on behalf of the Group, attended at the ANZ from time to time and met with representatives of the ANZ.
274	Thus, it was not the case that the only relevant connection between Peter, Isabelle and the bank that the ANZ was aware of was the familial connection. Isabelle’s connection with, and involvement in, the Group’s business was lengthy, hands-on, and included its financial affairs. 
275	Isabelle’s personal characteristics included the fact of her being an adult and having a daily involvement after 2011 in the business affairs of the Group. 
276	Isabelle gave evidence that she understood what a mortgage was and was aware that in 2017, she provided a mortgage over Unit 2 in favour of the ANZ. She knew this made her personally liable for money lent in relation to the property. 
277	Isabelle also understood the meaning of a guarantee. She recalled that there was a box within the 2017 guarantee and indemnity document which said that she should obtain independent legal advice and consider also obtaining independent financial advice. She accepted that she signed a statutory declaration included in the documents provided by the bank.
278	In relation to the circumstances surrounding the execution of the guarantees, as noted, Isabelle did not dispute that she signed various security documents including the mortgage and the 2017, 2018 and 2020 guarantees. The 2017 statutory declaration which she signed included the following statements:
“2. 	I have received independent legal advice and financial advice regarding the loan and security documents referred to in paragraph 1. 
3. 	After receiving that advice I have freely and voluntarily signed the following documents:
Individual guarantee and indemnity (Guarantee) of the Customer’s obligations to ANZ, limited to $3,570,000.00 $2,320,500 plus interest, costs and other expenses accruing under the Guarantee. 
I understand that a person who intentionally makes a false statement in a statutory declaration is guilty of an offence under section 11 of the Statutory Declarations Act 1959, and I believe that the statements in this declaration are true in every particular. 
279	The bank relied upon the statutory declaration when providing the facilities in 2017. Isabelle signed further statutory declarations when the facilities were varied and increased in 2018 and 2020. 
280	The ANZ also drew attention to some other authorities regarding the law of undue influence. The first case was Lin v Lin (No 2). This was a family dispute where the plaintiffs, on the grounds of undue influence and/or lack of mental capacity, challenged the validity of the first defendant’s appointment as appointor of the family trusts. They wanted to impugn the first defendant’s actions in removing and replacing the original trustees of those family trusts and in making three transfers of trust funds. The trusts were established by the father and he was the original appointor. The plaintiffs argued the appointor deeds should be set aside because the first defendant, the oldest son, exercised undue influence over the father. 
281	The trial judge examined the authorities and concluded that:
“These long-standing principles were recently re-affirmed by the High Court in Thorne v Kennedy. In essence, a donor or his or her legal personal representative will prima facie be entitled to have a transaction or gift set aside on the grounds that it was procured by undue influence in two categories of case:
(a) 	Where facts exist which positively establish that the donor made the transaction or gift as a result of actual undue influence exercised over the donor by the recipient (actual undue influence); or
(b)	Where facts exist which give rise to a presumption that the donor made the transaction or gift as a result of undue influence on the part of the recipient (presumed undue influence), unless the recipient can rebut this presumption.”
Her Honour observed that the law recognised the parent/child relationship as giving rise to the presumption of undue influence. Thus, any transaction or gift made in favour of the parent by the child will be liable to be set aside unless the parent can show that the transaction or gift did not result from undue influence. 
282	Her Honour stated that apart from the established categories, the presumption of undue influence will arise in any circumstances where:
(a)	at the time of a transaction or gift, a relationship exists between the donor and recipient of such a nature that the recipient is in a position to exercise dominion, influence or ascendancy over the donor by reason of the trust, confidence, dependency or reliance reposed by the donor in the recipient; and
(b)	the transaction is so improvident, or the gift or benefit so substantial, as not to be reasonably accounted for on the grounds of friendship, relationship, charity or other ordinary motives, nor ‘readily explicable by the relationship of the parties’.
283	The mere existence of a relationship of trust and confidence on the part of the donor and corresponding ascendency and dominion on the part of the recipient is not by itself sufficient to justify setting aside every benefit conferred. It must be shown that the influence exerted was truly undue – the impugned gift or transaction was the product of that influence so that it was not a free act by the donor.
284	The presumption can be rebutted when the recipient shows: 
(a)	the donor knew and understood what they were doing; and
(b)	the donor was acting independently without any influence arising from the ascendant position of the recipient.
285	The donor needs to be free of, or emancipated from, the influence of the recipient. Whether or not the donor was relevantly free depends upon the circumstances in each case. Courts have often placed reliance in this context on the presence or absence of improvidence and independent advice.
286	The court concluded that undue influence was unlikely to be established if:
(a)	the transaction was not so improvident as to not to be reasonably accounted for by ordinary motives but instead, readily explicable by the relationship of the parties; and
(b)	the donor understood the nature, effect and consequence of the transaction.
287	The second case was McIvor v Westpac Banking Corporation. Here, Mrs McIvor sued the bank to prevent it enforcing guarantees and a mortgage she had given to support loans made to her son. The evidence revealed that, until shortly before the litigation began, mother and son had been extremely close. The mother had absolute trust and confidence in her son in relation to commercial matters. The son, Mark, was a law graduate and gained extensive commercial experience as a solicitor before leaving the profession to conduct a money lending business. Until the relationship soured, Mark could get his mother to effectively sign any document he wanted. 
288	Before she signed the mortgage in 1995, Mrs McIvor received an explanation from a lawyer. The same happened with subsequent security documents in 2002 and 2003. Ultimately, the court found that Mrs McIvor had limited formal education, little business experience and was subject to undue influence from her son. However, it found that any presumption of undue influence had been rebutted by the provision of independent advice. While her decision to sign the security documents was affected by the trust and confidence she had in her son, and the expectation that he would continue to run a successful business, it was found that she chose to sign the documents with an appreciation of the independent advice she received about the risks and potential consequences. To that extent, she exercised a free mind and will when dealing with the security documents.
289	The judgment was clear that, if the circumstances raise a presumption of undue influence, the independent advice to the weaker party, for example the guarantor, can remove the suspicion of undue influence. Any inadequacy in the advice that was given, if not known to the bank, would not prevent it from assuming that the advice given was independent and appropriate. I observe that the judgment notes that the bank relied upon not only certificates given by solicitors that they had explained the documents to Mrs McIvor but also acknowledgements that Mrs McIvor had obtained advice from her lawyer and understood the risks associated with the transaction and her potential liability.
290	The ANZ submitted that, for several reasons, the court should find that Isabelle did not sign the various bank security documents due to actual or presumed undue influence. In particular:
•	The provision of the mortgage and guarantees was readily explicable due to the relationship of the parties.
•	Because Isabelle benefitted from the financial success of the Group, it was not an improvident transaction from her perspective.
•	In circumstances where Isabelle did not contribute anything to the purchase price of Unit 2 or contribute to the payment of the mortgage or interest or owners corporation fees or other outgoings (with the possible exception of one rate notice), the gift or benefit which Isabelle conferred in signing the mortgage and guarantees was not so substantial that it was not explained by the relationship between the parties.
•	Isabelle understood what she was doing, she knew the nature of the documents she signed and was aware of the potential consequences.
291	Further, the bank argued that it did not have actual or constructive knowledge of any undue influence:
•	Isabelle acknowledged to the ANZ that she should follow the recommendation to obtain independent legal advice. 
•	ANZ relied upon the statutory declaration Isabelle signed stating that she had obtained independent legal advice when taking the mortgage and the 2017 guarantee.
•	ANZ had no reason at the time to disbelieve or question the truth of the statutory declaration.
•	ANZ knew from its dealings with Isabelle that she worked actively in the business and had no reason to question her ability to read and understand the various security documents. 
Analysis 
292	In my opinion, issue 11(b) should be answered no. I reach this conclusion for the following reasons.
293	First, I do not consider that Peter exercised actual or presumed undue influence over Isabelle in order for her to sign the mortgage and guarantees. While Peter was Isabelle’s father and the most influential figure in the conduct of the Group’s business, Isabelle was not someone to do something she was not inclined to do, especially if it might have adverse consequences for her. In any event, it is a mistake to see the relationship between Isabelle and her parents as being one in which the parents (or one of them) was invariably in the dominant position. As noted earlier, Isabelle was clever and calculating and had considerable success in manipulating her parents to achieve the outcome she wanted. For years, Isabelle led a privileged and indulged life, largely because her parents enabled her to do so. 
294	Isabelle’s decision to sign the mortgage and various guarantees in favour of the ANZ was free and voluntary. She understood the nature of the documents she signed and was aware of the potential risks and liability this created. However, I infer from the evidence that Isabelle (quite reasonably) expected that her parents and/or the Group would protect her from any personal harm if she were sued by the bank. The understanding was the Group would pay any interest, fees and the like owing to the bank in connection with the facilities it provided. 
295	Isabelle was well aware from her upbringing and what she learned through working at the Group after 2011 what the modus operandi of the business was. She knew that the Group sold various properties as and when required to finance its broader operations and that relevant family members co-operated in this endeavour. 
296	Isabelle also appreciated that she derived substantial personal benefits from the successful operation of the Group business – including subsidised or no cost living arrangements, holidays, a car, clothes and the like. She was also aware that, in relation to Unit 2, she paid nothing towards the purchase price, the mortgage, the interest payments to the bank, the owners corporation fees or the costs of acquisition. She claims to have paid one instalment of rates due on the property. That seems to have been her sole financial outlay in relation to Unit 2. 
297	Secondly, the evidence did not establish that any influence Peter may have had was undue. From Isabelle’s perspective, the provision of the mortgage and guarantees was not improvident. It was readily accounted for due to ordinary motives, namely, helping out in a family business where Isabelle incurred minimal personal costs and derived substantial economic benefits. 
298	Thirdly, the bank’s dealings with Isabelle meant that it knew she held roles in the Group’s business from around 2011 to 2018, including bookkeeping responsibilities. She had dealings with the bank on behalf of the Group and dealt with a variety of tasks in the Group’s finances. She was familiar with the finances and attended to MYOB entries, compiling invoices for drawdowns and payments, writing cheques, banking cheques and performing electronic funds transfers. She also attended meetings with bank personnel. 
299	Fourthly, Isabelle signed three statutory declarations for the ANZ in which she acknowledged that:
•	she was a guarantor in relation to facilities made available to entities within the Group;
•	she had received independent legal advice and financial advice regarding the loan and security documents;
•	after receiving that advice, she had freely and voluntarily signed the individual guarantee and indemnity; 
•	she understood that a person who intentionally made a false statement in a statutory declaration was guilty of an offence under section 11 of the Statutory Declarations Act 1959 (Cth); and
•	she believed the statements in the declarations were true in every particular 
300	The bank was entitled to, and did in fact, rely upon the statutory declarations in agreeing to make facilities available to members of the Group and accepting the proffered security documents. David Foran was the relationship manager responsible for the relationship between the Group and the institutional property group within the bank. This division of the bank for which Foran worked was separate from the ANZ retail bank and private bank. It had its own processes and procedures which were different from those adopted by other divisions within the bank. When considering an application by a client, the institutional property group examined the transaction through the lens of an institutional property transaction. The institutional property group did its own assessment of the transaction regardless of earlier interactions or discussions between the client and other divisions of the bank. 
301	Foran said that the institutional property group essentially did asset based lending so that it examined the portfolio of assets proffered as security to check two things:
(a)	whether the borrower could service the interest on the loan; and
(b)	whether the borrower could repay the principal on the loan.
302	In this case the loan provided by the ANZ was to finance the purchase of an Officeworks building in North Lakes, Queensland. The bank was not relying on Isabelle to service any part of the loan. It wanted Unit 2 as collateral security for the loan. Foran said that in these types of scenarios, the bank did not ordinarily require a solicitor’s letter about independent advice in addition to the statutory declaration from the security provider. Indeed, there has been no default under the ANZ loan and the ANZ is not seeking to enforce any security against Isabelle. 
303	Finally, the ANZ was unaware that Isabelle did not obtain independent legal advice before signing the mortgage and guarantees. In the same way that a financier is entitled to assume that a solicitor who provides a solicitor’s certificate has given appropriate professional advice to a borrower or guarantor (unless the financier knows this not to be true), the bank here should be allowed to rely upon the statutory declarations signed by Isabelle. This outcome is consistent with principle provided, as here, the bank had no actual or constructive notice that the statutory declaration was false. 
Issue 11(c)
304	Isabelle referred to the issue of unconscionability as relied upon in her claim against the plaintiffs. This issue is divided as follows:
(a)	Isabelle’s material in relation to general law unconscionability.
(b)	Isabelle’s material in relation to statutory unconscionability.
(c)	the ANZ’s material in relation to unconscionability.
(d)	consideration of the issues.
Isabelle’s submissions on general law unconscionability 
305	Isabelle argued that the facts set out at paragraphs 36 – 42 of her revised closing submissions justified a finding that the guarantees should be declared void for general law unconscionability. In short, the factors she relied upon were those summarised in paragraphs 93 – 108 regarding the four pleaded matters which she said vitiated the loan deed. 
306	Isabelle contended that:
(a)	she was under a special disability when executing the 2017, 2018 and 2020 guarantees;
(b)	the ANZ knew of Isabelle’s special disability and unconscientiously took advantage of her because the ANZ knew and “would be taken to have known” that:
•	the guarantees were procured by Peter’s undue influence;
•	Isabelle was in a position of special disadvantage in relation to the execution of the guarantee as a result of the following matters that  the bank knew:
-	Isabelle’s age;
-	Peter and Isabelle were father and daughter;
-	Isabelle’s gross income from working in the Group was $5,400 per annum;
-	the bank was corresponding with Peter and/or his agents about the mortgage and the guarantees;
-	Isabelle was not a director or shareholder of any company within the Group; and
-	Isabelle was a high-risk guarantor – her personal benefit should be tested with independent legal and financial advice.
Isabelle’s submissions on statutory unconscionability
307	Isabelle argued that the concept of statutory unconscionability under section 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”) was broader and more flexible than under section 12CA. It was not constrained by concepts of unconscionability as developed by equity. 
308	Section 12CB of the ASIC Act provides as follows:
	(1)	A person must not, in trade or commerce, in connection with:
(a)	 the supply or possible supply of financial services to a person; or
(b)	the acquisition or possible acquisition of financial services from a person;
engage in conduct that is, in all the circumstances, unconscionable.
(2)	This section does not apply to conduct that is engaged in only because the person engaging in the conduct:
(a) 	institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or
(b) 	refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.
(3)	For the purpose of determining whether a person has contravened subsection (1):
(a) 	the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b) 	the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.
	(4)	It is the intention of the Parliament that:
(a) 	this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and
(b) 	this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and
(c) 	in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:
			(i) 	the terms of the contract; and
(ii) 	the manner in which and the extent to which the contract is carried out;
and is not limited to consideration of the circumstances relating to formation of the contract.
309	Section 12CA of the ASIC Act is in the following terms:
(1)	A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.
(2)	This section does not apply to conduct that is prohibited by section 12CB.
310	Isabelle argued that the bar for unconscionability under section 12CB was lower than that developed in equity. She argued that the values establishing and informing the standard of conscience for the purposes of section 12CB are honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made.
311	In terms of facts, Isabelle relied upon the characteristics of her relationship with her father, the nature of the guarantees and the circumstances prevailing at the time of entering into the guarantees. 
312	Isabelle relied upon aspects of section 12CC, namely, subparagraphs 1(a) and 1(c) which provide that, for the purposes of section 12CB, the court may have regard to factors such as the relative strengths of the parties’ bargaining positions and whether the documents could be readily understood.
The ANZ’s submissions on unconscionability 
313	The ANZ dealt with the legal principles, briefly noting a few salient points: 
•	for conduct to be unconscionable, it must involve some deliberate, or at least reckless, wrongdoing.
•	wilful blindness is sufficiently reckless to constitute unconscionability. 
•	the conduct must reflect a high level of moral obloquy.
•	the range of conduct covered is broad and includes trickery, taking advantage of another’s vulnerability, lack of understanding and misleading conduct. 
314	Based on comments made in McIvor v Westpac Banking Corporation, the bank also submitted that if a creditor knows a surety has received independent advice from a third-party, it would not be unconscionable for the creditor to enforce the transaction against the surety, even though the surety is a volunteer and later claims to have been mistaken. A creditor’s conduct will not be unconscionable if the creditor reasonably supposed that the guarantor had an adequate comprehension of the obligations being undertaken or assumed and understood the effect of the transaction, that is, the fact and extent of possible liability and the potential consequence of default by a principal debtor.
315	Before a court can invoke either the general law or statute to provide relief from unconscionable conduct, a party must show a disability or disadvantage whereby their ability to make a judgment in their own best interests was compromised. It is not sufficient that a transaction was unfair or unreasonable. To be unconscionable, there must be a degree of moral taint which merits the description unethical.
316	Broadly, ANZ relied upon the same facts as it did regarding the undue influence allegations. It contended that the evidence did not show that the security documents were procured by unconscionable conduct on the part of the ANZ. It referred back to material covered in paragraphs 290 – 291.
317	The ANZ also referred to additional matters:
•	although she agreed that, in order to prove unconscionable conduct by the ANZ, Isabelle had to show she had a special disability or special disadvantage, she did not establish such disadvantage.
•	Isabelle was familiar with the Group’s finances.
•	she understood what a mortgage and guarantee was.
•	she understood the warning or suggestion in the bank documents to seek independent legal advice. 
•	she understood the terms of the statutory declaration.
•	she realised that the security documents created the risk of personal liability.
318	Crucially, the ANZ argued that Isabelle did not allege or lead evidence that the bank engaged in deliberate wrongdoing, or took advantage of her vulnerability or disadvantage, or that the bank engaged in misleading conduct or trickery.
Analysis 
319	The concept of unconscionable conduct at general law broadly involves a relationship which places one party “A” at a special disadvantage with another party “B”; B having knowledge of the special disadvantage afflicting A; and B unconscionably exploiting that special disadvantage.
320	These considerations are not separate elements like the components of a cause of action in tort. A court of equity is to take a comprehensive view of all the relevant circumstances to arrive at a determination as to the real justice of the case. 
321	As previously noted, the existence of a special disadvantage requires a state of affairs where the ability of the innocent party to make a judgment in their own best interests is seriously affected. This could be a factor in the non-exhaustive list which Fullagar J described in Blomley v Ryan or it could be something else or a combination of factors. Each case depends on its own facts. 
322	Sackar J in Axis Bank v Gujarat NRE India Pty Ltd usefully examined some leading authorities on the operation of section 12CB of the ASIC Act which sets out the statutory law regarding unconscionability. The basic principles established by the case law are:
•	Section 12CC sets out factors to which the court may have regard in deciding whether section 12CB has been contravened. The court is guided, but not controlled, by the factors listed.
•	The court must consider all the circumstances of a case to reach a conclusion about unconscionability.
•	The conduct of a financier in obtaining a guarantee supporting an advance of money falls within the supply or acquisition of financial services within section 12CB of the ASIC Act. Conduct relating to enforcing the guarantee is also caught by that Act.
•	The statutory prohibition on unconscionable conduct is not confined to conduct regarded as unconscionable at general law. It is more broad ranging that the unwritten law.
•	To be unconscionable within the ASIC Act, the conduct must be a clear departure from accepted community standards. It should be so far outside societal norms of acceptable communal behaviour that it deserves condemnation as conduct which is offensive to conscience.
323	From one perspective, the detail of the legal principles is not especially important because, on any view of the facts, Isabelle’s case on this issue cannot succeed. I find that:
(a)	Isabelle did not suffer from a special disadvantage;
(b)	if Isabelle had a special disadvantage, the bank did not know of it;
(c)	even if Isabelle had a special disadvantage and the ANZ knew of it, the ANZ did not unconscionably exploit that disadvantage. 
324	Earlier in this judgment, I have explained why Isabelle did not suffer from a special disadvantage. The reference to the provisions of the ASIC Act does not change this. 
325	To say that Isabelle had markedly less power than the ANZ in relation to the guarantee is a truism which does not advance Isabelle’s case to any marked degree. Plainly, the bank is a powerful institution and Isabelle is not. However, the bank was seeking the collateral security of Unit 2 only because it was increasing the Group’s facilities to cover the purchase of the building in Queensland. The bank was not abusing its power or acting in a reprehensible manner. It was seeking only to strengthen its security because the extent of its advances to the Group was increasing. 
326	Isabelle made some submissions which I find troubling. She said that the ANZ breached its own internal requirements by failing to ensure Isabelle had obtained independent legal advice and financial advice in circumstances where the bank sent the security documents to the borrower to obtain her signature. She also argued that by signing the guarantees, Isabelle risked losing what the ANZ knew was her property. Finally, she said that the ANZ did not follow the procedure it had decided was appropriate. 
327	Isabelle’s submissions did not identify, and I could not find, the internal requirements of the ANZ institutional property group which required Isabelle to obtain independent legal and financial advice. In fact, this assertion about the need for advice, which I inferred was intimately connected with obtaining a certificate from a solicitor, was directly contrary to the evidence given by the bank officer David Foran whom Isabelle called as a witness. 
328	Similarly, Isabelle’s submission did not identify, and I could not find, specific evidence of the appropriate procedure which the institutional property group had apparently determined. The defendant’s submissions on this point seem to lack a proper factual basis. 
329	Isabelle says that she was put in a difficult position whereby she could not read and consider the documents before signing them. I do not accept this. I do not believe her when she says that Peter told her not to worry about seeking advice about the documents. It is apparent from Jessica’s evidence that she took the time to seek legal advice regarding Rushall Crescent. I find that it is more likely that Isabelle was not concerned about signing the documents. She knew how the Group operated and understood the nature of the security documents she was signing. In those circumstances, I doubt that a solicitor could have given her any important information of which she was not already aware. That being so, it was unlikely that independent legal advice would have influenced her actions. 
330	Contrary to Isabelle’s assertion, sending the documents to Peter for execution was not an unfair tactic. Isabelle’s argument assumes that Peter was the ascendant one in the relationship with Isabelle and he could use his influence to have her execute documents which she would not otherwise sign. In my view, the evidence does not support or make good these arguments. 
331	There is no allegation that ANZ used unfair tactics on Isabelle or pressured her to sign the security documents. Nor, importantly, was there any allegation that Peter acted as the bank’s agent. 
332	If Isabelle did have a special disadvantage (which I reject), there was no compelling evidence that the bank knew of it. Further, the bank did not take any improper advantage of Isabelle and her situation. 
333	Accordingly, the answer to issue 11(c) is no and therefore the answer to issue 11(c)(i) is also no.
Issue 12: If (as is admitted by Isabelle) the statutory declarations signed by Isabelle on 28 July 2017, 21 December 2018 and 10 July 2020 (in respect of the 2017 Letter of Offer, the 2017 guarantee and indemnity, the 2018 Letter of Offer, the 2018 guarantee and indemnity, the 2020 Letter of Offer, and the 2020 guarantee and indemnity) contain untrue statements:
(a) is ANZ entitled to:
(i) declaratory relief, that Isabelle made false statutory declarations in support of the 2017 guarantee and indemnity, the 2018 guarantee and indemnity, and the 2020 guarantee and indemnity?
(ii) an order that Isabelle indemnify all ANZ’s losses arising from false statutory declarations made by Isabelle, and its costs of this proceeding on a full indemnity basis, pursuant to clause 12.4 of the 2017 guarantee and indemnity, the 2018 guarantee and indemnity, and the 2020 guarantee and indemnity?
(b) alternatively, does Isabelle have no liability to ANZ (such that ANZ is not entitled to the relief sought in its counterclaim), by reason of any finding that:
(i) each of the 2017 guarantee and indemnity, the 2018 guarantee and indemnity, and the 2020 guarantee and indemnity are void or voidable by reason of undue influence and/or unconscionable conduct (see question 11, above)?
(ii) the 2020 Letter of Offer discharged the 2017 guarantee and indemnity and the 2018 guarantee and indemnity (question 9, above)?
334	I have discussed the statutory declarations in dealing with issue 11. I am satisfied that each of the three statutory declarations contain false statements. For example, each of them says that Isabelle received independent legal advice before signing. In the circumstances, I find that the ANZ is entitled to the declarations sought. Isabelle accepted in her reply submissions that if the guarantees were not set aside, then clause 12.4 would apply.
335	In relation to issue 12(b), the 2020 offer did not discharge the 2017 or 2018 guarantee. Nor were any of the 2017, 2018 or 2020 guarantees and indemnities rendered void or voidable due to undue influence or unconscionable conduct. 
336	Accordingly, the answer to issue 12(a) is yes and the answer to issue 12(b) is no.
Issue 13: With respect to Unit 2:
(a) have CI and CI6 paid all expenses, including the purchase price, owners corporation fees, council rate, and interest and bank fees relating to the Trawalla Loan?
(b) has Isabelle made no contributions to the purchase price, interest, fees or other expenses relating to Unit 2?
Plaintiffs’ submissions 
337	The plaintiffs’ submit that the evidence at trial overwhelmingly demonstrated that together CI and CI6 have paid all acquisition costs and expenses in relation to Unit 2. 
338	They point to documentation showing the payment of the acquisition costs and expenses to an amount of approximately $4 million. They argue that the documentation has been identified as accurate and tendered. In particular, the documentation is said to support a finding that:
(a)	CI paid the deposit to Trawalla Developments on 24 March 2016;
(b)	CI advanced the remainder of the deposit and first tranche of acquisition funds being a total of $1,599,990. They say that CI paid stamp duty, titles registration, owners corporation fees and rates in relation to Unit 2;
(c)	 CI6 advanced the balance of the purchase price being $1,971,514.76. This was obtained via the CI6 loan with ANZ;
(d)	Since August 2017, CI has paid all owners corporation fees and council rates. CI6 has paid all interest and banking fees in relation to the loan with ANZ
339	The plaintiffs highlight that Isabelle claims only to have made one rates payment regarding Unit 2. That is the extent of the payments from her own resources. As for the rates Isabelle claims to have paid, they highlight that the payment was allegedly made in October of 2021 and only came after the dispute between Isabelle and the plaintiffs had arisen. 
340	They emphasise that this payment was allegedly made by Jeremy and that Isabelle produced no documentary evidence to show that the payment was made.
341	In response to Isabelle’s submission that it is unclear who paid the remainder of the expenses related to Unit 2, the plaintiffs argue that this submission was not pleaded, runs contrary to her own submissions and that the documentary evidence demonstrates that CI and CI6 together have paid and continue to pay all expenses related to Unit 2.
Isabelle’s submissions
342	The first tranche of the Unit 2 purchase price was provided by CI to Isabelle. 
343	Isabelle conceded that the $1.97 million due to Trawalla Developments to settle the balance of the purchase price was paid by CI6. Isabelle also admitted that interest on that amount has been paid by CI6. In her submissions, Isabelle also conceded that she made no contributions to the purchase price or expenses. 
344	Isabelle contested whether the plaintiffs have proved whether the remainder of the costs and expenses (ie. any expenditure in relation to the property except for the purchase price and interest on the loan from the ANZ) were paid by CI or CI6. 
345	She also disputed whether the documentary evidence could be described as having “overwhelmingly demonstrated” that CI and CI6 have paid all costs in relation to Unit 2.
346	As this issue did not relate to the ANZ, it made no submissions on this point.
Analysis
347	Isabelle conceded in her written submissions that the answer to issue 13(a), insofar as it concerns the purchase price, would be yes. Similarly, Isabelle conceded issue 13(b) would be answered in the affirmative.
348	The primary dispute between the parties on this issue is whether CI and CI6 have together paid all expenses other than the purchase price.
349	The documentary evidence reveals that Isabelle’s contentions on this aspect of the case are not persuasive.
350	A receipt from Tisher Liner, the solicitors acting for Trawalla Developments, confirms that the initial deposit of $10,000 was paid by CI to Trawalla Developments on 24 March 2016. 
351	On 1 June 2017, Tisher Liner sent Isabelle a letter requesting $90,321 and $3,715.60 to satisfy stamp duty and land titles office registration fees respectively.
352	An email dated 23 June 2017 from Julie Thermos, a solicitor working for Tisher Liner, to Vanessa Jay requested the amounts of $5,983.50 being legal fees for both vendor ($2,250.50) and purchaser ($1,820.50) and owners corporations fees ($1,912.50). On 27 June 2017, Vanessa Jay replied attaching a bank confirmation for the amounts requested. Vanessa Jay noted that she was awaiting a copy of the invoice to cover the purchaser’s legal fees.
353	A Payment Detail Report from the ANZ shows that a transfer of $94,036.60 on 27 June 2017.  The debit account is stated to be ‘CHARBORD INVESTM’. The originator of the transaction is ‘CHARBORD INVESTMENTS PTY LTD’. The beneficiary of the transaction is ‘Tisher Liner FC Law Trust Account’. This corresponds with the amount requested from Isabelle by Tisher Liner to satisfy stamp duty and land titles office registration fees. 
354	A separate ANZ Payment Detail Report with the same date shows a further transfer of $4,163. This Payment Detail Report has the same debit account, originator and beneficiary. Noted on the report is a handwritten calculation. The calculation notes: 
“$2250.50 vendor acct. 
$1912.50 owners corp
__________________
$4163.00”
I infer from this note that the $4,163 payment comprised two figures – the vendor’s legal fees owed to Tisher Liner and the owners corporation fees.
355	Accounts from Tisher Liner evidence that the amount of $90,321 and $3,715.60 were paid to the State Revenue Office and Land Titles Office respectively in satisfaction of stamp duty and land titles registration fees on 20 July 2017. On 21 July 2017, an amount of $1,912.50 was paid by Tisher Liner to the owners corporation.
356	I find that, as a result of this documentary evidence, CI paid the legal fees for both purchaser and vendor, the owners corporation fees, stamp duty and land titles registration fees in respect of the purchase of Unit 2.
357	The plaintiffs tendered Exhibit PD during the trial. This exhibit was a spreadsheet compiling payments made by CI and CI6 in relation to Unit 2. It was prepared by Brett Lethborg. No issue was taken with the document by any party when it was tendered. Exhibit PD helpfully summarised the voluminous documentary evidence about the fees and interest in relation to Unit 2.
358	Exhibit PD shows that between 26 April 2017 and 31 January 2023, CI (as trustee for Charbord Family Trust) paid a total of $1,791,025.50 towards fees and expenses related to Unit 2. Of that amount, $1.6 million was the two advances made pursuant to the loan deed. The remaining $191,025.50 was in payment of, inter alia, the fees noted above, owners corporation fees, utilities (including gas, water and electricity) and council rates. 
359	The exhibit also shows the amount that CI6 (as trustee for Charbord Family Trust No 6) has expended towards the property. Between 21 August 2017 and 29 July 2022 CI6 spent $2,308,630.30. Of this figure, $1,971,514.67 was the balance of the purchase price for the property and the remaining $337,115.63 was interest and fees related to the ANZ loan. 
360	Isabelle gave evidence that she and Jeremy paid two council rates. She was unaware of which two years. Isabelle could recall receiving a council rate statement but not receiving a receipt. Jeremy claimed that they had paid at least two, but between Isabelle and himself they might have paid up to three or four council rates. As I have made clear earlier in my reasons I have little faith in the evidence of both Isabelle and Jeremy. However, the defendant did produce a document dated 13 October 2021 which showed a payment to the City of Stonnington for $5,897.38. Accordingly, I find that the defendant did pay one rates notice in this amount. 
361	I find that, in relation to the expenses other than the purchase price, CI and CI6 have paid all costs associated with the property bar one council rates notice. Considering that in submissions Isabelle conceded that she had not paid any expenses or fees related to Unit 2, I find that this does not substantially alter the answer to this issue.  
362	Both parts of issue 13 are answered yes.
14. If Questions 6, 7(b), 11(b)-(c), 13, above, are answered in the affirmative:
(a) would it be unconscionable for Isabelle to deny the proprietary rights and interests of CI and CI6 in Unit 2?
(b) has there been a subrogation in equity of Isabelle’s rights and interest in Unit 2?
363	I have so far found that the ANZ provided a letter of offer to CI6 to increase its facilities in 2017.
364	I have also found that Isabelle agreed to provide the mortgage and 2017 guarantee and indemnity by signing them.
365	I have, however, found that the 2017 guarantee and indemnity was not procured because of the presumed or actual undue influence of Peter over Isabelle. I have also found that the ANZ had no actual or constructive knowledge of such alleged undue influence. I have not set aside the 2017 guarantee and indemnity or the mortgage.
366	I have also found that the mortgage and the 2017 guarantee and indemnity were not procured by the unconscientious dealings of the ANZ within the meaning of section 12CD of the ASIC Act or at general law. I have not found them to be voidable or liable to be set aside.
367	Finally, as noted above, I have found that in substance CI and CI6 have paid all expenses and related costs, including the purchase price, for Unit 2.
368	Therefore, as the prerequisite findings for this issue have not been made, the issue need not be answered.
369	I accept that, if I am wrong about one or more of my existing findings, it is possible that issue 14(a) may need to be decided. However, such an exercise would require analysis of multiple permutations of factual findings involving more than one party to the proceeding. Given the circumstances, I do not consider there to be any utility in trying to grapple with this question. 
370	Moreover, the legal basis of the unconscionability alleged in issue 14(a) is unclear. However, given my findings, I consider it likely, in any circumstances, that it would be unconscionable for Isabelle to deny the plaintiffs an interest in Unit 2. 
371	If I were required to answer the question of whether there has been subrogation in equity of Isabelle’s rights and interest in Unit 2, I would hold that no subrogation has occurred. My reasons for so finding follow.
372	Isabelle is a guarantor of the loan between the ANZ and the Group. The borrowers are Constructions, Charbord Investments No 3, CI6 and Quater. In addition to the borrowers, the security providers are CI, Charbord Investments No 2, Peter and Isabelle.
373	The borrower of the particular loan facility used to satisfy the balance of the purchase price is CI6. The purpose of the facility is “to assist with the Group’s property development and investment activities”. 
374	The money was deposited into the account of CI. On 21 August 2019 the funds were transferred from CI to CI6. CI6 then paid the balance of the purchase price of $1,971,514.76 on 22 August 2019 to Trawalla Developments.
375	Subrogation occurs when a surety to a loan pays off the loan and then steps into the shoes of the original creditor. For example, A borrows money from B. A gives B a mortgage and C provides a guarantee for the loan. C, as guarantor, then pays B, the lender, the total of the loan owed by A. Subrogation operates in this situation to place C in the same shoes as B in regard to A and grants C the security given in B’s favour.
376	This is clearly not what has happened on the facts here. The funds were deposited with CI. CI then transferred the funds to CI6 and CI6 paid Trawalla Developments the balance.
377	Isabelle has only borrowed money from CI. This debt has not been paid off by anyone. In fact, CI is seeking to enforce the loan deed in this proceeding. Subrogation cannot have occurred in relation to it.
378	CI6 has paid off the debt that it, as well as other entities in the Group, owed to ANZ. The signed document that evidences the facility itself does not characterise Isabelle as a borrower. Isabelle did not owe this debt, she merely acted as a guarantor. 
379	I would therefore have found that the principles of subrogation do not apply.
Issue 15: Did Peter, Jacob and Isabelle enter into an agreement, arrangement or understanding, alternatively a joint relationship or endeavour, to partner in the acquisition of Unit 2, for and on behalf of the Szwarcbord Development Group (Acquisition Agreement)?
Plaintiffs’ submissions 
380	The plaintiffs contend that in 2015, Peter, Jacob and Isabelle entered into the Acquisition Agreement.
381	They allege that the terms of the Acquisition Agreement were that:
(a)	the Purchase Price and all outgoings in respect of Unit 2 would be paid by entities within the Group, in particular by CI and CI6;
(b)	all administration in respect of acquisition and outgoings for Unit 2 would be handled by the Group;
(c)	Jacob would be the designated registered proprietor and reside in Unit 2 for a period of time;
(d)	alternatively to sub-paragraph (c) above, and in the event that Jacob did not reside in Unit 2, Isabelle would be the designated registered proprietor;
(e)	as and when required by the Group, the designated registered proprietor would consent to the sale of Unit 2, the discharge of any encumbrances, and the return of any profits of such sale to the Group.
382	In support of their contention, the plaintiffs first point to the Groups’ long established business practice as evidence that there was a history of similar acquisition agreements existing.
383	The benefit of the business practice was said to be that it assisted in generating pre-sales (and thereby attracting other purchasers) and possibly limited eventual capital gains tax (if the family member whose name the property was in lived in the property as their primary residence). 
384	The plaintiffs argue that the purchase of Unit 2 was consistent with the business practice of the Group. 
385	The plaintiffs further submit that all directors of Trawalla Developments and the Group’s accountants were aware, both prior to and following execution of the contract of sale, that Unit 2 was to be purchased in the name of a family member. The exact family member was to be determined before settlement.
Isabelle’s submissions
386	For her part, Isabelle submits that there is no evidence establishing that the agreement was formed in 2015. She says that the Acquisition Agreement requires evidence in regards to each of the three persons alleged to have been party to it. She says that the opinion evidence of the Group’s accountants is not evidence of the existence of the agreement.
387	Secondly, Isabelle argues that the elements of the alleged Acquisition Agreement did not occur. In particular, that Isabelle was to become registered proprietor if Jacob did not reside in Unit 2. Isabelle submits that what actually occurred, in light of the facts, is that she became registered proprietor and Jacob resided in Unit 2. 
388	Thirdly, Isabelle draws attention to the fact that the plaintiffs have, without authority or clarification, alleged a range of different legal relationships. She points out that these descriptions are legally distinct and would have different legal consequences, requiring different facts and different legal elements.
389	Next, she submits that if such an agreement did exist, to be effective in creating an interest in land it must satisfy section 53(1) of the Property Law Act 1958 (Vic).
390	Fourthly, Isabelle contends that the Acquisition Agreement was said to have been formed in 2015. This is two years before the dates of the contemporaneous documents (defined below at paragraph 439). She says that even if the Acquisition Agreement did exist, it was subsequently superseded by the written intention evidenced by the contemporaneous documents. 
391	Because this issue did not affect the ANZ, it made no submissions on this point.
Analysis
392	Because this issue falls under the broad heading of “Common Intention Constructive Trust” I infer that the plaintiffs ultimately contend that if the relationship existed, whatever the nature of it, it gave rise to a common intention constructive trust. The existence of a common intention constructive trust will be dealt with below. 
393	The Acquisition Agreement requires an agreement, arrangement or understanding or some joint endeavour between the parties. Broadly, there must be a level of mutual understanding and knowledge, a meeting of minds, even if the formalities of a contractual agreement are not satisfied. The upshot is that the parties join together to pursue an objective of mutual benefit. 
394	It is alleged that the Acquisition Agreement was formed in 2015. The only contemporaneous document appears to be the contract of sale for Unit 2 dated 30 October 2015 which states that the purchaser is Jacob Szwarcbord and/or Isabelle Szwarcbord and/or nominee. This description is consistent with the idea of the Acquisition Agreement and the signing of such a document. In terms of oral evidence, only Peter and Isabelle gave evidence at the trial. Jacob was not called. He is aged 101, lives in an aged care home and suffers from advanced dementia. 
395	Peter said that he had a conversation with Isabelle about whose name Unit 2 was to be placed in – whether it was to be in Jacob’s name, Isabelle’s name or, as a last resort, Peter’s name. Peter said that he provided a copy of the contract to Isabelle, discussed it with her and gave her time to read it. Peter says that Isabelle had no questions about signing the contract.
396	Isabelle gave evidence that at the time she signed the contract of sale, she was informed that the sale was for the purpose of “inheritance tax”. Isabelle denied that she was aware of the family practice of acquiring units in developments for the purposes of presale and potential capital gains tax benefits. Isabelle said she was not told that Unit 2 was to be subject to the same arrangements as applied with other members of the family. In light of my assessment of Isabelle as a witness, I am unwilling to accept this evidence. 
397	She also stated that her belief at the time was that the Rushall Crescent property was a gift to her sister. This cannot be reconciled with Marika’s evidence that the Rushall Crescent property had never been described as a gift.
398	As foreshadowed earlier in this judgment, I prefer the evidence of Peter and Marika to that of Isabelle to the extent that she disagrees with them on the matters referred to in paragraphs 395 – 397 above. I accept Peter’s evidence and also find that Isabelle was not told that the Rushall Crescent property was a gift to Jessica. Further, Isabelle’s denial about the business practice is simply not credible. She lived through the experience growing up and then worked in the family business from 2011 for about 7 years. She is too intelligent and perceptive not to have understood the basic nature of the family business and the business practice. 
399	There is clearly a demonstrated history of the business practice taking place. In about 1999, the family began the purchase and development of 7 Grange Road, Toorak. This property was bought off the plan and placed in Marika’s name. The family sold the property in 2004. The proceeds went into the Group funds and were then used to purchase 20 Springfield Avenue, Toorak. Once that property was built, Peter and his family moved into apartment 2, 20 Springfield Avenue, Toorak. The family later moved into Kilsyth Avenue, Toorak. The property on Kilsyth Avenue was held in Marika’s name. It was sold, and the funds were reinvested in the Group. Subsequently, the family moved into Douglas Street, Toorak in 2008/2009.
400	Marika, Ms Clark and Ms McClelland all gave evidence about the existence of the business practice. 
401	In circumstances where:
(a)	the family business practice was a longstanding feature of the Group’s business activities; 
(b)	Isabelle grew up in the Szwarcbord family and moved house on several occasions due to the implementation of the business practice; 
(c)	Isabelle later worked in the family business for an extended period. This work included bookkeeping, looking after the accounts and dealing with trades, DAA and the ANZ; and 
(d)	Isabelle signed the contract of sale for Unit 2
I find that Isabelle was aware of the business practice and that there was a mutual understanding or arrangement formed between the parties in 2015 to the effect that Unit 2 was bought as part of the business practice which the family historically engaged in.
402	I accept that, as events evolved, not all the terms of the Acquisition Agreement came to pass. Nonetheless, the agreement was made even if it were not later implemented fully in accordance with its terms. 
403	I will deal briefly with the remainder of Isabelle’s arguments on this point. Because I have inferred that whatever the nature of the arrangement, the plaintiffs only seek a common intention constructive trust, section 53 of the Property Law Act is inapplicable. The section does not affect the creation or operation of resulting, implied or constructive trusts. 
404	The documents that Isabelle contends supersede the Acquisition Agreement have no bearing on this issue. This issue addresses whether it was formed, not whether it continued after 2017. I will address this argument further below. 
405	In summary, I conclude from the weight of the evidence that the Acquisition Agreement was formed in 2015. Accordingly, issue 15 is answered yes.
Issue 16: If question 13, above, is answered in the affirmative, were the terms of the Acquisition Agreement as set out in paragraph 7 of the Statement of Claim? 
406	I have found that the Acquisition Agreement was formed. This issue requires a separate but related determination of the terms of that Acquisition Agreement. I have outlined the terms above at paragraph 381. 
407	The plaintiffs’ argue each of the alleged terms of the Acquisition Agreement was performed except for the last term. Moreover, they submit that the loan deed sits comfortably within and alongside the terms and that there was precedent for such an arrangement – they point to the Rushall Crescent property in support of this contention.
408	Isabelle contends first that there are no terms of the Acquisition Agreement because the Acquisition Agreement did not exist. In the alternative, Isabelle relies on her submissions in relation to issue 15.
409	Because this issue is not material to the ANZ, the ANZ made no submissions in regard to it.
410	In summary, for broadly the same reasons as expressed above relating to issue 15, I find that the terms of the Acquisition Agreement were those set out by the plaintiffs. The direct evidence was of limited value. However, the circumstances were such that, on the balance of probabilities, the terms were as set out in paragraph 381. Terms (a), (b) and (e) were crucial while the others were less important. It appears that terms (c) and (d) were overtaken by events. Jacob refused to live in the retirement village style of accommodation which Peter and his brother had chosen, it was decided that he could live at Unit 2. The relevant documentation about Unit 2 was completed on the basis that Isabelle would be the owner, effectively on behalf of the Group. 
17. If questions 11, 13 and 14, above, are answered in the affirmative:
(a) does CI and/or CI6 have an equitable interest in Unit 2? If so:
(i) would allowing Isabelle to remain in possession of, and to retain the proceeds of sale in respect of, Unit 2 be unconscionable, alternatively, constitute equitable fraud?
(b) is Isabelle estopped from claiming any equitable interest in, or impeding the sale of, Unit 2?
(c) does Isabelle hold Unit 2 on constructive trust for CI and/or CI6?
(d) by reason of the matters pleaded at paragraphs 96 to 98 of the plaintiffs’ defence to counterclaim, would it be unconscionable and against the interests of equity for any relief, including declaratory relief, to be granted in favour of Isabelle?
411	As a preliminary note to this issue I do not understand the relevance of issue 11. I have found that the mortgage and the guarantees were not a result of any undue influence, unconscionability or unconscientious dealings.
412	If issue 11 were answered in the affirmative, then one or more of the following findings would have been made. 
•	The mortgage and the guarantees would have been:
•	signed as a result of the undue influence of Jeremy;
•	signed as a result of the presumed or actual undue influence of Peter. The ANZ would have been found to have had actual or constructive knowledge of this undue influence. As such, they would be voidable and liable to be set aside; and
•	procured by the unconscientious dealings of the ANZ within the meaning of s 12CD of the ASIC Act or within the meaning of the common law. As such, they would have been voidable and liable to be aside.
413	The ultimate effect of issue 11 is to set aside the mortgage and guarantees.
414	It is unclear to me how the setting aside of the mortgage and guarantees between Isabelle and the ANZ impacts upon whether or not CI or CI6 has an equitable interest in Unit 2.
415	I have answered issue 13 in the affirmative. I found that CI and CI6 have paid all expenses including the purchase price in relation to Unit 2 (except for one council rates notice).
416	This question also has as a prerequisite that I have answered issue 14 in the affirmative. Issue 14 also rests upon the assumption that parts of issue 11 were answered in the affirmative. I have declined to make a finding in relation to issue 14 because I answered issue 11 negatively. 
417	If I had answered issue 14 in the affirmative, the findings would have been made:
•	that it is unconscionable to deny CI and CI6 a proprietary interest in Unit 2; and
•	there has been a subrogation in equity of Isabelle’s rights and interests in Unit 2 in favour of CI6.
418	I will proceed on the basis that neither issue 11 nor issue 14 is a necessary prerequisite to deciding issue 17.
419	As a further preliminary note, both the plaintiffs and Isabelle replied to issue 17 as a whole with only cursory attention paid to the specifics of each sub-issue. I will first recount the parties’ submissions on issue 17 and then consider each sub-issue in turn.
Plaintiffs’ submissions
420	The plaintiffs submitted that between CI and CI6, they had in effect paid all acquisition and holding costs associated with Unit 2 and that Isabelle knew that she had not contributed to these costs.
421	They moreover stress that Isabelle has not expressed any dominion over or taken any steps prior to litigation to claim any interest in Unit 2.
422	The plaintiffs submit that it is open to the court to find that:
(a)	Isabelle holds Unit 2 on constructive trust for CI and CI6 until the debts are discharged;
(b)	it would be unconscionable for Isabelle to deny CI and CI6’s interests in Unit 2. It would also be unconscionable for Isabelle to remain in possession of Unit 2 and retain the proceeds of any sale of the property;
(c)	as a result of the Acquisition Agreement, Isabelle is estopped from claiming an equitable interest in Unit 2 and impeding the sale of Unit 2.
423	In oral submissions, the plaintiffs stated that the alleged trust could be either a constructive or resulting trust.
424	Finally, they submit that where real property has been paid for entirely by way of funds advanced to the purchaser and secured by a charge or obtained from a third party in respect of which a mortgage has been placed on title, the party advancing such funds and servicing such mortgage has equitable claims to both the property and the mortgage.
425	The plaintiffs submit that each sub-issue should be answered in the affirmative. 
426	In reply to Isabelle’s arguments, the plaintiffs contend that Isabelle has sought to recast her gift, gift intention and presumption of advancement claims as matters that go to the issue of whether a constructive trust in favour of the plaintiffs exists. They stress that this is unpleaded and suffers from the same difficulties that have made the claims of gift and presumption of advancement untenable.
427	In particular, they highlight that the pleaded case shows that the presumption of advancement operates between Peter and Isabelle with respect to the payment of funds in relation to the purchase of Unit 2. They argue that Isabelle’s submissions attempt to recast the alleged advancement as the transfer of Unit 2 itself.
428	They also argue that the presumption of advancement cannot arise where the property said to be subject of a gift did not belong to the donor and therefore could not be gifted. They emphasise that Unit 2 and the funds used to acquire Unit 2 did not belong to Peter, citing the maxim nemo dat quod non habet. 
429	CI and CI6 were each corporate trustees of discretionary trusts which were governed by a deed. Both CI and CI6 were bound to act in the interests of the beneficiaries of the trusts of which they were trustees – this included Peter and Isabelle, but also a range of other people. 
430	The plaintiffs emphasise that the alter ego claims advanced by Isabelle are unpleaded and would fail in any event. They say that Peter could not convert trust assets of Charbord Family Trust and Charbord Family Trust No 6 and treat them as his own without breaching the duties he owed as a director to CI and CI6. Moreover, Isabelle produced no authority for the proposition that a daughter receiving trust funds from a corporate trustee of which her father is a controlling mind are presumed to be by way of a gift.
431	They say that if intention is to be considered, then it is to be determined at the point of time of the transfer.
432	The plaintiffs point to an email sent by Isabelle two years prior to the litigation that is said to reveal that the intention at the time of transfer was that it would not be a gift. They say that the evidence of Isabelle reveals that this was a gift that did not happen and that Isabelle now complains that such an intention was expressed by Peter, she relied on it and now expects Peter to deliver on such an intention. The plaintiffs again stress that this was not pleaded and, if it were, would fail because no property was held by Peter in his name and it would be impossible for him to gift Unit 2 or the funds used to acquire it because it belonged to the trusts for which Trawalla Developments, CI or CI6 were trustees. 
Isabelle’s submissions
433	Isabelle makes six major submissions in relation to the existence or otherwise of a constructive trust over Unit 2 in favour of the plaintiffs:
(a)	the criteria to establish a constructive trust have not been met;
(b)	the constructive trust would effect an illegal purpose;
(c)	the financial statements of CI and CI6 show no debt owing by Isabelle to them;
(d)	equitable relief is discretionary and will not come to the aid of a party involved in an illegal purpose; 
(e)	the plaintiffs have not made out their clean hands argument;
(f)	the presumption of advancement applies.
Constructive trust criterion is not met
434	Isabelle’s first submission is that the legal requirements for a constructive trust have not been met by the plaintiffs. 
435	Isabelle cites McMillan J in Nagi v Hussein for the principles applicable to whether or not a court will construe a constructive trust. In that case, McMillan J cited her previous decision of Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc, and stated that:  
“The Court will construe a common intention constructive trust where:
(a)	there is an actual or inferred common intention of the parties as to their beneficial interest in a property;
(b) 	there has been detrimental reliance on that common intention by the claimant; and
(c) 	it would be an equitable fraud on the claimant to deny his or her interest in the property.  
The party asserting a beneficial interest against the legal owner bears the onus of proving such a trust. Before making an order for the plaintiff, the Court must be satisfied on the balance of probabilities that the plaintiff’s case is made out on the evidence. 
The common intention between the parties requires that the claimant should have been intended to have some form of beneficial interest in the property. Intention can be established through the parties’ express statements and conduct, such as financial contributions to acquiring property, payment of mortgages and comments regarding ownership of property. The intention will usually form at the commencement of the purchase of property or transfer of it, but can also arise after the acquisition of property. The inquiry is one of fact; the Court is concerned with determining the actual intentions of the parties rather than imposing what might be considered fair.”
	And:
“The final element of the test is that it would be a fraud on the claimant if their interest were denied. This has also been treated as a requirement of unconscionability, and has invited parallels with the law of proprietary estoppel.”
436	Isabelle then noted that the Queensland Court of Appeal had applied McMillan J’s description from Imam Ali Centre v Imam Ali Centre Inc in King v Fister and said further that:
 “Constructive trusts are often viewed as either “institutional constructive trusts” or “remedial constructive trusts”. An institutional constructive trust is one where the facts give rise to a proprietary interest in the property in question. It arises at the point in time when the relevant facts which establish the trust happen. A remedial constructive trust is, as its name suggests, one imposed by way of remedy in order to do equity. It is a trust imposed by the court and arises at the time of the making of the order.”
437	First, Isabelle submits that there must be actual or inferred intention of the parties that Unit 2 is to be held on trust and that this must be established by the plaintiffs.
438	Isabelle highlights that, prior to the transfer, there was a range of documented events which indicate the intention of Peter and Isabelle. She first points to the visit and inspection of the Capitol Grand building, and Isabelle’s evidence that within a short period of time after the visit Peter told her that he would give her an apartment in Trawalla Development. After this, a meeting was held at the office of DAA in early March 2016. The minutes of this meeting state: “Isabelle will take Szwarcbord apartment at Trawalla”. Moreover, in the lead up to the transfer, Isabelle made particular alterations to the design of the property.
439	The documents contemporary to the transaction (collectively, “the contemporaneous documents”) are said to show the actual intention of the parties, namely, that Isabelle was to own Unit 2 in fee simple. These documents were prepared by Tisher Liner. The number and uniformity of the contemporaneous documents is said to be emphasised by the fact that Peter is commercially sophisticated, a professional property developer and had his solicitors act for him in the transfer. Isabelle also highlights that the contemporaneous documents were then issued to third parties (such as the council and the State Revenue Office) with the intent that those third parties would rely on the documents.
440	Isabelle claimed that ANZ understood before the transfer that Unit 2 was Isabelle’s property. This knowledge stemmed from Peter via his agents.
441	Peter created a Foxtel and electricity account in Isabelle’s name but Isabelle submits that she never paid the outgoings. She says outgoing payments  were made from Jacob’s account before being reallocated to Isabelle in 2021. She contends that the evidence shows that CI paid the maintenance and associated expenses of Unit 2 and that there is no evidence suggesting that it was the intention of the parties that Isabelle reimburse CI. Moreover, she says the usual course is that the occupant, being Jacob, be liable to pay amounts for utilities and other consumables.
442	These submissions are said to be consistent with the argument that Jacob was accommodated in Unit 2 by Peter with Isabelle’s consent, that Isabelle was not asked to, and did not, pay any expenses related to Unit 2. She submits that, as registered proprietor, she would have been entitled to rent from 2017.
443	Isabelle then submits that because the contemporaneous documents do not show that Unit 2 is held on trust, that there could have been no detrimental reliance.
444	Finally, Isabelle submits that if the first two requirements of a constructive trust are met, there could be no equitable fraud by Isabelle failing to pay CI and CI6 the monies relating to the transfer and outgoings – in particular, because the transfer occurred according to the design and intention of Peter and the financial statements of CI and CI6 do not show a loan owning. 
Illegal purpose
445	The alleged illegal purpose has been discussed above in relation to the loan deed. Isabelle’s second submission is that the court will not allow its processes to be used by a litigant to benefit its own illegal conduct. In support of this proposition, Isabelle cites Nelson v Nelson, Carantinos v Magafas, Smith v Jenkins and In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (“Earth Civil Australia”).
446	Isabelle quotes a passage from Ward CJ in Eq. from Earth Civil Australia:
“Had I found that a Quistclose trust was created (as the AKA Parties contend), I would have held that it failed due to illegality. I am satisfied that the evidence establishes that, if such a trust was created, then it was created with the purpose of avoiding tax obligations and that this was central to the purpose of the trust (if not, then, as the AKA Parties have noted in their submissions in other contexts, the funds could have simply been directly transferred between the AKA entities without the need to involve Bluemine). I find, similarly to the finding in Holdcroft (see at [30]), that if the AKA trust was indeed created, then it was have been “a vehicle, not of lawful tax minimisation, but of deception and actual tax evasion”. The evidence in the present case leads to this conclusion and does not provide an alternative interpretation of the purpose of such a trust. I would have therefore found, as a matter of public policy, that the trust must fail, as upholding it would involve the court in serious illegal conduct with consequences on other citizens and institutions. In those circumstances it is not necessary to consider the submissions based on unclean hands.”
447	Isabelle submits that the business practice of the Group as relied upon by the plaintiffs is said to avoid land tax and capital gains tax. The practice has been discussed earlier in this judgment. In circumstances where property is held on trust, land tax is payable annually and capital gains tax is payable, if at all, upon sale.
448	Isabelle says that the effect of the business practice is that the Group would falsely represent to the State Revenue Office, amongst others, that properties were the principal place of residence of an individual and thereby avoid land tax. Similarly, the Group would represent to the ATO upon sale of a property that the main residence exemption applies when it does not. The business practice is said to be a long-standing practice of the Group to engage in unlawful tax avoidance against both state and federal tax authorities.
449	In relation to Unit 2, the State Revenue Office has been notified that Unit 2 is held by Isabelle in fee simple as her principal place of residence. No land tax has been paid since its transfer to Isabelle. If it had been held on trust for CI or CI6, land tax would have been payable by the entity entitled to the benefit of the property.
450	Likewise, for a capital gains tax exemption to apply, the claimant needs to be a person and absolutely entitled to the property. The property must be the main residence of the person and the person must reside in the property. If Unit 2 was truly held on trust, then capital gains tax would be payable upon sale. It is contended that if the court declares that the benefit of Unit 2 subsists in CI or CI6 pursuant to a trust or charge, then upon sale, if a profit is made no capital gains tax will be payable.
451	Ultimately, Isabelle submits that if the court grants the relief sought by CI or CI6 by way of trust or charge (in line with the loan deed), then those entities will have avoided tax liabilities. The court will have been made party to the plaintiffs’ scheme to engage in unlawful tax avoidance. 
Financial statements show no loan
452	The discussion of CI’s financial statements has occurred above. Isabelle submits that like the financial statements of CI, the financial statements of CI6 for 2018 do not record a loan being owed to CI6 from any other related entity.
453	There is no basis for the imposition of a constructive trust in favour of either CI or CI6 because equity would not grant relief to parties in respect of monies which are not shown as owing to those parties in their signed financial statements.
Equitable relief is discretionary
454	Equitable relief is discretionary and will not come to the aid of a party involved in an illegal purpose. Isabelle stresses that there is no cause for the conscience of the court to be invoked in favour of the plaintiffs because the plaintiffs, corporations controlled by a sophisticated businessman, effected the scheme with intention and the assistance of solicitors.
455	If the constructive trust is declared, it will exist from the time of the events in question – therefore, the court is being asked to declare a state of affairs at the time of transfer that Isabelle says are directly opposed to the state affairs as intended by the plaintiffs. 
Clean hands
456	Isabelle argued the doctrine of clean hands has no applicability to her and therefore issue 17(iv) should be answered in the negative. She says that the plaintiffs have not established any fact demonstrating any unclean hands on her behalf. 
457	She cited the decision of Davies J in King v Lynpete Australia Pty Ltd, where her Honour quoted from Buchanan JA’s decision in Anaconda Nickel Ltd v Edensor Nominees Pty Ltd. In that case, Buchanan JA referred to Attwood v Small where Loud Brougham said:
“… that general fraudulent conduct signifies nothing; that general dishonesty of purpose signifies nothing; that attempts to overreach go for nothing; that an intention in design to deceive may go for nothing, unless all this dishonesty of purpose, all this fraud, all this intention and design, can be connected with the particular transaction, and not only connected with the particular transaction, but must be made to be the very ground upon which the transaction took place, and must have given rise to this contract.”
Buchanan JA also stated:
“In the present case the equity sued upon arose from the assumption induced in the respondents by Anaconda that it would complete the purchase of the shares. Its promise to do so was not induced by any anterior wrongdoing on the part of the respondents. The variation agreement was directed, not to Anaconda, but to the bondholders. Further, even if the variation agreement was brought into existence with the aim of deceit, in fact no deceit was practised. The unmeritorious conduct now relied upon by Anaconda did not bear the requisite necessary relation to the equity sued for by the respondents to found refusal of relief.”
458	Isabelle submitted that there is no necessary nexus between the evidence established at trial and the equitable relief she seeks, namely, a declaration that the loan deed be set aside or that otherwise no monies are owing pursuant to the loan deed and a declaration that the mortgage and guarantees be set aside.
Presumption of advancement
459	As part of her counterclaim, Isabelle relied upon the equitable doctrine of the presumption of advancement to combat the creation of a resulting trust. She began by citing relevant legal principles including:
•	where a parent buys a property or otherwise provides purchase funds for a property to a child, equity will presume that any purchase of contribution was intended to be a gift such that the legal and equitable estates remain where they lie;
•	that the presumption of advancement applies from father to child and the rationale is based in the prima facie likelihood that a beneficial interest is intended in situations to which the presumption has been applied; 
•	that the question of intention is one of fact and concerns the intention manifested by the person or persons who contributed funds to the property;
•	it makes no difference to the operation of the presumption of advancement that the child was an adult at the time the property was acquired;
•	it makes no difference that the child has independent means;
•	the onus falls on the parent to displace the presumption when it arises in respect of transfers to children;
•	to rebut the presumption of a resulting trust, a party must adduce evidence that permits the court to find facts and circumstances that showed an objective intention of the participants to establish a trust;
•	the presumption can only be rebutted by the intention at the time of the transfer;
•	where a transfer of property from a parent to a child occurs to minimise or circumvent tax obligations, this will be used as evidence against the presumption of a resulting trust by reason that the parent’s objective cannot be achieved without vesting both the legal and beneficial interest in the transferred property in the child;
460	Ultimately, Isabelle submits that because Peter is her father, the presumption of advancement applies and the presumption has not been rebutted by any objective evidence.
461	In response to the plaintiffs’ submissions, Isabelle submitted that the registered proprietor of a property does not need to exercise dominion over a property and that the contemporaneous documents have been ignored by the plaintiffs.
462	ANZ made no submissions in relation to issue 17.
Analysis
Issue 17(a)(i)
463	The individual consideration of equitable fraud by Isabelle as against the plaintiffs was not considered by the parties in the revised written closing submissions. As previously noted in this judgment, I infer that this means the point is no longer pressed.
Issue 17(b)
464	The question of whether Isabelle is estopped from denying the plaintiffs an interest in the property, which was pleaded by the plaintiffs, was largely ignored by both parties in oral address and the revised closing submissions. No submissions were made directly on the point. The plaintiffs did not specify which species of estoppel they contend is relevant.
465	As no species of estoppel was pleaded or specified, I need not answer this issue. However, I will briefly address what I regard as the most pertinent species of estoppel, equitable estoppel. 
466	Brennan J’s formulation of the principles of equitable estoppel as stated in Walton Stores (Interstate) Ltd v Maher still stands as a leading formulation of the Australian law:
“it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.”
467	It is clear that Peter expected that Isabelle would sell the property and pass the proceeds of sale back to CI and CI6 when required. Also clear is that, because of the Acquisition Agreement, Isabelle was aware of this and knew that Peter was aware of this. Isabelle did not tell Peter at any point before CI6 paid the funds that she did not intend to comply with the Acquisition Agreement.
468	CI6 then paid the funds towards the balance of the purchase price in reliance on this expectation and Isabelle was aware of what was occurring.
469	If the property is not sold and part of the proceeds returned to CI6, then CI6 will suffer a detriment – namely, the loss of the $1.97 million spent in paying for the purchase of Unit 2.
470	Finally, Isabelle has failed to avoid CI6 suffering that detriment by complying with the plaintiffs’ request to sell the property and return the proceeds when asked and in compliance with the Acquisition Agreement.
471	Therefore, I find that an equitable estoppel would exist so as to prevent Isabelle from declining to sell the property in accordance with the Acquisition Agreement. In short, Isabelle repudiated the underlying basis of the business practice by insisting that she is the legal and beneficial owner of Unit 2 and was entitled to deal with the property as she alone saw fit. 
Issue 17(c)
472	McMillan J’s statement of principles applicable to the creation of a common intention constructive trust have been endorsed by the Queensland Court of Appeal and cited by the Victorian Court of Appeal. 
473	The existence of the Acquisition Agreement has provided the necessary intention on behalf of Peter, acting in his capacity as controlling mind of CI and CI6, and Isabelle that the beneficial interest of the property was to lie with the Group. 
474	The Acquisition Agreement was the basis for the entire arrangement. It was an established practice of the Group and provided the Group, including Isabelle, many benefits. It gave the family a home to live in, gave the development they were working on greater publicity through pre-sales, and provided the scope for tax benefits. 
475	As I have made clear throughout these reasons, I prefer the evidence of Peter, Marika and others over the evidence of Isabelle. Isabelle’s evidence has been selective and self-serving. Her denial of the business practice, and the existence of the Acquisition Agreement, is no exception. 
476	The Acquisition Agreement was, until the rupture in relations between Peter and Isabelle, in the process of being executed. The Group had, in effect, provided all funds for the property. CI had transferred to Isabelle the first tranche of the acquisition price and CI6 had paid the second. CI had attended to the administration and related expenses and CI6 had paid the interest on the bank loan needed to satisfy the balance of the property. Isabelle acknowledges that she has, in effect paid nothing towards the property. The status quo, leading up to the transaction, was that it was the intention of the parties that the beneficial interest of the property vested in the Group.
477	The contemporaneous records and documents relied upon by Isabelle do not reveal an alternative intention. 
478	Much has been made by Isabelle of the visit to the Capitol Grand apartment building in March 2016. A $5,000 deposit was paid. She stated that after this visit, Peter made clear that he thought the price of an apartment in the building was too high and that she should instead take Unit 2. 
479	Peter’s recollection of this event contrasts with Isabelle’s account. He stated that he had only been asked to visit the property, that he expressed no interest in its acquisition and was not involved in, and had not authorised, the payment of monies to reserve a property. He said that he had “stepped off an aeroplane from Canada and … [was] asked to go and attend an appointment that [Isabelle and Jeremy] had arranged”.
480	Marika described the visit to Capitol Grand as a “non-event” – that all Peter had told Isabelle and Jeremy was that the property was not worth the asking price.
481	I agree that the visit to Capitol Grand was not a significant event. It does not establish any intention on behalf of either party that the beneficial interest of a different property would lie with Isabelle.
482	A meeting was held at the offices of DAA on 9 March 2016. The minutes record a plan that, if Jacob’s accommodation in the supported living arrangements did not go ahead, Isabelle would take Unit 2. The evidence of Jane Clark and Jessica McClelland, both of whom attended the meeting and took notes, makes clear that the property was to be placed in Isabelle’s name for the benefit of the family – not as a gift. 
483	I am not convinced that Isabelle’s adjustments to the internal design of Unit 2 indicate that she was meant to have ownership of the property. At the time these design decisions were made, Isabelle was the design co-ordinator of the Group and the adjustments were only made with Peter’s approval. The changes do not indicate an intention that the unit was to belong legally and beneficially to Isabelle. For what it is worth, many of Isabelle’s alterations were later changed or delayed when Jacob moved into the property and had the unit adjusted to his needs.
484	I am not satisfied that the contemporaneous documents show an intention that CI6 was to have no interest in Unit 2. Although they are largely uniform, outwardly presenting to third parties that Isabelle held the property in fee simple, this was a necessary requirement if the business practice was to succeed in minimising taxes. It is that context in which these documents were prepared. That they do so reinforces the underlying business practice and supports the idea that Isabelle was to pay the funds back to CI6 eventually. I do not find that they sufficiently counter the intention of Peter, as controller of CI6, that when the funds were transferred, CI6 would have a beneficial interest in Unit 2. 
485	ANZ’s understanding as to the ownership of the property only extends as far as the legal ownership of Unit 2. Ultimately, Isabelle was the registered proprietor. She had the legal interest in the property. When contacting the bank for further lending, the legal position would be the position represented. This does not change the intention between Peter and Isabelle at the point of the transfer.  
486	Isabelle also argued that there was no evidence that the outgoings were to be paid by Isabelle. I accept this. That the outgoings were paid by CI and CI6 together provides further evidence in support of the Acquisition Agreement and further evidence of the intention of the parties – CI and CI6 acted upon the intention that they had a beneficial interest in the property and paid effectively all related expenses. 
487	Isabelle also submitted that it is consistent with her case that she did not pay the outgoings because Jacob lived in the property. She says that she would have ordinarily been entitled to approximately $94,000 per year in rent. It is also equally consistent with the plaintiffs’ case that Unit 2’s beneficial ownership was to lie with the Group. Jacob was the founding patriarch of the Group. It makes sense that Peter, as his son and manager for the Group, would provide for Jacob’s expenses.
488	This is sufficient evidence for me to infer an intention that the beneficial interest in the property was to lie with the Group – not with Isabelle. 
489	None of the documents or events that Isabelle has relied upon sufficiently displace the intention as demonstrated from the existence of the Acquisition Agreement that the beneficial interest in Unit 2 was to remain with the Group. CI6 paid a sizable amount towards the property to settle the purchase price, CI maintained all costs related to the property and CI6 paid the interest on the loan. These acts are substantial. This is sufficient evidence to justify a finding that the intent of the parties was that the beneficial interest lie with the Group.
490	As is clear from the preceding paragraph, the plaintiffs have detrimentally relied upon the common intention between Isabelle and Peter. Significant funds have been expended by CI and CI6 on the basis that beneficial ownership of Unit 2 would lie with the Group.
491	The final requirement outlined by McMillan J was that it would be equitable fraud against the plaintiffs to deny their interest in Unit 2. Because of the above reasons, I find that it would be a fraud against the plaintiffs to deny them the beneficial ownership of the property.
492	I find that the criteria for a common intention constructive trust are met.
493	It has been established earlier in these reasons that the plaintiffs emphasised that they came to the court to meet the case as pleaded by Isabelle in her defence and counterclaim. Isabelle has not pleaded illegal purpose at any point, and it only arose during the course of the trial. Because it was not pleaded, I will not engage with it in great detail.
494	I have addressed the financial statements of CI above. The absence of a loan in the CI6 statements is not determinative. The evidence clearly demonstrates that CI6 paid the balance of the purchase price and that CI and CI6 have in substance paid the remainder of the expenses associated with Unit 2. 
495	I find that the discretion reserved to me in equity will be best exercised by aligning the beneficial interest in Unit 2 with the intention of the parties at the time of the transfer. 
496	The question of equity and discretion is relevant also to the question raised by the documents filed at the State Revenue Office indicating Isabelle is the beneficial owner. As mentioned earlier, the fundamental intent underlying the operation of the Group business and the implementation of the business practice is that the interests of the Group are paramount and the interests of individual family members are subservient. Hence, it was never legitimate for Isabelle to claim the beneficial ownership of Unit 2. 
497	I accept that the State Revenue Office documents created the impression that Isabelle was the beneficial owner. Plainly in view of my findings, this cannot stand and the plaintiffs must take appropriate steps to rectify the situation. As to capital gains tax, no questions arise until Unit 2 is sold. However, I expect the Group to deal with the taxation authorities on the basis that Isabelle held the property on trust and not beneficially. Notwithstanding these comments regarding the State Revenue Office and the Australian Taxation Office, I do not accept that there is any proper basis to say the business practice is inherently illegitimate or unlawful. That being so it is, in my view, not appropriate to refuse the plaintiffs relief on public policy grounds. Equity is flexible and the interests of justice are best served by granting the plaintiffs relief but requiring them to address these other matters which have arisen during the trial. 
498	The plaintiffs in their amended reply and defence to counterclaim pleaded that Isabelle did not come to the court with clean hands. However, this was not pressed in the plaintiffs’ oral or revised written closing submissions and I infer that the plaintiffs do not press this point. 
499	As a final note, it should be made clear that the plaintiffs only pleaded a limited trust relationship between Isabelle and the plaintiffs. In particular, they only addressed the creation of a constructive trust in favour of the plaintiffs over Unit 2. In oral submissions, counsel for the plaintiffs slightly altered the position to include resulting trusts. However, counsel did not address the issue in any detail. Because the creation of a resulting trust is not pleaded by the plaintiffs, nor addressed in the revised written submissions, I will assume that the plaintiffs did not press this issue. Isabelle in her counterclaim and in submissions did press the presumption of advancement. The presumption of advancement only operates to rebut or prevent the presumption of a resulting trust. 
500	In the circumstances, I will not address in detail the creation or existence of a resulting trust or of the presumption of advancement.
501	Briefly, I would say the following. The presumption of a resulting trust arises in favour of a party when that party transfers property into another’s name for no consideration or that party purchases property in the name of another. The equitable interest arises at the moment of transfer. This presumption can be rebutted by the presumption of advancement.  
502	The presumption of advancement applies when the transfer occurs in the context of certain relationships where equity recognises that the benefit to one party was to be at the cost of the other. The relationship of parent and child is one such recognised relationship.
503	The presumption can be rebutted by evidence of contrary intention from the parties. 
504	As discussed earlier in these reasons, the existence of the Acquisition Agreement, and Isabelle’s knowledge of the Acquisition Agreement, as well as the broader business practice of the Group, support the conclusion that there was an intention that Isabelle would not receive the beneficial as well as the legal interest in Unit 2. 
505	When CI6 and CI transferred the funds to effect the purchase of Unit 2, the intention was not that Isabelle would receive a gift of that money. Instead, the funds were transferred to complete the purchase of the property in Isabelle’s name so that she would be the registered proprietor and the Group would receive the corresponding benefits as outlined earlier in these reasons. 
506	If I had to decide this issue, these reasons would be sufficient for me to find that the necessary intention existed at the time of the transfer to rebut the presumption of advancement. Therefore, I would have found that the property is held on a resulting trust for CI6.
Issue 17(d)
507	The plaintiffs did not pursue this issue at trial. Because they are the parties who might benefit from an answer, I shall not further discuss the question. 
Conclusion
508	For the above reasons, the answers to issue 17 are:
(a)(i) 		Not applicable 
(b) 		Not applicable 
(c) 		Yes
(d) 		Not applicable 
Issue 18: Did Peter and Marika (not a party) state to Isabelle, in or about March 2016, that they wished and intended to give her Unit 2 as a gift and would pay all costs and expenses associated with Unit 2?
509	This issue is resolved by deciding whose evidence to accept. 
510	Isabelle contends that this issue should be answered yes but gives no reasons for this conclusion. She says that the question “is not relevant to determining the issues in this case”.
511	Isabelle alleges that Marika and Peter between August 2014 and February 2016 told her that they wished and intended to buy a property for her and to cover all the costs and expenses associated with the purchase. She also alleges that in March 2016, Marika and Peter said to Isabelle that they wished to give her Unit 2 as a gift and that they would cover all payments for, and costs associated with, that gift.
512	Isabelle later alleged that due to the relationship between Peter and herself, the presumption of advancement operated so that the equitable interest in Unit 2 was the same as the legal title and the funds paid for the purchase of Unit 2 were paid pursuant to the gift intention which Marika and Peter had expressed. 
513	Isabelle seeks a declaration against CI, CI6 and Peter that the transfer to her of Unit 2 was by way of gift. 
514	In her evidence, Isabelle acknowledged that:
•	CI and CI6 did not gift her Unit 2;
•	Peter did not hold property in his own name and could not gift Unit 2 to her;
•	Trawalla Developments and its unit holders did not gift her Unit 2.
515	The plaintiffs say the pleaded allegation of gift and presumption of advancement must fail. Peter and Marika deny saying to Isabelle that they would gift her a property. Additionally, Marika was not a party to the litigation and could not be bound. 
516	The evidence at trial indicated that before Jacob refused to move into a retirement village, the plan was for Isabelle to be able to live at Unit 2 until such time as the Group wished to sell the property in accordance with its usual practice. 
517	Apart from the fact that I prefer the evidence of her parents about the alleged gift to that of Isabelle, I note that Isabelle said that there was no conversation with her parents about the gift of Unit 2 before March 2016. Also, Isabelle did not say to Jessica, the bank, the accountants or people working at the Trawalla Avenue property that her parents intended that she have Unit 2 as a gift. Between August 2017 and 17 January 2020 neither Isabelle nor Jeremy said to Peter words to the effect of “Where’s our property?” or that Unit 2 was gifted to Isabelle. They made no demand during that time for the return of Unit 2. Indeed, even after Jacob left the unit, Isabelle did not claim it or seek to live in it until the litigation was imminent.
518	To the extent that Isabelle relied upon changing a number of the specifications at Unit 2 as evidence of her receiving Unit 2 as a gift, I observe that, at the time, Isabelle worked for the Group as the design coordinator. She had design responsibilities and was in a position to suggest changes to a unit. Such changes were to be approved by Peter. 
519	In short, I find that there is no persuasive evidence that Unit 2 was gifted to Isabelle.
Conclusion
520	In general terms, I find for the reasons set out that the plaintiffs have succeeded in the major aspects of their claim. Isabelle has failed in her attempt to allege that she is the beneficial owner of Unit 2. She was always aware that Unit 2 was part of the family business and never belonged to her beneficially whether as a gift or otherwise. To the extent that some documents filed with the State Revenue Office suggested that she was the beneficial owner of Unit 2, they were incorrect. The plaintiffs will need to take prompt remedial action to file amended documents with the State Revenue Office or otherwise take such measures as are necessary to regularise the situation concerning the beneficial ownership of Unit 2. 
521	I direct the parties to confer about the form of final orders and costs in an effort to agree upon orders giving effect to this judgment. If they cannot agree, then by 10.00am on 1 December 2023, each party is to file with my chambers and serve a written submission setting out the final orders sought and the reasons therefor together with any supporting material. The submissions are not to exceed five A4 pages, a minimum 14-point typeface, 1.5 spacing and 40mm margins on either side of the page. Unless I consider it necessary, I propose to determine the question of final orders and costs on the papers without an oral hearing.

SCHEDULE OF PARTIES
between
CHARDBORD INVESTMENTS PTY LTD (ACN 104 932 532) AS TRUSTEE OF CHARBORD FAMILY TRUST	First plaintiff	
CHARBORD INVESTMENTS NO 6 PTY LTD (ACN 606 069 612) AS TRUSTEE OF CHARBORD FAMILY TRUST NO 6	Second plaintiff	
PETER STEVEN SZWARCBORD	Third plaintiff	
and		
ISABELLE SZWARCBORD	Defendant

[by original proceeding]
and	

ISABELLE SZWARCBORD	
Plaintiff by counterclaim	
and		
CHARDBORD INVESTMENTS PTY LTD (ACN 104 932 532) AS TRUSTEE OF CHARBORD FAMILY TRUST	First defendant by counterclaim	
CHARBORD INVESTMENTS NO 6 PTY LTD (ACN 606 069 612) AS TRUSTEE OF CHARBORD FAMILY TRUST NO 6	Second defendant by counterclaim	
PETER STEVEN SZWARCBORD	Third defendant by counterclaim	
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)	Fourth defendant by counterclaim	
[by counterclaim]