Australian Regional Credit Pty Limited v Rukavina and Anor

LEGISLATION CITED : Consumer Credit Code Uniform Civil Procedure Rules 2005

GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889 Akari v Sole [2008] NSWSC 59 CASES CITED : Allesch v Maunz [2000] HCA 40 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61

Plaintiff - Australian Regional Credit Pty Ltd PARTIES : First Defendant - Peter Rukavina Second Defendant - Ivanka Rukavina

COUNSEL : Mr JB Conomy for the Plaintiff Mr IGA Archibald for the Defendant

SOLICITORS : Plaintiff - Holman Webb Lawyers Defendant - Farrell Lusher

• 27 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION SCHMIDT J

2002/66585 AUSTRALIAN REGIONAL CREDIT PTY LTD v PETER RUKAVINA

JUDGMENT 1 HER HONOUR: By motion filed on 12 October 2010, pursuant to Rule 49.19 of the Uniform Civil Procedure Rules 2005 the defendants seek to set aside orders made by Registrar Bradford on 14 September 2010, dismissing a motion brought that day by Mr Rukavina, the first defendant. Orders were then sought staying a writ of execution issued on 9 August 2010, pending further order. The defendants now press that order, as well as an order that judgment for possession given in favour of the plaintiff on 30 July 2002 be stayed and that they be given leave to file and serve a cross claim within 14 days. 2 The earlier motion was supported by an affidavit sworn by the first defendant, Mr Peter Rukavina. The defendants also supported their application by evidence which was not available before the Registrar. That course was not opposed by the plaintiff, nor did it dispute that the orders sought could be made. Nevertheless, they were opposed as being unjust in the circumstances here before the Court, reliance being placed on what was observed by Hodgson JA in Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) NSWLR 61 at [14]: "14 In my opinion, there may be circumstances where it is appropriate to go further into the merits of the case of a person seeking an indulgence such as this, than to ask whether or not the case is fairly arguable. If such a person has a reasonable explanation of delay and the opponent does not have a strong case of prejudice, then a fairly arguable case is sufficient. However, if the explanation for the delay is less than satisfactory, or if the opponent has a substantial case of prejudice, then it may be relevant that the person seeking the indulgence shows that his or her case has more substantial merit than merely being fairly arguable." 3 For their part, the defendants led considerable evidence, in order to seek to address a number of considerable hurdles lying in the way of the grant of the relief sought. Thereby they sought to show that there was an explanation for their delay since 2002 in bringing any application to set aside the default judgment, to defend the proceedings, or to bring a cross claim and that they had prospects of success in the case which they belatedly wished to advance. 4 It is pertinent to refer to what Johnson J discussed In GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889, in relation to applications such as this: " Some Factors Relevant to Stay of Execution of a Writ of Possession 9 The Court has a discretion whether to stay the execution of a Writ of Possession issued in proceedings of this type. It is a power which is sought to be exercised frequently and in a variety of circumstances. There can be no prescription of the circumstances in which this important discretionary power ought be exercised. 10 Nevertheless, there are a number of factors which are clearly relevant to the question whether the discretion ought be exercised in the circumstances of the particular case. 11 Firstly, it should be kept in mind that, by the time a stay application is made, the proceedings have usually advanced through various stages without the Defendant participating in the proceedings. In the usual case (of which the present case is an example), the Defendant has not filed a Defence and Default Judgment has been granted (Part 16.4 and Part 36.8 Uniform Civil Procedure Rules) followed by the issue, with the leave of the Court, of a Writ of Possession (Part 39.1(1)(d) Uniform Civil Procedure Rules). Some time is then required for the Plaintiff to make practical arrangements with the Sheriff for execution of the writ. 12 Having been served with originating process alleging default under the mortgage and identifying the relief which the Plaintiff seeks, the Defendant is on general notice as to the consequences which may flow as a result of the proceedings. If the Defendant takes no action until the execution of the Writ of Possession is imminent, a legitimate question arises as to why the Defendant has not taken earlier action, either by way of negotiations with the Plaintiff or application to the Court. A Defendant seeking a stay ought be in a position to explain to the Court his or her action or inaction prior to the making of the application. 13 Secondly, the basis upon which the stay application is made is significant. As paragraph 20 of the Practice Note makes clear, there are three common circumstances advanced on a stay application:

(a) where the Defendant indicates that the proceedings are to be defended, a draft Notice of Grounds of Defence should be provided and the Defendant ought be in a position to make submissions concerning the merits of the proposed grounds;

(b) where the Defendant indicates that the loan is to be refinanced, proof of steps undertaken to refinance will be required on the application;

(c) where the Defendant indicates that the subject property is to be sold, copies of agent sale agreements, a contract for sale of the property, advertisements and other documentary evidence ought be provided. 14 he three categories referred to in the preceding paragraph of this judgment raise different considerations. 15 With respect to the first category, if a Defendant seeks to be let in to defend the proceedings (and, usually, to set aside a default judgment for that purpose), then a stay may be more readily granted to preserve the subject matter of the litigation pending the determination of the proceedings by the Court. 16 ... 17 The power of sale under s.58 Real Property Act 1900 is to be exercised for the purpose of the Plaintiff recovering the moneys which are due and owing to it as mortgagee (see s.58(3)). Even where the Plaintiff takes possession of the property for the purpose of exercising its power of sale, the Defendant may obtain an injunction restraining a mortgagee from exercising the power of sale if the amount of the mortgage debt (if this is not in dispute) is paid or (if the amount is disputed) the amount claimed by the mortgagee is paid into Court: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164-167, 168-169. In this respect, I have been referred by Mr Groben to a recent decision of Hamilton J in Parist Holdings Pty Limited v Perpetual Nominees Limited [2006] NSWSC 599, where his Honour considered the circumstances in which injunctive relief may be granted to restrain the exercise of power of sale by a mortgagee. 18 Thus, it remains open to a Defendant to discharge the debt owing to the Plaintiff in its entirety before the property is sold and to recover possession of the property. No doubt, it is personally convenient to a Defendant to retain possession of the property continuously rather than lose possession, and then regain it upon discharging the debt to the Plaintiff. It is for this reason that a Defendant who is seeking to discharge the debt to a Plaintiff will seek a stay of execution of the Writ of Possession to allow this to be done. 19 ... 20 ... 21 A stay may be sought on hardship grounds. The Defendant may contend that there will be hardship to him or her and other family members if the writ is executed and they are removed from the property. It must be kept in mind that the Defendant and other occupiers of the property (Part 6.8 Uniform Civil Procedure Rules) will have been served with originating process so that the consequences which may flow from the proceedings would have been notified to them. Of course, it may be that, in the absence of legal advice, the precise consequences may not be clear to a Defendant and other occupiers. It may also be that the Defendant and his or her family may have not confronted the reality of the situation at an earlier time. 22 Ordinarily, if a Defendant is not in a position to demonstrate a reasonable foundation for a stay in one of the three circumstances referred to in paragraph 13 above, then there could be no reasonable expectation of an extended stay on hardship grounds only. If it is inevitable that the Plaintiff will obtain possession of the property for the purpose of exercising the power of sale, then it will be necessary for the Defendant to vacate the property. 23 Of course, particular factors may exist in an individual case which bear upon this class of stay application and which may ground the exercise of discretion by way of a stay for a longer period. However, in circumstances where vacation of the premises by the Defendant is inevitable, there ought be no reasonable expectation of an extended stay being granted on hardship grounds. 24 It is a relevant factor, in the exercise of discretion on a stay application, to have regard to the level of indebtedness under the mortgage and the extent to which the Defendant has made payments and attempted generally to comply with the conditions of the mortgage. It might be thought that issues of this type would be relevant, in the first instance, to the decision of a mortgagee to commence proceedings against a mortgagor. Where proceedings are commenced, a poor record of payment by a Defendant under the mortgage may operate adversely to the Defendant on a stay application. 25 Ordinarily, a Plaintiff is entitled to recover, under the mortgage, enforcement costs and legal costs. It is necessary for Defendants to keep in mind that delay in the proceedings, and the taking of procedural steps which run up Plaintiffs' costs, will operate adversely to the Defendant in a financial sense if possession of the property is taken and the power of sale is exercised. The Plaintiff will be entitled to retain from the proceeds of sale of the property not just the principal and interest outstanding under the mortgage, but additional costs and expenses incurred in the proceedings and in the exercise of the power of sale. This will operate to reduce any remaining balance which may be available for payment to the Defendant. 26 In circumstances of falling property values, there may be a real prospect that the Plaintiff will not recover the outstanding level of indebtedness from the proceeds of sale of the subject property. The Plaintiff may then seek to recover any outstanding balance from the Defendant personally. 27 Accordingly, the likely sale price of the property may also be relevant to the exercise of discretion as to whether a stay should be granted, thereby extending the proceedings and increasing the level of costs incurred. 28 A further relevant consideration is the delay which will arise if it is necessary to postpone action by the Sheriff to execute a Writ of Possession. Where a date and time has been nominated for this action, and a stay is granted shortly before that time, it is the experience of the Court that a period of some two to three weeks is required before further arrangements can be made by a Plaintiff for the Sheriff to take possession of the property. Additional enforcement costs are involved in this regard as well. Accordingly, a last-minute stay will have the effect of allowing a Defendant a significant period of continued possession of the property and increasing the sum which the Plaintiff may recover from the Defendant. 29 It is, of course, necessary to consider all the circumstances of the particular case to determine whether a stay is granted and, if so, upon what terms. The Court may take the view that sworn evidence is required from a Defendant by way of an affidavit or oral evidence where an urgent stay application is made. In an appropriate case, the Plaintiff may wish to test the evidence of a Defendant with respect to the grounds of the stay application and the material advanced in support of it. 30 I have made these observations in this judgment to emphasise that Defendants can have no reasonable expectation that a stay of execution of a Writ of Possession will be granted upon request in every case. The nature of the proceedings, and the stage which the proceedings have reached by the time of such an application, are important factors which the Court must take into account and which a Defendant must overcome on a stay application. A Defendant must satisfy the Court that a sound and proper basis exists for the grant of a stay." 5 It is also pertinent to note that in Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172, it was observed by the majority at [27] that the discretion to set aside an order made in the absence of a party should be approached:

"... on the footing that it was prima facie the right of each party to have the proceedings heard in his or her presence and that justice to both parties required that each party should be entitled to present his or her case."[15] Murphy J saw the discretion to reopen as an aspect of federal judicial power which was to be exercised "only with caution."[16] The factors to be considered, in his Honour's view, were "the presence or absence of some real explanation for failure to use the opportunity to be heard, delay, acquiescence, [and] prejudice to the other party."

6 In Akari v Sole [2008] NSWSC 59 it was explained by Hall J that:

"28 It is a long established and accepted requirement that a person applying to set aside an order, regularly made in his or her absence, bears the onus of showing an arguable case on the merits, that is, a case that might reasonably bring about a different result, as well as an explanation for his or her absence: Magnate Projects Pty Limited v Youma Constructions (No 2) Pty Limited [2005] NSWCA 331 at [51] per Hodgson JA. In that case, Hodgson JA also observed:- "In my opinion, an applicant seeking to set aside a judgment obtained after an undefended hearing, does not have to show that a different result is likely should the judgment be set aside and a new trial ordered. However, the circumstances may be such, as Jordan CJ (in Vacuum Oil Pty Co Limited v Stockdale (1942) 42 SR(NSW) 239) said, as to require 'a reasonably clear case of merits to be shown'; that is, that it appear reasonably clearly that there is a defence capable of producing a different result. If that defence depends on facts, then there should be some evidence of those facts; and the circumstances may be relevant to the quality of the evidence that is required to show a defence on the merits in particular cases. Among such circumstances could be the degree of the applicant's default, and hardship to the respondent."

29 Accordingly, in general terms, the relevant matters to be addressed on an application to set aside a default judgment include the issues of delay, an explanation for any delay or default which occasioned the entry of default judgment, whether a good defence on the merits has been established and the question of whether any prejudice would be occasioned to the plaintiff by the making of an order setting aside the judgment."

The proceedings before the Registrar 7 The transcript of the Registrar's reasons for his decision was not available, but the parties were agreed that in substance it was concluded that: "In this matter I gave leave to file a notice of motion. The application is supported by the affidavit of Mr Rukavina, the affidavit of Mr Smith, who has acted for Mr Rukavina since August 2008. There was considerable material provided, including the deed of agreement between the parties and certificates of legal advice.

The proceedings were commenced in 2002 by statement of claim in relation to a mortgage. Judgment for possession was obtained in 2002. It is quite clear that there were agreements entered into between the plaintiff and the defendant. The initial writ for possession was issued in July 2002. There was subsequent arrangements between the parties.

In support of the present application, Mr Archibald has indicated that Mr Rukavina wants to obtain further advice so that he can apply to set aside what has taken place. He has referred me to Mr Rukavina's affidavit. Mr Rukavina incurred the liability to the plaintiff with the knowledge and participation of Piper and Maloney. There is a reference to Mr Rukavina then being unable to obtain alternative funds from the Croatian community. However, he did not pursue that and took up the liability to the plaintiff.

Mr Archibald referred me to section 70 of the Credit Code and the need for Mr Rukavina to obtain advice in relation to this code. He also referred to the question of hardship and the psychological difficulties suffered by Mr Rukavina. As against that, Mr Conomy for the plaintiff submitted that I need to consider what has taken place. I have been referred to a number of deeds, specifically the November 2008 deed and the recitals at the beginning of that deed. It is quite clear that there were monies owing as at that deed. It was submitted that the proposed claims by Mr Rukavina are foreclosed by that deed itself. I was referred to the certificate of independent advice attached to the Rukavina affidavit in relation to the 2000 agreement and the Smith certificate of advice in relation to the 2008 deed.

This is a matter in which Mr Rukavina was served on 29 April 2002. It is not until now that these matters are raised. It was submitted that I need to look at the parties' conduct. Whilst usually there is a period of time between the service of the statement of claim and judgment for possession in which a stay application can be made, it is not until 2010 that a stay of the possession is sought. I also need to have regard to the need for solicitors to proceed carefully in relation to the formulation of any claims.

I have considered the hardship aspect. The defendants are elderly persons. I also give consideration to the words of Johnson J in GE Personal Finance v Smith in which his Honour noted that such applications as the present are frequently made at the last minute. The defendant has had a considerable time and I cannot exercise a discretion based on hardship alone. The defendant is asking for additional time, but after considering the matter, I am not of the opinion that this is a matter in which a stay should be granted. The application is dismissed. The defendant is to pay the plaintiff's costs."

8 Given what the evidence has revealed, in my view, for reasons for which will become apparent, it may not be concluded that the Registrar fell into error in refusing the leave sought by Mr Rukavina in his earlier motion. To the contrary, given the absence of any proposed pleadings and a concession that $50,000 might have been owed by the defendants, the conclusion reached was plainly conceded. Nevertheless, the application brought by the defendants on the further motion must be considered in light of the further evidence now relied on.

The evidence 9 These proceedings were commenced in 2002. They were not defended. Default judgment was given and a writ of possession was issued on 1 July 2002, in relation to the defendants' home in Wagga Wagga. Until the September 2010 motion was filed the defendants have never challenged the plaintiff's right to possession of that property. To the contrary, they have acted consistently with it. 10 The defendants' solicitor, Mr Smith, provided two affidavits and was cross examined. A proposed cross claim, albeit still in incomplete form, is in evidence. Mr Smith had estimated that it would require 14 days to settle the claim, but that estimate had not been met by the time of the hearing on 6 December 2010. The possibility that the defendants would wish to commence proceedings by statement of claim was also adverted to. The relief which it is sought to pursue in the cross claim is that a deed of loan of 8 June 2000 and a further deed of 15 November 2001, entered by the plaintiff and the defendants, as well as a deed of agreement of 24 September 2008, entered between Mr Rukavina and the plaintiff be set aside. In the alternative, orders relieving the defendants from paying any amount under the deeds in excess of an amount considered reasonable by the Court are sought. The claims are sought to be advanced under the Consumer Credit Code and at common law. 11 Mr Smith has acted for the defendants since 2008. Despite this, it is apparent that the claims which the defendants now wish to advance were only revealed to him in very recent times. The circumstances in which they have come forward leave open the very real possibility that they are not genuine. Those circumstances were not entirely revealed by the evidence which the defendants led in support of their motion, but were clearly revealed by the evidence which Mr Rukavina gave in cross examination. When regard is paid to other relevant material in evidence, the reliability of Mr Rukavina's evidence becomes questionable. That difficulty is also underscored by evidence which Mr Smith gave. 12 In his September 2010 affidavit, Mr Rukavina, who immigrated to Australia from Croatia in 1961, deposed to having established a company, Rukavina Timber and Joinery Pty Limited (later called RTJ Trading Pty Ltd) in 1980. On his evidence he operated that business until the company was liquidated in 1990, after problems with the State Bank. Curiously, the company search in evidence suggested that while there was a Court order appointing a liquidator to wind up the company in 1995, the liquidation was still not complete, with the final entry being made on 9 November 2010, 'Deregistration request (Liquidator Not Acting or Affairs Fully Wound Up)' and the status of the company being noted as 'strike off action still in progress'. 13 In any event, Mr Rukavina incorporated another company, Pinebelt Pty Limited ('Pinebelt') in 1993. His evidence was that in 1997, $150,000 was borrowed from Esanda, it would appear by Pinebelt although in his oral evidence Mr Rukavina claimed that it was borrowed by Rukavina Timber and Joinery Pty Limited. Given the time that this company ceased trading, that was most unlikely. Pinebelt also borrowed $50,000 from the plaintiff in 1998, with the defendants' home then used as security. The defendants then dealt with a Mr Turner. 14 In evidence was also a May 1998 lease agreement, whereby Mr Rukavina sold various equipment to the plaintiff, who leased it to Pinebelt, in return for payment of 48 instalments of $1,673.64, with a residual value of $5,000. This arrangement was secured by a mortgage over the defendants' home. Pinebelt later went into default, with the eventual result that the plaintiff threatened to take possession of the defendants' home. In cross examination, Mr Rukavina agreed that at the time he understood that the defendants had guaranteed Pinebelt's performance of its obligations under the lease. He denied, however, that he had ever seen a solicitor, Bruce Jarratt, in connection with the mortgage the defendants then entered, even though Mr Jarratt had executed a solicitor's certificate attesting that he had advised the defendants about the mortgage documents, before they were executed. Mr Jarratt had acted for the defendants in relation to another matter. Mr Rukavina did not deny that the defendants signed the documents but insisted that they had not seen Mr Jarrett or been advised about the mortgage. 15 Mr Rukavina's evidence was that in 1998, Pinebelt was also seeking finance to purchase business premises. Mr Rukavina then met Ms Maloney, a finance broker. In December 1998 a deed of company arrangement was executed. A Mr Rangott was appointed the voluntary liquidator of Pinebelt. At that time Pinebelt still owed about $50,000 to Esanda and in excess of $80,000 to the plaintiff. A company search showed that Pinebelt was dissolved in July 2004. 16 Mr Rukavina's evidence was that the defendants then wished to discharge the debt owed by Pinebelt to the plaintiff, because of the security it held over their house. They sought finance. Ms Maloney acted for them. They wished to borrow sufficient funds to discharge the loan. At that time Mr Rukavina had applied for a pension, which he first received in December 1999. 17 Remarkably, it was Mr Rukavina's evidence that Ms Maloney later told him that she had done a deal with Mr Turner, but refused to tell him the details, saying 'that's confidential'. He had also then been offered the opportunity of a charitable gift from the Croatian community, which would have enabled him to discharge the Pinebelt debt. When he told Mr Turner that he was organising to discharge the plaintiff's loan, he was told that a deal had been done with Ms Maloney. Mr Turner also told him that it was confidential. As a result Mr Rukavina didn't pursue the proposed gift. That Mr Rukavina would have accepted his mortgage broker and the plaintiff so proceeding seems rather unlikely on his evidence. At the time he was a businessman clearly familiar with borrowings and what the entry of mortgage documents entailed. 18 Despite this claimed secrecy, there is no question that on 8 June 2000 the defendants executed a deed and a mortgage over their home, in the presence of a solicitor Mr Moir. Earlier, on 11 May, they had signed an acknowledgement that Mr Moir had given them legal advice about the loan and security documents for borrowings of $120,000 from the plaintiff, secured by the mortgage over their home. In his evidence Mr Rukavina claimed that despite the certificate, Mr Moir also did not advise the defendants about the effect of the deed, or the borrowings. They were with him for only a few minutes; they did not read the documents which they had signed and did not produce the identification it is asserted in the certificate he was provided. Mr Rukavina does not dispute that the defendants signed these documents, but denies any understanding as to what they concerned. That evidence was also rather implausible. It was undermined by the fact that there is no question that the defendants used the $120,000 advance secured over their home to repay the loans to Pinebelt from Esanda and the plaintiff. 19 The defendants, themselves, have never made any payments in respect of this new borrowing. For some two years those payments were made by Ms Maloney and a Mr Piper. On Mr Rukavina's evidence this came about as the result of a business arrangement then entered with Mr Piper and Ms Maloney, for the manufacture of windows and doors, using machinery previously used in its business by Pinebelt, which was in the hands of auctioneers, not having sold at auction. Premises were acquired before the $120,000 loan was received by the defendants. Mr Rukavina helped prepare those premises and then himself worked in the business from 2000. In return, repayments of the loan were made by Mr Piper and Ms Maloney. 20 A matter which Mr Rukavina did not deal with in his affidavits was the November 2001 deed of supplementary loan agreement, extending the term of the 2000 loan, (which had a termination date of 7 June 2001). This deed was executed by the defendants in November 2001 in the presence of Mr Piper. The termination date was 7 June 2002. 21 A dispute about a partnership developed, which was the subject of discussions and as a result, in March 2002, the relationship between Mr Rukavina, Mr Piper and Ms Maloney came to an end. Mr Rukavina ceased working in the business. He believes that it was sold in 2007 or 2008 and claims that machinery belonging to him, which was also being used in the business, was retained when he left. 22 While Mr Rukavina worked for Mr Piper and Ms Maloney, instalments due in respect of the $120,000 loan were paid. That ceased when he left the business in 2002. The defendants have never made any payments in relation to the loan themselves, even though the money they obtained from the plaintiff was used to refinance the earlier Pinebelt borrowings which their home had secured. 23 In his oral evidence, Mr Rukavina claimed that the defendants had never made any agreement with the plaintiff, even though they had executed the loan and mortgage documents and the loan moneys had been used to pay off the Pinebelt borrowings. That evidence is also difficult to credit, particularly when it is considered that not only do the defendants also complain about the calculations which the plaintiff made as to what it was owed by Pinebelt at the time of the loan, and what they borrowed as a result, they also claim that the loan was discharged as a result of a later agreement. 24 In July 2002, the plaintiff obtained judgment for possession of the defendants' home. At that time the defendants were not legally advised. The proceedings were not defended. A writ of possession was also issued, but was not acted on.

25 In his affidavit sworn in these proceedings on 14 September 2010, Mr Rukavina claimed for the first time, that this was because a Mrs Pratt, a friend, entered into an agreement with the plaintiff, which completely discharged what the defendants owed the plaintiff. This came about, he claims, because Mrs Pratt had in 1988 provided Rukavina Timber and Joinery Pty Limited a loan of about $140,000 secured by a bill of sale. In 2002, Mrs Pratt signed this over to the plaintiff, who agreed to discharge the plaintiffs. There is no document which evidences such an agreement. So far as the defendants are concerned, it is claimed that the agreement was an oral one. That, too, is implausible. 26 There was in evidence a deed of assignment, entered between Mrs Pratt and the plaintiff, which was dated 22 August 2002. It referred to the assignment of the 1988 bill, which had been registered as a charge and was still then current. The deed of assignment makes no reference, however, to the assignment being related to any debt between the plaintiff and the defendants. 27 In 2004 Mr Rukavina and the plaintiff each took proceedings against Mr Piper and Ms Maloney in the District Court. The cost of those proceedings were all met by the plaintiff. What the plaintiff's claims concerned is not in evidence. Those proceedings were settled on terms which are also not in evidence. Mr Rukavina's statement of claim was, however, in evidence. There he claimed that he had worked as a carpenter in Mr Piper's and Ms Maloney's business and that he allowed various plant and equipment in his possession to be used in the business; that in return they had agreed to repay the monies owed to the plaintiff; that they had breached the agreement to make those payments; that he ceased working for them on 11 March 2002 and that he should be paid $234,240 as a quantum meruit for the use of the equipment, or in the alternative, for breach of the agreement. 28 That claim failed. It was settled by entry of a verdict and judgment for the defendants, with each party to bear its own costs. 29 What Mr Rukavina also did not reveal in his affidavit evidence was that in 2008 he entered into another deed with the plaintiff, supported by a mortgage given over another of the defendants' properties in Wagga Wagga. He also thereby assigned to the plaintiff an interest in a claim which he had against the Commonwealth Bank in relation to a fraud allegedly committed by an ex-employee of the State Bank. On Mr Smith's evidence, at the time, this was still the subject of a police investigation, which has finally come to naught. No such proceedings have ever been taken. Mr Smith's evidence was that in 2008, Mr Rukavina was adamantly of the view that he would recover millions of dollars in damages in such proceedings, so that the assignment to which he agreed had real value. In the 2008 deed it was recited:

"A. By Deed of Loan Agreement between the Lender as Lender and PR and Ivanka Rukavina as the Borrowers (herein referred to as "the Borrowers") dated 8 June 2000 as amended by Deed of Supplementary Loan Agreement dated 15 November 2001 (both herein referred to as " the Loan Agreement ") the Lender provided financial accommodation to the borrowers (" the Loan ") upon the terms and conditions therein contained. B. Pursuant to the Loan Agreement and to secure the Loan, interest and all other moneys payable by the Borrowers to the Lender under the Loan Agreement, the Borrowers granted to the Lender a first registered mortgage number 6852134 (" the Mortgage ") over a property situate(sic) at XX XXXXXX Street, XXXXX XXXXX, New South Wales and being the whole of the land contained in Folio Identifier 19/A/7231 (referred to herein as " the property "). C. The Borrowers committed an(sic) event of default under the Loan Agreement and the Mortgage by failing to pay interest on the loan. D. In consequence of the default referred to in Recital C hereof, the Lender declared that the Moneys Owing (as herein defined) were immediately due and payable and demanded immediate repayment thereof. E. The borrowers failed to comply with the demand for repayment of the Moneys Owing by the borrower to the Lender under the Loan Agreement and the moneys remain due and owing to the Lender. F. Pursuant to a statement of claim for possession of the property (" the Proceedings "), judgment was entered in the Proceedings requiring the Borrowers to give the Lender possession of the Property. G. On 30 July 2002, a writ for possession was issued in respect of the judgment entered in the proceedings. H. PR has requested the Lender to stay the enforcement of the writ for possession of the Property for a period of twelve (12) months to permit the Borrowers to sell their property at X XXXXXX Street, XXXXX XXXXX and/or to finalise the CBA Proceedings (as herein defined) the proceeds of which are to be applied to the repayment of the Moneys Owing to the Lender up to the amount owing . I. The Lender has agreed to stay the enforcement of the writ for possession for a period of twelve (12) months upon the terms and conditions herein contained."

30 The deed had numerous operative provisions, including that the defendants were thereby given the right to live in their home for a further 12 months. The circumstances in which they would give the plaintiff possession of that property were dealt with, as was how the proceeds of the sale of that and another property were to be used to pay down the loan. It was agreed that everything reasonably necessary to give effect to the agreement would be done. 31 Mr Rukavina was advised about this deed by Mr Smith, who met with him, took instructions from him, and read and explained the deed to him. On Mr Smith's evidence he appeared to understand what was proposed and agreed to it. Mr Smith provided a certificate of independent legal advice to that effect. All that Mr Rukavina said in his affidavit evidence about those events was:

"40. In 2008 I was allowed further time to repay the amount said to be owed to ARC to enable me to pursue a claim against the State Bank (now Commonwealth Bank of Australia) that was then being investigated by the New South Wales Police and to the best of my knowledge and belief is still being investigated, although difficulties have arisen as a result of the loss of documents."

32 In cross examination when Mr Rukavina sought to explain how it was that he now sought to advance a case which denied what had been agreed in the 2008 deed, he said:

"A. This deed, I signed this deed to pay Australian Regional Credit that money by which I was, I signed under stress. The sheriff was come in two days time, I signed anything to stop the sheriff coming in until I get some documents.

Q. You would sign anything to stop that happening? A. No, I sign anything to stop the sheriff coming in.

Q. Mr Rukavina, you wouldn't call yourself a truthful man? A. I do.

Q. In most respects? A. Most respects, I did not owe any money to Australian Regional Credit.

Q. You felt justified in-- A. I was under stress, Australian Regional Credit terrorized my family for ten years. Now that is why I signed the documents from the solicitor. The previous solicitor applies to put in documents together to defend myself.

Q. Isn't it the case the Australian Regional Credit was more than reasonable entering into the September 2008 deed to give you an opportunity to proceed against the State Bank in order to get some funds to pay out your liabilities to Australian Regional Credit? A. It get paid in 2002. Australian Regional Credit send a sheriff to my home. I talk to Mrs Pratt a friend of mine. She owned the machinery, she sponsor Australian Regional Credit through her lawyer in Wagga to sign woodwork machinery for the debts on my home. I think Inglis Street, Australian Regional Credit accepted a deal with Mrs Pratt, signed the documents under on that machinery, signed it over to Australian Regional Credit. Also I signed my rights, any other machinery to Australian Regional Credit for the debts on my home to be paid up in full, Australian Regional Credit come in three years later, all payments didn't leave me any credit, that machinery.

Q. Mr Rukavina, when was the last time, if ever, you made a payment to Australian Regional Credit? A. I never did."

33 This evidence departed in various ways from other evidence led in the defendants' case. 34 In evidence was a letter from Mr Smith of 15 September 2010, in which reinstatement of a without prejudice settlement offer which the plaintiff had made to the defendants was sought. It had proposed that judgment for possession of the second property dealt with in the 2008 deed be consented to in its favour, together with an order for costs and an immediate surrender of possession of that property on the understanding that the plaintiff could immediately exercise its power of sale. In return, the defendants would be given possession of their home for a further period of one month. That proposal was accepted by the plaintiff and the agreement implemented. A writ of possession has been issued in respect of the second property in other proceedings. 35 It is apparent that there is still a dispute between the parties as to precisely how much is owed under the loan, particularly in relation to a sum of $13,721.36, claimed to have been in excess of what was required to be repaid in 2000, under the lease between Pinebelt and the plaintiff. It was not in dispute, however, that the combined value of the two properties is less than what the plaintiff is owed under the loan. 36 Mr Rukavina also again claimed hardship, he and his wife now being aged 70 years and in ill-health and suffering psychological problems. They have nowhere else to go. He also claimed difficulty in reading and understanding English and being of the firm belief that as the result of the agreement reached with Mrs Pratt, he and his wife had no liability at all to the plaintiff. 37 In my view, having heard Mr Rukavina's evidence, when considered together with that of Mr Smith, the conclusion that he suffered the difficulties which he claimed in reading and understanding English, is not open.

Delay and the claimed 2002 Pratt agreement 38 The case advanced was that there was a reasonable explanation for the delay until 2010 in making this belated application to have the 2002 judgment stayed, so that a cross claim could be advanced. I am unable to accept that submission. 39 An application to set aside a default judgment should be made as soon as it comes to a defendants' attention. There has been a complete failure, in this regard. 40 While on the one hand wishing now to deny that they ever entered into an agreement with the plaintiff, the proposed cross claim rests in part on a claim that in August 2002, not long after the plaintiff obtained judgement in its favour, Mrs Pratt entered into an agreement which had the result that there was a complete discharge of what the defendants owed the plaintiff. If such an agreement was then made, the defendants have always been aware of its existence, yet have never acted inconsistently with it until now. 41 Even if it be accepted that there was some agreement then reached between the plaintiff and Mrs Pratt, which affected the defendants, which is not apparent on the face of the document relied on, that it was thereby intended to completely discharge what the defendants owed the plaintiff is simply implausible, on all of the evidence. The plaintiff has never conducted itself in accordance with the existence of such an agreement. Nor have the defendants. 42 The claim advanced in 2004 against Ms Maloney and Mr Piper appears at odds with the case which the defendants now seek to advance against the plaintiff. They were legally represented in those proceedings, even though the costs of the litigation were met by the plaintiff. 43 The agreement which Mr Rukavina made in 2008, as reflected in the 2008 deed, at a time when the defendants were advised by Mr Smith, and then what was even more lately agreed in September of this year with the plaintiff, again when represented by Mr Smith, is also entirely at odds with the existence of the now claimed 2002 Pratt agreement. 44 What was pursued in 2004 and what was agreed in 2008 and more recently in 2010, does not explain the delay in raising the alleged 2002 agreement in any way. Rather, it supports the view that no such agreement ever existed and that it is a recent fabrication by Mr Rukavina. He, as he explained, is in a situation where he is desperate and thus prepared to do and say anything which will help stave off the loss of his home.

The Consumer Credit Code claim 45 The defendants wish to rely on s 70 of the Consumer Credit Code which provides: " 70 Court may reopen unjust transactions (1) Power to reopen unjust transactions. The Court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change. (2) Matters to be considered by Court. In determining whether a term of a particular credit contract, mortgage or guarantee is unjust in the circumstances relating to it at the time it was entered into or changed, the Court is to have regard to the public interest and to all the circumstances of the case and may have regard to the following-- (a) the consequences of compliance, or noncompliance, with all or any of the provisions of the contract, mortgage or guarantee; (b) the relative bargaining power of the parties; (c) whether or not, at the time the contract, mortgage or guarantee was entered into or changed, its provisions were the subject of negotiation; (d) whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the contract, mortgage or guarantee or the change; (e) whether or not any of the provisions of the contract, mortgage or guarantee impose conditions that are unreasonably difficult to comply with, or not reasonably necessary for the protection of the legitimate interests of a party to the contract, mortgage or guarantee; (f) whether or not the debtor, mortgagor or guarantor, or a person who represented the debtor, mortgagor or guarantor, was reasonably able to protect the interests of the debtor, mortgagor or guarantor because of his or her age or physical or mental condition; (g) the form of the contract, mortgage or guarantee and the intelligibility of the language in which it is expressed; (h) whether or not, and if so when, independent legal or other expert advice was obtained by the debtor, mortgagor or guarantor; (i) the extent to which the provisions of the contract, mortgage or guarantee or change and their legal and practical effect were accurately explained to the debtor, mortgagor or guarantor and whether or not the debtor, mortgagor or guarantor understood those provisions and their effect; (j) whether the credit provider or any other person exerted or used unfair pressure, undue influence or unfair tactics on the debtor, mortgagor or guarantor and, if so, the nature and extent of that unfair pressure, undue influence or unfair tactics; (k) whether the credit provider took measures to ensure that the debtor, mortgagor or guarantor understood the nature and implications of the transaction and, if so, the adequacy of those measures; (l) whether at the time the contract, mortgage or guarantee was entered into or changed, the credit provider knew, or could have ascertained by reasonable inquiry of the debtor at the time, that the debtor could not pay in accordance with its terms or not without substantial hardship; (m) whether the terms of the transaction or the conduct of the credit provider is justified in the light of the risks undertaken by the credit provider; (n) the terms of other comparable transactions involving other credit providers and, if the injustice is alleged to result from excessive interest charges, the annual percentage rate or rates payable in comparable cases; (o) any other relevant factor. (3) Representing debtor, mortgagor or guarantor. For the purposes of subsection (2)(f), a person is taken to have represented a debtor, mortgagor or guarantor if the person represented the debtor, mortgagor or guarantor, or assisted the debtor, mortgagor or guarantor to a significant degree, in the negotiations process prior to, or at, the time the credit contract, mortgage or guarantee was entered into or changed. (4) Unforeseen circumstances. In determining whether a credit contract, mortgage or guarantee is unjust, the Court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable when the contract, mortgage or guarantee was entered into or changed. (5) Conduct. In determining whether to grant relief in respect of a credit contract, mortgage or guarantee that it finds to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the contract, mortgage or guarantee since it was entered into or changed. (6) Application. This section does not apply to a change in the annual percentage rate or rates payable under a contract, or to an establishment fee or charge or other fee or charge, in respect of which an application may be made under section 72 (Court may review unconscionable interest and other charges). This section does not apply to a change to a contract under this Division. (7) Meaning of unjust. In this section, unjust includes unconscionable, harsh or oppressive." 46 At this stage it is for the defendants to show that there are facts which support the claim they wish to advance. That is entirely absent here. 47 The defendants were directors and shareholders of the two companies which they operated. In the course of conducting those businesses, they put up their home as security for their business borrowings. The 2000 borrowings, despite Mr Rukavina's evidence that they were not legally advised as Mr Moir's certificate represents and that they had not even read the documents they then signed, were nevertheless intended and used to refinance the existing business borrowings, which they had secured with their home. That accords with the purposes of the loan then disclosed. An arrangement was put in place whereby, in return for Mr Rukavina working in the new business which Mr Piper and Ms Maloney established, it was agreed that they would pay what was due on the new borrowing, rather than paying Mr Rukavina for his work. That agreement operated until Mr Rukavina parted company with Mr Piper and Ms Mahoney in 2002. 48 That situation does not reasonably appear to leave open the possibility that this refinancing arrangement was for 'wholly or predominantly for personal, domestic or household purposes' (s 6 of the Consumer Credit Code) as the defendants now wish to claim. 49 Mr Rukavina may well have wished to retire. Still, the defendants' existing circumstances, as the result of the business debts which their home secured, needed to be dealt with and so a new loan was taken out, it being intended that Mr Piper and Ms Maloney would make repayments. No doubt the agreement reached with Mr Piper and Ms Maloney was thought to provide a way by which the loan could be repaid over time. It was Mr Rukavina's work which was to result in the defendants' new borrowings eventually being paid off, so that the security given over their home could be removed. That arrangement came to an end. Mr Rukavina later unsuccessfully pursued Mr Piper and Ms Maloney for breach of that agreement. That presumably reflected an acceptance that it was not they who had breached the agreement. 50 The claim now sought to be advanced for the first time, contrary to what was discussed in 2000, is that the Code applied to all of the dealings between the parties, because the 2000 borrowings were 'provided or intended to be provided wholly or predominantly for personal, domestic or household purposes'. That there is a basis for that claim on the evidence led is difficult to see. Nor could counsel point to any authority which could be considered to support such a case. 51 Section 11(1) of the Code is relevant insofar as it provides that in any proceedings in which a party claims that a credit contract is one to which the Code applies, it is presumed to do so unless the contrary is established. On the evidence which has been led, it is difficult to see that the onus which would fall on the plaintiff, could not be met. 52 Not only does the evidence led not support the claim, it is contrary to documents which the defendants themselves signed in 2000 and 2001. Even if they had not bothered to read what they signed, what may not be overlooked is what Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 discussed at 182 in [47], the significance which the law attaches to the signing of a contractual document which a person signs knowing that it is a legal document relating to an interest in property, that person is in general bound by the act of signature and that to undermine that assumption "would cause serious mischief". 53 On Mr Rukavina's evidence, there can be no question as to the defendants' knowledge that they were then executing mortgage documents over their home. There is no question that they were aware of the purpose for which the borrowing was obtained. Also to be considered is that the claim now sought advanced by the defendants appears to be at odds with the claim which they advanced in the 2004 proceedings against Ms Maloney and Mr Piper, with the plaintiff's support. They were then legally represented. That claim is also at odds with what was agreed in 2008 and 2010, when they were also legally represented. 54 None of this provides any basis upon which the stay now sought might justly be granted.

The 2008 Deed and the 2010 agreement 55 What the defendants now seek to do is directly contrary to what Mr Rukavina agreed in the 2008 deed and what the defendants agreed in 2010, consistently with the 2008 deed. Mrs Rukavina was not a party to the deed, although she received the benefit of it and later acted consistently with it, in the agreement made in September 2010. No evidence has been led which could cast any doubt on the fact that she was aware of either the deed, or the later agreement. 56 Mr Rukavina is bound by the deed, by which in 2008 he accepted that the defendants owed what the plaintiff claimed in 2002, which became the subject of the default judgment which they had not defended. Mr Smith advised on the deed. He was also advising on the claim against the Commonwealth Bank. On his evidence, he took the necessary steps to ensure that Mr Rukavina understood the consequences of what he was agreeing to. There is no basis on which that evidence may be doubted. 57 There is no question that the principle of estoppel by deed prevents parties such as Mr Rukavina from disputing what he agreed to be bound by in the deed. There is simply no arguable basis on which it could be considered that he is not thereby estopped from embarking on the course which the defendants now seek to pursue (see Halsbury's Laws of Australia at [190 -195] [190 - 210] and the authorities discussed there). 58 That must be even more so, given that since then, the defendants recently made yet another agreement in 2010, which was entirely consistent with what was unambiguously stated to have been the facts, in the 2008 deed. 59 Here there was no suggestion that there was any public policy basis on which it could be argued that any term of the deed was invalid, or any other basis on which the exceptions to the general principle might here apply. 60 It seems to me that the plaintiff is entitled to rely on the deed. That provides yet another basis for refusing the stay now sought. The 2010 agreement, provides yet a further basis for that conclusion. It was entirely consistent with the 2008 deed and was entered by both defendants.

The Civil Procedure Act 61 The defendants also relied on the Act to support their application, but it seems to me that it provides in truth no such assistance. The overriding purpose specified in s 56 is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The Court must act in accordance with the dictates of justice (s 57). Section 57(2) requires in that respect:

"(2) For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case." 62 None of these considerations favour the granting of the very belated relief now sought in the absence of any proper explanation of delay. On the evidence the plaintiff has forgone for a very long time, its pursuit of possession of the property, while other proceedings against Mr Piper and Ms Maloney were first pursued and later when potential claims against the Commonwealth Bank remained alive. That it should be further kept out of possession in these circumstances, does not appear consistent with what the dictates of justice require, particularly when attention is paid to what was recently agreed in September 2010. Nor would it achieve the elimination of delay with which s 59 is concerned.

Bona fides 63 On an application such as this the Court is not concerned to determine the truth of what is asserted. In this case, however, given the way in which the parties advanced their respective cases, it cannot be overlooked that the defendants led evidence as to the matters on which they relied and Mr Rukavina was tested on that evidence. In the face of the evidence which he gave, the bona fides of the newly emerged claims have not been established. 64 No matter how sympathetic one might be to the defendants' difficult personal circumstances, that is not a basis for accepting such late and implausible claims as a basis for staying a default judgment which was not opposed in 2002 and has not been challenged since. To the contrary, the defendants have acted in accordance with its legitimacy, even in September 2010 when a new basis was agreed for allowing them to remain in their home for yet a further month, at a time when they were legally advised. The new idea which has come to mind since then, seems on all of the evidence to be but a recent invention. As Johnson J discussed in GE Personal Finance Pty Ltd while there may be some further practical delay before arrangements are made by the sheriff to take possession of the property, justice does not permit the grant of a stay in order that the defendants will be relieved of the necessity to vacate the property the subject of these proceedings.

Order 65 For those reasons, the orders sought in the motion must be refused. The usual order would be that costs should follow the event. The parties have liberty to approach in the event of any disagreement as to costs. **********

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