Australian Executor Trustees Ltd v Pachkovski

The 24 November 2010 motion 5It appears that on 24 November 2010 the respondents sought a stay of the writ of possession before Latham J, an application her Honour dismissed. 6On 24 November 2010 the respondents filed a summons seeking leave to appeal from the primary judgment. Handwritten on the first page of that document under the heading requiring details of the application for leave to appeal appears the following: "We did not put notice of appeal in time (within 28 days), because we waited for the Court on 24/11/10. Copy of Motion is included, and affidavit included." 7The following two pages set out a number of handwritten complaints apparently said to relate to the proceedings before the primary judge the detail of which I set out below (at [28] - [35]). 8Although the applicant's notice of motion refers to "motions" of 24 November 2010, there is only one motion filed by the respondents of that date - a motion filed on 24 November 2010 in which the respondents sought a stay of the primary judge's decision pending their appeal. That motion came before Young JA for hearing on 29 November 2010. His Honour granted a stay of the writ of possession until 31 January 2011 on condition that on 3 December 2010, 4 January 2011 and 3 February 2011 the respondents (the applicants on that motion) pay to the applicant (the respondent on that motion) care of its solicitors, Messrs Gadens Solicitors, the sum of $12,000. In default of any one payment not being made within three days of the due date, Young JA ordered that the stay be automatically lifted. 9Young JA also gave the respondents leave to file an amended summons seeking leave to appeal by 20 January 2011. He gave the applicant leave to file a notice of motion to dismiss the application for leave to appeal if so advised returnable at 9 am on 31 January 2011 and also to file an affidavit as to its prejudice if the stay was continued, each by 20 January 2011. 10In the course of his ex tempore reasons, Young JA made observations the first of which appear to have inspired the present application. First, his Honour said "[a]lthough the appeal does not appear to have that much going for it, that is not before me today. I am merely dealing with an application for stay of a writ of possession." He then added: "However, there are a couple of odd things about this matter. One is the rather brief reasons which his Honour gave, the second is that the cross-claim never seems to have been dealt with." As will become apparent from the following discussion (see [42] - [43]), the respondents have apparently prepared two cross-claims for the purposes of the proceedings: one stamped as filed 12 October 2009, the other described as an "amended statement of cross-claim" which bears no court stamp. It is not apparent to which document Young JA was referring, but it is tolerably apparent it was that filed on 12 October 2009 which was before the primary judge. 11After summarising the appellants' allegations as being that "they contracted for a loan on a particular basis, part of the loan at least to be a fixed loan at 6.4 per cent, but they ended up with a loan, according to the documents presented by the respondent, of 8.4 percent variable", Young JA commented "...the Judge seems to have considered that point and found against the appellants on the basis of the credit of the witnesses". He described the essence of their case as being "that there was a change between the application forms and the mortgage to which they were not parties which they never noticed. The Judge did not accept that." 12His Honour concluded: "However, although the appeal does not appear, as I say, to have much going for it, there does not appear at the moment to be prejudice if the $12,000 a month, which is admittedly payable under the loan no matter what it terms, is paid in the meantime, and the respondent is able to move the Court that the leave to appeal application be dismissed if it has not advanced . Hopefully the applicants will be able to get some advice from Legal Aid or elsewhere in the meantime. And that is one of the reasons why I have made some of the comments that I have already have made." (emphasis added)

Amended summons seeking leave to appeal 13On 27 January 2011 presumably in purported compliance with Young JA's order of 29 November 2010, the respondents filed an amended summons seeking leave to appeal. On the first page of that document against the heading "filed in relation to" the document states: "The whole decision below. The applicants seek leave because inability to afford a lawyer placing them at a severe disadvantage and the errors of the trial Judge in failing to give weight to the defence and the cross-claim. They were in default because they can't afford increases what is growing up every month." 14In that part of the documents setting out orders sought, the amended summons sought, in addition to leave to appeal from the decision below, an order for compliance with the subpoena issued on 6 January 2011 "and any amended subpoena after 6 January" an order for mediation, an order that the stay of the execution of the writ of possession be extended and such further or other orders as the Court considered appropriate. The amended summons did not repeat the handwritten complaints (see [7] above) but it is apparent the respondents have not abandoned them. 15The court papers include a White Book presumably prepared by the respondents in anticipation of the hearing of their summons. Mr A Casselden, who appeared for the applicant, informed me the White Book had not been served on the applicant. As I explain below (at [23]), the applicant did not object to my having regard to the materials in the White Book. 16The White Book included a draft Notice of Appeal. The proposed appeal grounds are: "The loan agreement was changed from fix rate to variable and interest only to cash flow loan. Different because of this resulted in approx. in 0.5 million dollars. Cross claim was filed 12.10.09. All legal fees should be taken from Plaintiff." 17The only order sought in the draft Notice of Appeal is that the appeal be allowed.

The subpoena 18The subpoena the subject of the notice of motion was issued at the respondents' request on 6 January 2011 and was returnable on 31 January 2011. A sample of the documents it purported to require the applicant to produce will give an indication of its tenor: "... 3. Real loan approval letter. ... 4. All issues document recording, referring to evidence in use by the plaintiff in respect of make Loan Contract. 5. All documents recording, referring to or evidence in use by the plaintiff of false address in all documentation was send to defendants. ... 18. Evidence of fraud document presented by the plaintiff in plaintiff's tender bundle on 31 March 2010 in court page 33 to 180. ...". (emphasis in original)

Evidence on the 20 January 2011 notice of motion 19As I said, the applicant's notice of motion was filed on 20 January 2011. The applicant relied in support of the notice of motion on an affidavit of Mr Owen Taylor sworn on 19 January 2011. Mr Taylor is an employee of Pepper Australian Pty Ltd, a company which manages the mortgage and the loan the subject of these proceedings on the applicant's behalf. Mr Taylor annexed to his affidavit a copy of a loan statement which detailed transactions from the time funds were advanced to the respondents until 16 November 2010. Mr Taylor deposed that the amount the respondents owed the applicant as at 16 November 2010 was $3,050,950.61. Mr Casselden informed me, without contradiction by the respondents, that they had defaulted on their loan repayments in about February 2009. 20Mr Taylor also attached a copy of a valuation report for the property the subject of the mortgage dated 12 January 2011 which values it as at that date at $2 million. 21The respondents tendered a number of documents. Exhibit 1 was a bundle of documents comprising a record of the proceedings dated 20 November 2009 before Registrar Bradford setting out a timetable for the service of evidence prior to the hearing of the proceedings below on 31 March 2010, a copy of a document filed on 12 October 2009 headed statement of cross-claim, a copy of the summons seeking leave to appeal filed on 24 November 2010 to which I have already referred and a document headed "amended statement of cross-claim". As I have said, there was no indication on the latter document that it had been filed in court. Mr Casselden informed me that document had not been served on it. 22The respondents also tendered a letter from a Mr Dominic D'Ettorre, the Sales Manager, of Oxford Real Estate. It states, in substance, that he had inspected the mortgaged property and that "based on recent and comparable sales in my opinion [the property] would sell in the vicinity of $2,600,00 - $2,800,00". The letter described that statement as an "appraisal" and said it did not "take into account a changing market and is not to be construed as a valuation". The respondents also tendered a letter from Mr D'Ettorre asserting that, based on comparable rentals in the immediate area, the property would rent in the vicinity of $3,000 a week. 23At the conclusion of the hearing I informed the parties that I proposed to have reference to the materials in that White Book which comprised the transcript of the proceedings before the primary judge, the copy of the mortgage and loan agreement, and the affidavits of Mr Blier and Mr Zeitoune. I invited them (in particular the applicant) to inspect the White Book and inform me whether that course was opposed in any respect. No such indication was received .

Submissions 24Mr Casselden submitted that the application for leave to appeal should be dismissed for the following reasons. The first was that the summons seeking leave to appeal was filed on 24 November 2010 and hence was out of time and there was no, or no adequate, explanation for the delay. Secondly, he submitted that when one examined the primary judgment and the pleadings there was no arguable case on appeal having regard, in particular, to the limited issue with which the primary judge was concerned. This, he contended, related only to the rate of interest due under the mortgage. He drew attention to the fact that the primary judge rejected Mrs Primanzon's evidence, preferring that of Mr Blier, the respondents' mortgage broker, who prepared the loan application. He argued that that finding of fact was credit based, thus making the respondents' prospects of success on appeal even more remote. To the extent there had been a cross-claim on file at the time of trial, he contended that it fell away when an amended defence was filed in which, inter alia, the third respondent admitted he had signed the mortgage. 25Insofar as the continuation of the stay of the writ of possession was concerned, Mr Casselden submitted that prejudice was established by the discrepancy between the amount of the judgment in the applicant's favour of $2,995,973.24 on which interest was accruing on a daily basis compared with the valuation of the property as at 12 January 2011 of $2 million. He accepted that, pursuant to Young JA's orders, the respondents had paid the two amounts of $12,000 a month which were due prior to the hearing on 31 January, however he contended that that $12,000 was well short of the monthly repayment due on the assumption that interest was accruing at the rate found by the primary judge. 26As to setting aside the subpoena, Mr Casselden first contended that because the respondents were litigants in person, a subpoena could not be issued except by leave of the Court, referring to Uniform Civil Procedure Rules 2005 ("UCPR") 7.3(1), and such leave had not been given. Secondly, he contended that the production of the documents sought in the subpoena was irrelevant when there was no application in the proposed appeal for fresh evidence to be adduced. Thirdly, he submitted that the subpoena was impermissibly wide. 27The respondents made a number of oral submissions, the gist of which I believe I have captured below. They also handed up a document headed "Amended Defence" which they explained set out written submissions advanced in resistance to the notice of motion. Some of the submissions in that document were also made orally. What follows is the substance of the respondents' oral and written submissions. I understand their submissions as having been intended to encapsulate the argument they would seek to advance on appeal 28The respondents' essential submission was, as Young JA said, a complaint that the loan secured by the mortgage was not that for which they applied. They contended that they had sought and been granted, a residential loan with three years interest fixed at 6.4 per cent, but that the applicant "changed" the loan to a commercial loan and subjected the respondents to penalties which would not have been permitted if the loan was a residential one. 29The submission was put as one to the effect that the applicant had changed the documents, more extravagantly that it prepared "fraud documents" and "forged documents" and led them in evidence before the primary judge. Another submission was that the third respondent's signature on the mortgage had been forged and that that could be demonstrated by a writing expert's report. In this respect it should be noted that in the course of submissions, the third respondent said, "I just agree to pay off the mortgage but I disagree to what they have changed." 30In support of their submissions, the third respondent drew my attention to a document entitled "Residential Mortgage Loan Application" (apparently signed by each respondent) attached to Mr Blier's affidavit of 1 April 2010 and, in particular, to page 9 of that document (as indicated by a fax transmission record at the top of the page). Under the heading "Details of Loan required" and in respect of each of the two loans sought of $1.85 million and $950,000 respectively, under the words "Interest rate" a box indicating "fixed" had been ticked. The number "3" appeared against the abbreviation "yrs" in respect of the $1.85 million loan. In contrast the third respondent contended the applicant had applied "a variable rate from beginning and cash flow with extra 2 per cent and we have commercial penalties as well. In fact it is residential, not commercial". 31A copy of what appears to have been the relevant loan agreement appeared in the White Book. The loan was described as a "Cashflow Manager loan". Under the heading "What is the annual percentage rate(s)?" the Program Manager's Standard Variable Rate was set out as 6.4% per annum, the margin as 2.0% per annum and "the indicative annual percentage rate payable by you at the disclosure date" as 8.4% per annum. On pages 5 and 6 the rate applicable on default appeared as 12.4% per annum. The document was signed on behalf of the lender on page 6 by a Mr Zeitoune. The names and apparent signatures of each of the respondents appeared on pages 8 and 9. 32As a development apparently of the submission concerning the interest rate, the respondents contended that they had accepted the applicant's loan agreement because the interest rate was cheaper than that which governed the loan they had previously had with the National Australia Bank and that they would not have entered into the agreement with the applicant if that had not been the case. 33Secondly, the respondents said they did not receive a copy of the mortgage, the loan agreement or any other document "until recent time". I understood this submission to have been intended to explain why they head not picked up the discrepancy for which they contended at the outset of their loan. 34Thirdly, the respondents complained that the primary judge did not consider their cross-claim. 35Fourthly, the respondents contended the applicant served its evidence for the trial on 31 March 2010 in default of the order made on 20 November 2009 and that they were not given time to read that evidence properly. 36Insofar as the subpoena is concerned the respondents' submissions were to the effect that production of the documents sought would reveal differences between the applicant's documents and those they held, would enable them to demonstrate the number of complaints they had made to the applicant and would explain "why they give the fraud documents and the forged documents to the court in evidence". 37Finally I note that in the course of their oral submissions the respondents said "[w]e do not have enough money in bank for fixing this".

The trial 38It is first necessary to have regard to the conduct of the trial to determine the issues before the primary judge. 39A copy of the transcript of the hearing before the primary judge of 31 March 2010 and 1 April 2010 was contained in the White Book. Mr Simpkins of Senior Counsel appeared for the applicant. Alexandre Pachkovski and Grigoriy Primanzon appeared in person. Mrs Primanzon sought to appear for Violetta Primanzon, the second respondent, who did not appear in person. In due course, as explained in the primary judgment (at [2]), his Honour allowed Mrs Primanzon to represent the second respondent. 40Early in the proceedings the third respondent handed up an amended defence which the primary judge gave leave to be filed in court. A copy of that document is included in the White Book. Relevantly the document said: "4. The defendants admit paragraph 4 of plaintiff's pleadings and particulars that a mortgage was given in favour of the plaintiff to the extent that a mortgage was signed by the defendants. However, the defendants do not know and do not admit to the terms and conditions set out in those documents and deny they are liable on the basis of the matter set out in paragraph 18 below and the matters outlined in the amended cross-claim. ... 18. The defendants say that the contract relied upon by the plaintiff is not their contract to the extent that the plaintiff has removed pages of the contract relating to the loan rate and loan fees except those containing the signatures of first and second defendants and replaced them with much more onerous provisions. 19. The defendants seek an order that the mortgage be set aside." (emphasis added) 41It appears from the transcript of the hearing that the amended defence was prepared by a solicitor. 42Immediately after the third respondent handed up the amended defence, the primary judge noted that he had "a notice of cross-claim by Violetta Primanzon" filed in October 2009. He asked Mr Simpkins whether he understood that to be current. It is not apparent that that question was resolved. However it is apparent that the cross-claim on foot at the time of trial was that bearing the court stamp as filed on 12 October 2009 to which I have earlier referred (at [10], [21]). 43Although the amended defence referred to an amended cross-claim, as I have said, no amended cross-claim appears to have been filed. It is clear that the primary judge was referring to the cross-claim stamped 12 October 2009. That document took the form of (omitting formal parts) a typed section which, although expressed as raising "a lot of question", did appear to contain an assertion that the letter of offer had been changed and that the respondents did not know "who signed the document for Grigoriy Primanzon". 44On page 2 the following appeared: "RELIEF CLAIMED 1 Grigoriy's Primanzon signature was forged 2 (Continue page number 2.1) PLEADINGS AND PARTICULARS 1 We are able to sell the property. But we need correct calculation from Australian Executor Trustees Limited. 2 (Continue page number 2.1)" Other than the pro forma words, the entries were hand-written. 45On page 2.1 (which was also handwritten) were a number of entries containing the following assertions: the "contract/letter of offer was changed"; "the terms and conditions had been changed after signing letter of offer and contract and mortgage document"; a variation was that "all pages except page number 1 was changed/replaced by Australian Executor Trustees Limited after we have signed the contract and letter of offer"; that a default notice under the Consumer Credit Code was not served, that there was "no busines purches [sic, as in original] declaration" in the document (with the parenthetical comment "however one may appear in the application forms"), no signatures on each page, that the respondents did not have legal advice, that the mortgage memorandum was signed by a solicitor "not known to him at the time it was executed", and that there was "no page 2 in the contract document". It also said that the respondents had offered to pay $12,000 a month for the mortgage which amount was "correct on [our] calculation and "we offered to pay $12,000 per month we ask to deduct all legal charges Australian Executor Trustees Limited billing us". 46On page 2.2 (which was also handwritten) appeared an assertion that "penalties had been changed to higher rate", then the following: 3 Contract to be re-done as it is not valid because Grigoriy's Primanzon signature was forged. 4 Terms and conditions to be changed to original state. Interest rate to be changed back to 6.4%. 5 There was no page number 2 in contract document. Therefor [sic, as in original] must be removed. 6 All pages in the contract documents to be change back to original state except of page number 1." 47On the first day of hearing, 31 March 2010, Mr Simpkins informed his Honour that the applicant had prepared a tender bundle and that a copy had been given to the respondents. He said the bundle consisted mainly of documents which had been exhibits to earlier affidavits and identified those which would be principally relied upon. It is apparent from the page numbers of that bundle to which reference was made in the course of that hearing that the bundle contained several hundred pages. The bundle was not before me. 48Also on the first day of the hearing, after the amended defence was filed in court, the third respondent informed his Honour that he contended his signature on the loan contract had been forged. His Honour pointed out that that assertion was inconsistent with the amended defence. It appears that a report from a handwriting expert had been served on the applicant presumably to support the third respondent's contention. Mr Simpkins said that in the event the third respondent sought to amend his defence to reassert his allegation of forgery, he would be in a position to cross-examine that expert the next day. 49The primary judge explained to the third respondent that if he sought to assert that his signature was forged, first, that the applicant would oppose such a plea because it was inconsistent with the amended defence but secondly, that the third respondent would have to ensure his handwriting expert was in court the next day to be cross-examined. His Honour made it clear that he would not allow the third respondent to maintain his claim of forgery unless the expert witness was available for cross-examination. The primary judge also explained to the respondents that the solicitor who prepared the amended defence should be in court the next day to explain why it was drafted to contain an admission on the third respondent's part that he had signed the mortgage. 50Neither the handwriting expert or the solicitor who prepared the amended defence appeared on the second day of the hearing, 1 April 2010. 51On the second day Mr Simpkins sought to rely upon two affidavits dated 1 April 2010 of Mr Blier and Mr Zeitoune both sworn, as I understand the transcript, to deal with the matters raised the previous day by the respondents concerning the loan application in the amended defence. 52Mr Blier's affidavit attached the Residential Mortgage Loan Application to which I have referred (at [30]). He said he could not recall his discussions with the respondents before that documents was completed. However he drew attention to a statement in Annexure "A" to his affidavit of 25 March 2010 referring to "our clients [being] attracted to Seiza's CFM product ..." and said he "would not have written [those] words unless [he] had discussed [the] CFM product with the defendants." (Seiza was the, or an, original lender which went into liquidation. Subject to the issues canvassed before the primary judge, there was no issue as to the applicant's entitlement to recover the loan.) 53He also attached to his affidavit a document called "Loan Application Summary for Originators" on which a box indicating "3 yr Fixed CFM Full doc" was ticked, according to his affidavit "as the loan product relating to the Loan Application". This document was dated 12 March 2007, the day after the loan application was signed. There is no indication the respondents saw it. 54In the course of his cross-examination Mr Blier explained that as far as he could recall, the loan was "a residential property loan ... [and] was to refinance that residential property ... [which] was used for investment" (Tr. 1/4/2010, 27). 55Mr Zeitoune was a paralegal employed by Gadens Lawyers, the applicant's solicitors, who had day to day carriage of that firm's file in relation to the documentation, including the loan contract, for the loan. He swore in his affidavit, relevantly, that he did not change any pages of the loan agreement after it had been signed, nor did he know of anyone else making any such changes. Mr Zeitoune was cross-examined on the second day of hearing at some length by, it would appear, both the first defendant (through a Russian interpreter), the third respondent and Mrs Primanzon. I do not discern anything of significance to the present application to have emerged from that cross-examination. 56Mrs Primanzon then gave evidence for the respondents. She said Mr Blier had said he would apply for a residential loan on their behalf. In response to the primary judge's questions she asserted that annexure "A" to Mr Blier's affidavit of 25 March 2010 "proves that this is ordinary home loan ... it means people live there ... there's no additional interest and there's no penalty." Annexure "A" was Mr Blier's covering letter submitting the loan application for consideration. It contains no express reference to any of the matters to which Mrs Primanzon referred. She said the documents (apparently referring to the loan application and possibly an authority of what precise nature does not appear from the transcript) established that she and her family were going to live in the mortgaged property. She said the interest rate was only 6.4% She complained that the respondents had not received copies of the relevant documents. 57In cross-examination by Mr Simpkins, Mrs Primanzon agreed that the mortgaged property consisted of 7 units and after it was bought was renovated, then rented out and a copy of the rental agreements given to Mr Blier when the loan application was made. She said Mr Blier had been told the mortgaged property was going to be used as a family home, denied he had told her about a "cash flow manager loan" and asserted the reason the mortgage was taken was because it offered a lower interest rate and a loan equal to eighty per cent of the value of the property. 58Mr Simpkins took Mrs Primanzon to the loan application and asked her whether she agreed with what was written in it. She agreed, "that's how we did it, our loan". She also accepted that that document disclosed in various places the use of the property as "investment" saying: "At the time we used it as investment, we couldn't write it otherwise." 59When responding to the question whether she knew when she signed the declaration as to loan purpose that if the loan was advanced it would be used for business or investment purposes or for both purposes, Mrs Primanzon said: "It's written here 'all loan or half the loan will be used for' and that's how we saw, that half for the home and the other half because...the other money, 750,000, we wanted to put it to investment loan." 60The following exchange then took place: "Q. Mrs Primanzon the [mortgaged] property had been held as an investment property by your family from the moment of purchase, hadn't it? A. INTERPRETER: Yes, because we didn't have money. That's why we ask money from that. Q. The intention that you and your family had was to strata the property and to sell off the units, wasn't it? A. INTERPRETER: Yes. We still have the same purpose but the documents are still in the council. We still try to do it but the council rejected it twice but we're doing it." 61Insofar as the loan agreement was concerned, Mrs Primanzon contended, relevantly, that the document she signed on behalf of the second respondent did not contain the second page on which the matters as to the margin and indicative annual percentage rate to which I have referred (at [31]) and a section headed "Repayments" appeared. 62On at least two occasions in the course of the hearing the primary judge asked the third respondent whether the issue the respondents wished to argue was the amount of interest, charges and expenses. He agreed that it was.

The primary judgment 63The primary judgment was, as Young JA observed, concise. After setting out the essence of the application and identifying the parties, the primary judge observed: "3 There is no need to examine the pleadings and, in particular, the issues raised by those filed on behalf of the defendants. As the matter unfolded at the hearing, there was only one issue which needed to be decided. 4 It was not in dispute that in July 2007 the parties entered into a loan agreement, whereby the plaintiff agreed to advance to the defendants an amount in excess of $2,000,000. The loan was secured by a mortgage, executed in the following month, over a property at Woollahra owned by the three defendants. Part of the amount advanced was used to discharge an existing mortgage over the property held by the National Australia Bank. It was also not in dispute that the defendants failed to make repayments of the loan when they fell due. 5 The only issue is the interest rate applicable to the loan. It was the defendants' case that the rate appearing in the loan contract in evidence before me is more than that which was agreed. The contract shows a rate of 8.4% whereas, according to the defendants, the rate negotiated was 6.4%. The serious allegation was made that pages of the contract were changed after they had signed it." 64The primary judge referred (at [6]) to the nature of the mortgaged property "a block of home units ... [a]t the relevant time ... apparently an investment property for the defendants. Units in it were leased, and the family lived elsewhere". 65His Honour then set out the evidence given by Mrs Primanzon who, he observed (at [7]) though "not a party to the loan contract or the mortgage, ... signed those documents on behalf of Violetta [and] ... it is clear that she took an active part in the process of obtaining the loan" and (at [16]) whose "evidence ... was relied on by the defendants on the issue of the interest rate." Her evidence was: "8 ... If the loan application were successful, it was intended that some of the funds would be used for business investment purposes but most of the money would be used to renovate the [Woollahra] property, whereupon the family would move into it. The existing loan from the National Australia Bank, at an interest rate of 6.79%, would be paid out and the new loan would be at a lower interest rate appropriate for a home loan. It was this, she said, which was discussed with Mr Blier. The interest rate was to be .39% less than the National Australia Bank loan, that is, 6.4%." 66The primary judge found (at [9] that this "account cannot stand with the evidence of Mr Blier and the documents which he prepared on behalf of the defendants". His Honour referred (at [9]) to: "Mr Blier's ... oral evidence...that ... the purpose of the loan was to refinance the property, which was to be used for investment. In a document entitled 'Loan application and summary for originators', under a heading 'Pricing details', the 'borrower rate' is shown as 8.45%." 67Next, the primary judge referred (at [10]) to the details of the "loan application, signed by Mr Pachkovski and Grigoriy, and by Mrs Primanzon on behalf of Violetta", noting: "...the amount sought is $2,800,000. Of that, $1,850,000 is said to be sought 'to refinance a property to be used for investment purposes'. The balance, $950,000, is said to be for the purpose of acquiring 'another investment property'. On the last page of the document there is a declaration, signed in the same way, that 'the credit to be provided to me/us by the credit provider is to be applied wholly or predominantly (ie in excess of half the loan amount) for business or investment purposes (or for both purposes.)' 11 The copy of the loan contract which is in evidence shows, on the second page, an interest rate of 8.4% per annum. Provision is made for repayments over the first 2 years at lower rates, although interest continued to accrue at the rate of 8.4%. This provided the defendants with the benefit of lower repayments during that initial period, but it is of no moment for present purposes. The first page of the contract describes the loan account as '2 year Cashflow Manager Loan', that expression also being used in the documentation prepared by Mr Blier. What it means is not entirely clear on the evidence, but I understand it to be an expression appropriate for a commercial loan." 68His Honour next dealt (at [13]) with Mrs Primanzon's assertion: "...that the contract in evidence was different from that which had been signed at that time. It is not clear from her evidence how many pages she says were changed. However, she claimed that on the first page the loan was described as 'residential' rather than 'Cashflow Manager'. She insisted that the interest rate was 6.4%, and she claimed that the second page of the contract in evidence, referring to the interest rate of 8.4%, was not in the document which was signed." As to these assertions, his Honour said: "14 Mrs Primanzon has either misunderstood the terms of the contract, or has been prepared to make an allegation of serious fraud which is entirely without substance. Mr Zeitoune, understandably, had no independent recollection of the transaction but, from the solicitors' records, was able to say that he had proceeded in accordance with his usual practice. The contract, with copies, was forwarded to the defendants and, in due course, returned to him bearing their signatures. He then signed the document on behalf of the plaintiff and attended to settlement of the loan." 69The primary judge found in relation to Mr Zeitone's evidence: "15 In his affidavit he denied having changed any pages in the contract, or being aware of anyone else having done so. In oral evidence, under cross-examination by Mrs Primanzon, he said firmly, '... we don't do that. I don't change pages in the contracts.' Mr Zeitoune, like Mr Blier, impressed me as an honest and reliable witness. Mrs Primanzon's evidence that the contract had been changed after it was signed is not credible, and I reject it." 70His Honour then concluded (at [17) that the applicant was entitled to possession of the property and to recover the sum outstanding in accordance with the loan contract.

Dismissal of the summons seeking leave to appeal 71A single judge of appeal may exercise the powers of the Court of Appeal, inter alia, to dismiss an appeal or other proceedings for want of prosecution or for other cause specified in the rules: s 46(1)(b) Supreme Court Act 1970 (NSW). That power would clearly extend to one to dismiss an application for leave to appeal. The Rules of Court are taken to include the Uniform Rules made pursuant to s 9 of the Civil Procedure Act 2005 (NSW) (the "CP Act") to the extent to which they are applicable in that Court: s 10 CP Act. The "Uniform Rules" are found in the UCPR. 72A single judge may not, however, make an order or direction involving the determination or decision of the appeal or other proceedings: s 46(2)(b), Supreme Court Act . The applicant seeks to invoke the power vested in the Court by UCPR 13.4 to dismiss proceedings which are either frivolous or vexatious or which disclose no reasonable cause of action. That rule applies to proceedings in the Court of Appeal subject to the modifications as are necessary: UCPR 51.1(3) and (4). An order made pursuant to UCPR 13.4 is interlocutory: Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 (at [11]). Such an order may as was said in Macatangay (at [11]) be seen "to have a degree of finality and practical effect", but it is not a final decision in legal effect because it amounts to a conclusion that there is "no triable issue". Accordingly, a dismissal of the application for leave to appeal on the basis of UCPR 13.4 does not determine or decide the appeal itself: Macatangay (at [15]). 73As I have said, Mr Casselden's primary submission was that the application for leave to appeal should be dismissed because it was out of time, not having been filed within 28 days after the material date (see UCPR 51.10, 51.16) and there was no explanation for the delay. It will be recalled that judgment was given on 12 October 2010. That was the "material date" for the purpose of calculating the 28 days within which the notice of appeal had to be filed: UCPR 51.2, 51.16(c). The summons seeking leave to appeal was filed on 24 November 2010. It was 14 days out of time. 74In my view there is some explanation for the delay - the respondents' apparent belief, as appears from their summons seeking leave to appeal (see [6]), that they could seek a stay from another judge of the Common Law Division and, I infer, their understanding that this was the next procedural step they should take. They appear to have been disabused of this notion on 24 November 2010. It is clearly no coincidence that their summons seeking leave to appeal and the motion seeking a stay were filed on the same day as their unsuccessful application before Latham J. In my view, having regard to the respondents' clear language difficulties, lack of legal qualifications, the comparative brevity of the delay and the discretion available to extend the time period (UCPR 51.16) the appeal should not be dismissed on this basis. Moreover any real prejudice the applicant may suffer may be cured to a substantial extent if it can enforce its writ of possession pending appeal. 75It is appropriate to consider the substance of the first matter arising on the application, whether the appeal should be dismissed on the basis that it is unarguable. 76The exercise of the powers to terminate proceedings summarily has been considered in a number of recent High Court authorities conveniently collected in Spencer v Commonwealth [2010] HCA 28; (2010) 84 ALJR 612 by French CJ and Gummow J (at [24] - [25]) and by Hayne, Crennan, Kiefel and Bell JJ (at [53] - [56]). Although in Spencer the Court was considering s 31A by the Federal Court Act 1976 (Cth) which is expressed in different language to UCPR 13.4, their Honours considered the ambit of s 31A in part by reference to cases concerning the power to order summary or final judgment conferred by provisions substantially, if not entirely, on all fours with UCPR 13.4. The relevant principles are, in my view, sufficiently summarised for present purposes in the judgment of French CJ and Gummow J as follows (footnotes omitted): "The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said: 'The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried'. More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following: 'Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.' There would seem to be little distinction between those approaches and the requirement of a 'real' as distinct from 'fanciful' prospect of success contemplated by s 31A. That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions." 77Brief reference should be made to the parameters within which the Court of Appeal exercises its powers on appeal from a final judgment. The appeal is by way of rehearing (s 75A, Supreme Court Act 1970 (NSW)). The Court is obliged, within the confines of the grounds of appeal, to "conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons" and "give the judgment which in its opinion ought to have been given in the first instance" ( Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 (at [23] - [25]) per Gleeson CJ, Gummow and Kirby JJ. While weight is given to the trial judge's advantage in seeing the witnesses, nevertheless a trial judge's conclusions may be found to be erroneous, even when they appear to be, or are stated to be, based on credibility findings in the light of "incontrovertible facts or uncontested testimony" or where the decision is "glaringly improbable" or "contrary to compelling inferences" in the case: Fox v Percy (at [28] - [29]). Where there is documentary material arguably supporting a party's case, that material must be considered in the judge's reasons in a satisfactory way: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; (1999) 73 ALJR 306 (at [94]) per Kirby J (Gaudron, Gummow and Hayne JJ agreeing). 78On the argument as presented it appears to me that the primary judge was correct to identify the only issue extant on the pleadings before him as the correct interest rate. The third respondent agreed that was so at trial. The forgery issue, which appears to have been the only substantive issue on the cross-claim, appears to have fallen away with the filing of the amended defence and the non-appearance of the handwriting expert. The respondents have referred in the draft Notice of Appeal to the applicant's entitlement to "legal fees" but whether that is any more than a complaint about the primary judge's costs order is not apparent. 79Although the respondents seek to complain that the applicant breached a directions timetable in serving its evidence, it is not clear whether that is so as a matter of fact. I do not discern any such complaint being made at trial. It is apparent both that the primary judge was at pains to ensure the respondents had time to read the documentary material. 80However the interest rate issue comprehended more than the question whether the interest rate was 8.4% as opposed to 6.4%, but also whether the rate was fixed or variable and whether the applicant was entitled to charge penalty interest. 81There was a large volume of documentary evidence before the primary judge. I have only some of the documents, although those I do have I anticipate are those which appear to be central to the appeal. There is an apparent discrepancy between the loan application signed by the respondents, expressed to be for a "Residential Mortgage loan", and the loan granted and described as a "Cashflow Manager Loan". Further the loan application expressed the interest rate to be "fixed" whereas, as appears to be uncontroversial, the loan agreement expressed the interest rate as variable. It seems to me that some of the respondents' submissions both at trial and before me were seeking to make that point - namely that they understood from the loan application that what they sought and were granted was a residential loan with a fixed interest rate which was not reflected in the loan agreement. Although the primary judge commented (at [11]) that the expression "Cashflow Manager Loan" appeared in the documents Mr Blier prepared, he did not deal with the loan application in which no such expression is found. Nor did his Honour deal with the reference to "fixed" interest in the same document. 82The fact that his Honour accepted the applicant's witnesses' evidence and rejected Mrs Primanzon's does not, as the foregoing discussion makes apparent, preclude a finding on appeal favourable to the respondents based on the documentary material. 83While it might be said that the foundation of the appeal appears slender (see Cox v Journeaux [No 2] [1935] HCA 48; (1935) 52 CLR 713 (at 720) per Dixon J; app Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 (at [53]) the Court (Gleeson CJ, Gummow, Hayne and Crennan JJ), nevertheless I do not have that high degree of certainty about the ultimate outcome of the proceedings if the application for leave to appeal is permitted to go forward which would warrant granting the first prayer for relief in the notice of motion.

The writ of possession 84Mr Casselden informed the Court without contradiction, that the respondents had made no payments in reduction of the mortgage between February 2009 and December 2010 when a payment of $12,000 was made presumably in compliance with Young JA's orders. 85Further, as I have said, the respondents admitted in the course of the hearing that they did not have the money to pay the debt. They have not offered to repay the debt, save to the extent of the $12,000 a month they say represents the correct monthly repayment. There is no explanation as to why they did not pay that amount monthly in the period February 2009 and November 2010. 86Prima facie the applicant is entitled to the fruits of its judgment. The onus is on the respondents to make out a case that it is appropriate for the Court to maintain the stay Young JA granted on 29 November 2010. I infer from his Honour's reasons that he was prepared to grant a short stay on that occasion in part because the applicant had not demonstrated such a stay would cause it prejudice. That position has been remedied by the evidence of the large discrepancy between the present value of the mortgaged property ($2 million) and the debt as at 12 October 2010 $2,995,973.24). As would be apparent, I place no weight on Mr D'Ettore's "appraisal" expressly disclaimed as being a valuation. 87Even if the respondents are correct that the interest rate is incorrect, they are still liable for the principal due under the mortgage. They did not submit the appeal would be nugatory without a stay or that they would suffer any particular hardship if the stay were dissolved. There is no suggestion that, in the event it is found that the interest rate is as the respondents contend, the applicant would not be able to reimburse the difference between the amount actually found to be owed and that for which the applicant has judgment. 88The applicant will clearly suffer prejudice even if the respondents continue to pay $12,000 a month as on the valuation evidence the value of the property is now substantially less than the principal of $2.8 million. 89In my view in those circumstances it is not appropriate that the stay Young JA granted should continue pending appeal - or, as the proceedings are presently constituted, the application for leave to appeal.

The subpoena 90The subpoena can be dealt with briefly. It should, in my view, be set aside substantially for the reasons the applicant advanced. 91First, the subpoena should not have been issued without leave: UCPR 7.3(1). There is no indication any such leave was sought or granted. It was, accordingly irregularly issued, an irregularity the Court may cure if appropriate: s 63, CP Act . However even though the respondents could not issue a subpoena without leave, they could have issued a notice to produce without leave: UCPR 34.1. I would be prepared, all things being equal, to treat the subpoena as a notice to produce. A notice to produce may be set aside on the same grounds as a subpoena. 92Secondly, the respondents are, I assume, of the view that they may use the documents sought in the subpoena as evidence on appeal. They may not understand that the circumstances in which fresh evidence may be admitted on appeal are constrained: s 75A(7) - (8), Supreme Court Act . In particular the evidence must be admissible and credible, and such that it could not have been discovered by the exercise of reasonable diligence before the trial: Wright v Ryan [2005] NSWCA 368 (at [24]) per Handley JA, Hodgson JA and Hunt AJA agreeing. The respondents advanced no contention which explained why the subpoena was not issued before the trial. I can see no prospect of them being able to use documents produced in response to the subpoena on appeal. There is, accordingly, no apparent relevance to the issues which might properly be explored on appeal. Moreover as is apparent from the language of the subpoena extracted at [18] above, it is expressed in pejorative language which, in my view, constitutes an abuse of process. The subpoena should be set aside.

Costs 93The parties have each had a measure of success on the motion filed on 20 January 2011. In my view it is appropriate that they bear their own costs. 94The respondents have been unsuccessful on the motion they filed on 24 November 2010. They should bear the costs of that motion.

Orders 95I would make the following orders: As to the motion filed on 20 January 2011:

1. Lift the stay of the writ of possession granted by Young JA on 29 November 2010.
2. Set aside the subpoena filed on 6 January 2011.
3. Each party to bear its and their costs of the motion filed on 20 January 2011. As to the motion filed on 24 November 2010:
4. Dismiss the motion filed on 24 November 2010.
5. Applicants to pay the costs of the motion.

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: 24 February 2011