ASSIGNMENT PROBLEM
Wayne Botch (Wayne) and Michelle Pearson (Michelle) are previous business partners who up to June of 2016, ran an online computer software distribution business called "Speedy Installations". Unfortunately, the business fell on hard times and Wayne and Michelle were successfully (personally) sued by a number of creditors in the amount of $250,000 each. In March 2017, when the NSW Supreme Court ordered Wayne and Michelle to pay the creditors $500,000, only Michelle had assets available to meet the debt. Michelle eventually sold two of her properties in Sydney and paid the creditors the full $500,000. At the time, Wayne told Michelle that it was expected that he would within the next 5 years, inherit his grandmother's estate as she was very ill and not expected to live very long. In discussion on 24 March 2017, Wayne and Michelle agreed that Wayne would pay her back $250,000 within the next 5 years. The next day, Michelle drafted and sent Wayne (by e-mail) the below Deed in draft form for his consideration and suggested that they sign it in a week's time. The agreement sent to Wayne by Michelle was in the following form:
"DEED OF ACKNOWLEDGEMENT OF DEBT
1. This Deed is made on the (insert date) between Wayne Botch (‘the borrower') and Michelle Pearson (‘the lender').
2. The borrower hereby acknowledges receipt by way of a loan from the lender of the sum of twenty-five thousand dollars ($25,000.00) (‘the loan')
3. The loan is repayable within the next 5 years.
4. Once the borrower pays the loan, he will have no further liability to the lender for his share of the debt paid by the lender to the creditors of Speedy Installations.
Signed by Michelle Pearson Signed by Wayne Botch
Dated: (insert date)"
Upon receiving the draft Deed, Wayne immediately contacted Michelle and said: "let's get this over with. I will print this and come around to your place today and we will sign it."
Michelle had a hair appointment booked for that afternoon and told Wayne it was a little inconvenient for him to visit that day. However, Wayne insisted that it be done immediately and Michelle was enthusiastic to have Wayne sign the Deed so that she had some security that he was responsible to pay her back his share of the $500,000 partnership debt. With that in mind, Michelle cancelled her hair appointment and the two dated and signed the above Deed on the afternoon of 25 March 2017.
Michelle has recently come to see you. She tells you that two (2) weeks ago she realised that she signed the above Deed around 12 months ago and the sum identified is not correct in that it says $25,000 when it should have said
$250,000. To make matters worse, she yesterday contacted Wayne and he said:
"an agreement is an agreement Michelle. I am not and I don't have to pay you any more than the agreed $25,000."
Michelle wants to know if there is anything she can do to make Wayne pay his $250,000 share. She also told you that a week before she signed the Deed with Wayne, he told her that he stood to soon inherit his sick grandmother's estate but she has since discovered that Wayne's grandmother died on 17 December 2000 and left him very little. Michelle tells you that she only agreed to pay Wayne's share of the debt because she believed he would have the money to pay her back.
Advise Michelle whether or not the law can assist her to have Wayne remain responsible to pay his $250,000 share and if so, how, and if not, why not?