Pyramid Building Society v Viewbank Garden Estate

[1998] VSC 104

SUPREME COURT OF VICTORIA

CAUSES JURISDICTION

Not Restricted

No. 12122 of 1991

PYRAMID BUILDING SOCIETY	Plaintiff/Respondent
v
VIEWBANK GARDEN ESTATE & ORS	Defendants/Applicant

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JUDGE:	Smith, J.
WHERE HELD:	Melbourne
DATE OF HEARING:	29 September 1998
CASE MAY BE CITED AS:	Pyramid Building Society v. Viewbank Garden Estate & Ors
DATE OF JUDGMENT:	15 October 1998
MEDIA NEUTRAL CITATION:	[1998] VSC 104

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PRACTICE AND PROCEDURE - appeal from a Master - default judgment - application to set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G. Fitzgerald	Holding Redlich
The 9th Defendant Appeared In Person

HIS HONOUR:

1. This is an appeal from a decision by Master Wheeler made on 7 August 1998 dismissing an application by the ninth defendant, Mr King-Siem (the defendant), to set aside a default judgment obtained against him in the sum of $2.6M for moneys owing under a guarantee. The judgment was entered in default of defence on 17 February 1994.

2. I have before me the material that was placed before the Master and further affidavits filed on behalf of the plaintiff by Mark Stephen Koroneos sworn 16 September 1998 and 21 September 1998. The former affidavit exhibits, amongst other things, a transcript of witness examinations before the Master (exhibit “MSK 1”). The latter contains the copy documents tendered during witness examinations before the Master (exhibit “MSK 1” to that affidavit). The parties agreed that the affidavits and exhibits were properly before me as evidence in this appeal.

3. From my reading of the transcript and the Master’s reasons, it appears that there has been a slightly different emphasis brought to bear on the matter by the defendant. Before me he sought to raise the following points:

1.	He argues that he did not receive the writ or other legal documents relating to the litigation.
2.	He did not instruct Williams Winter & Higgs, or Bruce Curl of that firm, to act on his behalf and had no knowledge that they were acting on his behalf.
3.	To the extent the documents were served on him at 362 Shannon Avenue, Highton, he was not living at that address and the service was therefore incorrect.

1. The above three points raise matters relevant to two questions. The first is the regularity with which the judgment was obtained. The second is whether there is reasonable explanation for the entry of the default judgment and whether he has or has not unreasonably delayed in bringing the application. These are, of course, matters which normally need to be addressed by a defendant seeking to set-aside a default judgment. (Rosing v. Ben Shemesh [1960] VR 173.)

2. The other points raised go to the question of whether there is a prima facie defence on the merits. The two major points he makes are:

1.	that he denies executing the relevant guarantee which formed the basis of the plaintiff’s case and asserts that they are forged; and
2.	that if his signature did appear on that document it was the result of fraud on the part of persons associated with the company borrowers.

1. On the question of whether the writ was regularly served or came to the attention of the defendant, the evidence given below revealed, in particular, the fact that correspondence passed from Mr Curl to the defendant addressed to “Post Office Box 63 Hawksburn”, an address which the defendant accepted was one at which he was at the time receiving documents. He admitted before the Master that he had previously seen a letter dated 18 December 1991 from Mr Curl. In that letter, entitled “re: Pyramind Building Society”, Mr Curl referred to a telephone conversation of that date. The letter stated that it enclosed a Writ and advised that Mr Curl had accepted service, filed an appearance and filed a defence “pursuant to your instructions”. Under cross-examination before the Master he said he did not recall the alleged conversation but could not deny it. He denied giving the alleged instructions. He said he did nothing in response to the letter. His explanation was “I didn’t believe that I was involved...”. Asked if he contacted Mr Curl to correct him he replied “I don’t believe so”. Challenged, he responded “I don’t remember, no”.

2. He was then shown a letter of 3 February 1993 from Mr Curl to him entitled “re Viewbank Gardens Estate & Ors ats Pyramid Building Society(in liquidation)”. The letter advised that a summons for final judgment had been issued against “all parties” and asked him to contact Mr Curl. Under cross-examination as to whether he received the letter at about 3 February 1993 he replied “ I couldn’t say one way or the other, but I assume so.” He denied making any appointment to see Mr Curl, again because, in his mind, he was not involved.

3. I am satisfied having regard to the defendant’s intelligence and his background in engineering and in commercial contracts and dealings that he would have understood the significance of these letters and do not accept his evidence as to his lack of response. In these circumstances, the defendant is unable to demonstrate that the writ was not brought to his attention and cannot demonstrate that the solicitors who entered an appearance on his behalf did not have authority to do so. I am satisfied, in fact, that they did. He cannot demonstrate that he had no knowledge that they were acting for him.

4. As to the regularity of service of documents at a later stage at 362 Shannon Avenue, Highton, no irregularity can be established. The defendant made no issue about the fact that strictly the suburb was Newtown. The address was the address for service placed on the Notice of Ceasing to Act filed on 30 May 1993 by Williams Winter & Higgs. Further it was the address specified in the guarantee at which documents were to be served. I accept the evidence, however, that the defendant did not live at that address it was an investment property owned by a trustee company which looked after the interests of a family trust. I also accept his evidence that he went there on occasions. The premises were occupied by Deakin University students. In those circumstances it is conceivable that he may not have received one or more of the application by the plaintiff to strike out his defence, the application to enter judgment in default of defence and any other documents related to such matters served upon him at that address. I am not prepared to hold, however, that the documents sent to that address did not come to the attention of the defendant. He is an intelligent man. The documentation he has prepared demonstrates a capacity for great detail, a keen interest in his own affairs and a mind focused on his affairs. I refer also to exhibit 12 to his affidavit of 14 May 1998 and resworn 9 June 1998 which was prepared by him. It demonstrates considerable skill in drafting and considerable care as to detail. It purports to be a revocation as at 1 June 1991 of loans, guarantees, warranties, sureties, pledges and otherwise indemnifying undertakings given in respect of the Viewbank companies in question in these proceedings and in respect of loans, amongst other things, from the Pyramid Building Society. His explanation that the various companies were named because it was possible he had been caught up in dealings with them is unconvincing. It should also be noted that the address of 362 Shannon Avenue was an address used as his address in a number of corporate documents by relevant companies and it would be surprising if he was not aware of that and that there was not a supply of documents to that address to which he would have needed to give attention. Further, as the Master pointed out, there is no evidence that the critical documents in this case had ever been returned as having been uncollected. I refer, in particular, to the summons of 23 November 1993, the summons and order of 9 and 21 December 1993, the order made by Master Evans on 2 February 1994 and the default judgment of 7 February 1994.

5. In light of the foregoing I am not satisfied that a satisfactory explanation has been advanced to explain the defendant’s failure to defend the proceedings and his delay in attempting to set aside the default judgment.

6. I turn to the question of whether there is a prima facie defence on the merits. In his affidavit, the defendant has sworn that he did not sight the document containing the guarantee at any material time and was not aware of its existence and composition until earlier in 1998. He deposed that he was never approached to consider providing personal guarantees and was not given an opportunity to peruse the alleged loan agreement with or without the guarantee clauses or to seek legal advice. He also stated in his affidavit that page 21 of the document purports to:

   “evidence a signature very similar to my own, but in my view the said

   signature is not mine”.

   He went on to depose:

   “In the alternative, if the said signature were to be deemed my own, the page upon which it appears was, for the purpose of execution, not at the material time attached to the document. In the event the signature would have been obtained by deception”.

   He attempted to give force to his evidence by deposing that at no time did he knowingly execute an unconditional and irrevocable guarantee and would never have done so if he had been aware of its contents. He gave some details to support that point.

7. In the course of his evidence before the Master, he was cross-examined about the signature. He acknowledged that the signature on page 21 of the document appeared to be his signature. In addition, he said that the signature at page 23 of the document appeared to be his signature. He did not recognise the signature of the witness. It emerged in the course of his evidence that he was often called upon to sign documents and he said he had signed documents without knowing what they were. He again said that the signature appeared to be his signature but he did not know whether it was or not. He said that he believed he never executed the guarantee. Asked if he was saying that someone forged his signature he replied that:

   “... it is not the first instance where I have had that suspicion and, frankly, I think if I had enough evidence, I could collect enough documents, which unfortunately I can’t, I could prove it”.

8. A little later he conceded that he would have to admit that he had been careless about what he signed. He said the “exacerbating circumstances were that there were an awful lot of documents being signed at that time”. He accepted that he did sign documents in many cases, regrettably, without reading them.

9. Two issues are raised by the defendant’s evidence given before the Master. The first concerns the question whether he has a prima facie defence that he did not execute the document. In my view there is insufficient evidence placed before me to support a finding of a prima facie case when the defendant acknowledges that the signature appears to be his and he is not in a position to support the asserted contrary belief with evidence. Something more is needed than a belief that the signature is not his in circumstances where he accepts that it appears to be his signature. In addition, I am not prepared to act upon the defendant’s unsupported belief in circumstances where he has not in my view, been frank in relation to his dealings with Mr Curl and Williams Winter & Higgs and in circumstances where he has prepared a document of considerable detail (Ex 12) which seeks, on the face of it, to withdraw from guarantees involving the very parties with which I am concerned in this case.

10. The other issue raised, in the alternative, is that if it is his signature which appears on the two relevant pages, he was the victim of a fraud in that the documents were attached to the guarantee document without his permission.

11. The defendant faces the difficulty that he is not alleging fraud on the part of the plaintiff but fraud on the part of the borrower and persons associated with borrower. He would have to be able to argue successfully that attaching the paper with his signature to the document constituted forgery and thus the fraud rendered the guarantee void not voidable. Assuming that to be the case, it is necessary to examine the evidence he has placed before me.

12. He gave detailed evidence before me of a regular practice within the relevant companies of signatories being presented with piles of six or more documents on a large table in front of which were the pages on which the signatures for those documents were to be placed. After signing, those sheets would then be attached to the relevant document. His evidence was that the signatories would file past the table on which the documents were placed taking it in turns to sign the documents and that they did so without reading them and without information about their contents. He thought it likely that, if it was his signature on the document, it would have been obtained in this way.

13. Thus, his evidence does not raise a prima facie case of any fraudulent activity on the part of those obtaining his signature as guarantor. It demonstrates his consent to the procedure about which he now complains. While that procedure had the potential for fraud, he can give no evidence that would support a case of fraud. If he signed the document in the above circumstances, it was attached with his authority and he is bound by the terms of the document, in the absence of fraud, even though he did not read it. (L’Estrange v. Graucob [1934] 2 KB 394 at 403; Taylor v. Johnson (1983) 151 CLR 422 at 446; Parker v. South Eastern Railway Co. (1877) 2 CPD 416, 421)

14. The defendant raised a further issue - whether he was entitled to receive notice of the transaction or copies of the documents pursuant to various legislative provisions. He asserted that he did not receive such documents and argued that he is, therefore, not bound by the guarantee. He referred to the Credit Act 1984, Money Lenders Act (repealed), Co-operation Act 1981 (repealed), Co-operatives Act 1996 (including the codes), Building Societies Act 1986, Consumer Credit Act 1995 (including the codes) and Trade PracticesAct 1975. He did not initially provide any details of the precise provisions which conferred the right upon him to receive such documents and an obligation upon the plaintiff to deliver them. I gave him the opportunity overnight to identify the provisions that he had in mind. He did so. At the resumed hearing he confined his argument to the Credit Act 1984 and the Trade Practices Act 1975. The provisions of the Credit Act do not apply to the transaction. As to the sections of the Trade Practices Act, assuming they apply, there is no evidence to support a defence under that Act.

15. In light of the foregoing I am not persuaded that the defendant has placed evidence before me that would support the conclusion that he has a prima facie defence on the merits or that there is any possibility that, with other evidence, he could raise a prima facie defence.

16. Having regard to the foregoing, the judgment should not be set aside. The appeal should be dismissed.

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