This matter comes before me today, 30 June 2020, on an urgent basis pursuant to a notice of motion filed by the plaintiff. The matter is listed for final hearing before me for five days commencing 6 July 2020.
On the application today, Mr Baird of counsel appears for the plaintiff, Mr Smallbone of counsel appears for the third and fourth defendants, and Ms Douglas-Baker of counsel appears for the Registrar-General who is a cross-defendant. The first and second defendants are no longer taking any part in the proceedings.
As set out in the notice of motion, which I granted leave to file in Court, the plaintiff seeks an order pursuant to r 28.4 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") that the questions set out in a document entitled "Separate Question for Determination" be decided separately and in advance of all other questions in the proceedings.
It also seeks an order that leave be granted to the plaintiff pursuant to s 132(2)(b) of the Real Property Act 1900 (NSW) to file a second cross-claim against the cross-defendant to the second cross-claim in the form of the draft second cross-claim marked "B".
Mr Baird has provided helpful written submissions in support of the motion. The third and fourth defendants and the Registrar-General generally consent to the orders sought in the motion.
The background to the motion and, indeed, the hearing, is as follows.
On 10 February 2018, the plaintiff commenced these proceedings seeking orders for possession of three properties owned by the third and fourth defendants at Marsfield and Hunters Hill. The plaintiff alleges that the first property was subjected to a mortgage securing the sum of $200,000 advanced to the first defendant, Shining Pty Ltd, pursuant to a loan agreement between the plaintiff and the first defendant dated 10 May 2017, the repayment of which was guaranteed by the second, third and fourth defendants by a Deed of Guarantee and Indemnity also dated 10 May 2017.
CEG Direct Securities Pty Ltd v Shining Pty Ltd [2020] NSWSC 858 | Case summary | Zoe
Further, the plaintiff alleges that the second and third properties were also the subject of a mortgage dated 22 June 2017 securing an increased principal sum of $318,000 pursuant to a variation agreement dated 22 June 2017 between the plaintiff as lender, the first defendant as borrower, and the second and third and fourth defendants as guarantors. The plaintiff also pleads that there was another variation agreement dated 11 September 2017 between the plaintiff as lender, the first defendant as borrower, and the second and third and fourth defendants as guarantors pursuant to which the principal sum was increased to $575,000.
The third and fourth defendants filed a defence denying that the plaintiff was entitled to possession and also asserting that each of the mortgages was void and of no effect, having been obtained by fraud.
The documents which may give rise to a liability on the part of the third and the fourth defendants were signed by their son pursuant to a registered Power of Attorney. The substantial defence raised by the third and fourth defendants is that the signatures on the Powers of Attorney are forgeries. They say so in affidavits filed in these proceedings.
On 26 May 2020, I granted leave to the third and fourth defendants to serve an expert report from a handwriting expert on or before 12 June 2020. On 12 June 2020, the third and fourth defendants served an expert report of Mr Steven Dubedat, a forensic document examiner, dated 12 June 2020.
I am informed that Mr Dubedat has concluded that there is "evidence to suggest" that the signature of the third defendant on the first Power of Attorney is not genuine and there is "evidence to suggest" that the signature of the fourth defendant on the second Power of Attorney is not genuine.
Although I granted leave to the plaintiff to serve any expert evidence in response, the plaintiff has indicated that it will not be doing so. Mr Baird also indicated to me today that he will not be cross-examining Mr Dubedat on the content of his report. Whilst no concession has been made about any findings that I might make based on Mr Dubedat's report, I understand that no party will be making a submission that I should not accept the content of Mr Dubedat's report. Without determining the issue because I have not read the report, it might be thought that in those circumstances, there is a reasonable prospect that Mr Dubedat's opinion would be accepted.
The parties agree that if that opinion is accepted, then the next issue of substance for determination would be a construction issue as to the mortgages. The plaintiff and the third and fourth defendants are in dispute as to the proper construction of the mortgages. I am not aware of the reasons for that dispute. It is not necessary that I consider the substance of the dispute at this time.
Having said that, the parties agree that if I accept the third and fourth defendants' construction argument, then they would necessarily win. That is, the plaintiff would not succeed against them at all. However, if I accept the plaintiff's construction argument, then I understand that the third and fourth defendants would wish to raise a number of issues of substance which they have pleaded in their defence and cross-claims. Those issues include matters relating to equitable fraud and potential allegations of fraud on the part of a legal practitioner.
I understand that significant factual evidence will be adduced on those issues.
The Register-General is involved at this stage on the basis that the third and fourth defendants would wish to have the records held by the Registrar General corrected. It seems inevitable that, if the third and fourth defendants are successful, consequential orders will be made in respect of correction of the record.
Whilst it may be unusual that the plaintiff would be seeking a separate question at this time, the justification for the separate question has only arisen in the past two weeks. As I have said, the third and fourth defendants have served expert evidence supporting the contentions they make and the plaintiff does not intend to challenge that expert evidence.
The Court may order a separate question in accordance with r 28.4 of the UCPR if the decision on a question would substantially dispose of the proceedings, or a whole or any part of a claim for relief in the proceedings, or would render unnecessary any trial or further trial in the proceedings, or on the whole or any part of a claim for relief in the proceedings.
Assuming I make findings consistent with the third and fourth defendants' expert evidence as to their signatures, and I find in favour of the third and fourth defendants on the construction point, the proceedings between the plaintiff and the third and fourth defendants would be at an end. There would be no need for a further substantial and highly contested hearing on the other matters raised by the third and fourth defendants. Similarly, there would really be no issue between the third and fourth defendants and the Registrar-General.
In the circumstances, I am satisfied that it is appropriate that I make the orders sought in the motion. A finding in favour of the third and fourth defendants on the questions raised would bring an end to the whole proceedings subject to the further claim that the plaintiff wishes to bring under the Torrens Assurance Fund as provided for in s 129 of the Real Property Act.
I thus order that the matters for determination by me on the hearing commencing 6 July 2020 will be limited to the questions set out in the document prepared on behalf of the Registrar-General (being an amended version of the plaintiff's document), originally headed "Joint Statement of Issues" but now marked as "Separate Questions for Determination".
I direct that the parties further consider that document and inform me prior to Friday, 3 July whether the questions remain suitable or whether there needs to be any variation to those questions. I am not suggesting that there are or should be but I just wish to make sure that the parties are satisfied that these are the only questions which are requiring determination at this time.
The balance of the issues raised on the pleadings will be stood over for hearing at a date to be fixed subject, of course, to the outcome of the separate questions.
I order also that the balance of the plaintiff's notice of motion filed today, being the application for leave pursuant to s 132(2)(b) of the Real Property Act, be stood over for further hearing and determination subsequent to my determination of the separate questions.
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Decision last updated: 02 July 2020