Ganesh v National Australia Bank Ltd
[2018] VSCA 224
•5 September 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0048
| ANANDAVALLI GANESH | First Applicant |
| and | |
| GANESH RADHAKRISHNAN | Second Applicant |
| v | |
| NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) | Respondent |
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| JUDGES: | HARGRAVE JA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 22 August 2018 |
| DATE OF JUDGMENT: | 5 September 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 224 |
APPLICATION PURSUANT TO R 64.08 OF THE SUPREME COURT
(GENERAL CIVIL PROCEDURE) RULES 2015 FOR AN EXTENSION
OF TIME FOR FILING AN APPLICATION FOR LEAVE TO APPEAL
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PRACTICE AND PROCEDURE – Application for leave to appeal out of time – Delay of one year – Application previously refused by Judicial Registrar – Proposed appeal totally without merit – Futile to grant extension of time.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants: | In person | -- |
| For the Respondent: | Mr A Segal | Gadens Lawyers |
HARGRAVE JA:
By application dated 21 March 2018, the applicants seek an extension of time for the filing of an application for leave to appeal against orders made by Vickery J about one year earlier on 20 March 2017.[1] By those orders, Vickery J dismissed an appeal by the applicants against orders made by Mukhtar AsJ on 20 December 2016. Mukhtar AsJ had ordered that the respondent bank, National Australia Bank Limited, was entitled to summary judgment on part, but not all, of its claims against the applicants and a company controlled by them, Gsquare Group Pty Ltd.
[1]Although variously dated 21 March 2018, and 6 April 2018, the application and supporting affidavit sworn 22 March 2018 were not accepted by the Court of Appeal registry for filing until 10 April 2018. Nothing turns on this. The application for an extension of time was refused by Irving JR on 7 June 2018. The applicants were dissatisfied with this decision and Irving JR referred this application to me to determine pursuant to r 64.15(1) of the Supreme Court (General Civil Procedure) Rules 2015.
The application for an extension of time is extraordinarily late. Rule 64.05 of the Supreme Court (General Civil Procedure) Rules 2015 requires that an application for leave to appeal must be filed within 28 days after the decision is made to which the application relates. However, the Court has a discretionary power to extend the time for filing an application for leave to appeal. The principles governing the exercise of that discretion were stated by Nettle AP and Neave JA in Muto v Secretary, Department of Planning in the following terms:
The factors which must be considered in deciding whether an extension of time to seek leave to appeal should be granted, include the length of delay, the reasons for the delay, and the extent of any prejudice suffered by the respondent if the extension is granted.[2] The Court will not extend time if the appeal is so devoid of merit that it would be futile to do so. [3]
[2]Jackamarra v Krakouer (1998) 195 CLR 516, 519–21 (Brennan CJ and McHugh J).
[3](2013) 38 VR 293, 296 [13] (citations in original).
The merits of the proposed appeal
I will first consider with the merits of the proposed application for leave to appeal.
The applicants are Ms Anandavalli Ganesh and her husband Ganesh Radakrishnan. In 2009 the bank loaned them a total of $1,425,500 under six credit facilities. The security for the loans included mortgages over the following pieces of land:
(1) 24 Plumpton Avenue, Oak Park — which was at that point the family home owned by the applicants jointly;
(2) 29 Glen Drive, Rye — owned by Ms Ganesh; and
(3) 20 Marcia Avenue, Rye — owned by Gsquare Group Pty Ltd, of which each of the applicants is a director.
In summary:
(1) The security for the first four facilities was the Plumpton Avenue property. Following a default on those facilities, the applicants voluntarily sold that property and the net proceeds of sale were sufficient to discharge all four facilities except for a small part of the ‘second facility’. Thus, there is an unsecured amount owing by the applicants to the bank under the second facility for that amount. The allocation of the net sale proceeds of Plumpton Avenue was itself contentious, and the bank applied to the Court to resolve the proper distribution of those proceeds between the various facilities. The subsequent distribution was in accordance with the Court’s determination.
(2) The so-called ‘sixth facility’ is secured by the Glen Drive property. The loan was for the specific purpose of Ms Ganesh purchasing that property as a rental property. The terms of the sixth facility included interest ‘offset’ arrangements, under which interest payable on the loan was offset against rental payments on the Glen Drive property deposited into a designated account with the bank. Thus the sixth facility was a sole purpose facility designed to fund Ms Ganesh’s purchase of the Glen Drive property for rental purposes.
(3) The so-called ‘fifth facility’ is contentious. It is clear that the initial loan arrangements which culminated in the fifth facility were made before the sixth facility. Like Mukhtar AsJ, I will refer to these initial arrangements as the ‘previous facility’. Further, it is uncontroversial that the purpose of the previous facility was to enable the purchase of the Marcia Avenue property. Ms Ganesh had purchased that property under a contract of sale with a nominee clause, and later nominated Gsquare as purchaser. The bank loaned the money to the applicants to enable the purchase to take place, on the security of Gsquare’s guarantee supported by a mortgage over the Marcia Avenue property. It appears that the parties intended a similar offset arrangement would apply to the previous facility but, for some unexplained reason, it was not acted upon.
(4) Later, in 2010, the previous facility was repaid and it was replaced with the proceeds of the so-called ‘fifth facility’. Under the terms of the fifth facility loan documentation, offset arrangements were put in place, as requested by the applicants. The controversial aspect of the fifth facility loan agreement is that the bank took the opportunity to extend the security it had held for the previous facility — which had been limited to the guarantee from Gsquare and the mortgage over the Marcia Avenue property — so as to include the existing mortgages over the Plumpton Avenue and Glen Drive properties. The security constituted by Gsquare’s guarantee and the related mortgage over the Marcia Avenue property continue. As a result of these amended arrangements:
(a) the mortgage over the Plumpton Avenue property remained as security for the first, second, third and fourth facilities — and that mortgage became security for the fifth facility also;
(b) the mortgage over the Glen Drive property remained as security for the sixth facility, and it became security for the fifth facility also; and
(c) the Gsquare guarantee and related mortgage became security for the fifth facility instead of the previous facility.
Following defaults under the various facilities, the bank commenced proceedings against the applicants and Gsquare in this Court, seeking judgments for the outstanding amounts of principal and interest due under the loan agreements under the second, fifth and sixth facilities and possession of the Glen Drive and Marcia Avenue properties. The bank brought a summary judgment application. Mukhtar AsJ determined that the bank was entitled to summary judgment against the applicants for the balance due under the terms of the second facility and the whole of the amount due under the sixth facility. Further, he granted summary judgment for possession of the Glen Drive property. Summary judgment was refused in respect of the claims made under the fifth facility and its securities, including the Marcia Avenue property. Thus, the applicants — through Gsquare — remain in possession of that property and are — together with Gsquare — defending the claims under the fifth facility.
Associate Justice Mukhtar gave detailed reasons for his conclusions.[4] In summary, his Honour concluded that:
[4]National Australia Bank Ltd v Ganesh [2016] VSC 738 (Reasons).
(1) The subject matter of the distribution of the net proceeds of sale of the Plumpton Avenue property has been determined by Court order and the distribution has taken place. The effect is that, with the exception of a small amount owing under the second facility, which is unsecured, the first four facilities have been paid out.
(2) The ambiguities surrounding the fifth facility, including the Bank’s failure to explain how the fifth facility came to replace the previous facility, and how the Plumpton Avenue and Glen Drive properties were added as security for that loan, were sufficient to refuse the Bank’s application for summary judgment in respect of the fifth facility — as to both the debt claimed and the claim for possession of the Marcia Avenue property.
(3) However, the Bank’s claims under the second and sixth facilities were not affected by the possibility that the applicants and Gsquare may have defences to the claims in respect of the fifth facility. Thus, the Bank was entitled to summary judgment in respect of its debt claim under the sixth facility and its claim for possession of the Glen Drive property.[5]
[5]Ibid [46]–[59].
The applicants appealed against the summary judgments entered against them. That appeal was heard and orally determined by Vickery J on 20 March 2017. In dismissing the appeal, Vickery J expressly adopted the reasons of Mukhtar AsJ as correct. Vickery J further ordered that the Bank amend its statement of claim to confine its claims to those made under the fifth facility. Those claims include the Bank’s claim for possession of the Marcia Avenue property under the mortgage given by Gsquare to support its guarantee of the applicants’ liabilities for the loan made under the fifth facility. Vickery J did not order that the applicants were restricted in the defences they could raise to their claims, or any counterclaims they may make.
Since that time, the applicants have been endeavouring to defend the remaining claims in the proceeding concerning the fifth facility and the Gsquare guarantee and mortgage over the Marcia Avenue property.
On 20 March 2018, the Bank finally succeeded in obtaining possession of the Glen Drive property pursuant to its entitlement under Mukhtar AsJ’s judgment to do so. The Bank is currently in possession of that property in its capacity as mortgagee. The property remains unsold, and it remains uncertain as to whether the net sale proceeds will be sufficient to discharge the debt under the sixth facility which is secured by that property.
The applicants contend that their proposed appeal has a real, as opposed to fanciful, prospect of success — as required by s 14C of the Supreme Court Act 1986.[6] I do not agree. In my opinion, the proposed appeal is devoid of any merit and thus has no real prospect of success. My reasons follow.
[6]Note Printing Australia Ltd v Leckenby (2015) 50 VR 44, 72–3, [82], [86]–[87].
The applicants do not dispute signing the documents in connection with the fifth facility and its securities. They contend, however, that they only signed the documents ‘under the belief and expectation that these documents were going to be used by [the bank] to set up an offset account and for no other purpose’.[7] They complain of the bank ‘foisting’ an agreement on them which enlarged their security obligations — converting the previous facility which was secured by only the Marcia Avenue property to a new and changed facility secured by, in addition, the Glen Drive and Plumpton Avenue properties. Mukhtar AsJ held that these were triable issues in connection with the fifth facility, and thus refused summary judgment in respect of the bank’s claims under the fifth facility.[8]
[7]Reasons [47] (emphasis added).
[8]Ibid [51]–[57].
But the applicants are not satisfied with that result. They contend that the bank’s conduct in connection with the fifth facility nullifies all the other facilities — and thus the bank’s claims made in respect of those facilities, and the securities for them, must fail. In other words, they seek to be excused entirely from any liability under any of the facilities. By their counterclaim, they sought relief including repayment of the net proceeds of sale of the Plumpton Avenue property and interest. In respect of these remarkable claims, Mukhtar AsJ stated:
How and in what way their grievance about the fifth facility somehow relieves them from other burdens under all other facilities is not at all clear to me, particularly as, in the events that have occurred, the borrowers have already voluntarily sold their Oak Park property to meet the debts they could not service, and the Court order has been made permitting the Bank to apply the proceeds to pay out indebtedness under the first, second (partially), third and fourth facilities. I think it is preposterous to contend that their challenge to the fifth facility collaterally nullifies all other facilities and securities. There is no challenge to the lawfulness of those other facilities. Obligations were unmistakeably incurred; benefits have been conferred; defaults have occurred; and, as I would emphasize, Court orders have been made for distribution of funds from a voluntary sale. …[9]
[9]Ibid [50].
More specifically, Mukhtar AsJ gave the following reasons for granting summary judgment in respect of the bank’s claims made under the second and sixth facilities:
As was submitted for the Bank, I think the sixth facility stands divorced from any dispute about the fifth facility. The evidence is plain that the borrowers have defaulted and the security over Glen Drive is enforceable independently under the sixth facility. I think the borrowers have no basis to undo collaterally their other obligations to the Bank outside the fifth facility even if it can be shown the fifth facility is impeachable or adjustable in some way. The same can be said for the remaining debt under the second facility, secured by the mortgage over Plumpton Avenue which has been sold. That liability has already precipitated and although the security is spent, I see no injustice in completing the recovery so far and ordering summary judgment for the amount remaining due under the second facility.
Accordingly I propose to grant partially the application for summary judgment. I propose to order the Bank recover possession of the land at 29 Glen Drive in Rye under its registered mortgage, and pay the Bank moneys secured under the so called sixth facility. In addition, I propose to order that the first and second defendants pay the debt remaining under the second facility, which is now unsecured.[10]
[10]Ibid [58]–[59].
Like Vickery J, I consider there was clearly no error in Mukhtar AsJ’s decision. Although the use of the adjective ‘preposterous’ was unnecessarily harsh, especially in dismissing the contentions of unrepresented litigants, I cannot think of any legal reason why the defences under the fifth facility, even if established at trial, have any collateral effect upon the liability of the applicants under the sixth facility, or the enforceability of the mortgage over the Glen Drive property as security for that facility. Nor do they have any effect on the enforceability of the outstanding unsecured debt under the second facility.
On their application in this Court, the applicants advanced similar contentions to those put forward before Mukhtar AsJ, and accepted by Vickery J. Further, they contended that the decisions of Mukhtar AsJ and Vickery J were attended by a denial of procedural fairness to them, amounting to either apprehended or actual bias.
I will deal first with the bias contentions. I reject them. Apprehended bias is easier to make out, so I will decide this point on that basis. The test for apprehended bias is whether ‘a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide’.[11]
[11]Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, 344 [6].
Insofar as the hearing before Mukhtar AsJ is concerned, the applicants did not apply to the judge to disqualify himself, and do not rely on his conduct of the summary judgment application. Instead, they contend that the Reasons give too much weight to the arguments of the bank and its counsel, and not enough weight to their arguments as self-represented litigants. The applicants endeavoured to support this argument by referring to findings of fact and law on which they lost. They did not refer to Mukhtar AsJ’s reasoning in their favour, when denying the bank’s application for summary judgment in respect of the claims under the fifth facility; including denying the bank’s claim for possession of the Marcia Avenue property. Given the applicants were partially successful, there is no prospect that a fair-minded lay observer might apprehend that the judge did not bring an impartial mind to the determination of the proceedings.
As to the alleged bias of Vickery J, the applicants sought to attack his decision concerning a later application regarding attempts by the bank to take possession of the Glen Drive property, without first obtaining a warrant of possession from the Court. The determination made by Vickery J in a later application has no bearing on his decision to dismiss the appeal from Mukhtar AsJ on the summary judgment application. There is therefore no merit in either of these bias contentions.
I return to the merits. The central contention of the applicants is that the Bank’s entitlement to enforce its claims under the first, second, third, fourth and sixth facilities, including their claims for possession of the Plumpton Avenue and Glen Drive properties under the mortgages securing those loans, was taken away by the Bank’s action — without their written consent — when they added those properties as security for the loan under the fifth facility. However, apart from assertion that this is so, the applicants were unable to provide any legal basis for such a contention.
I will not endeavour to set out all the various ways in which the applicants put their assertions. The clearest of them was a series of contentions to the effect that their application for leave to appeal is not fanciful because (doing the best I can to paraphrase them):
(1) There is no ‘clear law’ as to whether a creditor such as the bank is entitled to have a specific ‘stand-alone’ mortgage over a piece of land, while, at the same time, having a mortgage over that piece of land and other pieces of land to secure other debts on a ‘cross-collateralised basis’.
(2) Such a situation ‘leads to inconsistency’ and the law should not allow it.
(3) Thus, in circumstances such as the present, when the previous loan was paid out and replaced by the fifth facility, the Bank had an obligation to close the first, second, third, fourth and sixth facilities also, and to re-advance all the loans under one facility secured by one mortgage.
The applicants do not attempt to justify this assertion by reference to any legal or equitable principle; and I cannot think of any legal basis which could support it. Even if it held at trial that the fifth facility is unenforceable for some reason, and thus the bank cannot enforce the fifth facility against the applicants, the Gsquare guarantee or the mortgage over the Marcia Avenue property, that will have no effect upon the enforceability of the mortgages given by the applicants as security for the first, second, third, fourth and sixth facilities before the fifth facility was entered into. Thus, when there was default under those facilities, there was no legal impediment to the Bank enforcing them over the secured properties, namely, Plumpton Avenue and Glen Drive. Nor, following the sale of Plumpton Avenue and distribution of the sale proceeds against the indebtedness under the first, second, third and fourth facilities, is there any barrier to the bank proceeding to recover (on an unsecured basis) the unpaid balance of the loan under the second facility. Mukhtar AsJ and Vickery J were correct to so hold.
Nothing I have said in these reasons is intended to cast doubt upon the arguability of the applicants’ claims concerning the loan recorded by the fifth facility or the mortgage over the Marcia Avenue property. Those are probably matters for trial, as determined by Mukhtar AsJ in the applicants’ favour.
The length and reasons for the delay
Although it is unnecessary to do so, I will next consider the delay. Such a long period of delay obviously requires explanation. That remains so even when, as here, the applicants are self-represented. The applicants have endeavoured to explain the delay by a combination of factors, including failure of the Court’s self-represented litigant’s coordinator to inform them that they had a right of appeal to the Court of Appeal, the first applicant’s illness from July 2017, the work required by them to file court documents in relation to the continuing part of the proceeding, and that they have a child with special needs involving constant care and patience. They contend that it was not until a further hearing before Vickery J on 1 March 2018 that they first realised that their repeated applications to stay enforcement of the summary judgment against them were — in the absence of them having sought leave to appeal against Vickery J’s dismissal of the summary judgment — misconceived.
It is unnecessary to consider whether these matters constitute a reasonable explanation for the one year delay in the circumstances of this case because, for the reasons given above, the applicants’ proposed appeal is so devoid of merit that it would be futile to extend time to enable an application for leave to appeal to be filed.
Conclusion
For the above reasons, the application to extend the time within which to file an application for leave to appeal will be dismissed. I will hear the parties as to costs.
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