Australia and New Zealand Banking Group Limited v Huybers

[2014] NSWSC 720

Supreme Court

New South Wales

Medium Neutral Citation:

Australia and New Zealand Banking Group Limited v Huybers and anor [2014] NSWSC 720

Hearing dates:

3 December 2013, 12 February, 25 February and 18 March 2014.

Decision date:

10 June 2014

Before:

Bellew J

Decision:

1.The applicant's notice of motion is dismissed.

2.The applicant is to pay the respondent's costs.

Catchwords:

PRACTICE AND PROCEDURE - Application for stay of execution of writs of possession - Where applicant alleged that lender had known of, and participated in, a fraud - whether evidence sufficient to establish such knowing participation - whether delay in bringing application adequately explained - application for stay dismissed

PRACTICE AND PROCEDURE - Application for stay of execution of writs of possession - Evidence necessary to establish arguable case - Whether pleadings alone establish arguable case

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89
Re Foster; Ex parte Basan (1885) 2 Morr 29
Re Verma; Ex Parte Deputy Commissioner of Taxation (1985) 4 FCR 181

Category:

Principal judgment

Parties:

Australia and New Zealand Banking Group Limited - Plaintiff
Susan Elizabeth Huybers - First defendant
Green Global Constructions Pty Limited - Second defendant
Pineview Property Holdings Pty Limited - Third defendant
Biagina Rubino - Applicant
Australia and New Zealand Banking Group Limited - Respondent

Representation:

Counsel:
Solicitors:
Dominic Stanford Solicitors - Applicant
Kemp Strang - Respondent

File Number(s):

2013 / 106423

Publication restriction:

Nil

Judgment

BACKGROUND

1. By statement of claim filed on 8 April 2013 the Australia and New Zealand Banking Group Limited ("the respondent") commenced proceedings against:

(i)   Susan Elizabeth Huybers ("Huybers"), the first defendant;

(ii)   Green Global Constructions Pty Limited ("Green Global"), the second defendant; and

(iii)   Pineview Property Holdings Pty Limited ("Pineview"), the third defendant.

1. In those proceedings the respondent sought orders that:

(i)   it be granted possession of two properties, namely:

(a)   (a) a property at 5 Calderwood Road, Galston ("the Calderwood property"); and

(b) a property at 45 Pinevalley Road, Galston ("the Pinevalley property");

(ii)   leave be granted to issue writs of possession forthwith;

(iii)   Huybers pay the respondent the sum of $2,002,473.90;

(iv)   Green Global pay the respondent the sum of $2,523,991.23;

(v)   Pineview pay the respondent the sum of $2,083,046.96.

1. It should be noted that the Calderwood property and the Pinevalley Property are adjoining. Each is a separate lot in the one deposited plan.

1. Notices issued pursuant to r. 6.24 of the Uniform Civil Procedure Rules were served on 14 April 2013.

1. On 27 May 2013, no defence having been filed in the proceedings and no application for joinder having been made in response to the service of the notices under r. 6.24, the respondent filed a notice of motion seeking default judgment. Default judgment was entered on 18 June 2013 and writs of possession in respect of each of the Calderwood and Pinevalley properties were issued on 9 July 2013.

1. Notices to vacate, each dated 16 July 2013, were issued to the occupiers of each of the Pinevalley and Calderwood properties. The notices directed all occupants to vacate both properties prior to 11:30 am on 30 August 2013, and advised that in the absence of such vacation eviction action would proceed without further notice.

1. On 3 September 2013 a notice of motion was filed by Biagina Rubino and her husband Alfio Rubino, both of whom resided at the Calderwood property, seeking orders that:

(i)   the execution of the writs of possession be stayed;

(ii)   they be joined to the proceedings for the purposes of making that application.

1. After the notice of motion was filed, Mr Rubino passed away. The notice of motion has been continued by Mrs Rubino, to whom I shall refer as the applicant.

1. The notice of motion was first returnable on 5 September 2013. On that day, orders were made for the joinder of the applicant to the proceedings for the purposes of seeking a stay of execution of the writs of possession. A temporary stay was granted and the matter was adjourned until 9 October 2013 before Davies J.

1. On 8 October 2013 the applicant commenced proceedings in the Equity Division ("the Equity proceedings") against:

(i)   the respondent;

(ii)   Pineview;

(iii)   the Registrar General of New South Wales; and

(iv)   Salvatore Russo, solicitor.

1. The statement of claim filed in the Equity proceedings seeks the following relief:

(i)   a declaration that transfers, by the applicant to Pineview, of the Calderwood and Pinevalley properties, are void and of no effect;

(ii)   a declaration that the applicant is the legal and beneficial owner of each of the Calderwood and Pinevalley properties;

(iii)   an order that each of the Calderwood and Pinevalley properties be transferred to the applicant;

(iv)   a declaration that two mortgages in favour of the respondent are defeasible by reason of the fraud of Pineview.

1. When the applicant's motion came before Davies J on 9 October 2013 his Honour made orders for the service of further affidavit material. The matter then came before the Registrar on 15 November 2013 when directions were made for the service of submissions. The matter was then adjourned until 3 December 2013.

1. The matter came before me as Duty Judge on 3 December 2013. Also before me on that day was a notice of motion filed in the Equity proceedings seeking an amendment of the statement of claim. It was agreed between the parties that it was not necessary for me to determine that matter.

1. Towards the end of the proceedings on 3 December 2013 a Mr Dimitriou appeared before the court and informed me that he had "been requested to act for Ms Huybers in the matter". He explained that he was not a solicitor, that he was not employed by a solicitor, and that he had been asked by Huybers to "assist" her. He sought a continuation of the stay "on the basis that (Huybers) is able to have her matter heard". There was, of course, no application by Huybers before me on that day, nor has any application subsequently been filed by her. Mr Dimitriou then requested that the respondent provide Huybers with all affidavit material that it relied upon. In circumstances where no application had been brought by Huybers before me I declined that request.

1. The matter came before me again on 12 February 2014. On that occasion a Mr Rarparch appeared as agent for the solicitors acting for Huybers. He indicated that Huybers may wish to be heard on the motion brought by the applicant. I made a number of orders facilitating the provision of relevant material to Mr Rarparch and further adjourned the matter until 25 February 2014.

1. When the matter came before me on 25 February 2014 there was no appearance on behalf of Huybers nor was there any appearance by counsel for the applicant. I was informed by counsel for the respondent on that occasion that enquiries indicated that Huybers was no longer represented. Huybers was called but did not appear.

1. On the previous day, 24 February, I had received a large amount of further evidentiary material on behalf of the applicant. That material had also been provided to the respondent. Counsel for the respondent, not unreasonably, indicated that he required some time to consider it. I then made a number of further orders and adjourned the matter for further directions on 18 March 2014.

1. When the matter came before me on 18 March 2014 I made orders allowing the parties to provide further submissions in light of the additional material which had been served.

THE EVIDENCE

1. The following affidavits were read in support of the applicant's motion:

(i)   Manuelpillai Paul Dominic dated 3 September 2013;

(ii)   Biagina Rubino dated 3 September 2013;

(iii)   Alfio Rubino dated 3 September 2013;

(iv)   Lee Rubino dated 3 September 2013;

(v)   Andrew Jetson dated 23 October 2013;

(vi)   Manuelpillai Paul Dominic dated 23 October 2013;

(vii)   Gerard Quin dated 24 February 2014;

(viii)   Harjeet Singh dated 24 February 2014;

(ix)   Mauro Rubino dated 24 February 2014;

(x)   Paul Dominic Stamford dated 24 February 2014;

(xi)   Manuelpillai Paul Dominic dated 25 March 2014.

1. The respondent relied upon an affidavit of Ian Marsden dated 5 September 2013 and an affidavit of Steve Vanderveer dated 18 April 2013.

1. Also in evidence before me were:

(i)   copies of the front pages of the contracts of sale of the Calderwood and Pinevalley properties; and

(ii)   a copy of the transfer of those properties.

THE FACTS

1. In December 2011, the applicant and her late husband entered into a Heads of Agreement with the respondent which gave effect to the settlement of a dispute in which the respondent had claimed to be owed in excess of $6 million. Monies owed to the respondent had been secured by mortgages over the Pinevalley property and the Calderwood property, as well as over a further property at 153 Arcadia, Arcadia. The steps necessary to give effect to the settlement were completed in January 2012.

1. On or about 13 February 2012 the respondent approved an application by Pineview for an advance of more than $2 million to be secured by:

(i)   a mortgage over the Pinevalley property;

(ii)   a mortgage over the Calderwood property; and

(iii)   guarantees from Huybers and Green Global.

1. The Calderwood property was valued by the respondent at $1,350,500.00 and the Pinevalley property at $1,150,400.00. Following approval of the application, the respondent issued two letters of offer to Pineview on 14 February 2012. Pineview accepted those offers.

1. On 8 March 2012 the applicant transferred the Calderwood and Pinevalley properties to Pineview. The total stated consideration was $2,500,900.00.

1. The loan and mortgage and transactions between the respondent and Pineview were then settled. The respondent was granted a mortgage over each of the Calderwood and Pinevalley properties. Those mortgages were subsequently registered.

1. On 6 February 2013, in view of continuing default, the facilities advanced by the respondent to Pineview were terminated and the debt balance was the subject of a demand. The proceedings to which I referred in [1] to [5] above were then commenced. In the circumstances already outlined, judgment was entered in favour of the respondent in those proceedings and orders made (inter alia) for the respondent to have possession of the Calderwood and Pinevalley properties.

1. The applicant now asserts that she:

(i)   was "tricked" into transferring the Calderwood and Pinevalley properties to Pineview;

(ii)   thought she was signing a loan document in respect of the Pinevalley property, when she was in fact signing a transfer;

(iii)   did not know that she was transferring the properties;

(iv)   first discovered that she had done so in September 2012; and

(v)   did not receive the stated consideration.

THE SUBMISSIONS OF THE PARTIES

1. Two fundamental submissions were advanced on behalf of the applicant in support of the orders sought in the notice of motion. The first, was that the applicant had an arguable case of fraud against Pineview and the respondent. The second, was that she had adequately explained the delay in bringing the present application and would suffer undue hardship if it were not granted.

1. As to the first of those matters, counsel for the applicant indicated that it would be alleged that Pineview had perpetrated a fraud on the applicant. She further indicated that it would be the applicant's case that the respondent was "brought in relevantly to the fraud" by knowingly assisting Pineview in perpetrating it.

1. Counsel firstly submitted that in determining whether or not the applicant had an arguable case of fraud against the respondent it was not necessary for me to go beyond a consideration of the pleadings filed in the Equity proceedings. It was submitted, in effect, that if I came to the view that the statement of claim was properly pleaded it would be open to me to conclude, on that basis alone, that the applicant had an arguable case. I should say immediately that I am unable to accept that submission. The pleadings in the Equity proceedings are evidence of nothing more than the fact that those proceedings have been commenced. They say nothing whatsoever about the strength of the case that is brought (see In Re Foster; Ex parte Basan (1885) 2 Morr 29 at 30-34 per Brett MR; Re Verma; Ex Parte Deputy Commissioner of Taxation (1985) 4 FCR 181 at 187 per Beaumont J).

1. Counsel for the applicant then referred to various parts of the evidence. She relied in particular, upon the following matters in support of the applicant's case:

(i)   the loan document check list sent to the respondent stated that a full copy of the notice of sale was included, when it was not;

(ii)   the respondent had specifically requested, but did not receive, a copy of the contract of sale in respect of either of the two properties;

(iii)   there were unsigned documents included in the relevant loan application;

(iv)   no representative of the respondent had attended any settlement at the time of the execution of the transfer; and

(v)   the valuations provided to the respondent incorrectly stated that the properties were not encumbered.

1. Counsel for the applicant submitted that these circumstances, along with those surrounding the transfer, were "unusual". She also relied on the fact that the transfer had been executed by the applicant against a background of prior dealings between herself and the respondent.

1. Counsel for the applicant also explained that she relied upon a case of mistake, based upon the same facts. She accepted, as I understood it, that in order to make out such a case it would again be incumbent upon the applicant to establish knowledge on the part of the respondent.

1. As to the second matter, counsel submitted that there had been no, or at least no significant, delay on the part of the applicant in bringing the present notice of motion. Counsel relied upon the fact that the applicant was a person who had a limited understanding of English, and submitted that the evidence established that she had not understood the terms of the occupier's notice which was served. By reference to the affidavit of the applicant's late husband, counsel submitted that it would be open to find that notice of the relevant matters came to his attention in August of 2013 and that in these circumstances any delay was minimal.

1. Finally, it was submitted on behalf of the applicant that the respondent had failed to demonstrate that any prejudice would be visited upon it in the event that the stay were granted.

1. The principal submission of counsel for the respondent was that the respondent was the registered mortgagee of both properties, and that in circumstances where the applicant was not on the register, it was incumbent upon her to establish that she had an arguable case for the respondent to be removed. Counsel submitted that it would ultimately be incumbent upon the applicant to prove that the respondent had knowledge of, and had participated in, the alleged fraud. He submitted that there was no direct evidence of such knowledge and participation, and that there was no other evidence from which the requisite inferences could be drawn.

1. Counsel also relied upon the fact that the respondent had advanced in excess of $2 million in order to secure the mortgages and, importantly, had advanced that money to someone other than the applicant. It was submitted that in these circumstances, the fact that the applicant had some prior indebtedness to the respondent, whilst forming part of the background to the matter, was largely irrelevant.

1. Finally, counsel submitted that there had been unexplained delay on the part of the applicant in bringing the present application, and in bringing the Equity proceedings. He also pointed to the prejudice which would be visited upon the respondent in the event that the stay was granted. In this regard he submitted, in particular, that in view of the level of accruing interest, and because of the expected delay in the determination of the Equity proceedings, a shortfall would be likely to result in the event that the properties were sold.

DETERMINATION

1. In Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 the High Court concluded (at [177]) that the requirement of knowledge in a case such as the present fell to be analysed by reference to the first four of the following five categories:

(i)   actual knowledge;

(ii)   wilfully shutting one's eyes to the obvious;

(iii)   wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make;

(iv)   knowledge of circumstances which would indicate the facts to an honest and reasonable man; and

(v)   knowledge of circumstances which would put an honest and reasonable man on inquiry.

1. The evidence adduced by the applicant in support of the motion was voluminous. Whilst I have obviously considered that evidence, it is not my function to try any issue, or determine any question of fact. It is my function to determine whether or not the applicant's asserted position is arguable.

1. The submissions of the applicant, and the evidence which was relied upon in support of them, essentially amount to the proposition that there were unusual features surrounding the relevant transactions, from which an inference should be drawn that the respondent knew of, and participated in, a fraud perpetrated by Pineview on the applicant. Even if it is accepted that a fraud was in fact perpetrated, and even if it is further accepted that some aspects of the transactions were unusual in the sense relied upon by counsel for the applicant, they are no more than that. In my view, the matters relied upon fall short of establishing knowledge of the respondent of any fraud committed by Pineview on the applicant, much less any participation by the respondent in such a fraud. This is particularly so in circumstances where:

(i)   there is no issue that the applicant signed the transfer;

(ii)   the applicant does not suggest that any representative of the respondent was present at the time at which the transfer was executed; and

(iii)   the applicant does not suggest that any representative of the respondent had direct knowledge of the circumstances in which such execution occurred.

1. Further, there is considerable force in the submission advanced by counsel for the respondent concerning the fact that an amount of more than $2 million was advanced by the respondent. That, in my view, is an objective circumstance which tends very much against the proposition that the respondent knew of, and participated in, a fraud said to have been perpetrated by the very entity to which the money had been advanced.

1. Quite apart from those matters, there has been a significant, and largely unexplained, delay on the part of the applicant in bringing the present application. The following matters are of particular significance in this regard.

1. Firstly, in her affidavit of 3 September 2013 the applicant deposed (at paragraph [11]) as follows:

"I have been shown a notice of (sic) occupier by my solicitor. Annexed hereto and marked "A" is this document. I have not ever seen this document before. I don't understand what it means. I don't believe I have seen this document or any other document like this before".

1. It will be noted that the applicant first asserted that she had "not ever seen" the occupier's notice. She then asserted, in the same paragraph, that she did not "believe" she had seen it. There is a subtle, but important, inconsistency between those two propositions.

1. Secondly, there is evidence that the applicant became aware of a number of material facts long before the present application was made. In particular the affidavit of Lee Rubino, the applicant's daughter-in-law, establishes that the transfer of the Calderwood and Pinevalley properties first came to the notice of the applicant in the latter part of 2012. This resulted in (inter alia) a complaint being made by Ms Rubino to the police on behalf of the applicant in or about January 2013. In these circumstances, the fact that the late Mr Rubino may not have become aware of relevant matters until August 2013 is largely immaterial. The more important fact is that in circumstances where the applicant became aware of the transfer of the properties in the latter part of 2012, she waited until September 2013 to bring the present application. Why this is so has not been satisfactorily explained.

1. Thirdly, and as I have previously noted, the respondent relied upon an affidavit of service of Steve Vanderveer of 18 April 2013. That affidavit, the contents of which are unchallenged on the present application, establishes that personal service of (inter alia) the notices issued under r. 6.24 was effected on a person named "Gina" on 14 April 2013. "Gina" told Mr Vanderveer that she lived with the applicant and her late husband and would pass the notices on to them. Counsel for the applicant did not submit that the notices were not properly served in accordance with the Uniform Civil Procedure Rules. Clearly, once served, they were not acted upon. The fact that the notices were not acted upon is, of itself, significant. It is rendered even more so having regard to the matters set out in [47] above. The failure to act upon the notices has not been satisfactorily explained.

1. Fourthly, notices to vacate the properties were issued on 16 July 2013. As I have already noted, the present application was not brought until 3 September 2013, more than six weeks later. This further delay is similarly unexplained.

1. In my view, these delays, and the absence of any evidence which might properly explain them, tend further against the granting of the orders sought in the notice of motion.

ORDERS

1. For the foregoing reasons, I make the following orders:

(1)   The applicant's notice of motion is dismissed.

(2)   The applicant is to pay the respondent's costs.

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Decision last updated: 10 June 2014