Alirezai v Australia and New Zealand Banking Group Ltd

[1997] QCA 443

IN THE COURT OF APPEAL	[1997] QCA 443
SUPREME COURT OF QUEENSLAND

Appeal No. 4048 of 1997

Brisbane

[Alirezai v ANZ Banking Group Ltd]

BETWEEN:

MOHSEN ALIREZAI

(Defendant) Appellant

AND:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD

(Plaintiff)	Respondent
Thomas J Dowsett J Helman J

Judgment delivered 12 December 1997

Judgment of the Court

APPEAL ALLOWED WITH COSTS. JUDGMENT BELOW IS SET ASIDE AND REPLACED WITH AN ORDER GRANTING LEAVE TO DEFEND, WITH COSTS OF THE APPLICATION COSTS IN THE CAUSE.

CATCHWORDS:	PRACTICE - Appeal against summary judgment - Whether evidence raised a question in dispute which ought to be tried - Admissibility of affidavit material - Whether failure to swear to element of reliance fatal to raising of estoppel defence in summary judgment proceedings. Rules of the Supreme Court O.18 Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122 Gould v Vaggelas (1985) 157 CLR 215
Counsel:	Mr R Traves for the Appellant Mr M Daubney for the Respondent
Solicitors:	D Creevey & Associates for the Appellant Blake Dawson Waldron for the Respondent
Hearing date:	28 November 1997

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 4048 of 1997

Brisbane

Before Thomas J Dowsett J Helman J

[Alirezai v ANZ Banking Group Ltd]

BETWEEN:

MOHSEN ALIREZAI

(Defendant) Appellant

AND:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD

(Plaintiff) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 12 December 1997

This is a defendant’s appeal against summary judgment in favour of the bank for possession. The writ was specially endorsed under O.6 r.7 and the application was made under O.18 of the Rules of Court.

The appellant was at material times the registered proprietor of two properties (Lot 2 and Lot

6) in Toowoomba. In 1991, at the request of Mr Sarlak, the appellant executed a mortgage in favour

of the bank over Lot 2 as security for a loan by the bank to a company called Sarlak Enterprises Pty

Ltd. The present proceedings concern the grant of a further mortgage by the appellant in August 1993,

this time over Lot 6. It is common ground that this was intended to secure further borrowings which

Sarlak Enterprises Pty Ltd wished to make from the bank. The triable issue upon which the appellant seeks to rely arises from an oral limitation that is said to have been placed upon these further borrowings

and upon the appellant’s liability in respect of them. Such liability is the necessary foundation of the

bank’s right to demand possession.

The documents and material filed on behalf of the bank are prima facie sufficient to obtain a

summary judgment. The question is whether the material filed by the appellant shows cause against the

granting of such judgment(O.18 r.3), and in particular whether the appellant’s material should have

satisfied the judge “that there is a question in dispute which ought to be tried or that there ought for some

other reason to be a trial” (O.18 r.1A).

The affidavit of the appellant included evidence that the original 1991 mortgage over Lot 2 was

a collateral mortgage in favour of the bank to enable Sarlak Enterprises to borrow for a proposed tallow

export contract to be financed by the bank. In August 1993, after the debt under the first contract had

been paid out, the appellant agreed with Sarlak Enterprises to grant a mortgage in favour of the bank

over Lot 6 to enable that company to borrow $350,000 for another tallow export contract to be

financed by the bank. The appellant proceeds–

“I understood from my discussions with Sarlak that if Sarlak Enterprises did not borrow for the export contract, the bank had agreed that the second mortgage would not be relied upon.”

In a proceeding under O.18, unless the judge otherwise directs, an affidavit on behalf of a

defendant who wishes to show cause against the application may contain statements of information or

belief with the sources and grounds thereof (O.18 r.3(3)). In this case the appellant’s solicitor deposed

inter alia as follows–

“2.

I am informed by Mr Joe Sarlak and believe as follows:

(a)

after about December 1990, Sarlak Enterprises Pty Ltd as trustee for the Joe Sarlak Family Trust was a customer of the ANZ Bank, Albury, New South Wales branch;

(b)

at all times, he on behalf of the company dealt with a Mr Jackson who was the manager of the ANZ Albury branch;

(c)

in December of 1991, he asked the defendant to give the bank security over Lot 2 Mt Rascal to enable Sarlak Enterprises to obtain a bank guarantee from the ANZ Bank for the purchase of price of tallow to be sold to Iran. This was a request for a return favour as previously Sarlak had lent the defendant some money;

(d)

At this time, the bank held registered mortgages over the following property to secure an overdraft in the name of the company as trustee, a fully drawn advance and a residential investment property loan;

(i)	Yambla Avenue, Albury;
(ii)	Englehardt Street, Albury;
(iii)	Nurigong Street, Albury;
(iv)	Englehardt Street, Albury;

(e)

Sarlak agreed to give the mortgage on the basis of a special agreement which became clause 8 of the mortgage;

(f)

the tallow contract was performed, the proceeds of sale received, and paid into the ANZ Bank and the ANZ Bank guarantee was released;

(g)

in about August 1993, Sarlak approached the defendant about another proposal to export tallow to Iran;

(h)

Jackson told Sarlak that the bank would not rely on the proposed second mortgage if the money for the contract (ie the bill negotiated under credit) was not drawn down because the tallow export proposal did not proceed;

(i)

Mr Sarlak discussed these arrangements with the defendant prior to the execution of the second mortgage;

(j)

the tallow export proposal did not proceed and the proposed facility was not drawn down.”

Before the learned Chamber Judge, counsel for the bank objected to the reception of sub- paragraph 2(h) on the ground that it amounted to hearsay upon hearsay. Upon the appeal counsel for the respondent bank conceded that this was the only ground of objection and that the ruling was sought

on the basis of admissibility rather than upon a request that the Judge should “otherwise direct” under

O.18 r.3(3). The same position was maintained on appeal, and our task is therefore to consider

whether that sub-paragraph was admissible.

Mr Daubney for the respondent bank submitted that the evidence concerned a statement made

by Mr Jackson; that Mr Sarlak to whom the statement was made could have sworn a valid hearsay

affidavit (under O.18 r.3); but that the solicitor to whom Mr Sarlak relayed the information could

merely swear hearsay on hearsay, which was impermissible. The submission is misconceived. Such

evidence if given by Mr Sarlak would not be hearsay; it would be evidence of a relevant fact, namely

the representation that Mr Jackson made to him. That is one of a series of facts by which the defendant

sought to make out a defence of estoppel or a case for relief under the Trade Practices Act in respect

of a misleading and deceptive statement. With respect to the defence of estoppel the defendant would

be entitled to prove that such a statement was made to someone who would be expected to notify the

defendant of it, that that person did notify the defendant of it, and that in reliance upon it he acted to his

detriment, such as for example by signing the further mortgage.

We do not say that the evidence so far adduced proves satisfactorily all these matters. But a

defendant does not have to prove all necessary facts as upon a trial. The appellant sufficiently indicated

in his affidavit that this information was passed on to him by Mr Sarlak. Criticism may be made of the

loose formula: “I understood from my discussions with Sarlak . . .”, but we do not think that the

evidence should have been disallowed on that ground, and we do not understand counsel to have relied

on this as a ground for exclusion. The essential point is that the conversation between Mr Jackson and Mr Sarlak could be given by Mr Sarlak as original evidence of the representation. Mr Daubney’s

submission that the solicitor’s evidence was hearsay upon hearsay therefore fails.

It was further submitted that the appellant failed to swear that in reliance upon such information

he entered into the mortgage. That submission is factually correct, but in the context of the present

summary judgment proceedings that failure is not fatal to the raising of the defences that have been

mentioned. The nature of the defences has been disclosed with sufficient particularity, and there is

enough evidence to show that there should be a trial.

In Gould v Vaggelas (1985) 157 CLR 215, 238 it is recognised that the elements of

inducement and reliance may readily be inferred.

“. . Such cases are of a kind where in the general experience of mankind the facts speak for themselves. Where a plaintiff shows that a defendant has made false statements to him intending thereby to induce him to enter into a contract and those statements are of such a nature as would be likely to provide such inducement and the plaintiff did in fact enter into that contract and thereby suffered damage and nothing more appears, common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract.”

In the present case the statement made to Mr Sarlak goes directly to the rationale of the

proposed transaction. On its face it appears to afford a good reason that would assist to induce a third

party such as the applicant to advance further security. In the present circumstances we do not think

that the failure of the defendant expressly to swear to his reliance upon the representation conveyed to

him by Mr Sarlak is fatal to his right to defend.

“If . . . the defendant shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim, he ought not to be debarred of all power to defeat the demand upon him.”

[Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122, 133 per Isaacs J]
There is enough material here to show that there is a question in dispute which ought to be tried, and

that the summary judgment should be set aside.

The appeal should be allowed with costs. The judgment below should be set aside and

replaced with an order granting leave to defend, with costs of the application costs in the cause.