Idik v Huseyin

Judgment 1HIS HONOUR: This is an application pursuant to UCPR 49.19 seeking review of a decision by the Registrar on 22 February 2012 by which he set aside a default judgment for possession of land and let the defendant in to defend. 2There was not available for the hearing any transcript of the proceedings before the Registrar nor of his reasons for decision. There are some handwritten notes in the court file. As the application is not an appeal in any strict sense and there is a broad discretion as to the procedure to be adopted, it is recorded that the following material was treated as an evidential basis for the application: a) The pleadings, including the defence filed pursuant to the Registrar's order, b) Affidavits of the first defendant (Ayshen Huseyin) of 28 October 2011 and 29 November 2011 with respective annexures, c) Affidavit of Ilkay Salih Yusuf of 29 November 2011, d) Mortgage and loan agreement dated 3 July 2009 3The second defendant (Layka Lambali) was the sister of the first defendant. She is now deceased. 4In September 2008 Ms Lambali presented a form of Power of Attorney purportedly signed by the first defendant to Mr Yusuf who was a Justice of the Peace. He witnessed the signature of the first defendant as he claimed that he recognised it as hers. He neither saw nor spoke to Ms Huseyin who was at the time in Cyprus. According to movement records of the Department of Immigration, she departed Australia on 9 July 2006 and re-entered on 13 February 2010. 5The Power of Attorney was registered on 12 September 2008. 6Ms Huseyin is the registered proprietor of land known as Unit 29 195 Prospect Highway Seven Hills. 7There is some discrepancy of date between the statement of claim alleging the loan contract and mortgage dated 22 July 2009 and the exhibited documents which bear date 3 July 2009. However, irrespective of which if either is accurate, Ms Huseyin was neither a participant nor, as asserted in her affidavit, aware of any such transaction. In whatever circumstances it came into being, the only apparent participants were the plaintiff Ms Idik and Ms Lambali to the exclusion of Ms Huseyin. As the only survivor of those two who were engaged, Ms Idik would appear to be the only likely source of information about the circumstances although perhaps any lawyers who were involved in preparing the documentation might be able to cast some light on them. There is, of course, no such information before the Court in this application. 8The foregoing would, in an ordinary case, be deemed irrelevant but this transaction had extraordinary features. 9Purporting to act as her sister's attorney, Ms Lambali obtained $50,000 and gave her sister's property as security for the loan which was to be only of one month's duration and to be repaid at the expiry of that month with a "premium" of $30,000, that is a total repayment of $80,000. Converted to an annual rate of interest, this so called premium amounts to a rate over 700 percent. 10In default of the payment of $80,000 one month after the loan was made, interest on any unpaid amount was to accrue at 10 percent per month or 120 percent per annum. 11In the absence of any explanation, the agreement manifests as gross usury on the part of the lender and I reiterate my comment to counsel that it may be conceivable that the time may come when the court will decline to exercise its jurisdiction in support of a claim based upon seemingly reprehensible behaviour. However, any such contemplation could only be appropriate if there was a full knowledge of the circumstances and it would not be appropriate in interlocutory proceedings such as those at present to take such a course. 12The statement of claim was issued on 12 August 2010 nominating Ms Huseyin and Ms Lambali as first and second defendants respectively. It was served on Ms Huseyin on 11 February 2011. The statement of claim sought possession of the mortgaged land and money due on the loan agreement together with accrued and accruing interest. Default judgment was entered on 25 March 2011 for possession of land only. Curiously the description of the defendants by number is reversed in the minute of judgment but its terms are that Ms Huseyin second defendant (sic) give possession of the land to the plaintiff. 13Thus the time for filing defence expired some 15 days before default judgment was signed. Prior to the expiry of that time, Ms Huseyin had consulted a solicitor who, so far as the material shows, simply obtained copies of the documentation now relied upon by the plaintiff. In April she consulted new solicitors who advised the plaintiff's solicitors in May that it was intended to seek to set aside the default judgment. However, again according to Department of Immigration records, Ms Huseyin left Australia on 21 May 2011 and returned on 24 September 2011. 14I interpolate that Ms Lambali died on 17 January 2011 prior to the service of the statement of claim on Ms Huseyin and she was therefore unable to ascertain from her anything about what she had done or what were the circumstances in which the loan was negotiated. Ms Huseyin neither received the $50,000 nor, until sued, knew anything about it. 15It appears that Ms Huseyin's extended absence overseas is connected with need for care of her mother. She was not challenged on her deposition that upon return to Australia she also needed to care for a very ill relative here. Although she was able to sign a document brought to her from Australia, I accept that communication was less than ideal. Indeed, I observe that the first (unfiled) defence signed in Nicosia admitted granting Power of Attorney and I deduce from the overall documentation that this was likely to be have been derived from a misunderstanding of the solicitors who would have had instructions that Ms Huseyin had in fact given a Power of Attorney to her sister, but this was in 2006 and it might not have then been appreciated that what was relied upon by the plaintiff was a second purported Power of Attorney which was the one that Ms Lambali had presented to Mr Yusuf for witnessing. 16In any event, what Ms Huseyin asserted as to apparent forgery was clearly pleaded in the defence filed on 24 February 2012 in accordance with the leave granted by the Registrar. 17I am satisfied that delay has been sufficiently explained and should not operate to deny Ms Huseyin the relief which she sought. 18As I understood the principal thrust of the plaintiff's arguments they ran along these lines. The registration of the mortgage gave the plaintiff indefeasible title pursuant to s 42 of the Real Property Act and in answer to any question of "indefeasibility for what?" (Small v Tomassetti [2001] NSWSC 1112) there was pointed to, the terms of this particular mortgage which incorporated the terms of the loan agreement. In any event, to justify the setting aside of the default judgment it needed to be found that there was a triable issue and, it was submitted, such a finding was not open. To the extent that Ms Huseyin sought to rely on the Contracts Review Act 1980, the defence would inevitably fail because it is her pleaded case that she never entered a contract with the plaintiff at all: Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319; Perpetual Trustees Victoria Ltd v Cipri [2008] NSWSC 1128. See also GE Personal Finance Pty Ltd v Liddy [2008] ACTSC 126 where a spouse had forged her husband's signature on a Power of Attorney while he was overseas on active service in the Army. 19To the extent that Ms Huseyin seeks to rely upon the mortgage and loan agreement being unconscionable or unjust, it would be necessary to show that the plaintiff was responsible for or had knowledge of any unconscionability or fraudulent conduct: Frazis. 20I am, of course, not privy to what investigations have been undertaken on behalf of Ms Huseyin and I recognise that her solicitor stated that it was not alleged that the plaintiff knew of the fraud (by Ms Lambali), however in a transaction which has more than a taint of fraud, it might be expected that steps would be taken to establish just what were the circumstances in which a person gave $50,000 to another person, the latter purporting to act for someone could not have been present at a premium of $30,000 for use of that money for a month (or less than a month, if the dates in the statement of claim are correct). 21If it were thought that prudence might perhaps dictate application for administration of interrogatories to the plaintiff that can hardly be undertaken if the judgment stands. 22The gravamen of the plaintiff's case is that setting aside the judgment would be futile because there is no triable issue. 23In response to the submissions of the plaintiff, Ms Cooper the solicitor for the first defendant relied upon written submissions which had been prepared by counsel and put before the Registrar. It does not appear that the author of those submissions became alert to the problem that, if the contention that Ms Lambali acted without authority and Ms Huseyin was entirely uninvolved in the transaction was upheld, there was no contract between Ms Huseyin and the plaintiff. No reference was made to the cases above cited nor to any similar authority. 24However Ms Cooper submitted that her client was not excluded from potential relief made available by the statute or principles as to unconscionability or unjustness because on one view, there was a contract between the plaintiff and a registered holder of a Power of Attorney which was good on the face of it. In any event, she submitted that the authorities relied upon by the plaintiff were distinguishable in that what occurred in this instance was entirely different from and in contrast to the facts of all those cases. To the extent that distinction may be argued on that basis there would be apparent difficulty in distinguishing the facts of Liddy but the proposition was advanced in general terms rather than against individual instances. 25It was also contended that the plaintiff could have no interest in the land because the mortgage secured nothing. This proposition was not greatly elaborated but I infer that it was desired to make use of some of the remarks (and I make no observation as to context) such as, for example, made by Giles J (as his Honour then was) in PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643. Ms Cooper contended that, as Ms Huseyin was defined in the mortgage document as the borrower, but did not receive the funds advanced, she did not become obliged to repay what she had never received. 26When dealing with a concept such as triability I would approach it on the basis that I should not assess the positive prospects of success of any contention but, where it can be determined in the negative, that is that there are no prospects of success, a triable issue would not exist. 27As I have pointed out, the terms of the particular transaction as to "premium", interest and minimal length of loan are such as to cause considerable discomfort when enforcement is sought. I repeat that no explanation has been forthcoming as to how this extraordinary agreement came about. No reference was given to any case of similar dimensions. 28Whilst it would be less than candid of me not to record that I have reservations about what is being advanced on behalf of Ms Huseyin, setting aside the Registrar's ruling would terminate her opportunity to contest the claim. What has occurred has been a loan at astronomical rates of interest but not an unsecured loan, indeed given the amount loan it is likely to represent only a small proportion of the value of any residential property. Counsel for the plaintiff stressed that judgment had been signed for possession of land only but nothing was said about the plaintiff's future intentions, in particular if Power of Sale were exercised. 29Speaking in an entirely different context Allsop ACJ reminded that the task of the court is to render individual justice Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230. 30Justice in this instance cannot be achieved unless there is a proper examination of the transaction and a revelation of just how its extraordinary terms came into being and the opportunity for this would be extinguished if the present motion were to succeed. The ultimate outcome cannot be predicted without this knowledge. It follows that there are issues which need to be tried and determined. 31The motion is dismissed with costs.