Koutoumanos v Suncorp Metway Ltd

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FEDERAL COURT OF AUSTRALIA

Koutoumanos v Suncorp Metway Ltd [2019] FCA 568

File number: VID 1188 of 2016
Judge: STEWARD J
Date of judgment: 24 April 2019
Catchwords: PRACTICE AND PROCEDURE – application for summary judgment by the respondent – where applicant has no reasonable prospect of successfully prosecuting the proceeding – where applicant has not suffered any loss or damage  
Legislation:

Australian Securities and Investments Commission Act 2001 (Cth) ss 12CA, 12CB

Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law ss 20, 22

Federal Court of Australia Act 1976 (Cth) s 31A

Federal Court Rules 2011 (Cth) r 26.01

Australian Consumer Law and Fair Trading Act 2012 (Vic) s 61

Cases cited:

Australia and New Zealand Banking Group Ltd v Mishra [2012] NSWSC 1333

Ellison v Sandini Pty Ltd [2018] FCAFC 44; (2018) 107 ATR 831

In the Marriage of Bourke (1993) 114 FLR 89

In the Marriage of Michiels (1991) 103 FLR 1

Jones v Daniel (2004) 141 FCR 148

Liberty Funding Pty Ltd v Steele-Smith [2004] NSWSC 1100

Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217

White Industries Australia Ltd  v Federal Commissioner of Taxation (2007) 160 FCR 298

Date of hearing: Determined on the papers
Date of last submissions: 27 February 2019
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 27
Counsel for the Applicant: The applicant in person
Counsel for the Respondent: Ms S Worsfield
Solicitor for the Respondent: Gadens

ORDERS

VID 1188 of 2016
BETWEEN:

GEORGE KOUTOUMANOS

Applicant
AND:

SUNCORP-METWAY LTD

Respondent

JUDGE:

STEWARD J

DATE OF ORDER:

24 APRIL 2019

THE COURT ORDERS THAT:

1.Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth), the respondent have summary judgment against the applicant.

2.The applicant pay the respondent’s costs as agreed or assessed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

STEWARD J:

  1. Suncorp-Metway Ltd (the “respondent”) seeks summary dismissal of Mr Koutoumanos’s (the “applicant”) action for damages pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the “FCA”) and/or r 26.01(1)(a) to (d) of the Federal Court Rules 2011 (Cth) (“Rules”). For the reasons which follow that application is granted pursuant to s 31A of the FCA.

    Legislative Provisions

  2. Sections 31A(2) and (3) of the FCA provide:

    (2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

    (a)the first party is defending the proceeding or that part of the proceeding; and

    (b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

    (3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

    (a)       hopeless; or

    (b)       bound to fail;

    for it to have no reasonable prospect of success.

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Details
Case
[2019] FCA 568
Decision Date

CaseChat Overview and Summary

In the matter of Koutoumanos v Suncorp Metway Ltd, the respondent, Suncorp Metway Ltd, filed an application for summary judgment against the applicant, Koutoumanos. The central issue was whether the applicant had any reasonable prospect of successfully prosecuting the proceeding against the respondent, who had denied liability and claimed that the applicant had not suffered any loss or damage. The case arose from two loan agreements executed in 2008, secured by a mortgage over a property at 834 High Street, Thornbury, which was primarily used as a retail shop. Following a divorce proceeding, an order was made for the applicant to acquire the property by making a payment to his former wife, with a subsequent sale if the payment was not made. The respondent took possession of goods found at the property, sold most of them via public auction, and held surplus funds. The respondent argued it had no reasonable prospect of successfully defending the proceeding due to the lack of any reasonable cause of action and the applicant's inaction in the proceeding.

The court examined the criteria for granting summary judgment under Rule 26.01(1) of the Federal Court Rules 2011, focusing on whether the applicant had any reasonable prospect of successfully prosecuting the proceeding. The respondent provided detailed affidavits outlining their denial of liability and the sale of the goods, showing that the applicant had not taken any steps in the proceeding for over 16 months. The court noted the applicant's inaction and the lack of any counter-affidavits or evidence to support the applicant's claims. The court concluded that the applicant had no reasonable prospect of successfully prosecuting the proceeding and that the proceeding was effectively abandoned.

Accordingly, the court granted the respondent's application for summary judgment. The applicant was ordered to pay the respondent's costs as agreed or assessed. The court found that the applicant's inaction and lack of any reasonable cause of action justified the dismissal of the proceeding. The final orders included granting the respondent summary judgment and directing the applicant to pay the respondent’s costs as agreed or assessed.

Orders

Orders of the court

1. Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth), the respondent have summary judgment against the applicant.

2. The applicant pay the respondent’s costs as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Rule 26.01(1) of the Rules provides:A party may apply to the Court for an order that judgment be given against another party because:(a)the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or(b) the proceeding is frivolous or vexatious; or(c) no reasonable cause of action is disclosed; or(d) the proceeding is an abuse of the process of the Court; or(e)the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.Background On or about 12 June 2008, the applicant and his former wife borrowed monies from the respondent by entering into two loan agreements. The loans were secured by a first registered mortgage over 834 High Street, Thornbury (the “Property”). At that time, title to the Property was held by the wife. She was the sole mortgagor. The Property was used as a retail shop from which, what was said to be antiques, were offered for sale using the trading name “Department of History”. Clause 17 of each “Offer of Loan”, relied upon by the respondent on the question of costs, was in the following form:17. Enforcement ExpensesEnforcement expenses may become payable under this Credit Contract, if an Event of Default occurs. Any enforcement expense which the Bank reasonably incurs or expends in enforcing the Credit Contract, including all legal costs, costs and all reasonable expenses incurred by the use of the Bank’s staff and facilities, will be debited to the Account after the day on which the enforcement expenses incurred. You will be notified in writing of any enforcement expense on the next statement, after the enforcement expenses incurred and You agree to pay those enforcement expenses immediately on the date of debiting to the Account. In 2010, the applicant and his wife commenced divorce proceedings in the Federal Circuit Court of Australia. Following a trial in 2013, a Federal Circuit Court judge made the following orders pursuant to which the applicant was to acquire title to the Property upon the making of a certain payment, and failing that, for there to be a sale of the Property with the proceeds being applied, amongst other things, to discharge of the respondent’s loan. The orders were:1.Within 60 days of the date of these orders (“the due date”) the [applicant] shall pay to the wife the sum of $202,009 (“the payment”);2.Contemporaneously with the payment: (a)the wife shall transfer to the [applicant] at the [applicant’s] expense all of her right, title and interest in the property at 834 High Street, Thornbury, Victoria (“the property”);…3.In the event the [applicant] fails to comply with orders 1 and 2 above by the due date, the parties shall forthwith do all acts and execute all documents necessary to sell the property within 3 months of the due date …4. The proceeds of sale shall be distributed as follows:(a) Firstly, to pay the commission and costs of sale;(b)Secondly, to discharge the mortgage and any other encumbrances;…

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

By its defence, the respondent denied that it was in breach of the loan agreements. It pleaded that it was unable to agree to an interest-only period because the customers had not been able adequately to establish their financial position, or their ability to service over time the loan commitments. It also pleaded that approximately 63% of the goods found at the Property had been sold at public auctions, 2% was sold to Melbourne Second Hand Goods (“MSHG”) and 35% were donated or otherwise disposed of by MIL Group Pty Ltd (“MIL Group”).Application for Summary Judgment The application for summary dismissal was supported by six affidavits:(a)an affidavit of Donnacha O’Coilean sworn 12 July 2017. Ms O’Coilean is a manager of the respondent. In this affidavit she swore that the information set out in two earlier affidavits of a Ms Louka (see below) was true and correct;(b)an affidavit of Chantelle Mary Louka, a solicitor at Gadens, sworn on 24 February 2017. This affidavit set out the history pursuant to which the respondent gained possession of the goods at the Property, took steps to have the applicant remove those goods, and described the process by which the goods were sold, mostly via public auction. The affidavit deposed that the respondent held surplus funds of approximately $1.7 million (less ongoing legal costs) arising from the sale of the Property and goods;(c)an affidavit of Chantelle Mary Louka sworn on 12 July 2017. In this affidavit, Ms Louka set out more details concerning the sale of the goods and deposed that, as at the date of that affidavit, the applicant and the respondent had not reached any agreement with respect to the disbursement of the surplus funds;(d)an affidavit of Kirsten Avery, National Operations Manager of Tagma Property Consultants, affirmed on 23 January 2018. Tagma had been engaged by the respondent to manage the sale of the Property and the goods contained in it. In this affidavit, Ms Avery provided further details of that process. She confirmed that approximately 63% of the goods were sold by Leonard Joel at public auctions, 2% were sold to MSHG, and that 35% were not in a saleable condition because they were damaged. The MIL Group arranged for the donation and/or disposal of the latter;(e)an affidavit of Darren Moldrich, Team Leader in Late Stage Retail Recoveries of the respondent, sworn on 24 January 2018. This affidavit affirmed information contained in the affidavit of Ms Avery and exhibited the Federal Circuit Court judgment referred to above; and(f)an affidavit of Anna Marie Koumides, a solicitor employed by Gadens, sworn on 17 January 2019. This affidavit exhibited the loan agreements, referred to above, as well as the mortgage and memorandum of common provisions. In contrast, the applicant has not filed any affidavit material in relation to the respondent’s application. Indeed, he has taken no step in the proceeding for over 16 months. The only material steps he has taken in the proceedings has been to file his statement of claim, attend a judicial mediation, and file three affidavits dated 6 October 2016, 8 September 2017 and 15 September 2017.Section 31A

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.