Plaintiff v First Defendant

2 As the defendants had entered an appearance at Court that day in relation to adjournment I gave detailed reasons in Court for the refusal of the adjournment. However, due to the pressure of other business in the list that day and because the substantive summary judgment applications were then unopposed, the available court time was spent by counsel for the plaintiff taking me through the detail of the evidence and orders sought in the proceeding against Ms Hou alone, and making brief submissions in relation to this proceeding. In that regard, counsel for the plaintiff identified some points of difference in this matter compared to the proceeding against Ms Hou alone, and I raised some others. I was informed that apart from those points of difference, the evidence was otherwise in parallel in this matter with the evidence in the proceeding against Ms Hou alone, which had been considered in detail in Court. In the other matter, I indicated in Court that I would make the orders, but did not elaborate my reasons beyond that which was apparent from the discussion with counsel. In this matter I considered the evidence further in chambers, and made orders in chambers.

3 I have now been requested to express my reasons in each matter in writing as the defendants in this case and defendant in the other have appealed the orders. These are those reasons in this proceeding. I have provided detailed reasons in relation to the other proceeding, concerning Ms Hou alone, and so these reasons will only discuss in detail areas where this proceeding differed from that proceeding. Accordingly, these reasons should be read with the reasons in that other proceeding.

4 The history of this proceeding mirrors that against Ms Hou alone. The writ and statement of claim were filed on 15 December 2010, in this case seeking possession of a property at Brighton East and judgment in the sum (as at 10 December 2010) of $587,134.69); an amended defence on 9 June 2011; and a summons seeking to amend the statement of claim, summary judgment for possession (against Ms Hou as by then the sole registered proprietor of the subject land) and debt against both defendants, interest and indemnity costs was filed 6 September 2011. As in that case, the summons and affidavits in support were not served until February 2014 because the defendants notified a dispute to the Financial Ombudsman Service which was not resolved until January 2014. There were multiple consent adjournments pending resolution of the dispute.

5 In this case as in the case against Ms Hou alone, I applied the test in relation to summary judgment pursuant to the Civil Procedure Act 2010 as determined by the Court of Appeal (by majority- Warren CJ and Nettle JA) in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[1]. I set out that test in the other reasons.

6 The amended defence admitted the plea as to capacity of the plaintiff to sue; that until 24 December 2007 the defendants were the joint registered proprietors of the subject land which was transferred into the name of the first defendant, Ms Hou, alone by transfer registered 24 December 2007; that the parties entered into a loan agreement dated 23 September 2003 with a credit limit of $420,000 and terms as then pleaded and a mortgage dated 27 September 2003 over the land with terms as then pleaded; that the plaintiff advanced monies to them to the credit limit of $420,000 pursuant to the loan agreement; and that Ms Hou remained the sole registered proprietor of the land, but her interest was subject to the plaintiff's mortgage. No other matters were admitted.

7 As in Ms Hou's case, the amended defence did not advance any substantive defence. It was identical in form to that in Ms Hou's case, in that it sought particulars of the advance, the default, the notice and the calculations as to the amount said to be owing. As in that case, the amended defence also stated that the defendants could not admit receipt of the notice because they could not locate the original, although they had requested and received a copy through their solicitors from the solicitors for the plaintiff.

8 In this case, as in the other, there was a variation to the loan agreement by way of increase to the credit limit which was not pleaded in the original statement of claim and was sought to be pleaded in the proposed amended statement of claim. There were other proposed amendments broadly along the same lines as in Ms Hou's case. These proposed amendments further particularised or corrected the terms of the loan, gave particulars as requested of the advance, the default and the notice, pleaded that as a result of failing to remedy the default identified in the notice within the required time the total amount owing became immediately due and payable (to the extent it was not so immediately due and payable already) and made other consequential amendments.

9 As in that other case, the proposed amended statement of claim was exhibited to the principal affidavit in support of the summary judgment application and so notice of it was given on service of the summons and that affidavit, well in advance of the hearing. For the reasons set out in my written reasons in Ms Hou's case, I gave leave to amend the statement of claim as served, save that it was apparent that there was an error in the particulars proposed to be subjoined to paragraph 15. The proposed amended statement of claim as served had different figures in paragraphs 10 and 15 for the credit limit at 19 February 2010, the amount by which the balance exceeded it at that date, and the period of default. Paragraph 10 related to the first defendant Ms Hou, and paragraph 15 to the second defendant Mr Kanakaridis. It was clear that this was an error as the account was a joint account.

10 Scrutiny of the duplicate statements, served at the same time, showed that the correct figures and dates were those in paragraph 10. As the solution to the inconsistency was made available to the defendants at the same time as the proposed amended statement of claim, and they had not attended to oppose the application, I did not consider that there was any prejudice to them in allowing the further amendment by way of correction only. Accordingly, I granted leave to file the proposed amended statement of claim, but with correction to the particulars to paragraph 15.

Proof of the plaintiff's case not admitted by the defendants

11 The original loan agreement was admitted, but is also proved by JP-1 to the affidavit of Mr Pastro sworn 2 September 2011. The standard terms and conditions are proved by JP-2, Booklet of Standard Terms and Conditions dated July 2003 ("the Booklet"). This is the same Booklet as pleaded and proved in Ms Hou's case. Accordingly, I was satisfied that terms of the loan as re-pleaded were all proved.

12 In this case there was only one variation. It was proved by JP-3 to the affidavit of Mr Pastro sworn 2 September 2011. That is a letter dated 24 March 2004 which offered an increase to $496,000. The letter is addressed to Mr Kanakaridis only. It was accepted by Ms Hou on a date written as 6 April 2003 and by Mr Kanakaridis on a date written as 7 April 2003. I did not consider that anything turns on the fact that the offer was addressed to one defendant only, as it was accepted by both. As the original loan was September 2003 I inferred that the acceptance dates were incorrectly written by the defendants as 2003, when in fact they were 2004.

13 The proposed amended statement of claim pleaded that it was a term of the variation that the security specified in the original loan would extend to the loan as varied. This is not expressly stated in the offer, but it flows from what is expressly stated, and also pleaded, that unless expressly varied by the offer the terms of the original loan would continue to apply. There was no variation in relation to security in the letter of offer, and accordingly the security extended to the loan as varied.

14 As in Ms Hou's case, there was no evidence as to the purpose of the original loan, and so whether it was or was not regulated, save what appears in the original offer. JP-1 includes a statement that the lender is treating it as a non-regulated loan, and the purpose is there stated as being the purchase of an established dwelling. There was no allegation by the defendants that it was a regulated loan. Nevertheless, I was satisfied that if it was, the requirements of the UCCC as to the notice were satisfied.

15 The mortgage was admitted. It was also proved by JP-4. The Memorandum of Common Provisions was identical to that in Ms Hou's case and accordingly I was satisfied that the terms as repleaded were proved.

16 The initial and change to ownership of the land were admitted. They were also proved by JP-5 (the transfer from both defendants to the first defendant only) and JP-6 (the historical title search). An updated title search dated 6 February 2014 was exhibited as AFS-2 to the affidavit of Alexia Falie Schar sworn 21 February 2014, proving that the first defendant remained the registered proprietor of the land which remained encumbered by the mortgage.

17 The advance by way of draw down on the original loan was admitted. It was also proved by statement 1 dated 23 January 2004, being part of JP-7. Further draw downs pursuant to the variation on 13 and 16 April 2004 as pleaded in the proposed amended statement of claim were proved by the statement dated 23 April 2004 within JP-7.

18 As in Ms Hou's matter, the account was in default if the balance exceeded the credit limit. If that occurred, the defendants were required by the terms of the loan to repay the amount by which the balance exceeded the limit immediately. Evidence of default was given by Mr Pastro at paragraphs 20-22 of his affidavit, as corroborated by JP-7. I was satisfied that as at 22 January 2010 the limit was $496,000, as stated at the end of statement numbered 25 and that the defendants were at that date over the limit to the extent of $54,266.45. No credits are shown on the next statement, for the period 22 January 2010 to 23 April 2010 and there were further debits. I was satisfied that as at the date of the default notices, 19 February 2010, the balance of the account was $553,301.74 which was $57,301.74 over the limit. Thus default was proved.

19 As in Ms Hou's case, the plaintiff was entitled to issue a notice of default if the default had continued for 7 days. The account given above satisfied me that this was the case.

20 The notices were exhibited as JP-9. There are different notices to each defendant, as the first defendant was both borrower and mortgagor and the second defendant by this time a borrower only. Both notices are dated 19 February 2010. The notice to Ms Hou was addressed to her at the security property. It was in the same form as the notice to Ms Hou in the other proceeding, and equally compliant with the UCCC (if that was required).

21 The notice to Mr Kanakaridis was addressed to him at 2/6 Broadway St Elwood, which Mr Pastro deposes was the last known residential address of the defendants. Their amended defence also implies that this was their address at that time. While the form is different to that given to Ms Hou, the substance is to the same effect save that 30 days, instead of 31 was given to remedy the default. I accepted the submission of counsel for the plaintiff[2] that it was immaterial that the notices differed from each other in form and that under the UCCC (if indeed that applied) 30 days was a sufficient period to give to remedy the default. I was satisfied that the notice to Mr Kanakaridis satisfied the UCCC if it was required to do so.

22 I was satisfied that service of the notices was proved by paragraphs 25-29 of Mr Pastro's affidavit and the affidavit of Colin Candy sworn 25 August 2011. The defendants have pleaded that they cannot locate the original of the notices as served, but proof of receipt is not required having regard to the terms in the Booklet and the Memorandum of Common Provisions.

23 I was satisfied that the first defendant Ms Hou was served by the means set out in Mr Candy's affidavit, by leaving the notice at her last known residential address in Elwood. In relation to service on Mr Kanakaridis I was satisfied having regard to the matters deposed to by Mr Pastro and JP-8 that he was also served by post at that same last known residential address.

24 I was satisfied by the duplicate statements that the default was not remedied within the times specified in the notices.

25 As in Ms Hou's case, I was satisfied that the full amount of the balance then became due and owing. In respect of Ms Hou, this follows from the Memorandum of Common Provisions and the terms of the notice. In respect of both defendants, this also follows from clause 10(c) of the Booklet, which permitted the plaintiff to demand repayment of the total amount outstanding, and the terms of the notices.

26 The amount owing as at 27 March 2014 was proved by the Dobbs certificate exhibited as AFS-3 to the affidavit of Ms Schar sworn 27 March 2014 for the same reasons as set out in Ms Hou's matter. The plaintiff accepted that figure as the amount as at the date of hearing.

27 No substantive defence was pleaded, no affidavit filed by the defendants and no attendance entered to oppose the application.

28 For the same reasons as in Ms Hou's matter, to the extent matters were raised in the amended defence they were answered by the further particulars supplied by the proposed amended statement of claim or were not necessary for the plaintiff to prove.

29 Accordingly, I was satisfied that the plaintiff had proved that there was no real prospect of success in the defence.

30 No matters were advanced as to discretion. I otherwise repeat my reasons as given in Ms Hou's case.

31 For these reasons, I made the orders as sought by the plaintiff.

[1] [2013] VSCA 158.