Gemi Nominees Pty Ltd v Chamoun

Supreme Court of NSW|2024-05-27|Before: Faulkner J

Solicitors: Summer Lawyers (Plaintiff) Longton Legal (First Defendant) on 24 and 27 May 2024 Zed Law (First Defendant) on 23 July 2024 No Appearance (Second Defendant) File Number(s): 2022/280017

Introduction

These proceedings are brought by Gemi Nominees Pty Ltd (the Plaintiff) against Caroline Chamoun (the First Defendant) and Jack Chamoun (the Second Defendant). Ms Chamoun and Mr Chamoun have been married for 25 years.
On 29 March 2021, the Plaintiff entered into an agreement with the Defendants and a company associated with them called Croydon Automotive Repairs Pty Ltd (the Borrower). I will refer to the agreement as the Facility Agreement. Under the Facility Agreement the Plaintiff lent money to the Borrower. The Facility Agreement also contained a guarantee and indemnity from each of the Defendants for the repayment to the Plaintiff of the Secured Money and the performance of, and compliance by, the Borrower with all its obligations (the Guarantee).
To secure their obligations under the Guarantee, the Defendants granted to the Plaintiff a registered mortgage over two properties of which they are registered proprietors as joint tenants (the Mortgage). One of the properties is located at Cabarita, which is the residence of the Defendants. The other property is located in Croydon, and is a workshop from which the Borrower conducts its business.

Background

The proceedings were commenced by a Statement of Claim filed on 19 September 2022.
On 19 January 2023, the Defendants, who were at that time represented by a firm of solicitors called Madison Marcus, filed a Defence. On 7 February 2024, the Plaintiff filed a Reply to the Defence.
On 4 December 2023, the Defendants filed a Cross-Claim against the Plaintiff.
The pleadings closed on 21 February 2024 when the Plaintiff filed a Defence to the Cross-Claim.

Issues in the case

The best way to outline the real issues to be resolved in the proceedings is not by reference to the allegations in the Statement of Claim but by reference to the admissions in the Defence. The admissions were repeated in the written outline of submissions lodged on behalf of the First Defendant on 23 May 2024.
All of the following matters are admitted by the Defendants: 1. on or about 29 March 2021, the Borrower entered into a Facility Agreement with the Plaintiff; 2. in performance of the Facility Agreement, on or about 30 and 31 March 2021, the Plaintiff advanced $400,000.00 to the Borrower; 3. the Borrower did not repay the money to the Plaintiff by 24 December 2021 "or at all"; 4. on or about 29 March 2021, the Defendants entered into the guarantee and indemnity "guaranteeing and indemnifying [the Plaintiff] against all obligations of [the Borrower] under the Facility Agreement" - as set out above, the guarantee and indemnity were contained in the Facility Agreement to which the Defendants were also parties; and 5. the Defendants' liability for the Secured Money was secured over the Cabarita property and the Croydon property.
As set out below, on 22 July 2024 the First Defendant served a proposed Amended Defence. None of the admissions were withdrawn.
For the purposes of the relief claimed by the Plaintiff in these proceedings (an order for possession), it does not matter what amount was actually advanced or how much is actually due so long as it is more than zero. The Defendants admit that $400,000.00 was advanced. In fact, the Facility Agreement provided for an initial advance of $609,398.50 which was made up of the $400,000.00 plus $209,398.50 retained by the Plaintiff as pre-paid interest and fees.
The Defendants further admit that the documents relied upon by the Plaintiff as the necessary default notices and demands under the Facility Agreement (including the Guarantee) have been issued, as alleged by the Plaintiff. In their Defence, the Defendants positively contend that the documents were "not issued in accordance with the Agreement", but paragraphs 9 and 10 of the particulars provided in the letter dated 29 March 2023 from Madison Marcus to the Plaintiff's solicitors make clear that that contention does not add to the substantive allegations made elsewhere in the Defence, namely that the Borrower's failure to repay the borrowed money did not enliven the Plaintiff's right to issue default notices and demands because it was not a breach of the Facility Agreement. If there has been an operative breach of the Facility Agreement, there is no dispute that the necessary notices and demands have been issued.
The Defence includes an allegation to the effect that, in addition to the money lent on or about 30 and 31 March 2021, the Plaintiff had a contractual obligation to advance Tranche 2 of another $400,000.00, which the Plaintiff failed to do. This allegation is set out in paragraphs 9 and 10 of the Defence in terms which lack specificity. The essential argument appears to be that the failure to advance Tranche 2 was an anterior breach of the Facility Agreement by the Plaintiff, which relieved the Borrower of its obligation to repay the money which had already been lent. As pleaded, the legal basis for that is unclear. In any event, it is pleaded that the Borrower's (continuing) failure to repay the borrowed money is not a breach of the Facility Agreement.
When counsel for the First Defendant opened his client's case on the first day of the hearing on 24 May 2024, he properly accepted that, even if the Plaintiff did breach the Facility Agreement by failing to advance Tranche 2, the Borrower was still liable to repay the money which it had already received. As a result, the relevance of any such breach by the Plaintiff is limited to the loss alleged to have been suffered by the Borrower being kept out of the further funds. Absent a claim for damages (there is none), any such loss is in turn relevant only to the set off defence.
It follows that there is only one matter which may be described as a real issue in the proceedings, namely the further contention by the Defendants that the Borrower has a set off for a total amount which exceeds the amount claimed by the Plaintiff. As stated above, the Defendants filed a Cross-Claim in which the allegations made and the relief sought are limited to establishing the set off.
Turning then to the set off defence, the First Defendant contends that there are four amounts which the Plaintiff owes, and which should be aggregated in reduction (and hoped for extinguishment) of the amount which the Borrower owes the Plaintiff. The precise entity to which the Plaintiff is said to owe each amount is unclear (whether it be the Borrower, the Defendants personally or another company to which the First Defendant is related), but that important (and probably fatal) difficulty can be put to one side for now.
The four sums are pleaded in the Defence filed on 19 January 2023 and are expanded upon in the Cross-Claim filed on 4 December 2023. As summarised in paragraph 26 of the Cross-Claim, and as articulated in opening, the four sums are: 1. $180,000.00, which was paid by the Defendants to the Plaintiff in order to have caveats removed from a property at Lidcombe which another company associated with the Defendants planned to sell under a different transaction; 2. $90,845.87, which is half the prepaid interest claimed by the Plaintiff under the Facility Agreement up until 24 December 2021; 3. $287,076.30, which was paid to the Plaintiff as surplus proceeds from the sale of the Defendants' property at Double Bay; and 4. $490,000.00, which is said to have been lost by a related company when it forfeited the deposit it had paid for a property at Auburn because it was unable to complete once the Plaintiff failed to advance Tranche 2 - this appears to be loss referred to in [17] above.
The total of the four amounts is $1,047,922.17.
Mathematically, even if the Borrower is entitled to a set off (which the Plaintiff disputes) it is unclear how the total amount owed by the Borrower will be extinguished. Apart from that which may be implicit in [20(2)] above, until 23 July 2024 the Defendants did not raise any dispute about the quantum claimed by the Plaintiff. As stated above, the Plaintiff claims that the amount due under the Facility Agreement has increased to more than $2.6 million. As was her right, the First Defendant wanted to put the Plaintiff to proof of the amount it claims, notwithstanding the provision in the Facility Agreement which permits certain officers of the Plaintiff to give a lender's certificate. Even so, at the trial on 24 and 27 May 2024 the First Defendant accepted that the Plaintiff will be entitled to an order for possession unless the amount owed by the Borrower is completely extinguished. A reduction, even a substantial reduction, will not suffice for the Defendants' purpose in these proceedings.
It is further unclear how the Defendants' say that a set off might be claimed in circumstances where cl 3.4 of the registered Memorandum provides: "All money payable by any Obliger under this Mortgage must be paid… In cleared funds without set-off or counterclaim and free of all deductions…". Such a clause presents a significant obstacle to the Defendants where (as here) the Plaintiff seeks an order for possession: see Commonwealth Bank of Australia v MLD Financial Services Asset Management Pty Ltd [2015] NSWSC 1476 at [50]-[53] (Davies J).
In any event, by virtue of the admissions made by the Defendants and the nature of the set off defence, the Defendants were in substance the moving parties on the real issue which was to be determined at the hearing. The Defendants bear the onus of establishing each of the four sums they claim constitute the set off. By introducing the set off as an issue in the proceedings, the Defendants were under a duty to assist the Court to further the just, quick and cheap resolution of that issue by participating in the processes of the Court: s 56(3) of the Civil Procedure Act 2005 (NSW). To that end, the Court Book prepared in accordance with the relevant Practice Note, PN SC CL 6, included an Affidavit dated 27 October 2023 sworn by the First Defendant and an Affidavit dated 27 October 2023 sworn by the Second Defendant which addressed the factual basis for these claims.

Conduct of the trial

On 6 February 2024, the case was fixed for hearing for two days to commence on 24 May 2024.
On 9 February 2024, the case was listed for directions, on which occasion the Usual Order for Hearing was made.
On 19 March 2024, Madison Marcus, the solicitors which hitherto had acted for the Defendants, filed a Notice of Intention to File a Notice of Ceasing to Act. On 17 April 2024, Madison Marcus filed a Notice of Ceasing to Act.
The case was listed for further directions on 23 April 2024. The Defendants did not appear. Shortly before the time listed for the directions hearing, the First Defendant sent an email to the associate to the Judge before whom the case was listed and copied to the solicitors acting for the Plaintiff. The email stated: "Dear All, I am writing to inform the court that my husband, Jack, and I regretfully cannot attend the directions hearing scheduled for today at 2:00 pm. We are currently in the process of organising funds to engage a legal representation, which is necessary for our case. We understand the importance of this hearing and apologise for any inconvenience our absence may cause. We kindly request the court's understanding and would appreciate any guidance on how to proceed given our circumstances. Thank you for your attention to this matter. Many Thanks, Jack & Caroline Chamoun"
No orders were made at the directions hearing on 23 April 2024 other than to confirm the hearing date, reserve the costs and to grant liberty to apply on two days' notice.
On 20 May 2024, a Notice of Appointment of Solicitor was filed by a firm called Longton Legal by which a member of that firm announced his appearance for the First Defendant. He did not appear for the Second Defendant. The Second Defendant has thus been unrepresented since 17 April 2024. As will be seen, the Second Defendant has not taken an active part in the proceedings since that date.
As contemplated by the Usual Order of Hearing (albeit late), on 23 May 2024 a written outline of submissions was received from each of counsel for the Plaintiff and counsel for the First Defendant. No written submissions were received from the Second Defendant.
When the case was called for hearing at 10:00am on 24 May 2024, counsel appeared for the Plaintiff and counsel appeared for the First Defendant. The case was called outside the courtroom, but there was no appearance for the Second Defendant.
From the bar table, counsel for the First Defendant informed the Court that the First Defendant was in hospital. It was not known how long she would be there nor was it known what her condition would be in the following days, including on Monday, 27 May 2024. Counsel for the First Defendant had been briefed only days before. Without sufficient instructions, counsel could not conduct the cross-examination of the witness to be called by the Plaintiff. The First Defendant was also required for cross-examination on her Affidavit, for which an estimate of 30 minutes was given. The First Defendant's absence was therefore a looming obstacle to the conduct of the hearing.
Counsel for the First Defendant further informed the Court that his instructing solicitor was in contact with the Second Defendant, albeit through the Second Defendant using the First Defendant's mobile telephone, from which it may be inferred that the Second Defendant was co-located with the First Defendant.
At this early point, a short adjournment was granted so that the parties' legal representatives could discuss the recent developments and consider their respective positions. Upon resumption, the hearing commenced. Subpoenas for production were called upon and answered and access orders made. Each of the Plaintiff and the First Defendant opened their respective cases and all the objections to the Affidavits were heard and decided. Apart from foreshadowed objections to the relevance of some unidentified parts of the Plaintiff's Affidavits, counsel for the First Defendant took no objections. By approximately 2:30pm, the hearing had progressed to the point where the Plaintiff wished to call its witness. The First Defendant was still not present in Court. Counsel for the First Defendant applied for an adjournment until 10:00am on Monday, 27 May 2024. The application was neither opposed nor consented to by the Plaintiff. The adjournment was granted.
Shortly before the adjournment was granted, the following exchange occurred between counsel for the Plaintiff and the Bench: "SOMERVILLE: There is perhaps another issue that arises when one considers what happens on Monday and the quality of the medical evidence that might then be required to justify if any adjournment application or anything of that nature. HIS HONOUR: I think we need something pretty solid by Monday. SOMERVILLE: So do I, with respect. HIS HONOUR: Yes."

Adjournment application

At 10.00am on Monday, 27 May 2024 the hearing resumed. The First Defendant was again absent from court although she was again represented by counsel. There was no appearance for the Second Defendant.
Counsel for the First Defendant made an oral application for an adjournment. Although it was not expressly stated, the intent of the application was that the hearing be adjourned part heard to a date in the future.
In support of the application the First Defendant relied on the following evidence: 1. a short Affidavit from her solicitor dated 27 May 2024, all of which was admitted into evidence over the Plaintiff's objection; 2. an email to her solicitor from Dr Elizabeth Zhang which was sent on 27 May 2024 at 7:13am; and 3. fourteen pages of sequential text messages and attached photographs which had been sent between the First Defendant's telephone and the telephone of her solicitor; the text messages commenced early on the morning of Friday, 24 May 2024 and ended at 9:29am on Monday, 27 May 2024.
Before summarising the facts established by this material, it is important to bear in mind the relevant provisions of PN SC CL 6, namely paragraphs 43 to 45: "Adjournment 43. To ensure efficient use of Court time, proceedings fixed for trial will not normally be adjourned unless special circumstances have arisen which could not have been foreseen. 44. An application for adjournment requires supporting Affidavits. 45. An application for adjournment will not usually be granted unless the party on whose behalf the application is made is present at the time the application is made or has sworn an Affidavit verifying that that party is aware of the reasons for the application and identifying those reasons."
In this respect, PN SC CL 6 reads harmoniously with s 56(2) of the Civil Procedure Act which requires the Court to give effect to the overriding purpose when it exercises any power given to it by the statute, including the power under s 66 to grant an adjournment. In particular, paragraph 43 of PN SC CL 6 reflects the requirement in s 57(1) that regard be had to the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources and the timely disposal of all proceedings in the Court, not just the present proceedings. Whilst paragraph 45 of the practice note has not been complied with in this case, I was satisfied that the First Defendant was aware that the application was being made and the reasons for it. The adjournment should not be refused for want of compliance with paragraph 45.
The First Defendant's evidence itemised in [39] above established the following facts: 1. at about 7:00am on Friday, 24 May 2024, the First Defendant was taken to Concord Hospital in an ambulance where she was admitted; 2. at about 7:00am, the Second Defendant stated in a text to the First Defendant's solicitor that the First Defendant had a "cardiac issue"; 3. at 9:13am, the Second Defendant stated in a text to the First Defendant's solicitor that "[i]t's more likely it's blood clotting…" and "…her blood pressure still very high…"; 4. at that time, the First Defendant's solicitor made the first of five requests that a "report" or similar be obtained from a doctor; 5. at 12:05pm on 24 May 2024, a document entitled "SLHD Inpatient Front Sheet" was generated which included the text "Pres Problem/Reason for Visit: Pain, chest", which it may be inferred is a record of the information which the First Defendant gave to the hospital staff when she was admitted; 6. at 2:45pm on 24 May 2024, the Second Defendant stated in a text that he expected the "specialist" would come around between 3:00pm and 4:00pm; 7. at an unspecified time on 24 May 2024, a registered nurse completed an "Attendance Certificate" which stated that the First Defendant attended the Emergency Department on 24 May 2024; 8. at an unknown time before 3:43pm on Sunday, 26 May 2024, the First Defendant was admitted to the Emergency Department of Westmead Hospital; 9. at 3:43pm on Sunday, 26 May 2024, the First Defendant's solicitor sent her a text and made his third request for "…a report from a doctor to give the judge to try and seek an adjournment."; 10. at 6:00am on Monday 27 May 2024, the First Defendant's solicitor sent her a text and made his fourth request for "…a letter or report from Doctor or hospital confirming that you are still there"; 11. at 6:25am, the solicitor for the First Defendant had a telephone conversation with the First Defendant and "a female who identified themselves as 'Rien' a nurse in the employee of Westmead Hospital", during which both stated that the First Defendant had suffered a "mini stroke" and that the First Defendant "is under the care of a vascular specialist and neurologist."; 12. at 7:13am on 27 May 2024, Dr Elizabeth Zhang sent an email to the solicitor acting for the First Defendant to which was attached a document entitled "Emergency Department Summary" which was apparently prepared by Dr Zhang, and stated: "Attendance Certificate This is the certify that CAROLINE CHAMOUN of [xxx] Street, Cabarita has attended Westmead Hospital as an Inpatient on 26-05-2024 and remains in hospital on 27-05-2024 for ongoing management of her medical issues. Name Dr Elizabeth Zhang Designation ED Registrar Contact 8890555 Patient Location WESTMEAD HOSP WE W.K1 ESSU" 1. at 9:29am on 27 May 2024, the First Defendant sent a text to her solicitor in which she stated, "…I've sent what I can! they wouldn't allow me to send anything before discharge. I will try aging (sic) with another dr" and "Let me know if you need more and I will get Jack to demand it."; and 2. the First Defendant's solicitor replied to this text and made his fifth and final request: "We do need more. Please get a report from a doctor saying what is wrong and how long you will be there".
The core factual issue thrown up by the adjournment application was whether the First Defendant was unable to attend court to provide instructions and to be cross-examined on 27 May 2024. As the applicant for the adjournment, the First Defendant's inability to attend was a matter which she had to prove. By virtue of s 75 of the Evidence Act 1995 (NSW), the hearsay rule did not apply to her evidence so long as she also adduced evidence of the source. By virtue of s 66A, the hearsay rule did not apply to evidence of a previous contemporaneous representation made by the First Defendant about her own health.
Nonetheless, there remained a question of what weight was to be given to the evidence and what inferences were to be drawn from the evidence as a whole.
The following matters are to be observed. First, none of the evidence explicitly addressed the core factual issue. In Bobalas v Waverley Council [2016] NSWCA 139 at [221], McColl JA, (Simpson JA and Sackville AJA agreeing), said: "A medical certificate relied upon to demonstrate a litigant is unable to attend court must address the 'critical question whether, and if so why, the medical condition would prevent the [litigant] from travelling to the Court and participating effectively in a court hearing.'"
There was no statement from the First Defendant, the Second Defendant, the "specialist", the registered nurse who signed the Attendance Certificate on 24 May 2024, "Rien", the vascular specialist, the neurologist or Dr Zhang that the First Defendant could not attend court. The First Defendant left the proof of the "critical question" to inferences to be drawn from the other matters which were referred to in her evidence.
Second, the basis for the statements about the First Defendant's condition which were made by the Second Defendant on the morning of 24 May 2024 was not revealed. There is no suggestion that the Second Defendant has any medical training. The Court Book contains an Affidavit sworn by the Second Defendant on 27 October 2023 in which he specified his occupation as "mechanic", which occupation appeared to be common ground between the Plaintiff and the First Defendant when the case was opened. There is evidence that the Second Defendant expected the "specialist" to come around between 3:00pm and 4:00pm on 24 May 2024, from which it may be inferred that the Second Defendant was privy to some medical input from that time onwards. There is no evidence of the Second Defendant making any statements about the medical condition of the First Defendant after that input. Counsel for the Plaintiff submitted that no weight could be given to statements by the Second Defendant in circumstances where no Affidavit from the Second Defendant was read in support of the adjournment application and no explanation was given for that omission. I accept that submission.
Third, no evidence was adduced to explain the fact that the First Defendant was in Concord Hospital on 24 May 2024 but was then admitted to the Emergency Department of Westmead Hospital at some time on 26 May 2024. Although unclear, it would appear that the First Defendant was discharged from Concord Hospital on 24 or 25 May 2024, from which it may be inferred that there was nothing in her medical condition which required her to remain in hospital at that time. None of the paperwork which was generated at any such discharge (see below) was adduced into evidence on 27 May 2024.
Fourth, there is no evidence that the First Defendant was in hospital on Saturday, 25 May 2024.
Fifth, the basis for the statements made by "Rien" on the morning of 27 May 2024 was not revealed. Whilst "Rien" identified herself as a nurse, it was still necessary for the basis of her statements to be identified before any material weight could be given to them. This is especially so when the only evidence of her statements was the Affidavit affirmed by the solicitor for the First Defendant. The evidence was the deponent's understanding and/or analysis of what was said by "Rien". In any event, the evidence was so lacking in detail as to deprive "Rien's" statements of any meaning. Whilst it may be accepted that the words "mini stroke" were uttered, nothing was revealed about the time or nature of that episode or the implications of it other than the statement that it "affected" the "use" of the First Defendant's hand in some unspecified way. Counsel for the First Defendant fairly accepted that the statement by "Rien" about the First Defendant's medical condition did not prove the fact. The statement that the First Defendant was under the care of a vascular specialist and neurologist said nothing about the First Defendant's ability to attend court and give evidence on 27 May 2024.
As stated above, whilst s 66A of the Evidence Act provides that the hearsay rule does not apply to the First Defendant's statements about her own health, consideration still needed to be given to the weight to be attributed to those statements, and what inference could be drawn from those statement about her ability to attend court.
Sixth, the statement by Dr Elizabeth Zhang that the First Defendant remained in hospital "for ongoing management of her medical issues" was so lacking in detail as not to have material probative value on the question whether the First Defendant was able to attend court and give evidence on 27 May 2024: see Magjarraj v Asteron Life Limited [2009] NSWSC 1433 at [20],[22] (Barrett J).
Seventh, and importantly, regard had to be had to the absence of any report from a doctor or other health professional about the medical condition of the First Defendant. The solicitor for the First Defendant made five requests for such a report. The first request was made as early as 9:13am on 24 May 2024. The First Defendant's evidence demonstrates that there was opportunity for some kind of report or statement to be obtained from a doctor familiar with her medical condition. In this regard: 1. The First Defendant attended Concord Hospital on 24 May 2024 where it may be inferred she received some attention from doctors (tests were ordered), including the "specialist" who the Second Defendant expected to come around between 3:00pm and 4:00pm. 2. The First Defendant did obtain an "Attendance Certificate" from a registered nurse on 24 May 2024. The Attendance Certificate was prepared on a pro-forma document which contemplated that an alternative certificate might have been issued, namely a "Medical Certificate". A Medical Certificate would have addressed the "fitness" of the First Defendant and identified the condition for which the First Defendant was "treated". Whilst a Medical Certificate had to be completed by "registered health service providers, including Medical Officers", the availability of a pro forma document suggests that, even for a busy doctor, it would have been a simple matter for such a certificate to be issued if it had been medically accurate to do so. A Medical Certificate which did no more than address the First Defendant's fitness for work would have had little probative value for the critical question of whether, and if so why, her medical condition prevented her from attending court, but it may have been better than nothing. 3. As stated above, there was no evidence that the First Defendant was in hospital on Saturday, 25 May 2024 and there is no evidence as to why the First Defendant did not attend a GP in order to obtain, at the very least, a Medical Certificate, especially given the urging from her solicitor. 4. The First Defendant attended Westmead Hospital on 26 May 2024 and was still there on 27 May 2024. It may be inferred that she received some attention from doctors, including the vascular specialist and neurologist referred to by the First Defendant and "Rien" in their telephone conversation with the First Defendant's solicitor on 27 May 2024. It may also be inferred that she was seen by Dr Zhang. No report or certificate was produced from any of these doctors, other than Dr Zhang's "Attendance Certificate" referred to above at [41(12)].
No explanation was given as to why a report from a doctor was not adduced into evidence in support of the adjournment application. The text sent by the First Defendant at 9:29am on 27 May 2024 did not provide an explanation. It raised more questions than it answered. An explanation was warranted, especially given the requirements of PN SC CL 6, the events in court on Friday, 24 May 2024 as set out at [31]-[36] above, and the First Defendant's solicitor's early and repeated requests that a report be obtained. The report did not have to be extensive. The failure of the First Defendant to adduce any report into evidence gives rise to an inference that she was unable to obtain a report which demonstrated an inability on her part to attend court and give evidence on 27 May 2024.
As to the objective facts, there was evidence that tests were carried out on the First Defendant at Concord Hospital but no evidence about the results of the tests. There was no evidence of any diagnosis, let alone any prognosis. There was no evidence that she received any treatment either at Concord Hospital or Westmead Hospital. Other than for sleep, there was no evidence that the First Defendant was prescribed any medication. There was no explanation why no evidence was adduced about any of these matters.
In view of the evidence as a whole, I was not satisfied on the balance of probabilities that the First Defendant was unable to attend court and give evidence on 27 May 2024. In reaching that conclusion, I have had regard to the gravity of the matters raised by the application, including a failure by the First Defendant to attend court and the consequences for the First Defendant if the adjournment application did not succeed.
In those circumstances, the basis for the adjournment put forward by the First Defendant was not made out. In the language of paragraph 43 of PN SC CL 6, the First Defendant did not prove that special circumstances had arisen which could not have been foreseen.
Also relevant to the adjournment application was the prejudice which would be caused to the Plaintiff if the hearing did not proceed. The Plaintiff has been kept out of the lent money since 24 December 2021. Although the Plaintiff has a contractual entitlement to default interest on that money calculated at the then unchallenged rate of 48% per annum, an accumulation of unpaid interest will only protect the Plaintiff from the prejudice from delay if the Plaintiff is able to recover the full amount of its entitlement. Whilst the Plaintiff is secured by the Mortgage over the Cabarita property and the Croydon property, the LRS searches for those properties showed that there are other secured lenders with priority over the Plaintiff. There was no evidence about the Defendants' equity position. The evidence did not reveal whether the Plaintiff will be able to recover and, if so, to what extent.
As far as the allocation of the Court's scarce resources is concerned, the case was listed for a final hearing on 24 and 27 May 2024. An adjournment of the hearing to an unspecified and as yet unknowable date would mean that the two days have been largely wasted. A further hearing date will have to be allocated which would otherwise be available to hear another case before the Court. This is undesirable in circumstances where the current case would otherwise be concluded in the allotted time.
Having regard to all these matters and the overriding purpose by which the power to grant an adjournment is to be exercised, I dismissed the First Defendant's application for an adjournment.

Conclusion of the trial

Upon the dismissal of the adjournment application, counsel for the First Defendant sought a short adjournment to seek further instructions. An adjournment of 30 minutes was granted, following which counsel for the First Defendant informed the Court that his retainer had been terminated. He then withdrew. The solicitor for the First Defendant informed the Court that his retainer had also been terminated and he sought leave under Uniform Civil Procedure Rules 2005 (NSW) r 7.29(2) to withdraw. The solicitor for the First Defendant had been in direct contact with his client. A primary purpose of UCPR 7.29(2) is to provide protection for a solicitor's client, which protection is unlikely to be necessary where the client has expressly terminated the solicitor's retainer. In the circumstances of this case, I granted leave and the solicitor for the First Defendant withdrew.
Whilst the First Defendant's legal representatives were present in the court, I adjourned the hearing until 2:00pm to permit the Plaintiff to consider the recent development.
Upon resumption of the hearing at 2:00pm, there was no appearance for the First Defendant. As was the case on all previous occasions, there was no appearance for the Second Defendant. Counsel for the Plaintiff stated, and subsequently read an Affidavit by his instructing solicitor to prove, that steps had been taken at or about 1.30pm to inform the absent Defendants by both text and email about the continuation of the hearing. No response had been received from the Defendants. In any event, the further notification was unnecessary because the evidence tendered on the adjournment application made it clear that both Defendants were aware that the hearing was listed and proceeding. The prompt termination of the retainers of her legal representatives made clear that the First Defendant was aware the adjournment application had failed.
The hearing therefore proceeded in the absence of the Defendants. The Plaintiff moved on the Statement of Claim filed on 19 September 2022 and read three Affidavits by Michael Cooper dated 8 August 2023, 7 February 2024 and 14 May 2024. The Plaintiff also tendered a lender's certificate issued under cl 24.1 of the Mortgage Memorandum. The certificate certified that the amount payable to the Plaintiff under the relevant Mortgage was $2,639,532.79 as at 24 May 2024.
The evidence establishes that on 29 March 2021, the Plaintiff and the Borrower entered into a Facility Agreement pursuant to which the Plaintiff promised to advance money to the Borrower in accordance with the terms of the Facility Agreement. Each of the Defendants was also a party to the Facility Agreement as a guarantor and as a mortgagor of the properties at Cabarita and Croydon.
The terms of the Facility Agreement were contained in a number of documents including Registered Mortgage AR785151 which incorporated the provisions of Registered Memorandum AQ889375. By cl 3.1(a) of the Memorandum, each Obligor (which included the Borrower and each Defendant) promised to pay the Secured Money to the Plaintiff by the end of the Term, which concluded on the Final Payment Date, namely 24 December 2021. The Secured Money was made up of a number of elements, including the Principal Amount as specified in Schedule A. The Principal Amount specified in Schedule A was $1,009,398.50 to be advanced in two tranches, Tranche 1 being $609,398.50 on the Commencement Date. Tranche 2 was to be advanced in the Plaintiff's "sole discretion".
Pursuant to cl 28.5 of the Memorandum, each of the Defendants guaranteed to the Plaintiff the performance of the Borrower's obligations. Under cl 28.7, it was agreed that if the Borrower failed to pay the Secured Money, the Plaintiff could demand that the guarantors pay the amount which the Borrower had failed to pay. Pursuant to cl 28.14 the liability of the guarantors was joint and several.
On 30 and 31 March 2021, the Plaintiff advanced Tranche 1 by way of a payment of $400,000.00 to the Borrower and applied other money by way of prepaid interest and fees.
The Borrower did not repay any money by 24 December 2021, or at any time thereafter. Neither of the Defendants has made any payment to the Borrower.
Pursuant to cll 18.1 and 18.2 of the Memorandum, the parties agreed that an event of default would occur if the Borrower failed to pay the Secured Money in accordance with the Facility Agreement. It follows that on 24 December 2021 an event of default occurred.
Pursuant to cl 18.3, the parties agreed that if an event of default occurred, the Plaintiff could demand the immediate payment of the Secured Money and the Borrower and each guarantor indemnifier would be obliged to repay the Secured Money to the Plaintiff in accordance with that demand. Further, the Plaintiff would be entitled to exercise any right, power or privilege conferred on it by the mortgage, whether under legislation or at common law or in equity and take possession of and eject any occupants from the mortgaged property.
On 20 July 2022, the Plaintiff issued notices by which it notified each of the Borrower and the Defendants of the breach and demanded payment of the Secured Money.
As set out above, none of these demands has been met.
In the circumstances, the Plaintiff made good its entitlement to an order for possession of the Cabarita property and the Croydon property under cl 18.3 of the Registered Memorandum and s 60(c) of the Real Property Act 1900 (NSW).

Cross-Claim

On 24 May 2024, counsel for the First Defendant accepted that the Plaintiff was entitled to the claimed relief unless the First Defendant succeeded on her set off defence. As set out above, on 4 December 2023 the Defendants filed a Cross-Claim in which they sought declarations as to their entitlement to certain sums said to constitute a set off. Given the Defendants' ultimate failure to appear at the hearing, no evidence was adduced to make good the alleged set off.

Events subsequent to the trial

At the conclusion of the trial on 27 May 2024, judgment was reserved.
On 5 June 2024 my chambers received an email directly from the First Defendant. It read: "To The Honourable Associate Justice Faulkner. For completeness, I have copied in the Plaintiff to the proceedings. I hope this email finds you well. Attached to this email, you will find all relevant documents that substantiate proving my claim of Perjury. This evidence is integral to ensuring a fair and just resolution of the case. I respectfully request that Your Honor consider allowing this evidence to be admitted in the interests of justice and to uphold procedural fairness.

Many Thanks, Caroline Chamoun"

There was some material attached to the email, the contents of which have not been accessed.
In response to the email, the case was listed for directions on 7 June 2024. On that occasion the First Defendant appeared in person. There was no appearance for the Second Defendant.
After hearing from the parties, the following orders were made: "1. Any notice of motion for leave to reopen the case and/or for any other procedural orders which the First Defendant and/or the Second Defendant seek, together with any Affidavit relied upon by the First Defendant and/ or the Second Defendant to demonstrate why she/he or they contend that leave should be granted and/or the orders ought to be made, must be filed and served by 4pm on Friday, 21 June 2024. 2. The matter is listed for further directions at 9.30am on 27 June 2024 before Faulkner J. 3. Costs reserved. 4. First Defendant to provide the Second Defendant with a copy of these orders."
The First Defendant did not comply with Order 1. On 21 June 2024 my chambers received another email sent directly from the First Defendant. It read: "Dear All, I am writing to respectfully request an extension of the deadline for filing a notice for leave to reopen the case in the above-referenced matter until 5:00 PM on Tuesday, 25 June 2024. This extension is necessary as I only recently engaged legal counsel, and they require time to properly review my case and prepare the necessary documents. The additional time will ensure that all pertinent information is accurately and thoroughly presented to the court without prejudicing the other party, as the matter is listed for a Directions Hearing on 27 June 2024. We believe that granting this extension will serve the interests of justice by allowing a complete and fair consideration of all relevant materials and circumstances that we intend to file in the upcoming days. Thank you for your consideration of this matter. We appreciate your understanding and assistance in ensuring that this case proceeds with all necessary information before the court. Many Thanks, Caroline Chamoun"
It appeared that a new solicitor was retained by the First Defendant about this time.
On 26 June 2024 a Notice of Motion was filed by the First Defendant in which her solicitor was identified as Adwar Alkhamesi. The following orders were sought in the Notice of Motion: "Orders Sought: 1. That the First Defendant be granted leave for the case to be reopened. 2. That the First Defendant be granted leave to present new evidence as per the Affidavit of Caroline Chamoun sworn on 26 June 2024. 3. That the First Defendant be granted an opportunity to plead and run the case. 4. That the First Defendant be given an opportunity to amend their pleadings. 5. That the costs of this motion be reserved. 6. Such further or other orders as the Court deems appropriate."
The Notice of Motion was accompanied by an Affidavit sworn by the First Defendant on 26 June 2024. At a high level, the Affidavit addressed the First Defendant's health.
The First Defendant says in her Affidavit that there are "two doctors who are familiar with [her] medical history" but one is no longer working at her local medical centre and the other was unavailable until July. The First Defendant says that these are the only two doctors who can provide a report regarding her medical condition.
The Affidavit stated that the First Defendant was unable to attend court on 24 and 27 May 2024 "due to health reasons". The First Defendant is on medication for depression, high cholesterol and high blood pressure. In the morning on 24 May 2024, the First Defendant was very nervous and stressed, started to vomit and could not breath afterwards. She went to Concord Hospital where tests were carried out after which she was kept overnight to monitor blood pressure. She was discharged on Saturday 25 May 2024 and advised to get an MRI the following week. She was advised to call an ambulance if her symptoms returned.
Annexed to the Affidavit is a five page document from Concord Hospital which is headed "Final Report". The author is Farnaz Omidi who is described as a "Consultant". The document was printed at 8:41am on 25 May 2024 which suggests that the First Defendant was discharged from Concord Hospital first thing on Saturday 25 May 2024. The document contains a lot of medical terms and abbreviations. It appears that tests were undertaken. The admission summary is set out on page one of five as follows: "patient presented with sudden onset chest discomfort with shortness of breath on a background of having numbness, cramping in her lower limb for 2/7 days. More details as below. Patient was given aspirin by the ambulance members that have improved the pressure in her chest. On examination, patient did not have any obvious swelling, redness or tenderness in her left calve or thigh region. Her bloods were unremarkable with a normal serial trop and negative D-dimer. Serial ECG and CXR was also normal. Patient has been advised to take simple analgesia for the discomfort in her leg. GP to refer to cardiology if ongoing symptoms of chest discomfort. Patient to represent to ED if worsening of symptoms."
According to the Affidavit, on Sunday 26 May 2024 the First Defendant's heart rate increased and she could not feel the left side of her body. She went to Westmead Hospital "where they wouldn't let [her] leave". They suspected a "mini-stroke" which required further investigation. The First Defendant also required an MRI and a specialist appointment with the first available date being in mid-late July 2024.
Also annexed to the Affidavit is a five page document from Westmead Hospital which is headed "Discharge Summary" prepared by Phillip Adrian Smith who is described as a "Medical Officer". On page one of five, the document is dated "26 May 2024 23:20 AEST" which suggests that it was prepared just before midnight on Sunday 26 May 2024. The print date for the copy of the document attached to the First Defendant's Affidavit is 27 May 2024 at 7:07pm. The discharge plan is as follows: "Plan 1. Aspirin 100mg daily - can be purchased without script from chemist. 2. Rapid access neurology clinic follow up - please attend this appointment. The clinic will call you within the next 1 week with appointment times. If you do not hear form them within the week, please contact the clinic's secretary Lynn on (02) 9845 6792. E 3. MRI brain - forms provided. Please attend this before your clinic appointment 4. Please return to ED if you have a return of your symptoms or if you are otherwise very concerned."
The First Defendant's Affidavit also sets out her perceived difficulty with previous solicitors. There was nothing in the Affidavit which demonstrated that the various solicitors who have previously been retained by the First Defendant acted in anything other than a professional and competent manner. At a high level, the Affidavit refers to efforts made and difficulties encountered by the First Defendant in obtaining legal advice about the case.
The First Defendant's Affidavit also contained statements about "signature authenticity". The statements are fairly described as imprecise. As best as can be said, they do not relate to any issue in the proceedings as currently defined by the pleadings.
When the case came before the Court on 27 June 2024, counsel appeared for the First Defendant, apparently instructed by a solicitor. It was not the same counsel who had appeared for the First Defendant at the trial on 24 and 27 May 2024. The First Defendant was present in court. There was no appearance for the Second Defendant.
Counsel for the First Defendant informed the Court that he was not briefed in the substantive proceedings. Despite Order 4 in the Notice of Motion, he was not able to inform the Court what amendments the First Defendant wanted to make to her pleadings. The following orders were made: "1. The First Defendant to serve a draft amended defence and a draft amended cross-claim on the Plaintiff, and provide copies to chambers by email, by 4pm on 15 July 2024. 2. Matter listed for further directions on 17 July 2024 at 9.30am before Faulkner J. 3. Costs of today are to be reserved."
The First Defendant did not comply with Order 1.
On 15 July 2024 the First Defendant sent an email directly to my chambers. It read: "Dear All, Since our last court appearance, I have unfortunately discovered that my bank accounts with CBA Bank have been frozen by court order, which I was not aware of. This has prevented me from securing legal representation. Since then, I have been actively seeking solicitors to assist me. Late on Friday night and over the weekend, I made initial contact with a law firm associated with LawPath. They are willing to take on my case. However, due to the limited time frame, we have not yet had the opportunity to confer in detail or brief Counsel. They have suggested that I request a one or two-week adjournment to allow sufficient time to instruct them properly. I understand that the Plaintiff may oppose this request. However, it is in the court's best interest to have my documents reviewed by both solicitors and Counsel. These proceedings concern the Plaintiff's attempt to take possession of my family home. The delay caused by an adjournment is significantly less than the potential cost and delay of an appeal, which would result in my family losing our home. Once I have instructed my solicitors, they will formally go on record and communicate directly with the Court and Summer Lawyers. Thank you for your consideration and I appreciate your understanding. Many Thanks, Caroline Chamoun"
From the email it may be inferred that Adwar Alkhamesi no longer acted for the First Defendant. The Court file includes a Notice of Appointment of Solicitor dated 16 July 2024 in which a solicitor at Zed Law announced his appearance for the First Defendant.
On 16 July 2024 my chambers received an email from John Plumidis at Zed Law. It read: "Dear [Associate] & Colleagues Please note that an appearance will be via online court on behalf of Zed Law. We presently have instructions to assist the Court in respect of tomorrow's directions only. We will seek either an adjournment, or suitable directions, that will permit time for us to become fully instructed in the substantive matters before the court. I can be contacted in the interim via john@zed.law or 0448 214 000. Kind regards, JXP."
On 17 June 2024 the case was again before the Court on which occasion Mr Plumidis appeared for the First Defendant. There was no appearance for the Second Defendant.
Mr Plumidis informed the Court that he had only just been retained and had not yet obtained full instructions. The burden of Mr Plumidis' submissions was that the Orders made by the Court since 27 May 2024 were not complied with because the First Defendant lacked funds for solicitors. On the other hand, Mr Plumidis said that it was his understanding that the value of the Cabarita home exceeds $10 million. After submissions from both parties, I said: "I will list the matter for judgment on the 25th of July, which is eight days, and I will indicate that if amended pleadings and an Affidavit explaining the delay are brought forward, and I won't make an order for them, it will be entirely a matter for the First Defendant, if they are brought forward then I will hear submissions on the 25th of July when the matter is listed for judgment and before I hand it down as to whether or not I should defer judgment."
Ultimately the Plaintiff's counsel and solicitors had conflicting court commitments on 25 July 2024 and the case was listed for judgment on 23 July 2024.
At 3:00pm on 22 July 2024 my chambers received an email from Zed Law to which was attached a further Affidavit from the First Defendant dated 22 July 2024 together with a draft Amended Defence. There was also a short-written submission.
The Affidavit sets out further difficulties which the First Defendant has had with legal representation, including the departure of Adwar Alkhamesi on 28 June 2024 and the retainer of Zed Law on 15 July 2024. In relation to the First Defendant's health, Annexure A to the Affidavit is page one of seven of a "Discharge Plan" for a discharge from Westmead Hospital on 19 July 2024. The summary is as follows: "Caroline Chamoun is a 46-year-old woman who as admitted to Westmead Hospital under the care of Matthew Silsby (Neurologist). She initially presented to Westmead Emergency Department on 18/07/2024 with right sided facial weakness. A CT scan was performed showing no acute intracranial pathology. The likely cause of her presentation is Bell's palsy, however an outpatient MRI must be performed to rule out any other pathologies. She was deemed safe for discharge with outpatient follow up as outlined below: 1. GP follow up in 1-3 days please to discuss your admission and review your medications. A plan for your GP is written below. Please bring this letter with you GP to kindly: - Review admission and patient progress - Provide scripts for medications - Please organise an outpatient MRI - Please refer patient to their regular neurologist for follow up 2. Neurology - Acquire a referral to your regular neurologist from your GP - Please perform an outpatient MRI prior to the appointment 3. Medications Prednisone 70mg daily for 5 days A script has been provided"
Pages two to six were not attached to the Affidavit. Also annexed to the Affidavit is a printout from a generic website about Bell's palsy. There is also a letter dated 27 May 2024 from "Nurse Manager, Outpatients, Westmead Hospital" in which the First Defendant was informed of an appointment for her to attend the Rapid Assessment Neurology Clinic on 23 July 2024.
The First Defendant states in her Affidavit that she is not able to "eat properly or see properly as the right side of [her] face is completely paralysed". The Affidavit contains the First Defendant's acceptance that the Court may require formal evidence from an independent medical expert about her health.
The Affidavit also contains some statements about the Plaintiff's treatment of the First Defendant, which includes references to the amount certified as owning (more than $2.5m) and the interest rate of 48%.

Application for leave to re-open

The draft Amended Defence which was produced on 22 July 2024 is the same as the current pleading except that four new paragraphs have been added.
Those paragraphs read as follows: "Additional Pleadings 23 July 2024 What is the balance of the debt? 36 In answer to the whole of the claim, the First Defendant pleads: a. The relief claimed by the Plaintiff is discretionary; b. The Plaintiff is required to quantify and itemise the debt that it claims, and the manner of calculation; Particulars Uniform Civil Procedure Rules 2005 regs 14.15(2)(b) & 14.15(2)(d) (vis requirements of pleadings; orders for possession of land) c. [The Borrower] and its assets are now subject to administration or receivership; d. The administrators and/or receivers were appointed by the Plaintiff; e. The court does not presently have evidence of the amounts recovered by the administrators or receivers, and the calculation of interest based on those amounts; f. The circumstances do not permit the Defendants a reasonable opportunity to satisfy the debt or negotiate repayment; and g. The court's discretion to provide the relief sought by the Defendant ought not be exercised until balance of the debt claimed by the Plaintiff and the method of its calculation are provided to the court. Particulars Uniform Civil Procedure Rules 2005 regs 36.15 to 36.17 (Slip Rule, etc) Contracts Review Act 1980 37 In answer to the whole of the claim, the First Defendant additionally pleads the application of the Contracts Review Act 1980 (NSW) and equivalent federal legislation applicable to money lending and financial services. Particulars Uniform Civil Procedure Rules 2005 regs 14.15(3)(c) 38 It is unjust in the circumstances to enforce mortgages made a personal guarantee, for the sale of the guarantor's family home and the Second Defendant's principal place of business. Particulars 1. The Plaintiff has recourse against the debtor company CAMR and against the Defendants in their personal capacities. 2. The Plaintiff is a second mortgagee, and the first mortgagee is not a party to the proceedings. 3. The Defendants' 17 year old child lives at the family home, as do two other adult children. 4. Pleadings and other material provided by the Plaintiffs indicating that from approximately $400,000 advanced, a debt of $2.5 million accrued. 5. The Statement of Claim does not identify whether interest on the principal was charged compounding or simple. 6. It is unclear whether the debt claimed by the Plaintiff has been calculated at 24% p.a. compounded quarterly, or 48% compounded monthly. 7. A proper calculation of the extant debt will permit the parties to negotiate a settlement that does not require the sale of either or both properties. 8. The course of conduct undertaken by the Plaintiffs and articulated in the first crossclaim. 9. To be further particularised. 39 The First Defendant seeks a variation of the relevant land instruments, personal guarantees, and contract(s) between the Plaintiff and [the Borrower] so that that they are not unjust in the circumstances. Particulars 1. The instruments and guarantees are amended so that the Plaintiff many not assert the debts against the Defendant's home or place of business. 2. To be further partiularised [sic]."
No draft Amended Cross-Claim has been served.
When the matter was listed on 23 July 2024, Mr Plumidis appeared for the First Defendant. There was no appearance for the Second Defendant.
Mr Plumidis moved on the Notice of Motion dated 26 June 2024 and sought leave to file the Amended Defence.
Mr Plumidis' measured but tenacious submissions may be summarised as follows: 1. the further material attached to the First Defendant's Affidavit dated 22 July 2024 shows that the First Defendant was "unlikely to have been malingering" when she failed to attend court in May 2024 and there is "a real chance" that better medical evidence will become available that will explain her absence; 2. the changes in solicitor and the problems in obtaining legal advice may have contributed to the First Defendant's failure to comply with the Court's orders since 27 May 2024; 3. the First Defendant accepts that money is owing but she wants the case re-opened so she can cross-examine the Plaintiff's witness about the amount which is owing; she is unable to ascertain the amount owed, particularly because the Plaintiff has appointed receivers to the Borrower who are realising assets in reduction of the amount due; the First Defendant needs an "accurate assessment" of the amount owing so that she can put forward an offer of settlement; 4. it is in the interests of justice that the First Defendant be able to defend the case by relying on the Contracts Review Act 1980 (NSW); 5. it is not clear from the submissions the extent to which the Contracts Review Act will be relied upon; it will be relied upon to challenge the Guarantee from the First Defendant but it may also be relied upon to challenge the amount of the debt; 6. one of the properties is the family home where the Defendants live with their three offspring, the youngest of which is 17; it was asserted that the offspring have standing to oppose the application for possession; 7. the second property secured by the Mortgage is the location of the principal place of business and the First Defendant ought not be deprived of the property because she needs income to repay the debt; and 8. there is no prejudice to the Plaintiff because it is a well-resourced financial firm and it continues to accumulate interest.
For a claim under the Contracts Review Act the First Defendant relies on the case of Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd [2023] NSWSC 1079. In that case a couple granted a guarantee and a mortgage to secure repayment of a short term loan which had been made to their company. The interest rate was 72% once the default had occurred. Under the loan contract unpaid interest was compounded monthly. At first instance, Davies J held that there would be no basis for relief under the Contract Review Act merely because the interest rate was 72% per annum: Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd at [64]-[69]. However, Davies J held that the combination of the high interest rate and the monthly compounding of interest made the contract unjust. At the interest rate charged in the Ledinh case, monthly compounding interest was not reasonably necessary for the protection of the legitimate interests of the lender. Davies J accepted monthly compounding interest may not be unjust at lower rates: Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd at [76]-[77]. However, Davies J rejected the argument that as a result of the unjustness the Court ought to set aside the loan, the guarantee or the mortgage. His Honour permitted the lender to enforce the mortgage. Davies J made an order for possession in favour of the lender and gave judgment for the lender for the amount claimed under the loan, subject to the interest being calculated on a simple basis, not a compound basis. These orders were upheld on an appeal brought by the guarantors/mortgagors: Huynh v Ledinh Sovereign Super Pty Ltd [2024] NSWCA 78.
The Plaintiff opposes the grant of leave to file the Amended Defence, submitting that the proposed amendments are futile. The Plaintiff opposes the hearing being re-opened.
The evidence adduced since 27 May 2024 about the First Defendant's medical condition does not demonstrate a basis to permit the First Defendant to re-open the hearing. In her favour, it may be assumed that the First Defendant suffers from a medical condition which hopefully will be diagnosed in the near future. It may also be assumed that from time to time over recent months the First Defendant has been debilitated by her medical condition.
The evidence upon which the adjournment application was made on 27 May 2024 is set out in the first half of this judgement. The additional evidence adduced in support of the application to re-open the case is also set out above. On the key issue, I am not persuaded by the evidence that the First Defendant was unable to attend court and give evidence on 27 May 2024. The additional evidence attached to the First Defendant's Affidavits dated 26 June 2024 and 22 July 2024 does not take the matter any further than the evidence upon which the adjournment application was rejected on 27 May 2024. It remains the case that there is no evidence from a doctor which addresses the First Defendants ability to attend court on 27 May 2024. Nor is there any reasonable explanation why no such evidence has been obtained, despite the two months which have passed. The "Final Report" from Concord Hospital was printed on 25 May 2024 at 8:41am. This suggests that it existed or was readily obtainable on 27 May 2024. There is no explanation why it was not adduced in evidence in support of the adjournment application on 27 May 2024. In any event, the "Final Report" does not appear to assist the First Defendant's position. It shows that there were reported symptoms and tests, but nothing which required the First Defendant to remain in hospital on 25 May 2024. It is not even obvious from the "Final Report" that the First Defendant was unable to attend court on 24 May 2024.
The "Discharge Summary" from Westmead Hospital reveals that the First Defendant was discharged just before midnight on 26 May 2024. It may be accepted that she was still physically located at the hospital on the morning of 27 May 2024 and there may have been an administrative reason why, but the "Discharge Summary" does not contain evidence that there was a medical reason. Apart from a prescription of aspirin to be purchased over the counter and a future MRI scan, the only action item in the discharge plan was to obtain a follow up appointment at the "Rapid Access Neurology Clinic". Despite a name suggestive of urgency, on 27 May 2024 the Clinic notified the First Defendant that an appointment had been made for her two months in the future (23 July 2024). Evidently there was no urgent or even pressing need for the First Defendant to go to the neurology clinic on 27 May 2024. There was nothing in her condition which necessitated immediate attention.

Application for leave to amend

Ultimately, the question whether the First Defendant ought now to be permitted to re-open the case is to be decided by reference to the real issues in dispute and the just, quick and cheap resolution of those issues. For the purposes of the "just" resolution of the real issues, an important consideration is the substance of the claims made by each of the parties, including the claim which the First Defendant wishes to introduce into the case by amending her Defence.
As set out above, the only relief claimed by the Plaintiff is an order for possession. The evidence is set out above which establishes that the Plaintiff is entitled to an order for possession.
At the trial, the First Defendant accepted that the Plaintiff is entitled to an order for possession, subject only to her establishing a right to set off in a quantum greater than the amount owed to the Plaintiff. However, on the more recent application to re-open her case the First Defendant accepts that money is owed. The purpose of re-opening the case identified by Mr Plumidis is to permit cross examination of the Plaintiff's witness in order to challenge the amount said to be owed. The First Defendant also wants to amend her Defence to challenge the amount owed under the Contracts Review Act. More broadly, the evident purpose of re-opening and amending is to facilitate a settlement negotiation.
The terms of the proposed amendments to the Defence are set out above at paragraph [106]. Section 64 of the Civil Procedure Act relevantly provides: 64 Amendment of documents generally (1) At any stage of proceedings, the court may order - (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings
Section 58 provides: 58 Court to follow dictates of justice (1) In deciding - (a) whether to make any order or direction for the management of proceedings, including - (i) any order for the amendment of a document, and (ii) any order granting an adjournment or stay of proceedings, and (iii) any other order of a procedural nature, and (iv) any direction under Division 2, and (b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. (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.
Whilst I will approach the application for leave to amend having regard to the substance of the amendments, the First Defendant's extended history of failing to comply with the Court's order is not irrelevant: s 58(2)(b)(ii).
Leave to amend ought not to be granted where the proposed amendment is futile in the General Steel sense: Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 at [10-11] (Barrett J).
Having regard to the limited relief claimed by the Plaintiff (an order for possession) the proposed new pleading in paragraph 36 of the draft Amended Defence is futile. Paragraph 36 puts forward a three step argument: 1. the relief sought by the Plaintiff is discretionary (paragraph 36(a)); 2. the First Defendant is unable to determine the quantum of the debt, including by virtue of the failure of the Statement of Claim to comply with UCPR 14.15(d), which deprives the Defendants of a reasonable opportunity to satisfy the debt or negotiate repayment (paragraphs 36(b)-(f)); and 3. for these reasons the Court ought to exercise its discretion not to grant relief (paragraph 36(g)).
As registered mortgagee, the Plaintiff seeks an order for possession following an admitted event of default. The Plaintiff's right to that relief arises under cl 18.3(c) of the Memorandum of Common Provisions and s 60(c) of the Real Property Act 1900. In no relevant sense does the Court have a discretion whether to make an order for possession. In any event, once it is accepted that money is owed to the Plaintiff an order for possession ought to be made upon the Plaintiff pressing for that relief (as it does).
Paragraphs 37-39 of the proposed Amended Defence seek to add a claim under the Contracts Review Act. There is a reference to the "equivalent federal legislation applicable to money lending and financial services" but nothing has been said about that and there is no allegation of any federal statute being contravened. The reference can be put to one side at this late stage.
Section 7 of the Contracts Review Act provides: Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following - (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that - (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order. (3) The operation of this section is subject to the provisions of section 19.
Section 9 provides: Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of - (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following - (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not - (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of - (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act - (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract. (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made. (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.
The allegation in paragraph 38 of the proposed Amended Defence is worded in terms of unjustness arising from the "enforcement" of the Mortgage (and the Guarantee). The focus on enforcement is confirmed by the particulars which are generally directed to conduct since the contracts were entered into. There is no allegation that the terms of the Facility Agreement, the Guarantee or the Mortgage were unjust in the circumstances relating to them when they were entered into in March 2021.
Section 7 of the Contracts Review Act empowers the Court to act where it finds "a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made". Even if all the matters alleged or particularised in paragraph 38 of the proposed Amended Defence are assumed to be true, the Court's power under s 7 is not enlivened.
Further, s 9(2) Contracts Review Act sets out twelve circumstances to which the Court must have regard when considering whether a contract is unjust. None of those twelve circumstances are pleaded or particularised in the proposed Amended Defence. For example, there is no allegation about the procedure by which the contracts were entered into in March 2021. There is no allegation that there was a material inequality of bargaining power, or an inability to negotiate the terms, or a want of physical or mental capacity. Nor is there any allegation about the substantive terms of the contracts, such as the existence of terms which are unreasonably difficult to comply with or are not reasonably necessary to protect the legitimate interests of a party.
The question of unjustness is to be determined having regard to all the circumstances of the case. The circumstances listed in s 9(2) are not an exhaustive list of the circumstances to be taken into account: Amcor Ltd t/as Australian Paper Manufacturers v Watson [2000] NSWCA 21 at [31] (Sheller JA, with whom Meagher and Heydon JJA agreed). However, the specified circumstances are indicative of an inadequacy of one party to protect her or his interests when the contract was entered into, which is at the heart of the concept of unjustness under the Contracts Review Act: Provident Capital Ltd v Papa (2013) 84 NSWLR 231 at 233; [2013] NSWCA 36 at [7] (Allsop P). The absence of any allegation of the kind specified in s 9(2) is an indication that the First Defendant's complaint is not the sort which the Contracts Review Act is intended to address.
This is confirmed when the proposed particulars of paragraph 38 are considered in detail. Apart from the statement that further particulars are to be provided in the future, eight matters are to be relied upon for the allegation that it is unjust to enforce the Guarantee given by the First Defendant. None of the eight matters discloses relevant unjustness for the purposes of s 7 of the Contracts Review Act: 1. The fact that the Plaintiff has alternative rights against the Borrower does not make it unjust for the Plaintiff to seek to enforce its security over the First Defendant's properties, even though the properties are the family home and the principal place of business. Apart from the commercial reality of secured lending, the First Defendant agreed in cl 18.3(c) of the Memorandum of Common Provisions that the Plaintiff could enforce the First Defendant's mortgage before enforcing any other rights or remedies against any other person, and that the Plaintiff could enforce its securities "in any order". In any event it is doubtful that the receivership is a circumstance which existed when the Guarantee was entered into but rather an incidence the enforcement subsequently taken by the receivers; 2. The fact that the Plaintiff is the second mortgagee, and the first mortgagee had not been made a party to the proceedings does not make the enforcement of the Plaintiff's mortgage unjust, let alone the provisions of the Guarantee when it was entered into; 3. The fact that one of the secured properties is the family home in which a 17 year old child and two other offspring reside does not make the enforcement of the Guarantee or the Mortgage unjust. Were it otherwise, all New South Wales home lending would likely cease immediately, a matter to which the Court is to have regard under s 9(1) to the extent that the wider public interest is concerned; 4. The fact that the original loan of $400,000 (not including prepaid interest and fees) which was advanced on 31 March 2021 has now grown to a debt of $2.5 million does not make the Guarantee or the Mortgage unjust. There is no doubt that the interest rate is high and that the default rate is higher, but that does not by itself mean the Facility Agreement, the Guarantee or the Mortgage was unjust when entered into. If it be the case that the specified interest rate in combination with the frequency of compounding was not reasonably necessary for the protection of the legitimate interests of the Plaintiff, there would be a kind of circumstance referred to in s 9(2)(d) of the Contracts Review Act. If pleaded, the Court would have to take that into account. However, whether or not that circumstance would render the Facility Agreement, the Guarantee or the Mortgage unjust would depend upon all the circumstances of the case. In similar circumstances (albeit at a much higher interest rate), the Court found in the Ledinh Sovereign Super case (see above at [111]) that the loan agreement was unjust but not so as to deprive the lender of its entitlement to an order for possession; 5. The fact that the Statement of Claim does not expressly state whether the interest is charged as simple or compound interest does not make any of the contracts unjust within the terms of s 7. The Plaintiff sues on a registered mortgage and a registered memorandum of common provisions which are publicly available documents. In any event, the First Defendant signed the contracts in March 2021. The fact that the Statement of Claim does not plead this particular term does not make it unjust for the Plaintiff now to enforce its right to possession; 6. The same applies to the term as to the higher rate of interest and the lower rate of interest; 7. The fact that the First Defendant now wishes to negotiate a settlement with the Plaintiff does not make enforcement of the right to possession unjust, let alone the provisions of the contracts which were entered into in March 2021; and 8. The First Defendant also relies upon the "course of conduct" by the Plaintiff as articulated in the Cross-Claim, which appears to be a reference to the allegations that caveats were lodged on various properties (not the properties the subject of these proceedings) in which the First Defendant had an interest (sometimes through a company called JC Chamoun Investments Pty Ltd) which caused extra expense and/or loss in transactions involving those properties and those parties. These are the same matters which are relied upon for the Cross-Claim. It is not possible to discern from the proposed amendments how these matters are said to make the Guarantee or the Mortgage unjust for the purposes of s 7 of the Contracts Review Act.
The Contracts Review Act pleading is fatally defective. Had it appeared in the original Defence it would have been liable to be struck out because it does not disclose a reasonable cause of action. It is not simply a question of form which might be cured by more time and redrafting. The focus of the complaint which the First Defendant evidently wishes to make is the great difficulty which the Plaintiff's finance has caused her in the events which have happened. That complaint is not directed to the provisions of the Facility Agreement, the Mortgage or the Guarantee in the circumstances relating to them when they were entered into in March 2021.
The proposed amendment in paragraphs 37 to 39 of the draft Amended Statement of Claim is also futile.
A further reason why leave to amend ought not be granted is that the amendments are too late, especially having regard to their substantive deficiency. The proceedings were commenced in September 2022. The First Defendant had solicitors continuously acting for her when her Defence and Cross-Claim were filed in 2023. There is no explanation as to why the Contracts Review Act claim was not brought forward at that time, or at any other time prior to the trial in May 2024. Nothing was said about a Contracts Review Act claim at the trial. Since the conclusion of the trial, two more months passed before the First Defendant put forward these amendments. It may be accepted that she has struggled with obtaining legal advice, but her current solicitor has been acting since 15 July 2022. It is not submitted that the most recent solicitors require further time to investigate.
There is nothing to suggest that a grant of further time will produce anything of substance in defence of the Plaintiff's claim.
The application to amend is to be dismissed, as is the application to re-open the case.
I have not overlooked the fact that a combination of the First Defendant's current Defence and Cross-Claim raise the constituent elements of the claimed set-off. Some difficulties with the set-off are set out above including the First Defendants promise in cl 3.4 of the registered Memorandum to pay without set off. In the circumstances described above the set off was not pursued at the trial in May 2024. Even without the difficulties and the chronic procedural default, the First Defendant's acceptance that money is owed means that the set-off defence is incapable of disentitling the Plaintiff to an order for possession.
However, the First Defendant (and/or another proper party, as the case may be) should not be shut out from pursuing any of the claims currently made in the Cross-Claim, such as the claim that JC Chamoun Investments Pty Ltd suffered loss or damage by the unlawful lodgement of caveats. In those circumstances, the Cross-Claim is to be dismissed on the basis that the First Defendant (and/or another proper party) is not prevented from bringing fresh proceedings in the future, if so advised: s 91 Civil Procedure Act.

Costs

There is no reason why costs should not follow the event, for the Plaintiff's claim, the Defendants' Cross-Claim and the First Defendant's application to amend and to re-open.
The Plaintiff submitted that the costs of the trial ought to be ordered on an indemnity basis. In support of that submission, three matters were relied upon. First, the failure of the First Defendant ultimately to appear at the hearing and of the Second Defendant ever to appear. Secondly, the less than diligent manner in which the Defendants were said to have conducted the litigation from the outset. Thirdly, the lack of merit in the defence, especially the set off. These matters, whether taken alone or together, do not provide adequate reasons to depart from the usual basis upon which costs are ordered. Without more, it cannot be inferred from the Defendant's failure to appear and the paucity of the pleading that they never intended to defend the case. Further specificity would be required before an indemnity costs order could be based upon the Defendants' overall conduct of the litigation, including details of any costs orders which have already been made. Whilst the Defendants' Defence and Cross-Claim was fairly described by counsel for the Plaintiff as "challenging", without a further hearing it cannot be said that it was so lacking in merit as to warrant an indemnity costs order.
An order for costs does not have a penal purpose but is made solely for the purpose of ensuring that the successful party is indemnified for the costs, or part of the costs, it has incurred: Ohn v Walton (1995) 36 NSWLR 77 at 79 (Gleeson CJ). In this case, the Plaintiff does not appear to be at risk of being left unindemnified. Another element of the Secured Money payable under the Mortgage is "Costs and Expenses", which includes all legal fees "on a full indemnity or solicitor-and-own-client basis, whichever basis yields the higher amount". Of course, the Plaintiff's ability to recover costs under the mortgage is only as good as the Defendants equity in the secured property, but the Plaintiff will be in a no better position under an indemnity costs order.
In those circumstances, I am not persuaded that it is appropriate for the Court to make an order for costs under s 98 of the Civil Procedure Act other than on the usual basis.

Orders

For these reasons, I make the following orders: 1. The First Defendant's Notice of Motion filed on 26 June 2024 be dismissed. 2. Judgment for the Plaintiff for possession of the land described in folio identifier 2/865637 being the land situated at and known as 72-78 Parramatta Road, Croydon NSW 2132 and folio identifier Auto C consol 12585-132 being the land situated at and known as 31 Phillip Street, Cabarita NSW 2137. 3. The Cross-Claim filed on 4 December 2023 be dismissed. 4. The Defendants pay the Plaintiff's costs of the proceedings including the Cross-Claim and the Notice of Motion filed on 26 June 2024.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 July 2024

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