Perpetual Trustees Victoria Limited v Zelski
[2011] NSWSC 1571
•16 December 2011
Supreme Court
New South Wales
Medium Neutral Citation: Perpetual Trustees Victoria Limited v Zelski [2011] NSWSC 1571 Hearing dates: 12 December 2011 Decision date: 16 December 2011 Jurisdiction: Common Law Before: Schmidt J Decision: Settlement approved
Catchwords: PROCEDURE - approval of settlement proceedings involve a defendant who was appointed a tutor - settlement is in defendant's interests - settlement approved Legislation Cited: Civil Procedure Act 2005 Category: Procedural and other rulings Parties: Perpetual Trustees Victoria Limited (Plaintiff)
Joseph Zelski (Defendant)Representation: Counsel:
Mr P Newton (Plaintiff)
Mr D Roberts (Defendant)
Solicitors:
Kemp Strang (Plaintiff)
DM Roberts & Co Solicitors (Defendant)
File Number(s): 2008/00284107
Judgment
The plaintiff, Perpetual Trustees Victoria Ltd, commenced these proceedings seeking possession of a property at Mount Druitt, over which it held a mortgage in respect of a loan of $200,000, which it advanced to Mr Zelski, the defendant, in December 2006. The loan went into arrears in 2007, but the claim was defended. A cross-claim had been brought by Mr Zelski against a Mr Michael Conti, who had filed no defence and had not appeared in the proceedings.
In August 2010, Ms Barbara Ramjan was appointed Mr Zelski's tutor. Settlement negotiations resulted in an agreement, reflected in a Deed which was executed by the parties and Ms Ramjan on 12 December 2011. Approval of the settlement was sought of the Court under s 75 of the Civil Procedure Act 2005. The section provides:
"75 Settlement of claim made on behalf of, or against, person under legal incapacity
(cf SCR Part 63, rule 13)
(1) This section applies to any claim, enforceable by proceedings in the court, that is made by or on behalf of, or against, a person under legal incapacity.
(2) If, before proceedings are commenced with respect to any such claim, an agreement for the compromise or settlement of the claim is made by or on behalf of the person under legal incapacity, the court may approve or disapprove the agreement.
(3) An agreement disapproved by the court does not bind the person under legal incapacity.
(4) An agreement approved by the court binds the person under legal incapacity as if he or she were of full capacity and (if it was made by some other person on his or her behalf) as if that other person had made the agreement as his or her agent."
Having considered the evidence and the parties' submissions, I am satisfied that the approval sought should be given.
The evidence disclosed that Mr Zelski was seen by Dr Paul Darveniza. His report indicated that Mr Zelski had a memory of the events of December 2006. Mr Zelski told him that:
"He said he contacted the real estate agent about selling his house as he wanted to visit Poland, his original home country. As he understood it, the house was to be mortgaged and he was to be given sums of money of up to $200,000. In exchange he was free to live in the house for the rest of his natural days and then the house would then revert to the mortgagee on his death."
Mr Zelski felt under duress, including physical duress, when he signed the loan documents in the presence of certain people. He described them as standing over him. Later he went to their offices where he received amounts of up to $1,500 at a time, to a total of $30,000, which he spent on living expenses.
At that time he was living alone, independently, attending to his shopping, banking and finances. A younger friend lived with him at the time of the interview with Dr Darveniza. He told Dr Darveniza that Mr Zelski was becoming a little forgetful of certain matters, but that he could read, write, calculate, express and comprehend, with reasonable attention and concentration. He still shopped independently and attended to his finances, bills and banking.
Dr Darveniza observed:
"On examination he was alert and quite conversant and indeed seemed to speak reasonable English, although at times the interpreter was needed.
...
In summary, this gentleman only has signs of minimal cognitive impairment currently, which according to a friend has only become evident in the last two to three years, and he was able to give a good account of the events in December 2006 and hence, at that time in my view, there was no evidence of any cognitive dysfunction.
However, it is noted that it was a complex document and loan agreement that he was asked to sign and that he felt under duress and pressured and flustered at the time to sign it, without due consideration."
The Deed contains terms that:
" 2.1 The Loan Agreement and the Mortgage are valid and enforceable
(a) The Lender and Mr Zelski consent to an order being made in the Supreme Court of New South Wales declaring that the Loan Agreement and Mortgage are valid and enforceable.
(b) The Lender and Mr Zelski consent to an order being made in the Supreme Court of New South Wales declaring that the Mortgage secures the Loan and all amounts due under the Loan Agreement.
...
2.3 Mr Zelski to give the Lender vacant possession of the Property upon ceasing to reside in the Property
(a) Mr Zelski agrees to give the Lender vacant possession of the Property upon ceasing to reside in the Property.
(b) Within 25 days of ceasing to reside in the Property, Mr Zelski and/or his executors, administrators, trustees, legal personal representatives must notify the Lender that Mr Zelski has ceased to reside in the Property.
(d) The Lender agrees not to seek possession of the Property until Mr Zelski ceases to reside in the Property or fails to keep the Property in its current state of repair or fails to pay rates or outgoings levied in respect of the Property (and such rates or outgoings remain unpaid for a period of 6 months) or fails to maintain insurance over the Property in accordance with the Mortgage."
The proceedings are to be dismissed with no order as to costs.
The parties have each received legal advice as to their interests. On the plaintiff's approach, the effect of the agreement is essentially to put Mr Zelski into the position he told Dr Darveniza he understood that he would be in, once the loan was taken up.
On the evidence there seems to be a question as whether Mr Zelski is in fact under a legal incapacity. He does not appear to have suffered any incapacity at the time he obtained the borrowings. Nevertheless, for reasons which seemed appropriate to the parties, steps were taken to ensure that Mr Zelski understood the proposed settlement, including by the appointment of a tutor, by provision of the assistance of an interpreter, and the giving of legal advice.
On the submissions advanced by Mr Zelski's counsel, there was some measure of compromise reached between the parties in the final settlement, but that the position advanced for the plaintiff was essentially accepted. Mr Zelski and his tutor have been given legal advice that the settlement is in his interests.
Having in mind Dr Darveniza's assessment of Mr Zelski; what he told Dr Darveniza as to his intentions in 2006; and terms of the agreement which the parties have reached, it must be concluded that the settlement does appear to be in his interests.
Accordingly, I approve the settlement.
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Decision last updated: 16 December 2011
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