Lending 001 Pty Ltd v Dimarti

Summary judgment

1. It is convenient to deal first with the second defendant, because at the directions hearing on 8 July 2022 the first defendant told me that his defence would be exactly the same as the second defendant's defence.

The second defendant

1. The second defendant filed a defence on 9 March 2022 admitting to the entry into the mortgage but denying that there was default on the basis that monthly payments "have been made and are continuing to be made with respect to the loan". The second defendant pleaded that she received a representation to the effect that the loan could continue at the same interest rates "for at least an additional year" providing that the payments were made. She pleaded that the Consumer Credit (New South Wales) Code applied to the loan, that the plaintiff engaged in predatory practices by imposing or attempting to impose fees to which it was not entitled, claimed relief under the Contracts Review Act 1980 (NSW), and asserted that the plaintiff was in breach of the National Credit Code.
2. At the directions hearing on 2 June 2022 the second defendant sought to file an amended defence. This was because the plaintiff had claimed, quite correctly, that the defence filed contained no particulars of matters which required particularisation. I pointed out to Mr Pope at the directions hearing that it would be necessary for him to set out the particulars he relied on for the Contracts Review Act defence and to identify the provisions of the National Credit Code that he said were applicable.
3. A defence to the amended statement of claim was served but not filed, on 16 June 2022. The defence again pleaded the unparticularised representation concerning the extension of the loan. As particulars of the claim of predatory practices, the relief under the Contracts Review Act, and the breach of the National Credit Code the particulars were said to be these: 8. In support of the assertions made in paragraphs 5, 6 and 7 hereof of the Second Defendant supplies the following particulars and craves leave to consolidate the offending conduct: Particulars a. The Plaintiff's assignor made undertaking to extend the term of the loan provided payments were made and has failed to so extend the loan. b. The Plaintiff and the Plaintiff's assignor failed to supply statements of account when requested to do so and has only supplied account statements after complains were made to the regulator. c. The Plaintiff and the Plaintiff's assignor have made excessive claims to interest, fees and charges in a manner which is harsh and oppressive d. The Plaintiff and the Plaintiff's assignor induced the Defendants to sign documents prepared by the intended to exclude the operation of the National Credit Code, 9. In relation to the predatory lending practices and Contracts Review Act relief of the Plaintiff and the Plaintiff's assignor the Second Defendant supplies the following particulars: Particulars a. The Plaintiff and the Plaintiff's Assignor failed to extend the term of the loan made the Defendants despite promising to do so when the loan was negotiated. b. The Plaintiff and the Plaintiff's assignor have demanded funds in excess of those due to the Plaintiff and the Plaintiff's assignor in a manner which was harsh and oppressive by claiming interest fees and charges in excess of that provided in loan documents. c. The Plaintiff and the Plaintiff's assignor have demanded funds in excess of those due to the Plaintiff and the Plaintiff's assignor and refused until after a complaint was made to the regulator to supply any statement of account to specify the amounts being demanded. d. The interest fees and charges being claimed by the Plaintiff and the Plaintiff's assignor were excessive in all the circumstances. e. The Plaintiff and the Plaintiff's assignor supplied false and misleading information to credit providers to the detriment of the Defendants. f. The interest fees and charges were misdescribed or otherwise misstated in the loan documents in a manner which is contrary to the National Credit Code.
4. At the directions hearing on 26 July 2022 Mr Pope, for the second defendant, sought leave to file a further amended defence which he said would include the particulars that he acknowledged ought to have been included.
5. An amended defence was filed on 3 August 2022. In relation to the pleading concerning the representation the following particulars were included: (a) The representations were made through both oral and written communications with the broker of the loan. (b) The representations were not contradicted in communications between the first (sic) defendant and the plaintiff through either through (sic) the broker or directly.
6. The particulars in relation to the relief claimed under the Contracts Review Act were said to be these: (a) That the plaintiff be limited to recover the amount advanced to the defendant without additional fees, penalties and charges. (b) That the amount due to the plaintiff at repayment of the loan be reduced by the damages and legal costs caused by the plaintiff's harsh and oppressive conduct. (c) That the plaintiff is required to release any security over the property given as security for the loan pleaded by the plaintiff and any other property.
7. The pleading in relation to the National Credit Code was repeated but no particulars in relation to the relevant sections of the Code were provided.
8. Further compendious particulars were provided in relation to the predatory lending practices and the Contracts Review Act relief as follows: a. The Plaintiff and the Plaintiff's Assignor failed to extend the term of the loan made the Defendants despite promising to do so when the loan was negotiated. b. The Plaintiff and the Plaintiff's assignor have demanded funds more than those due to the Plaintiff and the Plaintiff's assignor in a manner which was harsh and oppressive by claiming interest fees and charges more than that provided in loan documents. c. The Plaintiff and the Plaintiff's assignor have demanded funds more than those due to the Plaintiff and the Plaintiff's assignor and refused until after a complaint was made to the regulator to supply any statement of account to specify the amounts being demanded. d. The interest fees and charges being claimed by the Plaintiff and the Plaintiff's assignor were excessive in all the circumstances. e. The Plaintiff and the Plaintiff's assignor supplied false and misleading information to credit providers to the detriment of the Defendants. f. The interest fees and charges were misdescribed or otherwise misstated in the loan documents in a manner which is contrary to the National Credit Code.
9. It may be observed that those particulars are identical with those which were set out in the earlier form of the defence. All of them concern events which post-date entry into the mortgage.
10. The second defendant filed and served no evidence in answer to the plaintiff's evidence in support of the motion. Although not strictly necessary to answer by evidence a motion for summary judgment, when the pleading was as deficient as it was, one might have expected some evidence to demonstrate an arguable defence.
11. At the hearing of the notice of motion I sought assistance from Mr Pope to understand the identification of the maker of the representation referred to, and when and where it was made. I also sought to understand from Mr Pope what acts or omissions on the part of the lender attracted the application of the Contracts Review Act. Finally, I sought to understand from Mr Pope what provisions of the National Credit Code were relied upon. Mr Pope's answer to all of those enquiries was that his instructions did not permit him to go beyond what was set out in the defence.
12. On the face of the particulars provided in relation to the representation, the representation was made by the broker. A mortgage broker is ordinarily the agent of the borrower: Morlend Finance Corporation (Vic) Pty Ltd v Westendorp [1993] 2 VR 284 at 308; Fitzgerald v Watson [2011] NSWSC 736 at [25]; Australia and New Zealand Banking Group Ltd v Bragg (No. 3) [2017] NSWSC 208 at [47]-[51]; Perpetual Trustee Company Limited v Bowie [2015] NSWSC 328 at [38]. There was no evidence to the contrary: cf Michalopoulos v Perpetual Trustees Victoria Limited [2010] NSWSC 1450; but see Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389.
13. The particulars purporting to be relevant to the relief under the Contracts Review Act do not, even by reference to s 9(2) of that Act, identify any acts or omissions on the part of the lender which could attract the application of that Act. The matters said to be particulars in relation to the Contracts Review Act all post-date the entry into the mortgage. There is no identification of how the National Credit Code is said to have been breached.
14. The assertion that the lender supplied false and misleading information to credit providers was unparticularised, contrary to r 15.3 UCPR.

The first defendant

1. The first defendant's defence reads in its entirety: 1. I am not indebted to the Plaintiff. 2. They are a bunch of crooks. 3. The plaintiff has engaged in predatory practices by charging fees to which they are not entitled to. 4. I want to claim relief under the Contracts Review Act. 5. The Plaintiff refused and failed to provide an account statement to the Second Defendant or my broker, Wafa Elmol for the purpose of finalising our loan. 6. The Second Defendant had no option but to lodge an AFCA complaint against the conduct of the Plaintiff as they continually refused to provide an account statement. 7. The Plaintiff has engaged in delaying tactics so that we could not secure a loan to pay them out. They then assigned the debit to Lending 001 so that they could avoid an AFCA investigation and charge excessive fees. 8. Mo Ahmed used the excuse that he could not provide an account statement for Oak Capital as the loan was now with Lending 001. Mr Ahmed is the manager for both companies. 9. The Plaintiff has engaged in deceptive behaviour.
2. The defence suffers from the same substantive problems as the defences of the second defendant. There are assertions of predatory practices and a claim for relief under the Contracts Review Act, but no basis for these has been shown.
3. It is not without significance that Mr Pope informed me at the hearing of the notice of motion that his firm had acted for both the first and second defendants at the time they entered into the mortgage. Even in those circumstances, Mr Pope was not able to identify any matter which would be able to be particularised whether to attract potential relief under the Contracts Review Act or otherwise. That consideration is relevant to the defences of both of the defendants.

Legal principles

1. The principles to be applied to an application for summary judgment are well-known. Any defence would need to be so untenable that it cannot possibly succeed (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129), and an order should be made where it is clear there is no real question to be tried (Fancourt v Mercantile Credits Limited (1983) 154 CLR 87).
2. In O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 Macfarlan JA (Beazley P and Ward JA agreeing) said at [3]: The High Court decision in Spencer v The Commonwealth [2010] HCA 28; 241 CLR 118 was concerned with s 31A(2) of the Federal Court Act 1976 (Cth) but the following principles stated in it are of general application: (a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]). (b) The critical question can be expressed as whether there is more than a "fanciful" prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward (at [54] in the judgment of the plurality). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success (ibid). (c) Powers to summarily terminate proceedings must be exercised with exceptional caution (ibid at [55]; see also French CJ and Gummow J at [24]).
3. In Commercial Banking Co of Sydney Ltd v Pollard [1983] 1 NSWLR 74, the plaintiff sued the defendant for moneys owing under a personal loan made by the plaintiff to the defendants. The defendants filed a defence asserting that the loan was unjust in the circumstances of the time it was made pursuant to the Contracts Review Act. Particulars were provided.
4. Justice Rogers said (at 80): Finally, the plaintiff submitted that even if the Act was otherwise applicable to the contract in question, the defendants have failed to adduce any evidence on the merits to sustain the defence so propounded. However, it seems to me that the decision of the Court of Appeal in Wells v Allott [1904] 2 KB 842 should guide me to the conclusion that it is inappropriate that a defence of the kind here under consideration should be dealt with on an application for summary judgment.
5. Similarly, in Chalak v G & G Mikhael Pty Ltd [2022] NSWCA 116, Basten AJA (with whom Ward P and Simpson AJA agreed) said [50] While the Court is familiar with apparently straightforward possession actions brought by lenders where a borrower is in default being met by defences or cross-claims asserting unconscionable conduct or some other basis for relief from the obligations of the mortgage, it is a rare case in which such proceedings can be disposed of by way of a summary judgment. In substance, the defendant's pleadings in this case, though ineptly drafted, attempted to plead such defences. There was no part of the plaintiff's evidence which established beyond contest that such claims were wholly without merit. Indeed, the plaintiff's case was not to address such claims, but simply to deny that it had been raised.
6. Justice Basten also considered what was required under r 13.1 UCPR and said: [17] The second limb of r 13.1 requires that the plaintiff produce evidence of a belief that the defendant has no defence. Again, the bold statement by the director for the respondent, "I believe the defendant has no defence to the plaintiff's claim and no arguable cross-claim", may satisfy the words of the rule, but does not provide a sufficient basis for summary judgment. [18] An inadequacy in the pleading of a defence or cross-claim should not lead to the plaintiff obtaining summary judgment unless it is clear that there can be no amendment of the defence or cross-claim which could provide a basis to deny the plaintiff relief.
7. It seems to me that the position in the present case is distinguishable from that in Chalak. In the light of what Mr Pope said, that it is clear that no amendment to either of the defences could provide a basis to deny the plaintiff relief. During the hearing, the following exchange occurred: HIS HONOUR: Mr Pope, is this the position, that if I was to strike this defence out but give you further leave to file another defence, you wouldn't be able to do any better? POPE: I would not be able to do better.
8. There is nothing identified in either of the defences to indicate how the Contracts Review Act is engaged in relation to the circumstances of the making of the contract of mortgage. No evidence has been filed by either defendant concerning those circumstances.
9. In relation to the second defendant, Mr Pope accepted that there was no real dispute that the Principal Amount was owed because it had been advanced.
10. The first defendant sought leave after the hearing to lodge a further written submission. Since he was appearing for himself I gave him that leave. The email he sent made it clear that the real issue, from his point of view, was not that an amount was owing to the plaintiff, but that extra fees and charges had been incurred by reason of an asserted failure on the part of the lender and/or the plaintiff to provide an account statement with a payout figure so that the defendants could refinance the loan.
11. It is not necessary to make any findings in relation to those assertions. I note only that he accepted that a payout figure was eventually provided, and that his complaints generally were about matters which had occurred well after the mortgage was entered into. The matters about which he complained were said to have increased what was owed, not to have impugned the mortgage, nor to have cast doubt on the fact that some money was owed to the plaintiff.
12. In Chalak, there was no dispute between the parties that the defendants owed interest at the rate of 7% on the amount borrowed. There was a dispute about whether the interest was payable at a higher rate than 7%. The primary judge gave judgment for possession, gave judgment for the plaintiff in an amount equal to the principal outstanding on the loan together with interest on that amount calculated at 7%, and then directed that there be a hearing as to the proper calculation of interest.
13. The Court of Appeal upheld the appeal by the borrowers with Basten AJA saying: [10] Further, there is an anomaly in granting summary judgment for an amount which includes an amount by way of interest, and at the same time providing for a trial as to the proper calculation of interest. Although the primary judge found that interest was payable and that the amount was no less than that awarded, it is unusual to treat a summary judgment as a means of providing an interim payment in circumstances where the plaintiff does not abandon its right to a larger amount. … [52] Finally, and apart from the relevance of the interest payable to the defences, there should not have been judgment for interest in a specific amount while the plaintiff was permitted to pursue a claim for a higher amount based on a different calculation.
14. In the present case, as I have indicated above, the real contest between the parties is the amount owing to the plaintiff by reason of the alleged failure on the part of the lender and/or the plaintiff to provide a payout figure, which, in turn, led to further interest charges and fees payable. In a case where the plaintiff seeks only a judgment for possession of the land, and not judgment for any amount outstanding, I do not consider that what was said in Chalak has application to the present case. It is not inappropriate in the circumstances to give summary judgment for possession of the land whilst reserving the parties' rights to an accounting of the precise amount owing. Although in Chalak, the judgment for possession of the land was also set aside, that was because one of the issues raised by the defence was the enforceability of the mortgage: Chalak at [44]-[46]. For the reasons I have given, there is no issue in the present case raised by the defences as to the enforceability of the mortgage.
15. I am satisfied from the affidavit of Mohamud Ahmed affirmed 12 August 2022 that there has been default under the mortgage, in that the Principal Amount was not repaid on 8 December 2021 or at all. Such failure entitles the plaintiff to exercise its rights including the right to obtain possession of the land under cl 18.3 of the Memorandum.
16. In those circumstances, the plaintiff is entitled to summary judgment for possession of the land.

Strike-out of defences

1. If I am wrong in relation to summary judgment, it is necessary to consider the alternative relief sought by the plaintiff, namely, that the defences be struck out pursuant to r 14.28 of the UCPR.

The second defendant

1. For the reasons I have given earlier, the amended defence is entirely deficient in its pleading and in the provision of particulars to demonstrate any substantive defence.
2. In the circumstances where the second defendant, legally represented, has filed or served three defences which are deficient in identifying any substantive defence to the claim, where there is no evidence from the second defendant of the allegations made in the defences, and in the circumstances where the second defendant's solicitor said that any further defence would not be able to take the matters beyond what was contained in the latest form of the defence filed 3 August 2022, it is appropriate to strike that defence out and not give leave to the second defendant to file any further defence. That would entitle the plaintiff to obtain default judgment.

First defendant

1. Only two of the paragraphs in the first defendant's defence are capable, on their face, of amounting to a defence. The first is paragraph 4 which says, "I want to claim relief under the Contracts Review Act". No material facts are pleaded which enable it to be seen if the Contracts Review Act is engaged. The first defendant said that his defence was to be exactly the same as that of the second defendant. The second defendant has not, and cannot, provide particulars to demonstrate how the Contracts Review Act is engaged.
2. The second paragraph is para 9 which reads, "the Plaintiff has engaged in deceptive behaviour". Again, no material facts are pleaded, nor are particulars provided. It is apparent, in any event, that this complaint is very likely to relate to the first defendant's main complaint, that there was a failure by the lender and/or the plaintiff to provide an account statement.
3. All of the other matters set out in the defence concern matters which occurred after the entry into the mortgage. They are incapable of impugning the mortgage and the plaintiff's right to exercise rights under the mortgage, because they do not amount to an equitable set off: Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th Edition 2014 Lexis Nexis); Commonwealth Bank of Australia v MLD Financial Services & Management Pty Ltd [2015] NSWSC 1476 at [32] to [37]
4. This defence should be struck out. The only question is whether the first defendant should be given a further opportunity to plead a proper defence to the claim.
5. From what the first defendant has told me at the hearing of the notice of motion, in his submission emailed subsequently, and at earlier directions hearings, the real source of his complaint, as I have said earlier, is that there was an asserted failure on the part of the lender, and thereafter the plaintiff, to provide a payout figure so that the loan could be refinanced. There seems to me to be two answers to that. First, a s 57(2)(b) notice was served. Secondly, as the defendants now accept, the present plaintiff served a document containing the payout figure after the first defendant had made a complaint to the Australian Financial Complaints Authority.
6. In any event, any failure to provide such a payout figure is only a matter which might result in an adjustment of what is owed by the defendants to the plaintiff in any accounting between the parties. At the present time the evidence shows that the Principal Amount together with interest is due and owing to the plaintiff. I do not consider that any purpose would be served by giving a further opportunity for another defence to be filed. It would not be consistent with ss 56 and 58 of the Civil Procedure Act 2005 (NSW).

Conclusion

1. Accordingly, I make the following orders: 1. 1. Judgment for the plaintiff for possession of the land comprised in folio identifier 120/10707 being the land situated at and known as 43 Monterey St, Monterey NSW 2217. 2. 2. The defendants are to pay the plaintiff's costs.

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: 29 August 2022