Perpetual Trustee v McAndrew

Perpetual Trustee v McAndrew - [2007] NSWSC 1452 - NSWSC 2007 case summary — Zoe

[14]

the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires." 6 Rule 13.4(1) of the Uniform Civil Procedure Rules provides that the court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are: if the proceedings are frivolous or vexatious; or if no reasonable cause of action is disclosed; or if the proceedings are an abuse of the process of the court. 7 Rule 14.28(1) of the Uniform Civil Procedure Rules provides that the court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading, firstly, discloses no reasonable cause of action or defence or other cause appropriate to the nature of the pleading; secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings; or thirdly, is otherwise an abuse of the process of the court. 8 Rule 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under sub-rule (1). 9 In the well known passage in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ at 129 stated: "It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense.'"

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Cross Claim 16 Mr McAndrew cross-claims that the mortgage and the loan be set aside pursuant to the Contracts Review Act 1980. In the alternative, he seeks an order declaring the mortgage and the loan to be void; or, an order varying the mortgage and the loan. 17 Mr McAndrew deposes that on 25 November 1998 he sustained severe personal injuries when as a pedestrian he was knocked down by a car. He commenced proceedings in the District Court at Newcastle. 18 On 19 November 2002, these proceedings were settled and the terms were approved in accordance with the provisions of the Damages (Infants and Persons of Unsound Mind) Act 1929. The District Court also ordered that the terms of settlement would not be disclosed. Mr McAndrew says that he has not worked nor carried on a trade, business or profession since the date of the accident. If Mr McAndrew is so mentally impaired that he gets lost when venturing unsupervised outside his home, his capacity to give instructions may be in doubt. 19 In a letter of offer from Challenger to Mr McAndrew dated 6 February 2004, the purpose of the loan was described as being for "refinance Perpetual Trustee $55,000 and Micor Finance (2nd M - business debt) $170,000 plus provide $41,000 working capital" (Ex A). 20 On 2 February 2004, Michael Wishart & Co, certified practising accountants, stated: "This letter is to confirm that Shaun McAndrew used the funds from the mycor (sic) loan to purchase one half of the company known as CS & MM Pty Ltd the loan required from first pacific finance is to pay out the mycor (sic) loan." (Ex B) 21 The plaintiffs submitted that the clear and unequivocal representations in writing made by Mr McAndrew on 12 January 2004 and 6 February 2004 were that firstly, the facility provided to the defendant (was) for the purposes of refinancing business debt and to obtain fresh working capital; and secondly, such financial accommodation as was provided was to be used wholly or substantially for business or investment purposes. According to the plaintiffs, contemporaneous documents executed by Mr McAndrew disclose that the only available characterisation for the purpose of the financial accommodation provided to him was for a business purpose. 22 The plaintiffs submitted that it follows that the jurisdiction which Mr McAndrew seeks to invoke under the Contracts Review Act 1980 (which is the sole basis simultaneously of the defence alleged, and the relief pleaded in the statement of cross claim) could never be attracted by reason of the operation of s 6(2) of the Contracts Review Act. The Contracts Review Act is a remedial piece of legislation which should be interpreted liberally free from the fetters imposed by analogous legal and equitable doctrines - see Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 at 277. 23 The plaintiffs further submitted, therefore, it is clear that nothing in the grounds of defence is sufficient to survive an application for summary judgment, upon the footing that there is no reasonable ground of defence, or that what is asserted is nothing other than wholly embarrassing to the plaintiffs, or vexatious to them. 24 Section 6(2) of the Contracts Review Act reads: "Certain restrictions on grant of relief

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14 Given the analogy in this case with a contingent liability, I consider that moneys should be paid into court. However, the court should not make the order for which the plaintiff contends, that is, an order that the whole of the net proceeds of sale over and above the secured principal and interest be paid into court. Rather, in the manner suggested by Inglis v Commonwealth Bank of Australia , Perpetual should nominate the estimated amount of its claim under clause 2.4 with respect to "enforcement expenses" and that amount should be paid into court pending determination of the Contracts Review Act claim concerning clause 2.4. I will make an order to that effect unless the parties prefer to agree to some regime which sees the amount in question, that is the amount nominated by Perpetual, as sufficient to cover enforcement expenses go into an interest-bearing controlled monies account with interest to follow the principal when it is paid out." 32 In Bassanese v Perpetual Trustees Victoria the issue in dispute was whether the particular clause of the mortgage which included enforcement expenses in the moneys secured the contingent liability was the amount of enforcement of costs. In Bassanese v Perpetual Trustees Victoria the mortgagor was seeking to redeem the mortgage. In these proceedings the mortgagor is not seeking to redeem the mortgage. 33 The general rule in Inglis v Commonwealth Trading Bank (1971) 126 CLR 161 at 169 relates only to interlocutory applications to restrain the exercise by a mortgagee of his rights and powers under the mortgage. The rule is not a rule of general application to all matters in which a mortgagor challenges a mortgage. The rule is not inflexible - see Restraining Sales by Mortgagees and a Curial Myth (1993) 11 ABR 1 per Bryson J, which discusses the origin and application of the rule; and Fisher and Lightwoods Law of Mortgage 2nd ed at [20.36] and [20.37]. 34 It is my view that a defendant seeking to have mortgage documents set aside on the basis of his lack of mental capacity should not be required to pay the amount due and owing under the mortgage before he is entitled to take court action. This would be contrary to the intention of the Contracts Review Act. Overton Investments v Cuzeno RVM and Bassanese v Perpetual Trustees Victoria are limited to the costs of enforcement expenses. The cross claim in these proceedings seek the whole of the mortgage and loan be set aside. The defendant says that he did not receive any of the proceeds of the loan. In these circumstances he should not be required to pay into Court a sum of over $300,000. 35 The plaintiffs' notice of motion filed 11 September 2007 is dismissed. 36 Costs are discretionary. Costs usually follow the event. The plaintiffs are to pay the defendant's costs as agreed or assessed.

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