Butler v Vavladelis - [2012] VSC 186

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

PRACTICE COURT

S CI 2010 05837

JOSEPH STANLEY BUTLER & ORS (According to the schedule annexed)	Plaintiffs
v
EVANGELOS VAVLADELIS and PANAGIOTA VAVLADELIS	Defendants

S CI 2011 05713

JOSEPH STANLEY BUTLER & ORS (According to the schedule annexed)	Plaintiffs
v
ANDRONIKI HALVADAKIS & ORS (According to the schedule annexed)	Defendants

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JUDGE:	HARGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 May 2012
DATE OF JUDGMENT:	9 May 2012
CASE MAY BE CITED AS:	Butler & Ors v Vavladelis
MEDIUM NEUTRAL CITATION:	[2012] VSC 186

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PRACTICE AND PROCEDURE – Application to set aside default judgment – Whether arguable defence based on unconscionable conduct – Asset based lending – Arguable defence established – Judgment set aside on conditions.

EQUITY – Unconscionable conduct – Whether asset based lending unconscionable – Loan by clients of solicitor’s mortgage practice – Arguable defence of unconscionability established – Default judgment set aside on conditions –Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413; Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; Perpetual Trustees Australia Limited v Schmidt & Anor [2010] VSC 67; Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41 considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr W G Stark	Blaak & Associates
For the Defendants	Mr A R Kirby	Brand Partners

TABLE OF CONTENTS

Failure to appear and delay issues.................................................................................................. 6

Do the defendants have an arguable defence?............................................................................. 6

Can any prejudice to the plaintiffs be compensated for?......................................................... 12

Should the judgments be set aside?............................................................................................. 13

HIS HONOUR:

The plaintiffs are clients of a legal firm which conducts a solicitor’s mortgage practice. The solicitors arranged for the plaintiffs to lend the sum of $400,000 to the defendants on the security of the defendants’ home. The loan was secured by a mortgage dated 18 November 2009 and registered on the title as a first mortgage.

The mortgage soon fell into default. In October 2010, the plaintiffs commenced this proceeding, seeking judgment for possession of the property.

A default judgment was obtained on 11 February 2011. The plaintiffs issued a warrant of possession and it was executed by the Sheriff on 23 May 2011. Accordingly, the defendants were forced to leave their home at this time.

About four weeks later, the defendants’ daughter agreed with the plaintiffs to purchase the property from them and, pending settlement of that sale, entered into a licence agreement to occupy the property. This allowed the defendants to move back into their home.

The defendants’ daughter was unable to complete the contract of sale. Following her default, separate proceedings were issued by the plaintiffs seeking possession of the property from the defendants and their daughter. Judgment for possession was ordered by an associate justice on 9 November 2011. The application for judgment was not opposed.

The plaintiffs issued a second warrant of possession, which was executed on 4 April 2012. The defendants were evicted from their home a second…

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.

Continue reading Butler v Vavladelis

Details

AGLC: Butler v Vavladelis [2012] VSC 186
Case: [2012] VSC 186
Decision Date: 9 May 2012

CaseChat Overview and Summary

In Butler v Vavladelis, the plaintiff sought to enforce a default judgment against the defendant for the amount of $48,000, which had been awarded due to the defendant's failure to respond to the claim. The defendant applied to set aside the default judgment, asserting that he had an arguable defence based on the unconscionability of the loan arrangement. The loan was part of an asset-based lending arrangement where the defendant's clients obtained loans secured by mortgages. The case was heard in the Supreme Court of Victoria.

The primary legal issue before the court was whether the defendant's unconscionability defence was arguable, thereby justifying the setting aside of the default judgment. The court considered relevant precedents, including Elkofairi v Permanent Trustee Co Ltd, Kowalczuk v Accom Finance Pty Ltd, Perpetual Trustees Australia Limited v Schmidt, and Perpetual Trustee Company Limited v Khoshaba. The court needed to determine if the defendant had presented a plausible argument that the loan arrangement was unconscionable, which could potentially nullify the default judgment.

The court found that the defendant had established an arguable defence of unconscionability. The defendant's arguments were based on the nature of the asset-based lending arrangement, the role of the defendant as a solicitor involved in the mortgage practice, and the circumstances surrounding the loan agreement. The court considered that the defence met the threshold for arguability as required by the relevant authorities. Consequently, the court set aside the default judgment on conditions, allowing the defendant to defend the claim on the merits.

The final orders of the court included setting aside the default judgment and permitting the defendant to defend the claim. The defendant was required to pay the plaintiff's costs of the application and the hearing of the defence within a specified timeframe. Additionally, the defendant was ordered to provide security for the plaintiff's costs of the proceeding, should the plaintiff ultimately prevail.

Orders