The plaintiff claims possession of a property at 4 King Street, Eastlakes and seeks judgment in respect of two loans made; one to the defendant personally and one to a company of the defendant and in respect of which a guarantee was given by the defendant for that loan.
The first loan was a home loan agreement entered into on 25 September 2013 whereby $597,000 was advanced to the defendant. Of that amount $590,980.97 was used to pay out a prior mortgage that the defendant had to the National Australia Bank over the property.
The second loan was described in the statement of claim as a business loan and was said to have been entered into on 26 October 2015. It was in two parts, and involved an overdraft facility of $263,000 and an advance to the defendant's company, Trojan King Pty Ltd, of $500,000. That business loan appears to have been some form of renewed or novated loan of an earlier business loan entered into between the plaintiff and Trojan at the time of the home loan. It seems that the defendant was anxious to borrow money for the purpose of purchasing or establishing a business and, on the basis that the bank agreed to lend money for that purpose, the defendant's home loan was also to be taken over by the plaintiff.
The security for both loans was a first registered mortgage over the land at 4 King St, Eastlakes.
There was default in respect of both the home loan and the business loan at least by 11 September 2017 as pleaded in the statement of claim, but the evidence tends to show that in respect of the home loan, default had occurred at an earlier time and certainly by June 2017.
A notice under section 88 of the National Credit Code and section 57 of the Real Property Act 1900 (NSW) was served on 12 September 2017. When that notice was not complied with, the present proceedings were commenced on 20 March 2018. The defendant filed a defence on 10 September 2018. That defence admitted the contents of the statement of claim except the defendant said that he did not know and could not admit the amounts in respect of what was owing.
Paragraph 3 of the defence read as follows:
3. The Defendant defends the claim and that the Plaintiff is entitled to the Orders sought on the basis that the Plaintiff has in respect of the Business Agreement and the Guarantee:
a) Engaged in unconscionable lending practices;
b) Engaged in irresponsible lending practices;
c) Failed to make proper inquiries of the Defendant's ability to service such loans; d) Failed to make inquiries of the Defendant's financial position; e) At the time the Defendant was at a special disadvantage; Particulars At the time of the Business Agreement and the Guarantee the Defendant: a) Was the sole income earner in the household raising three young children having just lost his wife and additional income earner, b) Further, the Defendant was essentially self employed through his business;
d) The Defendant's Company was a failing business with poor financial performance, evidenced by the fact that it went into liquidation in January 2017.
e) Despite this, the Plaintiff advanced the Defendant $793,000.
It is apparent from the terms of paragraph 3 of the defence that the defendant appears to be relying on either the Contracts Review Act 1980 (NSW) or unconscionability at general law, or both. The defence is not particularly adequately pleaded because a number of the assertions are conclusions rather than statements of material fact. However, I do not need, in all of the circumstances, to consider that aspect any further at the present time.
In the light of that defence, the plaintiff filed on 18 January 2019 a notice of motion seeking summary judgment for possession and for the total amount said to be owing under both of the loan agreements. In the alternative, an order was sought under Uniform Civil Procedure Rules 2005 (NSW) r 14.28 striking out the defence.
It is apparent from the terms of the defence filed that the only defence put forward is one that purports to deal with the business loan. No defence is pleaded in respect of the home loan.
There is the additional fact that under the principle more particularly identified in Collier v Morlend Finance Corporation (Victoria) Pty Ltd (1989) 6 BPR 97,462; [1989] ANZ Conv R 515, it would be necessary for the defendant to offer as a condition of setting aside any agreement in relation to the home loan that the amount used to pay out the pre-existing mortgagee was offered to the present plaintiff. No such offer has been made. That principle has more recently been discussed by the Court of Appeal in First Mortgage Managed Investments Pty Limited v Pittman [2014] NSWCA 110 at [172] to [183].
The defendant has resisted the granting of summary judgment in the matter, but nothing is put forward to show why summary judgment should not be granted in relation to the home loan.
Either having regard to the defence filed or to the Collier v Morlend principle, no defence is identified in respect of the home loan. In those circumstances, the plaintiff is entitled to possession of the land.
Clause 10.1 of the mortgage enables the giving of a certificate by an appointee of the plaintiff, and such certificate is conclusive evidence of the amount owing. The plaintiff relies on such a certificate given by Anthony James Weaver, an appointee of the plaintiff, which demonstrates that the amount owing pursuant to the home loan is in the sum of $623,244.19. The plaintiff is entitled to judgment for that sum in respect of the home loan being a part judgment of the whole of the claim.
In relation to the business loan, the solicitor for the defendant sought leave at the hearing of the notice of motion to withdraw as the defendant's solicitor, to enable the client to obtain alternative advice and representation. I refused leave to the solicitor to withdraw in those circumstances. I did so for the reasons which follow.
On 5 December 2018, when the proceedings were before me, I gave leave to the defendant, at the request of his solicitor, to file an amended defence by 10 December 2018. The proceedings were then stood over for directions until 12 December.
When the matter came before me for directions on that day, the defendant's solicitor said this:
We haven't filed an amended defence in accordance with your Honour's previous directions. The explanation is this: I was instructed by my client to obtain counsel's opinion. That opinion was obtained belatedly. We were due to obtain that on Monday. Counsel couldn't provide that until yesterday. That opinion was provided to the client. I feel obligated to probably [sic. properly?] put to the Court that the opinion that was provided by myself and conveyed to the client was that I couldn't properly put to this Court any amended defence that would satisfy my obligations under the rules in respect of prospects. I have provided advice to my client. It is very difficult for me to put anything further to the Court other than I couldn't file an amended defence in those circumstances. I have had difficulty in obtaining instructions from my client other than that he understands that an amended defence could not be put on. He conveyed to me last night that he had an informal second opinion from another barrister and he has had some discussions with that other barrister. I don't know where those discussions are going.
In the light of that material it seemed inappropriate to me that the defendant should, at the last minute, be entitled to sack his solicitor to have the option of seeking yet further opinion from a barrister when he had been provided with advice from his own solicitor and counsel whom that solicitor had retained. If the client had a second opinion to some different effect from another barrister, he has had the opportunity to deal with that by way of amended defence or different representation from 12 December up to the present time.
Nevertheless, the defendant seeks the opportunity to go to a final hearing in relation to the business loan. He says that the material that has been provided by the plaintiff on the present application has caused him to reconsider the approach that he takes to his defence of the business loan. That appears to be because the material discloses that the business loan was first taken out in August 2013 and the bank provided additional funds pursuant to that loan, or to the loan that was ultimately entered into on 26 October 2015, in circumstances where the defendant's business was proving to be unsuccessful. As best as I understand it, that seems to be the basis for the claim of unconscionability that is raised in paragraph 3 of the defence to which I have already made reference.
Although I consider it is something of an indulgence to the defendant, given the time that he has had, I am prepared not to proceed further with the application for summary judgment in relation to the business loan today, but to give the defendant the opportunity to amend his defence if he wishes, and to serve further evidence in support of such defence. I note in passing that the affidavit he has filed in defence of the present application does not, to any extent, support the defence that is already filed.
There are dates available for the final hearing of this matter as early as April 2019 and, in those circumstances, I consider that the defendant should be given one final opportunity to defend the business loan claim, both by amending his pleading and adducing further evidence.
Accordingly, the orders I make are these:
Judgment for the plaintiff for possession of the land comprised in Certificate of Title Folio Identifier 86/16011, being the land situated at and known as 4 King Street, Eastlakes, New South Wales.
Judgment for the plaintiff in respect of the claim on the home loan in the sum of $623,244.19.
Leave to the plaintiff to issue a writ to enforce the judgment of the Court, such writ not to be executed before 1 April 2019.
Any amended defence by the defendant is to be filed and served by 14 February 2019.
Any further evidence in support of the defence is to be served by 14 March 2019. Any evidence not served by that date will not be permitted to be relied upon at the final hearing.
Any evidence in reply by the plaintiff is to be served by 11 April 2019.
The matter is fixed for hearing on 23 April 2019 with an estimate of two days.
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Decision last updated: 04 February 2019