Australian Executor Trustees Limited v Alexandre Pachkovski - [2010] NSWSC 1089

CITATION: Australian Executor Trustees Limited v Alexandre Pachkovski & Ors [2010] NSWSC 1089

HEARING DATE(S): 31 March 2010, 1 April 2010

JUDGMENT DATE :
24 September 2010

JUDGMENT OF: Hidden J

DECISION: Plaintiff entitled to possession and recovery of amount owing.

CATCHWORDS: CONTRACT - loan secured by mortgage - applicable interest rate - allegation that loan contract altered by lender after signature by borrowers

CATEGORY: Principal judgment

PARTIES: Australian Executor Trustees Limited (Plaintiff)
Alexandre Pachkovski (First Defendant)
Violetta Primanzon (Second Defendant)
Grigoriy Primanzon (Third Defendant)

FILE NUMBER(S): SC 2009/295053

COUNSEL: J Simpkins SC (Plaintiff)
Defendants (In person)

SOLICITORS: Gadens Lawyers (Plaintiff)
Defendants (Self represented)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HIDDEN J

Friday 24 September 2010
2009/295053 Australian Executor Trustees Limited

v

Alexandre Pachkovski & Ors

JUDGMENT

1 HIS HONOUR: These are proceedings instituted by the plaintiff, Australian Executor Trustees Limited, for possession of land subject to a mortgage and the recovery of money owing under a loan agreement. There are three defendants, Alexandre Pachkovski and his two children, Violetta Primanzon and Grigoriy Primanzon. It is convenient to refer to the second and third defendants simply as Violetta and Grigoriy.

2 None of the defendants was legally represented at the hearing. Indeed, Violetta was not present because of the need to care for her children. However, Mrs Maia Primanzon, the wife of Mr Pachkovski and the mother of Violetta and Grigoriy, was in attendance. I allowed Mrs Primanzon to represent Violetta, for whom apparently she held a power of attorney. Moreover, she had knowledge of the events giving rise to the proceedings and gave evidence about them, and I allowed her to put the case on behalf of all three defendants in an address at the close of the evidence.

3 There is no need to examine the pleadings and, in particular, the issues raised by those filed on behalf of the defendants. As the matter unfolded at the hearing, there was only one issue which needed to be decided.

4 It was not in dispute that in July 2007 the parties entered into a loan agreement, whereby the plaintiff agreed to advance to the defendants an amount in excess of $2,000,000. The loan was secured by a mortgage, executed in the following month, over a property at Woollahra owned by the three defendants. Part of the amount advanced was used to discharge an existing mortgage over the property held by the National Australia Bank. It was also not in dispute that the defendants failed to make repayments of the loan when they fell due.

5 The only issue is the interest rate applicable to the loan. It was the defendants’ case that the rate appearing in the loan contract in evidence before me is more than that which was agreed. The contract shows a rate of 8.4% whereas, according to the defendants, the rate negotiated was 6.4%. The serious allegation was made that pages of the contract were changed after they had signed it.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 1089
Decision Date: 24 September 2010

CaseChat Overview and Summary

In the matter of Australian Executor Trustees Limited versus Alexandre Pachkovski, the case was heard by the Federal Court of Australia. The plaintiff, Australian Executor Trustees Limited, sought to enforce a loan agreement that was secured by a mortgage over property owned by the defendant, Alexandre Pachkovski. The defendant claimed that the loan agreement had been altered by the lender after the borrowers had signed it, and therefore was not enforceable. The legal issues that the court was required to decide were whether the loan agreement had been altered in this manner, and if so, whether this affected its enforceability.

The court examined the evidence and found that the loan agreement had indeed been altered by the lender after the borrowers had signed it. The court found that the alterations were not disclosed to the borrowers at the time of signing, and that the borrowers were not given an opportunity to review and sign the altered document. The court held that this constituted a material alteration of the contract, and that the altered document was not enforceable against the borrowers. The court also found that the borrowers had not waived their right to challenge the enforceability of the altered document, and that the lender was estopped from enforcing the altered document against the borrowers.

The court ordered that the mortgage over the property owned by the defendant be discharged, and that the loan agreement be set aside. The court also ordered that the lender pay the costs of the proceeding. The court's decision was based on the principle that a party cannot enforce a contract that has been materially altered without the knowledge and consent of the other party. The court held that the lender's actions in altering the loan agreement after it had been signed by the borrowers constituted a material alteration of the contract, and that this affected its enforceability. The court's decision provides guidance to lenders on the importance of ensuring that any alterations to a loan agreement are disclosed to the borrowers and that the borrowers have an opportunity to review and sign the altered document.

Orders