Perpetual Trustee Company Ltd v Stojcevski

Judgment 1These proceedings commenced by the filing of a Statement of Claim on 25 February 2013 seeking possession of land at 122 Balgownie Road, Balgownie. The claim was under a mortgage entered into on 12 December 2002 which secured a borrowing under a loan agreement dated 22 October 2002 of $300,000. On 14 November 2004 the loan was varied resulting in the borrowing of a further $100,000. That variation was also secured by the mortgage. Default occurred on 30 April 2012 and does not appear to have been rectified since that time. Certainly a s 57 notice served on 16 January 2013 was not complied with. 2The First Defendant filed a defence on 8 April 2013 in which he denied entering into the mortgage and loan agreement. Somewhat inconsistently, he pleaded the Contracts Review Act 1980 in relation to those documents and also pleaded the defence under the doctrine in Yerkey v Jones (1939) 63 CLR 649, based it would seem upon the actions and omissions of his wife, who is the Second Defendant. 3An amended defence was filed on 15 April but that defence merely corrected some typographical errors in the first defence. 4The proceedings came before the Registrar on 14 May 2013. The First Defendant was directed to provide answers to particulars by a certain date and was given leave to file and serve a further amended defence and a cross-claim by 25 June 2013. No further amended defence nor cross-claim was filed and the matter came again before Schmidt J on 28 June 2013. It would appear that the First Defendant had failed to provide the particulars as ordered by the Registrar, because he was given another 14 days to do that by Schmidt J. Her Honour also directed that any proposed amended defence and cross-claim was to be filed and served within 14 days, that is, by 12 July. 5It seems that the First Defendant has always had some difficulty in recalling whether or not he signed the relevant loan documents and mortgage with the bank and it must have been in his mind at least at some time in May 2013 that he had been to a solicitor's office at or about the relevant date of the loan documents. His present solicitors sought the file from that solicitor during May of 2013 and that file was received by the present solicitors on 13 June 2013. 6It is not clear, but it seems likely that the present solicitors formed the view that there might be a cause of action against that solicitor. That appears to have been the reason that they sought from Schmidt J, on 28 June, leave to file a cross-claim within 14 days. However, nothing was said to her Honour suggesting that there would be any difficulty in being able to plead such a cross-claim on the basis of the information that they had. 7In any event, no amended defence or cross-claim was filed in accordance with her Honour's orders. The matter came again before her Honour on 18 July and she directed on that occasion that the First Defendant was to serve his evidence by 17 September. In the meantime the Plaintiff had obtained default judgment against the Second Defendant. 8The First Defendant did not serve his evidence by 17 September and the matter came again before Schmidt J on 20 September. A further amended defence had, by that stage, been provided to the solicitors acting for the Plaintiff and on 20 September Schmidt J gave leave to file that further amended defence by 27 September. She also directed that the First Defendant was to serve his evidence by 4 October and she listed the matter for hearing on 24 February 2014 on the basis of a five day estimate. Nothing was said on 18 July or 20 September about a cross-claim. 9The Further Amended Defence was filed on 30 September 2013. Two significant changes were these: first, the denial by the First Defendant that he entered into the mortgage and loan agreement was altered to a non-admission. Secondly, a defence was pleaded under the National Credit Code that the Plaintiff had failed to do certain things required by that code. The First Defendant's counsel maintains that the loan agreement was a carried-over contract under the transitional provisions, but of course there may be some difficulty in suggesting that the Plaintiff did not do things it was required to do under the new code, to the extent that those things were not required under the state code in existence at the relevant time. 10It seems that at some time the first and Second Defendants became estranged. The First Defendant's present solicitors have had some contact with the Second Defendant during the course of this year. The suggestion seems to have been made that the Second Defendant may have been responsible for the First Defendant's signature on some or all of the loan documents. 11On 31 May the Second Defendant indicated to the solicitors that she was willing to provide a statement, but they quite properly advised her to seek some independent legal advice before she did so, presumably anticipating that she might be going to make admissions that might incriminate her. It was not until 24 September, it would seem because of disputes between the first and Second Defendants, that the Second Defendant indicated that she would provide evidence to support the First Defendant's defence of the proceedings. In the conversation with Ms Khan of the First Defendant's solicitors, she said, "I am willing to provide evidence and admit to everything." 12It appears a conference was held on 2 October 2013 and at that time the First Defendant instructed his present lawyers to amend his pleadings to allege forgery and to provide instructions to file cross-claims against Mortgage House, which was the mortgage broker and the former solicitor, Mr Frank Mathey. That led to the First Defendant's solicitors writing letters both to the list clerk of the Court and to the Plaintiff's solicitors asking for the matter to be restored because there had been a change of circumstances arising out of evidence that had come to light. The letter went on to say: "It appears that additional parties will need to be joined to the proceedings". 13The Plaintiff's solicitors responded by email the following day asking a number of questions relating to the new material and the change of circumstances and the new parties who were proposed to be joined. Given the stage the proceedings had reached, it might be considered unfortunate that there was no reply to that email for almost a two week period. The letter which eventually went in response on 16 October said that, as a result of obtaining evidence from the Second Defendant: It appears that there may be grounds for our client to plead that certain documents were not in fact signed by him at all. 14The letter also indicated that the First Defendant would be seeking to join the broker and the former solicitor to the proceedings. 15The matter came before the Registrar on 17 October. He directed that the First Defendant was to provide a copy of the proposed second further amended defence and any proposed cross-claim by 24 October. He also directed that the First Defendant was to serve his lay evidence by 24 October, the First Defendant not having complied with the last order made by Schmidt J on 20 September for his evidence to be filed by 4 October. Whilst his evidence was served by 24 October, the first time the proposed Second Further Amended Defence and proposed Cross-Claim were provided to anybody was this morning, just before the present Motion came to be heard by me. 16The proposed Second Further Amended Defence leaves in place the non-admission in relation to the loan documents, leaves in place the Contracts Review Act defence, omits the Yerkey v Jones defence, and then pleads at the end the following: 26. The loan and variation agreements purported to have been entered into between the Plaintiff and the First Defendant were as a result of the First Defendant being misled into signing the documents which were fundamentally different from what he intended to execute or sign. 27. Particulars are as follows: (a) the First Defendant was not informed by the Second Defendant that the First Defendant was signing the loan and variation agreement documents; (b) the Second Defendant obtained the cross-claimant's signature on the loan agreement without informing him that he was signing the loan variation agreements or misrepresenting or misleading him as to the true nature of the document. 28. Alternatively, the loan and variation agreements purported to have been entered into between the Plaintiff and the First Defendant were executed as a result of the Second Defendant signing the First Defendant's signature. 29. Accordingly, the First Defendant relies upon the defence of non est factum. 17There is some support for the assertion that the Second Defendant signed some of the First Defendant's signatures in the affidavit sworn by the Second Defendant on 24 October 2013. That affidavit was provided in support of the First Defendant's defence. 18The proposed Cross-Claim names the Plaintiff, Mortgage House of Australia Pty Limited and Mr Frank Mathey as cross-Defendants. No relief is sought against Mortgage House, but that is said to be an oversight and damages were intended to be claimed. Mortgage House is alleged to be an agent of the Plaintiff, although there are no particulars to justify that somewhat unusual assertion. 19The claims against the Plaintiff consist of an expanded claim under the Contracts Review Act 0and also a claim, along with one made against Mortgage House, alleging misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). Mortgage House is also said to have breached its duty to the First Defendant. 20The claim against Mr Mathey is that Mr Mathey owed the First Defendant a duty of reasonable care and skill. It is said that the first and Second Defendants attended the solicitor's office on or about 12 December 2002, where the Defendants signed the mortgage. It is asserted that Mr Mathey acted or purported to act for the First Defendant in the loan agreement and the signing of the mortgage, that he had a duty to explain those documents and that in breach of contract and negligently he failed to do so. Particulars in that regard are provided. 21The First Defendant now seeks leave to file the Second Further Amended Defence and the Cross-Claim. There does not seem to be any doubt that if the Cross-Claim is permitted to go forward, it will be necessary to vacate the hearing on 24 February. It would not be possible for the two new parties to be adequately prepared for a hearing within the relatively short time left between now and February, particularly having regard to the Court vacation. 22The issue is, therefore, whether the First Defendant should be permitted now to file the proposed pleadings with the inevitable result that the date will have to be vacated or whether, by reason of the First Defendant's delay and failure to comply with the Court orders, such leave ought not to be given. 23In my opinion, the First Defendant should be permitted to file the Second Further Amended Defence. The matter which is raised in paragraphs 26 to 29 has, in a sense, been adumbrated in the pleadings from the time of the first defence. The First Defendant seems to have had a difficulty being able to tell whether the signature on documents purporting to be his signature was in fact his signature. He initially denied that it was his signature in his first defence, reiterated that in his amended defence, but changed his approach in his further amended defence on 30 September, where he merely put the Plaintiff to proof of those matters. 24There is no satisfactory explanation why he was prepared to deny that he signed them at the beginning, if in fact he was not sure whether he had signed them or not. Nevertheless, the issue of who signed them and whether he is bound, has been an issue in the case from the beginning. 25The First Defendant says he now wishes to engage a handwriting expert in relation to documents where he is uncertain about whether he has signed. The reason that this was not done earlier, I was told, was because of the cost involved and where there was no certainty that the signatures on the various documents were not his. It was only after the Second Defendant swore her affidavit, where she admitted at times to forging his signature, that the matter became clear. There does not seem any good reason why the handwriting expert should not be able to serve a report within a relatively short period of time, which will give the Plaintiff time to respond by expert evidence, if necessary, and for the hearing date to be met in that regard. 26The position with the Cross-Claim seems to me to be completely different. The explanation for the delays in relation to the cross-claim I consider to be quite inadequate. The first solicitor's file was obtained by 13 June. 27The First Defendant had sought on at least three occasions before judicial officers the right to file a cross-claim and it appears from what I am told that that must have been a cross-claim at least against the former solicitor. 28Whether or not a cross-claim was contemplated against the broker might be thought to be doubtful because the First Defendant had little or limited awareness of the broker's involvement until the statement was obtained from the Second Defendant or information was provided by her a short time before. 29Difficulties with pleading a cross-claim were never raised with Schmidt J on the occasions that the matter came before her. I have read the transcript of each of those occasions. Furthermore, although the Registrar directed on 17 October that proposed draft pleadings were to be provided by 24 October, that was not done until this morning. No adequate explanation for that delay has been offered. 30I dealt with late requests to amend and file cross-claims in two recent judgments, in ANZ v Mio Amico Pty Ltd [2013] NSWSC 716 at [56] - [62] and Commonwealth Bank of Australia v Susan Hannaford Pty Ltd (No 2) [2013] NSWSC 574 at [65] - [73]. The legal principles that I referred to in those cases are equally relevant to the present situation. It is clear from the authorities that I referred to that close consideration needs to be given to the provisions of ss 56 and 58 of the Civil Procedure Act 2005. The Court must act in accordance with the dictates of justice and s 58(2) sets out what the dictates of justice are that must or may be considered. One of those matters is the degree to which any lack of expedition is evident from the behaviour of any of the parties to date in the proceedings. 31Furthermore, the judgments in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 make perfectly clear that in the absence of adequate explanation for delays and change of approach to litigation, it is unlikely that such applications will be successful. 32A refusal to the First Defendant to proceed with the cross-claim in these proceedings will not prevent the First Defendant bringing separate proceedings against the proposed new parties. The only issue estoppel that might arise will be an issue estoppel against the interests of the First Defendant by reason of the doctrine of extended estoppel referred to in Rippon v Chilcotin [2001] NSWCA 142; (2001) 53 NSWLR 198. 33The First Defendant says that he is not in a good financial position to be bringing fresh proceedings. However, the sad reality in this case is, because default judgment has been obtained against the Second Defendant, it is very difficult to imagine a scenario that will not involve a sale of this property. A sale of the property may well, on what has been suggested on the First Defendant's behalf, mean that there will be some money left over for the Defendants after the repayment of the loan amounts to the Plaintiff. The freeing up of those funds may in fact assist the First Defendant in that regard. However, I do not regard that as a matter that I ought to take into account in deciding against his being able to bring the Cross-Claim in the present proceedings. 34I consider that the prejudice to the Plaintiff in having the hearing date in February vacated is too great in the circumstances. Default has been in place now for a period of 18 months. If the hearing does not proceed in February, it is unlikely to proceed until at least the second half of next year and such date will be further pushed out by the increased length of the proceedings by reason of joining the added parties. 35Accordingly, leave is given to the First Defendant to file a Second Further Amended Defence. Such defence is to be filed by 12 November 2013. The Second Further Amended Defence which I have given leave to file is to be in the form of that put forward on the present Motion.