GI 451 Pty Ltd v Collins
[2024] VSC 610
•7 October 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
MORTGAGE RECOVERY LIST
S ECI 2024 00126
| GI 451 PTY LTD (ACN 662 577 791) | Plaintiff |
| v | |
| TONI LEE COLLINS | Defendant |
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JUDGE: | Goulden AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 7 August 2024 |
DATE OF RULING: | 7 October 2024 |
CASE MAY BE CITED AS: | GI 451 Pty Ltd v Collins |
MEDIUM NEUTRAL CITATION: | [2024] VSC 610 |
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PRACTICE AND PROCEDURE — Application for summary judgment pursuant to ss 61 and 63 of the Civil Procedure Act 2010 (Vic) — Whether the defendant’s defence enjoys no real prospect of success — Defendant to show cause against the application under r 22.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) — Evidence sufficient to show cause against application emerged during the course of the hearing – Application dismissed.
PRACTICE AND PROCEDURE — Defendant’s defence struck out on the basis that it is scandalous, frivolous or vexatious, may embarrass or delay a fair trial —Leave to re-plead.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms K Wangmann of Counsel | ERA Legal |
| The Defendant in person |
HER HONOUR:
By summons filed on 12 April 2024, the plaintiff seeks summary judgment against the defendant pursuant to ss 61 and 63 of the Civil Procedure Act 2010 (‘CPA’). The procedure for such applications is governed by Order 22 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’).
Background
In its statement of claim, the plaintiff claims as follows.
(a) On 31 October 2022, the plaintiff advanced $911,199.10 to Thoona ECO Resort Pty Ltd (‘Thoona’) under a Loan Deed.
(b) The defendant is the sole director of Thoona, and owns the real property situated at 147 Amery South Road, Thoona, being the whole of the land comprised in Certificates of Title, Volume 10922 Folio 272 and Volume 10901 Folio 199 (‘Property’).
(c) The defendant guaranteed the obligations of Thoona under the Loan Deed pursuant to a Deed of Guarantee and Indemnity dated 31 October 2022 (‘Guarantee’).
(d) As security for her obligations under the Guarantee, the defendant mortgaged the Property in favour of the plaintiff. The mortgage was registered (dealing number AW221530Y) (‘Mortgage’).
(e) Thoona failed to repay the amounts due under the Loan Deed by the repayment date.
(f) On 24 October 2023, the plaintiff issued a default notice to the defendant under the Guarantee demanding payment of the sum of $938,576.88.
(g) The defendant did not comply with the demand, and under the terms of the Mortgage, the plaintiff is entitled to possession of the Property.
Accordingly, the plaintiff seeks orders for possession of the Property as mortgagee.
The defendant, who until very recently has represented herself, filed a defence on 16 April 2024. By that defence, the defendant:
(a) seeks damages ‘under [s] 46 of the Commonwealth Constitution or in the alternative, from the substituted Act’;[1]
[1]Defence filed on 16 April 2024, [5] (‘Defence’).
(b) alleges that the plaintiff has breached provisions of the Criminal Code Act 1995 (Cth) and the Crimes Act 1958 (Vic); [2]
[2]Defence [9], [11], [13].
(c) alleges that, by reason of the plaintiff’s criminal conduct, the alleged loan was terminated ‘effective immediately’ and vitiated by fraud;[3]
[3]Defence [9(d)], [14], [15], [21], [24], [26], [29], [30].
(d) alleges that she tendered a promissory note in satisfaction of the obligation to pay, which the plaintiff has improperly refused to accept;[4]
[4]Defence [17].
(e) alleges that she would not have entered into the Loan Deed as a director of Thoona if she had known that the plaintiff would engage in unconscionable conduct or misleading and deceptive conduct, act dishonestly, make efforts to obtain property by deception, engage in third line forcing, breach its good faith obligation, engage in appraisal fraud and mortgage fraud, breach her privacy, obtain a profit by fraud, pervert the course of justice, breach the Loan Deed, breach the Commonwealth Constitution and breach its duty of care;[5]
[5]Defence [18], [31].
(f) alleges that the proceeding was issued without service of a notice of default on the defendant;[6]
(g) seeks reimbursement of monies from the plaintiff for defrauding the defendant;[7] and
(h) alleges that the plaintiff acted unconscionably by reason that its lawyers deceived her into attending their offices in Sydney on false pretences.[8]
[6]Defence [22], [30(c)].
[7]Defence [23].
[8]Defence [27].
In advance of the hearing of this application, the defendant exhibited a proposed amended defence to her affidavit filed on 26 June 2024. The proposed amended defence has not been prepared in a way that makes the proposed amendments readily distinguishable from the original. Without intending to be exhaustive, the proposed amended defence introduces allegations of contraventions of various statutes by the plaintiff and advances a defence based upon allegations connected with the sovereign citizen ideology concerning the removal of the Crown and the consequent invalidity of legislation relied upon by the plaintiff. It also incorporates further allegations about the defendant’s alleged inability to obtain legal advice about the Term Sheet dated 11 October 2022 due to a confidentiality condition in that Term Sheet.
Summary Judgment
Sections 61, 63 and 64 of the CPA
The plaintiff seeks summary judgment under s 61 of the CPA on the ground that the defendant’s defence has no real prospect of success. The Court can give judgment summarily under s 63 of the CPA if it is so satisfied.
The test under s 63 of the CPA is whether the defendant’s defence has a ‘real’ as opposed to a ‘fanciful’ chance of success. In the case of Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (‘Lysaght’),[9] the Victorian Court of Appeal stated that the test of whether a claim ‘has no real prospect of success’:
… should be construed as one of whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success; that the ‘real chance of success’ test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent’s case is not ‘hopeless’ or ‘bound to fail’, it does not have a real prospect of succeeding.[10]
[9](2013) 42 VR 27 (‘Lysaght’).
[10]Lysaght 39 [29] (Warren CJ and Nettle JA).
Although the changes to the summary judgment regime introduced by Part 4.4 of the CPA liberalised the test for summary judgment, the authorities urge caution, and that regard be paid to the overarching purpose under the CPA, when exercising the power to terminate a proceeding summarily given that, in consequence, the defendant against whom summary judgment is given will be deprived of the chance to pursue their defence. Courts should only exercise the power where it is clear there is no real question to be tried.[11]
[11]Lysaght 40 [35] (Warren CJ and Nettle JA).
Even where there is no real prospect of success of the case disclosed on the defence, and perhaps if there is any doubt about it, under s 64 of the CPA, the Court may nevertheless allow a matter to proceed to trial if:
(a) it is not in the interests of justice to summarily dispose of the proceeding; or
(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.
Whether the Court should, in accordance with s 64 of the CPA, allow the proceeding to go to a full hearing on the merits must be determined according to the circumstances of each case.
The authorities also establish that if an application for summary judgment is refused, as it will be in this case, it is undesirable for the Court to give detailed reasons for so ruling.[12]
[12]Becton Corporation Pty Ltd & Anor v Tricontinental Corporation Ltd & Anor (Supreme Court of Victoria, O'Bryan J, 11 February 1991).
Plaintiff’s Evidence and Submissions
The plaintiff submits correctly that, having regard to the procedure under Order 22 of the Rules, once the plaintiff on an application for summary judgment has established the elements of its cause of action, there ‘is ”something akin” to a shifting of the evidential burden to the defendant.’[13]
[13]Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86, [31], citing Hausman v Abigroup Contractors Pty Ltd (2009) 29 VR 213, 223–4 [53] n 13 .
In this case, Mr Epstein, a director of the plaintiff, has affirmed two affidavits, one dated 9 April 2024, and the second dated 3 July 2024. In those affidavits, Mr Epstein verifies the documents relied upon, including the Loan Deed, Guarantee and Mortgage, and other factual allegations made in the statement of claim such as the default in payment. Mr Epstein deposes to his belief that the defendant has no real defence to the claim made against her for possession of the Property pursuant to the Mortgage.
Defendant’s Evidence and Submissions
The defendant has filed several affidavits and written submissions in response to the application by which she intended to show cause against the application in compliance with r 22.05 of the Rules. For reasons which will become apparent, those affidavits and submissions have been superseded by affidavits and submissions filed subsequent to the hearing.
Should Summary Judgment be Awarded?
The Emergence of an Issue Regarding the Enforceability of the Mortgage Sued Upon
Self-evidently, the Mortgage is central to the plaintiff’s case, being the legal document upon which it sues for possession of the Property. The plaintiff registered the Mortgage on title to the Property. The terms and conditions of the Mortgage are recorded in the Memorandum of Common Provisions AA3609 (‘MCP’), also registered on title.
The plaintiff particularises the Mortgage at paragraph 12 of the statement of claim as follows:
(i)Mortgage executed by the Defendant on 17 October 2022 and bearing the registered dealing number AW221530Y.
(ii) Memorandum registered dealing number AA3609.
To verify its allegations, Mr Epstein exhibits a copy of the Mortgage as registered with the Land Titles Office to his first affidavit.[14] The registered version of the Mortgage bears the signature of the defendant, applied on 17 October 2022. It has been witnessed by her then solicitor, Mr David Joseph. The MCP is exhibited to Mr Epstein’s second affidavit.[15]
[14]Affidavit of Justin Kurt Epstein affirmed on 9 April 2024, Exhibit JE-1, 121-2.
[15]Affidavit of Justin Kurt Epstein affirmed on 3 July 2024, Exhibit A.
In her defence, the defendant makes several references to ‘Mortgage Fraud’ by the plaintiff but does not particularise what the mortgage fraud is alleged to be. As far as I can discern from the defence, which is convoluted and difficult to follow, the defendant alleges that mortgage fraud follows from the allegedly misleading, unconscionable and fraudulent conduct of the plaintiff in connection with the Loan Deed more generally. The defendant’s submissions do not shed further light on this part of her pleading.
Upon the opening of her submissions at the hearing of this application, the defendant sought to tender some documents she stated she had received from her former solicitor, Mr Joseph, that morning. She submitted that the documents revealed that the mortgage instrument she executed on 17 October 2022 had been subsequently amended without her knowledge and thus, was not the same as the registered Mortgage now being relied upon by the plaintiff. I marked the documents tendered by the defendant for identification as ‘Exhibit D1’. In light of this turn of events, at the conclusion of the hearing, I made orders for the parties to file further affidavit evidence and submissions confined to addressing the circumstances surrounding, and any consequences of, the amendment of the mortgage instrument prior to its registration, if indeed that occurred.
On 14 August 2024, the defendant filed two further affidavits: one signed by her and another sworn by Mr Joseph. By his affidavit, Mr Joseph deposes to the circumstances attending execution of the mortgage instrument by the defendant on 17 October 2022, and the ensuing communications between him and the plaintiff’s lawyers in relation to its amendment. The plaintiff has filed a further affidavit of Mr Andrews, a solicitor employed by the firm representing the plaintiff, affirmed on 21 August 2024. By his affidavit, Mr Andrews also explains how the amendments came to be made to the mortgage instrument prior to its registration. The explanations given do not differ significantly and there is no need for me, on this application, to probe those differences or draw conclusions about them.
The only relevant findings that I make for the purposes of this application are that:
(a) the actual mortgage instrument signed by the defendant on 17 October 2022 was altered after she executed it by way of the replacement of the front page with an amended version;
(b) the reconstituted mortgage instrument, with its new front page, and signed original second page:
(i) was not further seen, signed or initialled by the defendant;
(ii) was the version filed with the Land Titles Office by or on behalf of the plaintiff; and
(iii) is the version relied upon by the plaintiff in this proceeding i.e., the Mortgage.
I accept the defendant’s evidence (and that of her former solicitor, Mr Joseph) that she did not know about the amendment to the mortgage instrument she had signed, as described above, until the morning of the hearing of this application. This explains the omission of these matters from her defence filed earlier in the proceeding.
The defendant, having engaged legal representation subsequent to the hearing, filed further submissions. By those submissions, she calls into question, amongst other things, the authority of either her solicitor or the plaintiff’s solicitors, to make the alteration to the first page of the mortgage instrument without her knowledge or consent, the enforceability of the Mortgage as a result and the plaintiff’s entitlement to rely on the fact of its registration. The plaintiff’s submissions engage with these legal arguments and urge a conclusion that the plaintiff remains entitled to possession.
I am satisfied that the defendant’s evidence and submissions are sufficient to show cause against the application for summary judgment. They raise factual and legal issues for which it is only appropriate that there be a full hearing. Accordingly, the real question raised by the proceeding, whether the plaintiff is entitled to possession of the Property, ought be determined at a trial rather than summarily. The plaintiff’s application should be dismissed.
Striking-out the Defendant’s Defence
The defence filed by the defendant does not raise the allegations concerning the enforceability of the Mortgage that she now seeks to rely upon in defence of the proceeding and, to a significant extent, it contains allegations that are scandalous, vexatious, or which may embarrass or delay the conduct of the trial. By way of example only, the defence:
(a) asserts an entitlement to damages, which is the proper function of a counter-claim;
(b) includes allegations of serious misconduct and criminal conduct such as fraud which are not, or are not adequately, particularised;
(c) raises matters irrelevant to the issues in dispute in the proceeding, such as the reasons for late filing of material;
(d) fails to plead the material facts relied upon in the defence;
(e) makes allegations about appraisal fraud by persons not party to the proceeding;
(f) makes allegations about the conduct of the plaintiff’s solicitors prior to commencement of the proceeding.
The above concerns are made worse, rather than better, in the defendant’s proposed amended defence which was exhibited to her affidavit filed on 26 June 2024. Leave will not be granted for that defence to be filed.
Though no application is made, and given I have declined the plaintiff’s application for summary judgment and the proceeding will continue, I am satisfied that it is appropriate to strike out the defendant’s defence filed on 16 April 2024, and to give leave to the defendant to re-plead.
An Aside about the Solicitors’ Conduct
I note, in passing, the Court’s dissatisfaction with the character and tenor of some of the communications in evidence on this application, which have passed between the plaintiff’s legal representatives and the defendant. One of the obligations of lawyers is to be respectful to others involved in legal matters, including their opponent, no matter the circumstances.
Until recently, the defendant was unrepresented. She does not have any legal qualifications. No matter how unreasonable or non-sensical the plaintiff’s legal representatives may have considered her concerns, and no matter how frustrating they found her conduct to be, the plaintiff’s lawyers ought not resort to making derisory comments about the defendant, such as those they made to the effect that she or her actions were ‘just silly’ or ‘ridiculous’.[16] Such comments are not respectful.
[16]Affidavit of Justin Kurt Epstein affirmed on 3 July 2024, Exhibit D.
Further, when read in totality, the email communications between the plaintiff’s solicitors and the defendant in February 2024,[17] demonstrate that the defendant was incorrectly led to believe that by attending the plaintiff’s solicitors’ offices, rather than those of their client, she would be able to recover from them the two title deeds comprising the Property the subject of the Mortgage.[18] The defendant presumably travelled a long way, at not insignificant expense, from her home in Victoria to attend the solicitors’ offices in Sydney with this understanding. Instead of returning the title deeds, which of course they could not (a matter that the defendant, a non-lawyer without legal representation, clearly did not understand but which they did), the plaintiff’s solicitors used the opportunity of her attendance to serve the court proceedings on her. Such conduct is, likewise, not respectful to the defendant.
[17]Affidavit of Justin Kurt Epstein affirmed on 3 July 2024, Exhibit D; Affidavit of Toni Lee Collins filed on 19 June 2024, Exhibit 21.
[18]The wording of the email, from Mr Daren Anderson to the defendant, at Exhibit 21 to the Affidavit of Toni Lee Collins filed on 19 June 2024 is, on a fair reading, only capable of implying that if Ms Collins wanted the ‘Property Titles’ that she had demanded in an earlier letter to the plaintiff, she should come to the solicitors’ office rather than go to that of their client where she had stated she would go.
If the plaintiff’s solicitors need evidence of the impact on the defendant, it is laid bare by the considerable energy the defendant has so obviously devoted to identifying the above matters in her defence, submissions and affidavits filed in opposition to this application. Those matters, however, have no bearing on the merits of the plaintiff’s case against the defendant, or of her defence of it. They are not proper matters for inclusion in her defence. As a result, the plaintiff’s solicitors’ treatment of the defendant has led to a significant distraction of the defendant from the real issues in dispute in the proceeding and has been wasteful of her time, and that of the Court. It is not to be condoned.
Disposition
I will dismiss the plaintiff’s application for summary judgment against the defendant. I will also order that the plaintiff pay the defendant’s costs of the application, without recourse to charging those costs against the loan advanced by the plaintiff to Thoona, or charging those costs against the security provided by the defendant under the Guarantee and Mortgage.
For the reasons above, I will also strike out the defendant’s defence, with leave to re-plead.
I will ask the parties to provide a minute of order to give effect to these reasons, including a timetable for the filing of the defendant’s defence.
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