Jambrecina v Pyramid Building Society

Supreme Court of NSW|2001-03-05|Before: Lee J

CITATION : Jambrecina v Pyramid Building Society (In Liq) & Anor [2001] NSWSC 175 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 20522/2000 HEARING DATE(S) : 5 March 2001 JUDGMENT DATE : 21 March 2001

Drago Jambrecina (Plaintiff)

PARTIES : Pyramid Building Society (In Liq) (First Defendant)

Mr S T White with COUNSEL : Ms N O'brast (Defendants) Mr D Jambrecina (Plaintiff in person) SOLICITORS : Clayton Utz (Defendants) CATCHWORDS : Summary judgment - leave to proceed against a company in liquidation Corporations Law LEGISLATION CITED : Supreme Court Rules Limitation Act 1969 Associated Securities Finance v Harrow Properties Pty Limited (NSWSC, Lee J 26 May 1977, unreported) Henderson v Henderson [1843-69] All ER 378 Port Melbourne Authority v Ashun Pty Limited (1981) 147 CLR 589 Jones v Insole (1981) 64 LT 703 CASES CITED : Re Page [1910] 1 Ch 489 Hall v The nominal Defendant (1967-68) 117 CLR 423 Hunt v Allied Bakeries Ltd [1956] 1 WLR 1326 Re South American & Mexican Co Export Bank of England [1895] 1 Ch 37 Dinch v Dinch [1987] 1 WLR 252 Bryant v Commonwealth Bank (1994) 123 ALR 642 DECISION : (1) The plaintiff's statement of claim filed 31 October 2000 is dimissed (2) The plaintiff's notice of motion filed 28 September 2000 is dismissed (3) The plaintiff is to pay the defendants' costs of the motions and of the proceedings

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20522/2000 - DRAGO JAMBRECINA v PYRAMID BUILDING SOCIETY (IN LIQ) & ANOR

JUDGMENT (Summary judgment; leave to proceed against a company in liquidation)

1 MASTER: By notice of motion filed 28 September 2000 the plaintiff seeks an order for leave to proceed against a company in liquidation pursuant to the s 471B Corporations Law. The plaintiff relied on his affidavit sworn 31 October 2000. If the plaintiff's claim is not dismissed, then the defendants have no objection to leave being granted. Thus the outcome of the plaintiff's motion depends on the fate of the defendants' motion. 2 By notice of motion filed 16 October 2000 the defendants seek an order pursuant to Part 13 r 5(1)(a) and (c) of the Supreme Court Rules that proceedings be stayed or dismissed or alternatively an order pursuant to Part 15 r 26(1)(a), (b) and (c) of the Supreme Court Rules that the statement of claim be struck out. The first defendant is Pyramid Building Society (in Liq) (PBS). The second defendant is Farrow Mortgage Services (in Liq) (FMS). The defendants relied on the affidavit of Brigitte Sandra Markovic sworn 31 October 2000. 3 I shall firstly deal with the defendants' motion to dismiss the proceedings.

The 1992 proceedings 4 By statement of claim filed 31 October 2000 the plaintiff complains about the outcome of the 1992 proceedings in this court whereby consent orders for possession of various properties in Queanbeyan were made. In 1992 the plaintiff was declared bankrupt. The period of bankruptcy commenced on 21 August 1992 and expired in September 1995. It is common ground that last year the trustee in bankruptcy assigned the legal right to these causes of action to the plaintiff. 5 On 17 September 1987 the plaintiff gave a mortgage to Combined Mortgage Services Pty Limited over a number of properties. It secured a loan in the sum of $458,800. The loan was for interest only and for five years. The principal was repayable on 17 September 1992. Combined Mortgage Services Pty Limited subsequently changed its name to Farrow Mortgage Services Pty Limited (FMS) and later assigned the benefit of the mortgage to PBS. From PBS the mortgage was assigned to Perpetual Trustees and back to PBS. The plaintiff has no knowledge of these assignments. 6 In about December 1990 default was made under the mortgage. The first defendant by summons brought proceedings 10647/1992 seeking the possession of certain properties. The proceedings were brought against both the plaintiff in these proceedings and his wife. All parties swore and filed affidavits. These proceedings settled and short minutes of order were prepared on 17 December 1992. On 2 March 1993 judgment was entered in favour of the defendants. The defendants were granted possession to various properties in Queanbeyan.

The law in relation to summary judgment 7 Part 13 r 5 says: "(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings - (a) no reasonable cause of action is disclosed;

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings." 8 In paragraph 11 of the statement of claim the plaintiff pleads that a condition to discharge the mortgage, namely that the full proceeds of the sale was to be retained by the defendants, was of a criminal nature because the letter of consent for the discharge of security was misleading and extortionist. For pleadings of this nature due to the decision in Associated Securities Finance v Harrow Properties Pty Limited (NSWSC, Lee J 26 May 1977, unreported) the plaintiff cannot rely on Part 13 r 5. However the plaintiff can rely on Part 15 r 26. 9 Part 15 r 26 provides: "(1) Where a pleading - (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or

(c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleadings be struck out. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1)." 10 The defendants submitted that these proceedings disclose no reasonable cause of action, have a tendency to cause prejudice, embarrassment or delay in the proceedings and are an abuse of process of the court. Additionally, the defendants submitted that the statement of claim is res judicata and subject to issue estoppel. 11 There has been a long and involved history of litigation. In the 1992 proceedings the plaintiff and his wife filed affidavits. The issues they raised in their defence/cross claim were firstly, that Pyramid charged higher rates of interest than it was entitled (para 8 of the plaintiff's affidavit sworn 30 March 1992); secondly, that the proceeds of sale of certain properties were applied to reduce the principal rather than reducing arrears of interest (paras 13, 17, 19, 20 and 21 of the plaintiff's affidavit sworn 30 march 1992); and thirdly, that there were delays in settlement of certain properties due to Pyramid failing to supply a certificate of title within a specified time (paras 15, 19 and 21 of the plaintiff's affidavit sworn 30 March 1992). The plaintiff alleges that the second defendant evicted the tenants of the properties months before the sale of the properties occurred which resulted in the properties being vandalised. This meant that the properties did not have doors and windows and had lost 30% of their value. Hence they were sold at undervalue. 12 In 1999, the plaintiff filed a statement of claim (No 20101/99). In paragraph 3 of the statement of claim the plaintiff identified three properties, namely 7 Ellendon Street, 9 Crawford Street and 49 Derrima Road (being the properties the subject of his affidavit filed in the 1992 proceedings) and certain causes of action are alleged. 13 In relation to the 7 Ellendon Street property the plaintiff asserted the following:

"(a) on 2 November 1990 the plaintiff exchanged contracts for the sale of that property; (b) settlement of the property was due for 7 December 1990; (c) due to delay on the part of Pyramid completion did not take place until 19 April 1991; (d) the defendants breached the terms of the loan agreement." 14 In relation to the property at 79 Crawford Street the plaintiff asserted the following: "(a) on 11 April 1991 the plaintiff exchanged contract for the sale of that property; (b) there was delay in settlement due to the defendants; (c) the transaction settled on 3 October 1991; (d) the defendants breached the terms of the loan agreement." 15 In relation to 49 Derrima Road, the plaintiff asserted the following: '(a) on 9 November 1991 the plaintiff exchanged contracts for the sale of that property; (b) completion took place on 5 February 1992; (c) the defendants breached the terms of the loan agreement."

16 The defendants successfully applied to have the statement of claim struck out on 29 July 1999. Master Malpass struck out the statement of claim as being deficient but gave the plaintiff the opportunity to file an amended statement of claim. The defendant then applied to have the amended statement of claim struck out. On 15 December 1999 Master Malpass made orders striking out the statement of claim with no leave granted to replead the statement of claim. 17 On 28 January 2000 the plaintiff filed a notice of appeal from the judgment of Master Malpass. The appeal was heard on 29 February 2000 by James J who dismissed the appeal. A notice of appeal to the Court of Appeal from the decision of James J was subsequently discontinued by the plaintiff. In his judgment of 29 February 2000 James J at para 11 stated: "The deficiencies in the amended statement of claim are many and serious and I do not consider that I should give leave to the applicant to file yet another statement of claim. I have accordingly decided I should dismiss the plaintiff's appeal against the decision of Master Malpass on 15 December 1999." 18 In particular James J stated at page 4: "It seems to me that the Master was clearly right in finding that the pleading of the amended statement of claim was so defective as to require the conclusion that the entire pleading should be struck out. The Master referred to various defects in the pleading in paragraphs 6 to 10 inclusive of his judgment and I would adopt what the Master said in those paragraphs of his judgment. In those paragraphs of his judgment the Master referred to the requirements of part 15 rule 6 and part 15 rule 7 of the Supreme Court rules. Without endeavouring to deal exhaustively with the defects of the pleading, I would mention that the plaintiff' wife, who was a co-mortgagee, has not been joined as a plaintiff; the mortgage, which is the foundation of the plaintiff's claim, is not properly pleaded in the amended statement of claim; allegations are made indiscriminately against the two defendants, although, as I have pointed out, one of the defendants was the original mortgagee and the other defendant was an assignee from the original mortgagee. The particular provisions of the mortgage relied on are not properly identified. The conduct of the defendants, which is sought to be relied on, is not properly specified. The fourth paragraph in the amended statement of claim which is in fact numbered 3, continued over three pages of the document. This paragraph contained numerous matters of evidence or of comment which should not have been included in the pleading. …" 19 These deficiencies identified by James J have not been rectified in the current statement of claim and on that basis alone the current statement of claim should be dismissed.

Limitation Act 20 Clearly the acts that the plaintiff complains of that give rise to causes of action occurred in 1992. They, in the normal course, would be statute barred. However the plaintiff has sought to overcome these difficulties by relying on s 52 of the Limitation Act 1969 and submitting that he was under a legal disability, namely bankruptcy. 21 Section 52 states: "(1) Subject to subsections (2) and (3) and subject to section 53, where (a) a person has a cause of action;

(b) the limitation period fixed by this Act for the cause of action has commenced to run; and

(c) the person is under a disability, in that case: (d) the running of the limitation period is suspended for the duration of the disability; and

(e) if, but for this paragraph, the limitation period is extended so as to expire three years after the earlier of those dates.

(2) This section apples whenever a person is under a disability, whether or not he is under the same o another disability at any time during the limitation period."

22 The plaintiff relied on a passage from a text (author unidentified but copy of the passage was tendered to the court) to support his view that disability does not solely relate to that of infancy and that of unsound mind. However, it is my view that during the period of bankruptcy either the trustee could have pursued the proceedings or the plaintiff could have assigned the right. Neither of these events occurred. In these circumstances time would not stop running. As legal action could have been taken by either the plaintiff or a person standing in the plaintiff's shoes, it cannot be said that the plaintiff was under a legal disability referred to in s 52. Section 52 is not applicable. The claims as pleaded are statute barred and should be dismissed on this basis.

Issue estoppel and res judicata 23 The defendant referred me to Henderson v Henderson [1843-60] All ER 378, Wigram VC said at p 382: "I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication that litigation to bring forward their whole case and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The pleas of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." 24 A more often quoted case on the topics of res judicata and issue estoppel is that of the High Court in Port Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589, where Gibbs CJ, Mason and Aickin JJ said: "The distinction between res judicata (in England called 'cause of action estoppel') and issue estoppel was expressed by Dixon J in Blair v Curran (20) in these terms: "in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.' The distinction was restated by Fullagar J in his dissenting judgment in Jackson v Goldsmith (21). His Honour expressed the rule as to res judicata by saying: 'where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This rule is not, to my mind, correctly classified under the heading of estoppel at all. It is a broad rule of public policy based on the principles expressed in the maxims "interest reipublicae ut sit finis litium" and "nemo debet bis vexari pro eadem causa".' His Honour went on to discuss issue estoppel, citing the comment of Dixon J in Blair v Curran (22 ): 'A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies.'

… The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding." 25 The question is whether the causes of action claimed by the plaintiff have already passed into judgment in 10642/92 and 20101/99 so as to lose their independent existence. 26 20101/99 was dismissed summarily. However, 10642/92 was determined on the basis of consent orders for judgment. Neither proceedings have been determined by a trial on its merits. There is some doubt as to whether the doctrine of res judicata applies to proceedings that have been dismissed summarily. The text entitled Res Judicata, Handley JA (3rd ed Butterworths 1996) expressed the view that some decisions which are final for appeal are not final for res judicata and strange as it may seem some decisions which are interlocutory for purposes of appeal are final for res judicata. The court has taken the view that striking out a plaintiff's statement of claim on the basis that it disclosed no reasonable cause of action or is frivolous or vexatious is an interlocutory order - see Jones v Insole (1981) 64 LT 703 and in re Page [1910] 1 Ch 489. 'Interlocutory order' means an order other than a final judgment - see Hall v The Nominal Defendant, (1967-68) 117 CLR 423 at 440. In Hunt v Allied Bakeries Ltd [1956] 1 WLR 1326, Lord Evershed of the English Court of Appeal said that he "was left in no doubt at all, that rightly or wrongly, orders dismissing actions - either because they are frivolous or vexatious, or on the ground of no reasonable cause of action - have for a very long time treated as interlocutory." There is doubt whether the doctrine of res judicata applies to interlocutory decisions. It is arguable that the summary dismissals in 20101/99 are interlocutory decisions and they do not give rise to res judicata or issue estoppel. 27 10642/92 was finalised on the basis of consent orders being entered. However the same authors take a different view that a judgment or order by consent of the parties may be res judicata (see Spencer, Bower, Turner and Handley, Res Judicata 3rd ed para 38). At para 39 the learned authors stated: "Though consent judgments and orders are decision and their operative parts binding, it may not be clear that questions were concluded. The Court will examine the available evidence to ascertain the matters in dispute. Any issue which the parties recognise was the subject of the litigation and was fundamental to the judgment or order will be conclusively determined …" 28 The authority cited in support of the learned authors proposition was Re South American & Mexican Co Export Bank of England [1895] 1 Ch 37 at 50 where Lord Herschell LC stated: "… A judgment by consent is intended to put a stop to litigation between the parties, just as much as is a judgment which results from the decision of the Court after the matter has been fought to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments and were to allow questions there were really involved in the action to be fought over again in the subsequent action." 29 Re South American and Mexican was applied more recently in Dinch v Dinch [1987] 1 WLR 252 at 263. 30 In the 1992 proceedings the plaintiff asserted that the first defendant was not entitled to possession of the subject properties because it had breached certain contractual terms of the loan agreement which had the consequence that there was no default on the part of the present plaintiff and his wife thereby disentitling the first defendant to possession. As previously stated, on 17 December 1992 by consent the parties filed short minutes of order which had the consequence that judgment was given in favour of the first defendant in respect of the relief sought in the summons, namely, possession of the same properties identified in this statement of claim. 31 The 1992 proceedings in substance, if not in form. correlate closely to those pleaded in the current statement of claim. Insofar as there is any difference, the important point is that the matters could have been raised in the 1992 proceedings and should have been raised there prior to the plaintiff going into bankruptcy. Furthermore, if judgment was entered in favour of the plaintiff on the present claim it would have the effect of varying the rights of the parties under the mortgage. Thus there would be two conflicting judgments in this court and these judgments would declare inconsistent rights in respect of the same document (see Bryant v Commonwealth Bank (1994) 123 ALR 642 at 648-650). It is my view that the causes of action pleaded on the current statement of claim are res judicata.

32 In summary, the main reasons the plaintiff's current statement of claim should be dismissed is because he did not seek to address the deficiencies identified by James J in the drafting of this statement of claim. Additionally, as the claim is currently pleaded it is statute barred and subject to res judicata. 33 In relation as to whether leave should be granted to replead, I decline to do so because firstly, the issues sought to be ventilated should have and could have been agitated in the 1992 proceedings; secondly, the issues were raised in the 1999 proceedings both in the statement of claim and the amended statement of claim; thirdly, the statement of claim and the amended statement of claim in the 1999 proceedings were struck out and no leave was granted to replead after having been the subject of deliberations by Master Malpass (on two occasions) and James J on appeal; fourthly, the plaintiff discontinued his notice of appeal from the decision of James J; fifthly, the plaintiff has given no explanation why he should be permitted to commence proceedings which raise the same issues in earlier proceedings which have been struck out with no leave granted to replead; and sixthly, the defendants have incurred legal costs and should not be obliged to incur further legal costs. 34 The orders I make are:

(1) The plaintiff's statement of claim filed 31 October 2000 is dismissed.

(2) The plaintiff's notice of motion filed 28 September 2000 is dismissed.

(3) The plaintiff is to pay the defendants' costs of the motions and of the proceedings. **********

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