Practice and procedure - Summary judgment - Alleged fraud - No default

Bank Gemeinwirtschaft v London Garages [1971] 1 WLR 149

Gillon v Kyle, unreported; FCt SCt of WA; Library No 9123; 16 October 1991

Jacobs v Booths Distillery Company (1901) 85 LT 262

Miles v Bull [1969] 1 QB 258

Parkville Court Pty Ltd v Salvaris [1975] VR 363

Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

White v Johnston (1886) 8 ALT 53

1 ACTING MASTER CHAPMAN: At the commencement of the special appointment counsel for the plaintiff took objection to some of the evidence the defendants wished to rely upon. The first objection related to the affidavits of the defendants, sworn 1 November 1999 and filed in Homestyle Pty Ltd v Munyard & Anor CIV 1927 of 1999. It is said by the plaintiff that the material contained within these affidavits is not relevant as it does not touch upon the matter between the parties. It is further said as a matter of law it cannot be relied upon as the plaintiff is not a party in CIV 1927 of 1999. The plaintiff relied upon the decision of Printing Telegraph and Construction Company of the Agence Havas, Limited v Drucker [1894] 2 QB 801 at 803 - 804.

2 Counsel for the defendants argued that he was surprised by the objection to the affidavits and sought an adjournment. I considered the appropriate way to deal with the matter was to hear the special appointment but to allow the defendants to file supplementary submissions within seven days, a time which counsel for the defendants agreed would be sufficient. In fact, the submissions were not filed until 19 May and that was only after an enquiry by my Associate as to whether or not any supplementary submissions would be forthcoming. That position is hardly satisfactory.

3 Counsel for the defendants contends that the affidavit of Ms Munyard is relevant as it is submitted it touches upon the allegations of fraud in relation to the obtaining of the loan which fraud the plaintiff may have been a party to. It was argued that it would be against public policy if the defendants could not rely upon an affidavit filed in another matter where there is a serious issue that requires judicial scrutiny. It is said I should have an unfettered discretion to look at all the facts.

4 It is my view that the information contained in the two affidavits can be relied upon. The contents of those affidavits have been adopted by the defendants as deposed to by Ms Hutchinson in par 4 of her affidavit sworn in this matter on 7 March 2000. The evidence has been included in this action through the affidavit of Ms Hutchinson. The normal course may have been to include the affidavits as annexures to her affidavit, but I do not consider the way the evidence has been included should exclude it from being considered.

5 Further, I do consider the affidavits may contain information which is relevant to this application given the allegation of fraud. Indeed, the plaintiff referred to the contents of one affidavit during argument.

6 The next objection related to par 11 of the affidavit sworn by Denise Sandra Hutchinson on 7 March 2000. The objection is on the basis that there is no evidence in the paragraph, rather it is a bald assertion not supported by any credible or admissible evidence. I agree with the objection. No details of the allegations are given, nor whom it is said gave the advice. The source and grounds have not been deposed to, nor has any belief.

7 The main issue upon which the defendants seek to resist the summary judgment application is that of a possible fraud. Indeed, counsel for the defendants went so far as to say there actually exists a systematic conspiracy. These are very serious allegations and should only be made when there is clear evidence to support them. In my view that is not the case here.

8 I do not consider there is sufficient to link the plaintiff to any impropriety. It is conceded by counsel for the defendants that a lot of matters they allege cannot be verified by affidavit. He submits that in a summary judgment application all that is required is that he point to the factors on how the contentions by the defendants do have merit. Even if that were the test I am not persuaded from what is before me that there is any merit in the contentions.

9 Counsel for the defendants contends that it is not because of the defence of the defendants alone that the application should not succeed, but because of the serious issues raised by the defendants that judicial scrutiny is required. Certainly serious issues are raised by the defendants, but without more I do not consider there is sufficient to warrant the matter to go to trial on that ground. I might add, I would come to this view whether or not par 11 of the affidavit of Ms Hutchinson sworn on 7 March 2000 were struck out. If anything, the facts deposed to in par 11(g) and (h) of the affidavit of Ms Munyard sworn on 1 November 1999 tend to indicate the plaintiff had no knowledge of anything which was untoward. I do not consider the contents of Annexure "FRM11" to that affidavit by itself would lead one to the conclusion sought by the defendants.

10 It is not apparent to me that the affidavits of the defendants sworn 1 November 1999 contain evidence which would support the submissions contained in par 9(c) to (g) of the defendants' written submissions. These are serious allegations and should not be made without the support of appropriate evidence.

11 The next issue raised by the defendants in resistance to the summary judgment application is their assertion that they had entered into an agreement with the plaintiff to the effect that if they made the current payments the plaintiff would withhold action. This is deposed to at par 9 of the affidavit of Ms Hutchinson sworn on 7 March 2000.

12 At par 16 and par 17 of the affidavit of Helen Naumovski sworn on 27 March 2000 the meeting at which this agreement is alleged to have taken place is referred to. The deponent does not deny that Mr Steven Grove said what the defendants claim, nor that the facsimile dated 21 December 1999 reflected any agreement reached at the meeting of 9 December 1999 but, rather, the facsimile sets out "a proposal for settlement of the matter". It talks of "the decision on 9th December 1999" but does not state what that decision was.

13 This issue cannot be resolved on the affidavit evidence, but in my view it is worthy of further explanation and should be dealt with at trial.

14 The defendants further claim that no arrears exist in relation to the mortgage loan accounts. Paragraph 6 of the affidavit of Ms Hutchinson sworn on 7 March 2000 states:

"6. According to my record and those of the second named defendant, both of the loan accounts referred to in the affidavit of Wallis are presently up to date and there are no arrears."

It is, I think, pertinent to note the deponent does not depose to the nature of the record or to annex any appropriate documentation to the affidavit. One is left with the bald statement without anything to support it.

"7. In the past 12 months, the second defendant and I have paid in excess of $20,000 to the plaintiff, in reduction of the mortgage loan accounts. A portion of that money, despite our express instruction, has not been applied to the mortgage loan accounts, but has been applied against credit card and small overdraft facilities provided by the plaintiff."

16 This paragraph also lacks detail. For example, what portion of the money should have been paid to the mortgage loan accounts according to the defendants? In their letter of 29 August 1999 to the plaintiff, Annexure "HN5" to the affidavit of Ms Naumovski sworn on 27 March 2000, the defendants acknowledge that $5,200 had been paid to clear outstanding debt in relation to a personal cheque account and $8,000 in relation to a Visa card account. They appear to accept that those sums had been properly applied. What is not clear is whether or not those sums are included in the $20,000.

17 Further, in the affidavit of the first named defendant sworn on 1 November 1999 par 11(y), she deposes to the fact that she fell into default in making instalment repayments to the plaintiff. Having examined the evidence critically, I am not persuaded there is any credible evidence which would suggest the mortgage loan accounts were not in arrears at the material time.

18 For the reasons given I am not prepared to grant the summary judgment application. I consider the issue on which I am prepared to allow the matter to go to trial is shadowy and thus the leave to defend will be conditional. I will hear from counsel before I formulate the condition upon which leave will be granted.