Integrated Growth Solutions Pty Ltd v Campbell

[2015] NSWSC 517

Supreme Court

New South Wales

Medium Neutral Citation:	Integrated Growth Solutions Pty Ltd v Campbell [2015] NSWSC 517
Hearing dates:	29 April 2015
Decision date:	29 April 2015
Jurisdiction:	Equity Division
Before:	Stevenson J
Decision:	Plaintiff entitled to judgment against defendant; directions for disposition of plaintiff’s application for funds in Court
Catchwords:	EQUITY– general principles – equitable estates and interests – whether plaintiff has an equitable interest in a property previously owned by the defendant pursuant to an unregistered mortgage – whether the defendant’s signature on the loan and mortgage documents was forged; PROCEDURE – net proceeds of sale of property paid into Court – application for payment out of Court – whether plaintiff has an interest in the funds held in Court – whether plaintiff is primarily entitled to the funds and all interested parties are on notice
Legislation Cited:	Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Bank of New South Wales v Adams [1982] 2 NSWLR 659 Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 Elfar v Registrar General of New South Wales [2010] NSWSC 539 Harmer v The Commissioner of Taxation of the Commonwealth of Australia (1991) 173 CLR 264 Hudak v Adams [2013] NSWSC 1464 Pepper Finance Corporation Limited v Maloney [2013] NSWSC 890 Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505
Category:	Principal judgment
Parties:	Integrated Growth Solutions Pty Ltd (Plaintiff) Latesha Elizabeth Campbell (Defendant) (self-represented)
Representation:	Counsel: C Robinson (Plaintiff) Solicitors: A&J Montgomery Legal (Plaintiff)
File Number(s):	SC 2014/84779

EX tempore Judgment (revised)

1. The plaintiff claims to be the unregistered second mortgagee of a property previously owned by the defendant at Bass Hill. The plaintiff claims that its mortgage (“the Mortgage”) secures advances made by it to the defendant or at the defendant’s direction between 6 and 12 June 2012. Those advances were made pursuant to a Deed of Loan and Guarantee (“Deed of Loan”), which provided for a loan of $225,000 for a term of 60 days (with an option to extend to 90 days) at an interest rate, assuming timely payment, of 3 per cent per month and otherwise of 6 per cent per month.

2. The plaintiff advanced $225,000 to its solicitor's trust account on 5 June 2012. Funds were withdrawn from that trust account as follows:

Date	Journal reference	Amount
6 June 2012	Paid to Piper Alderman Payment as directed by Ian David Lazar	$52,000
7 June 2012	Paid to Tucker & Cowen Trust Account Payment as directed by Ian David Lazar in accordance with his authority	$25,000
12 June 2012	Paid to Latesha Campbell Payment as directed by borrower to the borrower	$17,000
12 June 2012	Paid to Olympic Bronze Pty Ltd Payment as directed by Ian David Lazar pursuant to his authority	$25,000
12 June 2012	Paid to Ivory Lane Developments Pty Ltd Payment as directed by Ian David Lazar pursuant to authority. Payment of fee	$2,060
12 June 2012	Journaled to Commercial Mortgage Trade Pty Ltd Supreme Court Litigation Payment of fees owed directed by Ian David Lazar	$10,000
12 June 2012	Paid to EMD and Associates Payment as directed by Ian David Lazar	$89,960.50

3. The total of those advances was $221,020.50. The balance was appropriated for costs and expenses, in accordance with the provisions of the Deed of Loan.

4. As can be seen, all but one of the withdrawals from the plaintiff's solicitor's trust account was said to be "as directed" by a Mr Ian Lazar "with" or "pursuant" to his authority. I will return to Mr Lazar's role below.

5. On 6 February 2015 National Australia Bank Limited, the registered mortgagee of the Bass Hill property, paid into Court $428,917.90. That sum represented the net proceeds of sale of the Bass Hill property following the exercise by NAB of its power of sale.

6. In those circumstances, the plaintiff seeks the following relief:

1. a declaration that the plaintiff had an estate or interest in the Bass Hill property pursuant to the charging clause within the Deed of Loan and the Mortgage entered into by the defendant on 6 June 2012;

2. judgment for the plaintiff in the sum of $225,000, being the amount due to the plaintiff under the Deed of Loan and the Mortgage;

3. judgment for the plaintiff for interest on the sum of $225,000 at the contractual rate under the Deed of Loan and the Mortgage;

4. a declaration that the plaintiff has an interest in the funds paid into Court by NAB to which I have referred above, being the residue of the proceeds of sale of the Bass Hill property by the first mortgagee; and

5. an order that the plaintiff be paid from the funds paid into Court the amount owing by the defendant to the plaintiff under the Deed of Loan and the Mortgage.

7. The defendant denies that she signed the Deed of Loan or the Mortgage. On 4 July 2014, she filed a cross-summons seeking declarations to that effect.

8. On 18 December 2014, Brereton J fixed this matter for hearing today. On 3 March 2015, his Honour also listed the proceedings in which NAB paid the funds to which I have referred into Court for hearing today. On each of those occasions, a solicitor appeared for the defendant.

9. On 25 March 2015, the solicitors acting for the defendant filed a notice of ceasing to act.

10. At 10am today, the defendant was called outside Court. There was no appearance.

11. I have mentioned that all but one of the advances comprising the $225,000 (after costs and expenses) were made at the direction of Mr Lazar. The plaintiff's solicitor, Mr Raed Rahal, has given evidence that:

1. in or about May 2012, he received instructions from Mr Andre Kunz, of the plaintiff, that Mr Lazar had arranged a loan for a "customer or client of Mr Lazar’s”;

2. thereafter he spoke to Mr Lazar on a number of occasions about organising execution of the Deed of Loan and the Mortgage, and Mr Lazar said that he was the defendant's "agent";

3. he was "vaguely acquainted" with the defendant as he had, in early 2012, discussed a legal matter with her;

4. on 6 June 2012, Mr Lazar telephoned him and said the defendant was "signing today";

5. a few days later he received the originals of the Deed of Loan and the Mortgage, evidently executed by the defendant;

6. on 14 June 2012, Mr Lazar telephoned him and asked him to draw a cheque in favour of the defendant for $17,000, stating "she will be coming in to pick it up".

7. later that day, the defendant attended at his office;

8. he met the defendant in the reception area and a conversation to the following effect took place:

The defendant: "I am here to collect a cheque”

Mr Rahal: “Can I have some identification please?”

The defendant: “I have a drivers licence”

Mr Rahal: “[T]hat is fine".

9. he took the defendant's drivers licence and photocopied it;

10. he then handed the defendant copies of the trust ledger concerning her loan and an acknowledgement document and said:

“I will just get you to sign a copy of the cheque as well as an acknowledgment and the copies of the trust ledger and statement which detail the transactions made on your account. Please look through it before you sign."

11. the defendant then signed a document in his presence which read:

“I Latesha Campbell confirm that I have taken receipt of the cheque requested by me in the amount of $17,000 from [the plaintiff's solicitor] on 12 June 2012.

I additional [sic] confirm that I have no objection to any of the cheques drawn or amounts paid as directed by Ian Lazar in the attached Trust Account Statement.”

The trust account statement attached set out the details that I have set out above at [2].

12. As Mr Robinson, who appeared for the plaintiff, pointed out in his helpful written submissions, the defendant bears the onus of proving that the signatures on the Deed of Loan and the Mortgage were forged: Elfar v Registrar General of New South Wales [2010] NSWSC 539 per Ward J at [192] to [197]; Hudak v Adams [2013] NSWSC 1464 per Rein J at [47].

13. Further, although the Court must consider all of the evidence and may prefer the oral evidence to the evidence of experts, it is more difficult to do so when expert evidence is adduced in respect of the signatures and that expert is not cross-examined: Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 per Young CJ in Eq at [247].

14. The plaintiff has adduced evidence from the well known and well respected handwriting expert, Mr Christopher Anderson. Mr Anderson has compared the signatures purporting to be those of the defendant on the Deed of Loan and the Mortgage with some "specimen" documents which contain the defendant's genuine signature. The specimen documents included the defendant's passport, her drivers licence and documents executed by the defendant concerning a lapsing notice she served in relation to a caveat lodged on the title of the Bass Hill property. Those documents were produced on subpoena.

15. Mr Anderson's conclusion was that there was "very strong support" that the writer of the "L Campbell" signatures on the specimen documents was the same person who signed the Deed of Loan and the Mortgage.

16. I accept that evidence, and conclude that the defendant did execute both the Deed of Loan and the Mortgage.

17. There being no other defence offered by the defendant to the plaintiff's claim, I propose to enter judgment in favour of the plaintiff against the defendant as sought by the plaintiff.

18. NAB, as first mortgagee, having exercised its power of sale over the Bass Hill property, held the proceeds of sale beyond those needed to satisfy its entitlement on trust for any subsequent mortgagee of whose interests it had notice: Bank of New South Wales v Adams [1982] 2 NSWLR 659 at 665 per Helsham CJ in Eq; s 58(3) of the Real Property Act 1900 (NSW).

19. NAB was on notice of the plaintiff's interest by reason of a caveat that the plaintiff lodged on the title. The solicitor for NAB made specific reference to that caveat in her affidavit sworn in the proceedings in which NAB paid the funds into Court.

20. On the sale of the Bass Hill property by NAB, the plaintiff's interest as mortgagee of that property converted to an equitable charge over the proceeds: see the cases referred to by Hallen J in Pepper Finance Corporation Limited v Maloney [2013] NSWSC 890 at [52].

21. As the funds paid into Court were the subject of a pre-existing trust, the funds remain, as between competing claimants to the fund, subject to the pre-existing trust, notwithstanding the payment into Court: Harmer v The Commissioner of Taxation of the Commonwealth of Australia (1991) 173 CLR 264 at 272 to 274 per Mason CJ, Deane, Dawson, Toohey and McHugh JJ.

22. The plaintiff seeks an order pursuant to Uniform Civil Procedure Rules r 55.11 that the funds paid into Court be paid out to it, to the extent necessary to satisfy its debt. The authorities show that, in those circumstances, the plaintiff must show three matters, summarised by Slattery J in Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 at [8] to [10]:

1. it is the party primarily entitled to the fund and the basis for that entitlement;

2. it has a beneficial interest in the very funds paid into Court; and

3. all other interested parties are on notice of the application.

23. The matters set out above show that the plaintiff may well satisfy the first of those requirements and can certainly satisfy the second. A difficulty arises in relation to the third matter. That is because the evidence suggests that there are two other parties that may have an interest in the funds, namely Mrs Saada Nassif and Mr George Nassif, both of whom lodged a caveat on the title of the Bass Hill property in August 2014.

24. On 22 April 2015, Mrs Nassif and Mr Nassif filed an appearance in the proceedings in which NAB paid money into Court.

25. Today, Mr Hollo of counsel appeared for both those parties. He informed me that Mr Nassif is a former de facto partner of the defendant and that Mrs Nassif is Mr Nassif’s mother.

26. Mr Hollo informed me that he had only recently been briefed in the matter.

27. The form of the caveat lodged by Mrs Nassif and Mr Nassif suggests that they claim an equitable interest in the Bass Hill property, although the manner in which their claim is articulated has not been accurately stated in the caveats.

28. There thus arises the prospect of a competition between those parties and the plaintiff as to entitlement to the funds paid into Court, as each claims an equitable interest in those funds.

29. I am not in a position to resolve that contest today and some procedure must now be adopted to enable that to be done.

30. I propose to invite counsel to now confer and endeavour to agree on a proposal whereby that contest can be sensibly resolved in the near future.

31. I make declarations in accordance with paragraphs 3 and 6 of the amended summons filed on 4 May 2015:

1. A declaration that the plaintiff had an estate or interest in the land situated at 914 Hume Highway, Bass Hill NSW contained in certificate of title folio identifier 27/132462 pursuant to the charging clause within the loan agreement and mortgage document entered into by the defendant on 6 June 2012.

2. A declaration that the plaintiff has an interest in the fund paid into Court in proceedings no. 2015/37605 being the residue of the proceeds of sale of the Land by the first mortgagee.

32. I enter judgment for the plaintiff against the defendant in the sum of $653,523, comprising the principal of $225,000 and interest to date of $428,523.

33. I order that the defendant pay the plaintiff's costs.

34. I order that the Amended Summons be otherwise dismissed.

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Decision last updated: 05 May 2015