Nissan Financial Services Australia Pty Ltd v Motbey

[2021] NSWSC 884

Supreme Court

New South Wales

Medium Neutral Citation:

Nissan Financial Services Australia Pty Ltd v Motbey [2021] NSWSC 884

Hearing dates:

21 July 2021

Date of orders:

21 July 2021

Decision date:

27 July 2021

Jurisdiction:

Common Law

Before:

Davies J

Decision:

1. Leave to the third defendant to file the proposed cross-claim annexed to the notice of motion of 9 July 2021 such amended cross-claim to be filed and served by 23 July 2021.

2. The third defendant to pay the costs of the notice of motion and costs thrown away by reason of the filing of the cross-claim.

Catchwords:

CIVIL PROCEDURE — cross-claims — against plaintiff — application for leave to file cross-claim out of time by third defendant — where consent not given by plaintiff to the filing — where Court satisfied that explanation for delay in preparing cross-claim provided — delay due to unavailability of documents and impecuniosity of third defendant — where proceedings did not stall completely during period of defendant’s failure to comply with directions — prejudice to plaintiff was only for relatively short period — where sufficient nexus between issues on plaintiff’s claim and issues raised by cross-claim — leave given to file cross-claim

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 58

Contracts Review Act 1980 (NSW) s 7

Cases Cited:

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

Nissan Financial Services Australia Pty Ltd (Plaintiff)
Robert Reginald Motbey (First Defendant)
Rebecca Jane Motbey (Second Defendant)
Debbie Lorraine Motbey (Third Defendant)
Jennifer Chappell (Fourth Defendant)

Representation:

Counsel:
D Farrar (Plaintiff)
Excused from appearing (First and Second Defendants)
N Allan (Third and Fourth Defendants)

Solicitors:
Farrar Lawyers (Plaintiff)
Navado Lawyers & Solicitors (First and Second Defendants)
Boom Lawyers (Third and Fourth Defendants)

File Number(s):

2020/135433

Publication restriction:

Nil

Judgment

1. On 21 July 2021 I heard an application by the third defendant seeking leave to file a cross-claim out of time against the plaintiff in these proceedings. At the conclusion of the hearing I made orders granting leave for the filing of the cross-claim, and said that I would provide reasons for that decision at a later date. These are my reasons.

2. The proceedings commenced on 6 May 2020. The plaintiff sought possession of land in Salmon Street, Tuross Head, a property owned by the four named defendants. The mortgage was given as security for a number of agreements associated with the purchase of a motor dealership. The plaintiff was the financer of the dealership. It was a company associated with the car company associated with the dealership.

3. Although the plaintiff seeks possession only of the property in Tuross Head, mortgages were given over three other properties. One of those properties was owned by the third defendant which, according to the affidavit of the third defendant’s solicitor is at 36 Eurobodalla Road, Bodalla, but according to the statement of claim is at 91 Princes Highway, Bodalla.

4. The plaintiff lent money to a company called Motbey Operating Co Pty Limited to purchase the car dealership. The directors of that company were the first and second defendants. They also guaranteed the company’s obligations. The third defendant was the mother of the first defendant. The third and fourth defendants were guarantors of the company’s obligations.

5. The first defendant filed a defence to the claim on 3 June 2020 and an amended defence on 26 May 2021. The third and fourth defendants filed a defence on 16 July 2020. It pleaded that those defendants could not admit any of the paragraphs in the statement of claim, and in response to most of those paragraphs, that was because they were not in possession of the documents pleaded as part of the statement of claim.

6. In addition to guaranteeing the initial loan on or about 23 June 2014, the statement of claim alleges that the first and second defendants agreed to guarantee further financial agreements entered into with the company in August 2014, August 2016 and March 2017. The third defendant was said to have provided guarantees in June 2014 and March 2017.

7. In about July 2020 the matter was referred by one or more of the defendants to the Australian Financial Complaints Authority (AFCA). Ultimately, AFCA determined in about February 2021 that it did not have jurisdiction in the matter.

8. On 1 March 2021 the Registrar ordered that the defendants were to provide proposed cross-claims to the plaintiff by 22 March 2021, and for the plaintiff to give consideration to the cross-claims by a specified date. The Registrar then made subsidiary orders providing for the filing of such cross-claims if agreed by the plaintiff, or the filing of a notice of motion by a specified date if consent was not given.

9. No cross-claims were provided as directed.

10. The matter came before me for judicial directions on 14 April 2021. I directed that the defendants were to file and serve amended defences and to serve any proposed cross-claims by 26 May 2021. Contrary to those directions, the third defendant filed a cross-claim on 23 April 2021. I subsequently directed that it be removed from the court file.

11. Ultimately, a cross-claim was served on the plaintiff’s solicitors on 7 June 2021. Particulars were sought but were not provided for a three week period.

12. When the matter came before me on 2 July 2021, the solicitor for the plaintiff said that consent would not be given to the filing of the cross-claim. In those circumstances, I directed the third defendant to file a motion if leave was to be sought.

13. The proposed cross-claim seeks orders pursuant to s 7 of the Contracts Review Act 1980 (NSW):

(a)   refusing to enforce against the cross-claimant the Guarantee & Indemnity given by her to the cross-defendant on or about 23 June 2014, except to the extent that it, or security for it, might be enforced against Lot 55 DP 218664 and otherwise known as 16 Salmon Street in Tuross Head (the co-owned property); and

(b)   refusing to enforce against the cross-claimant the guarantee and/or indemnity allegedly given by her to the cross-defendant on in (sic) March 2017, except to the extent that it, or security for it, might be enforced against the co-owned property; and

(c)   discharging the mortgage granted to the cross-defendant over Lot 35 DP 13566, otherwise known as 91 Princes Highway in Bodalla (the Bodalla house).

14. The matter which is said to lead to the unjustness of the guarantees and the mortgage is the knowledge about the state of the dealership, of which it is claimed the plaintiff was aware but the third defendant was not, based particularly upon what the third defendant became aware of after she entered into the various agreements. The unjustness is said to be based on the fact that the third defendant did not obtain any financial advice, together with her own lack of qualifications or experience, which would have enabled her to make an informed decision about entry into the arrangements. The claim relies heavily on the alleged knowledge of the plaintiff about the state of the dealership.

15. The application was opposed on two grounds. The first was the delay and the failure to comply with directions made on a number of occasions. The second basis was that the claim made by the plaintiff was for possession of the Tuross Head property and the third defendant’s relief concerned guarantees and a property about which there was no issue on the plaintiff’s claim. The plaintiff submitted also that there was little connection between the claim the third defendant sought to make, by alleging unjustness of the guarantees and the mortgage, and the defence of the claim made by the first and second defendants. The plaintiff submitted that, if the third defendant wished to make the claim pleaded in the cross-claim, she should commence separate proceedings to do so.

16. Section 58(1) of the Civil Procedure Act 2005 (NSW) requires the Court to act in accordance with the dictates of justice when considering making any order of a procedural nature. That includes an application for leave out of time to file a cross-claim. Subsection (2) sets out matters relevant to acting with the dictates of justice. The degree of expedition with which parties have approached the proceedings is a relevant consideration.

17. I accept also that an order for costs against a defaulting party may not be a satisfactory answer to a default: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [99] to [102].

18. Although there have been delays in this matter, and particularly by the third defendant in failing to comply with earlier directions to prepare a cross-claim, I am satisfied from the evidence of the third defendant’s solicitor that an explanation for that delay has been provided: Aon at [103]. Part of the explanation was the unavailability of documents so that there could be an adequate and comprehensive pleading of the cross-claim. There was the further aspect of the impecuniosity of the third defendant where, for two periods of time, pro bono assistance was provided by the third defendant’s legal advisors, or was attempted to be obtained from other sources.

19. While the explanation for the delay, or the whole period of the delay, is not entirely satisfactory, the proceedings did not stall completely during the period of the third defendant’s failure to comply with directions. The position has now been reached where the plaintiff’s evidence has been served and directions are in place for the service by all defendants of their evidence by 29 July 2021. A hearing date will be appointed within the next week.

20. In that way, while there is some prejudice to the plaintiff, it is for a relatively short period. The more significant delay occurred whilst the matter was with AFCA, and that was not the fault of the third defendant.

21. Whilst, on one view, the relief the third defendant seeks on the proposed cross-claim concerns a different property from the property of which possession is sought by the plaintiff, and concerns guarantees not being sued upon directly, at least at this stage, the matters raised in the proposed cross-claim arise out of the guarantees and mortgages provided as a result of the loan of 23 June 2014 and the subsequent loans, all of which are concerned with the same car dealership.

22. The defence of the first and second defendants challenges the reliance by the plaintiff on default notices issued to all of the defendants in October and November 2018, resulting in the termination of the finance agreements in December 2018. The defences in relation to those notices include estoppel, misleading and deceptive conduct, and unconscionable conduct. If those defences were successful that would likely operate for the benefit of the third defendant, because she is a guarantor along with the first, second and fourth defendants. This matter is picked up by the third and fourth defendants in paragraphs 6, 8 and 11 of the defence filed by the third and fourth defendants.

23. In all the circumstances, it appears to me appropriate that all issues concerned with the provision of finance by the plaintiff to the company, and guaranteed by the four defendants, including the provision of security properties, should be dealt with in the one set of proceedings. If, for example, the third defendant was successful in whole or in part on her cross-claim in having any of the guarantees set aside as against her, that may flow through for the benefit of the other guarantors.

24. For those reasons, leave should be given to the third defendant to file the proposed cross-claim annexed to the notice of motion of 9 July 2021, such pleading to be filed and served by 23 July 2021.

25. Although the third defendant has been successful on her notice of motion, she was seeking an indulgence from the Court on the basis that her cross-claim ought to have been filed at the time of the filing of her defence on 16 July 2020. In those circumstances, the third defendant should pay the costs of the notice of motion and should pay costs thrown away by reason of the late filing of the cross-claim.

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Decision last updated: 27 July 2021