Sivanantha v Angelie Pty Ltd [2021] VSCA 333

1 Before the Court are two applications for leave to appeal from orders of Judge Macnamara made on 8 July 2020[1] in a proceeding in the County Court. Judge Macnamara had before him two summonses in the proceeding. The first was filed on 30 January 2020 on behalf of Kanesaratnam Jeevaratnam ('Mr Jeevaratnam') and Janani Jeevaratnam ('Mrs Jeevaratnam'), seeking to set aside a default judgment for the recovery of land, and other relief. The second was filed on 20 April 2020 by Kanagakulasingam Sivanantha ('Mr Sivanantha') seeking an order that he be added as a party to the proceeding, that the default judgment be 'stayed', and other relief. His Honour dismissed both summonses. He published his reasons.[2] On 8 July 2020, his Honour dealt with the issue of costs.[3]

2 Mr Jeevaratnam now seeks leave to appeal from so much of his Honour's judgment as related to the dismissal of his and his wife's summons, and Mr Sivanantha seeks leave to appeal from so much of the judgment as dismissed his summons.

3 Mr Jeevaratnam and Mr Sivanantha appeared for themselves on their respective applications for leave to appeal. Counsel appeared on behalf of the first, second and third respondents to each application. The first, second, and third respondents are the plaintiffs in the proceeding. The other respondents, being Mrs Jeevaratnam and the trustees of the bankrupt estates of Mrs Jeevaratnam and Mr Jeevaratnam, filed notices of intention not to respond.

4 Mr Jeevaratnam applied for an adjournment. That application was refused for reasons delivered orally by the presiding judge.

5 By a writ filed in the County Court on 20 December 2018, the plaintiffs in the proceeding sought possession of a property at 7 Joanna Court, Mount Waverley alleging default under three loan agreements entered into by Mr and Mrs Jeevaratnam in 2010 and two mortgages registered in 2011. The defendants to the proceeding were Mr and Mrs Jeevaratnam and their respective bankruptcy trustees, Mrs Jeevaratnam having been made bankrupt on 18 November 2010 and Mr Jeevaratnam having been made bankrupt on 19 July 2013.

6 On 7 February 2019, default judgment for possession was entered against Mr Jeevaratnam in default of defence and against the other defendants in default of appearance.

7 By a summons filed on 22 February 2019, Mr and Mrs Jeevaratnam sought orders setting aside the default judgment.

8 On 24 September 2019, the summons filed on 22 February 2019 was dismissed by Judge Macnamara.[4] In his 'Reasons for Ruling', Judge Macnamara set out an explanation given, and complaints made, by Mr Jeevaratnam in relation to the relevant transactions, observing that Mrs Jeevaratnam had been made bankrupt while those transactions were in progress and that Mr Jeevaratnam had been made bankrupt subsequently. The judge recorded the fact that Mr and Mrs Jeevaratnam had been repeatedly alerted to the fact that they could only proceed if they could obtain an assignment of relevant rights of action from their bankruptcy trustees, given that both the property and any rights of action related to the relevant transactions had vested in their respective bankruptcy trustees pursuant to s 58 of the Bankruptcy Act 1966 (Cth). The judge recorded the fact that Mr Jeevaratnam told him that an application was pending in the Federal Circuit Court of Australia seeking relief from 'the trustee's refusal to assign rights'.

9 In his reasons for dismissing the February 2019 summons the judge stated that Mr and Mrs Jeevaratnam had no standing to bring the application. He observed that if in the future they were to become possessed of the necessary standing they could make a further application.

10 On 30 January 2020, an application was filed on behalf of Mr and Mrs Jeevaratnam seeking 'relief and remedy' in accordance with an affidavit affirmed on the same day by Mr Jeevaratnam. In that affidavit Mr Jeevaratnam denied that any money had been advanced by way of loan from the plaintiffs, explained that there was an agreement to invest in a property development project with one of the plaintiffs (Chandrika Pakthagurunathan, referred to as 'Chandrika'), deposed that Chandrika 'did not continue to invest money' after Mrs Jeevaratnam was made bankrupt, and that he did not 'realise' that Chandrika 'had made me sign three loan agreements ... and two mortgages ...'. The affidavit referred to his own bankruptcy and asserted that the 'alleged loan agreements are fraudulent, illegal and invalid'.

11 Mr Jeevaratnam affirmed a further affidavit on 2 February 2020. He deposed that Chandrika had 'tricked and forced' his wife and himself into 'signing the loan agreements and mortgages'.

12 By an application filed on 17 February 2020, Mr and Mrs Jeevaratnam sought orders in the Federal Circuit Court of Australia setting aside the County Court default judgment and requiring the trustees to give consent to Mr and Mrs Jeevaratnam 'so they will have standing to contest the case in the County Court of Victoria'.[5] On 3 April 2020, Judge Burchardt in the Federal Circuit Court dismissed that application.

13 On 20 April 2020, Mr Sivanantha issued an application in the County Court proceeding seeking the following orders:

(a) That I be added as a party to this proceeding

(b) That the default order made in this proceeding on 7 February 2019 be stayed

(c) The Defendants be directed to file their defences to my claims

(d) That precedence and priority be provided to my caveat over and above the mortgages of the First, Second and Third Defendants

(e) For costs and any other relief as to this court shall seem fit

14 The reference to the 'First, Second and Third Defendants' was intended to be to the plaintiffs.

15 Mr Sivanantha also filed a document headed 'Affidavit' and dated 18 April 2020. The document filed was not sworn or affirmed. Enquires made in the course of the hearing indicated that it had not been sworn or affirmed. The Court suggested that the document might be relied upon as a record of Mr Sivanantha's contentions, and the parties consented to reliance on the document on that basis. The document asserts that Mr Sivanantha advanced a total sum of $600,000 to Mr and Mrs Jeevaratnam and that he had been 'assured that a second mortgage' over the Mount Waverly property 'will be provided to me'. It continues:

The execution of this default judgment will seriously prejudice my ability to recover any funds, advanced in good faith, well before the mortgages to the Plaintiffs. A Caveat was registered by me on 17 March 2011. The mortgage was registered on 22 December 2011 and this is invalid.

16 In the Reasons, the judge firstly dealt with Mr and Mrs Jeevaratnam's application. He set out the allegations in the statement of claim. He then observed:

The narrative given so far indicates that by operation of s 58 of the Bankruptcy Act 1966 the Jeevaratnams' interest in the Mount Waverley property vested in their respective bankruptcy trustees. It seems, therefore, that any right to resist a claim for possession by the plaintiffs pursuant to the mortgages was vested in the bankruptcy trustees and not in Mr and Mrs Jeevaratnam.[6]

17 The judge then referred to the earlier summons which had been issued in February 2019, the application which had been made to the Federal Circuit Court and dismissed in April 2020, and the complaints made by Mr Jeevaratnam in his submissions to the Court in September 2019, and in his affidavits of 30 January 2020 and 2 February 2020.

18 The judge observed that no irregularity or non-compliance with the Court's Rules had been put forward.

19 The judge said he was prepared to assume without deciding that a satisfactory explanation for delay had been given, and that, notwithstanding significant concerns as to credibility, he was prepared to proceed on the basis that an arguable defence on the merits had been demonstrated.

What stands between the Jeevaratnams and success on their 2020 Summons is the same consideration which led to the failure of their 2019 Summons. That is, that the best title and right of possession for the subject residence and therefore the entitlement to resist seizure by the mortgagee lies not with the Jeevaratnams, but with their bankruptcy trustees, neither of whom seeks to have the judgment for possession in favour of the plaintiffs set aside. [7]

21 The judge then referred to some further matters urged on behalf of the Jeevaratnams before concluding:

It follows that for fundamentally the same reasons as the 2019 Summons was ineffective, the Jeevaratnams' 2020 Summons must likewise be dismissed. [8]

22 The judge then turned to Mr Sivanantha's summons. He set out the matters relied upon by Mr Sivanantha and, in particular, to the caveat which he had lodged. He observed that the basis for the caveat was a document signed by Mr Jeevaratnam which 'granted' to Mr Sivanantha 'the right to place a caveat' on all properties owned by Mr and Mrs Jeevaratnam.[9] Notwithstanding significant doubts which he held on the issue, the judge was prepared to assume that the words of that document did 'imply the creation of a charge'.[10] He then referred to the relevant provisions governing caveats, in particular ss 89 and 90 of the Transfer of Land Act 1958, and observed that under those provisions, upon registration of the plaintiffs' mortgages Mr Sivanantha's caveat would have lapsed only to the extent necessary to permit that registration.

23 Mr Sivanantha had explained that he had considered bringing independent proceedings in relation to his security interest, but that 'prohibitive costs' did not permit him to do so. The judge observed:

By virtue of s 42 of the Transfer of Land Act, the interest of the mortgagee is indefeasible unless set aside for fraud. By its very nature, it is a more potent interest than Mr Sivanantha's charge. Given that Mr Sivanantha has taken no enforcement action in court and seems not to be disposed to take any, to grant him the relief which he seeks would seem not only incongruous as a matter of priority in the competing claim, but also a recipe for paralysis.[11]

It is not obvious why it would be more economical for Mr Sivanantha to have these matters adjudicated as part of this proceeding rather than in a separate proceeding. Nor is it obvious why he should be allowed to 'shoehorn' himself into a proceeding which has already concluded with a default judgment in circumstances where the persons who might be thought to have the legal right to attack that default judgment, namely the bankruptcy trustees, have determined not to. ...

The matters already referred to might be thought to be a series of considerations, some discretionary as to why the relief sought by Mr Sivanantha might not be granted. There is, however, a jurisdictional reason why it ought not be granted. Rule 1.14 of the Court's Rules provides that the Court may exercise any power under the Rules, including the power to set aside a default judgment 'of its own motion or on the application of a party or of any person who has a sufficient interest'. In Delmo v Merrigal Pty Ltd (Unreported, VSC, 29 April 1988, BC8800726), Murphy J of the Supreme Court of Victoria held that a party claiming to be entitled to specific performance of a contract for the sale of a piece of real estate had a sufficient interest to seek to set aside a default judgment against the land for specific performance of a purported sale contract for the same land to another party. The two alleged sale contracts could not co-exist. In the present case, there is no difficulty in a mortgage and a charge of the same land co-existing. If Mr Sivanantha were regarded as having standing under the Rules to seek to set aside the present judgment, it would mean that any mortgagee or chargee of the same land would have standing to seek to set aside a default judgment for possession of the land in favour of any other mortgagee or chargee. Here, granting these plaintiffs the right to possession of the subject land does not finally foreclose the claim made by a charge of the same land in the way that specific performance of one alleged contract must necessarily forever block specific performance of another.[12]

25 Mr Sivanantha's summons was accordingly dismissed.

26 Mr Jeevaratnam's application for leave to appeal contains two proposed grounds. The first is that the default judgment was entered prematurely against him, the time for defence not having expired. The second proposed ground is that the judge was in error in stating that Mr and Mrs Jeevaratnam had agreed to mortgage the property, in circumstances where he had deposed to the fact that they had been forced to sign documents in 2011 following Mrs Jeevaratnam's bankruptcy.

27 Mr Jeevaratnam's written case did not engage with the fundamental problem upon the basis of which his applications in 2019 and in 2020 to set aside the default judgment were dismissed, namely, the bankruptcy of himself and his wife.

28 At the outset of the hearing before us (after refusal of the adjournment), the presiding judge emphasised to Mr Jeevaratnam the importance of addressing the issue of his standing, given his bankruptcy. Mr Jeevaratnam nevertheless focused his oral submissions upon a contention that the judgment had been entered prematurely; and complaints he makes against the plaintiffs, including that mortgages had been signed whilst his wife was a bankrupt, that he and his wife had been forced to sign documents, that no money had been lent to them by the plaintiffs, and that the plaintiffs were engaged in widespread wrongdoing which he characterised at one point as 'money laundering'. On the issue of his standing, he stated that he had approached the trustee but that the trustee wanted money before consent would be given and Mr Jeevaratnam did not have that money. He suggested that family members may now help him to bring the trustee to court.

29 Counsel on behalf of the first, second and third respondents focused their submissions on the standing issue. They relied on the decision of McDonald J in Bendigo Bank Ltd v Demaria.[13]

30 Section 58 of the Bankruptcy Act relevantly provides that upon bankruptcy the property of the bankrupt 'vests forthwith' in the bankruptcy trustee. As McDonald J explained in Bendigo Bank Ltd v Demaria, this means that, upon becoming bankrupt, the bankrupt is no more than a bare trustee of land of which they are the registered proprietor and they have 'no interest in ... proceedings brought ... for the recovery of that land and ... no standing to be heard in that proceeding.'[14]

31 Section 58 of the Bankruptcy Act was an insuperable barrier to each of Mr Jeevaratnam's applications to set aside the default judgment. Mr Jeevaratnam did not have standing to bring those applications. The judge was correct to dismiss them on that basis. Nothing has changed in that regard. Leave to appeal must be refused.

32 Mr Sivanantha's proposed grounds of appeal may be paraphrased as follows:

_(a) the judge wrongly assumed that Mr Sivanantha did not 'seem to take any enforcement action' and wrongly assumed that acceding to his application would be a recipe for paralysis;

(b) the amount owed to him by Mr Jeevaratnam far exceeds his equity in the property so that if he were to receive his 'proper amount' nothing would be left for the plaintiffs;

(c) the judge erroneously treated a proof of debt filed in relation to Mrs Jeevaratnam as relating to Mr Jeevaratnam; and

(d) the judge had failed to observe that Mrs Jeevaratnam's trustee had consented to the default judgment being entered on the basis of an arrangement as to distribution of the proceeds._

33 Mr Sivanantha's application to be added as a party required the judge in the County Court to exercise his discretion on a matter of practice and procedure.

34 This Court will only intervene in relation to discretionary judgments in the circumstances set out in House v The King.[15] It must be established that some error has been made in exercising the discretion. The judge must have acted on a wrong principle, allowed an extraneous or irrelevant matter to guide or affect him or her, mistaken the facts, or failed to take into account some material consideration. A decision may be so unreasonable or plainly unjust that it can be concluded that an error of the requisite kind has been made even though the error cannot be identified.

35 The Court is especially cautious before intervening in relation to matters of practice and procedure.[16]

36 In his written case Mr Sivanantha put forward contentions as to why the respondent plaintiffs' mortgages are invalid and why his charge (assuming, without deciding, that he has a charge, as did the judge below) has priority. The respondent plaintiffs in their written case contested those contentions.

37 At the outset, the presiding judge suggested to Mr Sivanantha that he needed to address the issue of whether the judge had made an error of the requisite kind in determining that the matters Mr Sivanantha wishes to raise should not be litigated in this proceeding, but, if they are to be pursued, should be so pursued by Mr Sivanantha in a separate proceeding

38 In his oral submissions Mr Sivanantha repeated the concerns expressed in his written case concerning the validity of the mortgages and the priority of his security interest. He indicated he was concerned that if the plaintiffs obtained possession they might not sell the property, but instead hold it indefinitely. He asserted that the plaintiffs had kept him 'in the dark' and had not acted in 'good faith'. He said that he would have liked to obtain legal advice but could not afford it. He said he was hoping family members might assist him.

39 Counsel for the respondent plaintiffs emphasised that his Honour's judgment was a discretionary decision to which the principles in House v The King applied. They submitted that the default judgment did not infringe upon Mr Sivanantha's rights, and that it was not apparent how the matter could proceed in the existing proceeding if Mr Sivanantha were to be added as a party. It was submitted that the default judgment did not shut Mr Sivanantha out from pursuing the rights which he claims to have and that he can commence a proceeding in order to do that. It was submitted that adding him as a party to this proceeding would practically involve the commencement of an entirely new proceeding in any event.

40 It seems to us that the judge was clearly right to refuse Mr Sivanantha's application to be added as a party to this proceeding and to 'stay' the default judgment. This proceeding concluded a considerable time ago with the entry of the default judgment. The default judgment cannot affect any valid proprietary interest Mr Sivanantha may have in relation to the property. There is nothing to preclude Mr Sivanantha issuing a proceeding to litigate the complaints he makes and to claim the priority he asserts against the respondent plaintiffs. That is clearly a far preferable course to adding him as a party to this proceeding. It is not at all clear what steps could properly be taken in this proceeding to accommodate Mr Sivanantha's claims. However it might be done, it would, to all intents and purposes, constitute a new proceeding in any event.

41 No relevant error of the trial judge has been identified. Leave to appeal will be refused.

42 For the above reasons, each application for leave to appeal will be refused.

ANGELIE PTY LTD (as trustee of the Angelie Superannuation Trust)

ANGELIE PTY LTD (as trustee of the Angelie Superannuation Trust)

[1] The applications seek leave to appeal from a decision made on 2 June 2020 which was the date upon which Judge Macnamara published his reasons. The relevant order was made on 8 July 2020.

[2] Angelie Pty Ltd v Jeevaratnam [2020] VCC 705 ('Reasons').

[3] Angelie Pty Ltd v Jeevaratnam [2020] VCC 989.

[4] Angelie Pty Ltd v Jeevaratnam (County Court of Victoria, Judge Macnamara, 24 September 2019).

[5] Jeevaratnam v Combis [2020] FCCA 746.

[13] (2001) VSC 218, [18]. Counsel also cited a decision in Bendigo and Adelaide Bank Ltd v Capotondi (2016) SASC 11. They conceded that the analysis in that South Australian judgment was essentially the same as that of McDonald J. Given that both of the applicants were unrepresented and had not been notified of an intention to rely on the South Australian judgment, the Court suggested the first, second and respondents' counsel should confine their reliance to McDonald J's judgment which they then indicated they would do.

[15] (1936) 55 CLR 499, 505; [1936] HCA 40 (Dixon, Evatt and McTiernan JJ).

[16] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177; [1981] HCA 39 (Gibbs CJ, Aickin, Wilson and Brennan JJ).