Eun Ju Park v Chong Eun Yi as executor of the late Young Ja Yi [2024] NSWSC 294

Supreme Court New South Wales

Medium Neutral Citation: Eun Ju Park v Chong Eun Yi as executor of the late Young Ja Yi [2024] NSWSC 294 Hearing dates: 13-14 March 2024 Date of orders: 22 March 2024 Decision date: 22 March 2024 Jurisdiction: Common Law Before: Elkaim AJ Decision: 1. Judgment for the plaintiff in the sum of $537,500. 2. The cross-claim is dismissed. 3. The defendant is to pay the plaintiff's costs of the proceedings. 4. I will hear the parties on any alternative costs order. Catchwords: CONTRACTS – formation – whether the Loan Agreement is a deed – whether forbearance to sue is sufficient consideration – whether the deceased had mental capacity to create the Loan Agreement – whether the deceased was under undue influence when creating the Loan Agreement – whether the plaintiff engaged in unconscionable conduct – whether the interest component of the Loan Agreement is a penalty – whether the reference to $300,000 in the Loan Agreement is a reference to the $300,000 bequeathed to the plaintiff in the deceased's will – held the Loan Agreement is valid and enforceable Legislation Cited: Contracts Review Act 1980 (NSW), s 7 Conveyancing Act 1919 (NSW), s 38 Family Law Act 1975 (Cth), s 90C Succession Act 2006 (NSW) Cases Cited: Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231; [2016] NSWCA 328 Brehm v Wright [2007] NSWSC 1101 Butler v Fairclough (1917) 23 CLR 78; [1917] HCA 9 Irvine v Irvine [2008] NSWSC 592 Kearney v Grow Choice Pty Ltd [2023] NSWCA 325 Labracon Pty Ltd v Cuturich & Anor [2013] NSWSC 97; 17 BPR 32,497 Legione v Hateley (1983) 152 CLR 406; 57 ALJR 292; 46 ALR 1; (1983) NSW ConvR 55-123 Player & Ors v Isenberg & Ors [2002] NSWCA 186 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Silvestro v S R Factors Pty Ltd [2010] NSWCA 74 SR Factors Pty Ltd v Silvestro District Court 2358/07, 8 May 2009 Category: Principal judgment Parties: Eun Ju Park (Plaintiff) Chong Eun Yi as executor of the late Young Ja Yi (Defendant) Representation: Counsel: Mr L Ellison SC (Plaintiff) Ms N Bailey (Defendant)

Solicitors: Strathfield Law (Plaintiff) Uther Webster & Evans (Defendant) File Number(s): 2022/130757 Publication restriction: Nil

JUDGMENT 1. The proceedings commenced with the filing of a statement of claim on 6 May 2022. A cross-claim was filed on 27 June 2022. An amended statement of claim was filed on 12 May 2023. Defences have been filed to the respective claims. 2. The plaintiff and the defendant are sister and brother, respectively. They are the only children of Mrs Young Ja Yi. Mrs Yi (the deceased) died on 4 June 2020. She was then aged 74. The deceased left a will dated 2 June 2020. Probate of the will was granted to the defendant on 16 November 2021. 3. The will provides that after payment of the estate's liabilities: 1. $300,000 to the plaintiff. 2. $200,000 to the defendant. 3. Anything remaining to be distributed in this way: 1. 60% to the defendant. 2. 11.76% to the deceased's grandson, Gregory Park. 3. 5.88% to the deceased's granddaughter, Serena Park. 4. 22.36% to the plaintiff. 1. Gregory and Serena are the plaintiff's children. The inventory of property owned by the deceased indicates that by far the bulk of the estate was made up of a house in Concord West. At probate, the house was given an estimated value of $2,300,000. The balance of property was about another $23,000 made up of cash in various bank accounts and a motorcar with an estimated value of $10,000. 2. The house in Concord West had been purchased by the deceased and her husband (Tae Soo Yi) in 1990. The deceased and Tae Soo Yi separated in 2015 and were divorced in 2018. Tae Soo Yi took up residence in South Korea in about 2015. He returned once a year, including presumably in 2018 when he executed a s 90C Family Law Act 1975 (Cth) agreement by which he transferred his interest in the Concord West house to the deceased. The deceased thereafter became the sole owner of the house. 3. The plaintiff's case is that, in addition to the monies she receives under the will, she is also entitled, from the estate, to a further $500,000. The $500,000 is said to be a product of a "Deed of Loan Agreement" (the Loan Agreement) made on 13 July 2017. The parties to the Loan Agreement are the deceased and the plaintiff. 4. The recitals to the Loan Agreement state that the deceased borrowed $300,000 from the plaintiff in 2012 and that this sum was used to renovate the Concord West property. 5. The Loan Agreement then goes on to record that the parties agreed that the $300,000 would be repaid if the house was sold or the deceased died. In addition, a fixed amount of interest, in the sum of $200,000, was to accompany repayment of the loan. 6. The defendant, by the cross-claim, primarily seeks a declaration that the Loan Agreement is "void, in whole or in part". In the alternative, the defendant firstly seeks a declaration that the $300,000 referred to in the Loan Agreement is satisfied by the provision in the will giving $300,000 to the plaintiff. Secondly, the defendant seeks an order under s 7(1)(a) of the Contracts Review Act 1980 (NSW), stating that the plaintiff is not entitled to the interest sum of $200,000. 7. In opening written submissions, the defendant put his case in this way: 1. the Loan Agreement was not a deed because it did not comply with s 38 of the Conveyancing Act 1919 (NSW), in particular because the signatures of the parties to the agreement had not been witnessed by an independent person; 2. the Loan Agreement was not an enforceable contract because the plaintiff had not given any valuable consideration; 3. the plaintiff could not establish an estoppel by convention to prevent the defendant denying her right to the $300,000 plus interest of $200,000; 4. the Loan Agreement should be set aside, partially, or fully, under the Contracts Review Act; 5. the interest of $200,000 should be regarded as a penalty and rendered void; and 6. the $300,000 referred to in the loan agreement was the same $300,000 left to the plaintiff under the deceased's will. 1. As a further alternative, the cross-claim seeks a declaration that the plaintiff "exercised undue influence over the Deceased or engaged in unconscionable conduct in respect of entry into the Loan Agreement". Accordingly, the Loan Agreement should "be set aside as unconscionable". 2. The plaintiff relied upon the following affidavits: 1. her own affidavits of 17 October 2022, 7 December 2022, 10 February 2023, 14 July 2023, and 19 February 2024; 2. three affidavits of Young Seek Park of 7 December 2022, 10 February 2023, and 16 February 2024; and 3. an affidavit of David Jin-Ho Oh of 27 February 2024. 1. Young Seek Park (also known as Dominic) is the former husband of the plaintiff. David Oh is a solicitor in the firm acting for the plaintiff; 2. The defendant relied upon the following affidavits: 1. his own affidavits of 7 November 2022 and 15 February 2023; 2. two affidavits of Myung Suk Shin of 7 November 2022 and 11 September 2023; and 3. an affidavit of Myung Hee Kim of 9 November 2022. 1. Myung Suk Shin is the defendant's wife (also known as Vicky). Myung Hee Kim (MH Kim) was a friend of the deceased. The defendant and Ms Shin have four children, now aged 19, 17, 14 and 8, respectively. Unlike the plaintiff's two children, no provision is made for any of the defendant's children in the deceased's will. This fact is not the subject of any complaint. 2. The parties' affidavits are awash with claims and counterclaims about their respective relationships with the deceased. Each relationship was close or distant, a carer or a parasite, loving or hostile depending upon which affidavit is read. But it is important to note that the plaintiff does not attack the deceased's will and has not made a family provision application under the Succession Act 2006 (NSW). The primary issues in this case surround the Loan Agreement; is it valid as a deed, is it valid as a contract and are its terms susceptible to extinction or change under the Contracts Review Act or otherwise?

Comments on the evidence, and in particular, the oral evidence 1. Both sides put their primary cases through their affidavits. All but two of the deponents were cross-examined. I do not think it necessary to summarise all of the affidavit material. A good deal of it will emerge through my following assessment of the witnesses and elements of the history behind the dispute. 2. For convenience, and without any disrespect, I will refer to the plaintiff's husband as Dominic and the defendant's wife as Vicky. 3. Prior to 2010 the plaintiff, her husband (Dominic) and their two children were living at premises in Rydalmere, which they owned subject to a mortgage. They also owned a unit in Campsie. 4. Around 2011 or 2012, the plaintiff reached an agreement (the first agreement) with her mother, which had the following ingredients: 1. the plaintiff and Dominic would sell their two properties and provide the equity to the deceased; 2. the deceased would permit the plaintiff and Dominic to construct a second storey on the property and also, separately, a 'granny flat'; 3. once the second storey was completed, the plaintiff and her family would move into the extension and live there rent-free; 4. the plaintiff would receive any rent paid in respect of the granny flat; and 5. the deceased would leave the entire house to the plaintiff in her will. 1. Pursuant to the above agreement the plaintiff said she paid $130,000 emanating from the sale of the Campsie unit to the deceased and, later, a further $240,000, being the equity from the Rydalmere property. The sums were paid in cash. 2. The plaintiff did not pay rent for the second storey, but her husband gave the deceased money from time to time for living expenses. The plaintiff did receive rent from the granny flat ($450 per week) although this was not every week as the deceased sometimes kept money for herself. 3. The defendant and his family moved into the granny flat in about 2017. This brought an end to the plaintiff receiving rent from the granny flat. There were also boarders living in the main house. The plaintiff collected rent from them when her mother was away but all of this rent went to the deceased. 4. Following the deceased's death, the rents seem to have been collected by the defendant's wife Vicky who appropriately, after paying expenses, deposited the balance into the deceased's estate. 5. It was put to the plaintiff that she had received significant benefits from the first agreement. She no longer had to pay interest on the two loans (in respect of the Campsie and Rydalmere properties), she did not have to pay rent for the new premises (the second floor) that she was occupying, and she was receiving rent from the granny flat. 6. The plaintiff agreed that she had received the above benefits, but this concession is to be viewed against the background that she and her husband gave up any capital gain they might have derived from their two properties, and they had paid $370,000 (or possibly more) to the deceased. In addition, the rent from the granny flat was not received every week and, in any event, came to an end in 2017. 7. It was put to the plaintiff that the words she attributed to the deceased in making the first agreement were suspiciously similar to the words used by her husband in his affidavit. In the plaintiff's affidavit the version is: "Mother: I want you to sell your properties and extend this house so that you can move into the extension. If you build a granny flat you can keep the income from the rent. If you do that I will leave Eun Ju this house in my Will. Eun's father is moving to Korea so he won't need the house and it is mine to leave in my will." 1. The version in Dominic's affidavit is: "YJ Yi: I want you both to sell your properties and extend this house so that you can move into the extension. If you build a granny flat Eun can keep the income from rent. If you both do that I will leave Eun Ju and you this house in my Will. Eun's father is moving to Korea so he won't need the house and it is mind to leave in my will". 1. The two versions are not identical, but they are very similar. In his oral evidence, Dominic said he had discussed the contents of his affidavits with the plaintiff and even that she had "told him what to say". This evidence was to some degree confirmatory of the defendant's assertion of effective concoction. 2. Dominic was however, an otherwise impressive witness. Without any disrespect to the cross-examiner, who was careful and precise in her questions, I am not sure that Dominic fully understood the questions he was being asked. He did not use an interpreter and seemed to me to often have some difficulty with understanding what he was being asked. 3. I also regard it as entirely unrealistic to expect that a husband and wife involved in litigation would not discuss the dispute from time to time. 4. I think there probably was discussion between the plaintiff and Dominic about a number of matters, including the conversations with the deceased. I am not however prepared to conclude that Dominic's evidence was made up. I note that in re-examination he confirmed that the contents of his affidavits were true and correct. 5. Returning to the plaintiff, she said that in 2017 she spoke to a solicitor, Mr Song about methods of recoupment of the monies she had paid to her mother. Mr Song sent her a text message outlining three possibilities. In summary, these were: 1. an IOU for $500,000 made up of $300,000 that had been lent plus $200,000 as fixed interest; 2. a transfer of the title of the property, then held jointly by the deceased and her husband, into the sole name of the deceased. Notably the 2018 Family Law Act agreement had not yet been made; and 3. following the transfer of title to the deceased, the use of a will to leave $300,000 plus the fixed interest of $200,000 to the plaintiff. 1. It was suggested to the plaintiff that the third option was effectively what had occurred, noting that the will includes a bequest of $300,000 to the plaintiff. It does not however mention the interest of $200,000 although this is perhaps arguably included in the 22.36% left to the plaintiff from the remaining estate. 2. The plaintiff said that after discussing the text message with her mother, her mother preferred to enter into a loan agreement. To this end instructions were given to Mr Song and she and her mother attended upon his offices. 3. The plaintiff was taken to a file note prepared by Mr Song in which it is stated that on 11 July 2017 the plaintiff and the deceased attended his office and were provided with an English version of the agreement and also a Korean version. The file note later says: "They took the Deed prepared and left the office › we did not see them executing them at our office." 1. The plaintiff disagreed with the file note. She was adamant that the documents had been signed in Mr Song's premises, that he was present as was his assistant. In fact, Mr Song had said that the loan would have no legal effect unless it had been witnessed. 2. The fact is that the documents were not witnessed, confirming the correctness of the file note. There is no dispute however that the Loan Agreement was signed by the deceased. There is a significant issue as to her state of mind and health when signing the document, the suggestion being that she was overborne by the plaintiff. 3. Another important event that occurred close in time to the Loan Agreement was that the deceased, on 2 June 2017, executed a will (Exhibit B). Under this will, the whole of the deceased's estate went to her husband, but if he did not survive her then the estate was to be split with 60% given to the defendant and 40% given to the plaintiff. 4. The significance of the 2017 will is that it effectively nullifies the defendant's argument that the deceased could not, or did not, distinguish between an agreement such as the Loan Agreement and a will. The defendant's argument was that the 2020 will should be taken as a progression of the deceased's intentions in which she treated the 2020 will as an effective update and amendment of the Loan Agreement. 5. The closeness in time of the 2 June 2017 will and the 13 July 2017 Loan Agreement indicate that the deceased was well aware of the distinction between the two documents. 6. The deceased was diagnosed with bowel cancer in about 2011. She underwent surgery and radiation treatment in 2012. She seems to have then recovered quite well until a diagnosis in 2015 of spreading cancer. She went to Korea for a few months to undergo chemotherapy. She continued with treatment during 2016 and 2017. 7. It was put to the plaintiff that the deceased was weaker and had less energy during bouts of chemotherapy. The plaintiff accepted this was the case, but only on the first day of treatment. Although this statement from the plaintiff is a little hard to accept, I do note that in a report dated 27 July 2017, the deceased's oncologist, Dr Blinman, said: "Mrs Yi is keen to recommence chemotherapy … and we agreed that she will do so next week. She was tolerating it well and having a god (sic) response so I am in favour of her continuing it too." 1. The plaintiff said that she attended all of the deceased's medical appointments with her. She was asked about the plaintiff complaining of right-side pain, neck pain and leg pain. The plaintiff was taken to various medical reports detailing these complaints. The plaintiff said that her mother would exaggerate her levels of pain in order to receive better treatment. 2. In respect of the right-side pain, the plaintiff was taken to an earlier report of Dr Blinman (13 June 2017) following a consultation on 31 May 2017. Dr Blinman records that the deceased "is quite troubled by fairly consistent right flank pain which sounds very much like right renal colic." Dr Blinman said she would liaise with urology colleagues as to whether further investigation was needed. Nevertheless, she was happy to "re-commence her chemotherapy given her good response to treatment so far." 3. Questions about left leg pain arose from a general practitioner note on 24 July 2017. The note does not actually refer to any pain but rather to "dermatitis in legs". I cannot see any relevance of this clinical note to the question of the deceased lacking capacity or being in an inferior bargaining position compared to the plaintiff. 4. The neck pain cross-examination seems to have been based on the report of a chiropractor, Dr Jun Choi, dated 4 July 2017. The chiropractor refers to the deceased having "chronic neck pain with shoulder tightness." Examination revealed "cervical facet joint disease on C4/5 and C5/6 without nerve impingement." A treatment plan was suggested involving "chiropractic adjustments, postural correction and exercise program." It is not clear if this treatment was taken up. But again, there is nothing in the report to suggest the types of incapacity or bargaining imbalance suggested by the defendant. 5. The plaintiff was also taken to a visit to an optometrist by the deceased complaining of "dry and itchy eyes." It is clear from the report of Dr Orekondy dated 23 August 2017 that any eye complaints were of little significance. The doctor removed some eyelashes which had caused trichiasis and prescribed eyedrops. 6. There is a report from the Concord Repatriation General Hospital dated 10 July 2017 indicating that the deceased was admitted on 10 July 2017 (three days before the Loan Agreement was signed). The operation report however indicates that the deceased was discharged on the same day with follow-up to occur after two months. 7. I have no doubt that in July 2017, the deceased was not well. She was undergoing chemotherapy and she had assorted aches and pains. But there is no evidence, and in particular no expert evidence, that would suggest she had any lack of cognition or capacity that might have allowed the plaintiff to exercise such influence over her that her normal resilience would otherwise have prevented. 8. The defendant did not actually suggest any mental incapacity, but rather an incapacity which included her medical condition. The defendant said there were seven factors that went to the establishment of an unfair bargaining position. I will return to these factors below. 9. Returning to the oral evidence, after the plaintiff gave her oral evidence, her former husband, Dominic, was cross-examined. I have already mentioned his evidence concerning the assistance he was given by the plaintiff in the preparation of his affidavits. 10. Dominic moved out of the property in about 2016 or early 2017. He went to Korea for about a year and then returned in 2018. He left again after about 12 months in order to receive dental treatment in Korea. 11. Dominic said that he had a close relationship with the deceased and visited her often, sometimes a couple of times a week, after his return from Korea. He never lived at the property again after leaving in 2016 or 2017. 12. He said that his original understanding of the first agreement with the deceased concerning the erection of the second storey was that the deceased would leave the house to both him and the plaintiff in her will. This understanding was dissolved by his separation from the plaintiff. 13. Dominic confirmed that after the family moved into the second storey no rent was paid. He said that, in about 2015 or 2016, he told the plaintiff to ask her mother to pay back the monies that had been paid after the sale of the Campsie and Rydalmere properties. He recalled that the monies from the sales had been given to the deceased over three or more occasions. 14. Dominic said that he had an independent recollection of the conversations with the deceased, notwithstanding his agreement that he had spoken to the plaintiff about the content of those agreements. 15. The house was sold in December 2022 for $2.68 million. A mortgage debt to the ANZ Bank of $189,746.25 was discharged. There have been some distributions under the will, including $300,000 to the plaintiff and $200,000 to the defendant. After the payment of expenses, there is a lump sum of about $2 million residing in a solicitor's trust account. Its distribution is awaiting the results of this litigation. 16. Vicky was the first witness called by the defendant. This drew some comment from senior counsel for the plaintiff, noting that the defendant remained in court during Vicky's evidence. While it might be thought of as normal to call a defendant as a first witness, or to at least send a party out of court while a witness is giving evidence before that party, I do not think the approach taken by the defendant in this case was necessarily wrong or productive of adverse comment. Part of the reason for this conclusion is that when the defendant gave evidence, he conveyed a poor impression without the need for any contribution from the forensic decision to call him after his wife. 17. Vicky was mostly cross-examined on her knowledge of the overall affidavit material and the possibility of some collusion with the defendant. It was put to her that she had exaggerated her degree of contact with the deceased and the extent to which she had provided domestic assistance. Vicky denied any exaggeration. 18. Vicky was also tested on her recollection of conversations. It was sometimes put to her that she had not even been present at certain conversations. She denied that she had ever said to the plaintiff: "that she was silly, that she shouldn't have put any money into the house." 1. Vicky explained that she collected rent from the boarders after the deceased's death. There were five boarders. They paid $70 per week although one person, who had the benefit of a pension, paid $150 per week. As already noted, she said that she used the collected money to pay any expenses and then deposited the remainder into the estate's funds. 2. I have already observed that the defendant was an unimpressive witness. Notwithstanding the detail provided in his affidavits, his memory of dates when important events occurred was almost non-existent. For example, he could not remember when he moved into the property. He also could not remember when he moved out of the property, at one stage saying it was about a month after his mother's death, but later amended to one or two months before the property was sold. 3. The defendant did not pay any rent to the deceased for his occupation of the granny flat. 4. The defendant said that he had not known that there was a previous will and he had not known about the Loan Agreement until after January 2021. When it was brought to his attention, he said that he was "not that interested in the agreement", a most unusual attitude for an executor to take, knowing that the $500,000 referred to in the agreement could potentially be drawn from an estate in which he had a significant personal pecuniary interest. 5. An area where I thought the defendant was deliberately tailoring his evidence to suit his case arose from his observations about the mental health (from a capacity point of view) of his mother. He said there was nothing wrong with her mentally when she signed her will two days before her death. He said there was nothing wrong with her mentally when she executed the divorce documents in 2018. However, he said he was not sure about her mental capacity in 2017 (notably the year when the Loan Agreement was signed) because his mother was "lying down all the time." 6. The two deponents who were not cross-examined were David Oh, on the plaintiff's side, and Myung Hee Kim on the defendant's side. Mr Oh's affidavit is effectively limited to an interview he had with Ms Kim about the deceased's capacity and activities. His annexed file notes do not particularly assist with any issue in the case. 7. Ms Kim was a friend of the deceased. They would play cards together. She thought that the deceased's English was basic. She said that she was at the deceased's house about 10 years before her death. The deceased told her that she had been diagnosed with rectal cancer and that she was going to Korea for treatment. This was in about 2016. Upon her return, the friends continued to play cards together about once a week. She noticed that the deceased tired easily when she was sick and "this got worse over time until her death." 8. Ms Kim also observed that the deceased relied on Vicky about the house. 9. The facts and versions posed by the opposing parties frequently display significant differences. Other than the comments I have made above about the witnesses, I do not see it as relevant to resolve these various differences. This is because I think there are two documents in this case, being the Loan Agreement and the 2020 will, both of which are simple in their contents and capable of easy application. 10. There is no argument about the will but considerable argument about the Loan Agreement. However, I can see no reason why the Loan Agreement should not be equally enforceable unless the defendant establishes one of the reasons that it has put forward as either voiding the whole of the agreement or a part of it. 11. I will deal with each of the defendant's reasons in turn.

Is the Loan Agreement a deed? 1. Section 38 of the Conveyancing Act states: "Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation." 1. The Loan Agreement, in both the English and Korean versions, is evidently signed by the plaintiff and by the deceased. There is no attestation of their signatures. 2. Prima facie, applying s 38, the Loan Agreement is not a deed. The plaintiff's response was to concede the point, although with one caveat arising from his estoppel argument. 3. The practical effect of the concession is that the benefit of a deed (in particular the absence of a need for valuable consideration) was not available to the plaintiff. 4. The plaintiff could therefore only rely on the Loan Agreement as a contract between her and her mother, a contract requiring the giving of valuable consideration.

Did the plaintiff provide valuable consideration? 1. The defendant conceded that "consideration may be given in form of forbearance from suing on an existing debt" but went on to say that such consideration is only available where "the forbearance is requested by the debtor or offered by the creditor as consideration". 2. In support of this argument, the defendant referred me to Kearney v Grow Choice Pty Ltd [2023] NSWCA 325, where, at [34], Basten JA stated: "Fifthly, the Mr Fagan's evidence did not include any statement that he had said to Mr Kearney that Grow Choice would not take proceedings against North West until the sale of Longacres, or the water rights. In other words, not only did Mr Kearney not seek forbearance, but Mr Fagan did not offer it. While it may be possible to imply a contract of guarantee where there was no discussion of the possible consideration for such a contract, the implication is, at best, strained. The mere fact of not bringing proceedings does not relevantly constitute forbearance." 1. In Player & Ors v Isenberg & Ors [2002] NSWCA 186 at [45], Beazley JA (as Her Excellency then was) said: "… forbearance to sue only constitutes good consideration if it comes about at the request of the other party to the contract." 1. I think there is an important point of distinction between the present case and both Kearney and Player. In both of these cases, the forbearance was asserted to be implied from the circumstances of the case. In Kearney the implication was said to arise from conversations between Mr Kearney and Mr Fagan. 2. In this matter, to the contrary, the forbearance is specifically stated in the agreement: "THE PARTIES AGREE: 1. Party A agrees to pay Party B the Loan with a fixed interest of AUD $200,000.00 if the property known as XXXXXXXX, Concord West NSW 2138 is sold or Party A is deceased." 1. My reading of cl 1 of the agreement is of a direct statement that Party A agrees with Party B to not seek repayment of the loan from Party B until the property is sold or the deceased dies. I think there is a forbearance both as to when repayment might be sought and as to the happening of one of only two events. 2. Another way of stating my view is that the forbearance to sue is actual forbearance falling within this statement by Isaacs J in Butler v Fairclough (1917) 23 CLR 78; [1917] HCA 9 at 96: "A promise not to sue for a limited period, definite or indefinite, is a valuable consideration where the substantive claim is one for which the other party is liable." 1. As stated by Gzell J in Brehm v Wright [2007] NSWSC 1101 at [29], "actual forbearance" is "good consideration." 2. Accordingly, I reject the defendant's argument that the plaintiff did not provide valuable consideration.

Contracts Review Act 1. I have already found that the deceased was not mentally incapacitated when the Loan Agreement was signed. However, this incapacity was one of seven factors put forward in support of the defendant's assertion that the deceased was in a position of disadvantage against the plaintiff. The other six were: 1. the deceased was an "ageing" woman; 2. the deceased had only a single asset, the property; 3. the deceased was living with the plaintiff and relying upon her; 4. under the Loan Agreement the deceased was giving away $500,000 for no fresh consideration, the advances by the plaintiff and her husband having been made some years previously and in connection with the agreement made at the time; 5. the deceased did not receive any independent legal advice; and 6. the deceased was disadvantaged by her educational and literacy background. 1. The deceased was 71 years of age when the Loan Agreement was signed. This is far from an age suggesting disadvantage. 2. The deceased may have owned no other substantial asset apart from the property, but it was a valuable property, as evidenced by the eventual sale price, it was largely unencumbered and it provided a steady rental income either through boarders in the main house or, up to the defendant moving in, through the granny flat. 3. The deceased may have relied on the plaintiff for many things, such as housework, but these were a benefit to her and not a detriment. There is no suggestion of any oppressive conduct on the part of the plaintiff in the manner in which she provided services to the deceased. 4. It is correct to say that there were no fresh monies provided after the initial sums derived from the sale of the plaintiff's two properties. However, the sums had been provided to extend the house. While the plaintiff and her family lived in the house the deceased received the significant benefit of the increased value by the house being extended both by a second storey and a granny flat. In addition, I note that Dominic continued to provide funds to the plaintiff from time to time. 5. Arguably, the deceased did not receive legal advice, independent of advice given to the plaintiff. However, a lawyer was consulted and not only explained the agreement to the deceased but also provided a copy in the Korean language which was signed by the deceased. 6. Exhibit C is a letter from Cambridge Lawyers, who prepared the Loan Agreement, to Uther Webster & Evans, the defendant's solicitors, dated 25 January 2021. The letter notes that Cambridge Lawyers were the deceased's "instructing solicitors back on 13 July 2017 when she entered her loan agreement with her daughter". I take this as a statement that Cambridge Lawyers regarded the deceased as their client and owed their primary duties as solicitors, to the deceased. The letter includes the following: "We are also informed that there were some concerns from your client in relation to the Deed of Private Loan Agreement made between the late Mrs Yi and her daughter on 11 July 2017 for the amount of AUD $500,000. However, we can assist both parties as to how the late Mrs Yi and her daughter came to agree this amount as the late Mrs Yi's loan from her daughter back in 2012 or 2012 (sic) when the late Mrs Yi asked her daughter's former husband to perform some works to her house at the above address. At the time of assisting the late Mrs Yi with her informal Korean version of the deed, she indicated that the actual financial dealing occurred sometime in 2012 or 2013 with her daughter and her former husband. On 11 July 2017, we were informed by the late Mrs Yi that her daughter and her then husband provided the construction funds for the late Mrs Yi to extend the above house and the late Mrs Yi estimated the total costs spent by them to be around $300,000 but the late Mrs Yi's daughter disputed this amount and she viewed the total amounts would be close to $450,000. Instead of arguing with the exact amount spent at the above house as the actual construction and extension of the house did occur back in 2012 or 2013, the late Mrs Yi was willing to consider paying her daughter the total sum of $500,000 when she is either deceased or when the house is sold in due course whichever occurs earlier. The late Mrs Yi agreed $500,000 consisted of $300,000 as the actual amount that her daughter and her husband spent on the house with the remaining $200,000 as the fixed interest for the principal loan of $300,000 used by the late Mrs Yi's daughter and her former husband. Both parties were happy with the contents contained in their informal deed as we could not assist them formally as we could not back-date their deed to 2012 or 2013 and the late Mrs Yi wanted the deed prepared in Korean so that she could understand what she was signing for. The late Mrs Yi and her daughter were happy to execute their informal deed of agreement in Korean (with the English version as a back-up) as long as they could both see and acknowledge the contributions made by the late Mrs Yi's daughter and her husband were reflected in the deed for $500,000 as their entitlements." 1. I think the contents of Exhibit C indicate that the deceased played an independent role in the formulation of the Loan Agreement and had the benefit of the, at least informal, input of her solicitors. 2. I had the impression, from both the plaintiff and the defendant, that the deceased was a strong willed, astute, and independent woman. 3. I do not think there is evidence to establish an unequal bargaining power or unconscionable overbearing by the plaintiff of the deceased. 4. The defendant drew my attention to the decision of Barrett J in Irvine v Irvine [2008] NSWSC 592, suggesting that, with some small points of difference, the case was otherwise analogous to the present matter. I disagree. I think Irvine is very different. In Irvine a nephew, for a nominal consideration of one dollar, organised for the transfer of his 90 year old aunt's property to himself and his two sons. The nephew organised his own solicitor to draw up the relevant documents. When the aunt signed the transfer, she did not know that a person who was present was a solicitor. 5. Barrett J found that the aunt was wary of her nephew and that the "transfer was oppressive because its effect was to take away from the aunt virtually her only asset, with nothing but the unenforceable oral assurance given in return, so that she was deprived of security of tenure and of the ability to resort to the asset to meet future financial needs." Nothing close to these considerations is applicable here. 6. In relation to the asserted education imbalance, it is difficult to know precisely the level of education that the deceased had. But as I have said, she seems to have been a very astute woman who had at least a rudimentary appreciation of English and displayed a continuing capacity to create income through the property. Even if rent for the granny flat did not go to her, she did derive income from at least five boarders living in the main house with her. 7. The defendant submitted that there was a secondary basis for attacking the Loan Agreement under the Contracts Review Act. It was submitted that the interest component ($200,000), being 66% of the principal sum ($300,000), was an unconscionable ingredient of the Loan Agreement. 8. If this argument was successful then I could, under s 7(1) the Contracts Review Act, either make an order declaring the interest provision void or vary the provision so as to set a 'just' rate of interest. 9. I was not provided with any authority for a specific order regarding an interest provision although I have, in a different jurisdiction, previously made such an order (SR Factors Pty Ltd v Silvestro District Court 2358/07, 8 May 2009. An appeal from this decision was dismissed. The Court of Appeal did not however deal with the interest order; Silvestro v S R Factors Pty Ltd [2010] NSWCA 74.) 10. In Silvestro, interest was charged at 20% per annum for an extended period during which the claimant had delayed pursuing the debt for a number of years. I found that the manner in which the 20% interest provision had been applied was unconscionable and I substituted a lesser rate of interest. 11. The facts here are of course very different. A greater difficulty facing the defendant is that the 66% calculation is not an indication of an interest rate but rather of an interest amount. Some calculations demonstrate the error in the defendant's argument: 1. if interest was calculated between the date of the Loan Agreement and the date of the deceased's death, the rate would be 23.03%; 2. if the calculation was between 1 January 2014, by which time the funds had been advanced, and the date of the deceased's death, then the rate would be 10.37%. It is to be recalled that the agreement to pay the $500,000 was made in respect of monies advanced some three or four years earlier; and 3. had the deceased lived beyond 4 June 2020 then, logically, the rate would continue to decrease until she eventually died, or the property was sold. 1. The above calculations are of a simple interest-rate. If a cumulative rate had been applied, it would have resulted in a lower rate. For example, on the first calculation, if accumulating monthly, the rate would be 17.77% instead of 23.03%. 2. I accept that 23.03% is a high interest rate. However, I think the more appropriate rate to be applied is 10.37% because it reflects the length of time between the provision of the funds (the making of the loan) and the recoupment of the loan. 3. On this basis, I do not think the interest component is an unjust or unconscionable feature of the Loan Agreement.

Is the interest component a penalty? 1. As an alternative to its argument under the Contracts Review Act, the defendant submitted that the $200,000 should be viewed as a penalty, again suggesting that it reflected a 66% rate of interest. It was submitted that the $200,000 interest component was "out of all proportion and should be declared void as a penalty." 2. I have already explained why I think this assertion of the rate of interest is not sustainable. This is enough to reject the defendant's argument that the interest component is a penalty. 3. Usually, a penalty is a consequence which arises on the happening of a stipulated event. This is reflected in many of the descriptions of a penalty. 4. For example, in Legione v Hateley (1983) 152 CLR 406; 57 ALJR 292; 46 ALR 1; (1983) NSW ConvR 55-123, Mason and Deane JJ said: "A penalty, as its name suggests, is in the nature of a punishment for non-observance of a contractual stipulation; it consists of the imposition of an additional or different liability upon breach of the contractual stipulation." (emphasis added) 1. I do however accept that a breach is not a necessary component for a finding that a particular provision may be viewed as a penalty. In Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30, the High Court said at [45]: "Enough has been said to show that (a) the first field for the operation of the equitable doctrine concerned the enforcement of bonds, (b) with respect to bonds, the expressions "obligation" and "condition" are not employed in the same or corresponding sense as appears in dealing with the breach of contractual promises, and (c) it does not follow, as the ANZ would have it, that in a simple contract the only stipulations which engage the penalty doctrine must be those which are contractual promises broken by the promisor." 1. In Arab Bank Australia Ltd v Sayde Developments Pty Ltd (20160 93 NSWLR 231; [2016] NSWCA 328, McDougall J drew together the authorities on penalties, including Andrews. He observed, at [105]: "Of course, the penalty doctrine is an exception to freedom of contract. That was recognised in Paciocco. But its very existence as an exception was seen to underline the need for, not mere disproportion, but extravagant or unconscionable disproportion, before it could be concluded that a particular stipulation was punitive, or penal, in character." (Paciocco refers to Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; (2016) 90 ALJR 835). 1. Approaching the interest provision on the basis of a rate of 23.2%, but probably a lower rate, I do not think there is an "extravagant or unconscionable disproportion". Part of my reasoning is that the amount of fixed interest, as I have noted above, had the potential to not only reflect a rate down to 10.37%, but also much lower had the deceased lived beyond June 2020. 2. The death of the deceased in June 2020 may be described as creating a windfall, through the interest provision, to the plaintiff, but I do not think the provision goes any further and certainly not to the extent of constituting a penalty.

Is the 2020 will an effective amendment to, or substitution of, the Loan Agreement? 1. Another way of posing this question is to ask if the $300,000 in the Loan Agreement is the same $300,000 given to the plaintiff under the will. 2. There is obviously a coincidence of the amounts, but I do not think that, without more, the coincidence can be elevated to the conclusion sought by the defendant. 3. I have already found that the deceased was aware of the distinction between a will and a loan agreement as highlighted by her executing a will on 2 June 2017 and then signing the agreement on 13 July 2017. 4. The defendant submitted that a finding that the gift in the will of $300,000 satisfied the obligation to pay the same amount under the Loan Agreement did not require the court "to apply any amendment or tortured construction of the provisions of the will." 5. This submission seems to rest only upon the coincidence of the two lots of $300,000. It would, in my view, be a tortured construction of the will to find that the $300,000 in the will was the same as the $300,000 in the Loan Agreement. The will, in its simple language, certainly does not say so. 6. There is nothing in the Loan Agreement that would suggest it supersedes the will made about five weeks earlier. Similarly, there is nothing in the 2020 will to suggest that it supersedes the Loan Agreement. The will makes no mention of the agreement and, other than the inclusion of the $300,000 gift, there are no words in the will from which any reference to the Loan Agreement can be drawn. 7. I have now dealt with, and rejected, all of the bases upon which the defendant has attacked the Loan Agreement. It follows that the agreement may be enforced against the estate. 8. The only outstanding matter is the plaintiff's alternative case supporting the Loan Agreement, namely that the defendant is estopped from denying its enforceability. The conclusions I have already reached render this argument unnecessary. However, the point was argued by the parties, and I must recognise that the estoppel argument would be important if my above conclusions were wrong.

Estoppel 1. The plaintiff, as did the defendant, referred me to the criteria for establishing a conventional estoppel set out in Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [200]: "(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant; (b) the defendant has adopted the same assumption; (c) both parties have conducted their relationship on the basis of that mutual assumption; (d) each party knew or intended that the other act on that basis; and (e) departure from the assumption will occasion detriment to the plaintiff." 1. The plaintiff submitted that each criterion was easily met. The parties had both understood and signed the agreement, they had both deliberately behaved on the basis that there was a debt and if the assumption was not followed, there would be significant detriment to the plaintiff. 2. The plaintiff made the point that that even if the Loan Agreement was found not to be a deed, which is the case, that did not necessarily impact upon the estoppel argument. I was referred to the decision of Lindsay J in Labracon Pty Ltd v Cuturich & Anor [2013] NSWSC 97; 17 BPR 32,497 at [154]: "Even if the defendants' mode of execution of the instruments was defective, in equity a party who knowingly takes the benefit of a deed may be bound by it even without execution of it: Lady Nass v Westminster Bank Limited [1940] AC 366 at 373." 1. One of the difficulties that might arise in this case is that, if I had found that the Loan Agreement was void under the Contracts Review Act, there would not have been an agreement (or deed) to form the basis of an estoppel. The same would apply if I had found that the agreement was unenforceable for a lack of valuable consideration. It would not simply have been a matter of the execution of the document. 2. This point was made by learned counsel for the defendant in final submissions when she said: "In terms of the defence argument about estoppel by convention, in some respect that is infected with the same issues as the agreement or consideration points that I have just raised regarding an allegation of new indebtedness. My friends submission that each party let the deed operate meant that the parties conducted their relationship on the basis of a mutual assumption, in my submission, goes nowhere in circumstances where the document didn't actually require the parties to do anything." 1. I think it follows that my conclusions about the validity of the contract and the absence of any right to relief under the Contracts Review Act establish the estoppel although, in these circumstances, there is no need to find the existence of an estoppel. Conversely, had I found any of the defendant's arguments against the validity of the agreement to have substance, I could not have proceeded to find the existence of an estoppel.

Orders 1. The plaintiff is entitled to a judgment in the sum of $500,000. The plaintiff has also requested interest, but has acknowledged that the awarding of interest lies within the discretion of the Court. Although there have been four years since the death of the deceased, the plaintiff acknowledged that a period of time would need to be allowed for the distribution of the estate. On the other hand, submitted the plaintiff, there had been an unexplained lengthy period before a grant of probate was requested. 2. In my view, a just result would be to allow interest for one year at 7.5%. This is $37,500 which will be included in the judgment sum. 3. The cross-claim is essentially defensive and covers the same issues as those raised in the opposition to the plaintiff's claim. On my findings, the cross-claim must be dismissed. 4. I make the following orders: 1. Judgment for the plaintiff in the sum of $537,500. 2. The cross-claim is dismissed. 3. The defendant is to pay the plaintiff's costs of the proceedings. 4. I will hear the parties on any alternative costs order.

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