Impedovo v Nolan
[2016] ACTSC 386
•3 November 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Impedovo v Nolan |
Citation: | [2016] ACTSC 386 |
Hearing Date: | 3 November 2016 |
DecisionDate: | 3 November 2016 |
ReasonsDate: | 23 December 2016 |
Before: | Penfold J |
Decision: | See [89] below. |
Catchwords: | APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – Enforcement of debt – seizure and sale order in place in favour of respondents – appeal from order of registrar refusing application for payment of debt by instalments – whether solicitors for respondents acted unconscionably in recording note on title of appellant’s property subject to seizure and sale order – whether seizure and sale order should be set aside – appeal dismissed with costs – seizure and sale order extended. EQUITY – General Principles and Maxims of Equity – whether noting seizure and sale order on title of affected real property unconscionable – whether using legal process against unrepresented owner of real property unconscionable – whether using legal process for the first time unconscionable. REAL PROPERTY – General principles – noting of seizure and sale order on title of affected real property – removal of note of seizure and sale order from title when order suspended by making of instalment order. |
Legislation Cited: | Court Procedures Rules 2006 (ACT), rr 2010A, 2159, 2162, 2201(6) Land Titles Act 1925 (ACT), s 48 Sheriff Act 2009 (Vic) |
Cases Cited: | Chen v The College of Building Ltd [2015] ACTSC 19 Harris v Caladine [1991] HCA 9; 172 CLR 84 Zhou v Kousal [2012] VSC 187; 35 VR 419 |
Parties: | Antonio Impedovo (First Enforcement Creditor) Eva Barbara Impedovo (Second Enforcement Creditor) Jonathan Peter Nolan (First Enforcement Debtor) Mary Maria Gabriel Vidovic (Second Enforcement Debtor) |
Representation: | Counsel Self-represented (First Enforcement Debtor); Mr Nolan, by leave (Second Enforcement Debtor) Ms A Irving (Enforcement Creditors) |
| Solicitors Self-represented (Enforcement Debtors) Trinity Law (Enforcement Creditors) | |
File Number: | SC 471 of 2014 |
Background
Some time in 2014, the parties to this appeal signed a deed resolving a dispute over the appellants’ failure to complete the purchase of a residential property in Adelaide. The deed provided for an agreed debt, in the amount of $85,000, to be paid by the appellants (the debtors) to the respondents (the creditors) within 14 days after the date of the deed.
Payment was not made under that deed. Since then, the creditors have made various unsuccessful attempts to enforce the debt, including by way of a seizure and sale order against real property owned by at least one of the debtors, and the debtors have, in the context of resisting that order, made a number of instalment payments at different times; despite this, because the instalment payments have been irregular, or barely enough to cover the interest that is accruing, presumably under s 108 of the Service and Execution of Process Act 1992 (Cth) and r 124(1) of the Magistrates Court (Civil) Rules 2013 (SA) at a rate of 10% per annum, the debt has increased, and now stands at around $130,000.
The current proceeding is an appeal by the debtors from the refusal of the deputy registrar to reinstate an order permitting them to pay the debt by instalments.
Enforcement attempts in the ACT
Money order in favour of creditors
On 23 September 2014 the Magistrates Court of South Australia made a money order against the debtors in favour of the creditors for a total amount of $122,991.03. On 21 October 2014 that money order was registered in the ACT Supreme Court as an enforceable order under r 2010A of the Court Procedures Rules 2006 (ACT) (the Rules) and s 105 of the Service and Execution of Process Act.
The seizure and sale order
On 15 December 2014, the creditors obtained a seizure and sale order under Div 2.18.5 of the Rules in relation to a unit in McMillan Cres, Griffith, ACT (the Griffith property), apparently owned by the second debtor, Ms Vidovic. There was no requirement for the application for that order to be served on the debtors, and the matter appears to have been dealt with without a hearing and in the absence of the parties, as provided for in r 2201(6) of the Rules. On 16 February 2015, the seizure and sale order was recorded on the title of the Griffith property in the form of what has been described in submissions variously as a “note” and a “notation” and is referred to in these reasons as a note.
On the day that the seizure and sale order was recorded on the title of the Griffith property, 16 February 2015, the second debtor entered a contract to buy a unit in Cromwell Circuit, Isabella Plains, ACT, for $330,000 (the Isabella Plains property).
On 25 March 2015 an instalment order was made in the Supreme Court. It provided for the debtors’ debt to the creditors to be repaid by instalments as follows:
(a)by 2 April 2015, $2,000;
(b)in the next 3 months, further instalments of $2,000 per month;
(c)thereafter by monthly instalments of $10,000.
The making of the instalment order suspended the operation of the seizure and sale order (r 2159). On 30 March 2015, the note referring to the seizure and sale order was removed from the title of the Griffith property on the application of the second debtor.
On 31 March 2015, the second debtor’s purchase of the Isabella Plains property was settled; the settlement involved a mortgage to the Commonwealth Bank of Australia secured over both the Isabella Plains property and the Griffith property. That mortgage was eventually registered by the bank on 29 October 2015.
Operation of instalment order
Several payments were made in accordance with the instalment order, but other payments were missed. In total, by 2 November 2015, at which point the debtors ought to have paid the creditors $48,000, they had paid a total of $11,000.
An affidavit made on 11 November 2015 by Maurice Falcetta of Trinity Law, (the creditors’ lawyers) records that before 2 November 2015, several communications were exchanged between the debtors and the creditors’ solicitor.
The first debtor, Mr Nolan, provided notice of likely delays in the making of the payment due on 2 August 2015. The creditors’ lawyers responded by giving the debtors notice that they were in breach of the instalment order, and sought documentary evidence of the matters alleged to explain the failure to pay the August instalment.
Over some time, Mr Nolan provided various general explanations for the failure, advising the creditors’ lawyers:
(a)that his “payments in” had been delayed;
(b)that this was due to “hospitalisation of a key man responsible for making that payment to me”;
(c)that:
the paymaster is back off the sick list and at work as of tomorrow. As soon as I have spoken to him tomorrow I will be in a position to advise as to when the outstanding amount will be paid
(d)that the paymaster has had a stroke and has been replaced:
with a younger edition [sic] who is picking up the duties now. Once she is au fait she will be cutting checks and sending payments
(e)that by the end of September, the outstanding payment would be made and thereafter “payment will be regular once more”; and
(f)that the arrears would be paid by 2 November 2015 and normal payments would then be resumed until the full amount is paid.
However, as at 11 November 2015, only one payment, of $3,000 on 1 October 2015, had been made since July 2015.
Renewal of seizure and sale order
On 11 November 2015, a form entitled Instalment Order – Notice of Cessation for Non-Payment, and a supporting affidavit sworn by Mr Falcetta, were filed in the Supreme Court. The effect of that was that the instalment order ceased to have effect (r 2162(1)). The creditors were obliged to serve on the debtors a stamped copy of the affidavit, and notice that the instalment order had ceased to have effect, under r 2162(2), and to file a copy of that notice in the Court under r 2162(3).
It seems that the necessary documents were served and filed accordingly, and on 8 December 2015 the Supreme Court renewed the seizure and sale order previously made against the debtors. The renewed order, specified to operate until December 2016, directed the enforcement officer to seize and sell the Griffith unit to satisfy the total amount owing under the money order; that amount was specified in the order as $130,066.35, plus interest from the date of the order at 10% per annum.
On 18 December 2015 a new note was recorded on Ms Vidovic’s title to the Griffith property.
Application for further instalment order
On 29 February 2016, the debtors applied for a further instalment order to be put in place. Their application was accompanied by an affidavit from Mr Nolan dated that day and explaining the default under the previous instalment order. Mr Nolan referred not only to the problem that he had previously identified, of delayed receipt of payments owed to him, but also to an “extremely serious and usually fatal illness” that he had suffered during the same period. He also claimed to have resumed employment, and to expect to receive a salary of $2,000 per week from the beginning of March 2016, a contractual payment of $50,000 in late March or early April, and extra payments of this type roughly every three months during 2016. The affidavit also claimed that the forced seizure of the Griffith unit, in which there was “no equity whatsoever” would leave the debtors “financially ruined and potentially homeless”.
On 7 March 2016, the deputy registrar refused the debtors’ application for a further instalment order.
Appeal and stay application
On 8 March 2016 the debtors filed this appeal from the deputy registrar’s decision.
On 9 March, the first debtor also filed an application in proceedings seeking a stay of enforcement of any orders by or on behalf of the creditors for a period of 28 days. This was accompanied by an affidavit by Mr Nolan made on 9 March 2016, which “confirmed” material in earlier affidavits and offered an explanation for the absence of any supporting evidence attached to his affidavit.
The stay application
First mention
The application for the stay was not served on the creditors, and they did not appear on 17 March 2016, the first mention date for the application. In their absence, Refshauge J stayed enforcement of the renewed seizure and sale order until 29 March 2016 on condition that the debtors deliver to Trinity Law, before 5.00 pm on 18 March 2016:
(a)a bank cheque for $2,000 made out to Trinity Law Trust Account;
(b)a letter advising the creditors of the stay application, and that it would be heard on 29 March 2016; and
(c)a copy of the application and the affidavit in support filed with the court.
Stay orders
An affidavit from Mr Nolan made on 24 March 2016 stated that the documents required by Refshauge J’s orders were served on Trinity Law as required, and on 29 March 2016 his Honour stayed enforcement of the renewed seizure and sale order until the hearing and determination of the current appeal, on condition that:
the sum of $2,000 paid by bank cheque payable to Trinity Law Trust Account be hand delivered to the offices of Trinity Law on the 18th day of each month until determination of the appeal.
The appeal
Nature of appeal
The appeal was identified as an appeal from the refusal of the deputy registrar to make a new order for the debtors’ debt to be paid to the creditors by instalments. As mentioned at [8] above, the effect of making an instalment order would be to suspend the operation of the renewed seizure and sale order.
An appeal from a registrar’s order is an appeal de novo (Chen v The College of Building Ltd [2015] ACTSC 19 at [14] and [15]; Stanley v Rees [2015] ACTSC 22 at [2]; Harris v Caladine [1991] HCA 9; 172 CLR 84). Accordingly, the debtors are not required to identify error on the part of the deputy registrar.
The Notice of Appeal specified that the appellant debtors sought the granting of the instalment order in the terms previously sought (presumably before the deputy registrar), and costs.
Affidavits
Several affidavits had been filed in the earlier proceedings, and in preparation for the appeal hearing, several further affidavits were filed, as follows:
Date Deponent 11 November 2015 Maurice Falcetta 24 November 2015 Maurice Falcetta 29 February 2016 Jonathan Nolan 4 March 2016 Maurice Falcetta 9 March 2016 Jonathan Nolan 24 March 2016 Jonathan Nolan 24 March 2016 (filed on 3 May 2016) Jonathan Nolan 27 September 2016 Maurice Falcetta 10 October 2016 Maurice Falcetta 31 October 2016 Jonathan Nolan
At the hearing of the appeal, counsel for the creditors objected to Mr Nolan’s 31 October 2016 affidavit, and Mr Nolan declined to read any of his affidavits. However, he said, he wished to rely on Mr Falcetta’s affidavits.
Mr Falcetta’s 27 September 2016 affidavit noted that:
(a)as at 24 November 2015, the total sum owed by the debtors to the creditors was $130,066.35 (made up of $119,226.08 (debt plus previously accrued interest) and $13,940.32 (recently accrued interest));
(b)as at 27 September 2016, the debtors had made seven payments of $2,000 each, and the total amount of the debt outstanding at that date was $116,066.35;
(c)between November 2015 and September 2016, however, further interest totalling $10,582.59 had accrued, and as at 27 September 2016 continued to accrue at the rate of $31.799 per day.
By his 10 October 2016 affidavit, with corrections identified in an email to the appellants dated 26 October 2016, Mr Falcetta relevantly asserted that, as at 10 October 2016:
(a)no further payments had been made by the debtors beyond those described in Mr Falcetta’s affidavit of 27 September 2016; and
(b)interest totalling $10,995.97 had accrued, and interest continued to accrue at a rate of $31.799 per day.
Mr Nolan sought to rely on one document annexed to Mr Falcetta’s affidavit sworn on 4 March 2016. This was a handwritten document apparently signed by Ms Vidovic, which read as follows:
To the Honourable Registrar:
1.I am the legal registered owner of the within named property.
2.A notation of an Order for Seizure and Sale was placed on my title.
3.This notation was wrongly placed ab initio; no order from the Supreme Court directed such notation and it was improperly done by the town agents of the creditors of an action to which I was party.
4.In any event on 25 March 2015 a new order in the aforesaid creditors’ action was issued.
5.This order is an instalment order and this has the effect of automatically extinguishing any order for seizure and sale in effect.
6.On perusal of the order wrongly noted on the title, it was also lodged and noted one full month before the Registrar of Enforcement received and served notice.
7.Through no fault of the Registry, a species of [fraud has been perpetrated against me.]
8.Instalment Order SC 14/471 dated 25 March 2015 is now in effect ongoing.
9.Any statement on my title that there is a seizure and sale order in effect is now untrue and potentially in Contempt of the Supreme Court.
For the above reasons I hereby respectfully request that any notation on my title be removed and that my title be cleared.
Yours sincerely
[signature]
Mary Vidovic
PH: [xxxx xxx xxx]
The bracketed words in paragraph 7 of Ms Vidovic’s document have been inferred from the top half of the relevant line, the bottom half having been cut off in a copying process at some time.
Ms Vidovic’s document was undated and did not identify “the within named property”. It seems to have been provided by Ms Vidovic to the Land Titles Office (LTO) when she and Mr Nolan had sought the removal of the first note from the title of the Griffith property.
Mr Nolan asserted that because it had been attached to an affidavit sworn by Mr Falcetta, Ms Vidovic’s document was “on oath”, and therefore Ms Vidovic’s assertion that the note “was wrongly placed ab initio” somehow established that claim.
Mr Falcetta’s affidavit included Ms Vidovic’s document within a bundle annexed and marked “C”, which he described as “dealing number 1964158 as lodged by” Ms Vidovic, dated 25 March 2015. Clearly, Mr Falcetta was swearing to the truth of his assertion that Ms Vidovic’s document was part of dealing number 1964158 and that the document had been lodged by Ms Vidovic, but equally clearly he was not swearing to the truth or accuracy of Ms Vidovic’s document.
Written submissions – creditors
In written submissions dated 27 September 2016, the creditors noted that there was:
(c)no evidence to support the first debtor’s assertion of continuing employment, or actual income from such employment;
(a)effectively no disclosure of the second debtor’s financial position or ability to make payments;
(b)no evidence to support the first debtor’s assertions of delayed payments to him, or of his serious illness, during 2015; and
(c)no demonstrated willingness to make additional payments towards the debt.
The creditors pointed out that ongoing repayments at $2,000 a month, even if made, would result in the debt being paid off only in 2021.
Further claims were made about the debtors’ willingness to settle the debt, but given the way the appeal unfolded, it is unnecessary to detail those here.
Written submissions – debtors
In written submissions dated 28 September 2016, Mr Nolan on behalf of the debtors submitted:
(a)that the creditors had previously failed to attend court on the hearing of applications related to this appeal, and subsequently did not instruct their agent as to orders sought;
(b)that the debt was “a confected debt absolutely unrelated to real losses suffered by the [creditors]” and does not arise from “the genuine terms of any underlying contract on which the [creditors] had at any point generally relied”;
(c)that therefore there was no:
especially urgent necessity for the current seizure and sale order to be pursued to the exclusion of any other enforcement action available to the creditors; there has been no default in payment of the sums ordered as a condition of the stay
(d)that allowing the seizure and sale order to be enforced would be “unduly harsh and inequitable” and would hamper the ability of the applicants to pay the enforcement debt, because the proceeds of any forced sale would be first be applied to the first mortgage holder, and any remaining proceeds would “have to be applied to undo the harm from seizure and sale being pursued”;
(e)that the instalment payments (possibly increased) should continue in preference to:
an unduly harsh execution order which has the potential to offend against the overarching laws relating to natural justice and fairness enshrined in all legislation and regulations of the Australian Capital Territory at all levels by operational statute
(f)that the court should not “unfairly discriminate against a debtor” (although without identifying the potential unfair discrimination concerned);
(g)that the creditors had suffered no genuine loss, that payment of this debt would be a “bonus” to the creditors, that there was no urgency of any special kind in its repayment, and that urgency would therefore be:
offensive to the principle of fairness and natural justice under which all Australian Capital Territory legal administration must be carried out;
(h)that there is a clear difference between orders to satisfy debt and orders which will result in bankruptcy or financial ruin, that the ACT courts cannot make orders usurping the proper operation of federal courts in relation to a matter of debt, given the Commonwealth’s “sole binding authority in relation to bankruptcy”, and that the effect of the seizure and sale order in this case “is clearly so onerous and disruptive ... as to operate as a de facto order of bankruptcy”;
(i)that the creditors should have sought other orders from a spectrum of financial remedies which are fairer to all parties, eg a variation of the terms of the instalment order, a garnishee order, an order for lump-sum payments, or an order for the sale of personal items; and
(j)in relation to the placing of the “note” on the title of the Griffith property:
The respondents have not acted in good faith in this matter on the occasion of placing a “note” on the title of the unit over which they seek to execute the order for seizure and sale. There was no authority in law or by order of the Honourable Court by which the bureaucracy of land titles for the territory should have placed any such note on a title, and this is well evidenced by the alacrity with which such spurious note was removed once the circumstances of its creation were brought to the attention of that bureaucracy. Were the notation legitimate it could not have been so removed. The circumstances of the placing of that note have never been explained by the respondents or their town agents beyond a general claim as of right by the principal of the respondent creditors’ town agents – and not the creditors themselves – that he had a right to so place this note by “legal and equitable right”.
Written submissions – creditors in reply
In submissions in reply dated 10 October 2016, the creditors said:
(a)the creditors only failed to attend court on the hearing of the stay application because they were not properly served by the debtors;
(b)the debt does represent a real loss, and in any case this is irrelevant;
(c)the debtors’ claim that they would be bankrupted by an enforcement order is unsupported by evidence;
(d)continuing payment at $2,000 per month would significantly prejudice the creditors; and
(e)the “note” placed on the title of the Griffith property involved the court orders being registered onto the title under s 48 of the Land Titles Act 1925 (ACT).
The creditors might also, reasonably, have pointed out, that the seizure and sale order had been revived because of the debtors’ failure to comply with the terms of the first instalment order, which had been made on the application of the debtors.
The appeal hearing
Further applications
At the appeal hearing, the creditors foreshadowed further applications, should the debtor’s appeal fail, being for the seizure and sale order:
(a)to be extended beyond the end of December 2016; and
(b)to be extended to apply to the Isabella Plains property as well.
Mr Nolan foreshadowed an application, in the event that the operation of the seizure and sale order survived his appeal, for an order that the price agreed for any sale ordered by the Court had to be approved by the Court.
He did not, however, make any such application after I rejected his arguments in favour of setting aside the seizure and sale order. Initially he had also suggested that if those arguments failed he would seek a new instalment order in the same terms as that made by Refshauge J in connection with the stay order, or with amendments, but he withdrew that suggestion after I pointed out that this would be unlikely to succeed given his decision not to offer any evidence about repayment proposals at this hearing.
Oral submissions
Mr Nolan tendered a letter from the Ambassador for the Democratic Republic of Timor-Leste dated 2 October 2016, which read as follows:
We are fully aware that Richard Morgan of the Pacific Future Foundation and the Temple Vault Ltd is acting in the interests of Timor-Leste in creating project opportunities for our consideration. This includes the project documentation by Mr Morgan and team and their specialist consultants led by Jonathan Nolan of AA Energy Ltd.
Whilst we are not bound by an initial project proposal or suggestion, we will welcome all compliant application [sic] for project development in our country brought to us by Richard Morgan, Pacific Future Foundation, Temple Vault or AA Energy Ltd and (SAIT) Servic̗os Aéreos Internacional de Timor Ltd, (Timor International Air Services Ltd) under their authority and delegation. Please call me direct if required on [xxxxxxxxxx].
Mr Nolan said that this letter was tendered to substantiate his previous claims that he did diplomatic work. The letter did not seem to me to do any such thing. An energy consultant providing services to a non-government organisation hoping to sell project opportunities to a foreign government is not thereby “doing diplomatic work”.
Nor could I see the relevance of such a proposition even if it had been established by the letter, since it seemed to add nothing to the issues of Mr Nolan’s capacity or inclination to pay the debt the subject of these proceedings.
In terms of his capacity to pay the debt by instalments, Mr Nolan indicated that he relied on the instalment application filed two years previously, saying that nothing had changed since that application was made. However, he said, he did not want to put on any other evidence for the purposes of the appeal.
Mr Nolan indicated that he required Mr Falcetta for cross-examination on the six affidavits he had made in the course of those proceedings and which were relied on by the creditors, and Mr Nolan initially offered to be cross-examined by the creditors. However, he later objected to giving evidence on the grounds that his evidence could not be relevant to the unconscionability argument he sought to make. I told him that he could object to individual questions on proper grounds, but that he had offered to submit to cross-examination and that the creditors were entitled to take up that offer, except to the extent that their questioning was clearly irrelevant.
Instead of pursuing the previously identified appeal grounds, Mr Nolan said that he would base his entire case on a claim that Mr Falcetta, acting for the creditors, had acted unconscionably in putting the original note on the title to the Griffith property, and that accordingly the seizure and sale order should be set aside.
This argument was not made convincingly, or even very coherently, at the beginning of the hearing, and accordingly I permitted certain cross-examination of Mr Nolan on the basis that it might be relevant to the claim of unconscionability as developed in submissions. In the event, none of the evidence given by Mr Nolan supported the unconscionability claim, and so it did not have any significance in resolving the appeal from the deputy registrar.
Mr Nolan’s representation of Ms Vidovic
Mr Nolan, not unreasonably, declined to give evidence of certain matters involving Ms Vidovic. This meant, among other things, that there was no evidence before me of Mr Nolan’s claim that Ms Vidovic had no legal qualifications (this also turned out not to be significant in resolving the appeal).
I also had to tell Mr Nolan that since he had been given leave (initially by Refshauge J) to represent Ms Vidovic, it was not satisfactory for him to deal with submissions relevant to Ms Vidovic’s role in the dispute by saying that he had no instructions from her.
Oral evidence
Jonathon Nolan
Mr Nolan gave evidence on oath as follows:
(a)that the original debt was entered into by consent, that he had an obligation to pay it back, and that he and Ms Vidovic had never disputed owing the debt;
(b)that on 16 February 2015 Ms Vidovic entered into a contract to purchase a property, being Unit 23, 36 Cromwell Circuit, Isabella Plains;
(c)that Ms Vidovic had arranged approval of a mortgage some time before that, to enable her to bid at auctions;
(d)that the debtors’ application for the first instalment order was made in March 2015;
(e)that he had contracted “golden staph septicaemia and it’s all just rolled from there” (this was apparently a reference to the health problems he claimed to have suffered in 2015 and early 2016);
(f)that after payments under the first instalment order were missed, the order ceased to be in effect and the seizure and sale order was reinstated and extended until December 2016;
(g)that there was no spare money from the mortgage to apply to the debt, but that this was not because of the purchase of the Isabella Plains property but because of Mr Nolan’s medical bills;
(h)that, in relation to evidence of his medical problems, he had previously provided his “patient number”, and “all [the creditors] had to do was call and confirm it”, while agreeing that it was not for the respondent to make his case for him;
(i)that around the time when the debtors were seeking the first instalment order, and around the time they were seeking the second instalment order, he had deposed that he expected to receive a lump sum payment of $50,000, but that neither of those payments had yet been received;
(j)that he “absolutely reject[ed]” the proposition that there were no lump sum payments coming his way, and explained that he had expected these payments from people for whom he was working in East Timor, but that the work that would have entitled him to those payments:
was completely set aside by their maritime boundary dispute with Australia. The people that I worked with there were totally caught up with that
(k)that Mr Nolan has legal qualifications, those being a Bachelor of Laws and what he described as a Bachelor of Arts (Jurisprudence), and had been admitted in the Supreme Court of New South Wales in September 1994;
(l)that he had practised mainly in the Northern Territory, South Australia and Queensland, and briefly held an unrestricted practising certificate in the Northern Territory, before signing the roll as a barrister, and later removing his name from the roll as a barrister in 1999 when he moved to Canberra for different employment;
(m)that subsequent disciplinary action by the Northern Territory Law Society led to the Northern Territory Supreme Court purporting to strike him off the roll (The Law Society of the Northern Territory v Nolan [2002] NTSC 46), action that he considered to be ultra vires;
(n)that Mr Nolan did not defend the application to have him struck off the roll in the Northern Territory because his barrister had died during the proceedings and Mr Nolan had not engaged another barrister;
(o)that when contacted by the Law Society about the application, he had indicated that he did not intend to oppose the proceedings to have his name struck off because he did not intend to practice law again anyway.
Mr Nolan denied having referred to himself as a barrister since he was struck off; he expressed surprise when counsel showed him an Australian Film Commission (AFC) record available on the Internet which referred to a film that he had directed and which described him as follows:
Jonathan Nolan is a barrister, screenwriter and investigator who divides his insanely busy schedule between managerial roles in his many investments with authoring new media projects.
Mr Nolan objected to this line of questioning as “going too far afield”; I allowed the AFC record to be exhibited, while noting that it was of relatively low weight, and also allowed the evidence relating to Mr Nolan’s legal career, because of the possibility that it would turn out to be relevant to the unconscionability issue that was still to be raised and explained by Mr Nolan.
As to the central issue raised by the approach being pursued by Mr Nolan, namely the registering of the note on the title of the Griffith property in February 2015, Mr Nolan said that he and Ms Vidovic had the note removed from the title; Mr Nolan said that they had gone together to the registry and had a discussion with staff. He said that:
they hadn’t heard of this sort of thing before. They said that they didn’t know the basis for it. They said there was no court order attached to it and on that basis there was every right for – in my personal presence I heard this – there was every right for Mary to make a note. There wouldn’t be any charge for doing so because it shouldn’t have been put on in the first place and it was removed.
Mr Nolan went on to say that after the note was removed, he and Ms Vidovic had failed to pay under the instalment order. Some months later, the Commonwealth Bank registered Ms Vidovic’s mortgage over the Griffith property.
Maurice Falcetta
Mr Falcetta was cross-examined at length by Mr Nolan. In summary, his evidence was:
(a)that before the seizure and sale order was made in December 2014, his firm had served notice of its intention to apply for that order on the then solicitors for the debtors; that notice was given under the Rules, using Form 2.49;
(b)that when his firm obtained the seizure and sale order, they had sought to execute it, and had also registered the order under the Land Titles Act;
(c)that he personally had not dealt with such an order before, so he had sought advice from an experienced property law practitioner, checked the Land Titles Practice Manual, and asked his clerk to check with the LTO to clarify the administrative procedure;
(d)that on advice from the LTO that a sealed copy of the court order was required, his firm had obtained that document and lodged it with the LTO;
(e)that he had registered the seizure and sale order because he believed that it would “give the Sheriff a priority in order to deal with the enforcement of that writ against that property”;
(f)that, on the advice of the LTO, he had done so using Approved Form 023 - CO, Application to Register a Court Order;
(g)that registering a seizure and sale order in this way did seem to be an unusual thing to do;
(h)that he had put a number of caveats on titles in the course of his legal practice;
(i)that, depending on the terms of the caveat and the interest that is created, a caveat might have the general effect of preventing “dealings” with property;
(j)that caveats were notified to property owners by the LTO;
(k)that there seemed to be some doubt whether a seizure and sale order created an interest in land such as to permit the placing of a caveat on a title.
Mr Falcetta rejected Mr Nolan’s propositions, put to him in cross-examination:
(a)that the note registered on Ms Vidovic’s title to the Griffith property had been used “solely to circumvent the normal practice and procedure relating to caveats, which would be the normal appropriate thing to do in these circumstances”;
(b)that “the only reason you confected these notes on this title is to harass, intimidate and bully the owner of the title in the hopes that you will more quickly extract more money from her”; and
(c)that Mr Falcetta “deliberately purported to register in this way because it doesn’t have notice [and] that [he wanted] to create a condition of shock and awe”.
Land Titles Act, s 48
Section 48 of the Land Titles Act, relied on by Mr Falcetta, is relevantly as follows:
48 Instruments—registration and priority
(1) The registrar-general shall register an instrument lodged in registrable form.
(2) The registrar-general may require a specified class of instruments to be lodged in duplicate.
(3) An instrument lodged, other than—
(a) an order of the court; or
(b) a grant; or
(c) a memorandum of provisions; or
(d) a notice of determination or memorandum of discharge under the Rates and Land Rent (Relief) Act 1970;
shall be attested by a witness.
Mr Nolan did not submit that this provision did not permit registration of a seizure and sale order.
The debtors’ arguments
As already mentioned, Mr Nolan offered no evidence, and made no submissions, to the effect that a new instalment order should be made. Rather, in his oral submissions, Mr Nolan argued:
(a)that the original note on the title to the Griffith property was obtained unconscionably by the creditors’ lawyers; and
(b)therefore, the renewed seizure and sale order (at [16] above) should be set aside.
In particular, he wanted the note of the seizure and sale order currently registered on that title to be removed.
Mr Nolan made submissions in reliance on the Victorian case of Zhou v Kousal [2012] VSC 187; 35 VR 419 (Kousal) in support of his claim of unconscionability. He referred me to the following parts of that judgment:
54 In Blomley v. Ryan, Kitto J observed:
The court has power to set aside a transaction. Whenever one party to a transaction is at a special disadvantage in dealing with the other party because of illness, ignorance, inexperience, impaired faculties, financial need or other circumstances, affecting his ability to conserve his own interests and the other party unconscientiously takes advantage of the opportunity, thus placed in his hands.
...
56 The more contemporary authority of Commercial Bank of Australia v Amadio, was relied upon by Zhou. Reference was made to the observations of Mason J where his Honour observed:
Relief on the ground of unconscionable conduct would be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.
57 Deane J expressed the following views in Amadio:
Unconscionable conduct exists in circumstances in which (1) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them, (2) that disability was sufficiently evident to the stronger party to make it prima facie unfair or unconscientious that he procure or accept the weaker party's assent to the impugned transaction in circumstances in which he procured or accepted it.
Where such circumstances are known to have existed an onus is cast on the stronger party to show that the transaction was fair, just and reasonable.
...
69That is not to say that relevant special disability for the purposes of the equitable doctrine should be “boxed” into defined categories. As French J (as he then was) explained in ACCC v C G Berbatis Holdings Pty Ltd:
Australian case law has been concerned about unconscionable conduct within the framework of specific doctrines identifying particular classes of conduct albeit their boundaries tend to be blurred by the generality of the notion of unconscionability in equitable doctrine. One such class of conduct is the unconscientious exploitation by one person of the serious disadvantage of another to secure the disposition of property or the assumption of contractual or other obligations by the weaker party. The kind of disadvantage which will attract equity's intervention in such cases may have many faces. Their variety is so great that they elude satisfactory classification - Blomley v Ryan [1954] HCA 79; (1956) 99 CLR 362 at 405 (Fullagar J).
70Deane J also referred to the approach of Fullagar J in Blomley v Ryan in the following passage in Commercial Bank of Australia Ltd v Amadio:
The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogues. In Blomley v Ryan (1956) 99 CLR, at p 405 , Fullagar J. listed some examples of such disability: "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary". As Fullagar J. remarked, the common characteristic of such adverse circumstances "seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other”.
(citations omitted)
Mr Nolan also pointed out that in Kousal, a sale that had been conducted by the sheriff was set aside and that “a fortiori”, if an order has not yet even been executed “it should certainly be able to be stayed”.
As described at [59] and [60] above, Mr Nolan had cross-examined Mr Falcetta about the circumstances in which the original note was obtained.
Mr Nolan asserted that the original note placed on the title of the Griffith property must have been improperly registered because it was immediately removed on application from the debtors. He said that the impropriety was proved by the document quoted at [31] above.
As already mentioned, Mr Nolan seemed to expect that Ms Vidovic’s assertion that the note “was wrongly placed ab initio” would be accepted as proof of that assertion. This was a curious expectation, not least because he had also raised Ms Vidovic’s lack of legal knowledge in support of his claim of unconscionability.
Mr Nolan’s submissions about Kousal were not particularly clear, but seemed to involve the following propositions (although the logical connections between Kousal and some of Mr Nolan’s propositions are somewhat obscure, at least to me):
(a)that Kousal at [54], [56] and [57] stood for the proposition that “unconscionability blocks a remedy” and that “special disadvantage is only one of the categories of unconscionability”;
(b)that Kousal at [69] and [70] stood for the proposition that “the categories [of unconscionability] aren’t closed” and that unconscionability “clearly includes somebody abusing their position as an officer of the court”;
(c)that:
the special disability that Mary Vidovic is under versus Maurice Falcetta is she’s not an officer of the court and the unconscionable conduct includes placing an note on a title. The note doesn’t exist in law. If it was a caveat she would have received notice of it. She didn’t. It’s abuse of process which is unconscionable.
(d)that Mr Falcetta “is in a position of greater authority compared to Mary Vidovic”, and is “a legal practitioner, an officer of the court”;
(e)that in this case there was no need to prevent dealings with the land owned by Ms Vidovic by putting a note on the title, and in particular that did not need to be done in order to facilitate the carrying out of the seizure and sale order by the sheriffs;
(f)that the only legal mechanism for preventing dealings with land by its owner is a caveat;
(g)that putting a caveat on the title, although that would also have been unnecessary, was something that Mr Falcetta had done many times before;
(h)that because of “the facts and circumstances” of this case, doing something for the first time (that is, putting the note on the title) made it unconscionable;
(i)that the note must have been improperly registered because when Mr Nolan and Ms Vidovic contacted the LTO, and Ms Vidovic provided written advice that the note had been “wrongly placed ab initio”, staff of the LTO “immediately removed it”;
(j)(possibly) that Ms Vidovic’s written advice was itself proof that the note should not have been registered (at [69] above);
(k)that putting the note on the title had been “harassing and intimidating [and] an illegitimate form of coercion” and “had every likelihood of jeopardising Mary Vidovic’s financial relationship with her bank and in point of fact, it was the bank that discovered the note”, and that that was not equitable, and was “just not fair play”;
(l)that Mr Falcetta by his behaviour had abused his position and had taken the unnecessary step in order to bully and intimidate, and that his behaviour had the effect of bullying and intimidating because “making a note on a title is an extremely serious matter as is a normal caveat and one of the main reasons one takes a caveat out in situations of debt is to legally legitimately incentivise [sic] the debtor to pay”.
Consideration
First I note that Vickers J, in Kousal, rejected, by reference to the facts, the argument that the plaintiff Mr Zhou was at a special disadvantage in that English was not his first language, but also rejected a submission that Mr Zhou was under a special disability arising from the fact that the sale of his property was “of a compulsory nature” and had been permitted to be conducted without a reserve.
Vickers J said:
75 However, I do not regard this as a special disability in the relevant sense. Zhou’s will was not overborne to the extent that it was not independent or voluntary by anything other than the operation of the law. He was not in any position to make a judgment as to what was in his best interests, simply because, by reason of the enforced sale of his Property under the Sheriff Act, he was deprived by force of law of the opportunity to do so. He was not placed at a serious disadvantage vis-à-vis the other party by anything other than operation of the law.
76 The law applies equally to all who fall within its jurisdiction without exception. There was nothing “special” about Zhou’s alleged disability for the purposes of the equitable doctrine.
Next, I note that in Kousal, Vickers J found that there was no unconscionability such as to found a remedy in equity. However, his Honour concluded that the sale should be set aside because the sheriff had not sold the property “in accordance with the relevant court and enforcement legislation” and an applicable court order, and therefore had not complied with the provisions of the Sheriff Act 2009 (Vic) permitting the sale of seized property.
There was nothing that I could see in Kousal to support an argument:
(a)that it is unconscionable for a solicitor legitimately to use a mechanism provided by the law in support of a court order made in favour of his or her client (even if this is the first time the solicitor has used that mechanism, even if there is no requirement to use that mechanism, and even if the other party to the litigation is an unrepresented person with no legal qualifications); and
(b)that any such “unconscionability” could deprive the solicitor’s client of the benefit of a court order properly made in favour of the client.
The fact that Mr Falcetta is a legal practitioner does not deprive him of the right to use the proper processes of the law even when he is dealing with an unrepresented person, even an unrepresented person who does not have legal qualifications. None of the evidence I have summarised suggested to me that Mr Falcetta acted other than properly, and in particular I could see no way in which the solicitor’s action could be found to have involved taking unconscionable advantage of the second debtor.
It seems that a property sold under a seizure and sale order is sold subject to existing mortgages and other charges. It is in the interests of an unsecured creditor to alert other possible creditors to the existence of the debt that has led to the making of the seizure and sale order. Whether or not it is necessary to put a note on the title of a property that is subject to a seizure and sale order, it may be a useful thing for a creditor to do. The fact that, as Mr Nolan submitted, the existence of the note had raised questions in the mind of Ms Vidovic’s bank is a good example of why registering such a note might be useful. I do not accept Mr Nolan’s submission that the bank had been concerned about the note because the note was “something totally outside [the bank’s] normal experience”.
Mr Nolan’s submission that a caveat is the only legal mechanism for preventing dealings with land by its owner may be strictly accurate, in that a seizure and sale order of itself does not prevent dealings by an owner, at least until the order has been executed and the owner has ceased to be the owner. Furthermore, a seizure and sale order does not take priority over a registered mortgage, but that does not establish that the registration of a note on the title, as was done in this case, is not a “legitimate” mechanism for alerting the world at large (and other potential creditors in particular) that the registered proprietor’s equity in the property may be of interest to other existing creditors.
The fact that Mr Falcetta had never previously put a note on the title of a property subject to a seizure and sale order does not establish that there was anything improper or unconscionable about doing so in this case.
Neither Ms Vidovic’s document, nor the fact that the note was removed by LTO staff when Mr Nolan and Ms Vidovic went to the LTO on 30 March 2015, establishes that the note was improperly registered.
The first note was put on the title on 16 February 2015, after the seizure and sale order was made, and it was removed after the first instalment order was made on 25 March 2015. The making of the instalment order suspended the operation of the seizure and sale order, so the removal of the note about the seizure and sale order was clearly appropriate by 30 March 2015. That does not establish that noting the seizure and sale order on the title while the order was in force was improper.
The fact that Ms Vidovic’s bank was concerned by the existence of the note on the title to the Griffith property does not establish that the note was improper, although it may suggest that until then Ms Vidovic had not been entirely frank with the bank about her financial liabilities.
Finally, in the circumstances of this case, and especially given the apparent, and continuing, unwillingness of the debtors to pay the debt (as to which see [39] above), I cannot see that there was in this case any impropriety in the creditors, or their solicitor, attempting to “incentivise” (to use Mr Nolan’s word) the debtors to repay their debt, either by obtaining the seizure and sale order or, having obtained that order, by taking steps legally available to them to warn the public that the second debtor’s property was liable to be sold to enable repayment of an existing debt.
Accordingly, I could see no basis on which I could or should make the order now sought by Mr Nolan, being to set aside the seizure and sale order (at [63] above).
Nor was there any basis on which I could have made another instalment order, as originally sought in the appeal, since there was before me no evidence of any intention, and not even an unsupported offer, by the debtors to continue making instalment payments.
Extension of seizure and sale order
After I had indicated my conclusions about the appeal, the creditors applied for two extensions to the current seizure and sale order.
The first was an extension of the duration of the order, which was to expire on 14 December this year. The operation of that order had been stayed for most of this year pending determination of this appeal.
The second extension of the seizure and sale order was to extend the order to the Isabella Plains property which I understood was also owned by the second debtor, Ms Vidovic. Mr Nolan did not oppose the making of either extension to the seizure and sale order in the event that his appeal was unsuccessful.
I note in passing that there was some delay in finalising the extension of the seizure and sale order to the Isabella Plains property, because the unit number of the property shown in the mortgage documents, which was claimed to be the debtors’ home, did not seem to match exactly the address given by the debtors in a variety of court and other documents. After an enquiry was made of the parties, Mr Nolan confirmed that the correct address of the Isabella Plains property was that identified on the mortgage documents, and the order was finalised.
Orders
Accordingly, for the reasons set out above, I made the following orders:
1.The appeal from the registrar is dismissed (noting that the dismissal has the effect of not only confirming the registrar’s refusal to grant an instalment order, but also confirming the registrar’s costs order).
2.The Court Procedures Rules 2006 (ACT) are dispensed with to the extent necessary to allow me to deal with Mr Nolan’s effective amendment of the orders that he sought on appeal and to allow me to deal with the oral applications made in court by the creditors’ solicitors to amend the seizure and sale order as to duration and as to the property affected.
3.The seizure and sale order made on 15 December 2014 and renewed on 8 December 2015 is extended until 14 December 2017.
4.The seizure and sale order as renewed on 8 December 2015, and as extended by Order 3 until 14 December 2017, is amended to permit the enforcement officer to seize and sell, in satisfaction of the order debt first, the real and personal property (other than exempt property), being:
(a)Unit [xx], Block [xx], Section [xxx] on Deposited Plan 7365 in the suburb of Isabella Plains (also known as Unit [xx] of [xx] Cromwell Circuit, Isabella Plains, ACT 2905); and
(b)the property already covered by the seizure and sale order, being Unit [xx], Block [xx], Section [xx] on Deposited Plan 8455 in the suburb of Griffith (also known as Unit [xx] of [xx] McMillan Crescent, Griffith, ACT 2617).
5.The stay order made by Refshauge J on 29 March 2016 is lifted with effect from today (3 November 2016).
6.The appellants (debtors) are to pay the respondents’ (creditors’) costs of the appeal to the Supreme Court.
7.There are to be no dealings with either of the properties specified in Order 4 until the expiration of seven days from the day on which a sealed copy of these orders is made available to the parties.
| I certify that the preceding eighty-nine [89] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Penfold. Associate: David Hoitink Date: 23 December 2016 |
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