Australia and New Zealand Banking Group v Meilak

The loan and the mortgage

1. In early 2014 the defendant applied for a loan from the ANZ. An agreement for a Business Loan was reached in February 2014 and the Mortgage was executed on 11 February 2014, as a result of which the ANZ advanced to the defendant the sum of $525,000 on 14 February 2014. This amount was subsequently increased by $50,000 and a variation to that effect was signed by the defendant on 1 April 2014.

The default

1. The defendant soon defaulted on the Business Loan and the Mortgage, as a result of which a default notice dated 22 January 2015 was sent to him. Ultimately, a notice of demand dated 17 September 2015 was served on the defendant, together with a suggestion that discussions occur with a view to resolving the dispute. By letter dated 29 September 2015, Mr Janoyan (the solicitor who had acted for the defendant on the Business Loan and Mortgage) wrote to the ANZ to inform it of his instructions that the loan would be paid in full by 31 October 2015. No such payment was made.

The commencement of the proceedings

1. On 10 November 2015 the ANZ commenced the present proceedings. On 17 November 2015 Mr Janoyan confirmed his instructions to accept service of the statement of claim. The statement of claim was endorsed by Mr Janoyan on 19 November 2015 to signify that he accepted service on behalf of the defendant.

The deed

1. By letter dated 4 December 2015 Mr Janoyan, on behalf of the defendant, offered to pay $30,000 on execution of a deed (to reflect the offer) and a further $30,000 by 31 December 2015, on the basis that no party would take any further action until 31 March 2016 and that at any time up to 31 March 2016 the ANZ would be obliged to accept payment of the balance owing and discharge the Mortgage. The ANZ accepted the offer and arranged for a draft deed to be prepared to reflect the arrangement.
2. On 16 December 2015 the defendant made a statutory declaration which was witnessed by Mr Janoyan to the effect that he had received legal advice regarding the deed and that he had freely and voluntarily signed the deed after having received the legal advice. Mr Janoyan certified, pursuant to s 34(1)(c) of the Oaths Act 1900 (NSW), that he had seen the face of the deponent to the declaration (the defendant) and that he had confirmed the defendant's identify using an identification document which was a photograph identification card.
3. By email sent to the ANZ on 17 December 2015, Mr Janoyan confirmed that the deed had been executed by the defendant. Mr Janoyan also filed a notice of appearance on behalf of the defendant in these proceedings on 17 December 2015. The evidence established that the defendant signed the deed and that his signature was witnessed by Mr Janoyan. The deed provided that, if the payments were made in accordance with its terms ($30,000 on exchange; $30,000 on 31 December 2015; and the balance on 31 March 2016), the notice of discontinuance of these proceedings which was signed by the parties and annexed to the deed as annexure "B" would be filed. The deed provided that, if there was default in payment, the plaintiff would be at liberty to file a consent judgment which was signed by the solicitors for the parties and annexed to the deed as annexure "A".
4. The deeds were exchanged on 18 December 2015 and the sum of $30,000 paid by the defendant to the ANZ on that day. The second payment of $30,000 was made on 11 January 2016. A further payment of $50,000 was made on 26 April 2016. No further payments were made.
5. On 7 June 2016 Mr Janoyan notified the ANZ by email that he had ceased to act on behalf of the defendant and gave the ANZ the contact details for Malcolm Meilak, the defendant's nephew, whom he identified as the "best contact". Ms Wells deposed in her affidavit that at no time during her dealings with Mr Janoyan did he ever inform her that the defendant did not have, or might not have had, the capacity either to provide instructions or to understand or execute the deed.
6. Malcolm Meilak sent an email dated 9 June 2016 to the ANZ to which he attached a document signed by the defendant authorising him to act on his behalf. The email continued: "My uncle is a very sick man suffering from Dementia and Parkinson's disease and this matter with the bank is causing him great stress."
7. On 1 September 2016 the ANZ responded by asking for copies of any medical records or reports showing when the defendant was diagnosed with dementia and Parkinson's disease and inquiring whether the defendant had appointed an attorney to make decisions on his behalf.
8. On 14 September 2016, Josephine Karipis of The Australian Law Firm contacted the ANZ on behalf of the defendant and asked for some time. On 22 September 2016 the ANZ filed the consent judgment in this Court (which was annexure "B" to the deed) on the basis of the terms of the deed which entitled it to do so if the defendant defaulted on payment in accordance with its terms.

The defendant's application for a tutor

1. I adjourned the defendant's application for a tutor on the basis that there was no expert or other evidence as to his mental capacity.

The ANZ's application for entry of the consent judgment and the defendant's application for a stay

1. Mr Docker, who appeared on behalf of the ANZ, informed me at the outset of the hearing that the ANZ proposed that the consent judgment be entered but undertook not to enforce the judgments for a period of eight weeks. He submitted that that period would give the defendant sufficient time to put on any application to set aside the judgment together with evidence in support. He contended that the ANZ had, through the affidavit of Ms Wells, established its entitlement to have the judgment entered, as a consequence of the defendant's breach of the deed. He argued that the ANZ ought not be deprived of its legal remedies in circumstances where no evidence had been adduced on behalf of the defendant to indicate that the ANZ was not entitled to judgment for possession and the monetary sum.
2. Mr Jefferis, who appeared on behalf of the defendant, submitted that the defendant was a 77-year-old pensioner who was in poor health and lived in a nursing home. He emphasised that the ANZ had not established the purpose of the loan or provided any indication as to why the defendant would need, or ought be granted, a loan of the magnitude advanced. He contended that the judgment ought not be entered until the factual questions about the execution of the Mortgage and the deed had been resolved. Mr Jefferis also submitted, from the bar table, that Mr Janoyan had acted on the instructions of someone other than the defendant and that the relevant file nominated a person other than the defendant as the client. He argued that his instructing solicitor had been unable to obtain evidence to that effect because Mr Janoyan's firm had claimed a lien over the file and had therefore refused to produce the file at the return of subpoena on 28 September 2016 (the date of the hearing) at 9am in the Registrar's list.

Consideration

1. The submissions made by Mr Jefferis included some very serious allegations and insinuations, both against the ANZ and against Mr Janoyan. However, there was no evidence to support them. The only reference in the evidence to the defendant's medical condition was contained in the email referred to above from the defendant's nephew to the ANZ. Notwithstanding a request by the ANZ on 1 September 2016 for medical records or reports on the defendant's medical condition, none has been provided. The defendant brought the matter before the Duty Judge (Beech-Jones J) on 20 September 2016 without notice to the ANZ and his Honour stood the matter over to 28 September 2016. However, no evidence was prepared in the interim, apart from an affidavit to support the application for a tutor, which did not include any medical evidence.
2. There are various bases on which a judgment which has been entered can be set aside: Uniform Civil Procedure Rules 2005 (NSW), rr 36.15 and 36.16 and Romeo v Papalia [2012] NSWCA 221 at [80] (Sackville AJA, Basten and Campbell JJA agreeing). It may be that evidence will be forthcoming to challenge the judgments for possession and the monetary sum which will lead to their being set aside. However, in the absence of such evidence, I am not persuaded that it would be appropriate to refuse to give the judgments, or to stay their entry. In my view, the period of eight weeks during which the ANZ has undertaken not to enforce the judgments will be sufficient for the defendant to obtain at least prima facie evidence on which to apply to set aside the judgment, or bring a cross-claim, or to apply for a stay of enforcement of the judgment. Accordingly, the giving of the judgments will not cause any substantive prejudice the defendant that cannot be remedied.
3. Orders
4. On 28 September 2016, I made the following orders: (1) Order that the subpoena issued to City Lawyers be stood over to Registrar's subpoena list on 7 October 2016. (2) Stand over the notice of motion filed on 26 September 2016 to 18 October 2016 for hearing before me. (3) Judgment for the plaintiff for possession of the whole of the land in certificate of title folio identifier 21/250127 known as 13 Betts Road, Greystanes in the State of New South Wales. (4) Judgment for the plaintiff against the defendant for $583,966.52 together with interest at the rates which apply to the Business Loan (as defined in the statement of claim) plus any of the plaintiff's costs or charges, any government duties or imposts charged to the Business Loan plus interest which applies to the Business Loan from 27 September 2016 until payment. (5) Note that the plaintiff has undertaken not to enforce (3) and (4) above for a period of 8 weeks.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 September 2016