First Plaintiff v Second Defendant

1 The Plaintiffs seek orders from the Court, pursuant to consent orders entered into between them as part of a settlement of the proceeding ('Consent Orders'). The circumstances in which the Consent Orders came into being will be described further below. Alternatively, the Plaintiffs seek summary judgment for possession of the land comprised in certificate of title volume 11243 folio 540 in Rivette Street, Craigieburn ('Property') pursuant to their summons filed 13 February 2019 ('Summary Judgment Summons').[1]

(a) Rick Rigoni sworn 11 February 2019 ('Rigoni Affidavit'). Mr Rigoni is a director of the First Plaintiff ('Rigoni Private Finance');

(b) Luke Owens sworn 26 June 2019 ('First Owens Affidavit'). Mr Owens is a director of the firm Ronayne Owens Lawyers, solicitors for the Plaintiffs; and

(c) Mr Owens sworn 17 July 2019 ('Second Owens Affidavit').

3 At my request, the Plaintiffs also provided a written outline of submissions, dated 18 July 2018, to the Court and to the Defendants ('Plaintiffs' Outline'). On 8 August 2019, the Plaintiff's counsel filed a further short outline, confirming that the Plaintiffs relied on the affidavits referred to above and the Plaintiffs' Outline, and stated that the Plaintiffs sought orders for possession of the Property, dismissal of the counterclaim, and costs.

4 The Defendants oppose the Plaintiffs' applications, relying on an affidavit of the Second Defendant, Mr Hashi, sworn 12 July 2019 ('Hashi Affidavit'). Mr Hashi is the sole director and shareholder of the First Defendant ('Sarar').

5 The Defendants were initially represented by solicitors in the proceedings, but those solicitors filed a notice of ceasing to act on 13 March 2019. Mr Hashi was informed that pursuant to the Rules, companies are required to appear in Court through a solicitor unless the Court grants leave to someone else to represent them. Mr Hashi then sought leave to represent Sarar. This was not opposed by the Plaintiffs. Given that the primary relief sought by the Plaintiffs is possession of the Property, which concerns only Mr Hashi, and that the other relief concerns both Defendants, I granted leave for Mr Hashi to make submissions on behalf of both Defendants. Although it is hard to see how the Defendants would not be better served by being represented by a solicitor, I cannot compel that course upon Mr Hashi as an individual party. In those circumstances, I considered it appropriate to grant leave as described.

6 These matters first came on for hearing on 19 July 2019 ('First Return'). During the course of the First Return I indicated that I did not consider there had been sufficient notice that the Plaintiffs intended to pursue the Summary Judgment Summons on that day (that matter having been notified only the day before via the Plaintiffs' Outline). The Defendants sought an adjournment as they wished to obtain legal advice and Mr Hashi said that he had not fully understood what application would be heard by the Court that day. Although I did not accept that it was not clear that the Consent Orders would be dealt with at the First Return, I indicated that I would grant a short adjournment in light of the confusion created by the Summary Judgment Summons and was granting this indulgence so that the Defendants could obtain legal advice if they wished, given the seriousness of the application. The matter of the Consent Orders was adjourned to 9 August 2019 ('Second Return'). I also made orders at the First Return that if the Defendants wished to rely on any further material, being affidavits additional to the Hashi Affidavit, then those affidavits must be filed and served by 4:00pm on 2 August 2019. No such affidavits were filed by that date or prior to the Second Return.

7 At the conclusion of the Second Return, I reserved my ruling and said that I would deliver it at 9:45am on 15 August 2019.

8 For the reasons set out below, orders will be made to give effect to part of the Consent Orders, being the order for possession and dismissal of the counterclaim. As the Second Return dealt only with the Consent Orders, and not with the Summary Judgment Summons, these reasons go only to the Consent Orders.

The loan, the guarantee, the mortgage and the defaults thereunder

9 In or about May 2017, the Defendants applied for a six month loan for $130,000.00 ('the Loan') with the Plaintiffs. Sarar was to be the borrower and Mr Hashi was to be a guarantor.[2]

10 During the application process, the Defendants were represented by a finance broker, Mr Gary Nicholls, and the contact with Mr Nicholls and the Plaintiffs was primarily in writing.[3]

11 On or about 10 May 2017, Mr Nicholls informed Mr Rigoni that Sarar was a clothing company and was seeking funds to finance the purchase of a store fit out and stock for its second store in Melbourne. The Defendants were seeking the Loan for a period of six months at the end of which the Defendants would repay the Loan by refinancing Mr Hashi's existing home loan.[4]

12 Mr Hashi retained Mr Tony Cavoli (also known as Antonino Cavoli) to advise on the documents. Mr Cavoli and Ronayne Owens Lawyers corresponded regarding the documents required for settlement of the Loan.[5]

13 Mr Cavoli provided a Certificate of Independent Legal Advice in respect of the advice given to Mr Hashi.[6]

14 The Plaintiffs and Sarar executed a loan agreement dated 26 May 2017 ('Loan Agreement') to give effect to the Loan, pursuant to which the Plaintiffs loaned Sarar $130,000, to be repaid within 6 months from the date of the Loan Agreement. Interest was to accrue at the rate of 24% per annum, but for so long as Sarar was not in default, interest would accrue at the rate of 20% per annum. Interest which was to be calculated monthly and payable monthly in arrears commencing one month from the date of the advance. Failing to repay the Loan on or before the repayment date, or failing to pay the interest owing by the repayment date, were events of default. Upon default, the full amount owing, including principal and accrued interest, would be immediately due and payable upon written demand by the Plaintiffs to Sarar. Sarar was required to pay the Plaintiffs' costs of enforcement of its rights under the Loan Agreement, including legal costs on a solicitor and own client basis.[7]

15 Around the same time, Mr Hashi entered into a deed of guarantee and indemnity dated 23 May 2017 ('Guarantee'), pursuant to which he agreed to guarantee the obligations of Sarar under the Loan Agreement.[8] Mr Hashi's signature on the Guarantee was witnessed by Mr Cavoli.[9]

16 By instrument of mortgage registered on the title to the Property, Mr Hashi mortgaged the Property to the Plaintiffs ('Mortgage').[10] The Mortgage incorporates the terms of the memorandum of common provisions numbered AA 689 ('MCP'). The Mortgage is a second mortgage over the Property, there already being a first mortgage to Westpac Banking Corporation registered on the title to the Property.[11]

17 Under the terms of the Loan Agreement, Sarar was required to procure the Guarantee and Mortgage as part of the security agreed to.

18 It was a term of the Guarantee[12] and the Mortgage[13] that a statement signed by the Plaintiffs (or their agents or solicitors) as to the amount owing was conclusive in the absence of manifest error (in the case of the Guarantee) and prima facie evidence of that fact (in the case of the Mortgage).

19 The Plaintiffs advanced the sum of $130,000 at Sarar's direction on or about 26 May 2017 ('Advance'), pursuant to the Loan Agreement and the Guarantee.

20 Sarar defaulted in paying the amounts due under the Loan Agreement by the repayment date. Demands under the Loan Agreement, the Guarantee and the Mortgage were served on the Defendants on 13 September 2018 and 5 October 2018.[14] Neither Sarar nor Mr Hashi met those demands ('Defaults').

21 Mr Rigoni signed a statement of the amounts outstanding as part of preparing his affidavit in support of the Summary Judgment Summons ('Statement').[15] As at 7 February 2019, the date of the Statement, the amount owing was $206,754.76.[16]

22 The Plaintiffs commenced this proceeding on 10 October 2018.

23 A notice of appearance was filed by G & M Lawyers on 31 October 2018 on behalf of the Defendants.

24 In their statement of claim dated 10 October 2018 ('SOC'), the Plaintiffs plead, in summary, the following:

(a) the entry into the Loan Agreement, the Guarantee and the Mortgage;

(b) the relevant terms of those documents;

(c) the Advance; and

(d) the Defaults.

25 The Plaintiffs claim from the Defendants the amount owing as at 5 October 2018, being $184,924.16, plus interest and costs. They also claim an entitlement to possession of the Property from Mr Hashi.

26 On 30 November 2018, G & M Lawyers filed a defence and counterclaim on behalf of the Defendants ('D & CC').

27 In the D & CC, by way of defence, the Defendants:

(a) admit that Sarar executed the Loan Agreement and they admit the terms of the Loan Agreement which were pleaded in the SOC;

(b) admit that Mr Hashi entered into the Guarantee and they admit the terms of it which were pleaded in the SOC;

(c) admit the Mortgage and the terms of it which were pleaded in the SOC;

(d) admit the Advance;

(e) deny that the Mortgage was to secure Sarar's obligations under the Loan Agreement;

(f) deny the Defaults;

(g) admit service of the default notices and that they did not pay the amounts demanded;

(h) admit that Mr Hashi is in possession of the Property; and

(i) deny the relief claimed by the Plaintiffs.

28 In respect of many of these matters, the Defendants also refer to the matters set out in their counterclaim.

29 By way of counterclaim (and inherently, due to the manner in which it is pleaded, by way of defence), the Defendants say that:

(a) the Loan Agreement was prepared by the Plaintiffs without any discussion with the Defendants and they did not have an effective opportunity to negotiate the terms;

(b) the terms of the Loan Agreement in respect of interest caused a significant imbalance in the Defendants' rights and obligations, were not reasonably necessary to protect the legitimate interests of the Plaintiffs, and will cause financial detriment to the Defendants;

(c) by reason of this, those terms of the Loan Agreement are unfair within the meaning of s 12BF of the ASIC Act and are void;

(d) further and alternatively, at all relevant times prior to the execution of the Loan Agreement and Mortgage, Mr Hashi was under a special disability by reason of him being a migrant from Somalia, having English as a second language, being unemployed with no substantial income, supporting his wife and eight children from his unemployment benefits; being unsophisticated in matters of business and finance; having no assets of any value, other than the Property which was the family's only place of residence;

(e) in around May 2017, Mr Hashi approached Gary Nicholls[17] of Rams Business Brokers to obtain a loan to buy stock for a clothing store. Mr Nicholls told him he would need to execute a guarantee for the loan;

(f) Mr Nicholls provided Mr Hashi with documents in respect of the Loan, including the Loan Agreement, Guarantee and Mortgage and advised him to have a solicitor sign off on the documents;

(g) Mr Hashi then met with Mr Cavoli, who asked him if he was happy with the documents and told him he would be guarantor for the Loan Agreement. Neither Mr Nicholls or the Plaintiffs advised Mr Hashi of the effect or possible amount of interest payable, the full extent of Mr Hashi's obligations under the Guarantee, or the consequences of signing the Guarantee and the Mortgage;

(h) no enquiries were made of Mr Hashi by Mr Nicholls or the Plaintiffs to determine his ability to service the interest payments or repay the amount due under the Loan Agreement without having to sell the Property; and

(i) by reason of these matters, it is unconscionable for the Plaintiffs to seek to enforce the Guarantee and the Mortgage against Mr Hashi.

30 The Defendants seek declaratory relief, including that the interest terms of the Loan Agreement are unfair and void; that it is unconscionable for the Plaintiffs to enforce the Guarantee and Mortgage; the Guarantee and Mortgage are voidable by Mr Hashi. They also seek orders that the Mortgage be discharged.

31 By way of their defence to the counterclaim, the Plaintiffs say that:

(a) the finance broker acting on behalf of the Defendants, Gary Nicholls, told the Plaintiffs that Mr Hashi operates a menswear clothing shop and required loan funds for shop fitout and purchase of stock, and that Sarar is an international clothing company and that the Defendants have the marketing rights for Australia and New Zealand. He also provided them with a copy of a proposed lease to be entered into by Sarar at Chadstone Shopping Centre. I also note that Mr Rigoni says in his affidavit that this was to be a second store for Sarar;[18]

(b) Mr Nicolls acted as agents of the Defendants;

(c) an indicative letter of offer in respect of the Loan, which specified the terms of the Loan including the provision of the guarantee and mortgage, was provided to the Defendants and signed by them on or about 19 May 2017, the signed copy of which was returned to the Plaintiffs by Mr Nicholls. After this, the formal loan documents were prepared;

(d) Mr Cavoli signed a certificate to say that he had provided advice on the nature and effect of the loan and security documents, and Mr Hashi signed it to confirm that Mr Cavoli had given that advice;

(e) the Defendants had ample opportunity to seek to negotiate the terms of the Loan Agreement, by direct contact or through Mr Nicholls or Mr Cavoli;

(f) the charging of interest at the rate set out in the Loan Agreement is within the range of commercially accepted interest rates for a commercial loan secured by second mortgage, and they deny that the interest terms are unfair or void;

(g) the Plaintiffs were told by Mr Nicholls that Sarar operated a clothing business from premises in Chapel Street, South Yarra, and he gave them a statement of assets which included business stock and fittings valued at $100,000;

(h) deny that Mr Hashi operated under a special disability; and

(i) deny the allegations made in the Counterclaim which I have described above.

32 The Plaintiffs issued the Summary Judgment Summons on 13 February 2019 seeking summary judgment for possession of the Land and payment of the outstanding amount. That summons was initially returnable on 18 March 2019, subsequently 1 April 2019, before Mukhtar AsJ.

33 On 13 March 2019, G & M Lawyers filed a notice that they had ceased to act for the Defendants.

34 The Defendants did not file any material in opposition to the Summary Judgment Summons.

35 On 1 April 2019, Mukhtar AsJ made an order vacating the hearing of the Plaintiffs' application for summary judgment. In the Other Matters section of this order, his Honour stated that:

This order has been made because on 29 March 2019 the Court was informed by the plaintiffs' solicitor that the whole proceeding has been settled and, accordingly, the plaintiffs would not be proceeding with their application for summary judgment.

The parties intend to submit proposed consent orders for the disposition of the proceeding at a directions hearing due to occur on 12 April 2019.

36 By signed consent orders forwarded to my Associate by email from the Plaintiffs' solicitors on 10 April 2019, on 12 April 2019 I made orders adjourning the directions hearing to 19 July 2019 ('Adjournment Order'). In that email, the Plaintiffs' solicitors stated that the parties requested an adjournment of the directions hearing until after 13 July 2019 and that the proceeding has settled, subject to the satisfaction of terms of settlement, with the last condition due for completion by 13 July 2019.

37 On 29 March 2019, Mr Owens, received a letter from Allan McMonnies, a solicitor then acting for Mr Hashi.[19] The letter stated that Mr Hashi was provided with advice. The letter also referred to Mr Hashi's attempts to raise finance and that he needed time to achieve that or to place the Property on the market for auction sale. A proposal was made on behalf of the Defendants to make interim payments of $2,500 per month and that consent judgment could be entered into if there was a default. This was said to provide the Plaintiffs with certainty and avoid the need for further proceedings.

38 On 29 March 2019, Mr Owens forwarded a deed of settlement to Mr McMonnies ('Settlement Deed'). The key terms are as follows:

(a) 'The Plaintiffs and the Defendants have agreed to resolve all disputes between them in relation to the Loan Agreement, the Mortgage, the Guarantee and the Proceeding [that is, this proceeding] in accordance with the terms of this Deed' (Recital F);

(b) the parties acknowledge the truth of the recitals (Clause 1);

(c) by entering into this Deed, none of the parties make any admission as to the validity of any matters alleged in the Proceeding (Clause 3);

(d) the Defendants shall execute the consent judgment attached to the Settlement Deed as Annexure A, consenting to judgment in respect of the amount owed under the Loan Agreement, together with the issue of a warrant of possession in respect of the Property (Clause 4.1);

(e) the Defendants acknowledge and agree that as at the date of the Settlement Deed, the amount due under the Loan Agreement, Guarantee and Mortgage is $226,921.97 and that the Plaintiffs are entitled to recover that amount, together with interest and fees continuing to accrue in accordance with the Loan Agreement, in the judgment entered in the Proceeding (Clause 4.2);

(f) the Plaintiffs agree not to enforce the consent judgment 'until [sic] a default occurs pursuant to Clause 5.4' (Clause 4.3);

(g) the Defendants must make monthly payments of $2,500 per month to the Plaintiffs, commencing on 5 April 2019 until the settlement of any refinance (see Clause 5.2) or sale of the Property (see Clause 5.3) (Clause 5.1);

(h) the Defendants shall use their best endeavours to obtain unconditional approval to refinance all debts affecting the Property within 45 days and provide a copy of any unconditional approval for refinance to the Plaintiffs upon receipt (Clause 5.2);

(i) if the Defendants do not obtain unconditional refinancing within 45 days, then they must list the Property for sale on or before 1 June 2019 with an auction date of no later than 13 July 2019. They must provide the Plaintiffs with a signed auction authority and marketing schedule with a reputable and licensed real estate agent, evidence of commencement of marketing and a proposed sale contract and vendor statement (Clause 5.3);

(j) if the Defendants fail to make any payment in accordance with Clause 5.1, complete settlement of any refinancing by 30 June, or the Property is not sold unconditionally on terms acceptable to the Plaintiffs (with settlement being no longer than 60 days) on or before 13 July 2019, then the Plaintiffs may forthwith take steps to enter and enforce the consent judgment (Clause 5.4); and

(k) each party to the Settlement Deed warranted that they had taken independent legal advice as to the terms, nature, effect and extent of the Settlement Deed (Clause 6.1).

39 In addition, the Settlement Deed contained the following clauses in respect of a release:[20]

5.1 The Defendants irrevocably and unconditionally release and forever discharge the Plaintiffs from all claims, demands, actions, suits and causes of action of every description whatsoever, which they may have or may have had against the Plaintiffs arising (whether directly or indirectly) out of or connected or related to the Lender's enforcement of its rights under the Loan Agreement, the Guarantee, the Mortgage and the Proceeding or any other matter arising from the execution by the Defendants of the Loan Agreement, the Guarantee and the Mortgage.

5.2 The Defendants agree that the release contained in Clause 5.1 may be pleaded by the Plaintiffs as an absolute bar to any proceeding commenced or continued by the Defendants in connection with the subject matter of the release.

40 The Consent Orders, signed by Mr Hashi on behalf of Sarar and himself, are set out at Annexure A to the Settlement Deed. They provide as follows:

1. The Plaintiffs recover possession from the Second Defendant of the [Property];
2. The Defendants pay the Plaintiff [sic] $226,921.97, being the amount due as at 29 March 2019 ('the Debt').
3. The Defendant [sic] pay the Plaintiff [sic] interest on the Debt from 30 March 2019 until the judgment debt is paid in full at the rate of 24% per annum specified in the Loan Agreement, such interest being calculated daily and debited daily on the basis of a year of 365 days and capitalised on the balance outstanding from time to time.
4. The counterclaim be dismissed.

41 The Settlement Deed is dated 29 March 2019 and was signed by or on behalf of both Defendants, by Mr Hashi, with Mr McMonnies as a witness.[21]

42 When forwarding the Settlement Deed signed by the Defendants by email on 29 March 2019 sent at 3:48pm to Mr Owens ('McMonnies Covering Email'), Mr McMonnies wrote:[22]

Our client did not believe that the amount due had increased to such a sum. We would ask to be provided with a break up of this figure. If there was some miscalculation we would seek that the figure was revised notwithstanding our client accepts the remaining terms. On that proviso our client has signed the agreement which has been scanned and is returned attached to this email.

We shall ensure the original copy is forwarded by post to your office this evening.

43 Ten minutes later, Mr Owens sent an email to Mr McMonnies, copied to Mr Hashi, which stated that:[23]

The loan statement is attached, showing the calculation of additional interest, and the plaintiffs legal costs, which are payable on a solicitor client basis in accordance with the loan documents.

I will have the deed countersigned and returned to you.

44 I note that the loan statement referred to is a copy of the Statement, with handwritten annotations stating the interest for March 2019, the monthly administration fee, and the legal costs.

45 No further query about the amount outstanding was raised at this time by or on behalf of the Defendants.

46 On 5 April 2019, Mr Hashi sent an email to Mr Owens and Mr McMonnies, seeking confirmation of account details for payment of the instalment amount due under the Settlement Deed.[24]

47 On 8 April 2019, Shaurya Rajbandhari, a solicitor at Ronayne Owens Lawyers, requested that Mr Hashi execute consent orders to adjourn a directions hearing scheduled for 12 April 2019 in this proceeding to allow time for satisfaction of the conditions in the Settlement Deed.[25]

48 On 8 April 2019, Mr Hashi made a payment of $2,500 to the trust account of Ronayne Owens Lawyers in accordance with the Settlement Deed.[26]

49 On 10 April 2019, Mr Hashi forwarded signed consent orders to Ronayne Owens adjourning the directions hearing until after 13 July 2019, to allow for the satisfaction of the conditions in the Settlement Deed.

50 As mentioned above, this resulted in the Adjournment Order made by me on 12 April 2019.

51 On 10 May 2019, Mr Hashi sent details of a further payment of $2,500 made to the trust account of Ronayne Owens Lawyers.[27]

52 On 31 May 2019, Mr Owens received an email from Serenay Kalkan of Armstrong Legal in relation to this proceeding, advising that Mr Hashi had engaged that firm in relation to the proceeding. Mr Kalkan asked if a response had been provided by Mr Owens to the McMonnies Covering Email in respect of a breakdown of the amount owing. Mr Kalkan also referred to Mr Hashi being 'in the process of retaining alternate legal representation.' Mr Owens responded to this email on 3 June 2019, providing a copy of his email to Mr McMonnies sent at 3:58pm on 29 March 2019 and the loan statement attached to that email.[28]

53 The Defendants failed to make the payment due on 5 June 2019 and subsequently have made no further payments under the Settlement Deed.[29]

54 Further, the Defendants have not provided to the Plaintiffs or Ronayne Owens any documents or correspondence in satisfaction of the refinance or sale conditions in clauses 5.2 and 5.3 of the Settlement Deed.[30]

55 The Hashi Affidavit is a short affidavit and it is convenient to set out the substantive paragraphs in full:

2. I refer to [the First Owens Affidavit] generally and say as follows:

1. I dispute that there was a guarantee, indemnity and mortgage over the [Property].

b. I was not given legal advice by lawyer Allan McMonies [sic].

1. I did not agree to any term of the deed signed 29 March 2019 other than to pay $2,500 per month. This deed was part of an overall negotiation, it was not the final agreement.

1. The deed signed 29 March 2019 was emailed to the plaintiff as an attachment to an email of my lawyer at that time Allan McMonnies of 29 March 2019. In the body of that email, Mr McMonnies advised that the amount due was disputed and requested a break down of the figure. I was not provided with a break down of this figure until 3 June 2019. I dispute the calculations.

Now produced to marked "MH-1" is a true copy of the email of Allan McMonnies to Luke Owens sent 29 March 2019.

1. I have filed a defence and counterclaim. I would like the Court to take these into consideration, and to make a ruling on this case.

56 Exhibit MH-1 to the Hashi Affidavit is a single page, setting out only the McMonnies Covering Email and not the attachment or any of the previous emails which formed part of the chain of emails between Mr McMonnies and Mr Owens.

57 On 7 June 2019, Ms Rajbhandari sent an email to the Registry of this Court attaching a copy of what were described as consent orders and stating that if anything further was required she should be contacted. The Defendants were not included in that email. Presumably, although it was not stated, the Plaintiffs were seeking that the Registry enter these as orders of the Court, on the papers, made by consent. The Registry then sent that correspondence to my Chambers.

58 On 13 June 2019 at my direction, my Associate sent the following email to Ronayne Owens in response:

The proposed orders have been sent to Judicial Registrar Matthews for consideration.

Judicial Registrar Matthews has reviewed the proposed orders and is not prepared to make them on the papers at this stage. The proposed consent orders have not been signed in the usual way, and the page containing signatures appears to be the execution page from a deed. Further, the defendants are now self-represented and usually consent orders are signed by a solicitor. The Judicial Registrar may be prepared to accept consent orders signed by self-represented litigants if satisfied as to their informed consent. The defendants were also not copied on the correspondence to the Court.

Would you please review the situation and let me know how you wish to proceed. I note that the proceeding is currently listed for directions on 19 July. If this cannot be sorted out prior to then, it can be dealt with at the directions hearing.

Please ensure that the defendants are copied on all future correspondence with the Court.

59 On the following day, my Associate received an email from Mr Owens, copied to Mr Hashi, which relevantly stated:

The consent orders were executed in conjunction with a deed of settlement, which authorises the Plaintiff [sic] to file the orders following a default under the deed.

We propose to file an affidavit setting out the terms of the deed, and the default under the deed, for further consideration by the Court.

The defendants will be copied on further correspondence, and will also be served with the affidavit.

60 On 26 June 2019, the Plaintiffs filed the First Owens Affidavit and sent a copy to my Associate and to Mr Hashi by email.

61 The following day, at my direction my Associate sent an email to Mr Hashi, copied to Ronayne Owens, in the following terms:

Dear Mr Hashi,

I refer to our telephone conversation yesterday in which you foreshadowed either filing an affidavit or sending an email in response to the Plaintiff's [sic] affidavit.

I confirm if you wish to put anything before the Court, this must be in an affidavit, which should be filed and served by 4:00pm on 12 July 2019.

62 On 11 July 2019, Ronayne Owens sent an email to my Associate, copied to Mr Hashi, which relevantly stated:

We note that a directions hearing is scheduled for 19 July 2019.

As per your email dated 27 June 2019, Mr Hashi has until 4:00pm on 12 July 2019 to file and serve an affidavit.

In the event that Mr Hashi fails to do so, please advise whether the court will require a further directions hearing or the matter will be dealt with on the papers.

63 My Associate sent an email in response on the same day, at my direction, stating that at this stage an appearance will be required on 19 July 2019.

64 Mr Hashi filed and served his foreshadowed affidavit by the required time.

65 On the afternoon of 12 July 2019, at my direction my Associate sent the following email to Ronayne Owen and Mr Hashi:

Now the Defendant has filed his affidavit, I confirm this matter will be heard on 19 July 2019 at 10:30am in Court 2, 436 Lonsdale Street Melbourne and appearances will be required.

The Plaintiff is requested to file and serve a brief written outline of submissions by 4:00pm on Wednesday 16 July 2019.

66 On Wednesday 17 July 2019, the Plaintiffs filed and served the Second Owens Affidavit, responding to the Hashi Affidavit.

67 At 8:53am on 18 July 2019, Ronayne Owens sent an email to my Associate and to Mr Hashi, attaching a copy of the Plaintiffs' Outline.

68 As set out above, no further affidavits were filed by the Defendants.

Summary procedure to enforce terms of settlement

69 The summary procedure to enforce terms of settlement was described in detail by Smith J in Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd:[31]

(a) The Court would ordinarily leave a party to proceed by separate bill if the agreement involved matters extraneous to the suit compromised. And it regarded an agreement as falling within this general category:

(i) If it dealt with property as to which no question was raised in the suit, or

(ii) If it provided for things to be done which went beyond the ordinary range of what the Court would order in such a suit, or

(iii) If its enforcement involved giving effect to equities of a different nature from those involved in the suit, or

(iv) If there were parties to the agreement who were not parties to the suit.

(b) On the other hand in cases not falling within this first general category the Court would ordinarily enforce the agreement in the suit compromised. In particular this was so if the agreement related solely to the conduct or prosecution of that suit, or to the staying or dismissal thereof, or to the granting of the whole or part of the relief claimed therein or to the doing of that which the suit was brought to enforce.

(c) For the purpose of deciding which of these two general categories a case fell within, the Court did not look merely at the particular obligations sought to be enforced. It looked also at the obligations of the applicant, so far as justice required that the application should not be granted without ensuring that they too would be performed. But it would disregard altogether obligations already fully performed. It may be observed that in order to ensure the performance of obligations by the applicant the Court could make an order conditional upon such performance.

(d) If there was a substantial question to be determined as to what were the terms of the agreement, or as to whether it was valid or specifically enforceable, as for example where a substantial case was put forward of material mistake or of other circumstances such as would afford a defence to a suit for specific performance, a party would ordinarily be left to proceed by separate bill so that the matters raised might be fully investigated.

(e) The fact that the only outstanding obligation under the agreement of compromise was one for the payment of an ascertained sum of money did not preclude the Court from enforcing the agreement in the suit.

70 Further, Smith J stated in Roberts that in deciding whether justice can be done under the summary procedure the Court, of course, needs to consider a variety of matters involving questions of degree including the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery may be desirable.[32]

71 In Roberts, Smith J stated that in that case:[33]

What we are concerned with is the class of case in which, following upon the making of such an agreement [for the compromise of an action], and at a stage when no order has been pronounced, one of the parties comes to Court, with the other opposing, and asks the Court to make an order to which, by the agreement, the other party undertook to give his consent, or an order directing the other party to pay money or do some other act which, by the agreement, he undertook to do. In other words, it is the class of case in which a party to an action comes to the Court seeking what is, in effect, an order enforcing the agreement specifically.

73 In Seachange Management Pty Ltd & Anor v Pital Business Pty Ltd[34] the Court of Appeal said that:[35]

the power to enforce a compromise is discretionary and is wider now than once was the case, it is not to be invoked unless the court is 'clearly satisfied that justice can be done'; and whether justice can be done is a question of degree. Consistently with the equitable origins of the power, one must weigh among other competing considerations the extent to which enforcement would involve extraneous matters, how substantial the questions to be determined as a precursor to enforcement may be, and procedural considerations like the desirability of pleadings and discovery and substantial cross-examination.

74 Roberts and Seachange have been followed in numerous cases.[36]

75 As referred to in paragraph 5 above, Mr Hashi represented himself at the hearing and I gave him leave to represent Sarar. I have previously summarised the principles applicable in circumstances where parties are unrepresented by lawyers in applications such as [37]e present,37 and I adopt that approach here.

76 Mr Hashi's oral submissions at the Second Return were a mixture of submissions (including references to the Hashi Affidavit) and evidence from the Bar Table. Rather than expect Mr Hashi to grapple with the distinction between the two, in terms of evidence from the Bar Table not being evidence per se and therefore not permitted, when it became apparent that this would be the nature of his submissions, I indicated that I would hear what he wanted to say and then have an oath or affirmation administered so that he could attest that to the extent that his submissions contained (previously) unsworn evidence, those matters were true and correct. The Plaintiffs' counsel did not oppose this course and this procedure was followed.

77 In relation to the Consent Orders, the Plaintiffs submit that:

(a) As the Defendants executed the Settlement Deed, they are bound by it.[38] They did so with the benefit of legal advice.

(b) The payment of two instalments of $2,500 by the Defendants constitutes part performance of the Settlement Deed and is an admission that the Settlement Deed is binding.

(c) Mr Hashi's affidavit of 12 July 2019 is disingenuous to say the least. It contends that there was no guarantee and mortgage over the Property, even though these documents are admitted in the D & CC. Mr Hashi's conduct should be seen for what it is; an attempt to delay the inevitable because he has not been able to raise a refinancing of the Loan.

(d) The Plaintiffs therefore should be entitled to enter the consent orders, which essentially mirror the relief sought in the Summary Judgment Summons. At a minimum, the Plaintiffs should be entitled to an order for possession of the Property. As indicated above, at the Second Return the Plaintiffs sought orders for possession of the Property, dismissal of the counterclaim, and costs. They did not seek the other orders set out in the Consent Orders at the Second Return.

78 Mr Hashi relies on his affidavit. He also made submissions, in the manner described in paragraph 76 above, that:

(a) A friend of his referred him to Mr McMonnies. He telephoned Mr McMonnies on 28 March 2019 and asked him for help and sent him what documents he could from his phone. Mr Hashi says that he did not give the D & CC to Mr McMonnies, he says that all he sent was the negotiations between the lawyers;

(b) He went to see Mr McMonnies on 29 March 2019 for legal advice. Mr McMonnies said that he could not represent him on 1 April 2019 [at the summary judgment hearing] as he did not have the documents. Mr McMonnies then said to him that if you want my advice, negotiate with them.[39] Mr McMonnies said that he would write the Plaintiffs a letter and asked what Mr Hashi could offer them. Mr Hashi said that he told Mr McMonnies he could pay $2,500 per month and he said that he does not know where Mr McMonnies got the material about refinancing and selling the house that he put in the letter;

(c) He only agreed to pay $2,500 per month and then to try to refinance. He says that the arrangement was that he would pay $2,500 per month while he negotiated with the Plaintiffs;

(d) He would never have agreed to obtain refinancing within 45 days as that would have been impossible;

(e) His current broker (who he did not identify) told him that he would be able to refinance by December 2019, as he needs one year of trading the business to obtain refinancing;

(f) He did not get legal advice about the Settlement Deed and that no one told him what it meant. He also says that Mr McMonnies did not explain the consent judgment to him. He says he spent 20 minutes with Mr McMonnies around 12:00pm when the latter wrote the letter and that Mr McMonnies subsequently called him and told him to come back at 3:30pm to sign documents;

(g) He has had legal advice since that the Settlement Deed was not fair. He says that the Plaintiffs were sharks, that Mr Rigoni wanted to get his house, and Mr Rigoni had organised a third mortgage over the Property at 44% per annum interest. He says that the Plaintiffs want to take away his rights to defend and to pursue his counterclaim; and

(h) The Settlement Deed is not binding on him, as he did not understand it, its terms are not fair, and he only signed it because Mr McMonnies told him to do so.

79 In reply, the Plaintiffs submit that none of that affects the enforceability of the Settlement Deed. Further, they say that Mr Hashi's reference to 45 days being too short to refinance ignores the context: there had been time to pursue refinancing prior to March 2019 as the loan was a short-term loan for 6 months. There had then been some months since then and there was no evidence of any steps being taken to refinance, other than the assertion about what a broker had told him.

80 The Defendants signed the Settlement Deed. Prima facie, they are bound by it. I do not consider it correct to characterise the McMonnies Covering Email as disputing the amount due. Rather, it is asking for a breakup of the amount and that if there was some miscalculation the figure be revised. The information requested was provided a short time later and Mr Owens confirmed the amount owing, and no disagreement with that amount was thereafter communicated to Mr Owens.

81 The Defendants had the opportunity at that time to raise a dispute over the amount due but did not do so.

82 It is not correct to say, as Mr Hashi does, that he was not provided with a breakdown of the amount due until 3 June 2019. It was given to Mr McMonnies ten minutes after it was requested. Mr McMonnies was his lawyer at the time. Further, Mr Hashi was copied into the email which Mr Owens sent to Mr McMonnies on 29 March 2019 at 3:58pm providing that information. Presumably, Mr Hashi is referring to the email sent by Mr Owens on 3 June to his new lawyers, as referred to in paragraph 52 above.

83 The Defendants could, if they wished, have refused to sign the Settlement Deed until clarification of the amount due had been provided and accepted by them. They did not do this. Instead, they signed a deed which contained all the terms which they now dispute, including the agreement to the Consent Orders.

84 Even if it can be characterised as a dispute over the amount due, for the reasons I have set out, that does not mean that the Settlement Deed is not binding.

85 Further, the statement made in the Hashi Affidavit at [2(c)] (see paragraph 55 above) is completely at odds with the terms of the McMonnies Covering Email, as are the submissions made by Mr Hashi. Mr McMonnies specifically stated that the Defendants accepted the 'remaining terms'.

86 Not only did the Defendants sign the Settlement Deed, they also separately signed the Consent Orders, which formed Annexure A to the Settlement Deed. Mr Hashi signed these as the sole director/secretary of Sarar and as the second defendant.

87 I do not accept Mr Hashi's version of what was agreed/not agreed in relation to the Settlement Deed. It is so contradictory to the contemporaneous documentation that his version belies common sense.

88 In my view, the Consent Orders fall squarely within the category of cases referred to in Roberts (see paragraphs 69(b) and 71 above). It is one of the simplest examples of such a case: the Settlement Deed provides for the entry of the Consent Orders in the event of a default by the Defendants under the Settlement Deed, and the Consent Orders have been signed by the Defendants. The defaults under the Settlement Deed have been established by the Plaintiffs and no evidence has been led by the Defendants to the contrary.

89 The terms of the Settlement Deed speak for themselves. I do not consider that this case falls within that class of cases identified in Roberts as requiring a separate action to be brought as summarised in paragraph 69(d) above. While the Defendants have attempted to raise questions as to the terms of the Settlement Deed and its validity or enforceability, they have not been able to establish that these are substantial questions which need to be determined. My reasons for this conclusion are set out in the preceding paragraphs.

90 Further, I do not see how Mr Hashi's protestations that he did not understand the Settlement Deed and the Consent Orders and that he had not received legal advice about them provide him with a basis in law to resist enforcement of the Settlement Deed in the circumstances of this case. First, such a position is contradictory to the express communications from the Defendants' lawyer (Mr McMonnies) and the warranty given in the Statutory Demand at Clause 6.1. Second, even if Mr Hashi did not understand the Settlement Deed or had not received legal advice or had not had it explained to him, he had sought out Mr McMonnies' assistance himself (it was not as if Mr McMonnies was connected with the Plaintiffs or as if Mr Hashi was relying on matters explained to him by the Plaintiffs or their representatives). I do not see how the Plaintiffs could be estopped from relying on the representations made by Mr McMonnies, the warranty given by the Defendants in the Settlement Deed, and the signing of the Settlement Deed and the Consent Orders by Mr Hashi, and nor do I see how it could be unconscionable for them to enforce the Settlement Deed in those circumstances.

91 I am satisfied that justice can be done by exercising the power to enforce a compromise.[40]

92 The Defendants want to be able to pursue the claims made in their Defence and Counterclaim, in particular, to impugn the Loan Agreement, Guarantee and Mortgage, and to press for the relief claimed in the Counterclaim.

93 However, by reason of Clauses 5.1 and 5.2 [sic] of the Settlement Deed,[41] it is no longer possible for the Defendants to do so. They have released the Plaintiffs from such claims.

94 For these reasons, the Plaintiffs are entitled to have those parts of the Consent Orders which they press, being the orders for possession of the Property and dismissal of the counterclaim, made by the Court.

95 I will hear from the parties as to the appropriate form of orders and as to costs.

[1] These matters were referred to me for hearing and determination by orders made on the Court's own motion pursuant to r 84.04 of the Supreme Court (General Civil Procedure) Rules 2015 ('Rules').

[5] Rigoni Affidavit, [10]; Exhibit RR-1, pp 100-102.

[6] Rigoni Affidavit, [11]; Exhibit RR-1, pp 233-234.

[7] Loan Agreement, Exhibit RR-1, pp 103-130.

[8] Guarantee, Exhibit RR-1, pp 131-155.

[10] Exhibit RR-1, pp 226-227. The instrument of mortgage bears the dealing number AR332895E.

[13] The MCP was not in evidence, but the Plaintiffs' Statement of Claim [at 15] alleges that the MCP contained such a term in clause 31(10) of the MCP. In their Defence, the Defendants admit that the Mortgage (and MCP) contained the terms alleged.

[17] In the D & CC, this person is referred to as Gary Nicholas. It is tolerably clear that this is an error and is a reference to Gary Nicolls of Rams: Mr Rigoni refers to him as Gary Nicholls in his affidavit and there are several pieces of correspondence exhibited to the Rigoni Affidavit between Mr Rigoni and Gary Nicholls of Rams: see Rigoni Affidavit, [5] and by way of example, Exhibit RR-1, pp 1-9.

[18] Rigoni Affidavit, [6]; Exhibit RR-1, p 5.

[19] Exhibit LKO-1, pp 1-2 is a copy of that letter. The letter was dated 28 March 2019 and while Mr Owens does not expressly say that it was received on that date, as he refers to being advised of certain things (ie the content of the letter) by Mr McMonnies on 28 March, he exhibits the 28 March letter: see First Owens Affidavit, [9]-[10]. However, it is apparent from the chain of emails at LKO-2, pp 1-6, in particular pp 4-5, that Mr McMonnies emailed the letter to Mr Owens on 29 March 2019 at 12:13pm.

[20] These are numbered 5.1 and 5.2 in the Settlement Deed, which appears to be an error, but nothing turns on that.

[28] Second Owens Affidavit, [9]; Exhibit LKO-2, pp 19-26.

[31] [1956] VicLawRp 86; [1956] VLR 555, 562-564 ('Roberts') (citations omitted).

[34] [2009] VSCA 139 ('Seachange').

[36] By way of example, see Ugrinovski v Naumovski [2018] VSC 437.

[37] Permanent Custodians v Sanders [2017] VSC 516, [24]-[29] ('Sanders').

[38] Relying on Toll v Alphapharm [2004] HCA 52; (2004) 219 CLR 165.

[39] At this point of Mr Hashi's submissions, I interrupted him to explain the concept of legal professional privilege and that he did not have to tell the Court what advice he was given unless he wanted to, and that if he did tell the Court the content of those matters, he would not be able to maintain privilege over them in future.

[40] Seachange, [40]: see paragraph 73 above.

[41] See paragraph 39 above.