IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	 Revised
Not Restricted
 Suitable for Publication	
  Expedited List
Case No. CI-17-03114

Peter Bornyan and Mary Bornyan	Plaintiffs	
		
v		
		
George Bornyan & Ors	Defendants	

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JUDGE:	His Honour Judge Woodward 	
WHERE HELD:	Melbourne	
DATE OF HEARING:	4 - 8 March 2019	
DATE OF JUDGMENT:	26 April 2019	
CASE MAY BE CITED AS:	Bornyan & Anor v Bornyan & Ors	
MEDIUM NEUTRAL CITATION:	[2019] VCC 482		

REASONS FOR JUDGMENT
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Subject:		CONTRACTS

Catchwords: 	Agreement for loan from parents to three sons – whether loan repaid – whether one son received repayments as agent for parents – discharge of mortgage – whether discharge procured in circumstances involving unconscionable conduct or undue influence – existence and effect of agreement between sons concerning repayment of original loan

Legislation Cited:	Property Law Act 1958 (Vic); Transfer of Land Act 1958 (Vic)

Cases Cited:		Christodoulou v Christodoulou [2009] VSC 583
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APPEARANCES:
	Counsel	Solicitors	
For the plaintiffs	Mr E Moon	Belleli King & Associates	
			
For the first and second defendants

For the third defendant 	In person 

Mr P Bradley, solicitor	

Shamrock Woodland Lawyers 	

HIS HONOUR:
Summary and outcome
1	This proceeding is part of a long-running and entrenched family dispute.  The amount claimed in the proceeding (approximately $360,000) is a significant sum in the lives of all family members involved.  But, as is so often the case in such disputes, the legal and other costs incurred by the family over the last five years in this and earlier proceedings in VCAT, probably amount to about that sum.  And that, of course, makes no allowance for the emotional toll on the parties caused by the dispute and the associated fracturing of family relationships.
2	In my judgment, the person primarily responsible for the evaporation of the family’s financial resources which has led to the dispute, is the third defendant and the plaintiffs’ eldest son, John Bornyan (“John”).  Over the years, John has received or otherwise been in control of funds totalling well in excess of $300,000.  The evidence establishes that these funds were intended to be held or applied for the benefit of the plaintiffs.  But the evidence also establishes that almost all of these funds have in fact been used primarily for John’s benefit or otherwise dissipated by him.  
3	Despite this, the legal principles governing the issues in the proceeding require that the burden of the plaintiffs’ claims will fall equally on the shoulders of all three individual defendants, namely, John and his younger brothers, the first defendant (“George”) and the second defendant (“Jack”).  I will order that George, Jack and John pay the plaintiffs $300,000, plus damages equivalent to their accommodation costs up to the date of the order.  But I have found against the plaintiffs on their claim to set aside the discharge of the mortgage to them over the Dandenong property.  As between George, Jack and John, I have found that John is obliged under the terms of the 2008 Agreement (in effect) to indemnify George and Jack for anything they must pay to the plaintiffs as a result of these reasons, and I will order accordingly.
4	However, it seems from the evidence that John is no longer in a financial position to pay his share of what is owing to the plaintiffs, let alone reimburse George and Jack for what they must pay.  The result is that it will ultimately be George and Jack who face the prospect of funding this judgment.  It also seems that they may be unable to do so without selling what remains of the family’s motor vehicle repair business or the Dandenong property where the business is carried on (or both).  Ironically, that business was originally bought for the brothers by their parents.
5	I should also observe that, although family allegiances appear to have shifted over time, it seems that John is presently primarily responsible for arranging the care of his parents and managing their affairs.  I will hear further from the parties (and, in particular, the legal representatives of the plaintiffs) as to the form of the orders I should make based on these reasons.  This may include whether orders can be framed to ensure that any funds that are made available to the plaintiffs as a result of my judgment are applied exclusively to their care and benefit.  While this may not be possible given the nature of the relief sought in the proceeding, I am concerned to ensure that the parties have an opportunity to consider this and make such submissions as they may be advised.
Background
Family history
6	The first plaintiff (“Peter”) was born as Bedros Borny in Aleppo, Syria on 23 September 1929.  The second plaintiff (“Mary”) was born as Hermine Minassian in the Ainarabe province of Syria on 7 July 1932.  Peter and Mary were married on 12 April 1953 in Aleppo and had 6 children, including John born on 7 January 1957, Jack born on 2 February 1963 and George born on 4 April 1964.  The family immigrated to Lebanon in about 1959 and then to Australia in 1974.  In about 1992, various family members including the plaintiffs and defendants changed their name from ‘Borny’ to ‘Bornyan’.
7	Peter’s first language is Armenian, and his second is Arabic. He gave evidence that English is his fifth language, and while he understands and can speak and read a little English, this is at a basic level. He attended primary school but left when he was about 13 years of age and did not undertake any further education.  He worked in car manufacturing factories after arriving in Australia until 1978, when he suffered a back injury and became an invalid pensioner.  On turning 65 in September 1995, he became an aged pensioner.
8	Mary attended primary school for a few years, but ceased any formal education aged between eight and ten years.  After arriving in Australia, she worked briefly as a factory worker at a pickle company, but has not otherwise been in paid work.  Her first language is Armenian and she gave evidence that she has only picked up a few words of English and cannot read English.  
9	In about 1978, Peter entered into an agreement with the Housing Commission to rent a property at 19 Waverley Road, Chadstone, 3148 (“Chadstone property”).  About a year later, after receiving a workers’ compensation payout, Peter and Mary agreed to purchase the Chadstone property.    By 13 January 1993, Peter and Mary had completed paying off the Chadstone property and were registered as its joint proprietors.  It was by then unencumbered.
10	In about 1984, the plaintiffs purchased a motor vehicle repair business called Piston Broke for George and Jack, who ran the business in partnership.  The business operated from premises at 30 Egan Road, Dandenong (“Dandenong property”).  In 1987, the three brothers Jack, George and John, with their brother-in-law, Tony Osky, were registered as tenants in common in equal shares of the Dandenong property. 
11	In about 1994, John approached Jack and George, seeking to join the partnership.  In February 1995, the business was incorporated under the name All-Tek Automotives Pty Ltd (“All-Tek”).  The three brothers were appointed the directors of All-Tek and held one-third each of its shares, through various trust entities.  The fourth defendant (“ISE”) is the trustee of John’s family trust.  A few months later, the brothers bought out Mr Osky’s interest in the Dandenong property, and (in the process) granted a mortgage over the property to Westpac.  In 1997, the brothers set up another business through the company A.S.E Auto Spares European Pty Ltd (“ASE”), which they also owned equally.
The ATO debt and the loan
12	In September 2000, the Australian Taxation Office (“ATO”) mistakenly paid $187,000 to All-Tek.  Jack and George’s evidence was that the three brothers agreed to use the money to “advance the company, and ourselves”, saying that at the time, both All-Tek and ASE were struggling financially.  Of that amount, approximately $76,000 was directed toward the two businesses.  George and Jack gave evidence that Jack had recently undertaken a share trading course and it was agreed that he would use the balance of the funds to trade on the share market.  John’s evidence was to the effect that he did not agree with this, but that Jack used the funds to trade in shares regardless.  However, nothing turns on this because all three brothers accept that they were jointly responsible to repay the funds to the ATO.
13	In around October 2002, the ATO sought repayment of the mistakenly paid funds.  The sum claimed by the ATO (which was not in dispute) was $196,319.51, and notices were issued by the ATO to each of the brothers effectively requiring them (as debtors of All-Tek), to repay that sum directly to the ATO.  To reduce the debt, the brothers first sold the shares Jack had purchased at a loss, leaving them owing the ATO approximately $135,000 (being roughly $45,000 each).  Jack and George gave evidence that they could have repaid their $45,000 share at the time, but John could not.  John asserted that both he and George were unable to pay $45,000 from their own resources.  Again, nothing turns on this apparent conflict in the evidence.
14	At a meeting between the three brothers to discuss how to repay the ATO debt, John observed that Peter and Mary both wished to move to Queensland.  He proposed that they suggest to Peter and Mary that they sell their Chadstone property, lend the sale proceeds to the brothers to repay the debt, and then the brothers would in due course purchase a house in Queensland for Peter and Mary.  George gave evidence that the brothers later met with the plaintiffs at the plaintiffs’ home.  In his oral evidence, Peter said that he was told, “We’ll sell the house, and then we will look after you until we buy a new one … Even all the expenses going to be paid by us”.  Peter and Mary agreed to the proposal.  It was common ground that John handled the sale of the Chadstone property on behalf of Peter and Mary. 
15	An estate agent was retained and the Chadstone property was put on the market.  The plaintiff’s later received an offer of $300,000 for the property, which they decided to accept.  On 18 November 2002, shortly before settlement of the sale of the property, Peter, Mary and the brothers executed an agreement to record the arrangement that the brothers had proposed to Peter and Mary (“2002 Agreement”). The 2002 Agreement states:
“This is a binding contract between Mr Bornyan and Mrs. Marry (sic) Bornyan and their three sons John, Jack and George Bornyan.
We John, Jack and George Bornyan agree to the following:
1.	To repay the amount of $300,000 in due course.
2.	We (means John, Jack and George) are obligated to keep our parents in the matter of payment of accommodations for the period it takes to repay the full amount loaned.
3.	All expenses to be shared evenly between John, Jack and George until such time, it is redeemed acceptable.
4.	When an opportunity arises to purchase a property for Peter and Marry (sic) Bornyan, then a decision must be considered by a unanimous vote between all parties to execute that decision.”
Sale of the Chadstone property and purchase of property at Varsity Lakes
16	John on behalf of the plaintiffs, had instructed Collins House Legal to act on the sale of the Chadstone property.  Apparently on John’s advice, the plaintiffs signed documents authorising Collins House Legal to pay $136,650.80 to the ATO and the remainder of the proceeds of sale to ISE’s account with the Commonwealth Bank.  John gave evidence that the latter authorisation was given because the money could not go to the plaintiffs’ account because it would have “flagged their pension”.  He said that ISE’s bank account was chosen because at the time he was “leery about [Jack and George] as to what they have done with the ATO’s money.  And I certainly did not want to break the rules anymore.”
17	In his evidence, George said that the first time he saw these authorisations was when they were produced as part of VCAT proceeding W32 of 2013 brought by John against Jack and George (“VCAT Proceeding W32”).  In 2002, he was unaware of what was being done with the balance of the proceeds, and stated that he did not ask questions about this because they were “a tight family, so there was no reason to – for one person to ask another person, or to query as to – because we’re not strangers, we’re very close family […] So, our word was our word”.  Jack gave evidence to similar effect.
18	Settlement of the sale of the plaintiffs’ Chadstone property was effected on 5 December 2002.  After adjustments and selling costs, $289,123.56 was realised by the plaintiffs on the sale.  In accordance with the authorisation provided to Collins House Legal, $136,650.80 of this was paid to the ATO and the balance of $152,472.76 was paid to ISE.
19	By the time of the settlement, the plaintiffs  had already moved to Queensland and were staying in short term accommodation in Burleigh Heads, while they looked for somewhere more permanent to live.  This took several months.  In early to mid-2003, Peter contacted John and said he had located a suitable property at Varsity Lakes near the Gold Coast, and John later arranged for the purchase of the property.
20	It is not in dispute that in July 2003, ISE was registered as the owner of Unit 2, 74 Mattocks Road, Varsity Lakes (“Varsity Lakes property”).  At the same time, a mortgage over the property was registered in favour of Tonto Home Loans Australia Pty Ltd (“Tonto”). The mortgage was stamped as securing a total loan amount of $213,200.  The loan was interest only for a term of five years.  The purchase price of the property was $266,500.  After allowing for adjustments and stamp duty it therefore appears that John used approximately $60,000 of the $152,472 balance from the sale of the Chadstone property towards the cost of the Varsity Lakes property.
21	Jack and George both gave evidence they believed, consistently with the 2002 Agreement, that all of the funds left over from the sale of the Chadstone property had been paid towards the purchase of the Varsity Lakes property.  In particular, Jack gave evidence that he visited the plaintiffs at Varsity Lakes in early 2004 to do some works on the property for the plaintiffs’ benefit.  He stated that “in my understanding when I was up there, this house belonged to Mum and Dad. […] I’m not doing works for anyone else but Mum and Dad”. George’s evidence was largely consistent with Jack’s statements.  However, they agreed that there had been no “unanimous vote” to purchase the Varsity Lakes property, as required by the 2002 Agreement.
22	John’s evidence was that after Peter found the Varsity Lakes property, he (John) called George and asked him how they ought to go about buying it, considering that neither ASE nor All-Tek could afford the purchase.  He said that George told him to buy it through ISE and he subsequently did so, upon securing finance.  John said that he paid the difference between the purchase price and the loan amount out of a pool of funds he controlled that mingled the proceeds of the sale of a property he owned and the sale of the Chadstone property
23	I do not accept John’s evidence that George suggested buying the property through ISE.  First, it is contradicted by George and Jack’s evidence that they believed the Varsity Lakes property was bought in their parents name, using the balance of the proceeds of the sale of the Chadstone property.  Second, there is no evidence that ISE was any better placed than All-Tek to “afford” the purchase.  On the contrary, most of the purchase price was borrowed and the portion that was not borrowed was supplied out of the sale of the Chadstone property.  And, as explained below, it was All-Tek that effectively funded the total borrowing cost for the next five years.
24	John’s evidence about what was done with the approximately $152,000 proceeds of sale of the Chadstone property paid to ISE was that it was used to pay “various expenses”.  He said these included approximately $33,000 spent on airfares, car hire and accommodation expenses for his parents in the period before the purchase of the Varsity Lakes property, and the cost of a car for the plaintiffs.  He added that a further $10,000 was put into the ASE account since the business needed “a bit of injection”.  John could not explain what had become of the $40,000 to $50,000 that remained unaccounted for (assuming the accuracy of the other expenses he described and allowing for the $60,000 paid toward the purchase of the Varsity Lakes property).
Refinancing of the Varsity Lakes property
25	From August 2003 until December 2008, All-Tek made monthly payments to ISE and ISE in turn made monthly payments to Tonto, in respect of the interest payments of the Varsity Lakes property.  Those payments varied over the period, but for the final 16 months of that period were $1,570 per month.  The evidence about whether George and Jack knew the payments were being made directly to ISE and not directly to the mortgagee, was confused.  The payments were shown in All-Tek’s internal accounting system as having been made to the mortgage broker FMC, but it seems likely that they were aware that the funds were in fact being transferred to an ISE account.  The effect of George’s evidence was that All-Tek was paying ISE and ISE was paying the mortgagee.  However, both he and Jack nevertheless believed that the house was registered in his parents’ names.
26	It appears that in March 2008, the interest-only period of ISE’s loan in respect of the Varsity Lakes property expired.  At around this time, John arranged to refinance the loan.  The evidence on aspects of the refinancing is unclear, except that it was refinanced with Westpac and that the new mortgage is shown to be stamped to secure $250,000.  Thus, it appears that John borrowed a further $37,000 on the security of the Varsity Lakes property.  There is no evidence about how John spent these additional funds.  Also, there is no evidence about whether the new loan from Westpac was principal and interest or interest only.  If it was the former, it follows that All-Tek’s payments in the period after March 2008 were contributing to reductions in the loan owing by ISE to Westpac.
Payments to John and the 2008 Agreement
27	On 2 September 2008, ASE paid $50,000 to ISE, at John’s request.  There is a significant divergence between the evidence of George and Jack, on the one hand, and John, on the other, about the circumstances and basis for this payment.  That disagreement also extends to two subsequent payments and to the circumstances of an alleged agreement between the brothers at around the time of the second payment in December 2008. 
28	George’s evidence was that the first payment of $50,000 was made after John approached George and Jack in late August, telling them that he was “getting pressure from Dad to repay the $150,000”.  He explained that the brothers referred to the loan as $150,000, as this was the sum of $136,000 borrowed to repay the ATO, rounded up to $150,000 to cover transport and accommodation costs associated with the plaintiffs’ move to Queensland.  Implicit in this was George’s evidence that he believed the other $150,000 comprising the total loan of $300,000, had been paid towards the purchase of the Varsity Lakes property.
29	George said that he and Jack consented to paying the sum of $50,000 to ISE to be passed on to Peter and Mary.  George said that there was no discussion about paying the money directly to Peter and Mary, because it had always been the case that “all the arrangements [were] done through John because John was handling all the affairs on behalf of Mum and Dad.”  A Westpac EFT transfer record in respect of the payment bears the typed contemporaneous description: “Transfer to John B”.  There is also a handwritten note on the document in George’s handwriting.  There is no evidence about when the note was made:
“1ST PAYMENT FOR FMC LOAN
TOTAL	$150,000
-$50,000
BALANCE 	$100,000”

30	Shortly after the first payment was made, John approached George and Jack again, saying that Peter was still putting pressure on him to pay down the debt and seeking a further payment from All-Tek.  Jack and George agreed to make this payment, but asked John to provide them with an account of how the money placed into the ISE accounts was being used.  George’s evidence was that John became defensive in response, saying: “What, don’t you trust us?”  According to George, he responded to the effect that it was a lot of money they were transferring and they wanted to make sure it was going to the right place.  In response, John offered to type up a second agreement to set out an arrangement for the payments.
31	George’s evidence about this agreement was that all three brothers were at All-Tek at the time of this discussion, and John went upstairs to his office and typed up an agreement between the brothers (“2008 Agreement”).  The only version of this agreement in evidence is unsigned, and bears the handwritten notation “copy”.  The form of the 2008 Agreement is as follows (emphasis and errors in original):
“Private and Confidential		15th December 2008
John Jack and George Bornyan
30 Egan Road Dandenong Vic. 3175
Re: loan for Qld Property 2/74 Maddox road Varsity lakes
This document is to acknowledge and supersede the contract dated back in 12th day of November 2002 between John, Jack and George Bornyan.
John Bornyan will have full responsibility of maintaining and paying off the loan.
John, Jack and George Bornyan have agreed to pay $150,000.00.
On 1st day of September 2008, John, Jack and George Bornyan have advanced $50,000.00 and have agreed to pay further $50,000.00 on 15th day of December 2008 Furthermore, John, Jack and George Bornyan have agreed to pay the remaining $50,000 in the near future.
And by doing so, John, Jack and George Bornyan have agreed to pay interest of $500.00 per calendar month due on the 10th day of each month until such time loan has been paid out.
John Bornyan		Jack Bornyan		George Bornyan”
32	Jack’s evidence was to the same effect.  He said that he and George questioned John when he asked for the second $50,000.  They suggested to John that if $100,000 was paid off the mortgage, the repayments should be a lot lower.  John responded: “What? You’re not going to help your mum and dad?  They helped you all the time”.  He then said he would go upstairs and make another agreement.  After doing so, he came back down and put a copy in front of Jack.  George was standing next to Jack and John was on the opposite side.  Jack’s evidence was that they all signed one copy and John gave each of Jack and George an unsigned copy – so there was one signed copy and two unsigned copies.
33	Neither George nor Jack could say with any certainty what became of the signed copy.  George said that he believed it had been held among the records at All-Tek, but he had been unable to locate it.  He noted that when John left the business in around March 2012, he took his belongings and there were also some documents missing from the office files.  George believed the signed version of the 2008 Agreement went missing at this time.  It was common ground that the plaintiffs were not involved in any discussions concerning the 2008 Agreement and were not parties to the agreement.  
34	The second payment of $50,000 was made by All-Tek to ISE on the date the 2008 Agreement bears (15 December 2008).  The Westpac EFT transfer record for this payment bears the contemporaneous typed description “ATO Loan repayment”.  It too has a handwritten notation in George’s handwriting.  George’s evidence was that this notation was made by him on the EFT transfer record at about the time of the payment.  It reads as follows:
“2nd Payment for QLD
1st 50K
2nd 50K
Balance 50K”

35	John’s evidence was that the two payments of $50,000 (and later payments referred to below) were made to him in lieu of wage cuts.  He explained at considerable length that all three brothers took a wage cut in the early 2000s because business was down.  He said that for six and a half years he was on $350 per week.  Then, in around 2007 after the business moved to internet banking and he was authorised to view the accounts, “I stumble onto something really interesting”.  He said what he stumbled on was that Jack did not take a wage cut – in fact he took a wage rise.  He said he questioned his brothers about this and they reluctantly agreed to compensate him.  He said this took a while, but after about a year he was getting desperate for some cash and he insisted they pay him, which they did.
36	In relation to the 2008 Agreement, John’s evidence was that he first came to know of this agreement in mid-2012, during a without prejudice meeting with Jack and George.  He described how it was produced at the meeting and how his lawyer said at the meeting that “we cannot actually accept this”.  He then referred in detail to a number of aspects of the 2008 Agreement which (as I understood his evidence) were reasons why it was “embarrassing” for George and Jack to rely on the document – such as that it had the wrong date for the 2002 Agreement.
37	For reasons set out below, I do not accept John’s evidence about the payments representing wage cuts nor his denials in relation to the 2008 Agreement.  For present purposes, it is sufficient to note that I am satisfied that:
•	the two payments were facilitated by George and Jack to John on the understanding that they were to be passed on to the plaintiffs in reduction of the balance of the loan under the 2002 Agreement; and
•	all the brothers signed (and thus agreed to the terms of) the 2008 Agreement, in the circumstances described by George and Jack.
38	However, importantly for the determination of the claims by the plaintiffs, there is no evidence that they played any part in these arrangements or received all or any part of the payments in reduction of the loan (or otherwise).  Indeed, as with the balance of the proceeds from the sale of the Chadstone property, the evidence is that this further sum of $100,000 was retained and spent by John or his company ISE. 
Further payments between the parties
39	Commencing with a payment on 8 January 2009 (the month following the signing of the 2008 Agreement), All-Tek reduced its monthly payments to ISE in respect of mortgage payments for the Varsity Lakes property, to $500 per month.  This is important objective evidence in support of George and Jack’s account of the circumstances of the $100,000 in payments, and the signing of the 2008 Agreement.  This reduction in the payments to $500 per month was an express term of the 2008 Agreement and is consistent with George and Jack’s belief that the payments were to be applied to reduce the loan for the Queensland property from $150,000 to $50,000.
40	Payments at the rate of $500 per month continued until November 2009, when All-Tek reduced the monthly payments to $415.  Jack’s explanation for this was in substance that, during one of the brothers’ regular meetings at All-Tek (occurring at a time when business was slow), Jack questioned John saying, “If you’ve paid $100,000 off that [debt], in my calculation we should only be paying $415”.  All-Tek continued to make monthly payments to ISE in that sum until September 2011.  In the meantime, in about October 2010, the plaintiffs returned to Melbourne and commenced living at a property in Hallam owned by their granddaughter.
41	From December 2010 to September 2011, All-Tek paid $415 per month to ISE and ISE paid the plaintiffs’ rent in the sum of $1,343 per month.  The evidence was that most of the rent for the property in Hallam was being covered by the rent being paid on the Varsity Lakes property.  The All-Tek contribution reduced to $375 per month commencing with the payment for October 2011.  This coincided with a further payment by All-Tek to ISE of $5,000 on 29 September 2011.
42	The substance of George and Jack’s evidence was that they understood the $5,000 to be a further payment towards the balance of the $50,000 that remained outstanding on the loan from the plaintiffs.  This is again consistent with the reduction in payments by All-Tek to ISE commencing with the payment next due after the $5,000 payment.  John’s evidence was that the $5,000 was a further payment towards his wages claim.  Again, there is no evidence that the plaintiffs took any part in or were otherwise aware of this payment, or that they received the benefit of any part of it from ISE or John.
43	In December 2011, the plaintiffs moved to their current home in Narre Warren.  All-Tek continued making monthly payments of $375 to ISE until March 2012.  And, except for the first month’s rent which the plaintiffs paid, ISE began paying the plaintiffs’ rent for the Narre Warren property in the sum of $1,149 per month until the payment due for August 2012.  Although the evidence about this is unclear, there is nothing to suggest that ISE had ceased receiving rent of at least this sum each month from the Varsity Lakes property, and continued to do so until around May 2013, when ISE sold the property.
The relationship breaks down
44	On 21 March 2012, the relationship between the brothers broke down.  This was precipitated by an argument between John, Jack’s wife Lisa, and Jack.  George and Jack gave evidence that John effectively abandoned the All-Tek business from this time.  On 31 March 2012 (a Saturday), John attended All-Tek’s premises and wrote cheques on All-Tek’s account payable to ISE for $550 and $45,000.  John wrote each cheque out of sequence, backdated them to 30 March 2012, endorsed each cheque with the words “PLEASE PAY CASH” and left the cheque butts blank.
45	According to George, the following day (Sunday) Lisa was working from home paying some All-Tek invoices using internet banking, when she noticed debits from All-Tek’s account in respect of the two cheques written by John the day before.  Lisa then telephoned George to see if he knew anything about them.  He said he did not and telephoned Westpac to arrange to stop the cheques.  Westpac called him on Monday afternoon to tell him that it was unable to stop the cheques as they had already been cashed out.  George’s evidence was that these withdrawals left All-Tek with only $3,000 in its bank account, which significantly impacted the business.  George also said that it was at around this time that he and Jack discovered the Varsity Lakes property was not owned by the plaintiffs.
46	George gave evidence that he treated the $45,000 taken by John as the final payment for his and Jack’s share of the $150,000 debt referred to in the 2008 Agreement.  He said “there was no reason that $45,000 – there was no other moneys outstanding to pay John personally.”  When asked whether he had discussed this with the plaintiffs at the time, he said that when Jack and he became aware of the payment in April 2012, they did discuss it with the plaintiffs.  However, this was not put to Peter during his cross-examination.  John’s evidence was that the $550 was to cover medical expenses for a work related injury.  As to the $45,000, John has given varying accounts of what this sum represented (discussed further below).  But in evidence before me, he said in substance that it represented the final instalment of the $150,000 owing to him for wages.
John ceases rent payments and sells the Varsity Lakes property
47	In about June 2012, Jack said that Peter contacted him to tell him that John was refusing to pay rent.  He said that after a brief discussion with George, they agreed that All-Tek would take over the rental payments.  From 16 August 2012, ISE stopped paying the plaintiffs’ rent and All-Tek commenced paying it, at the rate of  $1,149 per month.  Jack gave evidence that “there was no obligation for us […] we were doing it only as good faith because John at the time had stopped paying the rent.”  However, George accepted that he and Jack did not discuss the debt with the plaintiffs at this point, or tell them that he and Jack were paying their rent despite the fact they considered the debt repaid.
48	In around February 2013, ISE entered into a contract of sale of land to sell the Varsity Lakes property for $359,000.  The evidence was that $324,035 was required to pay out the Westpac mortgage and $24,233 was payable to ISE, after allowing for selling costs and adjustments.  It thus appears that the debt to Westpac of $250,000 at the time of ISE’s refinancing of the Varsity Lakes property in March 2008, had increased to $324,000 at the time of sale (a difference of $74,000).  There is no suggestion that any additional advances made by Westpac to ISE on the security of the Varsity Lakes property were applied in favour of the plaintiffs.  Nor is there any suggestion that the balance of the sale proceeds of $24,233 paid to ISE on settlement was so applied.
VCAT Proceeding W32
49	On 27 February 2013, John commenced VCAT Proceeding W32 against George and Jack, seeking orders for an adjustment of rights between the brothers pursuant to s233 of the Property Law Act 1958 (Vic) in respect of their ownership of the Dandenong property, and for the sale of that property.  It is apparent from the orders and reasons of Senior Member Walker dated 27 August 2014 (Bornyan v Bornyan (Building and Property) [2014] VCAT 1103) that many of the factual issues in this proceeding overlap with those agitated in VCAT Proceeding W32.  Although I must decide the issues in this case on the evidence before me, it is perhaps not surprising that the Senior Member’s findings largely coincide with my own.
50	In the hearing of VCAT Proceeding W32, John represented himself and George and Jack were represented by counsel.  It lasted three days.  The evidence comprised affidavits by John and George, and both were cross examined.  In George’s affidavit (sworn in July 2014), he deposed that (emphasis added) “a second registered mortgage is held by our parents, Peter and Mary Bornyan, as security for a loan of approximately $300,000 made to Jack, John and myself, which we are each liable to repay.”  The background to that mortgage is discussed below.
51	In his reasons, the Senior Member made observations and findings (among many others) as follows:
•	When the Senior Member asked John “what became of the balance of the proceeds of sale of the Chadstone House, which even on his figures is $41,658.68, he suggested that that was ‘his share’. He did not say that the Parents had given this money to him but it is clear from the evidence that he has never accounted for it and has kept it for himself” (at [34]).
•	After referring to John’s request for payments beginning in September 2008 “on account of the debt owed to the Parents” and the three payments to ISE of $50,000, $50,000 and $5,000 discussed above, the Senior Member notes that George and Jack “agreed to these payments, on the basis that the Applicant [John] would apply the money in reduction of the mortgage over the Queensland House. He did not do so” at [37]-[40].
•	The Senior Member added that: “No accounting has been given by the Applicant for any of this money. Although he denied in cross-examination that he had asked the payments to be made in reduction of the money owed to the Parents I am unclear what he claimed the payments were for” (at [41]).  Thus it appears that John did not assert in his evidence in VCAT Proceeding W32 that the payments were for wages.
•	In relation to the $45,000 cheque drawn by John on the All-Tek account on 31 March 2012, the Senior Member noted: “When I asked the Applicant what the two amounts were for, he said that the smaller cheque was for medical expenses he had incurred which he claimed All-Tek ought to pay and the larger amount of $45,000.00 was with respect to some money he had lent to a third company called A.S.E. Holdings (“Holdings”) some years earlier which was secured by debenture” (at [49]).  He also observed that John did not dispute that this money was taken without authority, “nor does he suggest that All-Tek had any legal responsibility to pay the debts of Holdings” (at [50]).  Again, this is inconsistent with John’s evidence before me that the $45,000 was the balance of wages owing.
52	The Senior Member made orders adjusting the one third undivided share of each of the brothers in the Dandenong property so that:
•	of the moneys secured by the first mortgage to Westpac, $45,000 was to be secured solely over John’s share; and
•	of the money secured by the second mortgage in favour of Peter and Mary (discussed below), $105,000 was to be secured solely over John’s share.
53	The effect of the Senior Member’s findings was that the $45,000 represented John’s unauthorised cheque withdrawal from All-Tek on 31 March 2013 and the $105,000 represented the three payments of $50,000, $50,000 and $5,000 that George and Jack agreed would be paid to ISE to reduce the loan from the plaintiffs.  The Senior Member also made a series of orders in relation to the sale of the Dandenong property, including orders facilitating the purchase by any one or more of the brothers, subject to certain conditions.
The mortgage to the plaintiffs over the Dandenong property
54	On 16 August 2013, George and Jack arranged for a letter of demand to be sent to John by M+K Lawyers on behalf of the plaintiffs.  At the same time, M+K Lawyers were advising George and Jack in relation to VCAT Proceeding W32.  The letter demanded that John account to the plaintiffs for the sum of $390,567.  This figure, as the letter explains, was M+K Lawyers’ calculation (based on instructions) of the money retained by John from the sales of the Chadstone property and the Varsity Lakes property.  George said that the figure of $390,567 was the result of an estimation by M+K Lawyers.  Mr Gerard Kennedy of M+K Lawyers, who was the solicitor with carriage of the matter at the time, confirmed this. 
55	On 5 September 2013, George and Jack executed a mortgage of their interest in the Dandenong property in favour of the plaintiffs, to secure repayment of the sum of $390,567 (“Mortgage”).  George said that this Mortgage was granted because the letter of demand sent on 16 August 2013 “fell on deaf ears … other measures were taken [on] advice from MK Lawyers to lodge a security against [the Dandenong property] to protect Mum and Dad’s position against John.”  The Mortgage was executed as a deed.  There was some conflict in the evidence about what the plaintiffs were told about the Mortgage and the circumstances of its execution, but no party has sought to argue that it was not validly executed and enforceable at the time it was given.  The Mortgage was registered on 24 September 2013. 
56	George said that after the order to sell the Dandenong property was made in VCAT Proceeding W32, he and Jack decided to purchase the property from John for $370,000.  At or around this time, George and Jack called Peter and asked him to come to All-Tek with Mary so that they could sign a discharge of the Mortgage they held over the Dandenong property.  On 9 or 10 June 2015, Peter attended the workshop at Dandenong alone, and (according to George and Jack) met with George, Jack, and Lisa.  George said that he asked Peter where Mary was, as they needed her to sign the discharge as well.  Peter said he would sign for Mary.
57	George’s evidence was that he then explained to Peter, in Armenian, the effect of the discharge in the following terms: “It’s a release of the mortgage that we have placed on 30 Egan Road, and the reason why we need it released is because the bank won’t transfer out of John’s – the sale from John to us unless this is discharged.”  He said that Lisa also “explained to Dad as well in English […] what this was, and how important of a document it was, as well.  So, it was very clear – we made it very clear to him what he was signing.”  Jack corroborated this and said that he too explained the document to Peter in similar terms. 
58	Peter’s evidence was different; he says that only George was present when he attended the workshop.  He saw Jack there, but Jack left in his car about the time Peter arrived.  He denied that Lisa was present.  He also said the only thing he was told by George about the document was that it was an important document and needed to be signed urgently so George and Jack could buy a house for him.  Peter also disputes the date the document was signed, saying that on 10 June 2015, he attended his bowls club first thing that morning to assist with organising a tournament.  The attendance register of the club was produced, showing Peter and Mary’s attendance on 10 June 2015.  George accepted that it was possible the meeting actually took place on 9 June, but he and Jack both said that they believed it occurred early in the morning on 10 June, before Peter went to the bowls club.
59	It is common ground that Peter told George that he could sign on Mary’s behalf and he proceeded to sign the discharge of the Mortgage both in his own name and in Mary’s name (“Discharge”).  George and Jack’s evidence was that they asked an employee, Gagandeep Singh Virk, to come and witness the signatures.  Mr Virk gave evidence to the effect that, although he signed the document as witness, he could not recall whether he saw Peter signing before he signed.  Peter’s evidence was that Mr Virk was not present when he signed the Discharge.
Final steps
60	On 23 July 2015, All-Tek made its last payment of rent on behalf of the plaintiffs.  George said that John’s actions from mid-2012 onward negatively affected the business and “to date it still has, and that’s why we had to end up stopping from paying rent to Dad, because we simply couldn’t afford to.”
61	It took a few months for George and Jack to complete the sale and purchase of the Dandenong property, as John initially refused to sell his interest and an application had to be made for the Principal Registrar at VCAT to sign the sale documents on his behalf.  George said that no money changed hands, as the Dandenong property secured a debt of approximately $280,000 owed to Westpac and George and Jack assumed this liability upon completing the sale.  As to the difference between the $370,000 purchase price and the $280,000 debt, George said that “[it] remained, I guess, as equity in the actual premises […] we had to pay stamp duty on top of that and legal costs, but there was no proceeds that came in.”
62	On 14 August 2015, the transfer of land by which the brothers transferred their interests in the Dandenong property to George and Jack for the consideration of $370,000, was registered.  The transfer was signed on John’s behalf by Jim Nelms, Principal Registrar of VCAT.  On the same day, a Westpac mortgage over the Dandenong property was discharged, and George and Jack granted a new mortgage to Westpac over the property.  Also on that day, the plaintiffs’ Discharge was registered.
63	There were a number of proceedings brought by the parties in VCAT in addition to VCAT Proceeding W32 including (as family allegiances shifted), a proceeding brought by the plaintiffs against John and a later proceeding by them against George and Jack (to which John was later added).  None of these proceedings advanced much beyond the preliminary stages, primarily for want of jurisdiction.  However, the plaintiffs rely on the fact that in one of the proceedings (BP1342 of 2105), Senior Member Walker made interlocutory orders on 4 December 2015, which included an order in terms as follows:  
“The Tribunal notes that, in the course of the hearing of proceeding W32/2013, the Respondents acknowledged that they jointly owed the debt that is claimed to the applicants”.
64	On 3 March 2016, the plaintiffs lodged a caveat over the Dandenong property, claiming an interest as a mortgagee.
Analysis
What (if anything) is owing under the 2002 Loan Agreement?
65	Peter and Mary submit that:
•	John does not dispute the debt owed to the plaintiffs.
•	They rely on a number of “exotic legal doctrines” in response to George and Jack’s defence of their debt claim.  However, following the hearing of the evidence, the plaintiffs’ primary submission is that George and Jack admit the debt. 
66	Although, as discussed further below, George and Jack’s final position in relation to the debt is ambiguous, I accept these submissions.  However, there is a further reason why it is not necessary to dwell on the “exotic legal doctrines” Peter and Mary rely on.  Namely that, in my view, George and Jack have failed to establish that any of the loan owing pursuant to the 2002 Loan Agreement has been repaid to the plaintiffs.  I will first explain why this is so, before turning to the plaintiffs’ admissions argument and then commenting briefly on their exotic legal doctrines.
67	The substance of George and Jack’s pleaded defence (put at its highest) is that the $300,000 was repaid by a combination of:
•	the $152,472 proceeds from the sale of the Chadstone property paid to ISE or John to be put towards the purchase of the Varsity Lakes property;
•	the sums totalling $150,000 paid to or taken by ISE or John comprising the two payments of $50,000 in late 2008, the payment of $5,000 in October 2011 and the $45,000 taken by John on 31 March 2012; and
•	the plaintiffs’ mortgage and rental payments made by All-Tek over the years.
68	So far as the first two categories of payment are concerned, the evidence establishes (and John and George accept) that little if any of this money was in fact ever paid to Peter and Mary, or otherwise applied for their benefit.  As discussed above, with the possible exception of some funds spent on the plaintiffs’ travel and initial accommodation when they moved to Queensland, it was kept by John and used for his benefit.  Thus to succeed on their argument that these two categories of payment were paid to the plaintiffs in reduction of the loan, George and Jack would need to establish that the payments were made to John or ISE on behalf of the plaintiffs.  This in turn could be established only if there was evidence that the plaintiffs had appointed John or ISE as their agents to accept payments on their behalf (or held him out as having been so appointed).
69	On this issue, the plaintiffs submit that significant doubt fell upon George and Jack’s agency argument in opening, when George admitted there was no reason for them to check with Peter about John’s assertions that Peter was demanding the repayments, and that John had taken advantage of George, Jack, and Peter’s trust.  Peter and Mary also point out that George and Jack:
•	led no evidence that they relied on any representation of the plaintiffs that John was appointed as their agent to purchase the Varsity Lakes property or that he was authorised to receive the payment of moneys on their behalf; rather, they admitted there were no discussions about these matters with the plaintiffs; and
•	persisted with their defence despite the fundamental and unavoidable difficulty created by their granting of the Mortgage to the plaintiffs at a time (5 September 2013) after which they now plead that they repaid the debt (30 March 2012), and also by their conduct during VCAT Proceeding W32 in which they maintained the debt remained outstanding.
70	The legal principles concerning the appointment of an agent are well settled and it is not necessary for me to set them out.  I agree with the plaintiffs’ submission that there is no suggestion that they have ratified any of the payments made to ISE as being made to their authorised agent.  Accordingly, it falls to George and Jack to prove either that there was an express or implied agreement by which the plaintiffs appointed John as their agent or that, in all the circumstances, the plaintiffs are estopped from denying that John was their agent (ostensible authority).
71	I also agree with the plaintiffs that agency by agreement can be disposed of quickly. There is no evidence that they appointed John as their agent for the purpose of receiving any payments of the $300,000 debt.  To succeed in a plea of ostensible authority, George and Jack need to prove that there was a representation made by the plaintiffs upon which they relied to their detriment such that it is unjust for the plaintiffs to resile from it. 
72	On this question, the plaintiffs rely on (among other things) George and Jack’s:
•	concessions that they were not aware of the letters of instruction from Peter and Mary concerning the distribution of the proceeds from the sale of the Chadstone property, until they were produced in VCAT Proceeding W32;
•	concessions that they did not discuss with their parents whether the Varsity Lakes property was a replacement property for the Chadstone property;
•	concession that there was no vote, as required by paragraph [4] of the 2002 Agreement;
•	evidence that they did not discuss the 2008, 2011 or 2012 payments with the plaintiffs, and specifically, whether those payments were received by John on their behalf; and
•	payment of the plaintiffs’ accommodation expenses in the period August 2012 to March 2015 and July 2015.  
73	The plaintiffs submit (and I agree) that it is not enough for John to represent to George and Jack that he was authorised by the plaintiffs to receive instalments in repayment of the debt.  The representation must come from Peter and Mary.  There is no evidence that any such representation was made.  In relation to the balance of the proceeds from the sale of the Chadstone property after payment to the ATO, George and Jack allege that it was John who represented to them that he would hold those proceeds on behalf of the plaintiffs.  There is also no evidence of any discussion with the plaintiffs (let alone representation by them) in relation to any of the payments to ISE totalling $105,000 or the $45,000 cheque that John drew on the All-Tek account.  Indeed, the clandestine circumstances in which John drew the cheque for the $45,000 undermines any suggestion that he was receiving this sum for the plaintiffs.
74	Turning to the third category of payment relied on by George and Jack as constituting repayment of the $300,000 loan (the mortgage and rent payments), the basis for suggesting these were made in reduction of the loan is far from clear.  The issue was not pressed by George and Jack in closing submissions.  Further, it is difficult to reconcile with the express term in the 2002 Agreement to the effect that the brothers “are obligated to keep our parents in the matter of payment of accommodations for the period it takes to repay the full amount loaned”.  In the circumstances, I agree with the plaintiffs that the full debt of $300,000 under the 2002 Agreement remains outstanding.
75	I am reinforced in these findings by the fact that—as noted above and despite some ambiguity in their position—George and Jack essentially conceded that a substantial loan to Peter and Mary was still outstanding.  This concession appeared to stem from their acknowledgement that the plaintiffs did not in fact get the benefit of any of the first two categories of payments referred to above.  They also accepted that they did not discuss the payments totalling $105,000 with Peter and Mary.  In their written submissions, they say: “We completely understand our parents position and we agree that the $300,000 or a house is still outstanding, as per the November agreement”.
76	However, after I asked George in the course of oral closing submissions whether this meant that he and Jack conceded that the full amount of the debt remained outstanding, George appeared to maintain the position that at least $150,000 of the debt had been paid.  As I understood it, George’s oral submission was to the effect that Peter knew that the $152,472 proceeds from the sale of the Chadstone property were paid to ISE and that the Varsity Lakes property was not in his and Mary’s name, and he should therefore take “some responsibility” for the fact that this money was later dissipated by John.
77	Further, in their written submissions, George and Jack say: “We plead with the court to find the evidence and the behaviour that Jack and George have kept their part of the agreement in so far as paying the amount of $150,000 of the capital borrowed initially.  Also paid monthly loan repayment every month for 10 years without default.  Also assisted with rent for a number of years.”  And in the course of the evidence and submissions, George and Jack pressed an argument that the form of the application in VCAT proceeding C5110/2016 brought by Peter against George and Jack, contained a concession that Peter had been paid $300,000.  The legal effect of any such concession is unclear—it may be relevant only to credit.  In any event, I accept Ms Apoyan’s evidence that she completed the document in consultation with her father Peter and that her entry of “$300,000” in response to the question “how much has been paid for the goods and/or services to date”, was based on her misunderstanding of the question.  She thought it referred to how much Peter had paid to Jack, George and John.
78	It is difficult to reconcile these inconsistent positions taken by George and Jack and more difficult still to identify how they support any kind of legal basis for them to avoid liability under the 2002 Agreement.  I have already discussed and rejected the agency argument in relation to both the balance of the proceeds of sale of the Chadstone property paid to ISE and the $150,000 payments to ISE between September 2008 and 31 March 2012.  Further, given that George and Jack were self-represented at trial and do not have any legal training, I have also considered whether other arguments might have been available to them.  For this limited purpose, I put to one side the fact that no such arguments are pleaded and the consequent unfairness to the plaintiffs in making any findings based on such arguments.
79	In particular, I have considered the possibility of arguments based on a failure to mitigate loss or a collateral agreement or oral or implied terms that operated to modify the express terms of the 2002 Agreement.  However, I have been unable to identify any coherent legal basis for George and Jack to assert as against their parents that they are liable for only $150,000 of the $300,000 debt.  Thus, in my view, there is no practical distinction between a concession that they still owed $150,000 under the 2002 Agreement and conceding that the full amount of the debt was still outstanding and payable by them.
80	In the circumstances, it is unnecessary for me to reach a concluded view on the plaintiffs’ arguments based on issue estoppel and abuse of process.  Had it been necessary to do so, I am inclined to think I would have rejected the former, but upheld the latter.  In the case of issue estoppel, the plaintiffs note that they were not parties to VCAT Proceeding W32 and appropriately concede that this is a significant obstacle to their reliance on the doctrine (referring to Kuligowski v Metrobus at [47]).  I agree.  However, there is considerable force in their submissions that it brings the administration of justice into disrepute if George and Jack are allowed to obtain adjustment orders against John in VCAT Proceeding W32 on the basis that they jointly owed the plaintiffs $300,000 but, in this proceeding, deny the debt.
Were the brothers discharged from their obligation under the 2002 Agreement to pay the plaintiffs’ accommodation costs?
81	The plaintiffs submit that because the brothers failed to discharge the debt owed to the plaintiffs, they remain liable to meet the plaintiffs’ accommodation costs.  I agree, and George and Jack do not seek to argue that their liability to pay the accommodation costs has ended for any reason other than their pleaded assertion that the loan was repaid in full by 30 March 2012.  I have rejected that assertion.  I therefore also agree with the plaintiffs’ submission that the brothers’ failure to pay the accommodation costs gives rise to a claim in damages against the brothers equating to the unpaid accommodation costs to the date of order.
82	For the purposes of calculating their loss and damage, the plaintiffs submit that the obligation to pay accommodation expenses will merge upon the entry of judgment against the defendants.  I agree.  I also agree with the plaintiffs’ submission that the Mortgage did not usurp or supersede the joint obligation of all three brothers created by the 2002 Agreement.  As noted above, I will hear submissions on the final form of the orders, including the calculation of loss and damage to the date of the orders.  Once the orders for payment of the $300,000 plus loss and damage is made, the obligation to pay ongoing accommodation expenses will merge in the judgment and orders.
Should the Discharge be set aside?
83	The plaintiffs make a number of submissions concerning the entry into and effect of the Mortgage, as follows:
•	the granting of the Mortgage and its subsequent registration were acts instigated by George and Jack;
•	the court ought to infer that the Mortgage was granted to improve George and Jack’s claim for an adjustment in VCAT Proceeding W32;
•	the Mortgage was expressed to secure repayment of $390,567, which (as noted above) was M+K Lawyers’ estimate of the amount for which John was required to account to the plaintiffs;
•	it is evident from his reasons that Senior Member Walker in VCAT Proceeding W32 treated the Mortgage as securing a debt of $300,000 and not $390,567;
•	the Mortgage is executed as a deed, and otherwise complies with the requirements of the Transfer of Land Act 1958 (Vic); and
•	accordingly, even if the plaintiffs’ advance is characterised as past consideration, the Mortgage is still effective because it is made by deed.   
84	With one exception, I accept each of these submissions.  They were not relevantly in dispute.  The exception is the submission that I should infer that the Mortgage was granted to improve George and Jack’s claim for an adjustment in VCAT Proceeding W32.  In my view, this was only part of the motivation.  As noted above, George’s evidence was that the grant of the Mortgage was one of a series of steps taken “on advice from M+K Lawyers” to protect the plaintiffs’ position against John.  I accept this evidence.  Clearly if John had succeeded in VCAT Proceeding W32, the family’s last remaining source of income and capital would have been seriously compromised or lost.  I return to this issue below.
85	Turning to the Discharge, the plaintiffs accept that registration of a discharge is effective to release the Mortgage even where the discharge is forged or where it is registered through a mistake or inadvertence.  But they maintain that the Discharge did not extinguish the joint obligation created under the 2002 Agreement and was procured in circumstances where equity ought to intervene to restore the status quo that existed prior to the registration of the Discharge.  They rely for this purpose on the principles of both unconscionable conduct and undue influence, citing (among other things) Kaye J’s summary of those principles in Christodoulou v Christodoulou, (at [78], citations omitted):
“As I have demonstrated, the principles relating to undue influence focus on whether the transaction was the product of the independent and voluntary will of the donor.  By contrast, the doctrine of unconscionable conduct is concerned with circumstances where the will of the donor, while independent and voluntary, is the result of a special disadvantage or disability of the donor, of which the donee has taken unconscientious advantage.  In other words, while undue influence focuses on the quality of the consent or assent of the donor, unconscionable dealing is concerned with the conduct of the donee or recipient in attempting 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 or good conscience that he should do so’.”
86	The plaintiffs in their written submissions set out at length the applicable legal principles in respect of both unconscionable conduct and undue influence.  Those principles are relevantly uncontroversial and well established and it is unnecessary for me to repeat them.
87	On the question of unconscionable conduct, the plaintiffs submit that Peter was under a special disability or disadvantage in his dealings with George (or George, Jack and Lisa) on 9 June or 10 June 2015 when he executed the Discharge.  They note that George and Jack conducted their case on the basis that Peter would sign any document reasonably requested, and assert that this meant that Peter, “when confronted by George (or George, Jack and Lisa) advising that he needed to sign a document to advance their interests, readily agreed to do so”.  They submit that Peter was at a special disadvantage in dealing with George and Jack, “because he was unable to consider his interests separately to those of George & Jack”.
88	I accept that at the time Peter executed the Discharge he was likely to sign any document reasonably requested by George and Jack.  But I do not accept that this was because he was “unable to consider his interests separately” to those of George and Jack.  Rather, in my judgment, he executed the Discharge because he considered at the time that his and Mary’s interests were aligned with those of George and Jack.  And he was right to do so.  As noted above, John’s pursuit of VCAT Proceeding W32 had the potential to seriously compromise the family’s financial resources.  Further, had John succeeded by that proceeding in forcing a sale of the Dandenong property to a third party and claiming part of the proceeds of sale, John’s prior conduct would have given George, Jack and Peter no reason to have any confidence that those funds would be applied by John to reduce the debt to his parents.
89	In relation to each of the specific matters relied on by the plaintiffs in support of their claims of unconscionable conduct, George and Jack were clearly aware of Peter and Mary’s personal circumstances, including their level of education and financial position.  I also accept that Peter trusted George and Jack at this time.  This was exemplified by Peter and Mary both appointing George and Jack as their attorneys by powers of attorney (financial) and powers of attorney (medical treatment), each dated 16 September 2013 (“Powers of Attorney”), at around the time the Mortgage was given.  However, I am not persuaded that there was any particular urgency associated with the signing of the Discharge, in the sense that Peter felt pressured to sign.
90	In my view, it was more likely than not that the Discharge was signed on the morning of 10 June 2015 in the circumstances described by George and Jack.  There is no obvious reason for the Discharge to be signed and then post-dated, and the attendance register from the plaintiffs’ bowls club does not exclude the possibility that Peter attended the Dandenong property before going to his bowls club.  Indeed, this was Jack’s explanation for Peter being in a hurry that morning.  The evidence about whether Mr Virk was present when Peter signed is inconclusive.  However, nothing of substance turns on either the date of signing or the witnessing issue, given that it is not in dispute that Peter signed the document both for himself and Mary.
91	What is in dispute is what explanation Peter was given about the document.  On this, I prefer the evidence of George and Jack.  Peter visited the workshop regularly at around this time and was on good terms with George and Jack.  He assisted them in resisting the attempts by John to force a sale of the Dandenong property.  His evidence was that he told George that he  “will do anything in my power to stop [John]” selling the property.  Against this background, I consider it likely that Peter saw the signing of the Discharge (like the signing of the Mortgage) as part of the process of protecting the Dandenong property from a forced sale and thus did not otherwise pay close attention to what he was told about the Discharge, who was present at the time, or other matters of detail.
92	Thus I accept that George explained to Peter in Armenian the effect of the Discharge in the terms referred to above.  It is unnecessary for me to make a formal finding as to whether Lisa was also present and if she added to the explanation in English.  Given Peter’s limited grasp of English, any explanation Lisa provided is unlikely to have added materially to Peter’s understanding of the document.  Further, I agree with the plaintiffs that I ought to infer that any evidence she might have given would not have assisted George or Jack.  I also accept Peter’s evidence that George said it was an important document, but it is unlikely that the only other thing he said was that it needed to be signed urgently so George and Jack could buy a house for him.  I do not suggest that Peter was knowingly embellishing this or any other evidence.  Rather, my impression was that his recollection of events was patchy and less reliable than George and Jack’s. 
93	The plaintiffs assert that at the time Peter signed the discharge they were wholly reliant on George and Jack for the payment of their rent.  It is common ground that All-Tek was in fact paying the plaintiffs’ rent at this time.  However, the evidence is that the plaintiffs started paying their own rent a month or so later, so it seems unlikely that they were “wholly reliant” on George and Jack.  In any event, there is no evidence that George or Jack used All-Tek’s payment of rent as leverage to influence Peter to sign the discharge, or that Peter was so influenced.
94	As to Mary not signing, the evidence is that Peter said he could sign for Mary and that he did so.  The plaintiffs do not develop in their submissions how Peter signing for Mary is said to support their claims of unconscionable conduct.  In terms of issues of credit and general impropriety, his signing as Mary reflects poorly on Peter, at least as much as it does on George and Jack.  Perhaps for this reason, the plaintiffs do not seek to have the Discharge set aside as against Mary for fraud.  In those circumstances, it seems to me that the most that can be said about it is that it is not relevant in the circumstances to consider how Mary may have been influenced by George and Jack.  The focus must be on Peter alone.
95	The next matter relied on by the plaintiffs concerns consideration.  I accept (as the plaintiffs submit) that inadequacy of consideration moving from the stronger party can be relevant to establishing both disadvantage and unfairness.  However, when considering these matters in the context of the dealings and relationship between the plaintiffs, on the one hand, and George and Jack, on the other, in my view it is artificial to focus on the Discharge in isolation.
96	As explained above, to my mind the Discharge forms part of a series of events and transactions during which the plaintiffs and George and Jack were cooperating in taking steps to prevent a forced sale of the Dandenong property by John.  This included first the grant of the mortgage by George and Jack and the later discharge of that mortgage.  Neither step involved consideration moving between the parties at the time of the transaction and the discharge did no more (or less) than restore the plaintiffs to the position they had been in for the 10 years preceding the grant of the mortgage.  In my view, seen in that broader context, the absence of consideration does not assist the plaintiffs’ arguments.
97	I should add that what I say above about the steps taken by the parties in response to John’s VCAT Proceeding W32, should not be read as endorsing those steps.  It is sufficient for present purposes to observe that they were part of a cooperative endeavour.  I also note in passing that I do not accept the plaintiffs’ submission that Peter’s execution of the Discharge enabled George and Jack to deny their obligation to pay the accommodation expenses.  The plaintiffs at all relevant times retained their contractual rights, which they have relied on (successfully) in this case.
98	Finally, the plaintiffs submit that George and Jack failed to explain what the plaintiffs would forgo in executing the Discharge and failed to ensure that Peter received independent legal advice, noting that George and Jack had procured legal advice for the plaintiffs when they arranged the Mortgage.  There is some force in these submissions.  Indeed, the evidence suggests that George and Jack did not themselves fully understand the plaintiffs’ rights under the Mortgage, and thus could not have given complete advice on the consequences of its discharge.  On balance, however, I am not persuaded that this is a sufficient basis for a finding of unconscionable conduct.
99	At the heart of any claim for unconscionable conduct is the stronger party unconscientiously taking advantage of the special disability of the other party.  On the issue of special disability, the plaintiffs rely on Peter’s limited education, status as a pensioner and lack of assistance.  These factors were undoubtedly present.  But, despite his evidently failing health and change of allegiance in more recent times, Peter did not strike me as someone easily influenced or overborne against his better judgment.  At that time, he judged that George and Jack were deserving of his and Mary’s allegiance and support.
100	More relevantly in the context of a claim of unconscionable conduct, I am not satisfied that George and Jack were seeking to take advantage of any perceived disadvantage or disability.  George explained that the Discharge would release the Mortgage and that it was required to enable the sale of the Dandenong property from John to George and Jack.  This was accurate as far as it went and appears to have been enough to satisfy Peter.  Clearly more could have been said, but in my judgment, any lack of information was not calculated to take advantage of Peter’s trust, limited education or the other disadvantages relied on.
101	The plaintiffs rely broadly on the same matters discussed above in support of their claim of undue influence.  The plaintiffs again refer to the statements of legal principle in the decision of Kaye J in Christodoulou v Christodoulou, (at [74]) and notably His Honour’s admonition to “examine all of the relevant factors which bear on the nature of the relationship between the donor and the donee”.  Again, to my mind, this requires examination of the history of the relationship at the time, including the cooperative efforts of George, Jack and Peter in responding to John’s VCAT Proceeding W32.  Seen in this light, Peter’s apparent willingness to give the Discharge is unsurprising.  Further, as I have observed, he did not strike me as a person whose will was easily overborne.  I otherwise reject the plaintiffs’ submissions on undue influence for the same reasons.  In my view, Peter’s execution of the Discharge was the result of the exercise of free will and thus the plaintiffs’ application for equitable relief will be refused.
Is John obliged to indemnify George and Jack for any liability to the plaintiffs?
102	The answer to this question depends on two subsidiary questions, as follows:
•	Was the 2008 Agreement a binding agreement between the parties?
•	If so, what is the effect of the 2008 Agreement?
However, before turning to each of these questions, I should first say something about my impressions of the evidence of George, Jack and John.
103	In my judgment, despite the self-evident disadvantage of being unrepresented, both George and Jack did a creditable job of presenting their case and impressed me as both straightforward and honest in their evidence.  I cannot say the same about John.  There was an air of unreality in much of his evidence.  For example, he gave evidence that the money ISE used to purchase the Varsity Lakes property came from a pool of funds in his account that included his own money and he therefore did not know whether the money he used towards the purchase of the Varsity Lakes property was his parents left over money or his money.  This evidence conveniently ignored the fact that the proceeds of sale of the Chadstone property retained by ISE were almost double what was required to purchase the Varsity Lakes property after allowing for the loan.  So if John in fact used his own funds towards the purchase of the Varsity Lake property, it follows that he kept an equivalent sum from the sale of the Chadstone property for his own use.  John has never accounted for those funds, or the other sums obtained by him on the refinancing and sale of the Varsity Lakes property.
104	Similarly, his evidence that he brought VCAT Proceeding W32 because he “wanted to pay mum and dad off”, was self-serving and disingenuous.  As were his frequent criticisms of George and Jack for failing to assist their parents.  There was nothing in the documentary record (including documents relating to VCAT Proceeding W32) to support John’s asserted motivation for bringing that proceeding.  It is also sits very uncomfortably with the history of his dissipation of funds obtained from the family business and from his parents.  Further, it makes no sense for him to prosecute substantial and expensive litigation to the significant detriment of the family business which was then paying his parents’ rent, if his sole motivation was to generate funds for his parents.  And it does no credit to John to be critical of his brothers for failing to support the plaintiffs, given he has secured (and then dissipated) well in excess of $300,000 in value at the expense of both his parents and the All-Tek business.
105	In relation to John’s evidence that the payments out of All-Tek totalling $150,000 were for wages, this too was unconvincing and I reject it.  The evidence about whether there had been a wages cut for all or any of the brothers and (if so) how long it had lasted, was inconclusive.  But even if there had been a wages cut, John has not been consistent in relying on this to explain the payments.  As noted above, John does not appear to have proffered the wages explanation in VCAT Proceeding W32.  In relation to the $45,000, John’s evidence in that proceeding was that it represented some money John had lent to Holdings that was secured by a debenture.
106	On the other hand, according to the minutes of a directors’ meeting some two or so years earlier (26 April 2012) it appears that John said the $45,000 was a personal loan from the three brothers to a third party and he took his share of the loan because he had no faith in George and Jack.  I asked John in the course of his evidence whether he accepted the accuracy of these minutes.  He first sought to deflect the question by saying the minutes had not been circulated, then seemed to confuse the meeting with another meeting where his solicitor was present and finally said that he did not remember the meeting.  Later, in an answer to a question from George about the minutes, he essentially suggested the minutes had been fabricated. 
107	In contrast, George and Jack’s accounts of the rationale for the payments was consistent and supported by objective and contemporaneous evidence.  This includes the handwritten notation on the second of the EFT transfer record (there was no evidence that the first was contemporaneous) and, most significantly, the evidence of the reductions in payments by All-Tek coinciding with the payments as discussed above.  In the circumstances, I accept that the payments totalling $105,000 were agreed to by George and Jack trusting that John would pass the funds on to the plaintiffs, to reduce the loan under the 2002 Agreement.  John failed to do so.  I am also satisfied that John was not entitled to the $45,000 he drew on the All-Tek account.
108	I also accept George and Jack’s evidence that they and John entered into a written agreement on the terms of the 2008 Agreement, on or about 15 December 2008, at around the same time as they made the second payment of $50,000 to John.  That they did so is consistent with their evidence about the circumstances of the two $50,000 payments and George and Jack’s understandable concern to ensure that John applied the funds for the benefit of their parents.  I accept that a copy of the 2008 Agreement was signed by all three brothers, although the signed copy has gone astray.
109	I do not overlook John’s assertion that the 2008 Agreement is “embarrassing” because it contains errors (including in relation to the date of the 2002 Agreement).  Indeed, this tends to reinforce my view that it is not a fabrication.  If George and Jack had set out to fabricate the agreement, it is unlikely they would make such obvious mistakes.  The wording of the agreement (including the errors) is to my mind more consistent with George and Jack’s description of it being prepared at short notice by John to facilitate the second $50,000 payment.  Thus my answer to the first subsidiary question above is that the 2008 Agreement is a binding agreement between the parties.
110	The answer to the second subsidiary question is less straightforward, largely because the 2008 Agreement is so poorly worded.  However, construing the 2008 Agreement as a whole and in the context of both the circumstances of its execution as described by George and Jack and the terms of the 2002 Agreement, I am satisfied that:
•	John agreed by the 2008 Agreement to the effect that, in consideration of the $150,000 to be paid to him or at his direction, he would be responsible to maintain and pay off the $300,000 loan to the plaintiffs;
•	John’s responsibility to “maintain” included continuing to pay for the plaintiffs’ accommodation as required by the 2002 Agreement (and to do so without contribution from All-Tek once the $150,000 had been paid);
•	by on or about 31 March 2012 the sums totalling $150,000 were paid to (or taken by) ISE at John’s direction in pursuance of the 2008 Agreement;
•	in or about August 2012, in breach of the 2008 Agreement, John ceased payments for the plaintiffs’ accommodation and has failed to pay off the $300,000 loan; and
•	by reason of that breach, George and Jack have suffered loss and damage, being the sums payable by them to the plaintiffs by reason of my finding above of breach of the 2002 Agreement.
111	I accept that George and Jack’s claims against John are not pleaded expressly as arising from a breach of the 2008 Agreement.  However, I am satisfied that paragraphs 17 and 18 of their third party notice and their claims against John for indemnity and contribution, are sufficient to support the findings above.  Further, George and Jack clearly ran their case on the basis that the 2008 Agreement was binding and enforceable and operated to pass liability under the 2002 Agreement to John.
112	John raised a number of matters in defence of George and Jack’s claims.  With one exception, these depended on acceptance of John’s version of key events (notably in respect of the $150,000 payments and the 2008 Agreement), which I have rejected as discussed above.  The exception is an argument said to derive from the Powers of Attorney.  The first thing to note about this argument is that it has not been pleaded and appears to have been advanced for the first time in closing submissions.  The effect of the argument appeared to be that, by accepting appointment under the Powers of Attorney in conjunction with the granting of the Mortgage to the plaintiffs, George and Jack assumed responsibility for the repayment of the loan under the 2002 Agreement.
113	The legal basis for the submission was not clear to me at the time and continues to elude me.  Putting it at its highest, it might be suggested that these arrangements evidenced an agreement by George and Jack to assume responsibility for the 2002 Agreement, or create some kind of estoppel that operates to prevent them from now denying liability.  Regardless, any legal consequence arising from these documents could only operate to create rights enforceable by the plaintiffs.  There is no conceivable basis for suggesting that they somehow operate to release John from his liability either to the plaintiffs under the 2002 Agreement or to George and Jack under the 2008 Agreement.  For these reasons (as well as John’s failure to plead any claim based on these facts) I reject the submission.
114	Finally, it is clear that the 2008 Agreement was between each of the brothers individually.  Accordingly, in the absence of any pleading directly against ISE (for example, based on a constructive or resulting trust), I am unable to discern any basis for a claim against that entity.  The claim against ISE will be dismissed.
Costs
115	I will also hear the parties on the orders that should be made on costs.  Subject to the terms of any offers of compromise or settlement that may have been made, my tentative view is that costs should follow the event.  That would mean that George, Jack and John would be ordered to pay the costs of the plaintiffs, and that there would be an order as between the brothers that John pay to George and Jack both the costs they are liable to pay to the plaintiffs plus George and Jack’s costs of the proceeding.  If John can show that the joinder of ISE led to costs being incurred by ISE in addition to those incurred by John, it may be appropriate to order that George and Jack pay ISE’s costs.  Otherwise, there would be no order made in relation to those costs.

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Certificate
I certify that these 36 pages are a true copy of the judgment of His Honour Judge Woodward delivered on 26 April 2019.
Dated: 26 April 2019

Shakti Nambiar