Australian and New Zealand Banking Group Limited v Vicki Christine Londish

Ex tempore Judgment 1HER HONOUR: By notice of motion filed 6 July 2012, the defendant seeks an order pursuant to s 64(1)(b) of the Civil Procedure Act 2005 that she be granted leave to file forthwith and serve an amended defence. 2The plaintiff is Australia and New Zealand Banking Group Limited (ANZ). The defendant is Vicki Christine Londish. The defendant relied upon her affidavit sworn 4 July 2012, that of her husband Ian Londish sworn 5 July 2012 and the affidavit of her solicitor Mark Gray-Spencer dated 6 July 2012, which attaches the proposed amended defence. 3The plaintiff seeks moneys due and owing under an agreement dated 9 November 2009. That agreement was secured by a second mortgage over property owned by the defendant. 4The original defence filed 26 March 2012 pleads that the agreement was varied by the plaintiff and the defendant on or about 31 July 2011 to the effect that the plaintiff would capitalise interest payments otherwise payable pursuant to the agreement. Mrs Londish admitted the terms of the agreement, receipt of a letter dated 29 November 2011 requiring payment under the agreement and the default notice, but did not admit the amount owing and denied she had defaulted under the mortgage. 5The plaintiff's counsel conceded that the amended defence raises arguable defences under the Contracts Review Act 1980, pursuant to Amadio v Commercial Bank of Australia Ltd (1983) 151 CLR 447 and unconscionability. He argued however that most of the defence should not be allowed because it seeks to withdraw admissions made in the original defence and this should not be permitted. The plaintiff's counsel also argued that the pleading in the proposed amended defence is not adequate as the plaintiff does not know precisely the case it has to meet. 6The amended defence starts by admitting the defendant's signature on the agreement but otherwise denying its terms. The same position is taken in relation to the mortgage. This is because the funds advanced were for the benefit of a third party, namely the Knoll Group of companies. Her husband was the director and the controlling mind of those companies. Hence she argues that the mortgage and the agreement are unenforceable. When this is borne in mind, it is my view that the amended defence is properly pleaded. 7The circumstances in which a party can withdraw an admission are set out in rule 12.6 of the Uniform Civil Procedure Rules 2005. It reads: "(1)A party raising any matter in a defence or subsequent pleading may withdraw the matter at any time. (2)Despite subrule (1), a party may not withdraw any admission, or any other matter that operates for the benefit of another party, except with the consent of the other party or by leave of the court. ..." 8The case law on this issue is set out by Kirby J in Bank of Western Australia v Salmon (No 1) [2009] NSWSC 224; and White J in SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816. Counsel for the defendant referred to Khouri v National Bank Ltd [2007] NSWSC 987. In Khouri, Gzell J referred to the judgment of Santow J (as he then was) in Drabsch v Switzerland General Insurance Co Ltd (1996) 130 FLR 127 and stated "...it was usually appropriate to grant leave to withdraw an admission where it was shown that the admission was contrary to the actual facts, or made inadvertently without due consideration of material matters." 9In the defendant's affidavit she explains how the filing of the original defence came about. She deposes as follows: "49.When I received the statement of claim in about February or early March 2012, my husband told me that we could not afford legal advice because already owed solicitors money in connection with previous legal work and that we could not afford to pay another solicitor. 50.I discussed the situation with my daughter, Erin, and she told me that she had a friend who was a law student, although he was not qualified as a lawyer. Subsequently, Erin told me she had spoken with her friend and we talked in general about what he had said. 51.My husband and I then talked the matter over, together with Erin's friend, and it was decided that I should do an affidavit because I was the defendant, and that my husband should also do one because he was the one who had always managed the business and dealt with the bank. We also talked about a defence which my husband had suggested. Although I had a copy of ANZ's claim, I did not understand it very well or what to do about it. 52.As a result, my husband typed up the affidavits and the defence. I signed my affidavit and my defence. I read my affidavit before signing it and believed it to be true. I read through the defence with my husband, which although I did not fully understand made sense in the context of his explanations. 53.After I first appeared before the judge on 18 May 2012, the judge insisted that I should try and get legal advice. I went to see the Legal Aid Officer in the Supreme Court and she told me that I did not qualify for legal aid. 54.I next appeared before the judge on 15 June 2012, together with my husband, and the judge again said that I should go and get legal advice. 55.Not long after that, my husband told me that he had applied to the NSW Bar Pro Bono Scheme, but without success. A bit later, my husband told me that he had spoken to a senior counsel that he knew from many years ago, who could introduce us to a barrister who might be able to help me. 56.I met my barrister, Mr Drew, in his chambers for the first time on Friday, 22 June 2012. After hearing my story, Mr Drew agreed to act for me. That was the first time that anyone had given me any proper legal assistance in relation to these matters." 10The original defence was prepared without the benefit of proper legal advice. While the defendant's husband may have a law degree, he does not practice as a lawyer and his interest differs from that of his wife. While the plaintiff now has to prepare a more extensive case, the amendments were made at a fairly early stage in the proceedings and they raised the real issues in dispute. Hence, in the interests of justice, it is my view that the defendant should be permitted to withdraw the admissions she made in the original defence filed on 26 March 2012. 11I turn now to costs. The defendant's counsel submitted that it was unnecessary for the plaintiff to argue this motion and it should have consented to the filing of the amended defence. The defendant has now abandoned the defence raised in the original defence. It is my view that the defendant has been granted an indulgence and the normal rule should apply. The plaintiff was entitled to argue the motion in the light of the withdrawal of admissions issue. The defendant should pay the costs thrown away by the amendments. 12On 1 June 2012 the plaintiff filed a notice of motion seeking, firstly, to strike out the original defence; and secondly, summary judgment. It is my view that the plaintiff's notice of motion was necessary at the time it was filed. It has now been superseded by the amended defence. The plaintiff should have the costs in relation to that motion. 13Counsel for the plaintiff sought that the defendant provide particulars in relation to matters were it is pleaded that it "knew or ought to have known" certain matters - see Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41. While the plaintiff can request particulars, the knowledge would most likely reside in the knowledge of the Bank employees, not with the defendant. So far as "ought to have known", that may be ascertained by inferences made from the facts. Those inferences can only be made at trial.