Liberty Funding Pty Ltd v STARSCAPE Holdings Pty Ltd - [2005] WASC 180

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LIBERTY FUNDING PTY LTD -v- STARSCAPE HOLDINGS PTY LTD & ORS [2005] WASC 180

CORAM: SIMMONDS J

HEARD: 21 JULY 2005

DELIVERED : 18 AUGUST 2005

FILE NO/S: CIV 1260 of 2005

BETWEEN: LIBERTY FUNDING PTY LTD
Plaintiff
AND
STARSCAPE HOLDINGS PTY LTD (ACN 093 411 440)
First Defendant
RAYMOND JOHN NEWTON
Second Defendant
MICHAEL THOMAS HEWISON PIDD
Third Defendant

Catchwords:

Procedure - Application for summary judgment - Application for default judgment - Mortgage action for possession - Turns on own facts

Legislation:

Nil

Result:

Application for summary judgment against second defendant allowed

Category: B

Representation:

Counsel:

Plaintiff:     Mr B C Smith
First Defendant             :     No appearance
Second Defendant         :     Mr T B Lyons
Third Defendant           :     No appearance

Solicitors:

Plaintiff:     Ilberys Lawyers
First Defendant             :     No appearance
Second Defendant         :     Gibson Lyons
Third Defendant           :     No appearance

Case(s) referred to in judgment(s):

Bahr v Nicolay (No 2) (1988) 164 CLR 604
Brisbane Unit Development Corp Pty Ltd v Robertson 1983] 2 Qd R 105
Conlan v Registrar of Titles (2001) 24 WAR 29
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 1
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

Case(s) also cited:

Milne Feeds Pty ltd v Bride (1993) 10 WAR 542
Sandgate Corp Pty Ltd (in liq) v Ionnou Nominees Pty Ltd (2000) 22 WAR 172
Tzekas v Citibank Savings Ltd, unreported; FCt SCt of WA; Library No 920234; 16 April 1992
Tzekas v Citibank Savings Ltd, unreported; FCt SCt of WA; Library No 930052; 10 February 1993

SIMMONDS J:

Introduction

These are the reasons for my order, made on 21 July 2005, granting the application of the plaintiff, Liberty Funding Pty Ltd, for summary judgment against the second defendant, Raymond John Newton. I refer to the second defendant in these reasons as the second defendant, and as Mr Newton, or Newton. The plaintiff's action is one for the enforcement of a loan agreement and associated securities. The loan agreement was entered into with the first defendant to which credit was extended. The loan agreement was secured by a mortgage over certain land, of which the first defendant is registered proprietor, and by a guarantee and indemnity given by the third defendant. The first defendant had acquired the land as trustee of a family trust. The second defendant was appointor under the trust, and, subsequent to the mortgage, loan agreement and guarantee, appointed himself the first defendant's successor as trustee. The plaintiff's action is also to enforce the loan agreement against the second defendant in his capacity as trustee, as well as for vacant possession of the land from him.
There was an appearance in the plaintiff's action for the first and the second defendants, but not for the third defendant. A statement of claim was filed. A defence was filed, but only for the second defendant. Subsequently, an application was made against the first defendant under O 62A r 2 for leave to enter default judgment against the first defendant for possession and debt which, after having been adjourned off from an earlier hearing, was included in the hearing before me of the plaintiff's application for summary judgment. It was also dealt with in the plaintiff's minute of proposed orders. Subsequently to the application for default judgment, the solicitors who filed the memorandum of appearance for the first defendant obtained leave under O 8 to be taken from the record, on the basis they had lodged that memorandum in error, never having had instructions to lodge any such memorandum from the first defendant.
Later in these reasons I indicate why, notwithstanding the orders I made in terms of the plaintiff's minute as amended, these reasons relate only to the summary judgment portions of my orders.
I should also note that, at the hearing before me, there was an appearance only for the second defendant. Finally, I should note that, on the applications before me, no relief was sought against the third defendant.
I first set out the background to the plaintiff's action, before dealing briefly with the plaintiff's application for default judgment, and reaching my reasons for granting the application for summary judgment in the terms I did.

The plaintiff's action

In order to provide the context to the plaintiff's applications, I need to refer to the background to its action. For that background I draw on the affidavits lodged in support of or in opposition to the plaintiff's applications, which is of course the material to which I am restricted.
Before me in support of the plaintiff's applications were two affidavits of Maria Pereira, an officer of the plaintiff, one in support of the application for default judgment and sworn 3 May 2005, and another, in support of the application for summary judgment and sworn 19 May 2005, as well an affidavit of Mark Cleary, another officer of the plaintiff, in support of the application for summary judgment and sworn 12 July 2005. The second Pereira affidavit deposed to the truth in every particular of the contents of the plaintiff's writ of summons, dated 2 March 2005 (par 4 of the affidavit) and to the deponent's belief, based on the contents of the affidavit, that the second defendant had no defence to the action (par 29(d) of the affidavit). These of course are necessary elements of the application for summary judgment: Civil Procedure Western Australia at [14.2.2] and [14.2.4].
At the hearing, the plaintiff sought leave to refer to a further affidavit from Mr Cleary in support of the application for summary judgment, sworn on 21 July 2005. I gave leave to refer to this affidavit, after the second defendant indicated he did not oppose such leave being given. The significance of this further affidavit will appear later in these reasons.
In opposition to the plaintiff's application for summary judgment was an affidavit of Raymond John Newton, the second defendant, sworn 21 June 2005.
From this material, the following emerged. The plaintiff's action against the first and second defendants rests on a loan agreement styled an "Investment loan agreement (fixed rate) schedule" between the plaintiff and the first defendant (Annexure "M" to both of the Pereira affidavits, of 3 May 2005 and 19 May 2005). The Pereira affidavits referred to this agreement as "dated 11 August 2005", although it bore under the signature for the plaintiff a "date of offer" of 31 July 2005, and no date under the signature for the first defendant. This agreement, which I will call the 2003 Loan Agreement (the term "Loan Agreement" is used in the pleadings), was treated before me before me as that referred to in the statement of claim par 5 as the "written Investment Loan Agreement (Fixed Rate) Schedule made on or about 31 July 2003".
The 2003 Loan Agreement contains a section "SECURITY" setting out "the following mortgages, other securities and guarantees, if any" as taken by the plaintiff. Under "Mortgage Property", there is a check mark (a cross) alongside the entry "Already taken", and beneath this appears "Date of Mortgage: Mortgage No: I195346" and the name of the first defendant, as well as the address of the property the subject of the Mortgage. This is the Mortgage (the term used in the pleadings), registered on 5 August 2002, referred to in the Statement of Claim par 8 (Pereira affidavit of 3 May 2005, par 5 and annexure "B", and Pereira affidavit of 19 May 2005, par 6 and annexure "B"). Under "Guarantee(s)" and "To be taken from (not applicable if left blank)" an entry appears, for "Michael Thomas Hewison Pidd", which is the name of the third defendant, as well as an address.
Before me there was initially a submission by the second defendant that the Mortgage, having been registered about one year before the 2003 Loan Agreement was entered into, did not extend to cover the obligations arising under that agreement. However, the Mortgage also included a "Memorandum of Common Provisions G803753" (Pereira affidavit of 3 May 2005, par 5 and Annexure "C" and Pereira affidavit of 19 May 2005, par 6 and annexure "C"; and statement of claim, par 8 and par 10). The Memorandum, cl 1.3, when read with cl 35, provided that the Mortgage covered both present and future amounts, owing both under the Mortgage and any agreement "which all of you acknowledge in writing to be an agreement covered by this mortgage". In view of the entries under "Mortgage Property" to which I have referred, it appears to me that this argument must fail. In any event the second defendant did not press it.
The second defendant, also initially, made a related submission, that the plaintiff had not pleaded any agreement respecting obligations created on or before the Mortgage was entered into, and thus there was no valuable consideration for the Mortgage, nor any agreement covered by the Mortgage such as was contemplated by cl 35 of the Memorandum. However, I do not need to address the question whether or not the Mortgage required valuable consideration (see Transfer of Land Act 1893 (WA), s 85), or cl 35 required that there be an agreement in existence at the date of the Mortgage. This is because the Cleary affidavit of 21 July 2005, to which I gave leave to refer as I have indicated, explains, as the first defendant conceded, the background to the Mortgage. I also note that this material provides additional detail to an entry in one of the documents called, in Mr Cleary's earlier affidavit, that sworn on 12 July 2005, "loan application documents" (par 4) and forming part of one of the annexures to that affidavit ("MC1"). That entry, under the heading "The purpose of this loan is:" was the dollar amount of the amount to be borrowed, and appeared alongside the item "Refinance loans secured by an investment property as follows ‑ Amount originally for investment purposes". As the first defendant's principal argument concerns in part what the plaintiff may have known at the date of entry into the Mortgage, I need to indicate in some detail the nature of that background deposed to in Mr Cleary's later affidavit.
The Cleary affidavit of 21 July 2005 deposed to an agreement in the form of an "Investment loan agreement (fixed rate) schedule" between the plaintiff and the first defendant. The affidavit deposes that this agreement was executed by the first defendant on or about 24 July 2002 (par 4). The affidavit annexes (as "MC1") a copy of what appears to be this document, which I will call the 2002 Loan Agreement. I note, however, there is no express cross-reference to "MC1" in the body of the affidavit, although no objection was taken to it being taken to be the 2002 Loan Agreement.
The 2002 Loan Agreement is in the same form as the 2003 Loan Agreement. The former document does not carry the date of 24 July 2002, but rather a "date of offer" of 18 July 2002. Under "Mortgage Property" the 2002 loan agreement there is a check mark (a cross) for a mortgage "to be taken" from the first defendant over the property the subject of the Mortgage that was registered subsequently. Under "Guarantee(s)" there are the same name and address as appear in the 2003 Loan Agreement. The Cleary affidavit of 21 July 2005 refers to the 2002 Loan Agreement as having been "rolled over" into the 2003 Loan Agreement (par 8).
I now turn to the plaintiff's application, considering first the application for default judgment against the first defendant, and then the application for summary judgment against the second defendant.

The plaintiff's application for default judgment against the first defendant

At the hearing, I was told by counsel for the plaintiff that this application was to be dealt with by me pursuant to his understanding of the case management order of Registrar S Boyle of 24 May 2005. That order, "pursuant to O 62A", was:
"The application for judgment against the first defendant is adjourned sine die and referred to the Master to be dealt with following the plaintiff's summary judgment application."
However, I note that the original application, dated 9 May 2005, rested on O 62A r 2, as I have indicated. That rule is for applications for judgment in default of appearance. However, the first defendant had filed an appearance, as I have indicated. Subsequent to that application having been made, also as I have indicated, the solicitors who had filed that appearance had been removed from the record, on the basis that they never had instructions to act for the first defendant in this matter (see affidavit of Simon Nicholas Davey sworn 18 May 2005, par 8). In the order of 24 May 2005 by Registrar S Boyle removing those solicitors from the record, there are no further orders with respect to the memorandum of appearance. In any event there is also no defence for the first defendant, which had been served with the writ of summons (affidavit of Cheryl Lorraine Harrison sworn 4 April 2005). The application of 9 May 2005 was expressed to rest on default in filing a defence (order 1).
At the hearing, as I have said, I made the orders for default judgment against the first defendant in the plaintiff's minute of proposed orders produced to me at that hearing. However, on closer inspection of the papers in preparing these reasons, it was not altogether clear whether or not default of appearance or default of defence was to be considered to be the basis the basis of the application. Assuming that the basis of the application is indeed O 62A r 2, there is the preliminary difficulty that that the rule on its face appears to be inapplicable here, as the mortgage action was one begun by writ, not by originating summons. The applicable rule would appear to be O 62 r 4, requiring the application to be by summons served on the first defendant for leave to enter default judgment. That does indeed seem to be the form of application in fact used by the plaintiff. Assuming it was O 62A r 4, and that the basis was default in filing a defence, in any event there was no certificate of service by the plaintiff's solicitor giving the first defendant notice of appointment of hearing of the summons and the affidavit in support, and of the adjournment of that hearing to the hearing before me (as required by O 62A r 4(3), which refers to O 62A r 2(3) and (5)).
In those circumstances I called the plaintiff and the second defendant back before me for me to raise these matters with the plaintiff. I indicated that I would not permit the extraction of the orders for default judgment until, at a further hearing, the Court had been satisfied as to the basis for the application, and compliance with all of the requirements for making such an order, including the notification requirements I have indicated. I also indicated that, in the event the first defendant had not been notified as the rules require, I would require service of a notification of a further hearing of the plaintiff's application at which the first defendant would have the opportunity to be heard in opposition to making the orders, if it wished to be so heard. At the further hearing in either case, the solicitor for the plaintiff should provide the certificate detailing the amount due at the date of that hearing, with continuing interest calculated on a daily basis, as is required in actions of this kind: Civil Procedure Western Australia, at [62A3.3]. That further hearing should be before the Registrar S Boyle, who had original carriage of the matter.
In the event, counsel for the plaintiff confirmed that the application for default judgment was indeed on the basis of the default of defence, and that the first defendant had been notified of the original hearing of the application before Registrar S Boyle. However, the first defendant had not been notified of the adjourned hearing of the application before me. In the event, counsel for the plaintiff was content that the matter be further adjourned to be heard before Registrar S Boyle as I have indicated.
However, in those circumstances also, I concluded that those parts of my orders that related to the application for summary judgment could be severed from those to do with default judgment, and that reasons for the former parts could be separately published. I also concluded that those parts to do with summary judgment could be extracted. At the hearing at which I had called back the parties, solicitors for the second defendant indicated they were content for me so to proceed.

The plaintiff's application for summary judgment against the second defendant

This application was brought under O 14, which requires such applications to be brought within 21 days after the defendant has entered an appearance, or at any later time by leave of the Court: O 14 r 1. The plaintiff sought an order abridging the time for this application, and referred me to the affidavit filed in support of the application and sworn on 19 May 2005 by Maria Pereira, an officer of the plaintiff, par 3. That paragraph referred to settlement discussions between the parties which appeared to terminate when the defendant filed a defence. There were no submissions made against an order abridging time and, in the circumstances so deposed to, I granted the leave sought.
The approach to the disposition of O 14 applications is well understood. It has recently been put in these terms in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12, per McHugh J, at [203], as follows (footnotes omitted):
"Australian courts operate under what is now described as the 'old rules' in the United Kingdom. This Court has said [Webster v Lampard (1993) 177 CLR 598, at 602 to 603, per Mason, CJ, Deane and Dawson JJ]:
'The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried' ... Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact. In such a case, it is essential that 'great care … be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal'."
The second defendant's case against the grant of summary judgment in essence was that, as the property the subject of Mortgage was held by the first defendant as trustee of a trust asset, and as the plaintiff's action was to enforce an obligation or obligations owed by the first defendant in its own right and not as trustee, the action, at least as to the enforcement of the Mortgage, had to fail.
There was no dispute before me that that the property was indeed a trust asset, held at the time of the Mortgage and the 2003 Loan Agreement by the first defendant as trustee. The Pereira affidavit of 19 May 2005 deposes that the 2003 Loan Agreement and the Mortgage were entered into by the first defendant "as trustee" of the family trust "and in any event as the registered proprietor" of the property the subject of the Mortgage (par 29(a)). However, the plaintiff's case was that it was not aware of any trust or equitable interest at any material time and there was no material before me, from the second defendant or otherwise, to raise a question as to its awareness in that respect. Even had it been so aware, there was no material before me, from the second defendant or otherwise, that would raise a dispute on a matter of fact that would defeat the plaintiff's claims.
As the holder of a registered mortgage, the plaintiff's title will only be defeated by fraud of the sort that would defeat the holder of a registered interest under s 68 and s 131 of the Transfer of Land Act. Mere knowledge of the existence of a trust is not enough (Bahr v Nicolay (No 2) (1988) 164 CLR 604). It would be necessary to show dishonesty in the registration of the Mortgage, in the sense at least of the mortgagee's knowledge or calculated abstention from inquiry that the mortgagor was acting in breach of its obligations under the trust (see Conlan v Registrar of Titles (2001) 24 WAR 299, Owen J, at par 75, 76). Of course, the fact that the Mortgage was acquired without fraud would not be relevant to the enforcement of it in respect of any obligations owed to the plaintiff that were not within the scope of the obligations that, on its true construction, the Mortgage secured.

On a plaintiff's application under O 14, there are two bases on which, where the plaintiff has provided sufficient material on which to grant the order, the Court may nonetheless decline to grant the application: O 14 r 3(1). The first such basis is that the defendant satisfies the Court "with respect to the claim, or the part of the part of the claim, to which the application relates that there is an issue or question in dispute which ought to be tried". The other such basis is that the defendant satisfies the Court with respect to such claim or part "that there ought for some other reason to be a trial of that claim or part".
With respect to the first basis, the defendant has an evidentiary burden to show a version of the facts which is not inherently incredible raising a dispute of fact calling for further investigation (Civil Procedure Western Australia, at [14.3.3]), although of course the overall legal burden of persuasion remains throughout upon the plaintiff (at [14.3.1]).
With respect to the second basis, the defendant may be granted leave to defend where the defendant is able to show that circumstances "ought to be investigated, as for example where a mortgagee's bona fides are challenged on grounds not devoid of merit and his or her claim requires the close investigation of a trial" (at [14.3.4]). At the same time, leave to defend will not be given (at [14.3.4]):
"Where the defendant does no more than assert that he or she ought to be given the opportunity by discovery or cross-examination to see if there is a possible defence (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 at 116) or to establish fraud when there is no evidentiary basis for it at the time of the application: Brisbane Unit Development Corp Pty Ltd v Robertson [1983] 2 Qd R 105 at 109."
In my view, the second defendant has not discharged the evidentiary burden referred to. The second defendant does not show any evidence that, at the time of the Mortgage or subsequently when the 2003 Loan Agreement was entered into, the plaintiff was aware or calculatedly abstained from inquiring whether the first defendant was in fact a trustee, and so any question of being aware or calculatedly abstaining from inquiring whether the first defendant was in fact dealing with trust assets to secure its own obligations in breach of trust does not arise. Nor is there any other evidence of this. I now explain how I arrived at this view.
The affidavit of Mr Newton deposed (at par 14) that, at no time prior to the lodgement of the Mortgage, was he aware of "the loan being taken out" by the first defendant, which took it out "in its own right". He further deposed (at par 15) that when he became aware that the property the subject of the Mortgage "in which I reside had been used as security for a loan to the first defendant in its own right" he took steps to remove the first defendant as trustee, and to have a vesting order made arising from the change of trustee.
However, I also note the statutory declaration lodged with the caveat on 29 June 2004 against the land the subject of the Mortgage (Annexure "G" to the Pereira affidavit of 19 May 2005). This statutory declaration refers to the use of the proceeds of the loan the Mortgage secured in 2002 to purchase certain other property, in Medina, with the balance of the proceeds paid into an account in the name of the first defendant established by the second defendant, and into which monies derived from a business carried on by the second defendant or his own monies were paid (pars 3 and 2(d) and (f) of the statutory declaration). The statutory declaration also refers to the second defendant having caused the transfer of the Medina property into the name of the first defendant on 13 August 2002. That transfer is referred to in the same terms, with the addition that the third defendant was to hold the Medina property on trust for the family trust, in the statutory declaration (Annexure "I" to the Pereira affidavit) of the second defendant lodged with the application to have the Medina property vested in the second defendant as the new trustee (par 4 read with par 5 of that statutory declaration).
However, the Newton affidavit states that he knew nothing about the purchase of the Medina property nor about the original loan until shortly after they took place, when he was informed of them by the third defendant. Notwithstanding what was said in the statutory declaration, Mr Newton's affidavit states he did not cause the transfer of the Medina property into the name of the first defendant (affidavit sworn 21 June 2005, par 16). That affidavit also states that, following the rejection of the original application for vesting orders for the Medina property, and on the advice of his current solicitor, Mr Newton has not applied for the transfer of that property into his own name, as it is "an asset belonging to the first defendant in its own right" (par 17).
Although the statutory declaration raises some question, at least as to the capacity in which at least part of the loan was taken, the material I have just referred to, taken as a whole, would justify calling for further investigation of the possibility that the mortgage and the original loan (which as I have indicated was rolled over under the 2003 Loan Agreement) were part of a breach of trust. This is notwithstanding the breadth of the powers of the trustee to borrow and give security for its borrowings under the trust deed for the family trust (annexure "RJN1" to Mr Newton's affidavit, cl 10.1(g)) to which the plaintiff took me. However, it seems to me that is not enough for the purposes of discharging the second defendant's evidentiary onus. The second defendant must also show at least some material that would justify calling for further investigation of the possibility that the plaintiff knew of, or calculatedly abstained from inquiry as to, the trust.
As to that issue, the second defendant initially sought to rely upon the entry into the Mortgage, as at best a voluntary transaction, as evidence raising the question whether the plaintiff was aware at least of the possibility it was dealing with a person not entitled to enter into that transaction. However, as I have already indicated, the Mortgage was not a voluntary transaction, having been entered into to secure among other things the obligations arising under the 2002 Loan Agreement, as the second defendant accepted, and this argument fell away.
I should add that the second defendant at the hearing indicated it had not had the chance to determine what amounts had been paid under the 2002 Loan Agreement. However, the plaintiff is not seeking to enforce that agreement. Rather, it is seeking to enforce the 2003 Loan Agreement. I did not understand the second defendant was calling into question the state of accounts under that agreement, as deposed to in the Pereira affidavit of 19 May 2005 (pars 26 to 28).
The other matters as to the knowledge or calculated abstention of the plaintiff to which the second defendant directed my attention included the declaration in the 2003 Loan Agreement that, "by signing this document", "you do not sign this acceptance as trustee, unless you have advised us in writing". This is referred to in Mr Newton's 21 June 2005 affidavit (par 11). I further note there is a blank alongside the portion of the 2003 Loan Agreement for "TRUSTEE INFORMATION (if applicable)". I also note there are corresponding declaration details and a corresponding blank in the 2002 Loan Agreement. There is also no reference to the first defendant as trustee in the "Mortgage Default Notice", sent to the first and third defendants (annexure "N" to the Pereira affidavit of 19 May 2005), to which Mr Newton's affidavit (par 13) directs attention. I note in passing that these notices were issued after the plaintiff had received a letter, dated 7 July 2004, from the second defendant's then solicitor (annexure "J" to the Pereira affidavit of 19 May 2005). This letter refers to the family trust and the second defendant's appointment as trustee of the trust, encloses copies of the deed for the trust and the appointment, and confirms that the land the subject of the Mortgage was a trust asset. The letter indicates that there will be application to the Registrar of Titles to vest that land and the Medina property in the second defendant as trustee of the family trust, and requests copies of documents relating to the loan secured by the Mortgage as the second defendant had not found, among the books and records of the third defendants, any such documents, except for the Mortgage.
The Cleary affidavit of 12 July 2005 deposes (at par 3) that the plaintiff "did not have any knowledge at all of a trust or any legal or equitable interests claimed by the second defendant in the property" the subject of the Mortgage, when the "Loan Contract" was "signed" and the Mortgage "registered". The affidavit further deposes that (par 5)
"As the Plaintiff had no knowledge of any trust or interest in the Property claimed by the Second Defendant, the Plaintiff did not have any actual knowledge of any fraud being committed by the Third Defendant against the Second Defendant in entering into the Loan Contract and the Mortgage, if in fact he did so and the Plaintiff did not have any knowledge of any facts that could reasonably have indicated that the Third Defendant may have intended to defraud the Second Defendant, if in fact he did so."
The affidavit annexes (as "MC1") a copy of what the affidavit describes as "the loan application documents submitted by the Third Defendant on behalf of the Second Defendant" (par 4). Those documents in fact comprise a letter dated 16 June 2003 thanking the first defendant and the third defendant for "your application for a secured loan facility", and attaching material to be completed, with an instruction to "sign the attached application form where required". The papers are signed by the third defendant as director and shareholder, "for and on behalf of" the first defendant, and dated 25 June 2003. There is no reference in the papers to the capacity in which the first defendant is proposing to enter into the transaction. The affidavit says that these papers "along with the documents referred to in my Affidavit sworn on 19 May 2005, show what facts were known to the plaintiff at the time the Loan Contract and Mortgage were entered into" (par 4). There was no affidavit of 19 May 2005 of Mr Cleary before me: the reference to the affidavit of 19 May 2005 is in my view a reference to the Pereira affidavit of 19 May 2005, and in particular to the 2003 Loan Agreement. As I have previously indicated, that document indicates that it was entered into with the third defendant other than as trustee.
The Pereira affidavit of 19 May 2005, consistently with the documents to which it refers as I have indicated, is sufficient to make the case for the plaintiff that, whether or not the Property was a trust asset held by the first defendant as trustee, the plaintiff had no knowledge of, and did not calculatedly abstain from inquiring as to, that fact. This is of course consistent with the capacity in which the first defendant was borrowing the funds secured by the Mortgage as indicated by the 2003 Loan Agreement and its 2002 predecessor.
The second defendant was unable to point me to any material in the affidavit in opposition to the application or in the affidavits in support of it that would in my view raise a dispute as to that lack of knowledge or calculated abstention. I have noted the statement of claim, however, which claims "the amount owing pursuant to the Loan Agreement and the Mortgage" as against the second defendant "in his capacity as Trustee of the Trust". This claim, to which I will return shortly, does not in my view qualify the case the plaintiff has put forward, that it did not at any material time know or calculatedly abstain from finding out that the first defendant was a trustee, dealing with a trust asset. Rather, it is a claim for relief in the alternative that allows for the possibility that the 2003 Loan Agreement did indeed create a trust liability. I note that Mr Newton's affidavit of 21 June 2005 deposes that, following his appointment as trustee of the family trust in place of the first defendant, "the assets and liabilities held in the name of the First Defendant were transferred, or were to be transferred, into my name as trustee for the Trust" (par 8b.). It is of course part of the second defendant's case that the first defendant's borrowing secured by the Mortgage was in its own right, and not a borrowing for the trust.
Further, it does not seem to me that the second defendant has shown "there ought for some other reason to be a trial". The second defendant pressed on me that it lacked the documentary material which might fill the gap in what material the defendant had, and which might establish that the plaintiff in fact had the knowledge it disclaimed having or had calculatedly abstained from inquiry. The second defendant indicated it should be given the opportunity, as through an adjournment of the hearing, to seek to obtain that material. However, I note the authorities to which I earlier made reference, Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 at 116, and Brisbane Unit Development Corp Pty Ltd v Robertson 1983] 2 Qd R 105 at 109, which it seems to me are the answer to that submission.

The orders

As I have previously indicated, at the hearing before me the plaintiff produced a minute of proposed orders relating both to the application for default judgment and the application for summary judgment. I made orders on both in terms of the minute as amended.
However, I have already indicated why, for the purposes of these reasons, I have severed those parts of the orders to do with the application for default judgment from the other parts, which relate to the summary judgment orders only.
The orders in the plaintiff's minute relating to its application for summary judgment were in their original form as follows:
"2.Judgment be entered in favour of the Plaintiff against the Second Defendant for the amount owing to the mortgage [sic] at the date of judgment such amount to be evidenced by a Certificate signed by the Plaintiff's solicitor and interest.
3.The Second Defendant do within 28 days after service of this judgment on the Second Defendant give to the Plaintiff vacant possession of all that piece of land being Lot 123 on Diagram 12466 and being the whole of the land comprised in Certificate of Title Volume 1085 Folio 288 situate at and known as 2 May Street, Bayswater in the State of Western Australia.
4.The Second Defendant pay the Plaintiff's costs of the action, including reserved costs, and the costs of this application, pursuant to Clause 20 of the Memorandum of Common Provisions G803753.
…
8.The Second Defendant pay the Plaintiff's costs of the action, including reserved costs, and the costs of this application, pursuant to Clause 20 of the Memorandum of Common Provisions G803753."
At the original hearing before me I raised with the plaintiff the question of the appropriateness of the order in 2. It appears to me that the basis for making such an order is not altogether apparent in the pleadings. I have already discussed in these reasons where such basis may be found in the materials filed in relation to the application for summary judgment. In the circumstances, the plaintiff indicated it would be content not to seek an order in terms of 2, and this was deleted from the minute for the purposes of the orders I made.
On that basis, the liability of the second defendant for costs on the basis of the Memorandum of Common Provisions is not apparent to me. In any event, I note that 8 is a repetition of 4. I will take submissions from the parties as to the appropriate order as to costs.
At the original hearing before me, in relation to the order in 3, the second defendant directed me to the Newton affidavit of 21 June 2005, in which he deposes that he is "in possession of Property, along with a tenant, Mr Ethan Pearson, who has resided there since early February 2005" (par 19). I note that in the Pereira affidavit of 19 May 2005 she deposes (par 16), on the basis of the affidavit of service by a Ms Cheryl Harrison sworn 4 April 2005, that no other person than the second defendant was in possession of the property the subject of the Mortgage at the date of swearing the Pereira affidavit. On the basis of this material, I indicated that the terms for the order in terms of 3 should be amended to insert, after "the Plaintiff" in the second line, the qualifying words ", so far as the Second Defendant is able to do so,", to allow for the presence of a tenant. The plaintiff was content to have such an amendment made.
With those amendments I made the orders in relation to the application for summary judgment as set out in the plaintiff's minute. However, I will hear from the parties as to costs.