Hilton v Ragusa
[2006] VSC 20
•3 February 2006
7
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6689 of 2005
| HOWARD HILTON and KATHERINE ANNE BRISCOE | Plaintiffs |
| v | |
| GIUSEPPINA RAGUSA | Defendant |
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JUDGE: | OSBORN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 20 JANUARY 2006 | |
DATE OF JUDGMENT: | 3 FEBRUARY 2006 | |
CASE MAY BE CITED AS: | HILTON & ANOR v RAGUSA | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 20 | |
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Appeal against decision of Master – Rule 22.06(1)(b) of the Supreme Court (General Civil Procedure) Rules 2005 – Requirement for 'some other reason' here ought to be a trial of the claim – Circumstances warranting further close investigation at trial.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C. Archibald | Coadys |
| For the Defendant | Mr G. Moffatt | I. Glenister & Associates |
HIS HONOUR:
By summons dated 29 September 2005 the plaintiff sought summary judgment for possession of the land comprised in Certificate of Title Volume 100128 Folio 232 ("the land"). This is an appeal against the refusal by Master Efthim to grant such judgment. The appeal before me is by way of rehearing.
The land is the defendant’s home and is situated at 81 Barrow Street Coburg. She is a 73 year old woman of Italian origin with limited English language and limited education. It is not contested that the loss of her home will have serious consequences for her.
The plaintiffs seek the order for possession pursuant to a mortgage dated 1 February 2005 registered in the Office of Titles. The mortgage states:
"The mortgagor mortgages to the mortgagee the estate and interest specified in the land described subject to the encumbrances affecting the land including any created by dealings lodged for registration before the lodging of this mortgage. This mortgage is given in consideration of and to better secure the principal sum lent or agreed to be lent to the mortgagor by the mortgagee."
The principal sum stated is $125,000 and is repayable by 30 April 2005. During the three months of the loan it bears a lower interest rate of 5% per month capitalised monthly in arrears and a higher interest rate of 10% per month capitalised monthly in arrears.
Affidavit material filed on behalf of the defendant establishes a strong case that the mortgage is a forgery forming the culmination of a series of fraudulent transactions by the defendant’s daughter Adele Ragusa ("Adele").
It appears that on 1 April 2004 Adele adopted the defendant’s identity and signed a loan agreement obtaining an initial advance of $28,000.
On 9 September 2004 Adele again adopted the defendant’s identity and signed an application by surviving proprietor and an application for a new duplicate certificate of title in place of one allegedly lost or destroyed. Subsequently a new duplicate certificate of title with respect to the land issued in the name of the defendant and into the possession of Adele.
On 2 December 2004 Adele adopted the defendant’s identity and signed a loan agreement pursuant to which she obtained an advance of $32,500 from Minjeff Pty Ltd.
On 1 February Adele again adopted the defendant’s identity and made application for a loan of $125,000 from the plaintiffs.
The application included a signed loan agreement, a signed counterpart mortgage and a disbursement authority together with supporting documentation.
The sum of $125,000 was advanced and disbursed in accordance with Adele’s instructions. The monies were in part paid out in discharge of prior loans including $35,750 to Minjeff Pty Ltd. The defendant relies inter alia on the following alleged facts:
(a) the amount borrowed was subject to “an extraordinarily high interest rate”;
(b) the same solicitors acted for the plaintiffs and Finance Express Pty Ltd;
(c)Finance Express Pty Ltd was not a creditor secure or otherwise of the defendant but was paid $75,412 together with a mandate fee of $5,734;
(d)one Paul William Stone is a director and secretary of Finance Express Pty Ltd;
(e)an establishment fee of $4,500 was paid to Mainvista Pty Ltd;
(f)one Wayne Sultan is a director and secretary of Mainvista Pty Ltd;
(g)Mainvista Pty Ltd was not a creditor secured or otherwise of the defendant and there is no apparent reason for this payment;
(h)the first named plaintiff knows both Mr Stone and Mr Sultan;
(i)the defendant did not receive any money from the funds lent by the plaintiffs;
(j)the supporting documentation submitted in conjunction with the making of the mortgage loan shows the identification procedure adopted by the plaintiff’s solicitors at the time of the purported execution of the mortgage was not complied with.
(k)the identification certificate produced in support of the loan application was defective as a copy of the defendant’s driver’s licence was not provided in accordance with the terms of the certificate;
(l)the solicitor’s certificate produced in support of the loan application was defective as no formal identification had been produced prior to the completion of the solicitor’s certificate and no independent interpreter had participated in the documentation process.
The defendant’s solicitor deposes by affidavit:
"On 10 May 2005 I had a telephone conversation with Howard Hilton the first named plaintiff. Mr Hilton said he was changing solicitors. He said that he was about to appoint Deacons. He said that he was a former solicitor in New South Wales and that he had been disbarred. Mr Hilton said that he knew Paul Stone of Finance Express Pty Ltd and Wayne Sultan of Mainvista Pty Ltd. He said that he specialised in the unregulated loan market as did Paul Stone and Wayne Sultan. He said that he was disappointed with Paul Stone and Wayne Sultan suggesting that they knew something was not right with the Ragusa loan. Mr Hilton expressed further disappointment saying that the last four loans that he had placed in Victoria had all turned bad. ..."
The defendant’s solicitor further deposes that at a meeting at the Law Institute of Victoria on 16 May 2005 Adele admitted to forging her mother’s signature on the mortgage and other loan documentation. She also stated that the loans had been arranged through a broker David Birch. She said Paul Stone kept telephoning her incessantly “trying to get her to sign various loan documents and applications.”
The plaintiffs contend that they hold a registered mortgage and they are entitled to enforce it.
They further contend that the defendant’s material does not demonstrate a defence to the action. They submit that the only relevant statutory exception to indefeasibility is fraud. Section 42 (1) of the Transfer of Land Act 1958 provides:
“Notwithstanding the existence in any other person of any estate or interest . . . which but for this Act might be held to be paramount or have priority, the registered proprietor of land shall, except in the case of fraud, hold such land subject to such encumbrances as are recorded on the relevant folio of the register but absolutely free from all other encumbrances whatsoever, except . . .”
It is submitted the fraud exception requires fraud of the plaintiffs Vassos v State Bank of South Australia[1]; Pyramid Building Society v Scorpion Hotels Pty Ltd[2]. However, it is submitted the defence does not allege the plaintiffs were fraudulent.
[1](1993) 2 VR 316 at 326, 328.
[2](1998) 1 VR 188 at 191.
It is further submitted that although an in personam claim as between the defendant and plaintiffs is capable of resisting enforcement of a registered mortgage once again none is here alleged.
The defendant contends that summary judgment should not be given in the circumstances of the case because the judgment would have very serious consequences for the defendant and some of the issues raised by the defendant warrant further investigation of the facts.
Rule 22.03 of the Supreme Court (General Civil Procedure) Rules 2005 ("RSC") requires an application for summary judgment to be made on summons supported by an affidavit verifying the facts on which the claim or on which part of the claim to which the application relates is based, and stating that in the belief of the deponent there is no defence to that claim or part.
In the present case the first plaintiff has sworn an affidavit asserting the fact of the debt, exhibiting a copy of the mortgage, and exhibiting other documentation relating to the loan and mortgage. He goes on to state in part:
"No fraud or forgery is alleged against the plaintiffs in the defence and neither the secondnamed plaintiff nor myself have any knowledge or belief that a fraud or forgery has been committed in relation to the transactions constituting the loan agreement or mortgage.
The defendant has not raised a valid defence having regard to s 42 of the Transfer of Land Act 1958 and accordingly I believe that there is no defence to the claim and the Court ought to enter judgment for the plaintiffs on this application."
Rule 22.06 of the RSC provides that
"On the hearing of an application for summary judgment the Court may –
…
(b)give such judgment for the plaintiff against the defendant on the claim or the part of the claim to which the application relates as is appropriate having regard to the nature of the relief or remedy claimed unless the defendant satisfies the Court that in respect of that claim or part a question ought to be tried or that there ought for some other reason be a trial of that claim or part; …"
The history of this provision is set out in the decision of Tadgell J in Hills v Sklivas[3] who came to the conclusion that the circumstances of that case justified leave to defend on a basis other than that the defendant had positively established a question to be tried.
"We were referred this morning on behalf of the appellant to the terms of R22.06(t)(b) of the County Court Rules. That provision was new to Victoria with the 1986 Rules of the Supreme Court. It was later copied in the Rules of the County Court. It differs from the earlier equivalent provisions of O.14 of the Rules of the Supreme Court, and the equivalent in the County Court, inasmuch as it abolished the former requirement that a defendant, in order to obtain leave to defend upon an application for summary judgment, must satisfy a court that he has a good defence to the action on the merits or to prove such facts as may be deemed sufficient to entitle him to defend the action generally. Of course, a defendant may do that under the new rules and obtain leave to defend. The present rule, however, entities the defendant also to resist the plaintiffs application for summary judgment in respect of his claim if the defendant satisfies the court that:
... in respect of that claim ... a question ought to be tried or that there ought for some other reason be a trial of that claim ...
As Murphy J pointed out in Chasfild Pty Ltd v Taranto[4] the effect of the new rule is that the mere inability of the defendant to pinpoint a precise issue or question in dispute which ought to be tried is no longer a bar to obtaining leave to defend. His Honour, following the lead which had been given by Megarry J in Miles v Bull[5], allowed the defendant leave to defend in a case where the defendant had satisfied him that the circumstances disclosed should be closely investigated. The decision of Megarry J in Miles v Bull apparently received the affirmation of the Court of Appeal in Bank Fur Gemeinwirtschaft AG v City of London Garages Ltd[6]. In that case the court did not consider it appropriate to grant leave to defend but Cairns LJ referred to cases other than those of the kind before Megarry J in Miles v Bull in which it might be appropriate to grant leave to defend notwithstanding that a particular issue had not been isolated as one deserving trial. Cairns LJ referred, among other examples, to cases in which it might be thought desirable that, if the defendant was to get judgment at all, it should be in the full light of publicity. Mr Meldrum before us this morning submitted that, since in Victoria the courts are public and court files are public, there is no occasion to apply reasoning of the kind which was indicated by Cairns LJ. In the present case, I consider that- it is appropriate that the transaction the subject of the respondent's claim should properly be ventilated at a trial, not because publicity is deserved, but simply because, by reason of its nature and circumstances, it is a transaction of a kind which ought to be closely investigated before the respondent should obtain judgment."
(Citations taken to foot.)
Ormiston J[7] also agreed that the circumstances were such as to require close investigation and Batt J[8] reached a like conclusion.
[3](1995) 1 VR 599 at 606.
[4]unreported, 9 June 1988
[5][1969] 1 QB 258
[6][1971] 1 WLR 149 at 158 in the judgment of Cairns LJ
[7]at 607.
[8]at 611, 612.
Although I have found the question a difficult one I have ultimately come to the same conclusion in the present case.
(a)If the defendant’s case is accepted summary judgment for possession would result in an harsh and from her point of view unjust outcome, in that she, a woman vulnerable by reason of age, limited English language and limited education, has been defrauded of her home.
(b)The evidence of fraud by a third party is strong.
(c)It must be accepted that in the absence of fraud or unconscionability touching the plaintiffs personally, the registered mortgage held by them will necessarily prevail but the circumstances in which the mortgage was obtained are entirely outside the defendant’s personal knowledge and her capacity to raise a case must be assessed on this basis.[9]
(d)The circumstances on which the defendant relies show both a network of relationships between persons involved in continuing fraudulent transactions concerning the land and documentation relating to the mortgage upon which the plaintiffs rely which might be thought to implicitly raise a serious question as to the mortgagors identity.
(e)Although these matters do not establish an arguable defence, they make the possibility of a defence more than merely hypothetical.
[9]See the statement of Lord Mansfield in Blatch v Archer (1774) 1 Cow. 63 at 65 cited by Batt J in Hills v Sklivas above at 610; "All evidence is to be weighed according to the proof which it was in the power of one side to produce and in the power of the other to have contradicted."
The above matters are sufficient to satisfy me that it would not be just to grant summary judgment. The language of the different members of the Court of Appeal in Hills v Sklivas demonstrates that ultimately the circumstances as a whole must be characterised by way of a synthesis which is not mechanical. The Court’s discretion is essentially one to withhold summary judgment in circumstances where the Court is satisfied that it would be just to do so because the matters before it give rise to a questions deserving the opportunity for the close investigation afforded by a trial. I am satisfied in the words of Tadgell J that the case before me involves "a transaction of a kind which ought to be closely investigated before the appellant should obtain judgment"[10].
[10]Hills v Sklivas at 607
Accordingly the appeal is dismissed.
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