Helliar v Australian Securities Limited & Ors
[2007] VSC 376
•27 September 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5493 of 2007
| GERARD FRANCIS HELLIAR who sues by his administrator Elizabeth Shalless | Plaintiff |
| v | |
| AUSTRALIAN SECURITIES LIMITED & ORS | Defendants |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 27 SEPTEMBER 2007 | |
DATE OF JUDGMENT: | 27 SEPTEMBER 2007 | |
CASE MAY BE CITED AS: | HELLIAR v AUSTRALIAN SECURITIES LTD & ORS | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 376 | |
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Debt – Appeal from orders of a Master requiring payment to alleged creditors from funds in court – Whether proper notice given to the person (under a disability) in whose name the funds were deposited – Whether evidence sufficient to establish claim – Propriety of proceedings taken under the Transfer of Land Act 1958 and Trustee Act 1958 where action in debt available – Appeal allowed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr K. Hanscome SC with Mr A. Dickenson | Opie & Co |
| For the First and Second Defendants | Mr R. Cook | Nicholas O’Donohue & Co |
HIS HONOUR:
By proceeding No. 9664 of 2006 (“the 2006 proceeding”) the present first and second defendants as plaintiffs issued an originating motion giving notice that they intended to apply to this Court on 15 November 2006 for certain directions and for orders for the payment to them of certain moneys paid into court. The moneys in question had been paid into court by a company called Crucis Pty Ltd following a mortgagee’s sale effected by that company as first mortgagee over certain property registered in the name of the present plaintiff, Gerard Frances Helliar.
Mr Helliar, who sues by his administrator, his sister Elizabeth Shalless, suffers from a serious psychiatric illness. This at times has as a consequence his involuntary detention under the Mental Health Act 1986. As a further consequence, a Mr Dale Swenson was by order of the Victorian Civil and Administrative Tribunal appointed his administrator. Then, on 15 November 2006, Mr Swenson (who had become unwell) was, by further order of the Tribunal, replaced by Ms Shalless.
In the meantime, Mr Helliar had granted a mortgage to Crucis Pty Ltd. It seems that he subsequently fell into arrears with payments due to that company. It for that reason became entitled to – and did - exercise its powers as mortgagee. And once it had recovered the amount of Mr Helliar's indebtedness to it, together with the costs and expenses of the mortgagee's sale, it paid the balance of the moneys into court. It did so because there was reason to think that a person or persons, or an entity or entities, other then Mr Helliar, might have a claim to the balance of those moneys; and, rather than become embroiled in any resulting dispute, the mortgagee took advantage of the procedure set out in s.77(3)(d) of the Transfer of Land Act 1958 and s.69 of the Trustee Act 1958, and the facility offered in these circumstances by the Senior Master’s (Funds in Court) Office.
It is relevant to bear in mind that the funds paid in by Crucis were, subject to any valid interest of a third party, Mr Helliar’s moneys. It is also relevant that, in this case, there were indeed entities which, apart from Mr Helliar, had claims to them. Amongst the claimants were the present first and second defendants, Australian Securities Ltd and MoneyWorks Pty Ltd. Each of those companies is a money lender. Each alleges that it entered into a money lending agreement with Mr Helliar. Each further alleges that Mr Helliar thereby incurred certain fees, for which he remains indebted to it.
It was to give effect to that claim for moneys owing pursuant to two separate money lending agreements (neither of which, as is conceded, resulted in any loans being actually advanced) that the present first and second defendants issued the 2006 proceeding.
The matter came on for an ex parte hearing before a Master of this Court on 15 November 2006. The Master then made certain orders at the instigation of the present defendants. Those orders included an order that notice in the form of a letter, to the effect of the schedule to the order, be given to Mr Swenson. The schedule is in the following terms:
Re proceeding number 9664 of 2006 in which Australian Securities Ltd and MoneyWorks Pty Ltd are plaintiffs. We had been instructed by Master Lansdowne to inform you that proceedings have been commenced by Australian Securities Ltd and MoneyWorks Pty Ltd seeking the payment of certain moneys out of court. The nature of the proceedings are more particularly described in the originating motion, a copy of which accompanies this letter.
The plaintiffs’ claim for the payment out of the moneys referred to is more specifically described in the affidavit of Joanne Randello sworn 1 November 2006, a copy of which also accompanies this letter. Directions were given by the Master on 15 November 2006 as to the further conduct of this proceeding. A copy of the order made by the Master on that date accompanies this letter. In particular, the order required that if you seek to be added as a defendant to this proceeding, any application in that regard should be made returnable on 13 December 2006. Notification of the order should be given to the plaintiffs in this proceeding at their address for service noted in the originating motion by 4.00 p.m. on 8 December 2006.
In the circumstances you may see fit to discuss this matter with your legal advisor.
The present defendants complied with the order of the Master. There is on the Court file in the 2006 proceeding an affidavit of service sworn by Brent Lodding on 11 December that year. According to Mr Lodding, he forwarded to Mr Swenson sealed copies of the Originating Motion, an affidavit sworn by Joanne Randello on 1 November 2006, and the Master’s authenticated order. I gather from Mr Lodding’s affidavit (it is not at this point entirely clear) that one copy (or duplicate original) of each document was addressed to a post office box address. The other was forwarded to a street address. In any event, it seems that, by one means or another, Mr Swenson received notice of that which the Master directed he be given notice. But he did not act upon it, save to place it with other papers relating to his administration of Mr Helliar’s affairs. These he transferred to Ms Shalless at about the end of November. I accept that, in doing so, he did not draw the 2006 proceeding to her attention.
By the time Ms Shalless received the relevant papers, Mr Swenson had ceased to occupy the position of administrator. Indeed, he no longer held that position when the documents forwarded by Mr Lodding were received by him.
For her part, Ms Shalless did not immediately review all that Mr Swenson handed over. She had other calls upon her time, and other urgent business to attend to on her brother’s behalf; and I accept that it was not unreasonable for her not to have discovered until early in the New Year that the letter and schedule to which I referred had been received by Mr Swenson, and that a hearing had (as the schedule specified) taken place on 13 December.
Accordingly, there was no appearance by Mr Helliar's administrator or by Mr Helliar when the matter returned to the Master on 13 December. It was in those circumstances that the Master gave judgment for the present defendants. She did so on the basis of the affidavit material put forward by them: the affidavit sworn by Joanne Randello on 1 November 2006, and Mr Lodding’s affidavit of service.
The plaintiff now seeks orders in a new proceeding (No 5493 of 2007, issued on 3 April 2007) which, among other things, include an order nunc pro tunc extending to 3 April the time within which Mr Helliar may appeal the orders made by the Master in the 2006 proceeding. He also asks for an order dismissing that proceeding, and an order for indemnity costs.
The plaintiff relies in part on what I find to be a failure by the plaintiffs in the 2006 proceeding to discharge the onus of proof that was upon them. He further submits that there was no jurisdiction in the Master to make orders pursuant to s 77 of the Transfer of Land Act because (in the circumstances of this case) it is a condition of the making of such orders that there be a mortgage or charge granted by Mr Helliar to the two money lenders. The Finance Facility Agreements made provision for a first mortgage over land at 6 Kershaw Street Parkdale, but even given that the land was not relevantly encumbered already to another mortgagee, no first or any other mortgage had been registered; and (Mr Helliar submitted) the reference in s.77(3)(c) is on its proper construction applicable only to registered mortgages.
Mr Helliar further submits that the procedure adopted by the plaintiffs in the 2006 proceeding was unfair and constituted an abuse of process. They ought, it was submitted, have issued proceedings claiming a cause of action in debt. Had they done this, Mr Helliar would have been named as defendant, personal service would have been required, and the claim would have been heard in the Magistrates’ Court in accordance with the relevant rules of procedure. The course actually adopted had fewer safeguards for a defendant, especially one under a disability, and was generally inapposite.
In my opinion, the first ground taken by the present plaintiff has been made out. The materials relied upon by the Master did not provide an adequate foundation for her judgment. I note that the affidavit of Ms Randello exhibits a copy, but not the original, of a form of application for the alleged loan from Australian Securities Ltd. She does the same in relation to the alleged loan from MoneyWorks Pty Ltd. She says that the first was executed on 1 September 2005 by Mr Swenson as administrator for Mr Helliar. The second, according to her affidavit, was executed by Mr Swenson on 10 February 2006. She does not say how she knows that either statement is true. She then swears that, once each application had been signed by Mr Swenson on Mr Helliar’s behalf, Mr Helliar became “bound by the terms and conditions of the loan facility agreement which [in each case] was intended to be the subject of the transaction between the parties.” This, it seems to me, is a statement of mixed fact and law. Insofar as it constitutes a statement of fact, Ms Randello does not reveal how she is in a position to swear to those facts. In an affidavit sworn on 12 April 2007, Ms Shalless says that she has been informed by Mr Swenson, and believes, that “no moneys were ever advanced nor were loan agreements ever executed.”
In her affidavit, Ms Randello continues that, in each case, Mr Helliar became “liable to pay” the relevant moneylender. As at 26 May 2006, the amount of Mr Helliar’s indebtedness to Australian Securities was, she swears, $24,549.63; and on the same day, he was indebted to MoneyWorks in the sum of $7,410.26. She does not, however, produce any documents sufficient to satisfy the provisions of the Evidence Act 1958 relating to the tender of business documents or computer records. Her own evidence is hearsay. The debt was in neither case properly proved.
The exhibits to Ms Randello’s affidavit are important. It does not appear from the body of Mr Lodding’s affidavit that they were served. An examination of the exhibits to the Lodding affidavit would reveal the answer; but I do not have those exhibits.
Upon reading the material to which I have referred, and after hearing counsel for the money lenders, the Master made orders for indemnity costs. The agreements alleged by the then plaintiffs made provision for such costs in such circumstances; but since they were not properly proved, the order for costs ought not to have been based upon them. No other basis for indemnity costs has been put forward.
In the light of these findings, I need not decide either whether s.77(3)(c) applies to unregistered mortgages, or whether the course adopted by the plaintiffs in the 2006 proceeding was unfair. I do not think that it was an abuse of process, although I have formed the view that it was inappropriate: this was a claim that ought to have been made in the Magistrates’ Court.
In the 2006 proceeding, the relief sought by the plaintiffs included payment out of court of moneys paid into court. The foundation for this claim was in part the proposition that the funds in question were paid in pursuant to s.77(3)(d) of the Transfer of Land Act, and were therefore subject to the provisions so far as they are applicable of s.69 of the Trustee Act. I accept this proposition. The latter section provides, by sub-s.(6), that in those circumstances, “the Court may on application by any person interested make any such order as is authorised by s.63 … of the [Trusts] Act [1915].” That section, in turn, empowers the Court to hear and determine an application for the distribution of moneys paid into court; but if it appears that any such moneys cannot be safely distributed without the institution of an action, the Court may direct that an action be instituted.
That, in my opinion, is what the Master ought to have done. The question is whether I, many months after and in a different proceeding, can now do it. I think that I can. A right of appeal is given by r.77.05 of the Rules of the Supreme Court. Time limits apply. They have been exceeded; but there is power to extend the time: r.77.05(6).
The plaintiff was not a party to the 2006 proceeding. He was, however, a person affected by the judgment given and orders made. Accordingly, he has a right of appeal: r.77.05(1). By instituting the present proceeding Mr Helliar has proceeded by way of Originating Motion rather than by way of notice to attend before a judge, but – like Nicholson J in Re Gasbourne Pty Ltd[1] - “I do not think that anything turns on this distinction.”
[1][1984] VR 801 at 832.
I must consider the steps which are most apposite to ensure that this matter is now dealt with and the issues between the parties resolved as efficiently and effectively as possible with the least possible cost. It is here necessary to note that, on 13 December, the Master joined a company called Bowen & Pomeroy Pty Ltd as a defendant, and then proceeded to make orders that various sums be paid to that company from the funds in court. It is not intended to interfere with these orders (although the fact that a third party was joined as a defendant and was then the subject of orders, in its favour, that affected not the plaintiff but the person in whose name the Court held the funds, demonstrates the inaptness of the process generally).
The most efficacious course, it seems to me, is to order that the time within which the plaintiff may appeal the orders of the Master made on 13 December 2006 in proceeding No 9664 of 2006 be extended to 3 April 2007; that the plaintiff have leave to institute the appeal by Originating Motion; that the appeal against the Master’s orders and judgment of 13 December 2006 in the 2006 proceeding (insofar only as they benefited the plaintiffs in that proceeding) be allowed; that, to the extent that that proceeding resulted in orders benefiting the plaintiffs in the 2006 proceeding, it be dismissed, with no order as to costs; that the present defendants be directed to institute as soon as practicable such action or proceedings against the present plaintiff as they may be advised; and that, failing the institution of such action or proceedings as aforesaid by 27 September 2008, the present defendants be forever restrained from instituting an action or proceedings seeking like relief as was the subject of the Master’s said orders. There will be liberty to apply. The plaintiff’s costs of the present proceeding must be paid by the present defendants as between party and party. This reflects the fact that I am not satisfied that the 2006 proceeding was an abuse of process, or that bad faith was involved.
If, as the parties accept is an appropriate course, the present defendants pay the moneys paid out pursuant to the judgment of 13 December into an account opened for that purpose by their solicitors, then those moneys may abide any orders of any court following the resolution of the anticipated proceedings. In those circumstances, following the conclusion of those proceedings, the moneys can be disposed of in accordance with the orders of the Court without the necessity to return to this Court so that the 2006 proceeding can be finalised.
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