Jams 2 Pty Ltd v Stubbings - [2016] VSC 711

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S CI 2016 02053

JAMS 2 PTY LTD (ACN 600 173 1117)	First Plaintiff
CONTERRA PTY LTD (ACN 078 900 017)	Second Plaintiff
JANACO PTY LTD (ACN 006 209 105)	Third Plaintiff
v
JEFFREY WILLIAM STUBBINGS	Defendant

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	21 September 2016, 20 October 2016
DATE OF JUDGMENT:	28 November 2016
CASE MAY BE CITED AS:	Jams 2 Pty Ltd and ors v Stubbings
MEDIUM NEUTRAL CITATION:	[2016] VSC 711

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POSSESSION OF LAND - application by mortgagee for summary judgment – proposed defence that loan unconscionable – asset based lending – no financial information supplied to the lenders – alleged misrepresentation by intermediary as to surplus funds - large procuration and consultancy fees insufficiently explained– alleged fraud in attempt at refinance after default – whether fault of intermediaries should be attributed to the lenders – summary judgment refused – only a full hearing on the merits is appropriate - leave to defend granted on condition of security – Civil Procedure Act 2010 (Vic) s 64(b).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J D Mattin	Ajzensztat, Jeruzalski & Co
For the Defendant	Mr A Kirby	Evans Ellis Lawyers

TABLE OF CONTENTS

Introduction and summary of conclusions................................................................................... 1

Procedural history.............................................................................................................................. 2

Test for summary judgment............................................................................................................. 5

Plaintiffs’ case..................................................................................................................................... 5

Transaction..................................................................................................................................... 6
Supporting documentation................................................................................................ 7

Advance.......................................................................................................................................... 9
Default.......................................................................................................................................... 10
Notice............................................................................................................................................ 10
Failure to remedy........................................................................................................................ 11
The defendant in possession..................................................................................................... 11
Conclusions on the plaintiffs’ case........................................................................................... 11

Defendant’s proposed defences.................................................................................................... 12

Proposed defences...................................................................................................................... 12
Principles of unconscionability................................................................................................ 13
Summary of principles............................................................................................................... 17

Application of these principles to this case................................................................................. 18

Defendant’s case.......................................................................................................................... 18
Personal factors.................................................................................................................. 18
Purpose of the loan and alleged scheme to circumvent the National Credit Code 19
High risk loan with low documentation........................................................................ 19
No explanation or independent legal or financial advice........................................... 19
Misrepresentation as to surplus funds.......................................................................... 19
Misrepresentation as to likelihood of refinancing by Westpac.................................. 20
Failure to advise as to second mortgage....................................................................... 20
Procuration, legal and consultancy fees........................................................................ 20
Misrepresentation by employee of the plaintiffs’ lawyers......................................... 21
Fraud in attempts at refinance......................................................................................... 21
Plaintiffs acting in concert with other actors................................................................. 21

Evaluation.................................................................................................................................... 22
Purpose of the loan........................................................................................................... 24
Asset based lending.......................................................................................................... 25
Misrepresentation as to surplus funds.......................................................................... 27
Procuration, legal and consultancy fees........................................................................ 29
Alleged wrongful conduct by Mr Kiatos and Mr Topalides; fraud in attempts at refinance 30

Conclusion................................................................................................................................... 32

Conditional leave to defend........................................................................................................... 33

HER HONOUR:

Introduction and summary of conclusions

By their amended summons filed on 19 August 2016 the plaintiffs seek summary judgment for possession of three properties registered in the name of the defendant. The properties are at Ashton Rise, Narre Warren; Westley Crescent, Narre Warren; and Truemans Road, Fingal. I heard the application over two days on 21 September 2016 and 20 October 2016. The defendant was represented by a solicitor on 21 September 2016 and by counsel on 20 October 2016. The plaintiffs were represented by the same…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] VSC 711
Decision Date: 28 November 2016

CaseChat Overview and Summary

In the case of Jams 2 Pty Ltd v Stubbings, the primary dispute involved an application by a mortgagee for summary judgment against a borrower. The matter was heard in the Supreme Court of Victoria. The mortgagee sought summary judgment based on the borrower's default in repaying a loan, while the borrower proposed a defence centred around the unconscionability of the loan agreement, which was part of an asset-based lending arrangement. The borrower claimed that they had not provided any financial information to the lenders, and that there was an alleged misrepresentation by an intermediary regarding surplus funds. Additionally, the borrower argued that the large procuration and consultancy fees were insufficiently explained and that there was an alleged fraud in the attempt to refinance the loan after default. The central issue before the court was whether the fault of the intermediaries should be attributed to the lenders and whether summary judgment was appropriate in these circumstances.

The court examined the application for summary judgment under the Civil Procedure Act 2010 (Vic) and considered the proposed defence. The court held that the complex issues raised by the borrower, including the alleged unconscionability of the loan and the conduct of the intermediaries, were matters that required a full hearing on the merits. The court was of the view that the borrower's defence raised genuine issues that could not be resolved on the basis of the documents alone. The court found that attributing the fault of the intermediaries to the lenders was not straightforward and would require detailed examination. Consequently, the court determined that a full hearing was necessary to properly assess the borrower's defence and the merits of the case.

In light of the above, the court refused the mortgagee's application for summary judgment and granted the borrower leave to defend the proceeding, subject to the provision of security for costs. The court emphasised that the borrower's defence, while complex, presented genuine issues that warranted a full hearing. The court also noted that the borrower's allegations of unconscionability, misrepresentation, and fraud were serious matters that needed to be thoroughly investigated. The decision underscores the importance of a comprehensive examination of the facts and circumstances in cases involving complex financial arrangements and alleged misconduct by intermediaries.

Orders